Export Authorisations

1. When is an authorisation required?

A license is not a formality at the end of the export process, but a requirement that deserves attention during the preparation of a transaction. If it only turns out that an authorisation is required just before shipment, this has immediate consequences for the planning.

The need for an authorisation depends on the applicable regime, the classification of the goods, the destination, the end-user and the intended end-use. For dual-use items that are included in Annex I to the Dual-use Regulation, export to a destination outside the European Union is in principle subject to an authorisation. Depending on the goods and destination, a general export authorisation can be used under certain conditions. Goods not included in Annex I may also be subject to an authorisation requirement in extraordinary circumstances, for example because of the intended end use.

2. What factors play a role?

A good authorisation assessment therefore does not start with filling in a form, but with the collection and assessment of information. What is supplied? What are the technical characteristics? Where do the goods go? Who ends up using them? And what are they used for?

For example, a company that exports technical equipment with advanced chips may assume that no license is needed because the customer uses the equipment exclusively for civilian purposes. However, the technical characteristics may indicate that the equipment falls under a strategic goods item in Annex I to the Dual-use Regulation.

3. Several types of authorisations

Not every authorisation requirement leads to the same type of authorisation. The Dual-use Regulation includes individual and global export licenses as well as national and Union general export licenses. Which option can be used depends, among other things, on the goods, destination, end users and conditions of the relevant authorisation. Separate licensing systems apply to military goods and sanctioned goods. A sanction regulation can also contain an authorisation option, but also a prohibition from which no derogation is possible.

4. Preliminary application and classification request

If it is established or assumed that an authorisation is required for an intended export, but there is a need for an indication of the likelihood of an authorisation being granted before entering into commercial commitments, a probe may be submitted. A preliminary application is a trial application and gives an indication of how a later authorisation application is likely to be assessed under the circumstances known at that time. The outcome is a snapshot and does not replace the final authorisation application.

If there is uncertainty as to whether goods, software or technology are subject to export controls, a classification request may be submitted to the Centrale Dienst voor In- en Uitvoer (CDIU). The CDIU is the unit of Dutch Customs responsible for matters relating to export controls.

As part of this assessment, the CDIU determines whether restrictive measures apply on the basis of, among other things, the technical characteristics of the items concerned and the transaction information provided. The outcome of a classification request does not constitute a formal decision within the meaning of the Dutch General Administrative Law Act and is therefore not subject to objection or appeal.

Both procedures can provide useful clarity at an early stage, but they serve different purposes. A classification request primarily concerns the applicability of restrictive rules, whereas a preliminary application provides an initial indication of the likely outcome of a subsequent authorisation application.

5. No authorisation requirement also requires substantiation

The assessment does not stop when the conclusion is that no authorisation is required. That conclusion must also be sufficiently substantiated. In many cases, the substantiation of this is similar to the analysis required for an authorisation application. Indeed, the technical characteristics of the product, the relevant export control rules, the destination, the end-user and the end-use must be assessed in both cases. The difference ultimately lies in the conclusion: the analysis leads to an authorisation application or to the conclusion that no authorisation requirement applies.

This recording also has practical importance. For example, in a customs declaration, the fictitious document code “Y901” must be used for certain measures, indicating that no authorisation requirement applies. When Customs asks afterwards why that document code was indicated, the company must be able to explain and substantiate what that conclusion is based on. The same applies outside the customs process. Banks can hold payments when a transaction raises questions from a sanctions or export control perspective. A well-recorded analysis then helps to provide insight into which assessment has taken place and why the transaction does not require a license according to the company.

6. Practical consequences of authorisation requirements

Authorisation obligations directly affect planning and customer agreements. Therefore, it must already be assessed during the commercial process whether an authorisation may be necessary. A granted authorisation may additionally include conditions that must be known to the employees involved in sales, logistic and documentation.

7. Authorisation management within the organization

Authorisation management therefore requires clear agreements. Who applies for authorisations? Who checks whether an authorisation is still valid? Who monitors the conditions? Who ensures that the right license is linked to the right shipment? Who checks whether the specific shipment falls within the period of validity, size and other conditions of the authorisation?

An authorisation is only usable as long as the actual transaction remains within the scope and conditions thereof. If the goods, destination, end user or end use change, this requires a new assessment of the applicability of the authorisation. Changes in sanctions or export control rules can also have consequences.

It is therefore wise for organisations to make authorisations and the substantiation of the lack of an authorisation requirement part of the normal export process.

Customs Knowledge can support organisations in assessing authorisation requirements, preparing applications, recording assessments in which it is concluded that no authorisation requirement applies and setting up practical procedures for authorisation management.

While every care has been taken in the preparation of this publication, Customs Knowledge accepts no liability for any errors or omissions, nor for their consequences. This article is not intended as specific advice. Please also refer to the General Terms and Conditions of Customs Knowledge BV.