Introduction: the world of export control

1. Export control is broader than many organizations think

By export control we mean the set of rules that determine whether certain goods, software, technology or services may be freely exported, transited, transferred or made available. This is not just about military goods. Products with a civilian application may also be subject to export control if they are also suitable for military purposes or other uses that harm international peace and security. Such goods or technology are the so-called dual-use items.

In practice, the collective term ‘strategic goods’ is often used. That concept includes military goods and dual-use items. In addition, goods that are not strategic can still be subject to export restrictions under sanctions legislation. That distinction is important. Anyone who calls everything “dual-use” may be missing military goods or sanctioned goods. Those who only look at sanctions may miss an authorisation requirement for strategic goods.

2. Why export control is becoming increasingly important

The broad scope of export control makes it a difficult concept. The delivery of a standard machine part, software update or technical drawing can already fall under export control regulations. The risk then arises not because someone deliberately wants to break the rules, but because it is insufficiently recognized that the rules may apply at all.

The following example illustrates this. A Dutch company supplies a software package for certain chips. At first glance, this seems to be a civil application. Nevertheless, the technical characteristics, the destination and the end user may give reason to assess whether export control applies. Is the software package possibly a dual-use item? Is there a possible military application? Are any penalties applicable? And who ultimately establishes that the export is permitted?

These are common situations. Developments on the international playing field also mean that vigilance is necessary. Sanctions are changing rapidly, technology is becoming more sensitive and banks, customs authorities and regulators are looking more critically at cross-border transactions. For companies, this means that export control is no longer a specialist topic at the periphery of the organization. It touches sales, logistics, compliance, finance and management.

3. Which parties play a role?

Export control brings together various parties. Within companies, sales, technology, logistics and compliance are often all involved. Outside the company, Customs is one of the most important supervisors. In particular, the Central Import and Export Service (CDIU) and Team Precursors, Origin, Strategic Goods and Sanctions Law (POSS) play an important role. Banks, forwarders, and in serious cases the Public Prosecution Service, can also play a role.

In practice, the CDIU is important for the provision of information and authorisations for strategic goods. Team POSS supervises compliance with rules relating to, among other things, strategic goods and sanctions legislation. Banks look at sanctions-related risks and payment flows from the perspective of their own obligations. Freight forwarders, in turn, see the flow of goods and customs documentation from their risk areas. None of these parties looks at it from exactly the same perspective. As a result, a transaction that seems commercially simple can still be more complex from a compliance point of view.

4. What can you expect from this publication series?

In this publication series, we take you step by step into the world of export control. We start with the basics: the relevant laws and regulations and the question of what exactly strategic goods are. We pay attention to both military goods and dual-use items. In addition, we deal with the sanctions legislation, the role of the exporter and the responsibilities of the forwarder. We also discuss permits, questions from banks and the enforcement of export control rules.

We always use the same practical approach for every publication within this series. First, we explain what the topic is about. Then we discuss why it is relevant for organizations involved in exports, logistics and customs practice. With an example we show where things can go wrong in practice. Finally, we indicate what organizations can check, record or discuss.

5. Practical points of attention for organizations

For organizations, the first step is often easier than expected: map out which goods, software, technology and services are delivered internationally. Next, look not only at the commodity code, but also at technical properties, destination, end user and end use.

Those who only engage with export control once a shipment is ready are often already too late. Companies that identify potential issues at an earlier stage can avoid delays, discussions with banks or authorities, and unnecessary risks. Customs Knowledge supports organizations with this assessment, with classification issues and with setting up workable compliance processes.

Do you have any questions? Please contact one of our advisors.

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.