The European Union (EU) controls
the export, transit, and brokering of dual-use items within its territory and
jurisdiction of its 28 member states*. It considers this control as an
important instrument in contributing toward global peace and security.
What are dual-use items?
In simple words, a dual-use item
is referred to as a good, software, or technology meant to be used by the
civilian population for legitimate purposes; but can also be misused for terror
attacks, international crimes, human rights violation, or the development of
weapons of mass destruction.
For example, a substance that
reacts chemically to release vast amounts of energy can be used in a regular
college chemistry lab for educating students. At the same time, it can be possibly
used in an explosive or a missile warhead. Here is another example: An electric
motor that is used for generating electricity for domestic households can also be
used in an armored military vehicle like a battle tank.
According to the available
statistics, export of controlled dual-use items from EU was around EUR59
billion, in 2014 alone, which is approximately 3.4 percent of the total EU
exports.
How is the export in dual-use items controlled?
Through EU Regulation (EC) No
428/2009, a common EU list of dual-use items is in place and it is binding on
all member countries of the EU to control the items in the list. The member countries
usually place a license requirement on any enterprise involved in international
trade of these items.
What is the proposal to modernize the existing dual-use regulation?
In September 2016, EU presented a
proposal for a regulation to modernize EU dual-use control. The proposal aims
at modifying or rather expanding the current list of items to adjust for the
technological and scientific developments that the world has witnessed in the
recent past.
The main agenda
of the proposal is to prevent human
rights violations associated with certain cyber surveillance technologies. It
is believed that if such technology is exported and falls into the wrong hands,
then it could be used by repressive and authoritarian regimes to spy and
intercept international communication which can pose a serious security risk to
various nations and their citizens.
Which industries will be impacted and require a
centralized trade management system to comply?
If this proposal is approved and
enter into force, EU companies trading in cyber surveillance technologies will
be required to obtain an export license and follow new procedural requirements.
Under such circumstances, it will
be imperative for all those enterprises which export any of the following
products to manage their trade through a robust centralized system.
- Computer and network surveillance related products
- Spyware manufacturing products
- Information extraction software
This 'catch-all' clause is in contrast
to the current provision according to which only the states are authorized to monitor
the export. Hence, any exporter might be asked to procure a license before
exporting the goods that are similar to any other goods existing in the
dual-use list. Under such a circumstance, identifying and assigning the license
and keeping a trail of the same manually will be an extremely challenging task
for enterprises.
How can Oracle Global Trade Management help?
With its out-of-the-box (OOB)
feature for license management, an enterprise can easily configure a number of
licenses based on quantity or value. These licenses can be automatically
assigned to the export orders involving the affected goods and makes the
process hassle-free.
Further, once the quota or the
value of any of the licenses reaches a critical level, the system can notify
the business and the business can further apply for new / additional licenses
with the relevant government authorities.
In addition, all scenarios that require any kind of export / import control measures can be modeled in the system and the entire process of screening, rescreening, and releasing sales orders can be made automatic using another OOB feature of trade compliance management.
Please meet
us at the Infosys Booth during the OTM SIG APAC 2016 Conference (Singapore) and
we shall be delighted to showcase our GTM solutions.
*28 member states since
no formal process of UK to exit from the EU has started as on today.
Written by: Mohammad Haider Talat and Ravikiran Narayan Khobragade