Alex has published a number of articles; including "Making Sense of European Trade Administration" and a Summary of the Scott Report which dealt with the Export of Defence and Dual Use Goods to Iraq.

BIFAlink  Trade Services                                                                www.bifa.org

Export Controls:  minimising your risks

Guidance on how to reduce the risk of interventions by the UK Border Force and HM Revenue & Customs, and how to minimise any delays when interventions do occur.

Over the years several articles have appeared in BIFA link on the sometimes contentious subject of export controls.

Our Members have concerns about what they regard as inconsistent enforcement of the appropriate legislation.  BIFA raised these points with government, and, in part, this article summarizes the outcome of these discussions and highlights some practical steps that can be taken to minimize any delays should there be an intervention.

Given the twin facts that certain groupings are hostile to the UK’s interests and that there is considerable instability in certain parts of the worlds, it would not be reasonable to expect that there should be no controls on the export of military and ‘dual-use items’ from the UK.  Given that most international trade is legitimate, many find it particularly frustrating that their consignments are stopped for investigation and subsequently released without any explanation being given.

BIFA’s concern is that these interventions are sometimes neither particularly well targeted nor managed.  As one Member noted the Detention Notice was sent directly to the exporter by second class post leading to unnecessary delays, and the UK Border Force (UKBF) was reluctant to speak to him as the customs agent.  This causes the freight forwarder significant problems obtaining information, particularly on consolidated shipments when multiple shippers’ export consignments are delayed.

Goods are ‘controlled’ for various reasons and are listed on the UK Strategic Export Control Lists or are on additional Sanctions Lists.

Consequently a licence is required because the goods are classified as ‘controlled’ items, regardless of the end-user.  The following broad categories of goods are likely to be controlled:

Items that have been specifically designed or modified for military use and their components;

‘Dual-use’ terms – are those goods and their software and components that can be used for either civilian or military purposes.  These products have to meet certain specified technical standards to be classified as dual-use goods;

Goods that might be used for torture;

Radioactive sources.

The key point is that all the above are specific items and can be clearly identified and ‘rated’, or classified to establish whether or not they require a licence.

However, other goods are not listed but there are concerns about end-use.  For instance, there might be concerns that an overseas organization could use the items in a Weapon of Mass Destruction (WMD) or military programme in an embargoed destination.  In these situations, the Export Control Office (ECO) of the Department for Business, Innovation and Skills (BIS) makes the export licensable via ‘end-use’ control classification. BIFA’s strongest guidance to its Membership is to avoid becoming involved in determining or obtaining licenses on behalf of customers – the potential risks are too great.

However, the freight forwarder can render assistance and guidance about the correct procedures to be followed and where to find the information that will allow their customer, the exporter, to determine whether or not the goods require a licence.  It is obviously beneficial to all parties to conduct the appropriate checks before the goods are loaded.

It is important to recall at this point that there is a wealth of information available online, although it can be complex to understand and evaluate what is relevant and what is not.  A good overview of export controls can be found at www.gov.uk/beginners-guide-to-export-controls#responsibilities-and-obligations.

There are numerous links from this main site which take the reader into all the main elements of the system.

It is particularly important that exporters appreciate the need to accurately classify their goods and that it is understood how to use ECO’s information and online tools – Goods Checker and the Control Search Tool.

However, as previously indicated, it is not necessarily the goods that require a licence, it is the end-user of the shipment who causes concern and leads to a licence being required.

More information can be found at the following web address www.gov.uk.weapons-of-mass-destruction-wmd-end-use-control.

There is a belief in government that the End-User Advice Service is by far the best method for exporters to use regarding end use control.

Any exporters shipping to a destination of potential concern should use the service to ascertain whether there are any current concerns with an entity.  This will result in a Yes/No answer, in writing, from BIS ECO.

When dealing with certain countries, it is important for the exporter to carry out as many checks as possible.  There are lists kept of what are referred to as designated entities, who are individuals or businesses subject to financial sanctions and who should not be traded with.  There are various lists covering such entities, such as at: www.gov.uk/government/publications/financial-sanctions-consolidated-list-of-targets.

Exporters, particularly in defence and hi-tech manufacturing who conduct business in certain areas, should be encouraged to familiarize themselves with export controls.  In particular, if a shipment is stopped it is important that the forwarder highlights the issue to its customer with a recommendation to investigate the methods to minimise the possibility of future interventions.

It is important that shippers provide as much information as possible about shipments for their freight forwarder to retain on file. This will be particularly useful, because, although it may not prevent an export from being stopped by HM Revenue & Customs (HMRC/UKBF), it can only facilitate speedy expedition, and it can give the exporter a warning before it ships.

We must remember that it is a criminal offence, not a minor misdemeanor, to export, import or trade in any controlled goods without a specific licence.  Other items may well require a licence for destination countries that are subject to embargoes and sanctions.  Whilst the guidance that we have given will not prevent every problem, it will help minimise interventions and any delays when they occur.