Potential impact of Brexit on the export of certain high technology goods (dual use goods) to the UK
Dual use goods are products and technologies normally used for civilian purposes which may have potential military applications.
For example many widely used software and hardware products/services are classified as controlled “dual use goods” based on the type of encryption deployed in such products/services.
The export of dual use goods is controlled by the Dual Use Regulation (Council Regulation (EC) No 428/2009) (as amended) (“Dual Use Regulation”). Entities that export any of the categories of goods or technologies listed in the annexes to the Dual Use Regulation (as updated from time to time) must apply for authorisation from the Department of Business, Enterprise and Innovation (“DBEI”) unless they qualify for one of the exemptions contained in the Dual Use Regulation.
“Export” only refers to goods sent to a destination outside of the EU customs territory. For the transfer of dual use goods within the EU customs territory, no authorisation is required (with some limited exceptions). If Brexit results in the UK leaving the EU customs territory then this exemption will no longer apply to dual use exports from Ireland to the UK.
The requirement to apply for and receive authorisation for export of certain goods creates a cost of trade particularly if goods are exported in high volume to particular countries. In order to ease the barriers to trade, it is possible to utilise a Union General Export Authorisation (“UGEA”) which covers exports of certain goods to certain countries.
UGEA Category 001 covers the export of most goods set out in Annex 1 of the Dual Use Regulation to eight countries: Australia, Canada, Japan, New Zealand, Norway, Switzerland (including Liechtenstein) and the United States of America.
If the UK does leave the EU on 29 March 2019 with no withdrawal agreement in place, the UK will become a “third country” for the purposes of the Dual Use Regulation. If this occurs, dual use goods exported from Ireland to the UK will be subject to the Dual Use Regulation and will require authorisation from the DBEI to export.
To avoid this consequence in a no-deal Brexit scenario, the European Commission has published a draft regulation which would include the UK on the list of countries which are subject to UGEA Category 001. In the event the EU approval process for the draft regulation is delayed, the DBEI has now stated that it will also introduce a national measure equivalent to a UGEA in Ireland.
The DBEI issued a notice to exporters on 16 January 2019 and it recommends that any company currently exporting subject to a UGEA, and which is currently exporting or planning to export dual use goods to the UK, notify the Export Licensing Unit of the DBEI now in order to avoid any potential processing delays. Furthermore, even if a company does not currently operate under a UGEA but is currently exporting or planning to export dual use goods to the UK, it should also contact the Export Licensing Unit of the DBEI.