Compliance with export control laws is one of the main challenges of a compliance department. Yet significant personal risks for management have put the topic high on the agenda of legal/compliance departments. To enhance their level of compliance with these rules, the European Commission (commission) just published its recommendation on internal compliance programs (ICP) for dual-use trade controls (the guidance). The guidance contains legally nonbinding elements that should be considered by EU companies concerned by dual-use trade controls in designing an effective ICP.
EU law imposes substantive rules for the export of dual-use items, which are implemented and enforced at the member state level. Dual-use items are defined as all goods, including software and technology, which can be used for both civil and military purposes. The EU dual-use regulation establishes a regime for the control of exports of dual-use goods, technology, and software outside the European Union. In its current form, the dual-use regulation does not contain ICP requirements with which companies must comply. Article 12(2) provides that, when determining whether to grant a global export authorization, competent authorities must consider the application by the exporter of "proportionate and adequate means and procedures to ensure compliance" with the dual-use regulation and the terms of the license. As a result, member states may require ICP implementation for simplified procedures or otherwise take it into account in their enforcement activities.1
In the past couple of years, discussions on the modernization of the dual-use regulation included a proposal for the introduction of ICP requirements for global export authorizations and EU General Export Authorisation for intracompany transmission of software and technology. The discussion was enriched by common approaches and practices concerning ICPs by various member states, which helped map the current state of relevant authorities' expectations for businesses.
These elements resulted in the guidance, which provides for a framework to help exporters identify, manage, and mitigate risks associated with dual-use trade controls and ensure compliance with applicable laws. It also aims to help competent authorities in their assessment of risks when considering the issuance of individual, global, or national export licenses.
The guidance builds on existing approaches in export control compliance, including in...