Explained: EU export control lists and dual-use goods classification
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Explained: EU export control lists and dual-use goods classification

Which EU lists are relevant for export controls? And what exactly do you need to remember when classifying dual-use goods? A step-by-step guide.

Author: Ulrike Jasper
Ulrike Jasper
01.02.2023

Relevance of export control lists and classification in the EU
What are the various export control lists?
Attributes of export control lists for dual-use items
Dual-use goods classification procedure
Difficulties in practice: example and useful statements
Bottom line for your ICP

Relevance of export control lists and classification in the EU

Export controls restrict the freedom of foreign trade in listed goods with the aim of preventing the development and proliferation of chemical, biological, and nuclear weapons and delivery systems and of conventional military goods, and of avoiding the military use of dual-use goods.

In practice, this means businesses that export must always comply with license requirements when exporting listed items. This license requirement for civilian goods is regulated by law in the EU Dual-Use Regulation 2021/821, applicable throughout the EU. Trade in military goods is governed by the national regulations of the respective EU member states.

The only way that a business can comply with the legally standardized license requirements for listed goods is to first classify its "product master", or "material master", i.e. all the materials it procures, produces, stores, and sells. This underscores how central the question of listing is to export controls. Checking materials against relevant lists is fundamental to a company's ability to reliably organize export controls.

What are the various export control lists?

All companies based in the EU must comply with at least two export control lists for the classification of their civilian goods. Besides the EU-wide export control lists, a national dual-use list may also apply, depending on the country. In addition, all EU member states have a national export control list for military goods.

This means that the following export control lists are relevant when classifying civilian goods at the EU level:

Annex I of EU Dual-Use Regulation: list of dual-use items

The regulations governing the export of civilian goods are found predominantly in EU law. Annex I of the EU Dual-Use Regulation 2021/821 is the list of dual-use items applicable to all EU member states – a technical list describing the specific technical parameters of dual-use items subject to license.

This list implements the internationally agreed controls on dual-use items from the four export control regimes of the Wassenaar Arrangement (WA), the Missile Technology Control Regime (MTCR), the Nuclear Suppliers Group (NSG), and the Australia Group (AG).

All the goods in a company's product master whose technical specifications are reflected in Annex I of the EU Dual-Use Regulation are always subject to license as dual-use items when exported.

Annex IV of EU Dual-Use Regulation: high-sensitivity list

Annex IV of the EU Dual-Use Regulation is a subset of Annex I listing all the highly sensitive dual-use items from Annex I. Annex IV items require licensing even for transfers within the EU.

Attributes of export control lists for dual-use items

The export control lists for dual-use items are positive lists. Controlled goods are designated in the lists by a precise technical description of their specifications and attributes.

Structure of dual-use list

The dual-use items listed in Annex I of the EU Dual-Use Regulation have an alphanumeric identifier, such as 1A001, each character of which has a specific meaning.

  • The first character is a numerical designation of the category to which the item belongs. Annex I of the EU Dual-Use Regulation distinguishes ten different categories describing different technical fields to which the dual-use items are assigned.
  • Each of the ten categories is in turn divided into product groups, identified by a letter that is the second character of the identifier: product groups A–C are for goods, product group D is for software, and product group E is for technology.
  • The number following the letter is called the "reason for control" and identifies the control regime from which the dual-use item is derived.
Breakdown of categories

0 = Nuclear materials, facilities, and equipment
1 = Special materials and related equipment
2 = Materials processing
3 = Electronics
4 = Computers
5 = Telecommunications (part 1) and information security (part 2)
6 = Sensors and lasers
7 = Navigation and avionics
8 = Marine
9 = Aerospace and propulsion

Breakdown of product groups

- A = Systems, equipment, and components
- B = Test, inspection, and production equipment
- C = Materials
- D = Software
- E = Technology

Breakdown of reasons for control (categories 1–9 only)

- - 001 - 099 = Wassenaar Arrangement (dual use)
- - 101 - 199 = Missile Technology Control Regime (dual use)
- - 201 - 299 = Nuclear Suppliers Group (dual use)
- - 301 - 399 = Australian Group
- - 401 - 499 = Chemical Weapons Convention
- - 501 - 899 = (reserved)
- - 901 - 999 = National controls

Example: 3A225 Frequency changer
  • Category 3: Electronics
  • Product group A: Systems, equipment, and components
  • Reason for control 2: Nuclear Suppliers Group

The last two characters (here: "25") are used for sequential numbering.

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Dual-use goods classification procedure

Dual-use classification is a strictly technical check. It's necessary to match the technical attributes of the product to be classified with the technical description in the checked list item.

If the checked product has the technical parameters described in the dual-use list number, the product is listed under the checked list number, making it a dual-use item. It's not possible to classify goods according to Annex I of the EU Dual-Use Regulation without technical knowledge of the checked items.

Important note

The actual use of the goods has no effect on their classification here. That is, a listed item does not lose its dual-use status because it will actually be used only for civilian purposes. At the same time, a product that is not on the dual-use list does not become a dual-use item because of a critical use for military purposes, for example. Dual-use classification is independent of the recipient and the use as well.

Difficulties in practice: example and useful statements

Checking relevant materials against the relevant export control lists poses major challenges for many companies. These lists may be easy to understand on the surface, but the nitty-gritty of checks often leads to considerable difficulties.

These difficulties affect not only companies with a large or frequently changing product line but also those that wish to export replacement parts. It’s possible to export a lot of machinery and equipment without a license, because dual-use items built into a piece of machinery are generally absorbed under the component provision. But as soon as you start exporting filters, sensors, pumps, valves, or frequency changers as replacement parts, the component provision no longer applies.

The replacement parts must undergo classification. All replacement parts listed as dual-use items are subject to license upon export under Art. 3 of the EU Dual-Use Regulation. There is no universally applicable approach to dual-use classification. The procedure needs to be tailored to each individual company’s structure.
That’s why there is no “one-size-fits-all" approach here. 

The following statements do apply universally, however, and may be helpful for all companies:

1

Dual-use items are always high-tech products. The dual-use list of Annex I does not include mass-produced goods or items freely available on the global market.

2

The classification of merchandise must be requested from the manufacturer or supplier. The level of technical detail of the item descriptions in Annex I makes it difficult to classify a product that you yourself did not develop or manufacture. The item descriptions generally require a specialized technical knowledge that typically only the manufacturer possesses. Unlike with customs classification, the exporter may rely on the manufacturer’s information for export control classification if the information is plausible. Information is plausible if it cannot be refuted by simple means. If the manufacturer’s information is not plausible, the exporter must reclassify independently.

3

For independent classification by the manufacturer, it helps to understand not only the product’s technical details but also the structure of Annex I. The ten categories of Annex I are based on the various tracks for engineering degree programs. This breakdown is designed to make it possible for companies to select just the right category based on the nature of the company’s operations.

Bottom line for your ICP

Goods classification as the core of export controls requires unique internal organizational efforts that should be part of an internal compliance program (ICP). Each company should define for itself how classification is to be carried out. What’s important here is clear documentation of technical checks and systematic maintenance of master data.

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