Dual-use goods, such as software and technology, refers to items that may be used by both civilians and military personnel. The nature of these items may result in potential use in the development and growth of weapons of mass destruction (WMDs). Therefore, the European Union, specifically the UN Security Council Resolution 1540, sets forth specific guidelines for which countries may receive encrypted exports from the EU, one piece in the puzzle of global trade compliance. To prevent a violation of these guidelines, you need to know what constitutes encrypted exports, which countries are appropriate for exporting such goods and how a violation could impact your organization.
What Are Encrypted Exports?
Encrypted exports are pieces of technology and data that may be used to develop WMDs. As a result, encrypted information may not be sold to countries that are the subject of trade embargos by either the United Nations or EU. Thus, the EU stands in accordance with the trade limitations for encrypted exports under the U.S. Bureau of Industry and Security’s Export Administration Regulations (EAR).
These regulations define five types of technology, including mass-market software, operations technical data, operations software or patches, sales technical data and other non-conforming pieces of technology or information that may lead to the development of a WMD, explains Benjamin H. Flowe, Jr. of Berliner, Corcoran & Rowe, LLP . Moreover, any disclosure of data, without being pre-exempted from obtaining an export authorization, may constitute a violation of the EAR.
Exports also include the transmission of technology or data through any means, such as email, hand delivery, shipping or download. So, you should work with Flash Global to ensure you are not sending encrypted exports without realizing it.
Which Countries Can the EU Export Encrypted Products Without Violating Regulations?
EU members have the authority to export encrypted products to other EU members without obtaining export authorizations. However, the EU has also established seven countries that are classified as an EU General Export Authorization (GEA), asserts the European Commission on Trade. These friendly countries allow for export of encrypted products from the EU, reducing risk in the global supply chain, provided the end-use of such items will not be used in the development or proliferation of WMD. They include the following:
- The United States
- New Zealand
Now, the EU may grant additional licenses to cover individual exporters or multiple items to multiple countries. The key is making sure a license or GEA exists for the given export. Furthermore, the future of the UK regarding Brexit may play a role in changing this list. In the interim, Britain will remain a member of the EU.
What Can a Violation of EU Encrypted Export Regulations Cost?
The exact costs of a violation of EU encrypted product regulations are unclear, but they may also incur additional fines and costs set forth by other global trade compliance statutes. There is great authority in the EU regarding the assessment of penalties and punishments for knowingly or unknowingly violating existing trade regulations. However, past assessments of penalties against parties that violated such laws have resulting in costs exceeding $10,000 per transaction, administrative penalties of more than $275,000 and extensive, 20-year denials of all export privileges. Civil penalties may also be applied at the discretion of the courts.
Protect Yourself Against Violations Today
The solution to preventing a violation is correctly mapping the likelihood of an item’s possible application to WMDs in various destinations. Unless the destination is a member of the seven countries identified, you need to make sure it does not fall within the EU’s existing encrypted export restrictions.
Flash Global’s network of forward stocking locations and hubs for reverse logistics can help you ensure your company does not unknowingly violate EU trade rules regarding encrypted products. Partner with Flash Global today, and let us show you how easy international trade can be when you have a global team of experts working to keep your company in accordance with all applicable compliance needs.