Interim response

BUSINESS FOCUS ON
ENFORCEMENT
The Export Control
Organisation’s response to
the techUK review of
compliance and enforcement
activity related to export
control for electronic systems,
assemblies and components
MARCH 2015
ECO response to a techUK review of regulation of export control for electronic systems, assemblies and components
Contents
Contents
Contents
BUSINESS FOCUS ON ENFORCEMENT ...................................................................................... 3
Introduction ................................................................................................................................... 3
Regulatory Background ............................................................................................................... 3
INTERIM RESPONSE .................................................................................................................... 4
Finding 1 ........................................................................................................................................ 4
Finding 2 ........................................................................................................................................ 5
Finding 3 ........................................................................................................................................ 5
FINAL RESPONSE AND KEY ACTIONS ....................................................................................... 6
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ECO response to a techUK review of regulation of export control for electronic systems, assemblies and components
BUSINESS FOCUS ON ENFORCEMENT
Interim response of the Export Control Organisation to techUK’s Review of
compliance and enforcement activity related to export control for electronic systems,
assemblies and components.
Introduction
The Business Focus on Enforcement programme enables business groups to collect and
present evidence directly to Ministers and Regulators. As part of the review of compliance
and enforcement activity related to export controls for electronic systems, assemblies and
components, techUK examined perceptions of businesses in the electronics sector that:
(i) other countries apply less demanding export controls to electronic products and
that common standards would help create a level playing field for UK firms; and
(ii) comparatively lengthy UK timeframes for obtaining export licences could be
leading to the unnecessary loss of valuable contracts and the cancellation of orders
for UK firms.
techUK presented their report and findings to Ministers and the Regulator - The Export
Control Organisation (ECO) - and this document sets-out the ECO’s response.
Regulatory Background
The ECO in BIS is responsible for the UK Strategic Export Control legislation and for the
assessment of export licences falling within the scope of strategic export controls. HM
Revenue & Customs are responsible for the enforcement of the controls.
UK Strategic Export Controls cover the following broad areas:
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Military equipment, software and technology
Dual-use equipment, software and technology
End-Use controls on items for weapons of mass destruction (WMD) and imlitary
programmes of concern
Trade sanctions,
Arms Embargoes, EU Restrictive Measures against Terrorists
Goods for torture and capital punishment
The techUK review focused on the impact of strategic export controls on the UK
electronics sector. The main legislation affecting the electronics sector is The Export
Control Order 2008 (S.I. 2008/3231), which sets out controls on primarily military goods,
and the EU Council Regulation (EC) No. 428/2009, (the ‘Dual-Use Regulation), which
controls so called ‘dual-use’ items – those that have uses in military and civil applications.
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ECO response to a techUK review of regulation of export control for electronic systems, assemblies and components
The ECO welcomes techUK’s report and commits to work further with techUK to
understand and, so far as we can, address its concerns.
INTERIM RESPONSE
Finding 1
The report identified UK electronics companies (principally in the Printed Circuit Board
(PCB) industry) that appear to be at a competitive disadvantage to their international
competitors because of the way export controls are implemented in the UK. In particular it
is claimed that the controls relating to “specially designed components” of control items is
being more strictly applied in the UK.
To address these concerns:
The ECO will make clear that it is prepared to reconsider the classification of
specific items where there is evidence that a particular assessment is open to
question. ECO will work with techUK, and, where possible, the companies
concerned to investigate the circumstances in detail and take appropriate action
where possible.

The ECO is keen for further reforms – building on those introduced for “near massmarket” electronic products in 2014 – to ensure that UK export controls reflect the
fast changing nature of technology and does not place UK-based exporters at a
disadvantage over their competitors in other countries. These reforms may include
some decontrols where these can be agreed internationally and the expansion of
light touch, “open” licensing solutions.

The ECO will discuss with EU partners the interpretation of “specially designed” as
used in the EU Dual-Use Regulation and in the Military List controls. A proposal for
reform in this area is already under consideration and the UK will continue to be
proactively engaged in pursuing an outcome that benefits both business and
regulators.

The ECO will conduct a review of the current requirements for End User
Undertakings (EUUs). EUUs are an important element of a robust licensing system
but there may be scope for reducing the burden this can place on exporters. The
review will consider the use of undertakings by EU partners and the United States
to ensure, where possible, that UK-based exporters are not at an unnecessary
disadvantage.
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ECO response to a techUK review of regulation of export control for electronic systems, assemblies and components
Finding 2
The report raised concerns about the impact on UK exporters of lead-times for obtaining
export licences.
In response:
The ECO is currently meeting its performance targets for processing export
licences as agreed by Ministers, and based on current IT systems and available
resources. To assist exporters, the ECO regularly publishes data about licensing
performance for key markets in order to provide useful information for exporters on
the likely timescales for licensing decisions. Exports to certain destinations and end
users do present risks from an export control perspective and processing times in
these instances will be longer, although decisions continue to be delivered to target.

The ECO will continue to work on a number of initiatives to provide exporters with
more flexible licensing solutions to reduce the need for repeat applications. An
improved five year Open Individual Export Licensing (OIEL) process was launched
at the end of February 2015, and further improvements will come on stream in the
autumn of 2015. These reforms are aimed at increasing take-up of more flexible
licences and reducing the number of licences in circulation.

In 2015/16, the ECO will undertake a review of its ‘off-the-shelf’ Open General
Export Licensing (OGEL) offer. The aims will be to increase the scope of exports
covered by OGELs, which are available for immediate use, and to make them
easier to understand and comply with. This expansion will inevitably need to be
balanced alongside maintaining effective strategic export controls.
Finding 3
The report is critical of the advice and guidance available for the classification of items,
from both ECO and UKTI recommended consultants.
In response:
The ECO’s Control List Classification (CLC) advice service – enabling exporters to
determine whether their goods are subject to control - was suspended in June 2014
because of a drop in performance resulting from the introduction of a new IT
system in BIS. Although the CLC service remains suspended because of resource
constraints, the ECO recognises it is desirable that it is reinstated. The ECO will
bring forward proposals for its reintroduction in the new financial year, possibly on a
charged for basis.
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ECO response to a techUK review of regulation of export control for electronic systems, assemblies and components

The ECO continues to provide an End-User advice service to support exporters
who know their goods are not on the control lists, but wish to understand whether
there and any concerns with the end-user.
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The ECO provides an extensive suite of training programmes for exporters; from
basic through to intermediate and advanced levels. These include programmes
aimed at helping exporters “rate” their goods against the export control lists, and
are supplemented by online tools and guidance.

The ECO will work with techUK and the electronics sector to investigate the
provision of bespoke training or learning opportunities to supplement the sectorbased training it already offers. A forthcoming example is a seminar aimed at the
“Cyber” sector which is taking place in early March.

The ECO already works with trade bodies, such as ADS and other parts of techUK,
to raise awareness and improve understanding of export controls. The ECO will aim
to work more closely with techUK, for example through its Joint Electronics
Telecoms Security Export Control Committee (JETSECC), to improve the advice
and guidance available to the UK electronics and related sectors.
FINAL RESPONSE AND KEY ACTIONS
The ECO will continue to work with techUK to further develop the measures detailed in
this interim response. The aim will be to finalise and agree key actions to take forward to
address the issues raised by the electronics sector in the report, whilst ensuring that the
UK’s effective strategic export controls for military and dual-use items is not compromised.
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