Understanding Dual-Use regulation, or regulation controlling the export of commodities with a civilian or military end-use, can be complicated. The development of these rules and regulations continues. Regulators are trying to keep up with the technical developments in the market, geopolitical developments globally, and their own economic interests. European regulators meet with traders within the European Union periodically at the European Union (EU) Export Control Forum to discuss the topic at hand and share best practices and developments.
One of the highlights of the European Union (EU) Export Control Forum held in December 2022 was the discussion around the intangible transfer of technology (ITT). The complexity of the subject was summarized in the presentation made by the German Federal Office for Economic Affairs and Export Control (BAFA).
Intangible means 'unable to be touched; not having physical presence'.
According to Article 3 of the EU Dual-Use Goods Regulation (821/2021), the export of dual-use items listed in Annex I are subject to authorization. The definition of dual-use goods includes technology and technology transfer. The same regulation defines "technology" as specific information necessary for the development, production, or use of goods. This information is "technical data" or "technical assistance." "Technical assistance" means any technical support related to repairs, development, manufacture, assembly, testing, maintenance, or any other technical service and may take forms such as instruction, advice, training, the transmission of working knowledge or skills, or consulting services, including by electronic means as well as by telephone or any other verbal forms of assistance.
Technical assistance is also regulated in Article 8 of the Dual-Use regulation. For technical assistance to be subject to authorization, the technical assistance provided must concern the uses referred to in Article 4, paragraph 1. These uses relate primarily to:
- The development, production, handling, operation, maintenance, storage, detection, identification, or dissemination of weapons of mass destruction
- A military end-use if the purchasing country or country of destination is subject to an arms embargo
- A use as parts or components of military items listed in the national military list exported without authorization or in violation of authorization
Since the definition of technology also includes "technical assistance" and the export/transfer of technology falls within the scope of Article 3, "technical assistance" is therefore covered by both Article 3 and Article 8. The EU has not published guidelines detailing this issue. However, BAFA Guidelines can be consulted to learn about the details of the subject.
The provision of technical assistance abroad must be distinguished from the export or transfer of technology to BAFA:
"The export or transfer of technology means the cross-border transfer of intangible technology. The technology, but not the transfer of a physical, tangible item, must be intangible. Therefore, export or transfer also occurs if technology is sent abroad in an email, or a phone call, for example, or if access is granted to technology stored in Germany.
Technical assistance, on the other hand, means the transfer of an intangible knowledge ("knowledge in the mind"); primarily, therefore, the oral transfer of information."
BAFA states that both Articles 3 and 8 may apply. Therefore, it is necessary to examine both the licensing requirements for export and the existing restrictions on providing technical support.
The Commission was called upon to publish guidance on this subject in 2023, as there has yet to be EU-level guidance. Trying to interpret and apply the regulation in the Member State that the Trader is established in and/or exports controlled goods from can create complexity for the Trader. BAFA's opinion can be used in decision-making until the Commission publishes guidance explaining the issue in technical aspects. However, it must be noted that these are the guidelines from the German authorities and might not be shared with other Member States.
Should you need any legal assistance concerning EU export control legislation, please do not hesitate to reach out to Tradewin.