Export Control

Export control is essential for compliant, international trade and regulates the export of goods & technology.

Export control means that trade with certain goods, countries or persons is restricted or even prohibited (embargo) for security policy reasons. This means that it is not permitted to simply deliver any goods from one country to another without checking whether that has restricted or even prohibited. A violation of embargoes or restrictions is a serious compliance violation and can have serious consequences for companies and individuals. In this context, export control is of particular concern to companies with their own production and supply chains.

In this article, we review the key fundamentals of export control:

  • Who is making export control regulations and why?
  • Do the requirements apply to all products, or only to a certain range?
  • What are the consequences of non-compliance?
  • How can companies protect themselves and train and support their departments to make the right decisions?

Who is making export control regulations and why?

The export control rules in force are set by the respective national governments or international organizations. In Germany, for example, the Federal Office of Economics and Export Control (BAFA) monitors the export of certain goods and technologies.

The reasons and motivations for this can be diverse: For example, an embargo can be imposed on a country for political reasons, regardless of what is to be supplied.



However, it may also be that only the supply of certain goods to a country is prohibited - e.g. the supply of weapons to a crisis region. Sanctions against certain companies or individuals can also be a reason. Or the supply of certain products and technologies is restricted because they could also be used for military purposes.

Export controls can therefore apply on different levels:

  • People, companies, or organizations Organisation
  • The use of certain products/technology
  • Procuts or technology
  • Certain countries

There are also regular gray areas or cases that do not immediately appear clear.
For example, while the export of weapons or ammunition for a tank is obviously subject to export controls, there are also many goods that could be used for both civilian and military purposes.

This is then called "dual use". These products could, for example - depending on the specification - be installed in a passenger vehicle or in a submarine. For this reason, export control also targets the use of the products, among other things, because it is often the intended use that determines whether the export of a product is controlled.

Which goods are subject to export control?

The scope of export control regulations varies by country and product category. Not all products are affected, but mainly specific goods, technologies or materials that could serve military or security purposes. Potentially dangerous goods that could be used for mass destruction or terrorism are also subject to strict export rules. Companies must therefore carefully check whether their products fall into these categories and comply with corresponding regulations.

Here, the word "product" refers not only to tangible goods, but also to intangible goods such as software or technology transfer in general. This includes consulting, training and technical information sent by e-mail or offered for download. Products that have been classified as "dual use" are on export control lists and may only be exported with a license. In Germany, this is done by the AL number, while in the USA the ECCN number is often found on invoices or delivery bills.

Sometimes products can also fall under export control without being explicitly on the control lists. This may be the case if it is known that they could be used for military or nuclear purposes.

It is essential to take these restrictions on use into account, especially in politically problematic regions or with critical customers such as the military. Therefore, so-called "end-use declarations" are often required as a precautionary measure, in which companies or customers must confirm the ultimate intended use. However, such confirmations are not normally required for non-critical transactions.

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What are the consequences of export control violations?

Depending on the severity of the violation, prison sentences may be imposed on the persons involved. Particularly in the case of deliveries of tools, machines, IT equipment or know-how, "dual use" goods can always be involved. It is therefore crucial to find precisely these needles in the haystack.

If export control regulations are violated, companies can be investigated, which can lead to serious legal consequences. Fines and sanctions can be imposed, which can of course cause enormous damage to a company's reputation and sales.

Train your departments and strengthen compliance

Um die Exportkontrolle effizient zu gewährleisten, ist es von entscheidender Bedeutung, dass Unternehmen sich umfassend über die aktuellen Regeln informieren und gegebenenfalls eine Exportlizenz beantragen. Insbesondere dann, wenn ihre Produkte unter diese Vorschriften fallen. Mit einer solchen Genehmigung ist es möglich, den Handel mit kontrollierten Gütern, Ländern oder Personen zu betreiben.

Voraussetzung hierfür ist, dass alle Auflagen erfüllt und die vorgegebenen Bedingungen eingehalten werden. Es empfiehlt sich dringend, sich mit den zuständigen Behörden und Experten in Verbindung zu setzen, um die Einhaltung der Exportkontrollvorschriften zu gewährleisten und mögliche Risiken zu minimieren.

Compliance Training

Hands-on examples:

  • In Procurement Depts: New suppliers should be carefully screened and checked against sanctions lists before entering into a business relationship.
  • In Human Resources: Applicants should be thoroughly screened before being hired.
  • In Logistics: New logistics service providers also require a thorough review.
  • In R&D: Innovative new developments should be screened for potential "dual use" capabilities.

For critical products and countries, checklists as well as one's own gut feeling (or common sense) are available as important decision-making aids. If there are uncertainties and the feeling is "I'd better ask", employees should rather ask too many questions than too few.

To ensure that your departments are well sensitized and empowered, regular compliance training for export control is a good idea. Ideally, you supplement e-learning with intranet content, contacts from the compliance team, and links to key resources.