In practice, export control affects many more companies than is often thought. Not only defence companies, but also machine builders, electronics manufacturers and trading companies can be subject to export control regulations.
What is export control?
Export control is the body of laws and regulations that determines whether, and under which conditions, certain goods, software or technology may be supplied abroad. The aim is to prevent sensitive products or knowledge from ending up with parties, countries or end users for which this is undesirable, for example because of proliferation risks or strategic security interests.
Export control is not limited to physical goods. Transferring technology, source code or technical documentation, for example by email or cloud storage, can also qualify as an export under certain circumstances.
When does export control play a role?
A number of factors determine whether export control is relevant to a specific transaction:
- The product or technology — is the product on a control list, or does it have dual-use characteristics?
- The destination — do restrictions apply to the country being exported to?
- The end user — is the end user linked to a sanctioned party, a defence-related organisation or another high-risk entity?
- The end use — could the intended use of the product be problematic, even if the end user itself shows no direct risk factors?
Licensing requirements: not always needed, but often underestimated
Not every export requires a licence. A large part of international trade falls outside the scope of export control. Yet many companies underestimate the risk, especially when:
- A product is seen as an "ordinary" commercial product, while its technical specifications still fall within a control list.
- Goods are supplied through an intermediary or distributor, so visibility of the ultimate end user is lost.
- An existing customer relationship is regarded as trusted, without periodic reassessment of the end use.
Consequences of an incorrect assessment
Wrongly missing a licensing requirement can have significant consequences, including legal risks, reputational damage and disruption of business operations. This makes a timely and correct assessment relevant, not only from a compliance perspective but also from a commercial one.
Example from practice
A machine builder has been supplying a regular international customer for years. The customer asks for a modified version of an existing machine with higher precision. This modification brings the specifications within the scope of a control list, which means that a previously unproblematic delivery may now require a licence. Without reassessing this particular order, this could go unnoticed.
Frequently asked questions
Does export control only apply to physical products?
No. Software, technology and technical documentation can also fall under export control, regardless of how they are transferred.
Is export control the same as dual-use regulation?
Dual-use is a specific part of export control, focused on goods and technology with both civilian and military applications. Export control is the broader framework that also includes other restrictions, such as sanctions-related export bans.
How do I know whether my export requires a licence?
This calls for an assessment of the product, the destination, the end user and the end use. An initial risk assessment often already gives direction before a formal application is needed.
TradeRisk supports companies with export control and dual-use questions, from an initial risk assessment to support with licensing processes. Also read more about when you need an export licence, the catch-all clause, dual-use goods and end-user screening.