Presentation to the C5 Export Controls Forum, 20-21 May 2014 Brussels. Explores 5 main areas for reform of EU export controls, taking into account the recent European Commission Communication on reforming Dual Use controls

1. Reforming Export Controls in the EU
Presentation to the C5 Export Controls Forum,
20-21 May, Brussels
RICHARD TAUWHARE
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2. Adapting controls to technological
and political developments…
5 needs, driven by technological developments, NGOs/Parliaments, industry, the US
export control reforms, other states, evolving risks and globalisation of supply chains:
1) level (and raise) the international playing field by establishing common high trade
control standards, effectively implemented, worldwide
2) make licensing decisions more consistent across EU
3) simplify controls, reduce delays and denials
4) extend controls to new technologies with potentially offensive capabilities (eg
some cyber), more rapidly, and manage the risks until they are controlled
5) relax controls on less sensitive/widely available technologies (eg equipment
incorporating cryptography)
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3. … while protecting
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 national security
 international security
 human rights
 legitimate trade in military and dual use items
 exporters’ reputations and
 minimising the administrative burden on exporters and governments –
this will be key for the successful reform of the EU Dual Use controls

4. 1. Level (and raise) the
international playing
field
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5. Design & control the process
The Arms Trade Treaty
"This is a landmark agreement that will
save lives and ease the immense human
suffering caused by armed conflict around
the world.”
David Cameron, UK Prime Minister
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6. The Arms Trade Treaty
 adopted by the United Nations General Assembly on 2 April 2013
 opened for signature on 3 June 2013
 entry into force requires 50 ratifications
 May 2014: 32 ratifications (17 from EU) and 118 signatures
 Expect entry into force this autumn
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7.  Conventional arms play a vital
role in ensuring legitimate
defence and security
 But their misuse costs 100,000s of
lives, violates human rights,
undermines security and
development, and fuels conflict,
crime and terrorism
Context 7

8. Arms Trade Treaty: Main Elements 1-5
1) Legally binding
2) fair prospects for eventually achieving universality (needs effort) – low
expectation of early US ratification but hope it will come: in practice,
the Treaty would impose no new obligations on the US
3) Covers all main conventional weapons, and ammunition and parts
4) Sets high standards: mandatory refusal if unacceptable risk - peace
and security, humanitarian law, human rights, terrorism or crime
5) Mandatory reporting of export authorisations
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9. Arms Trade Treaty Main Elements 6-10
6) Regulates brokering and where feasible of imports, transit and trans-shipment
7) Prevent diversion to illicit trafficking or use
8) Encouragement to prevent corruption
9) Cooperation and assistance between States Parties
10) Regular Conference of States Parties, small Secretariat
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10. Arms Trade Treaty: Benefits
What difference will the ATT make?
 Save lives – poorly regulated and illegal arms flows kill
 Promote development – violence costs resources and stability
 Combat terrorism and crime
 Reduce human suffering – most human rights abused by arms
 Protect legitimate arms trade – recognises right to self-defence.
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11. ATT: what does it mean for you?
 relatively straightforward to ratify as we already have comprehensive trade control
regimes. In UK (ratified 2 April), it required only minor amendments to brokering
regulations and updating of the export licensing Criteria
 So, minimal new administrative burden. But significant benefits, for both military and
dual-use trade. Higher, common global standards, implemented more effectively and
more widely, will:
 help level the playing field, reduce long-standing competitive disadvantage of EU
states vis-à-vis those with less stringent regimes
 increase predictability and confidence for global supply chains
 complement efforts (eg under UNSCR 1540) to improve export controls in all
states, particularly those where they are weak (EU lobbying and assistance)
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12. 2. More consistency
across the EU
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13. EU Common Position
 Common Position 2008/944/CFSP defines the common
rules governing control of exports of military technology
and equipment
 Requires each Member State to assess export,
brokering & transit licence applications for items on the
EU Common Military List on a case-by-case basis
against 8 criteria
 In UK, the same Criteria are applied to all controlled
items, including dual use items and those coming under
end-use/catch-all control.
 Recommend extending same approach to all EU – both
for consistency and to give human rights greater
prominence in assessments
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14. Criterion 1 International Commitments
Criterion 2 Internal Repression
Criterion 3 Internal Conflict
Criterion 4 Regional Conflict
Criterion 5 National Security
Criterion 6 International Community
Criterion 7 Diversion
Criterion 8 Economic Sustainability
Other Factors commercial and financial
interests; international relations;
strategic industrial base
The EU Risk Assessment Framework
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15. … is under review
 Common Position is currently under
review
 the review of the legal text is complete –
all are satisfied that the current 8 criteria
have stood the test of time and need no
amendment
 But also agreed on some improvements,
which may overlap with potential
changes to dual use controls…
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16. Improving implementation of the
Common Position
 Agreed on need to improve coordination and harmonisation at EU level
 Reviewing the EU Users’ Guide to bring it up to date in light of four years’ experience of
operating the Common Position and of the adoption of the ATT
 started with Criterion 7 (diversion) and Criterion 8 (economic development): revised
guidance agreed on provisional basis last year, now being implemented
 now looking at the Users’ Guide for the other Criteria. Once that is complete this year, the
complete revised EU Users Guide will be made public
 Also looking at the mechanism for sharing denials information. Hope that will soon move
to a faster, fully online system
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17. 3. Simplify & Speed-up
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18. Simplify & Streamline controls
 Expand ‘Open Licences’/General Export Authorisations, at EU and
national level
 Clarify End User Undertakings (the main reason in the UK for the
government to make a ‘Request for Further Information’ - currently affecting
some 50% of licence applications)
 Refine the definition of ‘specially designed for military use’: a priority issue
for Wassenaar and important if the international community is to maintain a
broadly common approach, given the US export control reforms
 Note European Commission proposal to be represented in the export control
regimes like Wassenaar. But extending membership to the EC will require
consensus which will be hard to achieve. And Member States will want to
continue to represent themselves, given their national security interests
 Improve transparency for exporters on the licensing process and
more/better information, in order to get better applications …
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19. UK Export Licence Refusals 2013
0 50 100 150 200 250
TOTAL
8 – Economic capacity of buyer…
7 - Risk of diversion
6 – Behaviour of buyer country
5 – UK National security
4 – Regional instability
3 – Internal tensions or conflict
2 – Internal repression
1 - Embargoes/Treaties
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20. Avoiding delays or denials
Given that all licence applications (ML, DU, end-use, embargoed) are considered case-by-
case against the same 8 Criteria, to avoid denials or delays exporters need to:
 give non-technical information about the product: what it does, and what it could it do
in the hands of the wrong people.
 make it clear what the application is for. Check out end user issues and submit
correctly completed End User Undertakings. What’s the risk of the export being
diverted to a different end user
 Check sanctions and embargoes. If there’s an exemption, what evidence do you need
to provide? Be aware of political situation in the country of destination, its human rights
record, the risks of the use of your equipment in internal or regional conflict
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21. 4. Extend controls to
new technologies
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22. Potentially offensive cyber technology
 Some existing controls – eg on cryptography - apply to elements of a cyber
export. But existing controls currently do not directly cover all cyber
capabilities
 The majority of cyber exports – whether products, services, advice, training or
know-how - hold little risk.
 But some may also be used to conduct espionage, track and disrupt political
opposition and restrict freedom of expression. Advanced capabilities can also
cut across our own or allies’ national security capabilities and interests and
may accelerate a state’s acquisition of an offensive cyber capability.
 EU Parliament and others have called for controls on cyber exports
 US indictment of 5 Chinese military officers on charges of hacking US
companies and passing trade secrets to Chinese comptetitors
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23. New controls
Complex issue
 the dual use nature of cyber capabilities
 the rapidly-evolving technology
 the relatively wide availability of some items
 the importance of not putting EU industry – market leaders in
some fields – at a commercial disadvantage in rapidly-
expanding global market
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24. New controls
 Nonetheless, new controls were agreed in Wassenaar in December (based on a
UK proposal), to be incorporated into EU Dual Use Regulation. These cover:
 equipment and software for creating and delivering "intrusion software“ -
software designed to be covertly installed on a computer or smartphone which
extracts data or otherwise compromises the device;
 "internet surveillance systems“ - systems that can monitor and analyse
internet traffic and extract information about individuals and their
communications
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25. Managing the risks until controls are
extended
 Until comprehensive, international controls exist, EU governments and
many of the leading cyber-security companies recognise the need to
manage the risks for non-controlled cyber exports
 Some countries – Iran, Syria - are already subject to sanctions that
include controls on cyber-related exports. For all other countries, it is
difficult to draw clear lines and it is necessary to consider exports case-
by-case.
 UK Government has designed a process, with the industry, and
companies are being encouraged to use it in assessing the risks of cyber
exports and when to seek government advice.
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26. Unmanned Aerial Vehicles (‘drones’)
pressures from
 some states (e.g. Pakistan)
 Parliamentarians
 NGOs (‘Campaign to Ban
Killer Robots’)
to place bans and increased
controls on use and exports of
UAVs and their components,
particularly armed UAVs
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27. Unmanned Aerial Vehicles (‘drones’)
 In fact, existing controls, under both the Missile Technology Control Regime and the
Wassenaar Arrangement, are very robust.
 While some small UAVs of limited capability may not be controlled depending on
their characteristics, all UAVs specially designed or modified for military use are
controlled.
 Large UAVs, in MTCR Category I: presumption of denial for all transfers. Scope of
Cat 1 needs to be reviewed if/when Unmanned Combat Aerial Vehicles (UCAVs)
replace manned fighter aircraft
 Use is a separate though related issue. States which operate UAVs argue that they
are operated strictly in accordance with international humanitarian law and their use
is identical to that for conventionally piloted combat aircraft.
 International debate underway in the Convention on Certain Conventional Weapons.
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28. 5. Relaxing controls
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29. Relaxing controls
 Some controlled items, often due to
technological development, have
become less sensitive and more widely
available
 Obvious example is mobile phone
networks which include some
cryptographic capability for purely
administrative purposes
 A priority in Wassenaar to agree to
define which technologies/items can
safely be de-controlled
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30. Recap
5 themes:
1) level the international playing field
2) make licensing decisions more consistent
3) simplify controls, reduce delays and denials
4) extend controls to new technologies more rapidly, and manage the risks
5) relax controls on less sensitive technologies
… while protecting national and international security, human rights, and
exporters’ business and reputations – and minimising the burden
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31. Thank you
Richard Tauwhare
richard@greenlightexports.co.uk
www.greenlightexports.co.uk
+44(0)770 311 0880
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