Iain MacVay - Bird & Bird www.exportcompliancemanagement.com

1. Exports in the Supply
Chain
Here there be monsters!

2. Export Regulation Outline
● Why export regulation?
● Sources
● EU and UK rules
● Compliance
● Enforcement
● Contractual Terms
© Bird & Bird LLP 2011

3. Why Export Regulation?
● Protectionism – local production of resources – China rare
earth
● Fiscal – taxes
● Statistical – trade data
● Customs – outward processing, repair
● Foreign and Defence policy
© Bird & Bird LLP 2011

4. International Sources
● UN – sanctions
● Wassenaar – dual use
● Australia Group – chemical, biological
● Nuclear Suppliers Group
● World Trade Organisation
● Etc.
© Bird & Bird LLP 2011

5. Rules - EU
● Commercial Policy – EU competence
● CFSP Decisions and measures against specific countries and
persons
● EU Customs Code and Implementing Reg
● EU Dual-Use Regulation 428/2009
● EU Common Military List - Notice
© Bird & Bird LLP 2011

6. Rules - UK
● Customs and Excise Management Act 1979 (CEMA)
● Export Control Act 2002
● Export Control Order 2008
● Statutory Instruments
● CHIEF, SPIRE electronic systems
© Bird & Bird LLP 2011

7. A few issues
● Technology
- Brochures, proposals
- Whistle blowing procedures
● Components
- Where separable from the product
● Personal data
- US ITAR compliance for third country nationals
© Bird & Bird LLP 2011

8. Compliance Objectives
● Legal compliance –
- Avoid penalties
- Avoid publicity
● Business risk – payments, supply chain disruption
● Reputational risk – bad publicity, reliable supply chain
partners
© Bird & Bird LLP 2011

9. Compliance Strategy
● Product classification
● Country of origin – how many rules
● Country of destination
● Payment structures
● Actors in the supply chain
- End users – military?
● Contractual terms
© Bird & Bird LLP 2011

10. Compliance Cycle
● Compliance programmes
● Licensing – ECO, Treasury Asset Freeze Unit – Single
Individual, Open General
● Record keeping
● Audits – internal, external
● Monitoring
● Disclosure
● Investigations – internal, external
© Bird & Bird LLP 2011

11. Enforcement
● Member States
● HMRC
● CEMA – Arts. 67-68 export offence
- "Any person knowingly concerned in the
exportation…of any goods with intent to evade shall be
guilty of an offence and may be arrested"
- Seizure, unlimited fines, prison up to 7 years
● CEMA – Art. 152 compound penalties
- No prosecution, financial penalty
- £575,000 2009, 18 cases listed 2009-11
© Bird & Bird LLP 2011

12. Contractual terms
● All parties must comply with the rules
● Anticipate changes in targeted products, countries and
persons
● Typical clauses
- Prohibited countries
- Compliance with rules – UN, EU, US, UK?
- Force Majeure – narrowly defined?
- Warranties and Representations
- Indemnification
- Choice of Law
© Bird & Bird LLP 2011

13. Thank you
Iain MacVay
Direct: +44 (0)20 7415 6617
Tel: +44 (0)20 7415 6000
iain.macvay@twobirds.com
Bird & Bird is an international legal practice comprising Bird & Bird LLP and its affiliated businesses. www.twobirds.com