Article "The EU Dual-Use Regulatory Framework: A Growing Success or an Imminent Fall ?" - Export Compliance Manager (DOW JONES)

The EU Dual-Use Regulatory Framework: A Growing Success or an Imminent Fall ?

A few years ago, EU Regulation 428/2009, which established a common framework for the control of exports, transfer, brokering and transit of dual-use items, was recast into EU Regulation 2021/821. The objective was to enhance clarity, effectiveness, and efficiency. Now, nearly four years later, the European Commission’s first annual report on its implementation raises a key question: Has the recast been a success, and is it still on the right track?

Context

The report covers 2022-2023, a period heavily impacted by Russia’s war of aggression against Ukraine and rising tensions in the Middle East. These geopolitical events have placed dual-use export controls under significant strain, testing the framework’s adaptability and enforcement capabilities.

Key Achievements

The report highlights several achievements, notably in terms of modernization of EU dual-use export controls :

• Enhanced framework agility :
  The recast has strengthened the framework’s ability to remain relevant and avoid obsolescence through:
  • the creation of an expert group focused on emerging technology such as quantum technology,
  • the publication of guidelines dedicated to cyber-surveillance items,
  • regular updates to the control list with, amongst others, new entries in electronics, semiconductors and computers.
• Increased awareness and global influence :
  • Upward trend for both authorised dual-use trade (the total value of which amounted to €57.3 billion in 2022 vs. €38.5 billion in 2021) and denials (813 denials in 2022 vs. 568 in 2021),
  • Increased awareness beyond the EU: meetings of the EU-US Trade and Technology Council, EU-Norway and EU-China Dialogues, potential expansion of the e-Licensing tool to Moldova, Bosnia and Herzegovina as well as Serbia.
• Digitalisation :
  • Further development of the Dual-Use e-System: to enhance information- sharing on denials and on the implementation of Russia-related sanctions,
  • Interconnection with national customs systems via the Customs’ Single Window environment to enhance trade facilitation.

Challenges and risks ahead

Despite progress, several obstacles threaten the EU Regulation 2021/821 effectiveness:

• Geopolitical tensions :
  The report indicates that China and the U.S. were amongst the main destinations in terms of volume of authorised individual exports and global export authorisations. So how will the framework continue to evolve in the context of the recent shift in U.S. trade policy under Trump and the multiple trade barriers imposed recently on dual-use items by the U.S. and China?
• Diverging national practices :
  EU Regulation 2021/821 allows Member States :
  • to extend controls on brokering and transit,
  • to apply intra-EU transfer controls for non-listed items.
  The report also highlights that EU Member States can introduce national control lists, which other Member States can use as a basis for imposing authorization requirements without adopting their own lists. These possibilities are increasing fragmentation rather than harmonization.
• Underutilized licensing system :
  The report mentions that the e-Licensing system went live in Latvia and Romania, was prepared for Italy, Slovenia and Wallonia while Hungary and the Brussels Region expressed an interest but what about the rest of the EU? The slow uptake raises concerns about widespread adoption and effectiveness.

Conclusion

While the modernization of the EU dual-use regime has brought significant improvements, ongoing geopolitical shifts, divergent implementation, and enforcement challenges are still posing substantial risks to the effectiveness of EU Regulation 2021/821. The coming years will be decisive in determining whether the recast truly enhances control efficiency or if regulatory divergence and external pressures will weaken its impact.

Credit : Charlotte Villatte, Co-founder & Manager at DefenseWise SRL - Publication : Export Compliance Manager (DOW JONES) - Issue 51

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