What are Dual-Use Goods and How are They Regulated?

Dual-use goods are products or technology that are used by both government agencies and civilian populations and different nations have specific policies and regulations as to which items fall under that category. Any number of products that are commonly used today may have originated within the government and later integrated into civilian life. As an increasing number of goods transition to everyday use, the challenge for trade-based companies is to keep abreast of ever-changing dual-use regulations.

How is Dual-Use Trade Regulated?

The Wassenaar Arrangement was established in 1996 with the goal of providing increased national and international stability through greater transparency and responsibility of dual-use trade — thus preventing potentially destabilizing accumulations in the marketplace. The Agreement binds dual use goods traded between industrialized nations, placing restrictions on partnerships that are believed to place populations at risk.

In addition, the United States launched a new inter-agency review of the national export control system in 2009, focusing on global competition. The review is currently underway and is comprised of a three-phased approach to updating and streamlining the U.S. Munitions List. Its goal is the creation of a single control list, a single licensing agency and unified information technology.

Examples of Dual-use Goods

Materials processing
Electronics
Computers
Telecommunications and Information Security
Lasers and Sensors
Navigation and Avionics
Propulsion Systems, Space Vehicles and Related Equipment

Dual-Use Export License Requirements

US Licensing

In the United States, the ability of any company to sell or distribute dual use goods depends on that company's export license. The Bureau of Industry and Security (BIS) has the responsibility of regulating the export of most commercial goods, including governmental hardware. While civilian goods rarely require an export license, the BIS lists numerous exceptions for dual use goods, particularly for military equipment.

Furthermore, the U.S. government requires a license for permission to sell goods overseas when the sale or exchange of goods violates U.S. security, foreign policy, nuclear non-proliferation, or when short supplies make it necessary to restrict sales. The BIS relinquishes the authority for sale of all non-threatening dual use goods to the Department of Commerce's jurisdiction based on its placement on the Commerce Control List (CCL) or the United States Munitions List (USML). Status on both the CCL and USML may vary according to current and former foreign policy initiatives. For example, a December 2015 policy meant to coincide with Russian sanctions added new names to the restricted entity list, while a September 2015 policy relaxed BIS standards for trade with Cuba.

EU and UK Licensing

Like its United States counterpart, the European Union closely monitors the sale of dual-use goods throughout its member states. All EU exports depend on the 428/2009 Council Regulation, with Article III stipulating an explicit authorization must be approved in order to trade military hardware. Individual member states may apply select policies to the sale of dual-use goods, such as Spain's policy to apply and extend brokering controls, while neighboring France does not.

The EU notes that dual use trades not only promote the exchange of technology, but contribute to a major aspect of the European economy, resulting in the use of a commission to monitor, update, and adjust their export laws in order to meet the EU's economic needs. Even so, the federation maintains export controls in order to uphold non-proliferation agreements, most recently launching an online public consultation in order to determine the status of regulations and updates.

Export authorization for governmental purposes in the United Kingdom serves the same purpose as licensing from the United States' BIS. The UK maintains an extensive list of all dual-use goods requiring export authorization; like its Western allies, the UK restricts some goods, such as nuclear materials, avionics, computers, and marine technology.

 


Descartes CustomsInfo™ For Continuous Compliance With Dual-Use Regulations

With the incorporation of an increasing number of governmental technologies, such as drones, into everyday civilian use, the licensing and authorization needed for dual use goods across the world will become more complex. Organizations that seek to purchase, sell, trade or license dual use goods require effective software to organize and update their information. Descartes CustomsInfo offers a turnkey software package that enables enterprises to maintain the right legal status, including reasonable care to prevent civil or criminal charges, and preventing errors before they happen. With a massive amount of data on hand, our enterprise resource planning (ERP) modules afford companies ease of use to populate, update, and access vast amounts of information on the global market for dual use goods.