Control of foreign trade of dual-use items
Ms. Anikó KOVÁCS Head of Export Control Unit
Phone: +36 1 458 5577
E-mail: kovacs.aniko4--.at.--bfkh.gov.hu
Department of Trade, Defence Industry, Export Control and Precious Metal Assay
Government Office of the Capital City Budapest
1124 Budapest, Németvölgyi út 37-39.
Tel: +36 (1) 458-5601
E-mail: exportcontrol--.at.--bfkh.gov.hu
Information
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(Mr.) József PETE |
Phone: (+36-1) 458-5601 E-mail: pete.jozsef--.at.--bfkh.gov.hu, exportcontrol--.at.--bfkh.gov.hu |
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(Ms.) Adrienn Lejla LOVAS |
Phone (+36-1) 458-5879 E-mail: lovas.lejla.adrienn--.at.--bfkh.gov.hu, exportcontrol--.at.--bfkh.gov.hu |
| (Ms.) Réka Luca SZIGETI |
Phone: (36-1) 458-5990 E-mail:szigeti.luca.reka--.at.--bfkh.gov.hu, exportcontrol--.at.--bfkh.gov.hu |
We kindly inform you, that on 9th September, 2021 the 2021/821/EU Regulation concerning setting up a Union regime for the control of exports, brokering, technical assistance, transit and transfer of dual-use items has entered into force.
References to the repealed Regulation shall be construed as references to this Regulation and shall be read in accordance with the correlation table in Annex VI. of 2021/821/EU Reg.
The Government designated the Government Office of the Capital City Budapest (further on: Office) as the Authority for foreign trade matters in Para. 2. of its Decree no. 365/2016 (XI.29.).
The Office thus adopts all necessary measures required to implement the international agreements regarding trade with dual-use items based on its designated duties, and acting under its scope of competences – in compliance with the internationally imposed terms and conditions, furthermore, has the right of drafting proposals for regulating trade with these items and technologies.
The Office is the licensing authority for dual-use items relating to export, transfer (within the EU) transactions, including related brokering services and transits. In certain cases it monitors imports of dual-use items from third (non-EU) countries and issues International Import Certificates; it also conducts consultations based on Hungary’s international obligations, furthermore takes care of certain obligations stemming from our international commitments, including those relating to international trade restrictions of dual-use and other items.
Dual-use items shall mean items, including software and technology, which can be used for both civil and military purposes, and shall include all goods which can be used both non-explosive uses and assisting any way in the manufacture of nuclear weapons, or other nuclear explosive devices.
The Department of Trade, Defence Industry, Export Control and Precious Metal Assay is responsible for the implementation of these tasks. The Export Control Department has other duties too, as the National Point of Contact of the Chemical Weapons Convention, and also of the Convention on the Prohibition of the Development, Production and Stockpiling of Bacteriological (Biological) and Toxin Weapons and on their Destruction.
Legal Regulations
Foreign trade with dual-use items is regulated by 2021/821/EU Regulation and the Government Decree No 13/2011 The EU Regulation sets up a Community regime for the control of exports, transfer, brokering and transit of dual-use items, meanwhile, Government Decree No 13/2011 contains the national implementing provisions of the Council Regulation and regulates also the import certification of dual-use items in specific cases.
The EU Regulation specifies at Union level the control mechanisms and measures regarding exports, transfer, brokering, and transit of dual-use items besides the related rules of procedure; furthermore it contains the list of the controlled items. The EU Regulation 2021/821 has direct effect and is directly applicable in all Member States.
The Annex I of the 2021/821/EU Regulation contains the list of dual-use items with export licence requirement. Besides their civil end-use, these goods and technologies, including software and technology can be used for military purposes, and includes items which can be used for the design, development, production or use of nuclear, chemical or biological weapons or their means of delivery, including all items which can be used for both non-explosive uses and assisting in any way in the manufacture of nuclear weapons or other nuclear explosive devices;
The export control regimes aim to prevent the ability to develop and produce weapons of mass destruction by state and non-state actors or terrorist groups, which pose a threat to regional and global security and peace, and also strive to impede destabilizing accumulations of conventional arms. Hungary is a member of every non-proliferation regime, which aim is to control the trade of a specific sector of dual-use items. Export control regimes wish not to impede legitimate trade but foster and enhance legitimate transfers.
The most relevant important non-proliferation regimes and conventions are as follows:
- the Australia Group (AG) (www.australiagroup.net)
- the Missile Technology Control Regime (MTCR) (www.mtcr.info)
- the Nuclear Suppliers' Group (NSG) (www.nuclearsuppliergroup.org)
- the Wassenaar Arrangement (www.wassenaar.org)
- the Biological and Toxin Weapons Convention (www.opbw.org)
- the Chemical Weapons Convention (www.opcw.org)
- the Zangger Committee (www.zanggercommitee.org)
In the case of nuclear items or nuclear dual-use items there are specific prescriptions that are to be observed. Government Decree No 144/2011 on the regulation of the foreign trade of nuclear and nuclear dual-use items (import and export control of nuclear materials and items) contains the relevant rules and prescriptions.
The Office shall issue the authorisations based on the resolution of the Minister responsible for foreign policy and − depending on the subject of the application − after having obtained the opinion of the Minister responsible for the industry, the Minister responsible for law enforcement, the Minister responsible for protection against disasters, and the heads of the National Tax and Customs Authority, the Information Authority, the Constitution Protection Authority, the Hungarian Atomic Energy Authority, the Military Security Authority, and the National Security Special Service.
All the procedures carried out by the Authority are free of duty.
Registration of firms by the Export Control Authority
Any activity under the scope of Government Decree No 13/2011 (II.22.) on the foreign trade authorisation of dual-use items may only be pursued, if the Authority has already registered the company/exporter. For the registration all the prescribed documents shall be attached to the application submitted to the Authority. The documents are specified by Article 3 (2) of Government Decree No 13/2011 (II.22.) as follows:
- the customs identification number specified in Article 6 (1) of Act CXIII of 2016 on the implementation of Union customs law (EORI number);
- a document identifying the applicant in an authentic manner: extract from company records, deed of foundation, personal identification card, or an authentic copy of any of these documents;
- a document certifying the authenticity of the signature of the person empowered to undertake obligations on behalf of the applicant;
- the tax identification number.
In relation to export-, transfer transactions, brokering services and also transit activities the applicant shall submit, in addition to the above, the following documents specified in Article 3 (3), as well:
- in case of persons other than natural persons, the document certifying the appointment of a person participating in the management of the company and responsible for export control, as well as the authorisation of this person to keep contact with the Authority, and
- the Internal Compliance Programme approved by the head of the company (non-mandatory).
The up-to-day list of registered firms is available under the “Registers” section of our website.
The Internal Compliance Programme (ICP)...
contains the exporter's internal procedures and measures in order to comlpy with the export control rules. The internal compliance programme’ or ‘ICP’ means ongoing effective, appropriate and proportionate policies and procedures adopted by exporters to facilitate compliance with the provisions and objectives of this Regulation and with the terms and conditions of the authorisations implemented under this Regulation, including, inter alia, due diligence measures assessing risks related to the export of the items to end-users and end-uses;
-describes the risk assessment concerning the orders and partners,
- regulates the order of filing all the documents pertaining to activities carried out under the rules of Government Decree No 13/2011 (II.22.),- regulates the scope of tasks and responsibilities of persons involved in the activities conducted under the rules of the of Government Decree,
- regulates the procedures for ensuring the implementation of 2021/821/EU Regulation and the Government Decree within the company,
- furthermore it gives instructions in the Action Plan about the way of elimination of the consequences arising due to possible infringements of the rules.
In case of Global Export Authorisation ICP is required. To assist elaborating the Internal Compliance Programme it is recommended to take into consideration the concerning recommendation of the EU Commission.
Types of Export Authorisations (licences)
2021/821/EU Regulation stipulates the types of export licenses to be granted:
- Union General Export Authorisation
- National General Export Ahorisation (not issued yet)
- Individual Export Authorisation
- Global Export Authorisation
An EU001-EU008 Union General Export Authorisation may be used, if the exports fulfils the criteria stipulated in Annex II. of 2021/821/EU Regulation (Annex II. Section A-H) A Statement (Declaration) in accordance with the Annex 3. of Government Decree No 13/2011 and the respective authorisation number (EU001-EU008) shall be listed on transportation documents or commercial invoices in case of export activities conducted on the basis of Union General Export Authorisation. For using the EU007 UGEA the exporter shall implement an Internal Compliance Program. In case of such export activities the exporter is obliged to send a summary report on the export transactions conducted by him to the Authority twice a year, for the first six months until 31 July of the current year, and for the other second six months until 31 January of the following year.
An Individual Export Authorisation is valid for a period of 1 year, which can be extended once by 1 year if the application was submitted within 30 days before the expiration. Large project authorisations shall be valid for a duration to be determined by the competent authority, but no longer than four years, except in duly justified circumstances based on the duration of the project. If the export activity concerns items that are subject to international sanctions (but may be licensed) an Individual Export Authorisation can only be granted for 6 months. The applicant shall submit to the Authority the End-user Certificate signed by the End-user.
A Global Export Authorisations can be granted for more end-users, for more countries of destination. It is valid for a maximum period of three years and may be extended once, for a maximum of 1 year upon an application for extension submitted 30 days prior to expiry at the latest. Large project authorisations shall be valid for a duration to be determined by the competent authority, but no longer than four years, except in duly justified circumstances based on the duration of the project. Applying for a Global Export Authorisation Internal Compliance Programme is required (mandatory). The exporter shall send the Authority a summary report of export transactions completed according to the Global Export Authorisation twice a year, for the first six months until 31 July of the current year, and for the other second six months until 31 January of the following year.
The relevant commercial documents relating to intra-Community transfers of dual-use items listed in Annex I of 2021/821/EU Regulation shall indicate clearly that those items are subject to controls if exported from the Community. Relevant commercial documents include, in particular, any sales contract, order confirmation, invoice or dispatch note.
’Large project authorisation’ means an individual export authorisation or a global export authorisation granted to one specific exporter, in respect of a type or category of dual-use items which may be valid for exports to one or more specified end-users in one or more specified third countries for the purpose of a specified large-scale project
Authoristation for Technical Assistance (Art. 8.)
An authorisation shall be required for the provision of technical assistance related to dual-use items listed in Annex I if the provider of technical assistance has been informed by the competent authority that the items in question are or may be intended, in their entirety or in part, for any of the uses referred to in Article 4(1) (see catch-all). Where a provider of technical assistance proposes to provide technical assistance for dual-use items listed in Annex I and is aware that those items are intended, in their entirety or in part, for any of the uses referred to in Article 4(1), the provider of technical assistance shall notify the competent authority. That competent authority shall decide whether or not to make such technical assistance subject to authorisation.
Authorisations for Brokering Services (Art. 6.)
An authorisation shall be required for the provision of brokering services of dual-use items listed in Annex I if the broker has been informed by the competent authority that the items in question are or may be intended, in their entirety or in part, for any of the uses referred to in Article 4(1) (see ctach-all). Where a broker proposes to provide brokering services of dual-use items listed in Annex I and is aware that those items are intended, in their entirety or in part, for any of the uses referred to in Article 4(1), the broker shall notify the competent authority. That competent authority shall decide whether or not to make such brokering services subject to authorisation.
Pursuant to 2021/821/EU regulation ‘brokering services’ are defined as follows:
brokering services’ means:
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· the negotiation or arrangement of transactions for the purchase, sale or supply of dual-use items from a third country to any other third country; or |
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· the selling or buying of dual-use items that are located in third countries for their transfer to another third country. |
For the purposes of this Regulation, the sole provision of ancillary services is excluded from this definition. Ancillary services are transportation, financial services, insurance or re-insurance, or general advertising or promotion;
A ’broker’ means any natural or legal person or any partnership that provides brokering services from the customs territory of the Union into the territory of a third country;The authorization procedure for Brokering Services is free of duty.
Authorisation for Transfer and Transit (Art. 11. and Art. 7.)
‘Transfer’ shall mean the delivery of dual-use items listed in Annex IV of 2021/821/EU Regulation within the EU. An authorisation shall be required for intra-Union transfers of dual-use items listed in Annex IV. Transfer licence is valid for a period of 1 year, which can be extended once by 1 year if the application was submitted within 30 days before the expiration. The applicant shall submit to the Authority the End-user Certificate signed by the End-user.
Pursuant to the 2021/821/EU Reg.‘Transit’ shall mean a transport of non-Union dual-use items entering and passing through the customs territory of the Union with a destination outside the customs territory of the Union where those items:
- are placed under an external transit procedure according to Article 226 of the Union Customs Code and only pass through the customs territory of the Union;
- are trans-shipped within, or directly re-exported from, a free zone;
- are in temporary storage and are directly re-exported from a temporary storage facility; or
- were brought into the customs territory of the Union on the same vessel or aircraft that will take them out of that territory without unloading;The rules applicable to (individual) export authorisation shall be also applicable to the authorisation for Transfer, Transit operations under the terms of Government Decree No 13/2011 (II.22.).
The transit of non-Union dual-use items listed in Annex I may be prohibited at any time by the competent authority of the Member State where the items are situated if the items are or may be intended, in their entirety or in part, for any of the uses referred to in Article 4(1) (see cach-all) .Before deciding whether or not to prohibit a transit the competent authority may, in individual cases, impose an authorisation requirement for the specific transit of dual-use items listed in Annex I if the items are or may be intended, in their entirety or in part, for any of the uses referred to in Article 4(1) (see catch-all). If the transit takes place through the territory of multiple Member States, the competent authority of each affected Member State shall be able to prohibit such transit through its territory
“Catch all” (Art. 4.)
“Catch all” measure shall be applied in special cases stipulated in Article 4 of the 2021/821/EU Regulation.
An authorisation shall be required for the export of dual-use items not listed in Annex I if the exporter has been informed by the competent authorities/the exporter is aware, that
- the items in question are or may be intended, in their entirety or in part, for use in connection with the development, production, handling, operation, maintenance, storage, detection, identification or dissemination of chemical, biological or nuclear weapons or other nuclear explosive devices or the development, production, maintenance or storage of missiles capable of delivering such weapons,
- the purchasing country or country of destination is subject to an arms embargo and if the exporter has been informed by the authorities the items in question are or may be intended, in their entirety or in part, for a military end-use;
- the items in question are or may be intended, in their entirety or in part, for use as parts or components of military items listed in the national military list that have been exported from the territory of that Member State without authorization or in violation of an authorization prescribed by the national legislation of that Member State.
That competent authority shall decide whether or not to make the export concerned subject to authorisation. Application for individual licence ( see Individual Licence) shall be submitted with EUC as supporting document.
„Cyber-surveillance catch-all” (Art. 5.)
’Cyber-surveillance items’ means dual-use items specially designed to enable the covert surveillance of natural persons by monitoring, extracting, collecting or analysing data from information and telecommunication systems;
An authorisation shall be required for the export of cyber-surveillance items not listed in Annex I if the exporter has been informed by the competent authority that the items in question are or may be intended, in their entirety or in part, for use in connection with internal repression and/or the commission of serious violations of human rights and international humanitarian law. Where an exporter is aware, according to its due diligence findings, that cyber-surveillance items which the exporter proposes to export, not listed in Annex I, are intended, in their entirety or in part, for any of the uses referred to in paragraph 1 of this Article, the exporter shall notify the competent authority. That competent authority shall decide whether or not to make the export concerned subject to authorisation. Application for individual licence (see Individual Licence) shall be submitted with EUC as supporting document.
Import of dual-use items – International import certificate (IIC)
Generally, the import of dual-use items to Hungary does not need any authorisations. However, there are some special cases when the import of dual-use items or import of other items subject to international commercial restrictions (sanctions) to Hungary from outside the customs territory of the European Union can be carried out with International Import Certificate (furthermore: Certificate) issued by the Export Control Authority.
Pursuant to Government Decree No 13/2011 (II.22.) the importers in Hungary shall apply for the International import certificate in the following cases:
(a) in case of dual-use items an authority of the country of origin requires the issuance of the Certificate;
(b) the nuclear item is listed in “Category 0” of Annex I to 2021/821/EU Regulation.
The Certificate may also be requested, if − in case of transfers within the European Union − an authority of the country of origin requires the issuance of the Certificate.
Applications for the issuance of the International Import Certificate shall be submitted with the contents specified in Part A) of Annex 4 of the Government Decree No 13/2011 (II.22.) plus the End-user Declaration properly filled and signed.
Submission of applications to the Authority and receipt of note of permission by the clients:
The application-forms and supplementary document forms you may find on our website: https://mkeh.gov.hu/E-ugyintezes/eNyomtatvanyok
We ask you to fill in the forms very correctly and precisely taking into consideration every relevant data. The applications shall be submitted electronically (via "Ügyfélkapu” or "Cégkapu") to the Export Control Unit.
The exporter (applicant) shall provide every relevant particulars, data to the Authority concerning the end-user, the consignee, the end-user country, and the items to be exported and their end-use as well.
The applicant shall be responsible for the authenticity of all data provided in the submitted application and the supplementary documents and the appropratie categorisation of the items.
The control list numbers (ECCN - Export Control Classification Numbers) of the dual-use are technical codes which pertain to the items listed in Annex I of 2021/821/EU Regulation.
You can find more information on the subject under the section “Frequently Asked Questions”:
http://mkeh.gov.hu/gyik?sajat=igen&id_cat=43&kateg=Export+Control+Department&parent_id=39
Applications may be submitted electronically. Licenses may be received personally at the Customer Service (Budapest, Németvölgyi út 37-39, "D" building, ground floor).
Office hours:
- Monday and Thursday: 8:30 a.m. - 11 a.m.
- Friday: 8:30 a.m. - 11 a.m.
The information about the electronic submission of document is available only in Hungarian language.
Transactions pursued in the frame of a Global Export Authorisation or a Union General Authorisation have to be summarised and reported to the Office twice a year. Our clients have to submit the first summary until 31st January. The second summary has to be submitted until 31st July. A template is available at the Forms section of our homepage.
Please submit electronically the relevant Forms filled to to the following address: exportcontrol--.at.--bfkh.gov.hu
Infringement of the regulations by the exporters and the consequences (fines)
In case of infringement of the regulations administrative and criminal sanctions are in force (as national legislation) adopted on the standards of international and EU Law. The following summary on the subject is available only in Hungarian.
Academia, Researchers
Commission Recommendation (EU) 2021/1700 of 15 September 2021 on internal compliance programmes for controls of research involving dual-use items under Regulation (EU) 2021/821 of the European Parliament and of the Council setting up a Union regime for the control of exports, brokering, technical assistance, transit and transfer of dual-use items available here: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32021H1700
Emerging technologies
The Emerging Technologies Working Group of the Commision complied a series of fact sheets providing summary information for relevant emerging technologies. (Data Analytics and Advanced Computing; Advanced Materials; Artifical Intelligence; Additive Manufacturing; Aerospace- Hypersonic Propulsion Technologies; Quantum Technology; Semiconductor Technology.)
The fact sheets are available on the following link: https://trade.ec.europa.eu/doclib/docs/2021/september/tradoc_159791.pdf
Intangible Technology Transfer (ITT)
Intangible Technology Transfer (ITT) is a challenging and more and more stressed question of the current export control system. For further information, please do not hesitate to contact our colleagues.
Dual-use exports controls and ’cloud computing’
The EU Dual-Use Coordination Group elaborated in 2014 a paper on ’Cloud Computing’: identifying the novelty of cloud computing, the different categories of cloud services, and the intercourse between the cloud computing services and the EU export control system. The paper summarises the export control implications relating to the usage of cloud computing, the types of transactions, security and data protection issues, etc. Authority of Defense Industry and Export Control principally agrees with the standpoint and conclusions stated in the paper.
Directorates of the National Tax and Customs Administration of Hungary (NTCA)
Government Decree 273/2010 (XII. 9.) on the organizations of the NTCA provides a general scope of activities for all local customs offices in respect of customs clearance (customs control) of the dual-use items.
The structure of the NTCA was reorganized from 1 January 2016, so the functions of the local customs offices were overtaken by the county (capital) and Airport tax and customs directorates.
Information about the NTCA - Directorates is available by the following link:
http://en.nav.gov.hu/contact/Tax_and_Customs_Directorates_of_the_NTCA
EU Guidances
The issue of the control of the dual-use items and technologies on the official web site of the European Union is available here (in English):
http://ec.europa.eu/trade/issues/sectoral/industry/dualuse/index_en.htm
Modernisation of the regulation
EU Comimission's proposal for export control regulation (recast-2016)
Review the EU's export control- Impact Assessment-2015
Review the EU's export control system -Communication (2014)
The export control system of the EU in respect of dual-use items: to provide competitiveness and security in our changing world. “The Green Book” (2011)
Reports
2021 Annual report from the Commission to the European Parliament and Council (2019 export data)
2020 Annual report from the Comission to the European Parliament and Council (2018 export data)
Activity Report of the Defence Unit and Export Control Unit 2018 (only in Hungarian)
2019 Report from the Commission to the European Parliament and Council (2017 export data) and Annex (enforcement measures)
The EU restrictions in force (in English):
https://eeas.europa.eu/topics/sanctions-policy/8442/consolidated-list-of-sanctions_en
UN sanctions (in English):
https://www.un.org/sc/suborg/en/
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