Remove Red Tape

Export control

These regulations include the legislation on export controls on military and dual-use goods, radioactive sources, software and technology and other certain goods. It also includes the provision of technical assistance to these goods. The list of regulations also includes control orders to implement trade sanctions and arms embargoes in relation to specific countries.

The Government is determined to take a hard look at anything which imposes bureaucratic burdens. We are committed to our international obligations and it is not the Government’s intention to cease to control exports, but these regulations cannot be exempt from a comprehensive look to check that we are not imposing burdens that are out of proportion to the good they seek to do. This Red Tape Challenge spotlight gives you the opportunity to look whether export control processes are too bureaucratic and burdensome for the benefit they bring, whether they could be simplified or better implemented, or if you think they should be kept exactly as they are.

You can find all 23 regulations that relate to export control below to the left.

Tell us what you think should happen to these regulations and why, being specific where possible:

• Should we scrap them altogether?
• Could their purpose be achieved in a non-regulatory way (eg through a voluntary code?) How?
• Could they be reformed, simplified or merged? How?
• Can we reduce their bureaucracy through better implementation? How?
• Can we make their enforcement less burdensome? How?
• Should they be left as they are?

16 comments on “Export control”

1. Robert Windsor-manager trade services atth British International Freight Association on August 23, 2011 at 10:12 am said:

   The basic problem is that my memmbers are cought in the middle of a very difficult situation. The ECO system does not fit well withing trade procedures. Our Members tend to focus on the customs tariff which does not interface well with certain aspects of the ECO system which does not use tariff headings but a rating system. There is no correlation between the ECO system and Tariff-which makes everybody’s life more difficult. Also too maydual use goods are snagged as potentially needing a licence when in fact it transpires that no licence is required.. The main problem is the small and medium companies where an account persoor similiar does some shipping as a secondary role and is confronted with a very comlplex regime for the personwho is not familiar with it.Comment Tags: BIFA ECO response
2. Eion MacDonald on August 22, 2011 at 5:44 pm said:

   Ensure that licence application or preliminary review is donewithin four (4) weeks maximum. One potential export took over 10 months to clear as not needing a licence. Commercvila firms cannot neter into supply contracts that take this time to review.Comment Tags: time to review
3. Charles Cook on August 22, 2011 at 3:48 pm said:

   Following on from several of the contributors below, it is quite plain that the UK already has a relatively bureacracy free export control process especially when Open General licences may be used. Several have commented that it is EU legislation which imposes difficulties and increased bureaucracy and the “technical assistance” proposals would seem to fall into this category although their exact defintions and applications are as yet unclear. I work for Airbus and it is our UK-based support to final assembly lines which will require considerable study to guarantee we remain compliant.

   However, there are several areas which could ease the burden of UK controls:

   1. Removal of some items from the military list – The catch-all is the “design, manufacture or modification for a military use” but when the use is plainly exactly the same as the use in a civil application there seems little need to control the export. Allied with this we need an easily applied process to remove things from the military list when there is no specific military utility in the product.
   2. Support to our own UK military forces – it seems bizarre that we cannot export to UK military forces, no matter where they are outside the UK, without an export licence. The end user is defined and the risk of diversion lies in the supply chain through theft or other illegal action rather than diversion by the intended recipient.
   3. Blanket clearance for UK Government Collaborative Programmes within the terms of the contracting processes as Michael Bell suggests – This is a brilliant example of 2 different government departments working almost in opposition. It especially becomes ludicrously evident when any licence request then has to go into MoD for further approval that industry may export to fulfil its contractual obligations to that very same department (this also links up with my point 2) I have been trying for 4 years now to get an OGEL for a collaborative project (A400M) still with neither success nor indication that there will be success in the near future. In the meantime, the process for clearing suppliers, especially, to use the extant licence is time consuming and bureaucratic in the extreme.

   Finally, the charging issues will only add to the red tape the Government is seeking to reduce. Quite apart from the costs involved, especially for SMEs who are not necessarily equippped to deal with any additional impositions, the processes of charging and confirming will merely add further delay and complexity into an already complex situation.
4. Neil Harvey on August 15, 2011 at 9:30 am said:

   I would just like to add a general comment to David Hayes’ remarks about bureaucracy. Back in 2008, the Cabinet Office issued a Code of Practice on Regulatory Guidance. Has that piece of work been consigned to the waste bin following a change of Government or is it still valid? If it is, perhaps all export licence organisations could use the opportunity of the Red Tape Challenge to re-affirm their commitment to the 8 golden rules contained in it.Comment Tags: better regulation, bureaucracy
5. Michael Bell on August 15, 2011 at 8:32 am said:

   The government must control strategic exports. Only the government can bring to bear all relevant factors- industrial, foreign policy, intelligence etc- before authorising an export. But there is much scope for a reduced burden of implementation.

   My comments, which are based on the experience of a major defence company, echo those already made. UK strategic export controls are uniquely risk based and user friendly. The management of the Export Control Organisation is approachable and open to suggestions for improvement. The use of Open General Export Licences (OGELs) has greatly reduced the number of applications, perhaps by as much as 90%. But we can do better. Progress is too slow.

   2010 figures show a denial rate for SIELs of only 1%, which indicates that the open licensing concept can be significantly extended without risk to UK interests. Furthermore open licences, although they reduce the number of applications, have costs of their own for industry in terms of compliance training, record keeping and audit.

   A number of suggestions can be, and have been, made to reduce the burden of red tape on industry. None are new. We have no reason to suppose that they are unacceptable to the UK authorities. Our impression is that they lack the resources, and support from the ‘top of the office’, to carry them through. For example:
   - Further extend scope of OGELs to cover more items to more destinations- the aim might be to reduce the number of SIELs to a point where the denial rate was around 5%.
   - An OIEL ‘passport’, to be used for lower risk destinations while more sensitive destinations were further assessed and progressively added to the coverage. This would address the fact that currently the OIEL approval process is much too slow. Only 57% are processed within 60 working days. In the meanwhile, SIELs have to be used;
   - Exemptions for temporary exports- there seems to be no point in controlling exports for demonstration, exhibition, trials etc when the equipment is returned to source and remains under the control of the exporter;
   - Exemption from ’trade’ controls by bona fide exporters, so that the controls focus on the arms dealers which are their intended target;
   - An ‘umbrella’ licence for major export projects so that, as soon as the transaction is approved by HMG, all associated exports, including those in the supply chain, are covered by the same approval;
   - An on-line process for automatic generation of licences where applications meet OGEL conditions;
   - Urgent support in the context of the Wassenaar Arrangement for the initiative currently under way in the US to remove lower sensitivity items from the military to the dual use list, or from controls altogether.

   It is a matter of great regret that HMG has decided to introduce charging for licences before giving effect to ideas on these lines, thus adding financial cost to industry’s existing bureaucratic burden..
6. David Hayes on August 12, 2011 at 9:49 am said:

   I am the Chairman of a UK national special interest group, the Export Group for Aerospace & Defence (EGAD) the Secretary of which, Brinley Salzmann, has already commented on this forum, as have I and other members of EGAD’s Executive Committee.
   I also run my own export control consultancy, dealing with companies of all sizes, across many industrial sectors operating under the controls of various countries and so have daily contact with many diverse companies directly affected by several different export control systems.
   Looking at the comments by Neil Harvey of the Chemical Industries Association and listening to the comments of EGAD members and of many of my own client base, there is a common thread here: that thread is EU regulation. The whole concept of a “Red Tape Challenge” must be questionable on the basis that the UK has little or no effective control on the incredible volume of red tape emanating from Brussels.
   The UK has a comparatively flexible and predictable system of strategic export licensing. That is not to say that it could not be improved by, for example, the single portal suggested by Neil but compared to countries with split responsibilities for strategic goods, like the US, or with many countries in the EU who currently lack the equivalent of the UK’s system of open general licensing, our system is ‘ahead of the game’.
   However, are we any longer playing the right game? The recently retired US Secretary of Defense, Robert Gates, called the current US export control system, “rigorous but not effective”. There is now a realisation in the US that an over-bureaucratic system threatens the very national security that it was intended to protect by driving customers away to other providers and, ultimately, by reducing the influence of the original provider in the wider world. The US approach to attempting to deal with the issue is referred to as the “Export Control Reform Initiative” – and the degree of success that the initiative will enjoy is still an open question.
   The supreme irony would be for the US to develop a much more open system and overtake the systems of the main EU strategic goods exporters (notably the UK) in terms of competitiveness, while the EU itself continues to churn out additional bureaucracy, like the controls on technical assistance related to defence articles already covered in the forum, to the ultimate detriment of its own competitiveness. The example, earlier in the forum, of EU legislation making it more difficult for a UK company than a US company to bid on a French civil nuclear programme is but one example of how unintended consequences of legislation can often adversely affect industry and drive business overseas. The real question is whether we, both industry and government, add cost to business by spending too much time controlling the wrong things for the wrong reasons.
   The real challenge, as Brinley has pointed out, is how to deal with the fact that the current, resource intensive system results in a refusal rate of less than 2%.
   EGAD has offered to work with the Export Control Organisation and other interested parties to identify ways in which this could be addressed but, even as we stand ready to do so, further EU legislation looms on the horizon, the government resources available to deal with the additional requirements, in either policy or operational terms, are being reduced and, to add insult to injury, UK industry is going to be expected to pay for a deteriorating service while at the same time delivering an “export led recovery”. The argument that payments will be used to deliver improvements in the service is not very convincing when you are a small company faced with paying £200 for an export licence to deliver an order worth £100. You might not be around to see the “improvements”.
   The current charging proposals are a real threat to the capability of UK SMEs in particular to compete in global markets, especially when other EU countries will not be charging for licences. There is a counter argument that the more complex the licensing system, e.g. if the charges are not triggered until a certain licence value is reached, the more costly it becomes to implement and administer.
   There will be a full consultation on licence charging and all affected parties should ensure that their views and concerns are fed into this process, either directly or through their relevant industry bodies.Comment Tags: bureaucracy, David Hayes-Export Controls, export controls, licence charging, refusal, SME
7. Neil Harvey on August 11, 2011 at 10:04 am said:

   I am Head of International Trade at the Chemical Industries Association, representing 150 companies in the UK. Last year, the value of UK chemicals and pharmaceutical sector exports was £49.3 bn. I fully endorse earlier contributions, particularly those made by Messrs Knowles and Salzmann. But I would like to add that there are also export controls on hundreds and potentially thousands of chemicals over and above those covered by the dual use regulation.

   The introduction wrongly states that there are only 23 regulations that relate to export controls. That may be true for BIS but what about those operated by HSE (the Prior Informed Consent Export Control Regulation EU Reg 689/2008 covering hundreds of substances and this list will grow as the REACH and Biocides authorisation process kicks in), the Home Office (Drug Precursor Controls EU Regs 111/2005 and 1277/2005), the Home Office again (Misuse of Drugs Act 1971 banning imports of ‘legal highs’), DECC (trade controls on chemical weapon precursors) and Defra (trade ban on chemicals named in the Stockholm Convention).

   So in addition to SPIRE there are other export/import licensing systems operated by OGDs, most notably the Home Office and HSE. DECC also have a computerised registration system that seeks information on sales and purchases. All these systems are independent of each other so, for example, a laboratory chemical supply company that dispatches small quantities of chemicals to laboratories over the globe has to register the same sales information with different departments. The Home Office have a brand new computerised system which is being entirely paid for through compulsory fees levied on industry. The licencing system is a law and order requirement – there is absolutely no commercial benefit to industry. It is therefore an export tax that EU competitor companies do not pay. The ECO are also contemplating taxing the advanced manufacturing sector to pay for SPIRE. SPIRE is a Defence tool which should be funded by taxpayers not industry. Treasury should be reminded that companies are also taxpayers. Exporters of small consignments (such as laboratory chemical suppliers) will be driven from the UK if export licence fees are widely introduced.

   So there is no joined up action across OGDs but BIS itself seems to lack a coherent industrial policy. The Advanced Manufacturing sector has been designated by UKTI as a priority trade and inward investment sector. So, on the one hand, BIS is trying to encourage Advanced Manuafucturing exports and inward investment and on the other hand is contemplating charging for export liences from the same sector. Why not net one against the other and reduce the BIS headcount? There would be no net cost to business and BIS running costs would fall.

   My preference, though, would be to drop (or not introduce) charging for all export licensing services and for Government to open a One-Stop Shop portal for all types of export licensing so that companies no longer have to go to replicate information when registering with different export licensing departments. From a customer’s erspective, it would be helpful if SPIRE and all the other export licencing computer systems should operate from the same IT platform.Comment Tags: Chemicals, CIA, Neil Harvey, other export licensing systems, SPIRE
8. Nigel Knowles on August 8, 2011 at 9:58 am said:

   The idea of reducing Red Tape has been an ongoing project for many years now; its lack of success indicates how truly difficult any attempt to roll-back the impact and cost of entrenched government bureaucracy really is. With respect to export control legislation, we need a paradigm shift to current thinking. A significant number of exports are now processed by Exporters using the Open General Export License (OGEL) facility; this facility requires Exporters to hold and maintain records of all export transactions made under the relevant OGEL, including the retention of original End User Undertakings and supporting contract and export shipping documents for audit. Open Licenses have significantly reduced the administrative burden and cost of government bureaucracy. They are a success.

   Of all the remaining export licenses (Single Individual Export Licenses (SIELs) and Open Individual Export Licenses (OIELs)) which require UK DBIS ECU inter-departmental consultation with FCO, MoD, Treasury, security services, GCHQ, etc., approximately 97% are approved. In view of this, the government should complete a review of the currently available Open General Licenses and seek to modify their scope or introduce new OGELs to absorb the 97% of license applications which are still subject to SIEL and OIEL approvals. The Government could then use its expertise to concentrate on dealing with the remaining 3% of difficult cases that would remain.

   The need for simplification of the current export license system is urgent; recently DBIS ECU indicated that (by April 2012) they will introduce “Fee charging” to Exporters for every export license. Sums of £300 per SIEL and £3000 per OIEL, plus a registration fee to use OGELs has been suggested; the object is to make Exporters bear the bureaucratic cost of the UK Export Licensing system (circa £10M). It is understood the MoD are thinking along the same lines for Exporters’ use of their mandated MOD Form 680 Equipment Security Clearance system. “Fee charging” will apply to both Military Goods and Dual-use Goods. The bureaucracy and cost of administering a “Fee charging” system is likely to be a significant extra cost. No doubt Exporters will be expected to fund that additional new cost of bureaucracy too.

   “Fee charging” could be a colossal home goal; the law of unintended consequences is pertinent. The government is seeking an ‘export-led’ economic recovery; “Fee charging” will be seen by many Exporters as a new tax. The Exporting base in UK is quite small. no doubt as fees rise in the future, registrations would become less and less – as export manufacturing would transfer to mainland E.U. or elsewhere overseas. Those that cannot compete on price or simply object to the fee, may not register for OGELs or apply for SIELs/OIELs and will export without licenses; the currently successful OGEL process may become undermined. Where exports of Dual-use goods fall within the competency of the EU, companies may move their licensing operations to non-fee charging EU states.Comment Tags: Export license process, Fee Charging, Red Tape
9. Barry Fletcher on August 6, 2011 at 11:45 am said:

   There are numerious areas of the current UK/EU export legislation which I believe are no longer fit for purpose in todays International Business Community.
   The burden imposed on the Oil & Gas Industry operating in the UK sector of the continental shelf, being one such example. The current legislation discriminates against companies operating in the UK, against say those operating in Norway.
   The Category 5 Part II Cryptography Note, as currently written, means that some UK companies are struggling to obtain export licences, whilst others exporting the exactly same goods to the same end-user believe (rightly or wrongly) they can apply the de-control and therefore are exporting without licences.
   In other instances I am aware of the Government using unpublished definitions of terms required to decide if an export licence are required, thus potentially leading to an exporter unintentionally breaching UK Export Legislation.
   Companies are struggling to determine if they have licensable Technology, in particular Technology for “Use” of certain controlled items.
   Whilst I fully understand the reasons, the intention of the UK Government to impose charges for Export Licences, could potentially force many UK based companies who make large numbers of low priced exports of controlled goods, in say support of servicing aircraft, move their export warehouses to other parts of the EU where charging will not exist. This could have serious consequencies for the UK ecomomy.Comment Tags: Barry Fletcher, Charging, Encryption, EU, FIEC, Oil & Gas, Technology
10. David Hayes on August 5, 2011 at 3:57 pm said:

    There are many potential areas for improvement. However, if I had to focus on one area which imposes a totally bureaucratic but otherwise pointless burden on British industry, it is the requirement for export licensing of controlled items, common in the oil & gas industry, to the UK sector of the continental shelf.
    This requirement arises because our own continental shelf is, for the purpose of the EC Customs Code, outside the EU. Changing this status would require a change to the customs code but would, at a stroke, relieve both government and industry of a licensing burden which cannot be justified under the normal criteria for requiring licences.
    France had the foresight to make sure that most of its overseas territories are within the customs territory, so dual-use equipment going to a platform 13 nautical miles off Aberdeen requires a licence, whilst the same equipment going to the island of Reunion in the Indian Ocean, in most cases, does not.
    Moving now to an area where the restrictive licensing is understandable but where the result is to damage UK and EU industry and that is the nuclear sector. Most civil nuclear related items require export licences even within the EU. This includes “technology” of the sort required to respond to bid proposals from other EU countries. As an example, a UK company wishing to send “technology” in response to a civil nuclear programme bid in France would require an individual licence. A US company could, in most cases, use a US open licence and therefore respond much more readily than the UK company to an EU bid.
    The common thread here is the operation of EU rules and there is currently a Green Paper looking at reform of the EC Regulation controlling dual-use exports, though not directly looking at the customs code.
    Both these industries are in the vitally important energy sector and their competitiveness is being hampered by regulations which are either, as in the first case, almost impossible to justify and in the second apparently having unintended consequences for EU companies when bidding against non-EU suppliers.Comment Tags: david hayes, EU, Nuclear, Oil & Gas
11. Brinley Salzmann on August 5, 2011 at 3:51 pm said:

    It was Lord Justice Scott, in his report to the “Arms to Iraq” affair, back in 1996, who stated export licences should be “dealt with expeditiously and with fairness to exporters”. I am the Director – Overseas & Exports at A|D|S, a not-for-profit trade organisation representing the interests of some 920 x UK Aerospace, Defence, Security and Space companies, and also act as the Secretary for a UK national special interest group whose sole focus is providing export controls advice and assistance, whose name is the Export Group for Aerospace & Defence (EGAD), which has some 250 Members. As such I have been on the receiving end of a veritable tsunami of complaints from Member Companies (and others) about perceived delays in the processing of export and trade control licence applications since at least the last quarter of 2009. There is a clear perception that the Export Control Organisation, and its advisory departments, do not have the numbers of staff that they need to cope efficiently with their workload(s). Over the years, as the Open Licensing system has been developed, taking out of the equation an increasing number of standard individual export licence (SIEL) applications, the numbers of SIELs applied for has steadily fallen from 100,000+ back in the late-1980s, down to c.10,000 in c.2006, which, in turn, has allowed a reduction in the staff numbers involved to take place over the years; however, since 2007, according to the official figures, the numbers of SIEL applications per annum has gone up to c.12,000 (2008), then to c.15,000 (2009), then to c.17,000 (2010), with at least the same number expected to occur this year, as well, but with not only no staffing numbers increase to compensate for this increased workload, but, in fact, further staffing resource reductions taking place. All hands have been thrown into adding additional staff to the processing of SIEL applications, just to enable the ECO’s heads (and those of its advisory departments) above water, but with the resultant highly unfortunate demise of other licensing activity (eg the processing of open individual export licence applications and ratings enquiries), which have (of necessity) had to be allowed to languish in the background. As a result of these complaints we undertook a joint survey in early-2010 with INTELLECT’s JETSECC trade organisation, which enabled us to identify the fact that our respective Members were able to report that they had lost the opportunity to compete for at least £35m+ worth of potential business in the period July 2009 to June 2010 purely and simply down to delays that they had experienced in the processing of export licence applications and other necessary approvals. Clearly, therefore, the current system is costing the UK potential export business, which is, as a result, being won by our overseas competitors by default.
    The creation of the Open Licensing system, in the early-1990s, has given the UK a huge advantage in the export environment, and many other nations have been particularly jealous of our OGELs and OIELs systems. However, with the fact that statistically the UK Government approves c.98% of all SIEL applications, we are certain that there must be considerable scope for the further expansion of existing suites of OGELS and greater use of OIELs, so as to remove from the system a very large number of further additional SIELs, and relieve the currently over-burdened export licensing system, so that the scarce resources can be focused even more efficiently on those cases which REALLY do need detailed further consideration. We are convinced that the current procedures can be made more systemically efficient, without any resulting threat of proliferation.
    • Terry Scuoler on August 9, 2011 at 9:41 am said:

      Dear Brinley,

      Thank you for your expert and highly informed contribution to this debate.

      Do you know what dictates whether an application for an export licence follows the ‘open’ or ‘standard’ route?

      For example, is it based on strict criteria or guidance open judgement?

      I am trying to think through whether or not th regulations themselves could be holding back the changes you suggest.

      Terry
12. D. A. Duncan on August 1, 2011 at 12:48 pm said:

    There must be a strong argument for achieving the purpose of these regulations without damaging the business of exporting british manufactered goods. Our company manufactures custom designed boat propellers and each propeller requires an export license taking at least 4 weeks to obtain. Our quick delivery market has now dissapeared because we can not respond in time.
    We would be quite happy to be vetted or approved as a law abiding company or through a voluntary code with penalties.
    The system we have now is seriously damaging manufacturing and exports, the exact oposite to what the country needs. If we can not change the system we will be faced with moving abroad where regulations are sensible.
    • Terry Scuoler on August 4, 2011 at 3:03 pm said:

      Hello,

      I am truly dismayed to hear the experience of your company. May I ask a few questions to clarify my understanding of the issue?

      (1) Could the propellers you refer to conceivably be used for military purposes?

      (2) Do you need an individual export licence for each propeller in a shipment and has this always been the case?

      (3) Are you able to get quick and clear information on how your applications for export licences are progressing?

      Terry
13. Terry Scuoler on July 28, 2011 at 10:33 am said:

    As a former chief executive of a company supplying the global defence industry and the Red Tape Challenge ‘Champion’ for manufacturing, I am very interested in the experience of UK manufacturers applying or re-applying for export licences.

    Clearly, there is a need for oversight of the export of certain types of products to certain places. However, I am also aware that many companies are frustrated with how the export control process is administered. These companies report that a lack of transparency, communication and predictability in the process is hampering their ability to get products to market in time to compete effectively.

    Does this chime with your experience or have you found the process to be smoothly implemented?
    • David Hayes on August 10, 2011 at 7:28 am said:

      Terry

      You may be interested to know that, at the very time this red tape challenge is going on, yet more bureaucracy is due to be implemented when EC Directive 2009/43 introduces export controls on ‘technical assistance’ relating to goods on the EU Common Military List.
      The implications of this for UK industry are, as yet, unclear but one thing is certain: the net result will not be a reduction in red tapeComment Tags: david hayes, EC ict directive, export controls, Red Tape, technical assistance