Helping the UK subsea sector navigate new waters

Subsea UK urges the subsea industry to take stock of new export and trade controls.

While the supply chain is desperate to return to normal and capitalise on orders following the disruptions caused by COVID-19, there’s a need for companies to exercise caution when processing transactions involving controlled items, particularly in light of new export and trade rules in place following Brexit.

Since the United Kingdom left the European Union on 31 December 2020, licensing requirements for the export of certain items to the EU have changed. If you are based in Great Britain, a licence is now required to export all dual usecontrolled items, including certain underwater equipment, which in turn impacts subsea, oil and gas, and renewables firms in Great Britain looking to supply controlled products to clients in the EU.

Advice on how subsea companies can navigate export and trade controls, including the changes in place following Brexit, was the focus of a recent webinar organised by Subsea UK and the Department for International Trade (DIT). For full details about which licences are required for trading in dual-use and other controlled items from Great Britain and Northern Ireland to the EU, see the government guidance.

The webinar was presented by Claire Harrison who leads the work of the Business Awareness Unit in the Export Control

Joint Unit (ECJU). ECJU is the government administrative body for licensing controlled goods software and technology. ECJU also ensures UK exporters understand export control and trade sanctions regulations and policies, to enable them to remain compliant with export control laws on military and dual use goods software and technology, as well as sanctions regulations on items exporting to sanctioned destinations.

The overall aim of the online event was to provide government guidance on the export and trade controls affecting the industry, the strategic export licenses required by the sector and the application process, to ensure transactions are as smooth as possible for both suppliers and customers.

Controlled items Submersible vessels, telecommunications equipment, radio communications equipment and marine navigation radars – just some examples of ‘dual use’ controlled items due to their potential defence capabilities – now require a licence if being exported to countries within the EU.

You can check whether your items are controlled using the consolidated list of military and dual use items, including UK national controls. You can also use the Goods Checker Tool to check if your items are included on the lists, or apply for a control list classification on SPIRE.

With the subsea industry having a vested interest in these items, the need for the sector to fully understand the controls and how they can impact on trade was highlighted at the event.

Claire Harrison said: “Before the end of EU Transition, most dual use controlled items being shipped to the EU didn’t need a licence. Now, if you are in Great Britain and selling items on the dual use control list to the EU, then you need a licence. To facilitate these exports, ECJU published the Open General export license dual-use items to EU Member States, which requires registration on SPIRE, the Export Control Organisation’s online export licensing system.

“If you are exporting dual-use items to other countries, you may be able to use the Retained General Export Authorisations for your exports. If you can’t meet the terms and conditions of these types of open licences and your items are controlled, you need to apply for a Standard Individual Licence.

“Typically, with subsea, some of these exports may not be permanent – the underwater equipment in question may be for hire. This is a temporary export, and a different licence is required in that circumstance.

“Anything on the strategic control lists being exported anywhere in the world needs a license. If it’s dual use, companies may be able to use an open general export licence to ship to the customer. That generally involves a one-off registration. You will only need to quote the licence name or the unique licence number on your commercial documentation. If you can’t use an open licence, you must use an individual export licence”.

There are no charges for strategic export control licences.

Know your customer One of the biggest pieces of advice from Claire to the subsea industry was the importance of suppliers knowing the location of the end user and, most importantly, if they are based in a sanctioned destination.

There is a new UK sanctions regime. Helpfully, the processes of ensuring the requirements for licensing haven’t changed. If there’s a trade sanction or arms embargo in place impacting the subsea sector, you will need to apply for a licence. See the government guidance on UK sanctions and where trade sanctions, arms embargoes and other trading restrictions apply.

Claire added: “UK suppliers need to be aware of the end users and conduct due diligence. Who are the typical customers of your customer?

“Also, if the controlled equipment or item isn’t being shipped from UK, but the UK subsidiary or parent company is instructing another part of the company overseas to ship the item to a third country, then they need to have permission from us to do that – that’s called a trade control. Navigation and subsea items could come into that, and a trade control licence may be required.”

Protect your know-how The export and trade controls don’t just cover equipment and technology, with permissions also required for sending physical and intangible transfers such as valuable technical details, blueprints, and even instructions manuals associated with any controlled items.

Claire Harrison explained: “The know-how – the insight and technology needed to build the equipment - is also controlled, as is software. Transfer of that technology or software, physical or digital, requires a licence.”

Best practice For companies looking to comply with the new export and trade rules and ensure smooth transactions with customers, Claire Harrison emphasised that research and preparation is key.

Figure 2. Technip FMC subsea infrastructure.