The last word

EXPORT CONTROLS ON DUAL USE GOODS: DO YOU NEED EXPORT APPROVAL?

By Susan Danks, Head of Customs and Regulatory Compliance at the Freight and Trade Alliance (FTA).

Susan Danks, Head of Customs and Regulatory Compliance at FTA.

Australia’s export control laws are part of an international effort to restrict the spread of conventional, biological and nuclear weapons and their delivery systems and to ensure the responsible export of defence and strategic goods technologies, while also encouraging the export of goods and technology where that is consistent with Australia’s national interests and international obligations. Australia’s export controls are contained in legislation that includes the Customs Act 1901, the Defence Trade Controls Act 2012 (DTCA), Weapons of Mass Destruction (Prevention of Proliferation) Act 1995 and Military End-Use provisions (section 112BA).

Significant fiscal penalties are issued in countries such as USA and Canada for breaches of their own legislation in this area. Businesses and other entities such as universities should therefore consider carefully whether any of the goods, software or technologies they send or take out of Australia may be subject to these export controls.

CONTROLS ON THE SUPPLY OF DEFENCE AND DUAL USE GOODS

The purpose of the Defence Trade Controls Act 2012 is to control the transfer of defence and strategic goods, software and technology in accordance with Australia’s international obligations and national interests. The Act includes provisions regulating: • exporting, supplying or brokering the supply of goods on the Defence and Strategic Goods (DSGL) List and related technology; and • the intangible supply of technology relating to DSGL goods, such as supply by electronic means - Defence and Strategic Goods List (DGSL) - The DGSL is divided into two parts, with ten categories in Part 2: • Part 1 is the Munitions (military goods) List. • Part 2 lists goods that are “dual use”, that is, the goods that may have been developed for commercial purposes but could also be used for military or WMD applications.

To establish whether a particular item is controlled, the exporter must first check the DGSL to determine if the goods themselves are listed, and then whether related materials, equipment, software or technology are also listed. There are some exceptions, for example DSGL technology already in the public domain or what would be considered as basic research or is the minimum necessary information for patent applications.

If the goods are listed on the DSGL, the exporter must then check the technical specifications of the goods being exported against the control thresholds in the DSGL. Commonly, this associated technology may also be controlled if it is ‘required’ for the ‘development’, ‘production’ or ‘use’ of the controlled good. For example, the DSGL lists computers that are designed to operate below -45 °C or above 85 °C. The DTCA only applies to the technology necessary for the computer to operate at these temperatures. Technology that does not influence this ability is not controlled.

Controls on the export of intangible goods are also in place. This means that if goods that are in an intangible form would require a permit to export if they were in tangible form (i.e. if they were actual goods), they

require an export permit. Some examples of intangible means are email, fax, telephone and providing access to training or electronic presentations that contain DSGL technology. The provisions apply across all sectors of industry, including training and research.

It’s important to remember too that the inclusion of controlled information in the repair and return of goods, or provision of a technical paper, specification, blueprint or even an email containing such information, sent overseas even if to a fellow employee or a client, is prohibited unless an export permit is first obtained. Importantly, it does not matter to what country the information is exported, including our allies.

The outcome is that a permit is also required to take controlled technology stored on a physical medium, such as on your laptop or a USB drive, outside of Australia. This includes scenarios where the information is sent by post or is carried by hand or in checked baggage.

PERMITS AND PENALTIES

Exporters and their brokers should take particular care to determine whether their activities with defence or dual-use goods,

“Exporters and their brokers should take particular care to determine whether their activities with defence or dual-use goods, software or technologies may be subject to export controls and require an export permit. ”

software or technologies may be subject to export controls and require an export permit.

Offences in relation to controlled defence and strategic goods, software and technologies can attract substantial penalties – in some cases, 10 years’ imprisonment or 2,500 penalty units (i.e. currently AU 525,000), or both.

US EXPORT GOODS

It must also be noted that if the export contains any tangible (e.g. parts) or intangible goods (e.g. software) that are of USA origin and required an export permit from USA, then an export from Australia may require export permits from both Australia and USA, Export permits for Australian goods are obtained through the Defence Export Control Office (DECO), but they cannot provide export permits for controlled US origin components or software.

If you get it wrong? Significant penalties including imprisonment can apply, and if the goods include components etc of US origin, then significant penalties may also be incurred from US. ■