Germany expands export controls on emerging technologies

On 23 July 2024, the 21st ordinance amending the German Foreign Trade and Payments Ordinance (Außenwirtschaftsverordnung, “AWV”) entered into force. Additions to the national dual-use list (Part I Section B of the Export List) are at the centre of the amendments. They include emerging technologies such as parametric signal amplifiers, cryogenic refrigeration units and quantum computers. All newly added items are subject to export controls (see A). Furthermore, additional violations of EU sanctions against Russia now constitute administrative offences and can be prosecuted in Germany (see B). The amendments also add exceptions to the arms embargo against Somalia and the Central African Republic (see C).

A. Expansion of national dual-use items list

For goods listed in Annex I of Regulation (EU) 2021/821 (“Dual-Use Regulation”), an export authorisation is required pursuant to Art. 3(1) of the Dual-Use Regulation. In addition, EU Member States can list further dual-use items nationally, thereby subjecting them to export restrictions (Art. 4(3) and Art. 9(1) of the Dual-Use Regulation).

In the 21st ordinance amending the German Foreign Trade and Payments Ordinance, the German legislator has added numerous emerging technologies to Section B of the Export List which is the relevant list for nationally controlled dual-use goods. As a result, these technologies are subject to authorization requirements pursuant to Sec. 8(1) No. 2 AWV (exports) and Sec. 11(2) AWV (regarding transfers where the operator is aware that the final destination of the goods is outside the customs territory of the EU).

In line with certain criteria outlined in the Annex, the following items are on the list if the final destination of the goods is outside the EU’s customs territory and outside the territories listed in Annex II Section A Part 2 of the Dual-Use Regulation (Australia, Canada, Iceland, Japan, New Zealand, Norway, Switzerland, Liechtenstein, United Kingdom, United States):

• Equipment designed for dry etching (3B1901k)
• Low temperature integrated CMOS circuits (complementary metal oxide semiconductor) (3A1901a15)
• Parametric signal amplifiers (3A1901b13)
• Cryogenic refrigeration systems (3A1904)
• Scanning electron microscopes (3B1903)
• Cryogenic wafer test equipment (3B1904)
• Quantum computers and related ‘electronic assemblies’ and components (4A1906)

Additionally, technology and software supporting emerging technologies have been added to the list (3E1901; 3E1902; 3E1905; 4D1901b3; 4E1901b3), although some of the additions are not restricted by destination (3D1902; 3D1907).

Due to the inclusion of emerging technologies on the national dual-use list, companies must immediately review whether their exports are subject to the new authorization requirements under Sec. 8(1) No. 2 and/or Sec. 11(2) AWV. In 2021, the EU Commission had expressed concerns that national dual-use list could lead to a “patchwork” of different export control regimes which ultimately could have a negative impact on the security interests of the EU and its Member States.[1] To address these concerns, the EU Commission published a compilation of national control lists under Art. 9(4) of the Dual-Use Regulation in October 2023. However, it remains doubtful whether the compilation will prevent the patchwork and its negative effects on the internal market.

B. Additional negligent violations of EU sanctions included as administrative offences

Sec. 82(9) AWV defines three new administrative offences regarding the EU’s sanctions against Russia.

Sec 82(9) No. 10 AWV addresses the incorrect accounting of cash balances or other revenues referred to in Art. 5a(8)(a) and/or (b) of Regulation (EU) No 833/2014, whereas Sec. 82 (9) No. 11 AWV refers to the prohibition outlined in Art. 5a(8)(c) second half sentence of Regulation (EU) No 833/2014, sanctioning the disposing of certain net profits.

According to the newly added Sec. 82(9) No. 15 AWV, the permission of ownership, control, or the holding of a position contrary to Art. 5b(2a) of Regulation (EU) No 833/2014 in relation to crypto-asset wallet, account or custody services to Russian nationals or residents of Russia likewise constitutes an administrative offence.

C. Facilitations for exporting military goods to Somalia and the Central African Republic

The amendments also include facilitations for exports of military goods to Somalia and the Central African Republic. The newly inserted Sec. 76(12) AWV authorizes the export of military goods to Somalia if they assist the Somali state as well as international aid and support missions. Sec. 76(17) No. 4 AWV, in turn, authorizes the export of military goods in support of the security forces in the Central African Republic.

 

 

 

 

 

[1] EU Commission, White Paper on Export Controls, COM(2024) 25 final, p. 9.