On December 8, 2021, the UK government announced a package of measures to revise certain aspects of the UK’s export control regime following the completion of a regime review by the government. The measures include revisions to the licensing criteria for strategic export controls, an expansion in the scope of the military end-use control and a tightening of controls on exports to China. Taken together, the measures represent a significant reworking of the UK export control regime. Affected businesses should carefully analyze the new requirements to ensure that they remain compliant, particularly given substantial revisions to the licensing criteria for strategic export controls, which have been applied with immediate effect.
UK Strategic Export Licensing Criteria
In a statement to the UK parliament, the Secretary of State for International Trade presented a substantially revised version of the eight licensing criteria for strategic export controls, which will now be known as the Strategic Export Licensing Criteria (“New Criteria”). The New Criteria replace the Consolidated EU and National Arms Export Licensing Criteria announced to the UK Parliament on March 25, 2014.
The New Criteria will be applied with immediate effect to all licence decisions (including decisions on appeals) for:
- export, transfer, trade (brokering) and transit/transshipment of goods, software and technology subject to control for strategic reasons (collectively “items”); and
- to the extent that they are subject to control, the provision of technical assistance or other services related to those items.
Certain of the criteria may also be applied to MOD Form 680 applications alongside other considerations and assessment of proposals to gift controlled equipment to other nations’ governments.
The key revisions reflected in the New Criteria are:
- Criterion Two – Expansion of the circumstances in which the UK government will not grant a licence to instances when a clear risk exists that items may be used to facilitate internal repression or a serious violation of international humanitarian law. The definition of “internal repression” also has been broadened to include serious violations of human rights and fundamental freedoms (previously, the definition applied only to major violations).
- Criterion Three – This criterion, which deals with the preservation of internal peace and security, has been significantly amended. The circumstances in which the UK government will not grant a license have been extended to instances in which there is a clear risk that overall items would “undermine internal peace and security.” The range of factors to be considered when assessing the potential for items to undermine internal peace and security also has been expanded.
- Criterion Four – Expansion of the criterion’s focus to the preservation of peace and security generally (previously, the criterion targeted regional peace, security and stability). The range of factors to be considered when assessing the impact of items on peace and security has been expanded to include whether items might be used to commit or facilitate gender-based violence or serious acts of violence against women or children. The factors relevant to assessing an item’s impact on conflict and stability in a region has also been extended to include, among other things, humanitarian purposes or impacts.
- Criterion Six – Expansion of the circumstances in which the UK government will not grant a licence to instances when a clear risk exists that items may be used to facilitate or commit an offence relating to transnational organized crime (previously, the criterion focused solely on terrorism offences).
- Criterion Seven – Expansion of the factors the UK government must consider when assessing the risk that items might be diverted to an undesirable end-user or for an undesirable end-use to include the risk of undesirable end-use either by the stated end-user or another party.
- Other Factors – The New Criteria also contain a catch-all provision enabling the UK government, in exceptional circumstances, to decide not to grant a licence for reasons other than those set out in criteria one through eight when the pertinent items may have a significant negative impact on the UK’s international relations.
The New Criteria will be applied on a case-by-case basis considering all relevant information available at the time a licence application is assessed. In announcing the New Criteria, the Secretary of State for International Trade stated that the UK government “will not refuse a licence on the grounds of a purely theoretical risk of a breach of one or more of [the New] Criteria” and will continue to take into account advice received from the Foreign, Commonwealth and Development Office, Ministry of Defence and other government departments and agencies, as appropriate.
Revisions to the Export Control Order 2008
Enhancement of Military End-Use Controls
The UK’s existing military end-use controls can only be applied to the export of otherwise non-controlled items that are intended for use as components in, or production equipment for, military equipment in an embargoed destination. According to the Secretary of State for International Trade, the status quo “does not allow [the UK government] to fully address threats to national security, international peace and security, and human rights arising from the use of non-listed items by the military, police or security forces, or entities acting on their behalf, in an embargoed destination.”
The UK government therefore intends to expand the definition of “military end-use” to remove this limitation and permit such control on a case-by-case basis. According to a Notice published by the Department for International Trade’s Export Control Joint Unit, the control would only be applied when the UK government informs the exporter that a proposed export is, or may be, intended for a military end-use in an embargoed destination.
To minimize the impact on legitimate trade, there will be exceptions for:
- medical supplies and equipment intended for hospitals or other public health institutions providing medical services; and
- food, clothing and/or other consumer goods generally available to the public and sold from stock at retail selling points, without restriction.
On January 12, 2021, the then Foreign Secretary announced a package of measures to combat forced labour and human rights abuses in China’s Xinjiang region, which included a review of export controls as they apply to the Xinjiang region. The review concluded that there were anomalies and inconsistencies within the UK’s export control regime.
As a result of the review’s findings, China will be added to the list of destinations subject to military end-use controls to rectify an anomaly derived from the way the EU arms embargo was imposed in 1989 and the drafting of the current legal text. This will not change the extent of the partial arms embargo on China.
The enhancement of military end-use controls and addition of China to the list of destinations subject to such controls will require legislative amendments to the Export Control Order 2008 before they come into effect. The UK government has indicated that it will present these amendments to parliament in Spring 2022.
According to the Secretary of State for International Trade, “[t]aken together, these changes will  strengthen [the UK’s] ability to prevent exports that might be used directly or indirectly to facilitate human rights violations in all destinations subject to military end-use controls.”