Export controls in the area of dual-use goods

The export of products for military or civilian use has to be authorised. The regulations are strict and violations are subject to high fines.

There are only a few areas where the saying "better safe than sorry" is more appropriate than in the area of export controls for cross-border trade in goods. The background of the legal restrictions in connection with export controls mostly concerns the national security interests of the Federal Republic of Germany, the European Union or international agreements. Transgressions are correspondingly intensively pursued and penalised and this can lead to substantial fines and serious image problems for companies. In this area, the changes to the foreign trade law at the end of last year again significantly tightened up the regulations. Intentional or careless violations against these restrictions now constitute a criminal offence.


In addition to the export of weapons and military equipment, the export controls are also concerned with the widespread export of so-called dual-use goods. Dual-use goods pose a particularly high risk because they can be used for civilian and also military purposes. Therefore the export of goods which are potentially dual-use goods to countries outside of the European Union without controls and of listed dual-use goods without an export permit is not possible.


The German export economy is severely affected by this issue because these goods can be many varied products such as chemical substances, laboratory materials or pipes. In particular, the area of replacement part deliveries can be affected by the regulations for dual-use products. In accordance with European law (article 3 of the dual-use regulations) or domestic German law (§8 of the German Foreign Trade Ordinance), there is a permit requirement for export to countries outside of the EU.


The delivery of dual-use goods within the European Union is in principle free of restrictions. The exceptions to this are certain dual-use goods where delivery requires a permit. The delivery of dual-use goods as defined by the German Foreign Trade Ordinance also requires a permit when the manufacturer or supplier has knowledge that the final destination is located outside of the EU. Goods subject to a permit are classified in special goods lists. The goods on the lists are characterised by special technical features which enable a specific functionality or condition, or if the goods are "especially" designed for a special purpose. If the examination determines that a product is included on one of the lists, an export permit must be applied for from the German Federal office of Economics and Export Control (BAFA).


This export permit must be applied for by the exporter of the actual export operation. Export permit applications are made online in Germany using the ELAN-K2 system (electronic application registration and communication). This process integrates the required forms and the system therefore offers a comprehensive paperless application for a permit. The application must be partly supplemented by further documents such as an end-use statement. These documents serve to further determine the final consignee, the final destination and the intended use of the products and provide verification in order to enable the BAFA to make a decision regarding the application for a permit.


There are different types of export permits and companies can use a number of forms of relief. A single export permit is limited to a specific exportation project. An authorisation for a maximum amount enables numerous export deliveries from an exporter up to a defined amount to one consignee. It constitutes a special form of the single export permit. General permits grant the export for an export procedure which in principle would require a permit without it being necessary for the specific export project to go through an individual permit procedure. For example, the export of dual-use goods with the exception of goods in Annex IIg can be made using a general permit to countries such as Japan, Canada, USA, Norway and Switzerland. The use of a general permit triggers certain registration and reporting obligations with regard to the BAFA.


If a company wishes, for example, to export a lathe to Brazil, it must check the list in Annex I to the dual-use regulations and also check the export list of the German Foreign Trade ordinance (AWV). The identification codes 2B001 or 2B201 of the Annex I to the dual-use regulations are relevant. When the lathe fulfils the listed technical parameters, it is subject to a permit. These parameters are, for example, with "2B001 a)" a "positioning accuracy of 0.006 mm or better" and with "two or more axes for simultaneous axis control". The company must check each of these technical parameters for the individual identification codes to see if the machine fulfils these conditions and therefore requires an export permit. The person responsible for exports (at management level) or employee from the export department should work together with technical experts on a regular basis. The company also has the possibility to apply for advice regarding the list of goods from the BAFA. In this case the BAFA checks if the goods are listed on one of the goods lists. The information regarding the list of goods is in the form of a technical report based on the goods and only relates to the specifically described goods.


It is also possible to work with special software in this area and the result of the examination of the item is documented in the master data of the ERP system. Experience shows that different software systems often do not communicate efficiently with each other and this leaves gaps. However, in order to avoid penalties it is important to avoid these gaps and to document the examination as well as the result.


Companies which trade in sensitive products must consider export controls to be a natural activity and should not react with apprehension concerning possible penalties. An understanding for the necessity of export controls has to be developed and a functioning compliance system should be established. This requires human resources and clear processes and assignment of responsibilities. This is the only way export controls can be performed effectively and without an unnecessary waste of resources.



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Ewald Plum

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+49 711 7819 144 97

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