Dual use

DUAL-USE GOODS (DU)

There are many reasons to place international trade in arms, military equipment and dual-use goods under international and national control (see WME (weapons and military equipment, translator’s note)). This control has its own historical development. The control of international and foreign trade in WME, or in the so called conventional weapons, is generally understood by wider business and social community, as well as the reasons for the adoption of restrictive measures in this trade.

The Persian Gulf War in March 1991 refocused international attention from conventional arms export controls to how best to prevent the spread or 'proliferation' of conventional and weapons of mass destruction (WMD), as well as dual-use goods and technologies. 

In order to understand the concept of DU and the control thereof, primarily the terms of export control of dual-use goods, it is necessary to know the origin of that control.

Joshua, G., s. (2004), International Relations, explained more closely the situation of WMDs "Weapons of mass destruction are different from conventional weapons in the enormous potential mortality they cause by the absence of discrimination toward those that will be killed."

Science and the entire human mind, together with the natural resources, were put into operation to find the means for more efficient destruction of life on this planet. Classic weapons were not effective enough to carry out this task, and nuclear and other devices and systems were invented.

WMD is traditionally composed of nuclear, biological and chemical (NBC) weapons and rocket systems for their launching.

The notion of DU

Controlled DUG shall include goods and relevant technology, which in addition to civil can also have military purposes, and which in any way can help in the production of nuclear weapons or other nuclear explosive devices, chemical and/or biological weapons. 

DUG comprises commercial goods, including software and underlying technology, which is often seen in foreign trade, but according to certain technical characteristics, properties, method of use and final purpose can be used in dual way, i.e., it can be used in the production of WMD and their launching systems. DUG also includes goods like computer software and technology, as well as goods that can be used for non-explosive purposes, but which in any way can help in the production of weapons which pose threat to world peace.

Regulations

Control of foreign trade in dual-use goods is relatively recent in the world and in the Republic of Serbia as well. It was first introduced into our law in 2005, in the then state planning (SU SMN).

The Law on Export and Import of Dual-Use Goods came into force on 8 November 2013 (link "Off. Gazette of RS", no. 95/2013). Entry into force of this Law repealed the provisions of the Law on Foreign Trade in Weapons, Military Equipment and Dual-Use Goods, in the part related to DU.

The aim of this law is to strengthen the already established control in the field of export and import of DU and the provision of brokering services and technical assistance in connection with the DU, to ensure and protect the defence, security, economic and foreign policy interests of the Republic of Serbia, its international credibility and to ensure observance of international obligations of the Republic Serbia in this field.

 

The law is in conformity with the provisions of Article 3 of the Stabilisation and Association Agreement between the European Communities and their Member States, on one side, and the Republic of Serbia on the other. In addition, it is in accordance with United Nations Security Council Resolution 1540 on non-proliferation of weapons of mass destruction and the Action Plan of the Republic of Serbia for the implementation of this Resolution.

Export control of DU and related technology and control WME belongs to different decision making levels in the European Union (EU).

Responsibility for implementation of export control of DU and related technology is on the community ("first pillar") – it is a part of the common trade policy of the EU community, which was established in Title IX of the Treaty on the Establishment of the European Community, while control of weapons and military equipment falls within national jurisdiction of the EU Member States (see WME).

The Council Regulation (EC) No 428/2009 of 5 May 2009 setting up a Community regime for the control of exports, transfer, brokering and transit of dual-use items, OJ L 134, 29.05.2009, p. 1-269 (>>>) is a binding regulation for all EU member states in this area. In European legislation, this regulation on DUG is directly applicable in the laws of all Member States.

By virtue of the aforementioned European Regulation, Member States have the discretional right to decide on permit applications, implementation of this legal act, as well as the prosecution of cases of violation of legal provisions.

The law allows for the application of the relevant ratified international agreements and conventions, such as the Non-Proliferation of Nuclear Weapons Treaty (NPT), the Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on Their Destruction (CWC) and the Convention on the Prohibition of the Development, Production and Stockpiling of Bacteriological (biological) and Toxine Weapons and on Their Destruction (BTWC) and the declaration of the competent international organisations on conducted export and import of nuclear and fissile materials, equipment and technologies, chemicals, microorganisms, bacteria, toxins and other materials, equipment and related technologies as DUG, in order to prevent the spread of WMD.

The Nuclear Non Proliferation Treaty - NPT was ratified in 1970 in SFRY, and FRY approved it in 2002. In the area of nuclear weapons, the Law on Ionizing Radiation and Nuclear Safety, which regulates the production, use, import and export of nuclear, radioactive, radiological and similar materials for lawful purposes has been adopted. These permits are issued by the Agency for Radiation Protection and Nuclear Safety of Serbia, which is responsible for the implementation of these laws.

The Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on Their Destruction (Chemical Weapons Convention - CWC) entered into force on 29 April 1997. Our country (FRY) joined the Convention on 20 April 2000. Its aim is to eliminate the whole category of weapons of mass destruction – chemical weapons. The former SFRY was among a few countries with the capacity to produce chemical weapons and possessed that kind of weapons, so our country's accession to the Convention was of greater significance. Chemical substances covered by the Convention are divided into chemical listed in Lists 1, 2 and 3 of the Annex to the Convention. To ensure that these chemical substances are used exclusively for permissible, peaceful purposes, a verification regime has been established, which includes submission of annual declarations with detailed information concerning the exports, imports, production, processing, use and storage of toxic chemicals relevant to the Convention. 

In accordance with obligations under the Convention, the Republic of Serbia adopted the Law on Prohibition of Development, Production, Stockpiling and Use of Chemical Weapons and on Their Destruction (See "Official Gazette", No.36 / 2009), which regulates implementation of the Convention. Also, the law stipulates that export and import of chemical substances from Lists 1, 2 and 3 are performed on the basis of permits issued by the ministry in charge of foreign trade, as DUG or WME. It is forbidden to export and import chemicals listed in Lists 1 and 2 with a state that is not Party to the CWC.

Transportation of these goods is regulated by the Law on Transport of Dangerous Goods (See "Official Gazette of the SFRY" No. 27/90, 45/90 and "Official Gazette" number 24/94, 28/96, 21/99, 44/99, 68 / 02 >>> ).

The Convention on the Prohibition of the Development, Production and Stockpiling of Bacteriological (Biological) and Toxine Weapons and on Their Destruction - Biological and Toxin Weapons Convention - BTWC (see Official Gazette of SFRY-International agreements and other agreements, No. 43 / 74) obliges Member States to never and under no circumstances improve, produce, stockpile or otherwise acquire or store:

1. microbial or other biological agents or toxins whatever their origin or method of production are, which according to the type and quantity are not intended for use for prophylactic, protective or other peaceful purposes and
2. weapons, equipment or vectors designed to use such agents or toxins for the purpose of hostilities or in armed conflict.

Export and import of biological and toxic substances is based on permits issued by the ministry responsible for foreign trade, as DU or WME.

 

The law allows for the accession to international control regimes in the field of DUG export control and competent participation of local experts in the Nuclear Suppliers Group (NSG), to whom the Republic of Serbia became member in 2013. The regime of export controls is a multilateral cooperation agreement that attempts to accelerate the efficiency of national export control of Member States. That is: Wassenaar Arrangement – WA (>>>), Nuclear Suppliers Group – NSG (>>>), Zangger Committee (>>>), Australia Group – AG (>>>) and The Missile Technology Control Regime – MTCR (>>>). 

The main characteristics of DU goods export and import control

Nowadays, the prevalent foreign trade policy in the world is the liberal one, which implies the principle of free movement of goods and services, or the freedom of foreign trade, which is one of the principles defined by the Law on Foreign Trade. In relation to this "umbrella" law in the field of foreign trade, the Law on Export and Import of Dual-Use Goods constitutes a "lex specialis" and the basic mechanism for limitation and monitoring of movement of goods and services, which are legally considered to be controlled. By introducing restrictions in exports, this law represents a set of preventive measures to ensure that the export of dual-use goods and services, in this regard, do not contribute to illegal or undesirable activities of companies and entrepreneurs in other countries and the spread of WMD.

The law gives normative basis and mechanisms for implementation of DUexport - import control policy, check of end-users and end-use of goods, verification and confirmation of receipt of goods, it prescribes the procedure and criteria for permit issuing, a list of products for the control and exemptions.

 

The main principle of DU exports and imports is that these goods, as well as related technologies and services in connection with that, cannot enter or leave the territory of the Republic of Serbia without the permission of the ministry responsible for foreign trade.

DU export and import control system includes:

• issuance of individual permits;
• issuance of individual permits at special procedure;
• adoption of the National Control List of Dual-Use Goods – NCL DU;
• control and verification of end-user certificates and other documents in the export of DU;
• issuance of certificates for the importation of DU, after the control and verification required and documentation;
• issuance of decisions in the conducted administrative proceedings;
• approvals for DU re-export;
• control following the issuing of permits;
• offenses for violation of law and bylaw  provisions.

Permits

The permit is a document which at the applicant’s request is issued for export and import of dual-use goods, for brokering services and technical assistance.

There are four types of permits, as follows:

• permit for DU export;
• permit for DU import;
• permit for brokering services;
• permit for the provision of technical assistance.

The ministry competent for foreign trade issues permits to one particular exporter or importer to carry out a single transaction under the conditions stipulated by contract, for one end user or consignee in another country or in the Republic of Serbia and includes one or more products from NCL DU. 

Thus, the permit is of single nature, which means that it is issued to a single exporter and covers exports to one end user, or is issued to one importer for import from one exporting country to an end user in the Republic of Serbia, etc. The permit may contain one or more products from NCL DU.

The validity period is one year. There is a possibility of issuing individual permits for a period longer than one year but not more than the agreed deadline for completion of the transaction. In this case, the permit holder is obliged to submit reports on the implementation of the transaction at least once a year.

The permit is issued to the applicant for permit and cannot be transferred to third persons. The applicant may be a person who is registered for foreign trade activities in the SBRA. Upon the submission of application for permit with the prescribed documents to be submitted alongside, the statutory decision-making procedure is conducted. The competent ministry shall be submitted five (5) sets required (on a prescribed form) with the necessary underlying documentation.

Content of the permit application is prescribed by the Law on Export and Import of Dual-Use Goods. The Rulebook on the form and content of the application for a permit, permit form and other forms that accompany the export and import of dual-use goods prescribe the forms and content of the permit application, permit form, forms and content of applications for the issuance, and forms and content of the certificate and the certificate following the export and import of DUG, or the provision of brokering services and technical assistance.

The deadline for deciding upon the application is 10 days from the day the final approval made by the following authorities:

• ministry responsible for defence matters;
• ministry responsible for foreign affairs;
• ministry responsible for internal affairs and
• state administration body in charge of national security.

Permitting requires the necessary consent of all departments, and if some of these state authorities denies the consent, the issuing of permits shall be decided by the Government of the Republic of Serbia.

Permits at specific procedure

These permits are issued, without prior approvals and consents, if:

• exported or imported DUG belongs to the security or defence forces of the Republic of Serbia, or security or defence forces of other countries, which enters to, crosses over, or leaves the territory of the Republic of Serbia in order to:
  • fulfil the obligations of the Republic of Serbia arising from international agreements and membership in international organisations;
  • participate in multinational operations;
  • participate in international drills conducted in or outside the territory of the Republic of Serbia;
• DU is exported or imported  in order to provide humanitarian aid or donations in emergencies.

Knowing about the goods and classification thereof – National Control List of Dual-Use Goods (NCL DU)

It is important to note that in accordance with the Law on Export and Import of Dual-Use Goods, exporter, importer, broker and provider of technical assistance shall, prior to the commencement of operations of export, import, brokerage services and providing technical assistance, determine whether the goods fall in controlled goods group – DU.

In order to achieve compliance with relevant regulations, an entrepreneur or legal entity should understand whether and under what circumstances the product, technology and software is subject to export or import controls. All items are evaluated based on the National Control List of Dual-Use Goods (>>>), hereinafter NCL DU.

NCL DUG is adopted by the Government of the Republic of Serbia, at the proposal of the ministry responsible for foreign trade. NCL DU is in line with the relevant list of the European Union and the Council Directive (EC) no. 428/2009 of 5 May 2009 - Annex I stipulates a list of dual-use goods and related technologies from Article 3 of this Regulation. NCL DU is in line with Annex I of the European Directive 1382/2014 of 22 October 2014 (>>>)

 

There is the latest list in place in the EU, which is contained in Annex I of the European Directive 2420/2015 dated 12 October 2015 (COMMISSION DELEGATED REGULATION (EU) 2015/2420 of 12 October 2015 amending Council Regulation (EC) No 428/2009 setting up a Community regime for the control of exports, transfer, brokering and transit of dual use items) >>>

To determine the number of NCL DU and classification of goods in accordance with technical characteristics

End User Certificate as the main document in exporting of DU

Pursuant to the Law on Export and Import of Dual-Use Goods, the application for permit must be accompanied by the original End User Certificate, obtained from the official authority of the end- user’s country, or other appropriate certificate or document issued by the competent authority of the country final destination, which is not older than six months, a translation of the original certificate certified by a certified court interpreter, and other information necessary for decision-making, at the request of the competent ministry.

The law stipulates a possibility to check the end-user certificate (certificates), and such check is carried out by the ministry responsible for foreign affairs, at the request of authorities involved in the permitting process.

The original end-user certificate, inter alia, should include a statement of purpose – the purpose for which the goods will be used and that they will not be re-exported or otherwise put into trade again, without the written approval of the relevant ministry of the state of the supplier/origin.

Certificates issued for import of DU

Certificates shall be issued on prescribed forms (Rulebook on form and contents of the application for permit, form of the permit and other templates following the export and import of dual-use goods), at the applicant request for import of DU, as follows:

• End User Certificate;
• International Import Certificate;
• Delivery Verification Certificate.

Exceptionally, the ministry responsible for foreign trade shall verify the end user certificate on the form prescribed by the exporting country if regulations in place in the exporting country require so.

Decisions in conducted administrative proceeding

 

As already mentioned, in order to get the permit, it is necessary to obtain consent from all relevant legal departments. If any of the above mentioned state authorities denied the permit and the Government of the Republic of Serbia decides not to issue the permit, the ministry responsible for foreign trade shall issue a decision rejecting the application for the permit.

The ministry in charge of foreign trade under certain conditions prescribed by law shall issue:

• decision on revocation of the permit;
• decision on the termination of the permit;
• decision on the permit amendment;
• decision banning the transit of DU listed in NCL DU.

All decisions shall be final, and the Republic of Serbia is not responsible for any damage caused by these decisions.

Catch all clause – permit for goods not listed

Permits for the export of DU listed in NCL DU have been discussed above. However, the Law on Export and Import of Dual-Use Goods defines the control of goods which are not listed in NCL DU, but under certain conditions can be considered controlled goods. This provision is in line with Article 4 of the Council Regulation (EC) No. 428/2009 of 5 May 2009, which specifies the provisions of a "catch-all clause" as follows:

• export of dual-use goods not covered by NCL DU is permit based when the person who intends to export is informed by the relevant ministry:
  • that the goods are intended or may be intended, in whole or in part, for the development, production, modification, handling, assembly, testing, repair, disposal, use, maintenance, storage, detection, or the proliferation of weapons of mass destruction;
  • that the goods will be used or may be wholly or partially used for military purposes in the customer’s country or the country of the end user, if the country is under embargo on armaments and military equipment on the basis of the decisions of the United Nations Security Council, Organisation for Security and Cooperation in Europe and other international organisations that oblige the Republic of Serbia, or on the basis of the relevant provisions of national legislation;
  • that the goods will be used or may be, in whole or in part, used as a part or component of armament product and military equipment from NCL DUG, which are exported from the territory of the Republic of Serbia without appropriate  permit or contrary to the terms of the permit issued in accordance with the law;
• in the case that the exporter knows or has reason to suspect that DUG intended for export, but not listed in NCL DUG, or intended to be used, in whole or in part, for any of the purposes mentioned above, he/she shall be obliged to notify competent ministry, which will determine whether it is necessary to apply relevant permit.

End military use

For the purpose of applying the provisions relating to technical assistance and "catch-all clause", the Law on the Export and Import of Dual-Use Goods provides for the following definition of end military use, which is fully in line with Article 4, Item 2 of the Council Regulation (EC) No. 428/2009 of 5 May 2009:

1. installation of the goods, parts or components into the goods for military use from the NCL DU;
2. use of equipment for the production, testing or analysis and of their components for the development, production or maintenance of goods for military purposes from NCL DU;
3. use of any unfinished products in a plant for the production of goods for military purposes from NCL DU.

Export restrictions in issued permits and re-export

Export permits related to DU may be issued under special conditions, which means that the exporter of DU has the obligation to comply with the permit requirements. This could be the obligation to provide confirmation of receipt of the DU (Delivery Verification Certificate) by the authority of the end-user state and/or the required notification with the transport details of the delivery of DU (pursuant to the UN Security Council Resolutions) and similar. In this case, the exporter shall provide the competent permitting ministry with the proof that customer, or end user of DU has been informed about it.

The end user of DU originating from the Republic of Serbia, exported by the exporter who complied with the conditions of the permit issued under special conditions, e.g. with the obligation to obtain prior consent from the manufacturer and/or exporter’s state, can carry out re-export of DU to third countries, after the approval of the ministry responsible for foreign trade of the Republic of Serbia. The consent can be obtained within the legally prescribed permitting procedure.

If the end user of goods imported into the Republic of Serbia, under the condition of prohibition of re-export without prior consent of the country of origin or the seller’s approval, intends to re-export the goods, they shall provide evidence that such consent/approval has been obtained as underlying document to the application for permit which is submitted to the ministry competent for foreign trade. 

If exporter/importer fails to comply with the given condition, the permit can be revoked by virtue of the said decision on revocation of the permit.

Therefore, it is necessary to monitor the implementation of permits and permit conditions, organise safe delivery and reception of DU, follow the goods along the transport route and know at all times where DU is located. It is recommended to obtain the certificate of acceptance of DU even when such obligation is not required by the ministry in charge of foreign trade. It is very important that this document contains the place and date of taking over, name and surname of the person who takes the DUG over, as well as his/her function, the number of personal identification documents and similar data.

Obligations of exporter and importers, brokers and providers of technical assistance

If the exporter and importer, brokers and providers of technical assistance are holders of permits for the subject activity, they shall:

• maintain records on conducted export, import, provided brokerage services, and technical assistance – provide commercial, financial and other documentation based on which DU can be identified, as well as quantity thereof, full business name and address of all participants in the activity, the purpose of the goods, a description of brokerage or technical assistance services;
• enable competent authorities to collect information about each purchase order or transaction relating to the DU, that is, to supervise and control implementation of the issued permit;
• maintain records for at least 10 years from the date of the transaction;
• deliver to the ministry responsible for foreign trade, a report made on the prescribed form stating the subject transaction within 15 days of crossing the border or performing services, and indicate permit number on the basis of which such transaction was executed;
• deliver to the ministry responsible for foreign trade, a written notice, in case of any changes in permit data not later than 7 days from the occurrence of the resulting change or finding out about it;
• submit for review any business books, mail and any other information at the request of the ministry responsible for foreign trade, customs authorities and/or the prosecutor's office and others at the request of the ministry responsible for foreign trade.

Control after the permit issuance

Customs authorities, security forces and competent inspection authorities of the Republic of Serbia implement permanent control over the foreign trade activities related to DUG in the scope of their activities and powers. Ministries, special organisations and other state administration authorities, in addition to the obligation to keep data secrecy, have the right and obligation to exchange information on exporters, importers, as well as exported or imported DU, which is necessary for implementation of controls in accordance with the provisions of the Law on the Export and Import of Dual-Use Goods.

Exporters, importers, banks and other financial organisations, forwarders and transporters, as well as other persons who possess any information necessary for the implementation of DU-related import and export control are obliged to submit business books, mail and any other information for review at the request of the state authority. Brokers, technical assistance providers, carriers, and authorised representatives in the customs procedure are subject to the obligation to protect classified information and to make all relevant documents available.