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SOFF och Teknikföretagen kommenterar vitpapper om exportkontroll

The Technology Industries of Sweden (Teknikföretagen) and the Swedish Security & Defense Industry Association (SOFF) represent companies at the forefront of innovation and technological development that constitute Sweden’s defense and industrial base. The organizations welcome the acknowledgement that fostering conditions for an innovative and competitive industry is paramount for European economic security.

To achieve this shared objective, we submit the following remarks regarding the White Paper on Export Controls for your consideration.

  • In recognition of the new geo-strategic situation and the blocking by Russia of necessary decisions in some export control regimes, we acknowledge the importance of allowing necessary and agreed export controls to be adopted regardless of this blockage.   
  • Adoption of new controls should proceed only if they have been negotiated within the Wassenaar Arrangement (WA) or alternative multilateral frameworks and have achieved a significant level of maturity and consensus, evidenced by the support of a majority of members.
  • New controls also need to meet the normal criteria: (1) the foreign availability of the item outside the EU; (2) the ability to make a clear and objective specification of the item; (3) the enforceability of the controls; (4) the impact on EU competitiveness; and (5) the likelihood of retaliatory responses from third countries.
  • Furthermore, it should be ensured that other members of the export controls regime, especially key industrial states and important trading partners, also will adopt the same controls as the EU. Otherwise, the competitiveness of European industry, as well as the effectiveness of export controls as such, will be severely reduced.
  • If a review of the EU regulation 2021/821 is to be initiated before the already agreed timeline, it is important that the scope of the review is built on a realistic assessment on where consensus and agreements can be reached among the Council, with its Member States, and the European Parliament. Neither the EU institutions, nor its Member States or the European industry can afford a lengthy review process which would be costly and damaging for export controls and reduce European influence in the global export controls arena.
  • It is also of vital importance that industry is involved and consulted if new export controls are to be discussed, prepared and adopted, and at an early stage in the process.

General comments

The existing legal framework for dual-use export controls is based on a clear distribution of roles between Member States and European institutions in terms of controlling exports of dual‑use goods with the following foundations and principles:

  • National sovereignty in the regulation and implementation of export controls on war materials and dual-use goods;
  • European coordination in the regulation of controls on intra-community transfers of dual-use goods in strict compliance with national prerogatives in this area;
  • National representation of Member States within multilateral control regimes.

We encourage the European Commission and EU Member States to strengthen coordination among Member States within the current regulations in force and without calling into question the existing institutional balances in this important area. It is necessary to ensure the full application of Regulation 2021/821 before considering any revision of this text. Even if the White Paper only tackles the dual-use controls, we wish to reiterate the exclusive competence of Member States in matters of export control of war materials and military items.

We also stress that a development where export controls are used to achieve policy objectives other than the instrument’s intended purpose must be avoided. Explicitly, the process by which certain products are placed under export control in the EU must not be expanded to include political considerations to restrict trade in technologies deemed to be of strategic nature for the EU or its Member States but must continue to be based solely on security considerations. Otherwise, there is a significant risk of costly, retaliatory actions and countermeasures by third countries with detrimental effects to international trade in legitimate products. In turn, this could exacerbate a politically driven regionalization process that is counterproductive for an innovative and competitive industry in Europe, and thus the long-term security interests of the EU and its Member States. Such development may also increase the administrative burden placed on European companies and unduly restrict legitimate business operations without contributing to intended security objectives.

Furthermore, it is inadvisable for lists controlling exports from the EU to go beyond corresponding lists in other important markets and trading partners in order to limit the emergence of diverging technical requirements for European exporters.

Detailed comments

1.     Ensure the continuation and the strengthening of uniform controls in the EU

The objective of coordinating control of dual-use products or technologies for which an agreement exists between EU Member States within multilateral control regimes – in particular in order to overcome Russia’s blocking within said regimes – is essential for industry in the EU. This objective should allow European manufacturers operating in several Member States to avoid being confronted with classification methodologies and control categorizations with variable geometry, and should above all allow, more broadly, to avoid unequal restrictions and secure level playing field between European industries.

The two concrete proposals formulated in paragraph 5.1 of Chapter 5 are, however, very different and need to be further specified to ensure that the process to expand EU export controls does not enable EU Member States to go beyond the implementation multilateral control regimes or overcoming blocking in said regimes. Their legal feasibility must also be verified with regard to and in compliance with the texts in force. For example, it is not clear how EU Member States would be in a position to confirm that they have taken on such commitments internationally in the absence of functional multilateral export control regimes.

In situations where decisions in export control regimes are blocked, it is reasonable to seek alternative methodologies to implement the export controls deemed necessary. Since other members of multilateral export regimes implement these on national basis a legislative proposal from the European Commission can be a viable path forward (Option 1), as it is unlikely to be able to claim that export regimes not adopted constitute an international commitment (rendering Option 2 less viable). However, it is crucial that adoption of new controls should proceed only if they have been negotiated within the Wassenaar Arrangement (WA) or alternative multilateral frameworks and have achieved a significant level of maturity and consensus, evidenced by the support of a majority of members. Furthermore, they also need to meet the normal criteria: (1) the foreign availability of the item outside the EU; (2) the ability to make a clear and objective specification of the item; (3) the enforceability of the controls; (4) the impact on EU competitiveness; and (5) the likelihood of retaliatory responses from third countries.

In addition, we assert that the second proposal (Option 2) cannot and must not trigger a modification of the existing institutional balances nor call into question the competences of the Member States in matters of dual-use goods export control enforcement.

2.     Set up a forum for political coordination on export controls

Any improvement in dialogue between Member States regarding dual-use export control is beneficial in order to provide greater consistency in Member States’ decisions, greater legal certainty as well as a better ability to anticipate state decisions for industry.

In particular, it is necessary to ensure that such possible role of the European Commission (to be specified) would not contravene the principle of sovereignty of the Member States and result in (1) increased institutional complexity and legal insecurity, (2) increased processing time for industry, (3) increased risk of blockages in the event of divergent approaches between Member States and/or the European Commission, or (4) forced harmonization of Member States’ positions on the basis of new criteria.

3.     Mechanism for better coordination of new National Control Lists

We support coordination efforts that respect the texts in force and existing institutional balances (see previous question). The operational facilitation of the use by Member States of Articles 9 and 10 of the European regulations relating to the control of dual-use goods, through concrete measures and functional tools, without it being necessary to modify the regulation, would for example be an initiative we would encourage.

4.     Bring forward the timing of the evaluation of the Dual-use Regulation

It is appropriate to ensure the full application of Regulation 2021/821 before considering any reassessment and revision of this text. A revision of Regulation 2021/821 would also risk diverting corporate resources dedicated to implementing sanctions against Russia and combating their circumvention. While welcoming the European Commission’s analysis, we do not support this proposal which could call into question the existing balances.

If a review of the EU regulation 2021/821 is to be initiated before the already agreed timeline, it is important that the scope of the review is built on a realistic assessment on where consensus and agreements can be reached among the Council, with its Member States, and the European Parliament. Neither the EU institutions, nor its Member States or the European industry can afford a lengthy review process which would be costly and damaging for export controls and reduce European influence in the global export controls arena.

Concluding remark

In general, priority should be placed on the effective implementation of existing export control regulations (full enforcement of Directive 2009/43/EC and implementation of the recent Regulation (EU) 2021/821). The European Commission has a key role to play in ensuring that those regulations are fully implemented in a consistent manner and fostering outreach to Member States and European companies with regards to implementation of good practices across the EU. The regular forum on dual-use export control that the European Commission used to hold before the COVID crisis was a relevant occasion to benchmark and improve efficiency of export control policies and compliance programmes among EU Member States. This kind of forum should be revived in a way that could trigger better alignment. It of vital importance that industry is involved and consulted if new export controls are to be discussed, prepared and adopted, and at an early stage in the process.

More broadly, in a rapidly developing geopolitical world, with a growing necessity to adapt in a timely manner to recurring and changing economic sanctions, it is important that the regulatory framework for export controls is consolidated in a longer-term perspective and offers reinforced legal certainty. Regulation 2021/821 as well as the institutional balances that underlie it cannot be modified without profoundly affecting the internal compliance programs of companies, and, as a result, progressive foreign trade restructuring. The economic model on which European companies build their long-term strategy depends on it.