The United States and the European Union are two of the world’s largest trading partners. In 2021, 15.5% of all U.S. exports (by dollar value) went to EU member countries, while 17.3% of U.S. imports arrived from the EU, according to the U.S. Office of Technology Evaluation.

With so much material moving back and forth, it may come as a surprise that there isn’t a full-fledged bilateral trade agreement between the two.

Source: Worldtopexports.com

Both the U.S. and EU export control systems are guided by four multilateral export control regimes that establish common control lists and practices for governments around the world.  They are:

Disparate and sometimes surprising combinations of governments have worked together on these common rules because it makes their national policies more effective—both for exporters that follow them and the government agencies that enforce them.

As a result, the EU rules – now known as Regulation 2021/821 – have much in common with the U.S. Export Administration Regulations, or the EAR.

  • Both regulations include dual-use items—meaning they apply to goods that can have both civil and military applications.
  • Both include control lists that are organized by categories and individual control entries that generally correspond when present on both lists. For example, the top US Export Control Classification Number (ECCN) by shipment count to the EU is 5A002 for information security commodities. The EU list contains an equivalent entry under the same 5A002 designation.
  • Both establish basic requirements for when a license – or export authorization in EU parlance – is required.
  • Both have a similar approach to items moving within their own boundaries. Moving items across state lines in the United States isn’t considered exporting, and with some limited exceptions, goods can move just as freely among EU members.
  • Both systems identify circumstances in which export license requirements might be waived. Part 740 of the EAR enumerates 18 license exceptions. The EU has eight General Export Authorizations (EUGEAs) that allow export to specified destinations under certain conditions without a license.

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The big differences

Not surprisingly, there are significant differences as well.

ITAR not included: The EU doesn’t have anything that compares to the U.S. International Traffic in Arms Regulations (ITAR), which regulates exports of defense articles and defense services, or to the EAR’s 600 series military item controls for that matter. That’s because the EU rules are limited to areas of “community competence” agreed upon by member nations—in the case of export controls, that means dual-use, not military, items. While the EU’s Common Position 2008/944/CFSP outlines how member nations should approach controls for military technology and equipment, decision-making and administrative authority rests with each member state.

No central administrative authority: While the EU establishes dual-use export control regulations for its member countries, it doesn’t have its own bureaucracy like the U.S. Bureau of Industry and Security to manage the export authorization process. The EU itself does not issue export licenses. That work is left to the government of each member nation, such as Germany’s Federal Office for Economic Affairs and Export Control (Bundesamt für Wirtschaft und Ausfuhrkontrolle). The EU also does not enforce its own rules. Once again, this aspect of implementation is the responsibility of national authorities.

Extraterritoriality: U.S. regulations routinely apply to items after they’ve been exported from the United States, and in many cases to items that have never touched U.S. soil. For example, foreign-made products or software that contain U.S. components or are produced with the benefit of technology or software originating in the United States may be subject to U.S. export license requirements [see related post: Subject to the EAR – What It Means and How to Approach It]. And through the concepts of reexports and in-country transfers, which are embedded throughout the EAR, the United States claims jurisdiction over movements outside the U.S. of many items with some connection to the U.S.

Countries don’t like it when other nations try to legislate what happens within their borders, and the EU and its member states generally don’t formally accept this kind of U.S. export control extraterritoriality, though they often abide by it in practice.

By contrast, the EU regulations rarely apply to reexports and transfers outside the Union.

Brokering: If a person or entity in the EU negotiates a deal from a non-EU nation to another non-EU nation involving dual-use items, that transaction may come under EU regulations on brokering services. This mechanism applies when the dual-use items may be intended for weapons of mass destruction or other military end-uses. In the United States, brokering regulations only exist for items subject to the ITAR and is handled differently under that regulation.

Philosophical difference over control lists: The EU Dual-Use Export Control List in Annex I to Regulation 2021/821 is based almost entirely on the four multilateral control regimes, though national authorities may impose controls on additional items. Its U.S. counterpart, the Commerce Control List (CCL), is packed with items not addressed under the multilateral associations. Many of the items unilaterally controlled by the US BIS are controlled at a low level – think ECCN 9A991 for many civil aircraft parts – but others are highly controlled. For example, the EU list doesn’t have anything comparable to the CCL’s 600 series (military items that were once subject to the ITAR and have been moved to the EAR) [see related post: Exporting 600 Series Items Under License Exceptions]. These would instead typically be addressed under the military export controls of individual member states.

A simplified way to look at it is that the EU dual-use list is a subset of the U.S. CCL. If an item is on the EU’s list, it’s probably also on the U.S. list. But if it’s not on the EU list, there’s still a chance you’ll find it on the CCL.

EAR99 and NLR: In the EU, if an item is contained in Annex I, an export authorization is required. And if the item isn’t on the list, then it’s generally not controlled. (The EU regulation does provide that even non-listed items require a license if they are intended for use in WMD programs or human rights violations—commonly called “catch-all” controls.)

The U.S. system isn’t so clear: Just because something isn’t on the CCL doesn’t mean it’s not controlled. It could still be classified as EAR99 and may require a license based on where, to whom or for what purpose it’s being shipped. And an item that’s on the CCL might be authorized for export as No License Required (NLR) – no license or even license exception necessary – based on the same factors.

Are changes coming?

In general, exporters who have experience in both systems tell me they find the EU system easier to navigate. The two systems are largely aligned, and the most troublesome differences are those in which the EU regime allows activities that the U.S. doesn’t—such as the extraterritorial issue of reexports and transfers.

But Russia is one of the participants in the multilateral regimes, and its rising belligerence toward the Western democracies has been driving the U.S., EU and other governments to consider the limits of these now decades old post-Cold War mechanisms. There is a rising discussion on both sides of the Atlantic whether it’s time to develop a new “plurilateral” export control group. In fact, with the extraordinary level of coordination among like-minded governments in imposing sanctions on Russia beginning in 2022, a new era may have already arrived.

Contact the Export Compliance Training Institute

Do you have questions about the differences between U.S. Export Controls and European Export Controls? Visit www.learnexportcompliance.com to learn about our company, our faculty, our staff and our esteemed Export Compliance Professional (ECoP®) certification program. To find upcoming e-seminarslive seminars in the U.S., Europe, and elsewhere, and live webinars and browse our catalog of 80-plus on-demand webinarsvisit our ECTI Academy. You can also call the Export Compliance Training Institute at 540-433-3977 for more information.

Scott Gearity is President of ECTI, Inc.

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