US, UK Outline Effort to Update, Align Export Controls

The U.K. plans to update its export control regime to better restrict sensitive technology transfers and streamline flows of defense goods to close allies, the country said in a joint declaration with the U.S. released last week. The U.K. also said it’s planning to study how it can “respond effectively” to risks posed by outbound investments as the U.S. prepares to launch its own outbound screening mechanism (see 2305310075).

The commitments were unveiled as part of a broader document on “economic partnership” issued by the two countries, which described efforts by the U.S. and U.K. to more closely align their sanctions, export controls and investment screening efforts to allow those tools to “work in a complementary way.” The two nations said technology, economics and national security are “more deeply intertwined than ever before,” adding that they are facing “new challenges to international stability,” specifically naming China and Russia.

“We remain committed to continuing to lead in the technologies of the future and advance the closest possible coordination on our economic security and technology protection toolkits,” the countries said, “to ensure that emerging technologies work for, not against, our democracies and security.”

Part of that effort includes updating outdated regulations governing certain trade restrictions. The countries said “many of our technology protection tools were designed for a different time, a different set of threats, and a different set of technologies,” and their “current regulatory frameworks related to export controls, investment screening, sanctions, and research and development security are essential tools that should correspond to a changing geostrategic and technological environment.”

The U.K. plans to “consult” later this year on how it can update its export control regime and “consider how best to flexibly and rapidly tackle sensitive technology transfers,” the document said. The country also plans to “consult on the targeting of end uses and end-users of concern” and is planning on “examining its export control regime to streamline the flow of defense trade,” specifically mentioning the Australia-U.S.-U.K. (AUKUS) partnership (see 2305240061).

The U.S. will also review its controls as the countries look to take “concrete steps to update and more closely align our respective toolkits across all these areas to prevent the leakage of sensitive and dual-use emerging technologies, and other export-controlled commodities and technologies.” The document also mentions that the two countries will address their “approach to tackling the challenge of intangible transfers.” Some foreign exporters have urged their governments to align their approach to intangible transfers with the U.S., especially businesses in the European Union, which has been criticized for its lack of clear guidance on the topic (see 2206150038 and 2303220027).

The document acknowledges, however, that the U.K. recently “enhanced its capability in this area by expanding the scope of its Military End Use Controls (MEUC) regime.” The country is “progressing work -- due to complete by the autumn -- to understand its impact.”

While the document states that the U.S. is “working to develop a targeted set of controls on outbound investments in sensitive technologies with a core national security nexus,” the U.K. stopped short of committing to a similar regime. The countries said the U.K. plans to “complement” the U.S. effort by “swiftly engaging a range of business and financial stakeholders to develop an evidence base to assess and inform how the UK can best calibrate its actions to respond effectively to these risks and meet our shared objective.”

The two countries also committed to continue tackling Russian sanctions evasion efforts, including by penalizing third countries that help Moscow acquire controlled goods and technology. They said they plan to “enhance our ability to collect, analyze, and share information and data with a financial sanctions nexus from our financial institutions and businesses,” including to help both governments find companies “financially supporting or facilitating payments to Russia’s war machine.”

They also will “protect humanitarian activity from unintended impacts of sanctions,” applauding a December vote at the U.N. Security Council that established a humanitarian carve-out across U.N. sanctions regimes (see 2212120054). The U.K. “will take this further in its autonomous sanctions programs as appropriate,” the document said.