EU Industry Calls for More Export Control Harmonization, Standard Licensing Times

EU industry gave a wide range of feedback on the European Commission’s January white paper on export controls, saying they support the idea of a new EU-wide forum to coordinate on export restrictions and urged the commission to do more to make sure new controls are introduced evenly across all member states. Others said the EU should set binding deadlines for licensing decisions, fix the bloc’s “vague” export definition for intangible technology transfers, and make it easier for companies to navigate EU member states’ increasingly conflicting export rules.

The commission received feedback from more than 20 European trade groups and companies in response to the white paper, which analyzed the current EU export control system and included several proposals, among them “uniform” controls on items that haven’t been adopted by multilateral export control regimes (see 2309270015).

Several trade groups urged the commission to find a solution to the stalled Wassenaar Arrangement, a consensus-based multilateral export control regime that has been hampered by Russia’s membership. The Confederation of Finnish Industries, the largest employers' association in Finland, said it has been “difficult to add” new items to the Wassenaar list over the past few years, which has “led to an increase in unilateral, non-harmonized decisions also at the EU.”

The Germany-based Machinery and Equipment Manufacturers Association, also known as VDMA, said Wassenaar members should agree to implement export control proposals discussed at the multilateral body even if Russia votes to block them. The Technology Industries of Sweden and the Swedish Security and Defense Industry Association suggested a different approach, saying the EU may need to create a new agreement to control dual-use technologies across member states.

It’s “essential” that the EU “overcome” Russia’s blocking of new Wassenaar proposals, the two groups said. This will help European manufacturers operating in multiple European countries “avoid being confronted with classification methodologies and control categorizations with variable geometry” and “unequal restrictions.”

The American Chamber of Commerce to the EU also said managing varying controls across member states can be challenging. It’s become “increasingly complex for EU exporters to navigate conflicting national rules,” the chamber said, especially smaller companies that can’t spend as much on export compliance.

Several commenters supported the idea proposed by the commission for a new EU forum for “political coordination” of export controls. Digital Europe, which represents the European digital technology industry, said the forum should include industry members and should “actively solicit contributions from the private sector” on potential restrictions. It should also create dedicated expert groups to oversee talks on individual critical technologies, Digital Europe said, and should coordinate with EU allies to “avoid unilateral restrictions.”

The Technology Industries of Sweden and the Swedish Security and Defense Industry Association said this could give the EU better legal footing on its export control decisions and would allow companies to better “anticipate” new restrictions. “Any improvement in dialogue between Member States regarding dual-use export control is beneficial,” the groups said.

EU companies would also benefit from similar timelines for export licensing decisions across all member states, said Spectaris, a German technology industry group. “Binding timeframes” in which government agencies must make licensing decisions would help prevent “competitive disadvantages for companies in member states with longer processing times and promotes efficient market operations,” Spectaris said.

The EU should also “standardize” the types of documents companies need to submit and procedures they must go through when applying for a license. “Standardized application forms and processing procedures would significantly reduce the administrative burden and increase transparency across member states,” the group said.

Several groups specifically criticized how the EU treats exports of intangible technology transfers. Digital Europe, which previously called on the EU to modernize its export rules surrounding cloud services and data transfers (see 2206150038), said the EU is preparing new guidance to address the issue.

That guidance could help clarify the bloc’s current “export” definition, which is “ambiguous” and “has led to varied interpretations and regulations for such transfers both within the EU and in its dealings with global partners, complicating the export process and increasing costs for EU exporters,” the group said. “Upcoming Commission guidelines should address this, including by clarifying that encrypted technology exports happen only after decryption outside the EU.”

The American Chamber of Commerce to the EU also urged the commission to issue guidance on its rules for intangible transfers, which are “at odds with the treatment of such transfers in other jurisdictions,” including the U.S. and the U.K. The chamber said the rules require EU exporters to spend time and money applying for export licenses that other countries don’t require.

The European Association of Automotive Suppliers added that the “lack of clarity regarding intangible technology and software is a clear example of the pressing need for harmonization” of export controls across member states. “Urgent clarification is required regarding the storage of controlled technology on third-country servers, administrative access by third-country [information technology] support or providers, and the provision of software as a service to third countries,” the association said.