Managing Export Controls And Sanctions Post-Brexit

Author:Ms Stacey Winters and Kentaro Ide
Profession:Deloitte
 
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In the wake of the results of the UK's June 23 referendum on EU membership , businesses must assess the impacts of "Brexit" on their operations and prepare to manage the resulting risks. Without a concrete timeline and an understanding of the new regulatory framework, preparing for what may come is incredibly difficult and the country is currently in a state of flux. The well-known British wartime slogan "Keep Calm and Carry On" has come into its own once again at this uncertain time.

Export controls and sanctions impact

The UK's export control and sanctions regime was built on an EU system and governed by EU regulations. The UK will need to develop new legislation to govern economic sanctions and dual-use exports, but there could also be an impact on the existing national military control regime. Brexit removes Europe's largest nuclear-armed military power from the EU's Common Security and Defense Policy, drastically limiting the EU's defense influence and resources.

While the UK remains in NATO, and with structural changes in the EU potentially at least two years away, Brexit creates uncertainty and presents a number of challenges to companies who operate their supply chain across the EU and the UK. Such challenges will include:

Export licence responsibilities: Changes to the existing definition of "exporter" were currently underway in the UK with the implementation of the European Unions Customs Code (UCC). How the UK will react to UCC is now unknown. For companies operating distribution models from the UK and making exports under licences registered in other Member States, the licensing structure will have to be redesigned, requiring companies now to operate under UK licences. Similarly, for companies using UK export licences to export from other EU locations, export licence responsibilities will likely shift to those EU locations, requiring further export licences. Export licensing requirements for exports/transfers to the EU: The UK will have to re-design its approach to movements of goods and technology to the EU, impacting all existing licences. The UK will need to remain competitively attractive to European exporters and consider introducing licences (e.g., OGELs) that mimic the existing arrangements under the EU General Export Authorisations. At the same time, the UK could also use its ability to make decisions about its existing control regime (that were previously...

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