Processing Times for Export Licenses

In a minor interpellation (Bundestag Document 20/5135), the CDU/CSU parliamentary group drew attention to the persistently long processing times for export applications at the Federal Office for Economic Affairs and Export Control (BAFA). The federal government confirmed that processing times have become significantly longer due to the assumption of new tasks resulting from Russia’s war of aggression against Ukraine, as well as the implementation of the energy cost containment program. Despite an increase of 23 staff positions at the BAFA, the situation remains strained, with processing times that in many cases exceed half a year and, in some instances, even exceed one year.

These delays pose significant competitive disadvantages for German export companies and undermine Germany’s appeal as a business location. While the current export licensing practice is perceived as effective, it is not seen as efficient or transparent. This leads to a lack of planning certainty for companies and their foreign partners, which puts Germany at a considerable disadvantage as a business location.

Since the situation had not improved significantly, another minor inquiry was submitted on November 14, 2023 (Bundestag Document 20/9288).

You can find the answer here

As announced in the joint press release issued by the BMWK and BAFA on December 29, 2023, additional measures will be introduced to accelerate and streamline procedures in the area of export controls. In addition to strengthening BAFA’s decision-making authority, licensing procedures will be further streamlined by amending existing general licenses and introducing new ones. This second package of measures complements the procedural improvements that already took effect on September 1, 2023.

These measures include, above all, a revision of the existing national general authorizations and the announcement of three new general authorizations. These changes, as well as the three new general authorizations, will take effect on January 8, 2024.

PUBLICATION OF GENERAL LICENSES TO STRENGTHEN AND ACCELERATE EXPORT CONTROLS

GENERAL PREAMBLE

General licenses (AGGs) are a special type of export license. They have the same effect as all other export licenses, but do not require an application. Rather, general licenses are issued ex officio, and as a result, all exports that meet the requirements of the respective general license are automatically authorized. General authorizations therefore offer exporters the advantage of immediate delivery and planning certainty for the duration of the respective general authorization’s validity.

In order to take full advantage of these benefits in the interest of all parties involved, economic operators are asked to review any authorization applications they have already submitted to determine whether they now qualify under the General Authorizations and to cancel the corresponding individual applications, citing the applicable General Authorization.

DEVELOPMENTS IN THE FIELD OF MILITARY EQUIPMENT

The existing general authorizations have been revised, and a new general authorization has been announced.

OVERVIEW:

New General Authorization No. 35:

Announcement of a new AGG regarding the supply of spare parts worth up to 25 percent of the value of the main item—for the export or transfer of which a BAFA license has been granted—to certain countries.

Substantive amendments and additions to the existing AGG No. 19 (expansion of the scope of goods to include military land vehicles in certain categories, as well as expansion of the list of countries), AGG No. 23 (waiver of the requirement for an export license for re-exports and re-transfers to certain countries), AGG No. 25 (expansion of case groups for particularly trustworthy recipients), AGG No. 26 (expansion of eligible case groups), and AGG No. 33 (expansion of the list of countries to include Singapore).

IN DETAIL:

The New General Authorization No. 35 (Spare Parts Supplies in the Defense Sector)

General Authorization No. 35 facilitates the export and transfer of spare parts listed in Part I, Section A of the Export List (Annex AL to the AWV) that are necessary for maintaining or restoring the operational readiness and functionality of the main item, with the exception of goods under items 0001, 0002, 0003a, 00021b, and 00022 (however, application technology is permitted). The prerequisite is that

the initial export or shipment of the main item for which the spare parts are intended was approved by BAFA,

the export or transfer authorization for the principal item was granted to the holder of this General Authorization or to a company within the same corporate group, or the export or transfer of the principal item took place pursuant to the lawful use of a General Authorization,

the export or transfer of the spare parts is made to the recipients and end-users specified in the authorization, or to the same recipients and end-users to whom the main item was originally exported or transferred under the General Authorization, and

the value of the replacement parts does not exceed 25 percent of the value of the main item. Section 2(23) of the Foreign Trade Act (AWG) applies when calculating the value of the goods.

General Authorization No. 35 may be used for up to five years after the date the authorization for the export of the principal item was granted or—if a General Authorization was used—within five years after the export of the principal item, provided that the authorization for the export of the principal item has not been revoked or withdrawn.

This provision applies to transfers and exports of spare parts to recipients and end-users in all countries, except for countries subject to an arms embargo as defined in § 74(1) of the Arms Export Control Act (AWV), as well as Afghanistan, Armenia, Azerbaijan, Burkina Faso, China (including the Hong Kong Special Administrative Region), Gabon, Yemen, Liberia, Mali, Niger, Saudi Arabia, and Turkey.

Exports and transfers carried out under General Authorization No. 35 must be reported to the BAFA by the exporter or transferee every six months using the ELAN-K2 export system.

The General Authorization will take effect on January 8, 2024, and will remain in effect until March 31, 2025.

Amendment to General Authorization No. 19 (Land Vehicles for Military Purposes)

As announced on January 5, 2024, a new exclusion clause has been added to Section II, Number 3.2, stipulating that General Authorization No. 19 does not apply to goods subject to the War Weapons Control Act (KrWaffKontrG) and the War Weapons List issued pursuant thereto.

In Section II, Number 4, the list of authorized goods is expanded to include goods listed under Number 0006a of Part I, Section A of the Export List (Annex to the AWV) for exports and transfers to the destinations specified in Section II, Numbers 5.1 through 5.3.

In light of recent developments, Gabon, Mali, and Niger are being removed from the list of eligible destinations in Section II, paragraphs 5.4 and 5.5.

In Section II, paragraph 5.2, the list of approved destinations is expanded to include Albania, North Macedonia, and Montenegro.

The General Authorization will take effect on January 8, 2024, and will remain in effect until March 31, 2024. The previous version of General Authorization No. 19 will be repealed effective January 8, 2024.

Amendment to General Authorization No. 23 (Re-export)

In light of recent developments, as announced on January 5, 2024, in Section II, Item 5, Gabon, Mali, and Niger have been removed from the list of eligible destinations.

In addition, Section II, Number 4.1 d includes an additional category of cases, under which the return or re-export to the original country of origin following maintenance, repair, presentation (exhibition and demonstration), testing, trial, or evaluation within the country is granted preferential treatment. This includes the re-export of goods of the same nature and quantity in exchange for the goods imported into or brought into the country for the aforementioned reasons. Notwithstanding case groups 4.1(a) through 4.1(c), the application of case group 4.1(d) does not require a prior export or transfer approved by the BAFA.

Section II, Number 5 clarifies that the category of cases referred to in Section II, Number 4.1(d) applies only to transfers into the customs territory of the European Union (Section 2(25) of the AWG) and to exports to NATO member states—with the exception of Turkey—as well as to Australia, Japan, Liechtenstein, New Zealand, the Republic of Korea, Switzerland, and Singapore.

The General Authorization will take effect on January 8, 2024, and will remain in effect until March 31, 2024. The previous version of General Authorization No. 23 will be repealed effective January 8, 2024.

Amendments to General Authorization No. 25 (Special Categories)

Pursuant to the announcement dated January 5, 2024, an additional category has been added to Section II, Number 4.17, under which exports and transfers to government agencies of the Federal Republic of Germany abroad are eligible for preferential treatment, provided that, at the time of export or transfer, a contract for the delivery of the goods is in place with the relevant government agency.

In addition, Section II, Number 4.18 includes a further category of cases, under which exports and transfers carried out on behalf of or at the direction of the Federal Foreign Office of the Federal Republic of Germany for the purpose of performing official duties or for official use are granted preferential treatment.

In addition, Section II, paragraph 4.19, includes a provision under which exports and transfers carried out as part of a capacity-building initiative by the Federal Government are given preferential treatment, provided that the export or transfer is based on a contract in effect at the time of the export or transfer in connection with this modernization initiative and the connection between the export or transfer and the modernization initiative has been confirmed by the competent federal ministry.

In addition, Section II, Number 4.20 includes a further category of cases, under which exports and transfers to an official United Nations peacekeeping mission are granted preferential treatment, provided that the export or transfer is based on a contract or order in effect at the time of the export or transfer that designates that United Nations peacekeeping mission as the recipient.

In light of recent developments, Gabon, Mali, and Niger will be removed from the list of eligible destinations in Section II, Number 5.3.

The General Authorization will take effect on January 8, 2024, and will remain in effect until March 31, 2024. The previous version of General Authorization No. 25 will be repealed effective January 8, 2024.

Amendments to General Authorization No. 26 (Armed Forces)

With the announcement dated January 5, 2024, a ground for exclusion is added to Section II, Number 3.2, according to which the use of General Authorization No. 26 is not permitted if goods with IT security functions within the meaning of § 51 of the VS Directive (VSA) are to be exported, which, in accordance with the VSA, have been approved by the Federal Office for Information Security (BSI) or for which an application for approval has been filed for use in connection with information classified as “VS – FOR OFFICIAL USE ONLY” or higher under Section 4(2) of the Security Clearance Act (SÜG).

In Section II, paragraph 4.1(d), an additional category is added, according to which exports to the armed forces of a Member State of the European Union, a NATO member state (with the exception of Turkey), or to the armed forces of Australia, Japan, Liechtenstein, New Zealand, or Switzerland, for the performance of official duties or for their own official use outside their own national territory, are granted preferential treatment.

Section II, paragraph 5.2 clarifies that General Authorization No. 26, insofar as it applies to the new category in Section II, item 4.1(d), applies to exports or transfers to all countries except those listed in § 74(1) of the AWV, as well as Afghanistan, Egypt, Ethiopia, Armenia, Azerbaijan, Burkina Faso, China (including the Hong Kong Special Administrative Region), Côte d’Ivoire, Eritrea, Gabon, Yemen, Liberia, Mali, Morocco, Mozambique, Niger, Rwanda, Saudi Arabia, Thailand, Turkey, Uzbekistan, and the United Arab Emirates.

The General Authorization will take effect on January 8, 2024, and will remain in effect until March 31, 2024. The previous version of General Authorization No. 26 will be repealed effective January 8, 2024.

Amendments to General Authorization No. 33 (Export and Transfer of Other Military Goods)

With the announcement dated January 5, 2024, a ground for exclusion is added to Section II, Number 3.3, according to which the use of General Authorization No. 33 is not permitted if goods with IT security functions within the meaning of § 51 of the VS Directive (VSA) are to be exported, which, in accordance with the VSA, have been approved by the Federal Office for Information Security (BSI) or for which an approval has been applied for, for use in connection with information classified as “VS – FOR OFFICIAL USE ONLY” or higher under Section 4(2) of the Security Clearance Act (SÜG).

In Section II, paragraph 5.3, Singapore is added to the list of approved destinations.

In addition, a definition of the application technology was included in the notes.

The General Authorization will take effect on January 8, 2024, and will remain in effect until March 31, 2024. The previous version of General Authorization No. 33 will be repealed effective January 8, 2024.

DEVELOPMENTS IN THE FIELD OF DUAL-USE GOODS

The existing general authorizations have been revised, and two new general authorizations have been announced.

OVERVIEW:

New General Authorization No. 40:

Announcement of a new General Authorization for the export of certain chemicals to India (based on the existing European Union General Authorization No. EU006)

New General Authorization No. 41:

Announcement of a new AGG for the supply of spare parts valued at up to 25 percent of the value of the main item—for which an export license has been issued by the BAFA or the export is authorized under a general European Union export authorization—to all countries except those subject to an arms embargo

Substantive amendments and additions to the existing AGG No. 13 (new categories for particularly trustworthy recipients, exports of dental milling machines for dental purposes to certain countries), AGG No. 14 (expansion to include continuous mixers, with the exception of explosion-proof machines), AGG No. 17 (expansion to include capacitors), and AGG No. 37 (expansion of the list of countries to include Brazil)

IN DETAIL:

The new General Authorization No. 40 (for the export of certain chemicals to India)

General Authorization No. 40 facilitates the export of

Items listed in entry 1 through 3, inclusive, entry 5 through 22, inclusive, entry 24 through 28, inclusive, and entry 30 through 65, inclusive, of entry 1C350 in Annex I to the EU Regulation

Items listed under 1C450a, items 4 through 7, inclusive, of Annex I to the EU Regulation

Items listed in entry 1C450b, items 1 through 6, inclusive, and item 8 of Annex I to the EU Regulation

to recipients and end users in India.

There is no requirement to report the use of the General Authorization.

The General Authorization will take effect on January 8, 2024, and will remain in effect until March 31, 2025.

The New General Authorization No. 41 (Spare Parts Deliveries in the Dual-Use Sector)

General Authorization No. 41 facilitates the export of spare parts listed in Annex I of the EU Dual-Use Regulation that are necessary for maintaining or restoring the operational readiness and functionality of the main item, with the exception of the items listed in Annex II, Section I, of the EU Regulation, as well as items listed in Class E of each category in Annex I. This is subject to the condition that

the original export of the main item for which the spare parts are intended was authorized by BAFA or by way of a general authorization issued by the European Union,

the export authorization for the principal item was granted to the holder of this General Authorization or to a company within the same corporate group, or the export of the principal item took place under the lawful use of a General Authorization,

the export of the spare parts is made to the recipients and end-users specified in the authorization, or to the same recipients and end-users to whom the main item was originally exported under the General Authorization, and

the value of the replacement parts does not exceed 25 percent of the value of the main item. Section 2(23) of the Foreign Trade Act (AWG) applies when calculating the value of the goods.

General Authorization No. 41 may be used for up to five years after the date the authorization for the export of the principal item was granted or—if a General Authorization was used—within five years after the export of the principal item, provided that the authorization for the export of the principal item has not been revoked or withdrawn.

Exports of spare parts to recipients and end-users in all countries are authorized, with the exception of countries subject to an arms embargo as defined in Article 2(19) of the EU Dual-Use Regulation. No notification regarding the use of the General Authorization is required.

The General Authorization will take effect on January 8, 2024, and will remain in effect until March 31, 2025.

Amendments to General Authorization No. 13 (FAG)

Pursuant to the announcement dated January 5, 2024, an additional category has been added to Section II, Number 4.22, under which exports to a government agency of the Federal Republic of Germany located abroad are eligible for preferential treatment, provided that a contract for the delivery of the goods with that government agency is in place at the time of export.

In addition, Section II, Number 4.23 includes a further category of cases, under which exports carried out on behalf of or at the direction of the Federal Foreign Office of the Federal Republic of Germany for the purpose of performing official duties or for official use are eligible for preferential treatment.

Section II, paragraph 4.24, includes a provision under which exports carried out as part of a capacity-building initiative by the Federal Government are granted preferential treatment, provided that the export is based on a contract in effect at the time of export in connection with this capacity-building initiative and that the connection has been confirmed by the responsible federal ministry.

In addition, a provision is included in Section II, paragraph 4.25, that facilitates exports to official United Nations peacekeeping missions, provided that the export is based on a contract or order in effect at the time of export that names the United Nations peacekeeping mission as the recipient.

In addition, Section II, item 4.26, an additional category is included, according to which exports to the armed forces of a member state of the European Union, a member state of NATO (with the exception of Turkey), or to the armed forces of Australia, Japan, Liechtenstein, New Zealand, or Switzerland, for the performance of official duties or for their own official use outside their own national territory, are eligible for preferential treatment.

Furthermore, a case group is added in Section II, item 4.27, to grant preferential treatment to exports of specialized machine tools for the milling of dental prostheses covered by subitem 2B201a and to software associated with the aforementioned machine tools covered by item 2D002 of Annex I to the EU Regulation, provided they are intended for dental applications.

The General Authorization will take effect on January 8, 2024, and will remain in effect until March 31, 2024. The previous version of General Authorization No. 13 will be repealed effective January 8, 2024.

Amendment to General Authorization No. 14 (Heat Exchangers, Valves, Pumps, and Flow-Through Mixers)

As announced on January 5, 2024, Section II, Item 4 expands the list of authorized goods to include continuous mixers (Item 1B118 of Annex I to Regulation (EU) 2021/821, with the exception of explosion-proof machines).

The General Authorization will take effect on January 8, 2024, and will remain in effect until March 31, 2024. The previous version of General Authorization No. 14 will be repealed effective January 8, 2024.

Amendments to General Authorization No. 17 (Frequency Converters and Capacitors)

Pursuant to the announcement dated January 5, 2024, Section II, Item 4 expands the list of authorized goods to include goods under entries 3A001e2 and 3A201a of Annex I to Regulation (EU) 2021/821.

The General Authorization will take effect on January 8, 2024, and will remain in effect until March 31, 2024. The previous version of General Authorization No. 17 will be repealed effective January 8, 2024.

Amendment to General Authorization No. 37 (for the export of dual-use goods to certain countries)

Effective as of the announcement dated January 5, 2024, Section II, Item 5 expands the list of eligible destinations to include Brazil.

The General Authorization will take effect on January 8, 2024, and will remain in effect until March 31, 2024. The previous version of General Authorization No. 37 will be repealed effective January 8, 2024.

Press Release, Berlin, August 31, 2023
SPECTARIS Welcomes Accelerated Approval Procedures for Export Controls

Three-quarters of SPECTARIS companies have lost contracts due to excessively long wait times / However, new measures by the Federal Office of Economics and Export Control are unlikely to be sufficient when it comes to third countries such as China

Starting September 1, 2023, the Federal Office for Economic Affairs and Export Control (BAFA) will introduce new measures to strengthen and expedite administrative processes in the area of export control. The German industry association SPECTARIS welcomes this approach but also sees further room for improvement: “It is commendable that these urgently needed changes are finally taking effect. SPECTARIS member companies have suffered considerably from the long processing times at BAFA,” emphasizes SPECTARIS Managing Director Jörg Mayer.

A survey of SPECTARIS members conducted in July and August 2023 highlights the problem areas and the urgent need for action. According to the feedback, the average processing times for export applications from SPECTARIS sectors at the BAFA were most recently six to eight months on average. Some companies have been waiting over a year for approvals. This has a significant negative impact on the companies’ competitiveness. In the industry-wide survey, three-quarters of the participants stated that they had already lost orders due to the long processing times. In total, the order volume of the orders pending with the BAFA amounts to a good 150 million euros among the survey participants alone.

A key aspect of the announced changes is the accelerated approval process for selected partner countries. In the future, shipments to certain EU or NATO partners and close partner countries will be facilitated by general licenses, which will significantly reduce the administrative burden previously associated with case-by-case decisions. For other third countries, however, detailed case-by-case reviews will remain in place. It remains to be seen whether the new measures at BAFA will also speed up decisions regarding so-called “critical countries.” Especially with major trading partners such as China or Israel, political decision-making processes remain lengthy even after the adjustments and pose a risk to companies’ export business.

Starting September 1, 2023, additional important measures will also be implemented. These include extending the validity period of zero-value notices to two years and extending the validity period of information regarding the list of goods to the same period. Furthermore, the validity period of the declaration by the person responsible for the export (AV 1) will also be extended to two years.

SPECTARIS continues to view with concern the lifting of the moratorium on individually attributable services in the areas of arms control, export control, and investment screening, which is expected to result in the introduction of fees starting in 2024. This decision stands in stark contrast to the federal government’s announced moratorium on new burdens, which was intended to spare the German economy any disproportionate additional bureaucratic burdens.

SPECTARIS has set up a special webpage that provides updates and detailed information on this topic.

SPECTARIS is the German Industry Association for Optics, Photonics, Analytical and Medical Technology, headquartered in Berlin. The association represents 400 German companies, most of which are small and medium-sized enterprises. In 2022, the consumer optics (optometry), photonics, medical technology, and analytical, biotechnology, and laboratory technology sectors generated total revenue of approximately 84 billion euros and employed about 342,000 people.