Regulatory Compliance updates March 2024

Dutch proposals for enhanced EU coordination on export controls

Following the EU White Paper on the coordination of export controls, the Netherlands has published a document with suggestions to enhance export controls coordination:

• member states should consult with other member states before publishing a national control list;
• member states should regularly update other member states regarding the status of national measures;
• member states should share translated versions of control lists and other materials to foster transparency;
• member states should notify other member states about enforcement measures; and
• dedicated meetings should be established to discuss strategy and there should be enhanced information sharing. Source: Link

EU agrees on sanctions on Russian assets

European Union ministers have agreed to designate more than 30 individuals and organisations held responsible for Russian dissident Alexei Navalny’s death. The news comes as the bloc’s foreign policy chief said there was ‘strong support’ for a decision to seize the revenues from Russia’s frozen assets and direct them toward military support for Ukraine.

EU Council and Parliament strike a deal to ban products made with forced labour

The Council and the European Parliament have reached a provisional deal on the regulation prohibiting in the EU market products made with forced labour. The provisional agreement reached today between the two co-legislators supports the main objective of the proposal to prohibit the placing and making available on the EU market, or the export from the EU market, of any product made using forced labour. The deal introduces significant modifications to the original proposal clarifying responsibilities of the Commission and national competent authorities in the investigation and decision-making process.

The EU reaches a provisional agreement on the Packaging and Packaging Waste Regulation

On Monday, 4 March, co-legislators reached a deal on the Packaging and Packaging Waste Regulation. This provisional political agreement will still have to go through several steps before its finalisation. Member States are expected to approve the text on 15 March, and the European Parliament will give its green light to the text during its last Plenary session, during the week of 22 April. The deal and its new requirements are therefore being clarified after further technical discussions took place in the days following the agreement.  

The Regulation also creates a number of waste prevention measures. This includes the intensely discussed binding re-use targets for different types of packaging, from transport to sales and food packaging. The text does include a series of exemptions to those targets specified in the Regulation, which will potentially impact companies’ strategies.  

In terms of waste management measures, the Regulation also lays down restriction on certain types of single-use packaging and will require economic operators to minimise the packaging that they use and place of the market (including a maximum of 50% void-space limit for transport, grouped and e-commerce packaging).

EU adopts 13th package of individual and economic sanctions

The Council adopted today - in view of the second-year mark of the beginning of Russia’s full-scale invasion of Ukraine - a thirteenth package of restrictive measures on Russia.
Designations and updates include:

• Individual listings: The Council decided to impose restrictive measures on an additional 106 individuals and 88 entities
• Import-export controls and restrictions: The Council added 27 new entities to the list of those directly supporting Russia’s military and industrial complex. They will be subject to tighter export restrictions concerning dual use goods and technologies, as well as goods and technology which might contribute to the technological enhancement of Russia’s defence and security sector. Some of these entities are located in third countries (India, Sri Lanka, China, Serbia, Kazakhstan, Thailand, and Türkiye) and have been involved in the circumvention of trade restrictions, others are Russian entities involved in the development, production and supply of electronic components for Russia’s military and industrial complex.
• Iron and steel: decision adds the United Kingdom to a list of partner countries which apply a set of restrictive measures on imports of iron and steel from Russia, and a set of import control measures that are substantially equivalent to those of the EU. Source:  Link

EU Commission launches targeted consultation to get feedback on the rules governing tax dispute resolution in the EU

On 12 March 2024, the European Commission launched a targeted consultation giving stakeholders the chance to give feedback on the functioning of the EU’s framework to help resolve cross-border tax disputes for businesses and citizens in relation to double taxation issues. Double taxation occurs when two or more countries claim the right to tax the same income or profits of a company or person. This can happen, for example, due to a mismatch in national rules or different interpretations of the transfer pricing rules in a Double Taxation Treaty (‘DTC’). This can cost businesses and citizens time and money to resolve.

The Directive on Tax Dispute Resolution Mechanisms or DRM (Directive (EU) 2017/1852) came into force on 1 July 2019 and introduced clearer rules and more stringent deadlines to resolve such cross-border tax disputes. The general objectives of the DRM are to improve the EU business environment, help boost investment and the creation of jobs, and improve the confidence of business and citizens in public administration. The DRM focusses on the main stakeholder(s) affected by double taxation situations and broadened the scope of previous tools that focused mostly on transfer pricing and the attribution of profits to permanent establishments. In accordance with Article 21 of the DRM, the Commission is now conducting a review and preparing a report on its functioning, with a focus on the Directive’s implementation in its first years. To this end, the Consultation launched on 12 March 2024 seeks to obtain stakeholders’ views. The deadline for submission to this consultation is 10 May 2024.

European Union: GUM - Guarantee Management System

GUM (GUaranty Management System) is a project included in the European Commission's Multi- annual Strategic Plan for Electronic Customs (MASP-C). The GUM project aims to ensure harmonised management, at EU level, of the various types of guarantees, excluding transit. The Guarantee Management System will enable the granting and management of the authorisations for comprehensive guarantees and the monitoring of the guarantees, except for Transit which is handled in NCTS. Guarantee management covers registration, verification of the existence and validity, monitoring of the reference amount and release of the guarantee. Also, a guarantee is a financial cover for customs duties and other chargers that are temporarily suspended and shall be required both for customs debts which have been incurred as well as those which may be incurred, unless otherwise specified. New requirements for the Guarantee Management and the resulting business have stemmed from the UCC, such as:

• an increase in the volume of cases where the guarantee management takes place: it is now required to provide the guarantee in the context of temporary storage and all special procedures, other than transit and free movement of goods.
• the possibility to have a guarantee valid in more than one Member State is introduced. This makes it possible to declare guarantees established in a MS other than the MS in which the customs declaration or declaration of temporary storage is granted;
• all communication shall be performed by electronic means, with a view to improve traceability, reliability and integrity of data, and shall allow for paper-based communication only in defined exceptional cases. Source: European Commission

EU Traders offered online access to the new central PoUS system

The main objective of the Proof of Union Status (PoUS) system is to replace the paper procedure of T2L/T2LF and shipping company’s manifest used to prove Union status of goods with electronic means. From 1 March 2024, in accordance with the provisions of the Union Customs Code (UCC), the Proof of Union Status (PoUS) system phase 1, which establishes electronic proofs in the form of T2L and T2LF data, has been launched by the Commission. The T2L and T2LF data are means to prove the Union status of goods in free circulation which have been brought from one point to another within the customs territory of the Union and temporarily leave that territory. The PoUS system allows for a harmonised and integrated process across the EU.  The PoUS system provides a central platform for the management of Economic Operators' proof requests and enables communication among the Member States' Customs Authorities and between them and Economic Operators for the purpose of submitting and processing the proofs of Union status in the form of T2L and T2LF data regulated by the UCC. The PoUS system replaces the paper T2L and T2LF proofs and offers the benefit that Economic Operators and Customs Authorities have access to the data throughout the whole process. Source: European Commission

EU Member States agree to update the EU list of non-cooperative tax jurisdictions

On 20 February 2024, Member States decided to remove four jurisdictions – the Bahamas, Belize, Seychelles, and Turks and Caicos Islands – from the EU list of non-cooperative jurisdictions for tax purposes (Annex I). The Bahamas and Turks and Caicos Islands were fully delisted because they successfully addressed deficiencies in their enforcement of economic substance requirements. Belize and Seychelles were moved to Annex II pending the results of a supplementary review by the Global Forum on Tax Transparency and Exchange of Information. Today’s update is another step ahead in the EU’s continuous effort to promote tax transparency and fair taxation globally. It confirms a general positive trend for the majority of the jurisdictions concerned, whose engagement in the process continues to produce positive results. Based on this update, Annex I of the EU list is now made up of 12 jurisdictions that have not improved their tax good governance standards or made insufficient progress in delivering on their previous commitments. Those countries are: American Samoa, Anguilla, Antigua and Barbuda, Fiji, Guam, Palau, Panama, the Russian Federation, Samoa, Trinidad and Tobago, US Virgin Islands, and Vanuatu.

Additionally, 10 jurisdictions now feature in Annex II based on commitments they have taken to improve their tax good governance. The EU will closely monitor these commitments to make sure they are followed up on. Thanks to the EU listing process, many countries have already taken concrete steps and measures to comply with tax good governance standards. Source: European Commission

The Export Control Joint Unit (ECJU) has amended the Export Control Order 2008 and the Council Regulation (EC) No 428/2009

The Export Control Joint Unit (ECJU) has amended the Export Control Order 2008 (“the 2008 Order”) and Council Regulation (EC) No 428/2009 of 5 May 2009 setting up a Community regime for the control of exports, transfer, brokering and transit of dual-use items (Recast) (EUR 2009/428). The Export Control (Amendment) Regulations 2024 (SI 2024 No. 346) will come into force on 1 April 2024. These Regulations make changes to:

• Schedule 2 (military goods, software and technology) of the 2008 Order
• Schedule 3 (dual-use goods, software and technology) of the 2008 Order
• Annex I (dual-use goods, software and technology) of the assimilated Dual-Use Regulation

European Union: Common military list of the European Union 

The list of equipment covered by the 2008/CFSP Council Common Position defining the principles of export control of military technology and equipment has been published. 
Link

European Union: Fluorinated greenhouse gases Regulation updated

The new F-gas Regulation (EU) 2024/573 was adopted on 7 February 2024, and started to apply on 11 March 2024. For the most common F-gases, hydrofluorocarbons (HFCs), the quota system generates a steeper reduction in the amounts that importers and producers may place on the EU market, and in 2050 HFCs will be phased out in the EU. The Regulation has stricter rules to prevent emissions where F-gases are being produced or used already, e.g. by including more types of equipment and gases under the scope of measures that prevent leakage during transportation, installation, servicing and disposal of equipment and products. The Regulation initiates a phased reduction in the production of HFCs within the EU. Commencing in 2025, companies will be granted production rights equivalent to 60% of their average annual production from 2011 to 2013. This rate will reduce over time: in 2036, companies will be granted 15%.

EU guidance on Russia diamond import ban

The EU has updated its FAQs to explain the traceability-based verification and certification mechanism for rough diamonds, evidential requirements on importers, the link with the Kimberley Process certification, and the optional certification mechanism between 1 March 2024 and 31 August 2024. Source: Link

EU: Implementing Regulation on the adoption of a European Common Criteria-based cybersecurity certification scheme

Regulation specifies the roles, rules and obligations, as well as the structure of the European Common Criteria-based cybersecurity certification scheme in accordance with the European cybersecurity certification framework set out in Regulation (EU) 2019/881. The European Common Criteria-based cybersecurity certification scheme (EUCC) builds on the Mutual Recognition Agreement (‘MRA’) of Information Technology Security Certificates of the Senior Officials Group Information Systems Security (‘SOG-IS’) using the Common Criteria, including the group’s procedures and documents. The European Cybersecurity Certification Group will play an important role in the maintenance of the scheme. It should, inter alia, be carried out through cooperation with the private sector, the creation of specialized subgroups and relevant preparatory work and assistance requested by the Commission. 

EU renews Belarus sanctions

The EU has prolonged its Belarus sanctions regime for 1 year until 28 February 2025 “in view of the continuing repression and drastically deteriorating human rights situation in Belarus, and the ongoing involvement of the country in Russia’s illegal military aggression against Ukraine”.

EU publishes due diligence sanctions guidance & tanker sales FAQs

The EU has published due diligence guidance for EU operators to identify sanctions circumvention risks and FAQs on the notification and authorization of tanker sales, explaining the new requirements imposed upon the vendors of oil tankers. Link – FAQ, Link - guidelines

France amends export controls on dual-use goods & quantum technology

As of 1 March 2024, a licence will be required to export technologies relating to quantum computers, and advanced electronic components such as semiconductors, from France to non-EU countries. These new measures come a few months after the Netherlands and Spain introduced similar measures, and in the context of the adoption by the EU of its Economic Security Strategy, which identified four technologies as critical, including advanced semiconductors and quantum technology.

Germany issues general authorization for provision of professional services to Russian subsidiaries of EU companies

BAFA in Germany has issued a national general authorization permitting German companies to continue providing accounting, auditing, and other professional services to Russian subsidiaries of companies based in the EU or partner countries until 31 March 2025.

Latvia bans import of Russian agricultural and animal feed products

The Latvian Saeima parliament has adopted amendments to the Law on Agriculture and Rural Development, prohibiting the import of agricultural and animal feed products from Russia and Belarus for use in Latvia.

Swiss AG considering prosecution of commodity trading companies for circumventing Russia sanctions

The Swiss State Secretariat for Economic Affairs (SECO) has reportedly been investigating 3 commodity trading companies for possible violations of Russia sanctions by conducting Russia-related business through foreign subsidiaries. According to the Swiss public radio, SRF, SECO has referred 2 of the companies to the Office of the Attorney General (OAG) of Switzerland to consider prosecution.  The OAG must now decide whether to initiative formal proceedings.

Switzerland extends temporary humanitarian exemption by six months

On 21 February, the Federal Council decided to extend by six months the temporary humanitarian exemption to the sanctions regime against Syria that was introduced after the earthquake that struck the country in February 2023. The exemption now applies until 12 September 2024.

Switzerland implements the EU’s 13th package of sanctions

The Federal Department of Economic Affairs, Education and Research (EAER), which is responsible for sanctions, decided on 29 February to impose further sanctions against Russia. Switzerland is thus joining the 13th sanctions package of the European Union (EU), adopted in response to Russia's ongoing military aggression against Ukraine over the past two years. The measures will enter into force at 6pm on 1 March.

• Switzerland’s State Secretariat for Economic Affairs (SECO) updated its interpretation aid for sanction measures, adding guidance on:
• the normal administrative actions that are exempt from asset freezes;
• whether financial institutions should consult with SECO before releasing frozen assets;
• no evidence is required in the event of import from the EEA or the UK of iron and steel products that have already been in Switzerland and are being re-imported unchanged;
• evidential requirements under the diamond import ban; and
• the requirement to include in contracts an obligation to prevent re-export to Russia, providing a template.

United Kingdom: Notice of introduction of new trade sanctions against Russia on the import of third country processed diamonds of Russian origin, and the publication of guidance for businesses

The UK has introduced additional trade sanctions against Russia. A summary of the change is provided below.

• Imports from Russia

The ban on imports of goods of Russian origin have been extended to cover additional commodity codes within Chapter 7102:

• 7102100000 – unsorted diamonds
• ex 7102310000 – non-industrial diamonds, simply sawn, cleaved or bruted
• 7102390000 - non-industrial diamonds, other than unworked or simply sawn, cleaved or bruted

Pre-lodged declarations made before 1 March 2024 that arrive after this date will be rejected unless the declaration is amended to include the correct document code. These document codes will be live in HMRC systems on 1 March 2024.

UK Law Society updates sanctions guidance

The guide to the UK sanctions regime sets out information on the criminal offences under the regime, how to carry out a risk assessment, the sanctions lists and your reporting obligations. This guide covers:

• the UK sanctions regime
• criminal offences under the regime
• doing a sanctions risk assessment
• checking clients against sanctions lists
• high-risk jurisdiction lists
• the 'control' test
• acting for a client on the sanctions list
• OFSI
• OTSI
• sanctions on Russia
• resources

United Kingdom: General Trade Licence for sanctioned iron and steel

The UK has amended the General Trade Licence for sanctioned iron and steel to permit the import of Russian iron and steel products manufactured or produced before 23 June 2023.
Link

United Kingdom: Registration for new Trade Remedies measure

Trade Remedies Authority have introduced registration as part of a Trade Remedies investigation on the import of excavators weighing 11,000 tonnes or more from China. The measure applies to the following commodity code as of 7 March 2024:  8429521000. Imports of excavators under 11,000 tonnes from China are exempt if an invoice declaration is provided. This measure has now been updated in legislation as The Official Controls (Import of High-Risk Food and Feed of Non-Animal Origin) (Amendment of Commission Implementing Regulation (EU) 2019/1793) (England) Regulations 2024. These measures may be more commonly known as CHED-D.

UK publishes sanctions and trade guidance

OFSI has published a factsheet on maritime shipping, providing a high level summary of OFSI’s maritime shipping guidance, common evasion practices, and explaining that financial services including insurance may be prohibited. The UK has published Iran trade and export guidance, encouraging sanctions-compliant trade with Iran.

UK parliamentary committees consider Russia diamond ban, oil price cap & circumvention

The UK Commons Delegated Legislation Committee and the Lords Grand Committee have debated the Russia Regulations 2024 which brought into effect the prohibition on Russia diamonds equal to or larger than 1 carat in weight. Source: Link