Summary of an article in a UK Ministry of Defence magazine. An analysis of the advantages to UK defence and security exports of taking a strategic approach to export controls and licensing, in particular to enable them to manage the greater risks involved in exploiting sales opportunities in emerging markets.

1. UK Export Controls:
A Strategic Approach
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2. Why a ‘Strategic Approach’?
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 Adopting a strategic approach to export
licensing can:
 boost your exports
 save you money
 protect your reputation

3. Finding New Markets
 If you are exporting a new defence or security product, or
looking for new markets, the obvious places to start are
the developed countries of the EU and NATO
 large, stable, transparent procurement
 but crowded markets, shrinking defence budgets
 on the other hand, there are the emerging markets, some
with defence budgets increasing annually by over 10%.
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4. Finding New Markets
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5. Managing the Risks
 successfully exploiting these opportunities requires
navigating the correspondingly greater risks
 export controls - often seen as no more than a
bureaucratic chore – can, if used strategically, be a
valuable and low cost tool in managing such risks.
 In 3 main ways:
1) conduct due diligence early
2) streamline export licensing applications
3) put an effective compliance system in place
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6. 1) Conduct
Due Diligence
Early
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7. Due Diligence
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 If you do not do this for yourself, the Government, in
assessing your export licence application, will do it for
you and could refuse you a licence
 In 2013, on average, one licence was refused every
working day
 as a result, substantial resources dedicated to
marketing, tendering and contracting were lost
 can be avoided by using the risk assessment
framework the Government uses in assessing all
licence applications

8. 1 - Embargoes/Treaties
2 – Internal repression
3 – Internal tensions or …
4 – Regional instability
5 – UK National security
6 – Behaviour of buyer …
7 - Risk of diversion
8 – Economic …
0 50 100 150 200 250
TOTAL
Why 196 export licences were
refused in 2013
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9. Due Diligence: Sanctions
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 Is the destination country subject to any sanctions?
 do not automatically assume these rule out all
defence exports. In many cases, embargoes apply
only to non-government actors while permitting
defence supplies to the government and officially-approved
bodies
 beware too of the rapidly-evolving nature of sanctions:
the rules can change overnight and it is the exporter’s
responsibility to keep up-to-date. Check carefully what
is and is not permitted and subscribe to update alerts

10. Due Diligence:
Red Flags and Denied Parties
 Know Your Customer
 are they on Google?
 do they have a legitimate reason for needing this equipment?
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 are the quantity and performance capability proportionate to the need?
 any unusual packing or trading terms requested?
 Is the customer on any lists of ‘denied parties’? Even inadvertently trading
with someone on the lists can lead to severe penalties, including potentially
being added to the lists yourself.

11. Due Diligence: National Security
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 Would your proposed export risk undermining the security
of the UK or our allies?
 Applying for an MOD Form 680 will help to assess this.
Since F680s (unlike export licences) precede tendering
and contracting, they can give a valuable early indication
of the Government’s assessment of the security risks
 F680s can cover market survey; promotion; demonstration
overseas and in the UK; software for demonstration
OGEL; Supply, Local Assembly and Local Manufacture
 But 2 downsides with F680s:
 not available for equipment or technology classified below
Official – Sensitive
 do not take into account the other risks assessed in the
export licensing process. So being granted one does not
guarantee that you will subsequently be granted a licence

12. Due Diligence: Other Criteria
 Would your proposed export fail the other export licensing criteria?
These cover the risks of an export being misused to
 violate human rights or international humanitarian law
 provoke or prolong conflict or tension in the destination country
 be used aggressively against another country
 be diverted, whether to an agency involved in a WMD programme or with a
record of repressive behaviour, or to terrorists or criminals.
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13. 2) Streamline
Export Licence
Applications
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14. Streamlining Applications
 In most cases, securing export licences does not need to
be burdensome nor cause delays
 There are 2 relatively simple areas where a surprising
number of exporters go wrong
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15. Streamlining: Open Licences
 Use Open licences as far as possible.
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 The UK licensing system, though it may seem clunky, in
this respect at least is years ahead of those elsewhere.
Open licences save 50,000 applications a year in the UK
 If your export is eligible for an Open General licence, you
can register online and go ahead with unlimited
shipments as long as you meet the conditions
 If there are none covering your particular export but you
are (or will be) making multiple shipments to regular
customers, try securing an Open Individual licence -
these significantly cut the volume of paperwork

16. Streamlining: SIELs
 If you have to apply for Standard Individual Export
Licences, do it early and fill in the form fully
 by far the greatest cause of delays is when
officials need to request further information from
the exporter
 this increases the turn-around time for an
application from around 13 working days to, on
average, 23 days.
 The two main pitfalls are
 incorrect End User Undertakings
 incomplete descriptions of the goods
 Since you already have all this information, it should
not involve much extra effort to get it right first time.
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17. 3) An Effective
Compliance
System
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18. Compliance Systems
 The law does not specify how exporters should ensure they meet the
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requirements: there is no ‘one size fits all’ approach, every situation is unique
 So you can choose to design a system which works best for you
 But where possible use existing systems, do not reinvent the wheel
 Keep it simple and fit for purpose, integrated into your standard processes
rather than as an ‘add on’ which risks ‘dropping off’
 ECO Compliance Code of Practice provides a framework of practical steps to
keep licensing procedures simple but effective, drawn up by the Government in
close consultation with industry.

19. Ten Key Points of Compliance
Programmes
1) Company Compliance Statement – signed by a Director
2) Clear lines of responsibility
3) Compliance Procedures/Manual – in writing
4) End Use Controls checks
5) Screening: Customers; Suppliers; suspicious enquiries
6) Incorporate export control into Quality Management
7) Implement internal audit processes
8) Ongoing awareness raising and training of all involved
9) Record Keeping, Reporting
10) Emergency Management and Voluntary Disclosures

20. Conclusion
 Why does a car have brakes? So
it can go fast
 A company that can take
advantage of opportunities - and the
inherent risks - will outstrip
companies which cannot
 A relatively minor investment in
adopting a strategic approach to
export licensing can help exporters
manage the risks and thereby
unlock the returns to be found in the
high growth, emerging markets.

21. Thank You
Any questions?
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Richard Tauwhare
Green Light Exports Consulting
Email: richard@greenlightexports.co.uk
Web: www.greenlightexports.co.uk
Phone: +44(0)770 311 0880