Export controls are restricting the UK electronics industry

Ken Ball, Head of Electronics at techUK explained: “We are aware of the significant improvements due to be implemented by the ECO but we’re concerned at the slow progress to date. Following our report, we laid out a clear programme of improvements, and we’re clear that implementing these changes would have a real, positive impact for UK electronics companies.”

It’s exactly a year since techUK completed its report on ‘Export Controls Processes for UK-based Electronic Component and Systems Manufacturers’, under the Business Focus on Enforcement pilot project. This was followed by a meeting with the ECO and ministers at a ‘star chamber’ to discuss the measures that could be taken to help the UK electronics industry to establish a level playing field to other European and worldwide manufacturers.

The final version of techUK’s report was published by BIS in March alongside an interim response from the ECO. In August, the ECO published a full report and response detailing the work that they would do to address the issues highlighted in the techUK report.

Throughout last year techUK met with its members to identify in detail the barriers that exist to export technology components and subsystems, and to propose solutions that can be adopted by the ECO. Most notably the ECO launched two deregulatory reviews in September 2015 with techUK and ADS, which have now nearly concluded:

• Firstly, to review the system of End User Undertakings (EUUs) to simplify their scope and application to reduce the regulatory burden on UK exporters. 
• Secondly, to review open general licensing to determine the scope for moving more exports to light touch licensing arrangements, which exporters may register for online for immediate use without End User Undertaking. This would expand the scope of Open General Export Licences (OGELs) which provide quick access to ‘off the shelf’ licensing cover for a range of exports and destinations.

The ECO is now consulting a range of government departments on a package of proposals arising from these reviews and following this will seek clearance from ministers.

techUK’s member meetings have resulted in two specific activities:

1. Drafting of two new Open General Export Licenses (OGELs) for components – one to cover dual use technologies and one for components used in military applications. Both OGELs have been designed to cover a small range of custom designed or modified components that are currently covered by standard licensing.
2. techUK members have proposed a system for the requirements of an End User Undertaking (EUU) or Consignee Undertaking (CU) to be met by including specific clauses determined by ECO in the terms and conditions in order quotations and contracts, including a method for the supplier to ensure that the customer is aware of these terms and conditions in the supply of products that require a licence. ECO is proposing to run a pilot with a selected group of techUK members in order to define how and when they can be used. In addition, ECO will introduce a fully digital system for the undertaking with the introduction of a new digital licensing system later this year.

Ball continued: “The early introduction of these two new OGELs, along with changes to the way EUU/CU requirements are implemented, will make a significant difference to UK component manufacturers. techUK hopes that this work will reverse the trend to manufacture these components outside of the UK to avoid UK license restrictions.”

In addition to this work, techUK has identified a number of improvements to the way licensing is currently applied to components and systems which incorporate cryptography. This technology is increasingly being used in a wide range of products from mobile phone, communications infrastructure, to anything that has to transmit data in a secure format. Many of these components and systems are the backbone of the digital economy of the future.

Over the next few months, techUK will be working with ADS to recommend changes to the ECO for the licensing of these products with the intention of developing an improved system to be implemented by Autumn 2016.