How U.K.'s new export control act will hit U.S. firms.

• Author: Salzmann, Brinley
• Position: Government Policy Notes

Significant modifications to the United Kingdom's export controls went into effect in June, almost a decade after a major public inquiry into the alleged sale of defense and dual-use technology by British firms to Iraq prior to the 1991 Gulf War. The changes stem from the U.K. Export Control Act of 2002, which seeks to address perceived inadequacies in the country's current export control system. Among other things, the new regulations impose additional controls in the following areas:

* The intangible transfer of technology.

* The provision of technical assistance relating to weapons of mass destruction.

* Trade activities (trafficking and brokering).

The new legislation has resulted in a major culture change for affected British firms trying to come to grips with the regulations' impact on their commercial activities.

Over a period of some eight weeks, from mid-January to the end of February, a small team of representatives from the Defence Manufacturers Association, Department of Trade and Industry and the government's customs and excise agency briefed more than 700 representatives from firms in 13 different locations around the United Kingdom on the new law.

During these meetings, companies were briefed on the implications of the new act for U.K. firms and what they needed to do to meet its requirements. Many non-U.K, companies, however, June not be aware that their activities, either while visiting the United Kingdom or employing British nationals in their workforce, even outside of the kingdom, could require them to comply with the law.

To help clarify the situation, DTI has placed all of the information related to the new regulations--with background guidance documents to assist companies to come to terms with interpreting the controls--on its Web site (www.dti.gov.uk/export.control).

Here is a brief summary of the requirements:

First, export-related commercial activity undertaken by overseas firms on business trips to trade Fairs in the United Kingdom--such as the Farnborough International Airshow in July and the Defence Systems & Equipment International Exhibition in September 2005--will be subject to the new rules.

To be covered by the regulations, the goods involved must be on the British Military List, and a foreign company's activities in the United Kingdom, for the most part, limited merely to the actual signing or negotiation of contracts.

The vast majority of normal commercial and promotional activity is unaffected, but...