Linking Security and Economic Interests Damages Legitimacy of Non-Proliferation Regimes

You are the Vice President of Global Trade Control at the chemical company BASF. Please explain the export control from a company point of view.

Export controls are an integral part of the BASF Code of Conduct. The Code of Conduct centrally defines the behavioural guidelines and standards for BASF employees worldwide. My team also manages the global organisation of export controls. As the world's largest chemical company, the various trade control laws, of course, are particularly important for us. Right at the forefront are the decisions of the Australia Group. The decisions of this international regime are designed to ensure that exports do not contribute to the proliferation of chemical or biological weapons. In Europe, these are transferred into national export control legislation. Companies are only allowed to export products containing these listed substances if they have obtained an official licence.

Has the Covid-19 pandemic changed how German industry works in the area of export controls?

At the very beginning of the Covid-19 pandemic, export restrictions on the export of personal protective equipment (PPE) were first imposed by the German government and then by the European Union. Particularly in the chemical and pharmaceutical sectors – but also everywhere where PPE is used for occupational health and safety – bottlenecks ensued and led to global shortages. Furthermore, deliveries to subsidiaries outside Europe became more difficult to execute. This was not an easy hurdle for the chemical and pharmaceutical sectors. However, the Federal Office of Economic Affairs and Export Control (BAFA) deserves high praise. Despite the pandemic situation and the associated restrictions, PPE exports were usually approved quickly and pragmatically, without significant losses in the processing times of other approval procedures. 

Much has happened since you accepted the position as chairwoman of the BDI Working Group on Export Controls in 2019. What are currently the most important topics for German industry?

In 2018, the United States revised their export control regime. U.S. export control has always been extraterritorial in nature, because the basic rule is that U.S. goods never lose their "citizenship." This means that if a German company processes U.S. components into a product, exporting it from Germany to a third country may also require an export license from the respective U.S. authority. In principle, export control is committed to security policy objectives. However, we have observed that export control by the United States is increasingly used to enforce economic interests. This linkage of security and economic interests damages the legitimacy of the non-proliferation regimes. We also observe that the United States is increasingly confronting economic operators with a choice: either do business in the United States or in China. The attempt to unilaterally enforce security and economic interests damages the globally-operating German industry.

Another important topic is sanctions policy. Since 2018, the United States has increasingly imposed extraterritorial sanctions without consulting its European partners. The Trump administration thus enforces commercial and security policy interests without diplomatic means. European economic operators suffer from this because they either conduct business directly in the United States or are dependent on financial institutions that must refinance themselves using the U.S. dollar. This last point applies to just about every reputable financial institution in the world and thus it affects every company.

Efforts have been underway since 2016 to reform the EU regulation on the export of dual-use goods. Negotiations are currently ongoing between the European Commission, the European Parliament and the European Council. What are your hopes for the current trialogue?

The export control of dual-use goods, which can be used either for civilian or military purposes, is intended to ensure the non-proliferation of weapons of mass destruction. The EU has so far incorporated the lists of the respective international regimes, e.g. the Wassenaar Arrangement, into Annex I of its Dual-Use Regulation. Now the EU seeks to increase its autonomous control. Specifically, the Commission and Parliament wish to restrict the export of communications technology surveillance equipment (CCTV), because of massive human rights violations in the countries of the Arab Spring. CCTV was used there in 2010 to identify demonstrators and thus used against civil society.

Unfortunately, the Commission's initial proposals did not meet the requirements of a proper export control system. Goods export controls and the legitimacy of non-proliferation regimes depend on appropriate rules. Everything must be interlinked, from the regulatory requirement to practical implementation. Otherwise economic operators are forced into legal uncertainty.  The fact that four years later no agreement has been reached delineates the controversial and complex nature of the discussions.  My hope for a successful conclusion of the reform is that it provides economic operators with a concrete and proportionate regulation. It is important to avoid decisions being shifted to the Member State level. This would lead to an uneven level playing field within the EU in the area of export controls.

Renate Becker-Arnold has been the chairwoman of the BDI Working Group on Export Controls since January 2019. Holding a doctorate in chemistry from the University of Marburg, she serves as the Vice President of Global Trade Control at BASF.