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Up in the air

Date of publication: 1 March 2019

Oleksiy Gorbatyuk, Lawyer

Source: The Journal of Export Controls and Sanctions

Like many nations, Ukraine continues to develop and employ export controls as a means of limiting the proliferation of weapons of mass destruction (‘WMD’), maintaining international security, and as an integral aspect of national security policy. In line with its international obligations on the nonproliferation of WMD and restrictions on arms transfers and counterterrorism, the international transfer of military-use and dual-use goods is subject to state export controls. These controls and their implementation are set out in the Law of Ukraine On State Control of International Transfers of Military and Dual-Use Goods of 20 February 2003 (‘the Law’). The Law provides for the implementation of export control in several ways:

1. through classification of goods;
2. through the issue of licenses or determinations;
3. through customs control and customs clearance; and
4. through the imposition of sanctions on business entities which have violated controls on international transfers.

Classification of military-use goods

According to Article 1 of the Law, military-use goods exported together or separately constitute (1) products for military use, (2) military services and (3) technology for military use.

Under the same article, military services are defined as: the provision to foreign legal entities or individuals, in Ukraine and abroad, of services including agency [i.e., brokering activities], related to the development, production, construction, assembly, testing, repair, maintenance, modification, modernisation, operation, management, demilitarisation, destruction, sale, storage, detection, identification, acquisition or use of products or technologies for military use, as well as to specified entities of a foreign state or its representatives or foreigners of services associated with funding of such works. According to the same article, military-use goods are also included within the definition of military services.

As can be seen from the above wording, the provision of services for the transportation of military-use goods is not included in the definitions. However, in the same article, the Ukrainian legislator has sought to include transportation services for military-use goods within the definition of agency [brokering] services. But this is conceptually incorrect.

The Law defines ‘agency’ as any activity of Ukrainian business entities which contributes to the international transfer of military-use items, including financing, transportation, or forwarding of cargoes, regardless of the origin of such goods and the territory in which the specified activities are performed. But according to Ukraine’s civil law, a transportation service cannot be identified as an ‘agency’ and should be included within a list of extra services within the meaning of export control law – as per EU law.

The Law requires that the Cabinet of Ministers of Ukraine (‘CMU’) approves the list of controlled goods, the international transfer of which should be subject to state export control (hereinafter, ‘the List’).