Netherlands: Export restrictions part IV: Why is an export compliance protocol important? - Boels Zanders
When exporting goods from the Netherlands to countries inside and outside the European Union (EU), national and international rules, legislation, export controls and customs formalities apply. This is something you may have to deal with as an entrepreneur. But what exactly are export restrictions, to whom do they apply and why is it important to be aware of them and to act accordingly? That is explained in this blog series.
The intention of our blog series is to inform you as an entrepreneur about the reasons and the necessity for awareness of possible export restrictions and the prevention of problems in your company when acting contrary to these restrictions. An effective compliance protocol can help.
In the previous blogs, we have already discussed in detail what is meant by export restrictions, the organisations to which they apply and the consequences of breaching the legislation. In this section, we consider the usefulness and necessity of export compliance. In the final part, we will examine the specific contents of an effective export compliance protocol.
What is an export compliance protocol?
An export compliance protocol serves as an internal manual, referring to, for instance, the internal protocols and procedures to ensure that all risks related to export control are covered. An export compliance protocol is in fact a guideline for an organisation to take responsibility for arranging compliance with applicable legislation within a company and to be able to demonstrate what measures have been taken to act in accordance with the legislation. The protocol also contains guidelines to ensure that the policy is pursued internally.
Every export compliance protocol is a customised solution, because the way in which a company develops an effective export control policy depends on various factors. These include the size of the company, the goods and services provided, the market in which the company operates and countries with which it does business. The requirements of an export compliance protocol will be discussed in more detail later.
Importance of export compliance protocol
In principle, the responsibility for acting in accordance with legislation lies with the entrepreneur (exporter) in question. The exporter should determine whether there is a strategic product or service. This is determined using a goods code. The same code is used for declaring goods and services to customs. This list is extensive and open to interpretation. For that reason alone, it is good to document and record the considerations made to qualify a product. If you are still in doubt, it is a good idea to contact the competent authorities in advance. In this way, you can avoid any possible discussions with the Central Import and Export Service (CDIU) or customs at a later stage.
Checking certain elements and whether or not to draw up an export compliance protocol is a responsibility of the company itself. The Dutch Ministry of Foreign Affairs strongly recommends the introduction of such a protocol and emphasises that a protocol is necessary in order to be able to determine in retrospect which risks have been weighed and on the basis of which information the decision to export has been taken. In addition, from a compliance perspective, banks and other (government) institutions are increasingly expecting their clients to have such a policy.
Benefits of export compliance protocol
A properly implemented export compliance protocol has several advantages. It reduces a company’s risk of violating legislation. In addition, a sound export compliance protocol gives companies the opportunity to use global licences, which gives the company more advantages in terms of the number of licences to be applied for, delivery times, continuity of the company and reduces the administrative burden. For the Dutch government, a properly developed export compliance protocol is an important instrument in its shared responsibility to prevent unwanted exports of strategic goods and thus contribute to international security. The export compliance protocol also helps the company to demonstrate to the competent authorities that the company is compliant.
The prevention of financial damage due to non-compliance with legislation is, of course, of great importance. This damage may occur if fines are handed out or if export restrictions are imposed. The reputational damage that may result is also of great importance. Reputational damage can lead to further financial loss or even bankruptcy. This can be prevented by a sound export compliance protocol.
The export compliance protocol includes measures to ensure that the applicable legislation relating to export control is complied with and that no criminal or other sanctions are imposed. The export compliance protocol serves as an internal manual. It is of huge importance for a company. In the fifth and final part of this blog series, we will discuss the specific contents of an export compliance protocol.