European Commission report on trade in dual-use goods published

On 30 January 2025, the European Commission presented its report on the implementation of Regulation (EU) 2021/821 (Dual-Use Regulation) for the reporting period 2022-2023.

A comparison with the last two reports of the European Commission clearly demonstrates the increased importance of dual-use goods for European foreign trade. While the total value of authorized exports (including those under EU and Member State general licenses) amounted to EUR 31 billion in the reporting years 2019 and 2020, it rose to EUR 57.3 billion in 2022, representing 2% of exports. Goods types and countries of destination: During the reporting period, general licenses were by far the most important type of license (approx. EUR 27.3 billion), followed by individual licenses (approx. EUR 17.1 billion) and general licenses (approx. EUR 9.7 billion). Regarding the type of goods traded, the highest value share for individual licenses was 0EC1 "Nuclear materials, installations, systems and equipment" (EUR 6.4 billion, 33% of the total), followed by 2EC1 "Machine tools and systems and components for industrial equipment" (EUR 1.8 billion, 9% of the total) and 5EC2 "Goods and equipment for information security and cryptanalysis" (EUR 1.3 billion, 7% of the total). However, these same "Goods and equipment for information security and cryptanalysis" represent the largest volume share (18%) of collective licenses. Collective licenses are also used for the export of goods for "Software for telecommunications and information security" (14%) and "Optical and acoustic equipment, related components, materials and components; other sensors" (10%). A similar picture emerges with regard to general export licenses. These are primarily used for the export of "goods and equipment for information security and cryptanalysis" (EUR 4.81 billion, 45% of the total value), but also for 3EC4 "equipment for the manufacture and testing of semiconductor devices or materials" (EUR 1.32 billion, 12% of the total value) and 9EC3 "rockets and spacecraft" (EUR 961 million, 9% of the total value). Overall, the export of dual-use goods shows a concentration in the telecommunications and information security sectors. This includes not only commercial civilian hardware and technologies, but also those for government surveillance and interception on land, at sea, and in space. The particular importance of these goods for European foreign trade is also demonstrated by the fact that the European Commission, in its report, focuses on the licensing of goods for digital surveillance. The European Union's requirement for export licenses for such goods aims to mitigate the risks of internal repression and the perpetration of serious human rights violations using these goods. In the reporting year, Member States received 288 export license applications for such goods, the majority (216) of which concerned eavesdropping systems. The most significant destinations for dual-use goods are China and the United States. In terms of individual and general licenses, the United States was the largest destination country by value (24% of the total volume), followed by China (19%). Looking at individual licenses alone, China dominates (EUR 5.6 billion, 28% of the total value).

Conclusions and Outlook

Due to the high importance of both the US and Chinese markets and against the backdrop of geopolitical tensions between Washington and Beijing, EU exporters of dual-use goods are exposed to increased risks.

Firstly, it is possible that the new Trump administration will impose tariffs on imports from the EU, which could severely impact exporters depending on the US market. Furthermore, the Trump administration could tighten the already robust US re-export controls, particularly with regard to China, which could mean that EU exporters whose dual-use goods are subject to US re-export controls would no longer be able to serve the Chinese market, or could only do so to a limited extent. Finally, the relevant licensing authorities in the EU member states could also adopt a more restrictive licensing practice with regard to exports to China, for example in the event of increasing tensions in Taiwan or the South China Sea.