Joint Committee on Enterprise, Trade and Employment debate -
Wednesday, 29 Sep 2021

Control of Exports Bill 2021: Department of Enterprise, Trade and Employment

Chairman

I thank the members for participating in today's committee meeting, in line with the exceptional circumstances and measures we have to take due to Covid-19. I hope this will be the last meeting during which we are restricted to two hours and will have longer periods during which we can discuss our topics from next week. All members attending a meeting are required to exercise personal responsibility in protecting themselves and others from the risk of Covid-19. Members are required to practice good hand hygiene and leave at least one vacant seat between themselves and others when attending. They should also maintain an appropriate level of social distancing during and after the meeting. Masks should be worn at all times during the meeting, if members are physically present, except when speaking. I ask for their full and continuing co-operation in this matter. Any member participating in the meeting remotely is required to participate from within the Leinster House complex only. Apologies have been received Deputy Matt Shanahan and Senator Marie Sherlock.

Tody we will consider the pre-legislative scrutiny of the control of exports Bill 2021. The EU operates a system of export controls that form part of a multilateral framework to support global security by preventing the proliferation of weapons of mass destruction, promoting regional stability, preventing terrorism and protecting human rights. EU controls apply to military equipment and dual-use items. While EU instruments apply, trade and military equipment is a national competence and, therefore, export controls must be provided for in national legislation. The proposed legislation is designed to ensure there are adequate powers of enforcement in Ireland and international obligations are respected. To explain the provisions of the general scheme of the control of exports Bill in detail, I welcome, from the Department of Enterprise, Trade and Employment, Dr. Eamonn Cahill, Ms Carol Toolan and Mr. Matthew Geoghegan, who are participating remotely. They are very welcome.

Before we start, I will explain some limitations to parliamentary privilege and the practice of the Houses as regards references witnesses may make to other persons in their evidence. The evidence of witnesses physically present or who give evidence from within the parliamentary precincts is protected pursuant to both the Constitution and statute by absolute privilege. However, today's witnesses are giving their evidence remotely from a place outside the parliamentary precincts and, as such, may not benefit from the same level of immunity from legal proceedings as witnesses who are physically present. Witnesses have already been advised that they may think it appropriate to take legal advice on this matter.

Witnesses are again reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity, by name or in such a way as to make him, her or it identifiable, or otherwise engage in speech that may be regarded as damaging to the good name of the person or entity. Therefore, if their statements are potentially defamatory regarding an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative they comply with any such direction.

Dr. Eamonn Cahill

I thank the Chairperson and members of the committee for their invitation to discuss pre-legislative scrutiny for the control of exports Bill. I am joined by my colleagues from the trade licensing and control unit in the Department, Ms Carol Toolan and Mr. Matthew Geoghegan. I will briefly summarise the nature and purpose of export controls to provide some context, followed by the rationale for upgrading the current Act and then briefly outline the main provisions in the new Bill.

Export controls are a multilateral, global mechanism designed to prevent the proliferation of weapons of mass destruction preserve regional stability, prevent terrorism and protect human rights. Export controls are rooted in the work of a number of multilateral non-proliferation regimes such as the Missile Technology Control Regime, the chemical weapons convention and the most significant from Ireland’s perspective, due to its focus on technology, the Wassenaar Arrangement. Technical experts in the regimes maintain and update, on an on-going basis, lists of items within their remit that should be subject to export control by the participating states.

Export controls generally take the form of a legal obligation on exporters to obtain prior authorisation that is, an export licence, from the national competent authority in a state for the export to third countries of certain designated goods that is, the listed items. The success of export controls is predicated on uniform and consistent implementation on a multilateral basis. A published list of controlled items is a prerequisite for achieving this objective. A list-based approach also provides regulatory transparency and certainty for exporters.

However, achieving the multilateral consensus required to update a list and then giving legal effect to that update inevitably entails a time lag between the need for a new control becoming apparent and the implementation of that control. Therefore, the regulations also make provision for controlling the export of items not currently on the list, under specific and exceptional circumstances. These are so-called catch-all controls and are intended as a temporary bridging measure, until an item can be included on the list.

One further important consideration in terms of the regulations is they should be targeted and proportionate, and endeavour to mitigate the risk of unintended consequences. This is especially important when the regulations apply to SMEs which can be disproportionately impacted by the regulatory burden due to their limited resources and inability to benefit from economies of scale in ameliorating set-up and ongoing operational costs. To this end, export controls are designed to minimise the burden on reputable exporters engaged in legitimate, low-risk trade.

The legal framework for export controls in Ireland is established in a number of linked national and EU instruments. The two key EU instruments in the context of today’s discussion are as follows. The first is EU Regulation 821/2021 setting up a Union regime for the control of exports, brokering, technical assistance, transit and transfer of dual-use items. Trade in dual-use items is an EU competence and this regulation has direct legal effect in all member states. However, member states are obliged to establish in national legislation effective, proportionate and dissuasive penalties applicable in the case of infringements of the provisions of the regulation. The EU regulation also provides member states with discretion to adopt certain additional measures in their national legislation.

Dual-use items are defined as products and components, including software and technology, that can be used for both civilian and military applications. The regulation explicitly identifies 1,850 types of dual-use items, spanning ten categories, which I will not read, because of time, but it is clear the breadth and range of items in the scope of the regulation. Of particular note in the Irish context is that many mainstream business ICT products are classified as category 5 dual-use items, by virtue of the fact they incorporate strong encryption for data protection. These items include data storage, networking and IT security products, both hardware and software.

The second key EU instrument is the Council Common Position 944/2008, defining common rules governing control of exports of military technology and equipment and most recently amended in 2019. The categories of military technology and equipment to which these rules should apply are set out in the common military list of the EU.

The Common Position sets out the eight criteria against which licence applications should be assessed. Control over the export of military equipment is a national competence and the Common Position does not have direct effect in member states. Therefore, its provisions must be given effect by national, primary legislation. The national legislation comprises the Control of Exports Act 2008 and a number of statutory instruments.

The Department as the national competent authority for export controls is committed to providing a robust, transparent export control system and is proposing to bring forward new legislation to update the Control of Exports Act 2008. The Department’s overarching goal in bringing forward this legislation is to mitigate the risk that controlled items could be exported from Ireland and used to cause injury in regional conflicts or to violate human rights in third countries. Therefore, the Bill is designed to ensure that Ireland has a comprehensive and robust legal framework for regulating the exports of controlled goods and in particular, to ensure that the Minister, currently, An Tánaiste, has comprehensive and effective powers of enforcement.

The current Act must be updated to reflect the significant advances in technology, new developments in business practices, updates to EU instruments, and the evolved geopolitical risk landscape.

The main provisions of the Bill are detailed as follows. The Bill will repeal and replace the Control of Exports Act 2008 and will establish the national strategic export control list, that is, a list of goods, services and technology subject to export controls. The national list will include all items on the EU Common Military List. However, the national list may also include other items of equipment or technology that are to be brought under control nationally, in advance of their inclusion on an EU list.

The Bill will provide a solid legal basis for regulating the control and export of services as well the export of goods.

The Bill will ensure that the Minister has an effective enforcement capability and will provide authorised officers of the Department with more effective powers for investigating potential infringements of the controls and will ensure that the penalties for infringements of the regulations are proportionate, graduated and dissuasive.

The Bill will provide for the use of administrative sanctions for non-compliance with export controls.

The Bill will ensure that the Minister has a robust legal basis for administering export controls, such as for example, setting terms and conditions and reporting obligations associated with export licences.

The Bill will include a provision to exempt from licensing requirements the temporary transfer out of the State of military equipment, including firearms, by the Defence Forces or An Garda Síochána when necessitated by operational requirements, for example for training, maintenance and repair, and UN missions. However, such items being sent abroad for disposal, whether for sale or for destruction, will be subject to a licensing requirement.

The Department has been engaging with the Office of the Attorney General including the office of the Parliamentary Counsel on the drafting of the Bill. Important legal questions have arisen and are being systematically addressed, for example,on the unique interplay between national and EU competence in EU export controls and the mechanism for handling appeals. The Department is consulting with othert Departments and State entities, as appropriate.

As a result of these engagements, considerable progress has been made, both in terms of refining the Department’s policy objectives, as well as drafting the body of the full Bill. It is the Department’s desire to have a full draft of the Bill available for publication during the autumn session.

I thank the Chairman and the members of the committee, for their attention this morning. My colleagues and I look forward to answering their questions on this important piece of legislation.

Chairman

I thank Dr. Cahill and I now invite members of the committee to discuss any issues they have with the Department. I remind members participating remotely to use the raise hand feature so that I can see who wishes to contribute and, more important, when the contributor has finished speaking for him or her to lower the hand. We have a rota system. The first person who has indicated is Deputy O O'Reilly who I now call and she has 14 minutes.

Deputy Louise O'Reilly

I thank the Chairman and our witnesses for coming in and for the comprehensive presentation. This is very technical, so I have written my questions down to ensure that I can keep some order to them. My first question relates to the ten categories that are listed, which Dr. Cahill has informed us are in the region of 1,850 and there are 50 types of dual-use items. Can Dr. Cahill give our committee some examples of what type of items we are talking about? He has mentioned 1,850 different types. I would just like to know what would be on this list, please.

Dr. Eamonn Cahill

I thank the Deputy and I will do my best. The Deputy is entirely correct in that this is a very technically complicated area both in terms of the legislative framework we have to operate in as well as the actual items at the centre of all of this.

Before I attempt to answer the Deputy’s question, the list is fully in the public domain. That is a key element of their mechanism to ensure that there is maximum transparency. The list is written in very technical terms by engineers and technical experts specifically for the purpose of removing any ambiguity so that any potential exporters should be fairly readily able to identify whether or not their items, based on their performance characteristics, come within the scope of the regulation.

To try to put some colour on this for the Deputy, as she has noted, the range is vast. It ranges from materials and chemicals that could be used for producing chemical weapons or explosives but which also have very legitimate industrial and agricultural applications. I emphasised in my presentation the importance of the information and computer technology, ICT, category 5. The equipment that the Deputy has in her office and around her in data storage, firewalls, and anti-virus products, many of which have fairly mainstream business applications, are subject to export control. To be frank, this is almost a legacy of the Cold War era in the concerns about items with strong encryption getting into certain parts of the world with the potential for them to be reverse engineered and so forth. Those are the bulk of the items that are exported out of Ireland.

As to equipment and machines, items, for instance as are much in vogue at the moment, such as acrylonitrile butadiene styrene, ABS, manufacturing 3-D printing machines, can be used to high precision and even more mainstream computerised numerical control, CNC, machines, or working metal in the production of high precision components. There are also things as mundane as pumps that might be used in a food production environment in a factory for moving slurries around, which have to have a Teflon non-corrosive coating on them for obvious hygiene reasons. Those same pumps also tend to be the types of things one needs if one is cooking up chemical weapons because the Teflon prevents the acids corroding them, and so forth.

It is quite extraordinary and shocking when one goes through the regulation first just to see how many fairly common or garden industrial items can be put to nefarious purposes if someone is sufficiently creative and so minded.

Deputy Louise O'Reilly

Part 3, the section on military controls, states that the Bill seeks to set high common standards for the management of and restraint in the transfer of military technology and equipment. Key to that, the general scheme tells us that this is “to prevent the export of military technology and equipment which might be used for internal repression or international aggression or contribute to regional instability”. This is a very lofty and noble aspiration. I am curious to know how that would be achieved. Can Dr. Cahill give the committee some examples of the type of internal repression, international aggression and regional instability that he is referring to? Would Dr. Cahill consider and count the Israeli repression of the Palestinian people as an internal repression or as international aggression? I thank the Chairman.

Dr. Eamonn Cahill

I thank the Deputy. First, we have a procedure for assessing the licence applications and an integral part of that is consultation in the first instance with our colleagues in the Department of Foreign Affairs who can clearly give us their perspective as to the situation on the ground in particular destination countries. The types of areas that are of concern in the context as alluded to by the Deputy are the most apparent or obvious regions where there are ongoing conflicts. These include the Middle East, Yemen etc. Areas like that will obviously be to the fore when assessing licence applications in respect of those destinations. We would also consult with our colleagues in the licensing authorities in the 26 other member states as well, because as I mentioned, it is critical that there is a consistently uniform approach internationally on this. There is no use one member state taking one particular view and another state taking another one.

In assessing whether a licence should be granted in respect of some of those sensitive areas, a great amount depends on the nature of the item itself and the potential for it to be used for a non-civilian purpose. In other words, this is the potential for the item to be used directly or for it to be instrumental in conflict, in aggression and in the infringement of human rights and repression of citizens and so forth. It is very hard to give specific examples. Everything, by legislation, must be assessed on a case-by-case basis. As I said, we consult, as appropriate, with experts. Our Department staff are not experts and do not have responsibility in international relations so we would seek input, as appropriate, from the relevant actors.

Deputy Louise O'Reilly

Am I correct in saying that the guidance, in the first instance, comes principally from the Department of Foreign Affairs? I understand that there are international considerations, etc., across the European Union but in the first instance the advice and guidance that Dr. Cahill's Department would seek in this comes from the Department of Foreign Affairs.

Dr. Eamonn Cahill

All licence applications are automatically forwarded to the Department of Foreign Affairs and, obviously, we pay huge heed to the observations it provides, in particular where it expresses particular concern. However, to be clear, at the end of the day, my Department is the national competent authority so we will make the final decision as to whether to grant or to deny a licence application.

Deputy Louise O'Reilly

In appendix 2, on assessing licensing applications, the Department states that 22 export licences were denied in 2020 and 38 were denied in 2019. Could Dr. Cahill give us the reason for those denials? I note that in his presentation he mentioned concerns about end use, protection of human rights, the risk of diversion and EU sanctions. Are there specifics on which he could elaborate to give us a broader picture of what it is the Department is referring to?

Dr. Eamonn Cahill

I will do my best. The Deputy will appreciate, I hope, that I cannot get into too many specifics and we cannot talk about individual cases or licences. The first point to note is that our statistics show huge variability from year to year and, as the Deputy pointed out, there was a significant change from 2019 to 2020. A lot of that is a reflection of the relatively small scale of the Irish economy. Different patterns or exports by a small number of exporters will have a huge impact on the statistics. The 2019 figures represent a spike. They were definitely out of kilter with the figures for most years. The reason for that is very much related to the unfolding humanitarian crisis in Yemen that came to the fore in that timeframe. The Deputy may well be aware that there was a United Nations panel of experts report which made explicit references to state actors involved in war crimes and the overall humanitarian crisis there. On the back of that, a number of licences were denied, and that caused the spike in that year to which the Deputy alludes.

More generally, our denials are for a range of different considerations. Certainly, a key one is the risk of diversion, that is, the potential that something could be transferred to a military end user in the destination country. That concern is exacerbated if there is an active regional conflict under way. Human rights are another important consideration if there is active repression or if there are humanitarian crises in the general area. I think we make denials under most of the eight criteria set out in the common position over the course of a year, which very much comes down to the particular destination and the nature of the items in respect of which the export licences are being requested.

Deputy Louise O'Reilly

In head 5, under the section Offences and Penalties, subhead 14, it states that "authorised officers will have discretionary powers to impose administrative penalties in lieu of criminal prosecutions for violations of control of export laws". Could Dr. Cahill give us an update on this? To me, that is fairly wide-ranging. I am not suggesting at all that any person involved would come with the intent of abusing it, but the potential is there, so what checks and balances will be in place? Being able to use a discretionary power to impose an administrative penalty in lieu of a criminal prosecution is a fairly heavy-duty power. What sorts of checks and balances will be there for these authorised officers to ensure that they exercise that discretionary power hardly at all? It has to act as a deterrent, but there surely must be some checks and balances in place to make sure that this quite substantial power is not abused in any way.

Dr. Eamonn Cahill

It is fair to say that one of our motivations to bring forward this new legislation was to give a broader portfolio of responses to infringements. Under the current Act we are very restricted. We have only the nuclear option of an actual prosecution and, given the nature and the diversity of exporters we are dealing with and the range of different infringements that can be encountered, we felt that that was unduly restrictive. To give the Deputy a flavour of the exporters we deal with, at one end of the spectrum we deal with large multinationals involved in multimillion euro export transactions. They have in place dedicated trade compliance departments. They are very sophisticated internally and so on. At the other end of the spectrum we deal with SMEs and indeed micro-enterprises, which may have literally two or three individuals to ten people, so they are in a very different place, yet they are still obliged to comply with the same overarching regulations and so on. From time to time we will come across companies that have breached the regulations purely because of a lack of awareness rather than by any criminal intent, so it is appropriate that we work with them to help them to come into compliance, hold their hand, essentially, and help them navigate through the regulations. There is a spectrum of different potential infringements, not all of which warrant the resource commitment, and I stress that the resource commitment of mounting a prosecution is very significant. That is why we are seeking to have a broader suite or portfolio of responses to the different scenarios to reflect better the diversity of exporters we encounter out there. The authorised officers will be officials of the Department, so there will be internal checks and balances in the form of formal procedures and guidance documents for us in order that we have a consistent approach to determining whether something warrants a slap on the wrist or something much more serious, up to and including court actions.

Deputy Louise O'Reilly

These powers are quite substantial. I would not like to think - and I am pretty sure it was not Dr. Cahill's intention to give this impression - that somehow this authorised officer might look at a situation and think that because criminal prosecution is very expensive and heavily resource-dependent, he or she will go for something else. The resources need to be made available if a criminal prosecution is what is required. I will give Dr. Cahill an opportunity to clarify if the Chairman agrees because I think my time might be up. The Chairman might indulge us with that. I would be a little disturbed if what was driving this were resource constraints rather than the necessity to warrant a criminal sanction. Dr. Cahill might want to clarify that.

To be clear, are the authorised officers people within the Department who are overseen just by the normal departmental procedures or are they subject to separate ones, given the power they will have?

Dr. Eamonn Cahill

I thank the Deputy for the opportunity to clarify. I certainly do not mean in any way to imply that the availability of resources or staff would be in any way a consideration in deciding how to respond to a potential infringement - quite the opposite. The Department has been investing extra staff in this area in the past two years. It just goes back to the fact that responses need to be proportionate and relevant to the level of infringement that has been encountered. What we are in essence talking about is potentially writing to a company and giving it a timeframe - six months or three months - to put in place a more rigorous and more robust internal compliance programme. If at the end of that time we are satisfied that it has achieved that target, that would be a satisfactory outcome. Absolutely, the decision to pursue an action through the courts would be exclusively and entirely determined by the severity of the offence and the evidence to take forward that case.

In response to the Deputy's final question, she is correct that the authorised officers will be officials of the Department appointed by the Minister of the day.

Senator Ollie Crowe

I thank the officials, particularly Dr. Cahill, for their time and insight. I note that the briefing document for today's meeting refers to the need for regulations to be minimal in terms of burdens placed, particularly on SMEs, given their limited resources, which I think everyone would agree with. In addition, I note that the document states that many mainstream business ICT products are classified as category 5 dual-use items under the EU regulation. Can the witnesses advise what impact this classification is likely to have on SMEs in Ireland? Can they estimate how many SMEs are involved in exporting such products? Could they also inform me if the burden imposed by these regulations will be very challenging for many SMEs?

Dr. Eamonn Cahill

We are very conscious of the diversity in the exporting population here in Ireland. As the Senator rightly identified, the SMEs have particular issues.

The biggest issue for SMEs is becoming aware that their items may be within the scope of the regulation. The burden of applying for a licence is minimal. We go to great lengths to help companies to navigate through the application process and so forth. Over the past year or so, we have put a bit of effort and resources into greater outreach, focusing specifically on the sector. We produced an online five-minute video and we also have a booklet, which I hope is written in relatively plain English, to help companies to come to terms with how they may be impacted.

I was asked about the number of companies. It is very much those in the high-tech ICT space that are exporting outside the EU. Most of the items can move freely within the Single Market. Indeed, there are provisions that essentially white-list a number of key markets, including those of the US, UK, Australia, New Zealand and so forth. There are many measures we can bring to the attention of SMEs that will greatly reduce the overheads and burden. Even where they do have to apply for a licence, there is a relatively straightforward process from their perspective. We have an online system. The company does a once-off registration and then it just uploads the relevant information on a case-by-case basis, or as each export comes up.

Senator Ollie Crowe

I thank Dr. Cahill. I am aware that there was consultation in 2019 whereby the Department sought submissions on updating the 2008 Act. Could he inform us about that consultation? How many submissions were there? To what extent were the submissions taken into account when drafting the Bill?

Dr. Eamonn Cahill

As part of the RIA, we sought observations and submissions from all affected stakeholders, particularly those in industry, large and small, in addition to other entities. We did not receive a great number of submissions. One reason was that the proposed legislation has a minimal impact regarding the licensing for reputable exporters. The licensing regulations and application procedures will, by and large, be as before. The main changes relate to our ability to respond to potential infringements, investigations and so on. It is primarily a question of the enforcement element, which should only be of academic interest to the vast majority of exporters, who are extremely compliant.

As part of the RIA, we applied good practice in respect of identifying where the proposed regulations need to be modified or whether particular exemptions or other measures need to be built in respect of SMEs. It would be neither appropriate nor possible to include exemptions from the regulations for SMEs regarding export controls but we are conscious of the need to put a particular emphasis on helping them. We have put a lot of effort into outreach over the past 12 months. We are always keen to find fora in which to engage with companies one on one as well as collectively. We are always happy to meet representatives of companies one on one in our offices.

To answer the question, we have made considerable efforts to help the sector. It should not feel in any way disadvantaged or disproportionately impacted by the new legislation.

Senator Ollie Crowe

I thank Dr. Cahill for those detailed answers. I will leave it at that for now.

Deputy David Stanton

I thank our guests for appearing today and briefing us on this technical legislation.

Dr. Cahill mentioned the Wassenaar Arrangement in his presentation. Could he give us a briefing on that and its relevance to the legislation?

Dr. Eamonn Cahill

I thank the Deputy for his question. The genesis of export controls globally probably dates back to shortly after the Second World War. The controls took off during the Cold War. As the Deputy can well understand, it was very much about the western powers wanting to make sure that nuclear technology and other weapons of mass destruction, and affiliated technologies, did not get into the hands of those who would use them for nefarious purposes. Several of these informal groupings emerged over the period, whereby various like-minded countries came together to work to help to identify lists of technologies and items that they felt should be kept under some sort of control to prevent them becoming freely available on the global stage.

The Wassenaar Arrangement is the arrangement most relevant to Ireland because it covers the technology gamut, certainly including ICT but going well beyond that to include machinery and so forth. Approximately 42 states participate in the Wassenaar Arrangement globally, including all the major powers, such as the US and Russia. It is not an international body in the sense of the UN or anything like that; it is very much a more informal body. Its primary activity involves technical experts from the participating states coming together for intensive discussions. They thrash out the precise technical specifications of items that should be subject to control. The items on the published list, which I mentioned, are not identified only at the level of their overall functionality but also down to the level of their individual performance characteristics. For pumps, it would be to do with their throughput in cubic metres per second and so forth. For electrical items, it would be about their power characteristics, frequency responses and so forth. It is highly technical.

Deputy David Stanton

I thank Dr. Cahill. I get the gist of it. There are 42 participating countries, including most of the western countries and the “advanced” nations, for want of a better word. In Dr. Cahill's briefing document, he states the 2008 Act does not refer to transit or transmission. Was that, or is it, a major loophole?

Dr. Eamonn Cahill

I am not aware that it was. Actually, I think there is a slight typographical error in that the text should read "trans-shipment" rather than "transmission". It should refer to both transit and trans-shipment. It was primarily a question of the major trans-shipment hubs in Europe that would be relevant to Ireland. Ireland is not a trans-shipment base in the way that certain central European cities and ports are. I am not aware that there has been a loophole or that there have been any practical implications for us over the past 12 years. Nonetheless, in terms of completeness and so forth, we are conscientious about making sure we do a thorough job and cover all the elements in the new legislation.

Deputy David Stanton

As Deputy O'Reilly pointed out, the authorised officers have a lot of authority and power. Several review and appeals mechanisms are involved. Those who are impacted have 21 days in which to lodge an appeal, for instance. There is a specialised external appeals panel and an internal review by a senior officer in the Department. Are there time limits on how long the reviewers and panels can work? If there is a grey area and a restriction is placed on an export such that it takes forever for the review or appeal to take place, the exporter will be out of pocket, to say the least, or may lose business. He or she may be quite legitimately involved in business. Where we are giving powers to authorised officers and so on, are there any constraints on, or limitations to, how long it takes for the appeals panels and internal and external reviewers to carry out their work?

Dr. Eamonn Cahill

This is a live issue for us. We are very much in the depths of discussing various frameworks and so forth. Ms Toolan can give us the up-to-date state of play on that issue.

Ms Carol Toolan

I thank the Deputy for the question. As Dr. Cahill said, we are currently going through the appeals side of things with the Office of the Attorney General to sort out and tighten up the timeframes. The idea behind the internal review is to address the fact that the exporters may need a timely response, as referred to by the Deputy. The internal review would offer them a quick and less expensive way of having either their licence or a compliance notice checked by an officer of a higher level, or a different officer, just to have a different point of view on it. The external panel is a matter on which we are also going into detail with the Attorney General to determine how it might operate in respect of timeframes and so on.

The idea behind that is to offer an independent mechanism for the exporter so the decisions of the authorised officer, or of the deciding officer in the case of licences, would be reviewed by somebody completely independent and external to the Department.

Deputy David Stanton

Okay. This is something we have come across previously in other legislative measures and I was concerned about appeals and reviews. I am glad to hear that the Department is conscious of it and working on it. That is good.

Cybersecurity is mentioned quite a lot here. Could the witnesses expand on their thoughts on that?

Dr. Eamonn Cahill

I will take that question. Cybersecurity is very topical in terms of the implications for human rights in various quarters at present. A very important development on that front is that the new EU dual-use regulation came into effect on 9 September. It is a replacement of the previous 2009 regulation. Probably the single biggest advance in the EU regulation is a new focus on human rights and the potential for cyber surveillance technology to be exported to Europe and be used for repression and so forth. There are new additional measures in the regulations to control those exports. As that regulation has direct effect in all member states, the measures automatically apply in Ireland as well so we can inherit those powers automatically. Nonetheless, the EU regulation provides member states with discretion to go further and to introduce additional controls in their national legislation, and we are proposing to do that in the current legislation. Essentially, we want to take advantage of all discretion opportunities we are given by the EU regulations to provide additional control and to ensure we have a belt-and-braces approach on all fronts.

Deputy David Stanton

I am not sure if Dr. Cahill will agree, but it might be important as well that there are many multinational tech companies in Ireland at present and that gives us a greater responsibility. Is that the case?

Dr. Eamonn Cahill

Yes, absolutely. We are very conscious of the companies that are here. However, I will make an important clarification for the Deputy. The word "cyber" has taken on very negative connotations in the recent past. It is assumed to be synonymous with people doing nefarious things. Strictly speaking, cyber simply means relating to the computer systems. There is a very big and burgeoning cybersecurity industry in Ireland, but cybersecurity is quite distinct from cyber surveillance. We are always very conscious of that. The technologies being exported by companies here in Ireland are legitimate items intended for legitimate applications. They do not have the potential to be misused in the sense of the cyber surveillance that underpins the EU regulation. There are a couple of well known, high-profile products around the world that are designed specifically for use in surveillance ways, and the Deputy will probably be aware of some of the media coverage of that in recent months.

Deputy David Stanton

The other issue there is cyber control whereby various governments can control the Internet and what is put out on it and so forth.

I have a final question. I note that 135 individual military licences were issued in 2020. That was almost three times the value of the number issued in 2019, when there were 99. That is a massive increase. Could the witness comment on that? Why is that the case? It is striking that it went up that much in a short period of time.

Dr. Eamonn Cahill

I do not have any specific explanation or story to account for that other than that, as indicated earlier, our statistics across the board exhibit huge variability from year to year. That is a reflection of the small number of exporters. In the military space we have a particularly small number of exporters. Particular success in terms of sales for them and particular patterns of exports changes can have a disproportionate impact on the statistics. I would not necessarily say that it is a trend. It is just a particular spike in that year.

Deputy David Stanton

I thank the witnesses.

Chairman

Does anybody else wish to speak?

Deputy Richard Bruton

Can I come in here, Chairman?

Chairman

Yes.

Deputy Richard Bruton

I will be brief. It appears that technologies evolve very fast and the uses of different data or electronic means also evolve very fast. How do the witnesses keep the list up to date with the potential applications that people can find as we move to the Internet of things and so forth? It seems that it is going to be a constantly moving target and one could almost conceive of any product having a potential use in the hands of particular groups. How does that work?

I know that at EU level there has always been this issue about national competence versus EU competence. There has always been a to-and-fro tugging as to whether there should be overriding EU competence for larger transactions, whether one can appeal from one to the other or whether national competence in certification or licensing in one country should prevail in other member states. Has that been an issue of controversy in this territory or how does national competence and EU competence overlap?

Dr. Eamonn Cahill

In response to the first question, the Deputy has identified one of the biggest perennial challenges in the export control space, which is keeping on top of advances in technology. It is not just advances in technology. There is no limit to human ingenuity when it comes to re-purposing ostensibly safe items to cause harm or to use them in improvised devices and so forth, so that is a constant challenge for us. The EU has in place a fixed framework for updating lists annually. That is quite efficient and can track changes in technology relatively quickly. However, as I alluded to in my opening statement, there is an additional mechanism to give additional flexibility and to aid responsiveness on the part of competent authorities, these so-called catch-all controls. If we become aware tomorrow that somebody is about to export a widget from Ireland that is currently not subject to controls, we have extraordinary powers to intervene in the short term and prevent that export taking place, with a view to ultimately getting that list formally incorporated on the list for future controls. It is not a perfect system, but vast effort is being put into making sure the lists are updated in as timely a fashion as possible and, as I indicated, there are alternatives for exceptional circumstances.

The EU competence versus national competence issue is another key challenge for us. First, in the dual-use space it is very clear that it is exclusively an EU competence, so the policy is set at EU level. However, the implementation of that policy is a member state competence so one gets into issues there regarding whether member states are implementing things in a consistent and uniform fashion and so forth. Again, there are mechanisms in place to support that. Member states co-ordinate with regard to licences that they deny, for example, to prevent exporters engaging in licence shopping. If they are denied in one country, they cannot then obtain one in another member state. The situation is very good in respect of consistency and uniformity in the dual-use piece.

The military area is more complicated. As we said, it is a national competence and different member states have different political and policy views about exports of arms to different parts of the world. The common position is supposed to address that and bring all of us onto a common converged approach to that, but it is not legally binding and different member states have taken different approaches in the past with regard to exports to some areas in which there was conflict under way. Obviously, Ireland does not have an arms industry in the way that many other member states have, so it is of lesser concern for us but it is something we are very conscious of.

Ms Carol Toolan

I might add to that with regard to head 11, which is the controls on the non-listed items. The lists will be very clear regarding the dual-use and with the national strategic list of what is currently in play. Head 11 will be a similar catch-all to the dual-use catch-all and will allow us to intervene. Then there is the possibility of adding further items to the list when new technologies emerge that will need to be added in the future.

Deputy Richard Bruton

I thank the witnesses. That is fine.

Chairman

Nobody else has indicated to speak. Unless anyone else wishes to come in, that concludes our consideration of the matter. I thank the officials from the Department of Enterprise, Trade and Employment - Dr. Cahill, Ms Toolan and Mr. Geoghegan - for assisting the committee in its consideration of the matter today.

That concludes the committee's business in public session for today. I now propose that the committee goes into private session to consider other business. Is that agreed? Agreed.

Sitting suspended at 10.20 a.m. and resumed in private session at 10.21 a.m.

The joint committee adjourned at 10.42 a.m. until 9.30 a.m. on Wednesday, 6 October 2021.