Trading Strategic Goods: Security, National Interests and Economic Development
On 30 January 2016, twelve MEDEVAC armored medical evacuation vehicles built by the Delta State Military Scientific-Technical Center were sent from Georgia to Saudi Arabia. In early February, Georgian and foreign press actively covered the successful deal, concluded on the basis of a contract signed between Delta and Saudi Arabia in December 2015. According to the contract, Saudi Arabia plans to buy more such vehicles.
International regulations adopted with the support and participation of nearly all UN member states require a certain level of transparency in the activities of parties involved in trading strategic products.
The export, import and transit of military and dual-use materials and products and related brokerage and technical services is governed in Georgia by a special trade regulation regime as the issue has a security aspect in addition to the economic dimension. Dual-use products are defined as materials, products or technologies, including computer programs that can be used in the manufacture of weapons, including weapons of mass destruction.
Georgia, as a UN member state, has in recent years taken major steps towards refining its regulations governing trade in strategic products and harmonizing them with Western approaches.
The Law governing trade in strategic products
Georgia has a special law “on controlling military and dual-use products,” the latest version of which went into force on 1 October, 2014. The revamped law created a new basis for controlling the import and export of dual use products in Georgia. Experts from the USA, EU and the German Federal Export Control Agency took part in the elaboration of the draft law alongside the Georgian parliament and executive government.
The new legislation was drafted with Western experience in mind and the lists of dual-use products are fully in line with EU regulations. The mentioned export control system will facilitate bringing Georgian legislation into line with EU norms and standards, as well as Tbilisi’s obligations under the Association Agreement with the EU.
This implies establishing an effective national export control regime, specifically “strict control over the export and transit of products linked to weapons of mass destruction, control over end-users of dual-use technologies linked to weapons of mass destruction, and harsh sanctions for violators of export control rules.”
The new legislation determines which government bodies are charged with issuing permits for trade in military and dual-use products. In the case of dual-use products it is the Revenues Service (under the Finance Ministry) which is responsible for issuance permits and licenses, while in the case of military products permissions and licenses for export, transit, brokerage service and technical assistance can be issued by the permanent Standing Commission for Oversight of Military-Technical Issues of the Ministry of Defense (MoD).
The afore-mentioned Delta is governed by the new law. Delta is a legal entity of public law subordinated to the MoD and requires permits for the export of dual-use products.
The permits are issued for a specific number of units and cover a specific period of time; their terms are strictly monitored. End-user certificates document who the ultimate recipient of the product is - that is to say that the State oversees whose hands the products ultimately end up in. In countries under sanctions - countries that violate human rights or where an armed conflict is ongoing - the MoD is not allowed to issue permits for the export of military or dual-use products. Before permits are issued, the MoD-based permanent Standing Commission issues its conclusion and recommendations. Representatives of various bodies take part in this process: the Justice Ministry, the Interior Ministry, the Foreign Ministry, the State Security Service, the Technical and Construction Oversight Agency and the Environment and Natural Resources Protection Ministry. Each agency assesses, based on its own considerations, whether to recommend that a given product be granted an export permit and license by the MoD.
Among the main criteria for giving recommendations and issuing export licenses are the situation regarding human rights and the upholding of international humanitarian norms in the country of ultimate use, and the risk that the product could end up in the hands of terrorists or terrorist organizations.
Since its foundation, the MoD’s Standing Commission for Oversight of Military-Technical Issues has refused companies’ requests for export permits on several occasions for failing to meet the above criteria.
How do permits get issued?
Logistics and transport companies which export military or dual-use goods or bring them into the country for transit purposes submit relevant documentation - including the end-user certificate - to the MoD’s military-technical department, which makes the decision on issuing an export license.
After the permit is issued, these companies refer to the Patrol Police and the Emergency Situations Department, which provide escort and protection for the cargo. The company must pay a fee for this service. Such cargoes are subject to a special safety regime - as per the international obligations Georgia has undertaken.
Revenues Service Statistics on issuance of permits
According to the Revenues Service, in the year following the law’s entry into force, 235 permits were issued while one company was refused the right to transit a cargo from Iran. At that time Iran was under sanction. There were also cases in that period where permits were not granted because the company in question sought to transit through the country products that did not meet the technical requirements of the list of dual-use products. The Revenues Service has shared with us the following examples of this:
One company was refused the right to import detonation cords and industrial explosives. In this case, the product contained a methane-detonator, which is a compound of ammonium nitrate, TNT and inert salt and has a detonation speed of 3,000 meters per second, which far exceeds the maximum stipulated in the list.
Another case involved a company seeking to export Ultra-X gas monitors which detect toxic materials. According to the list of dual-use materials, toxic gas monitoring systems and detectors are subject to special controls. The list of gases detected by the product in question did not correspond to those indicated in the list of dual-use products and therefore the export permit was not granted.
These two examples illustrate the intricacy of the issue of controlling the circulation of military and dual-use products. Regulations require simultaneous, multidimensional approaches and capabilities, the upholding of international non-proliferation obligations, and the consideration of economic interests and the potential for relevant medical-technical uses.
Future refinement
The future refinement and development of Georgia’s export control system is important from the standpoint of strengthening national security, as well as meeting important economic development goals. These include: retaining the country’s function as an east-west transit corridor; ensuring high economic growth; attracting investment (including in the high-tech sphere); and quickly reaching free trade deals with various countries, including the successful finalization of talks with the EU, the USA and China.
This article was prepared within the framework of the project “Studying Export Control Legislation and Practices in Georgia,” which is implemented by the Civic Council for Defense and Security Issues Non-governmental Organization, with the support of the US Energy Department and the Argonne National Laboratory.
Shorena Lortkipanidze