Press release
Minister Calleary welcomes new control of exports and investment screening legislation
From Department of Enterprise, Trade and Employment
Published on
Last updated on
From Department of Enterprise, Trade and Employment
Published on
Last updated on
Minister for Trade Promotion, Digital and Company Regulation, Dara Calleary, has welcomed the signing into law of two important pieces of legislation, the Control of Exports Act 2023 and the Screening of Third Country Transactions Act 2023.
Speaking about the importance of the new legislation, the Minister said:
"In an increasingly interconnected world, the national and global security environment is becoming more contested and complex. Reflecting this changing environment, and the increasing diversification of threats, the government has passed two key pieces of legislation designed to protect security and public order and to ensure that Ireland meets EU and International obligations and responsibilities by having an effective system of export controls."
The Control of Exports Act 2023, when commenced, will ensure that Ireland continues to operate a robust framework for regulating the export of controlled items, principally dual-use and military items.
Controls take the form of a legal obligation on exporters to obtain prior authorisation to export designated items to third countries and seek to balance the pursuit of free trade and the functioning of open markets with maintaining international stability and security.
Minister Calleary added:
"When targeted correctly and enforced effectively, export controls are a powerful tool. With an ever-changing geopolitical landscape and advances in technology, there was a need to strengthen and modernise the current legislative framework for export controls in Ireland."
In recognition of the need to also protect Ireland’s critical technology and infrastructure from potentially harmful foreign investment, the Screening of Third Country Transactions Act 2023 will introduce an inward investment screening mechanism into Ireland for the first time.
This screening mechanism will provide for reviews of certain third country investments relating to critical technology, critical infrastructure, critical raw materials, sensitive data or media plurality, to determine whether these transactions pose a risk to Ireland’s security or public order. The Act empowers the Minister for Enterprise, Trade and Employment to investigate, authorise, condition, or prohibit foreign investments based on a range of security and public order criteria.
Minister Calleary said:
"Ireland welcomes foreign direct investment – FDI is, after all, a cornerstone of our successful economic model. However, in a rapidly changing world we cannot be naive about those that would seek to undermine our security. I believe that the inward investment screening mechanism that we have developed is tailored to suit Ireland’s needs, ensuring that we remain an attractive location for FDI whilst being a safe and responsible location in which to do business."
Establishing a formal inward investment screening mechanism represents an opportunity to design and tailor a system appropriate to Ireland’s needs. Ultimately, our approach balances Ireland’s longstanding FDI Strategy whilst also acknowledging the challenge posed by potentially hostile investments. The implementation of an investment screening mechanism also provides reassurance to key trading partners that Ireland is a responsible global player, cognisant of the threat posed by the strategic and potentially hostile State-backed investment strategies being deployed by some third-country corporations.
It is intended that the new screening mechanism will come into force during Q2 2024.
The Minister for Enterprise, Trade and Employment is the National Competent Authority for Export Controls in respect of ‘dual-use’ and military items in Ireland. The legal basis for the Minister’s powers and responsibilities in respect of export controls is provided by a complex legal framework spanning EU Regulations, EU Directives, Council Common Positions, the Control of Exports Act 2008, and several statutory instruments.
The current framework is based around the Control of Exports Act 2008. The Bill was initiated in the Dáil by Minister of State Dara Calleary and completed its passage through the Houses of the Oireachtas on Wednesday 18 October 2023. President Higgins signed the Bill into law on 26 October 2023.
Export controls are a multi-lateral, global mechanism that contribute to international peace and security. The primary purpose of export controls is to prevent the proliferation of weapons, both conventional weapons and weapons of mass destruction (WMD). The controls also play a secondary role in protecting human rights and international humanitarian law.
In particular, the controls apply to cyber-surveillance items exported from the customs territory of the Union that might be misused by persons complicit in, or responsible for, directing or committing serious violations of human rights or international humanitarian law.
Controls usually take the form of a legal obligation on exporters to obtain prior authorisation to export designated items to third countries. Controls seek to balance the pursuit of free trade and the functioning of open markets with maintaining international stability and security.
An effective system of export controls on dual-use and military items is necessary to ensure that Ireland meets EU and International obligations and responsibilities in this space.
The legislative framework for export controls in Ireland is established by both national and EU instruments. To support this legislative framework, lists of dual-use items, military/strategic items are essential. Itemised lists for both categories stem from the EU.
‘Dual-use’ items are products and components, including software and technology, that can be used for both civil and military applications. The list of ‘dual-use’ items subject to export control is set out in Annex 1 to Regulation (EU) 2021/821. Assessment criteria for applications for dual-use export authorisation are set out in Article 15 of the Regulation.
The Regulation has direct effect in Member States. However, Member States are obliged to establish in national legislation effective, proportionate and dissuasive penalties applicable in the event of infringements of the provisions of the Regulation.
The majority of ‘dual-use’ exports from Ireland are mainstream business ICT products, both hardware and software, (networking, data storage, cybersecurity and so on). They are categorised as ‘dual-use’ items as they make use of strong encryption for data protection purposes.
The EU Common Position sets out a detailed list of military items which should be subject to prior authorisation.
Military export controls are a national competence, and the Common Position does not have direct legal effect in Member States. These provisions must be given effect by means of national primary legislation. The Common Position sets out eight criteria against which authorisation applications should be assessed.
Military exports from Ireland are predominantly ICT components and mechanical devices of military standard.
Military export controls overlap with dual-use export controls in several ways. It is vital that dual-use and military items are closely coordinated and that there is a common policy framework in place to ensure consistency and transparency.
The legislation was developed on foot of the adoption of the EU Investment Screening Regulation, which applied from 11 October 2020. This regulation is a response to the growing concerns amongst Member States regarding the purchase of a number of strategic European companies by foreign-owned firms (and in certain cases, state-owned firms).
It will give full effect to the EU Regulation Investment Screening and facilitates the introduction of an investment screening mechanism in Ireland. It is intended that the screening mechanism will come into effect during Q2 2024.
Specifically, the Act:
The ultimate objective of the legislation is to empower the Minister for Enterprise, Trade and Employment to respond to threats to Ireland’s security and public order posed by particular types of foreign investment, and to prevent or mitigate such threats.