International trade rules

Export controls

What export controls limit international trade in defence and security articles? Who administers them?

Germany has strict export control regulations and procedures for military equipment and dual-use products. The manufacture, trade, brokering and transport of weapons of war are subject to a government licence pursuant to the War Weapons Control Act. This applies in particular to any export. The export of military equipment and dual-use products is also subject to licence requirements under the Foreign Trade and Payments Act and the Foreign Trade and Payments Ordinance (AWV). The goods covered are listed the Export Control List (Annex 1 of the AVW).

The licence under the War Weapons Control Act is issued by the Ministry of Economic Affairs, upon consultation with the Ministry of Defence and the Foreign Office. The decision is a political one taken on a case-by-case basis. No licence is necessary for the supply of weapons to the German military, federal police, customs administration or other law enforcement authorities. Export licences for military equipment and - if applicable - dual-use products are issued by the Federal Office for Economic Affairs and Export Control (BAFA).

Export licences for military equipment are granted on the basis of the ‘Political Principles Adopted by the Government of the Federal Republic of Germany for the Export of War Weapons and Other Military Equipment’ of 19 January 2000 (Political Principles) and the EU Council Common Position 2008/944/CFSP defining common rules governing control of exports of military technology and equipment (EU Council Common Position). In some respects, the German government applies stricter criteria than those imposed by the EU Council Common Position. Export licences for dual-use products are granted by BAFA on the basis of the EU Dual-Use Regulation No. 428/2009 (as amended).

Domestic preferences

What domestic preferences are applied to defence and security procurements? Can a foreign contractor bid on a procurement directly?

German public procurement rules, including in the fields of defence and security, are based on competition, equal treatment and non-discrimination. Hence, German public procurement law prohibits any discrimination against bidders on the grounds of their nationality. This applies to all contractors from EU, EEA and GPA member states. There are no restrictions on foreign contractors bidding on a procurement directly.

Favourable treatment

Are certain treaty partners treated more favourably?

German public procurement law is based on EU law and the GPA, which prohibit any discrimination on the grounds of nationality. However, this applies only to contractors from the EU, EFTA and member states of the GPA. That said, there are no rules providing for more favourable treatment of contractors from any particular country.

Sanctions

Are there any boycotts, embargoes or other trade sanctions between this jurisdiction and others?

Germany adheres to the boycotts, embargoes and other trade sanctions put in place by the United Nations or the European Union regarding defence and security articles.

Weapon embargoes involve the prohibition of or restrictions on the delivery of weapons, ammunition and other military equipment within the meaning of Part I, section A of the national Export Control List and of paramilitary equipment as well as the provision of related technical assistance.

Country-related weapon embargoes to be observed in Germany as of 8 October 2018:

  • Armenia;
  • Azerbaijan;
  • Belarus (including equipment used for internal repression);
  • the Central African Republic;
  • China;
  • Congo;
  • Eritrea;
  • Iran (including equipment used for internal repression);
  • Iraq;
  • Lebanon;
  • Libya (including equipment used for internal repression);
  • Myanmar (including equipment used for internal repression);
  • North Korea;
  • Russia;
  • Somalia;
  • South Sudan;
  • Sudan;
  • Syria (including equipment used for internal repression);
  • Venezuela (including equipment used for internal repression); and
  • Zimbabwe (including equipment used for internal repression).

In addition, there are person-related weapon embargoes. These relate to listed individuals as well as related entities, for example, Al-Qaida, as well as certain entities in Afghanistan, Yemen and other countries.

There are also embargoes on the export (and sometimes also the import) of certain dual-use goods as listed in the respective embargo regulations. This currently applies, for example, to Iran, North Korea, Russia and Syria.

Trade offsets

Are defence trade offsets part of this country’s defence and security procurement regime? How are they administered?

The concept of offsets is incompatible with the EU principle of non-discrimination on the grounds of nationality. Offsets are therefore generally considered illegal under European and German defence procurement rules. While this appears to be common ground regarding contractors from the European Union or EFTA, the situation regarding suppliers from third countries is less clear. That said, offsets do not form part of the German defence procurement regime or general practice even with regard to contractors from third countries.