[08.05.2008 first posted on silicon republic]
Irish-based technology firms exporting hi-tech hardware as well as intangible items like software over the internet could face fines ranging from €12,500 up to €10m if they fail to meet stringent new laws.

The new Export Controls Act, which was recently passed by the Dail, will have a significant impact on exporters of dual-use goods. It will affect exporters of a very wide range of goods including ‘high-tech’ equipment, chemicals and pharmaceuticals.
It will also impact software developers and distributors, R&D and technical support centres, engineering and chemical consultants and universities and research institutions.
This new legislation builds on existing export controls by expanding the product coverage to explicity include intangible exports; vastly increasing the monetary penalties from €12,500 to €10m for non-compliance and extending powers of the Revenue Commissioners/Customs authorities to conduct audits.
Damian McCarthy of PricewaterhouseCoopers told siliconrepublic.com that firms could be fined if they fail to properly indicate their intended use overseas or ensure that they will not be put to nefarious use such as by terrorists or criminals.
“These controls have always been there, but if you look at developments in recent years such as 9-11, we now have a situation where using the internet and email sensitive hi-tech information can transfer virtually.
“The controls use to focus on military goods and dual-use goods that could be used by civil or military users. These include hardware, high-end computing systems, high end chemical equipment and other materials that could be used in the development of explosives or chemical weapons or drugs.”
As an example, McCarthy cited firms exporting encryption software. On the one hand it might enable a firm to encrypt sensitive commercial or financial information, on the other a criminal network may use it to cloak drug trafficking.
“Firms in Ireland whether manufacturing goods or engaging in R&D will be obliged to not only show they know more about the customers for whom the goods are intended but also what those customers will do whit that equipment. They will need to apply for export licenses and the department will conduct its own investigation.
“For example, if you’re making glassware for lab-use, you will need to proved that you are making it fro a real college or business and not some guy with a suitcase full of cash.”
McCarthy said that large technology companies based out of Ireland will already have sophisticated internal controls to handle export controls and are conscious of the new changes.
“The real challenge is for mid-tier or smaller software houses or R&D and call centres that never saw their activities as exports – these are the companies that stand to have the biggest potential risk of exposure because of their lack of familiarity with obligations in this area.
“A lot of standard off-the-shelf software could be fine but where you are moving into sophisticated dual-use capabilities that’s where the concern lies.
“But higher end encryption or software that can be used to operate controlled hardware, the fact that it is distributed in intangible form is going to be a real challenge to exporters in terms of assuring the authorities who will be accessing that software. You can’t just sell it to who you like and not be responsible for its subsequent use,” McCarthy warned.
By John Kennedy