Pandora’s box: from export-restricted goods to nuclear technology
Only a small fraction of companies worldwide generally do trade in export-restricted goods. Nevertheless, SAP has still come up with and marked the appropriate fields for configuration in the customer master data. In this blog post, we will show you what export-restricted goods actually are, give you a broad overview of the issues involved and show you what possibilities of analysis exist in SAP.
The subdivision of export restrictions
Before we get to the exciting bit, here’s the dry theory:
In Germany, the cornerstone of export restrictions is foreign trade law, which consists of the Foreign Trade and Payments Act (AWG), the Foreign Trade and Payments Ordinance (AWV) and the War Weapons Control Act (KWKG).
We will not go into the details here, but will only set out some of the general foundations, as this area is so extensive and detailed that you could easily spend your whole life working on it – and as auditors we certainly do not have the time to do that! So, at a glance, here are the most important things you need to know:
Based on the restrictions in the Foreign Trade and Payments Act (AWG), the Foreign Trade and Payments Ordinance (AWV) sets out concrete regulations concerning:
- Licensing requirements
These serve nationally as regulations for the implementation of the export controls carried out by customs. On the website of the German customs authorities, a distinction is made between four categories of goods subject to export restrictions: armaments, dual-use items, instruments of torture and rough diamonds. War weapons are treated separately under foreign trade law, and this is not something we will seek to explain in what follows. Instead, we shall focus on so-called dual-use items, which are subject to a licensing requirement. The name “Dual-Use” already lets us into part of the secret: these are goods that can be used for both civilian and military purposes. Dual-use items include, for example, chemicals or machinery, but also technologies and materials, and may therefore be of particular relevance to one or two of you auditors out there.
A list of all dual-use items that are subject to authorization requirements can be found in this EU regulation.
This list is based on a Regulation adopted by the EU for all Member States and providing for common authorization requirements and procedures for all EU Member States for exports (Council Regulation (EC) No. 428/2009 of 5 May 2009 (EC dual-use Regulation). But that is not all. In addition, there may also be national restrictions requiring authorization, although the goods are not on the list of EU regulations. According to German law, these goods can be found in Section 9 of the Foreign Trade and Payments Ordinance (AWV). There it says the following in paragraph 1:
(1) The export of goods which are not cited in the Export List or in Annex I of Council Regulation (EC) No. 428/2009 of 5 May 2009 setting up a Community regime for the control of exports, transfer, brokering and transit of dual-use items (OJ L 134 of 29 May 2009, p. 1), most recently amended by Regulation (EU) No. 388/2012 (OJ L 129 of 16 May 2012, p. 12), shall be subject to a licence if the exporter has been informed by the Federal Office of Economics and Export Control (BAFA) that
- these goods are or can be wholly or party destined for the construction or the operation of a facility for nuclear purposes within the meaning of Category 0 of Annex I of Regulation (EC) No. 428/2009 or for installation in such a facility and
- the country of destination is Algeria, Iran, Iraq, Israel, Jordan, Libya, the Democratic People’s Republic of Korea, Pakistan or Syria.
Analysis of export-restricted goods in SAP
So that’s the theory then. Now let’s take a look at SAP and check the corresponding fields accordingly.
To sum up: only those exporting the goods need an authorization. Therefore, we need to take a look at our customer master data and check the characteristics of those fields. The general part of the customer master data can be found in the following SAP table:
KNA1 (General Data in Customer Master)
The easiest way to access the table is via the familiar transaction “SE16” or “SE16N”. For the table, we specify the table named above:”KNA1″ and confirm with the “Enter” key. This gives us an overview with all the field names and the corresponding technical name. We then search for the following lines and specify the options below one after the other:
|Field name||Option||From value||Technical name|
|Biochem. Warfare||≠ Select: Not equal to||CCC01|
|Nucl.nonprolif.||≠ Select: Not equal to||CCC02|
|Natl.security||≠ Select: Not equal to||CCC03|
|Missile techn.||≠ Select: Not equal to||CCC04|
You do however have to examine each option individually one after the other. If you select all the fields at once and “Select: Not equal to”, it is very likely that you will not get any results at all, since all four conditions must apply to a given customer for SAP to deliver a result. If you have entered the settings one after the other, you receive all customers for whom legal authorization is required based on the goods to be delivered. The option “Select: Not equal to” with an empty “From value” ensures that we get all customers for whom a value (any value, independent of what the actual value is) is maintained in the corresponding field.
For the sake of completeness, here are the abbreviations of the field names from SAP once again:
|Biochem. Warfare||Indicator for biochemical warfare for legal control|
|Nucl.nonprolif.||Indicator for nuclear nonproliferation for legal control|
|Natl.security||Indicator for national security for legal control|
|Missile techn.||Indicator for missile technology for legal control|
In order to also check the German licensing requirements for the countries mentioned in Section 9 Foreign Trade and Payments Ordinance (AWV), paragraph 1, sentence 2, we have to scroll a little further up in the overview for the SAP table “KNA1” to the field name “Country”, technical name “LAND1”. This time, select the option: “Select: Equal to” and use the abbreviations in the following table:
|Country||ISO-3166 Alpha-2 Abbreviation|
|Democratic People’s Republic of Korea||KP|
Unfortunately, I have not found a way to specify a list of countries, so that all countries can be evaluated at the same time. If you have any idea how to do this, please let me know in the comments!
Of course, we can use the SQL Editor, with the following statement (tested on a SAP Hana database):
SELECT * FROM KNA1 WHERE LAND1 IN (“DZ”, “IQ”, “IR”, “IL”, “JO”, “LY”, “KP”, “PK”, “SY”)
The SQL Editor can be accessed as usual using the “DBACOCKPIT” transaction and the “Diagnostics – SQL Editor” tabs. Run the query by pressing “F8”.
Once you have a list of results from one of the two procedures, you must check whether the corresponding authorization/licensing requirements have been met and whether the master data has been properly maintained. There is also the possibility that your company uses the newer SAP module “Global Trade Services”, which is part of the SAP GRC solution. In this case, it is almost certainly possible for you to use even more complex options in SAP Customizing.