Dual-use compliance basics: why it matters for your global growth
Dual-use items – goods, software and technologies with both civilian and military applications – are tightly regulated in the EU, US and many other jurisdictions. For mid-sized industrial companies, getting dual-use compliance wrong can mean export bans, fines and personal liability. This article explains the core building blocks, typical risks and what a robust compliance approach looks like.
What are dual-use items in practice?
Dual-use items are not limited to “obvious” military goods. Many DACH hidden champions operate in grey zones without noticing it at first.
Typical examples include:
- High-performance machine tools, sensors, optics and materials
- Advanced electronics, chips, FPGA boards, RF components
- Encryption software, secure communication tools, certain AI/ML systems
- Chemicals, specialized coatings, propulsion or navigation components
These items are listed in annexes and control lists (e.g. EU Dual-Use Regulation, US Export Administration Regulations). But even components not explicitly listed can be controlled if they are intended for a critical end-use or end-user (e.g. defence, surveillance, weapons programs).
Core principles of dual-use compliance
Dual-use compliance essentially answers three questions: What are you exporting, to whom and for what purpose?
1. Classification: what exactly are you exporting?
You first need to determine whether a product, software or technology is controlled:
- Match technical parameters against control lists (e.g. performance thresholds, precision, encryption strength).
- Consider not just the end product, but also modules, software updates, technical assistance and know-how transfers.
- Watch for “deemed exports” – providing controlled technology to foreign nationals, even within your own facility.
For engineering-driven companies, this step requires close interaction between R&D, sales and legal/compliance, supported by clear internal classification guidelines.
2. Destination and end-user checks
Even a non-controlled item can become a compliance risk if it is shipped to a sensitive country or buyer.
- Screen all counterparties (customers, distributors, intermediaries) against sanction and denied-party lists.
- Assess the country risk (embargoes, sectoral sanctions, defence relevance).
- Request end-use statements where appropriate; be cautious with vague or implausible descriptions.
For companies considering US market entry, you also need to understand how US export controls may apply extraterritorially – for example, if you incorporate US-origin components into your products.
3. End-use controls and “red flags”
Authorities focus increasingly on the real-world use of dual-use items. Warning signs include:
- Customer insists on unusual shipping routes or opaque intermediaries.
- Technical requirements clearly exceed stated civilian use cases.
- Reluctance to provide company information, ownership structure or end-user certificates.
In such cases, “not asking further questions” is a risk. Documentation of your due diligence process is often the line between a manageable issue and an allegation of intent.
Key building blocks of a dual-use compliance program
For DACH hidden champions, a pragmatic, engineering-compatible compliance framework is crucial. It should protect management from personal liability while enabling international expansion.
Governance and responsibility
- Board-level acknowledgement that dual-use compliance is a strategic risk topic, not only a legal detail.
- Clear assignment of responsibilities (export control officer, escalation paths, backups).
- Documented policies that are readable for engineers and sales – not just legal specialists.
Processes embedded in daily operations
- Classification workflow integrated into product development and offer processes.
- Customer and transaction screening embedded in CRM and ERP, not in isolated spreadsheets.
- Release and escalation rules (e.g. when to involve legal, when to refuse a transaction).
Training, documentation, monitoring
- Regular, role-specific training for sales, engineering and logistics teams.
- Audit-proof documentation of key decisions and risk assessments.
- Periodic internal audits and updates when laws or product portfolios change.
Dual-use compliance and US defence market entry
For companies eyeing the US – and particularly the defence ecosystem – dual-use compliance is not just a defensive measure. It is a market access requirement and a value driver.
Proper structuring can help you:
- Ringfence your DACH parent company from US-specific defence and liability risks via dedicated US entities.
- Address US defence customers’ expectations on compliance, reliability and speed.
- Support premium pricing (often 300–400% above DACH levels as a potential, not a guarantee) through credible, documented compliance and quality frameworks.
At LANA AP.MA International Legal Services (lanaapma.com / lanaapma.ch), dual-use and export control topics are a recurring component of our Market Entry USA / US Defence advisory. From our base in Frankfurt am Main, with offices in Basel and Taipei, we combine legal and economic perspectives, including rare on-the-ground insight through Western legal admission in Taiwan.
How LANA AP.MA structures dual-use compliance in practice
LANA AP.MA is a boutique law and advisory firm (founded 2021, led by Dr. Stephan Ebner) focusing on US market entry (including defence) and global M&A. Our approach to dual-use compliance follows a few core principles: aggressive in identifying risks early, comprehensive in structuring the solution, and focused on actually solving the problem rather than adding bureaucracy.
Typical steps in a dual-use-focused market entry project
- Initial risk mapping of products, target markets and existing distribution.
- Entity and ringfencing setup in the US to separate risk spheres.
- Design of a lean export control/compliance framework adapted to your internal resources.
- Integration of distributor or partner structures without losing compliance control.
For US law firms and corporate legal teams, we offer plug-and-play EU case handling from Frankfurt – with speed and outcome orientation as priorities.
Anonymous customer example
One mid-sized European technology manufacturer (500+ employees) wanted access to US defence-adjacent demand while protecting the family-owned parent company. The management saw the US as “too risky”. Through a structured ringfencing setup, dual-use classification of key products, and distributor contracts with clear compliance clauses, the company was able to:
- Limit liability exposure at parent level through a dedicated US entity.
- Demonstrate robust compliance to demanding US customers.
- Position pricing significantly above previous DACH levels, based on documented value and compliance reliability.
Over 30 verified 5★ reviews of LANA AP.MA’s work (across market entry and M&A) underline that these structures can be implemented efficiently when legal and economic aspects are handled from a single source.
Next steps: turning dual-use compliance into a strategic asset
Dual-use compliance is more than a legal obligation. It is a prerequisite for scaling internationally, entering US defence-adjacent markets and securing premium pricing potential. With a clear classification approach, embedded processes and ringfenced structures, you can reduce risk while enabling growth.
If you want to explore how your current setup supports (or limits) US and global expansion, book a short intro call with LANA AP.MA International Legal Services via lanaapma.com. This content is for general information only and does not constitute legal advice for any individual case.
