The Prime Minister, Mr. Benjamin Netanyahu, has approved the recommendation of the team which was appointed to examine the supervision of cyber exports.

Just to recall, on January 1, 2016, the Cyber bureau within the Defense Export Control Agency of the Ministry of Defense (DECA) published draft amendments to the Export Supervision Order on cyber exports.  After this publication, DECA approached the public and industry players in order to receive their input to the draft amendments. We reported on this development in a previous newsletter, click here to read.

Our firm filed its input with DECA, with respect to clients of the firm.  In our input we explained the position taken by potential exporters of cyber technologies, namely that the definition of the phrase, which lies at the foundation of the amendment, 'intrusive software' is extremely broad and encompasses within it a wide range of items which would be subject to regulation.  This is in addition to burdensome licensing requirements which, together, are likely to bring about unwelcome results such that the legal framework limits the array of the security and innovation and is also likely to decrease the ability of the companies and individuals to protect themselves against cyber threats which are on the increase.

This proposed wide definition, which was even broader than the definition given in the Wassenaar Arrangement (on Export Controls for Conventional Arms and Dual-Use Goods and Technologies – which Israel has not signed, but which it has adopted), includes within it common and necessary software tools, which are frequently used in software engineering and which are not necessarily malicious software tools.  Rather these tools are the basis for many software products – remote management software, anti-virus software, management software, monitoring software and management systems.  If all this were to remain under supervision with tedious licensing requirements, it would make the process of innovation and entrepreneurship, as well as the ongoing work in these fields, limited, lengthy and costly.  So an Israeli company, which tries to compete with a foreign company, may encounter difficulties which do not apply to the foreign company and thereby may lose transactions as a result of delays and/or costing in seeking approvals under the Order as it was proposed to be amended.

In light of the comments which were received, including also those from our office, on April 19, 2016, the spokesman for the Prime Minister published a statement that the team which the Prime Minister, Mr. Benjamin Netanyhu, had established to examine the supervision on export in the field of cyber technologies had decided that the supervision over such field will stick to the Wassenaar Arrangement, but will not go beyond that, and that in the interests of certainty as well as the reduction of the regulatory burden, definitions will be published which will clarify the scope of the supervision. Also a thorough examination will be conducted into the issuing of exemptions and concessions to the obligation to obtain a license, according to policy, types of products, technologies and services.  This would be done together with a continuous monitoring of developments concerning Wassenaar Arrangement and the policies with respect to supervision over export of cyber products in other countries and taking into account the national interests and assets with respect to the security, political and economic sphere.  There will also be on-going consultation with the cyber industry and in particular regarding the definition of the tools.  It was also decided that the Defense Export Control Agency of the Ministry of Defense would oversee the export for use by defense forces or for them, in accordance with details to be published and subject to the provisions of the law.    The supervision over all other export in the cyber field will be carried out by the Ministry of the Economy together with the Cyber Bureau.

There is no doubt that this is not the last word in Israel on the subject of the control of cyber export.  The balance between the desire to seek to ensure that the advancements and the technologies will not be used by hostile parties on the one hand, and the desire to maintain the competition and attractiveness of the Israeli industry in the field, on the other, poses a serious challenge to the State and the authorities.  The joint cooperation which is to be established between the Ministry of the Economy and the Cyber Bureau will continue to be examined by the relevant players in the industry and our office will continue to follow and advise on this process.