German Foreign Trade Law

The Außenwirtschaftsgesetz (AWG)

German foreign trade law is governed by the Außenwirtschaftsgesetz (AWG) and the Außenwirtschaftsverordnung (AWV), which together form the legal framework for cross-border trade in goods, services, capital, and technology. The AWG was comprehensively reformed in 2013 to modernise Germany’s export control system and to enhance investment screening mechanisms. Section 1 AWG establishes the fundamental principle of freedom of foreign trade (Grundsatz der Freiheit des Außenwirtschaftsverkehrs): all foreign trade transactions are unrestricted unless the AWG or AWV expressly provides otherwise. This principle reflects Germany’s export-oriented economic model and its commitment to multilateral trade liberalisation. The restrictions that exist are primarily motivated by national security (äußere Sicherheit), foreign policy interests (außenpolitische Interessen), and the prevention of disruptions to the peaceful coexistence of nations (Störung des friedlichen Zusammenlebens der Völker), as listed in § 5 AWG. The AWG also implements EU sanctions regulations and UN Security Council resolutions, and provides the legal basis for German participation in multilateral export control regimes, including the Wassenaar Arrangement, the Australia Group, the Nuclear Suppliers Group, and the Missile Technology Control Regime.

Export Controls

German export controls are among the most developed in the world, operating at the intersection of EU law, multilateral regimes, and national legislation. The AWV prescribes detailed licensing requirements for the export of dual-use items (goods, software, and technology that can be used for both civilian and military purposes), war weapons (Kriegswaffen under the Kriegswaffenkontrollgesetz, KrWaffKontrG), and other controlled goods (including arms, ammunition, and certain chemicals). The EU Dual-Use Regulation (2021/821) sets a common framework for dual-use export controls across the EU, and the AWV supplements it with additional national controls, including the catch-all clause (Auffangtatbestand) under § 8 AWV, which empowers the government to require an export licence for items not listed on the EU control list if the exporter has been informed — or has reason to know — that the items are intended for use in connection with weapons of mass destruction or military end-uses in certain countries. The national control list (Ausfuhrliste), part of the AWV, catalogues controlled items, including military goods, armaments, and certain sensitive technologies such as encryption software and advanced manufacturing equipment. The enforcement of export controls has been significantly strengthened following the Export von Rüstungsgütern decisions of the Bundesverwaltungsgericht, which confirmed the legal obligation of exporters to exercise due diligence and to verify the end-use and end-user of controlled items.

Sanctions Implementation

Germany implements EU sanctions (Sanktionen) and UN Security Council sanctions through a combination of directly applicable EU regulations and national implementing measures under the AWG. The Bundesamt für Wirtschaft und Ausfuhrkontrolle (BAFA) is the primary licensing and enforcement authority for economic sanctions, including asset freezes, trade embargoes, and restrictions on financial services. BAFA’s Sanktionsdurchsetzungsstelle (Sanctions Enforcement Unit), established in 2023, coordinates sanctions enforcement across federal agencies and maintains a public register of sanctioned persons and entities. The AWG provides criminal penalties for the violation of sanctions under § 17 AWG: intentional violations may be punished by imprisonment for up to five years, or up to ten years if the violation endangers national security. The Außenwirtschaftsgesetz also provides for the freezing of assets and the forfeiture of profits derived from sanctions violations. The Federal Ministry for Economic Affairs and Climate Action (Bundesministerium für Wirtschaft und Klimaschutz, BMWK) issues administrative guidance on sanctions implementation, including the interpretation of the vaguely worded “circumvention” (Umgehung) provisions in EU sanctions regulations, which prohibit transactions that circumvent or undermine sanctions. The Bundesgerichtshof has held that the exporter bears the burden of verifying that a transaction does not involve entities owned or controlled by sanctioned persons.

The Role of BAFA

The Bundesamt für Wirtschaft und Ausfuhrkontrolle (BAFA), headquartered in Eschborn, is the central administrative authority for foreign trade controls. BAFA processes over 20,000 export licence applications annually, operating across three directorates: export controls, energy and raw materials, and foreign trade promotion. BAFA’s Export Control Directorate is divided by technology area (dual-use, weapons, chemicals) and maintains specialised units for country-specific sanctions analysis and end-use verification. BAFA cooperates closely with the Federal Office for the Protection of the Constitution (Bundesverfassungsschutz) and the Federal Intelligence Service (Bundesnachrichtendienst, BND) in assessing the reliability of foreign end-users. BAFA’s decisions on export licence applications are subject to judicial review before the Verwaltungsgericht Frankfurt am Main (administrative court). In addition to licensing, BAFA conducts compliance audits of exporters, imposes administrative fines for minor violations, and refers serious violations to the public prosecutor’s office for criminal investigation. BAFA also operates the denial notice database (Ablehnungsdatenbank), which records applications that have been refused by EU member states to prevent forum shopping. The Merkblätter (guidance notes) published by BAFA on export controls, sanctions implementation, and investment screening are widely relied upon by practitioners and are regularly updated to reflect changes in EU and German law.

Investment Screening

Germany has one of the most comprehensive investment screening regimes in the European Union, governed by §§ 55–63 AWV and §§ 4–19 Aussenwirtschaftsgesetz. The regime distinguishes between sector-specific screening (sektorspezifische Prüfung) for investments in defence, cryptography, and certain security-relevant industries, and cross-sectoral screening (sektorübergreifende Prüfung) for investments in critical infrastructure, including energy, water, telecommunications, healthcare, finance, transport, and media. In 2020, the screening thresholds were significantly lowered, and the scope of sectors subject to mandatory notification was expanded to include AI, robotics, semiconductors, and biotechnology — reflecting the EU Regulation 2019/452 (Foreign Direct Investment Screening Regulation). The BMWK may prohibit or impose conditions on foreign acquisitions if they pose a threat to the public order or security of Germany or the EU. The review period is two months for the initial phase and up to six months for the in-depth investigation. The Siemens/Gamesa and Mubea decisions illustrate the BGH’s approach: the court has upheld the BMWK’s broad discretion to prohibit acquisitions where the foreign investor is state-owned or state-controlled and the acquisition targets critical technologies. The Länder (federal states) have also enacted investment screening laws for acquisitions of land by non-EU purchasers in certain regions, though these have been the subject of constitutional challenges.