On March 26, 2026, Israel’s Export Control Agency at the Ministry of Economy and Industry (“ECA-MOE”) released a new draft law regulating activities related to dual-use exports. Titled “Foreign Trade Regulation Law: Oversight of Civilian Dual-Use and WMD-Related Exports, 2026” (the “Dual-Use Exports Bill” or “Bill”), the Bill aims to significantly overhaul Israel’s civilian export control regime, replacing the existing, fragmented regulations with a comprehensive, modern framework aligned with international standards. This client update provides an overview of the rationale behind the Dual-Use Exports Bill, its key provisions, initial implications for various stakeholders who may be affected by it, and recommended near-term actions in preparation for its enactment.
The Dual-Use Exports Bill has been published as a draft open for public comments until April 25, 2026. Exporters and other affected stakeholders should consider using this window to submit written remarks, focusing on operational feasibility, timelines, scope questions, exemption criteria, and the practical impact of expanded enforcement and penalties. Early engagement is often the most effective window of opportunity to help shape the final contours of the regime before it proceeds to the legislative process.
Rationale for the Dual-Use Exports Bill: Modernizing Israel’s Export Control Framework
Israel’s current dual-use export control system, based on rudimentary Orders from 2004 and 2006, is widely considered outdated and insufficient to address the complexities of the modern geopolitical and technological landscape. The existing framework also lacks the regulatory tools for effective oversight in today’s environment. Specifically, some of the key drivers for this legislative change are as follows:
- Keeping up with Technological Advancements: Rapid technological developments require a flexible framework capable of addressing emerging technologies faster than possible through multilateral regimes such as Wassenaar. The Dual-Use Exports Bill significantly expands ECA-MOE’s controls beyond the basic international arrangements used as a basis for the existing control framework. The expanded controls proposed under the Dual-Use Exports Bill are manifested both through the addition of independent Israeli control lists, through catch-all clauses, and through control of various activities related to exports not contemplated by traditional multilateral arrangements.
- Addressing Geopolitical, Economic, and Security Risks of Non-Compliance: Under the current system, ECA-MOE assessed that most dual-use export activity may occur without the required licenses and that it does not currently possess the regulatory toolset required for modern, effective enforcement. A weak or perceived weak export control regime can damage foreign relations and hinder access to critical technologies. Moreover, as Israel’s trade partners increasingly make use of export controls as sanctions, exporters who circumvent such sanctions may face blacklisting and trade disruptions, causing significant reputational harm and damage to Israel’s economy.
- Streamlining and Clarity: The Dual-Use Exports Bill aims to consolidate core principles into a single framework and add tools missing from existing legislation.
Key Provisions of the Dual-Use Exports Bill
1. Who Is Subject to the Law
- All exporters connected to exports from Israel: The basic licensing obligation is framed broadly to apply to “any person” (אדם) exporting a controlled dual-use item from Israel (Section 3, Section 4). It can apply both to people who direct such shipments from within Israel and from outside Israel.
- Israeli residents and Israeli corporations: The Bill introduces certain brokering controls that are directed at Israeli residents (תושב ישראל) and Israeli corporations (תאגיד ישראלי), including when the activity occurs outside Israel (Section 5). The draft defines an Israeli corporation as one incorporated in Israel, or one whose center of business is in Israel and is controlled, directly or indirectly, by an Israeli citizen or resident.
- Any stakeholder involved in transshipment through Israel: Since the Bill also controls transshipment through Israel, in connection with a limited list of end-uses and end-users, it may therefore indirectly apply to foreign persons engaged in transshipment through Israel.
- Any person providing certain technical services: The Bill places sweeping limitations on technical support by “any person” for items not on the dual-use control list, in connection with a limited list of end-uses and end-users.
While the draft is centered on Israel-based exporters and Israeli persons, the combination of broad export licensing language and regulation of certain activities that may be conducted abroad by Israeli residents/entities can extend compliance obligations beyond purely domestic exports and should be closely scrutinized by Israeli and foreign stakeholders.
2. What Items are Controlled under the Dual-Use Exports Bill
The Dual-Use Exports Bill distinguishes between “controlled dual-use items” and “dual-use items that are not controlled”, but that may become subject to licensing under a “catch-all” mechanism.
Under the definitions in Section 2 of the Dual-Use Exports Bill, controlled dual-use items are listed on the Israeli “List” (הרשימה). The “List” itself is currently based on the control lists of international regimes/treaties referenced in the First Appendix of the Bill, and currently includes the Wassenaar Arrangement (dual-use goods and technologies), the Australia Group (chemical/biological-related items, including relevant dual-use), the Nuclear Suppliers Group (NSG) Parts 1 and 2 (nuclear and nuclear-related dual-use), and the Chemical Weapons Convention (CWC) schedules. However, Section 49 of the Bill allows the List to be expanded by the relevant minister through an inter-agency process.
In addition, Section 4 of the Bill provides certain ‘catch-all’ authority to control additional items that are ironically defined as “dual-use items that are not controlled”. Such items become controlled if the competent authority notifies the exporter that the item falls within specified high-risk end-use/end-user scenarios:
- The item may contribute to the development of atomic, biological, or chemical munitions.
- Export may violate UNSC sanctions.
- Export may circumvent other sanctions.
- The item may support terrorist activity.
- The item may serve as a component or spare for an illegally exported item.
Moreover, Section 4(b) further introduces a knowledge standard, prohibiting exports of such items even without prior notification, where the exporter knew or should have known of such risks.
What Constitutes an “Export” for Licensing Purposes
Surprisingly, the Dual-Use Exports Bill does not include a definition for the term ‘export’. However, it introduces a broad, technology-focused definition of “export of controlled software and technology” to capture both traditional physical exports outside of Israel as well as ‘deemed exports’ within Israel, as follows:
- Transfers from Israel to outside Israel of controlled technology or software “in any manner,” including electronic transmission.
- Transfers occurring within Israel (directly or indirectly) to:
- a person who is not an Israeli citizen; or
- a person who is not an Israeli resident; or
- a foreign corporation (תאגיד חוץ).
Several carve-outs are embedded directly into this definition, effectively excluding certain transfers from the definition of “export”, such as export of items in the public domain, basic scientific research, and certain open-source software. The current language of these carve-outs does not neatly align with the well-known ‘General Technology Note’ and ‘General Software Note’ in the Wassenaar Arrangement and the international arrangements referenced in the abovementioned control ‘List’.
4. Licensing and Reporting Obligations
- Baseline export licensing (Section 3): No person may export a controlled dual-use item without a valid export license issued by the competent authority )except where the item is subject to Israel’s Defense Export Control Law(.
- Catch-all export licensing and reporting duties (Section 4): MOE-ECA may require a license to export “dual-use items that are not controlled” for certain end-users and end-uses where certain risk-based criteria apply (WMD use, terrorism, sanctions evasion, etc.), and exporters may have affirmative reporting duties where they suspect such end-use prior to exporting such items.
- Licensing/Reporting of additional export-related activities:
Under the Bill, licensing and/or reporting apply not only to direct exports from Israel but also to the following related activities:- Brokering between foreign parties (Section 5), concerning “controlled dual-use items or technical assistance, by Israeli residents or Israeli corporations where informed of such licensing requirement by ECA-MOE, based on the end-user/end-use criteria in Section 4 or where there is a reasonable suspicion the activity involves an end-user or end-use prohibited under Section 4 of the Bill.
- Transshipment (Section 6) of any items – whether “controlled dual-use items” or “dual-use items that are not controlled” – where there is a reasonable suspicion the transshipment involves an end-user or end-use prohibited under Section 4 of the Bill. Moreover, the Bill grants ECA-MOE and Israeli Customs officials detention/confiscation rights for any goods suspected of meeting the prohibited end-user/end-use criteria in Section 4.
- Technical assistance (Section 7) regarding “controlled dual-use items”, where informed of such licensing requirement by ECA-MOE, based on the end-user/end-use criteria in Section 4 or where there is a reasonable suspicion the activity involves an end-user or end-use prohibited under Section 4 of the Bill.
5. De Facto ‘Release’ Mechanisms – Wide Licenses
Alongside the significant expansion in licensing scope, the Dual-Use Export Bill also lays the foundation for several types of ‘releases’ that may reduce licensing burdens for low-risk exports.
One of the key flexibilities under the Dual-Use Export Bill is that Head of MOE-ECA is expressly authorized to determine when an export license will be limited to a particular transaction and when it may be issued in a form that is not limited to a specific transaction (Section 8). In particular, the draft provides that a non-transaction-specific license may be limited (or framed) by defined parameters – including specific destination countries, a defined period of time, a defined purpose/end-use, or a defined supplier. This authority potentially allows exporters to operate under a “wide” license covering multiple shipments, multiple sales, and potentially multiple end users, so long as the exports remain within the license scope as set by the regulator; the Head of the Department’s determinations on these licensing categories must be published on the Ministry’s website.
In addition, the Head of MOE-ECA is empowered to exempt activities described in the Third Appendix of the Bill from licensing. The Third Appendix includes a closed set of specific activities such as temporary exports for demonstrations, as well as an open-ended exemption for certain low-risk items to low-risk countries, subject to certain reporting obligations, to be determined by the Head of the ECA-MOE after a certain inter-agency consultation. It remains to be seen which items and which countries will benefit from such exemptions.
6. Supervision, Inspection, and Enforcement Powers
The Dual-Use Export Bill would significantly expand the ECA-MOE’s supervisory and enforcement toolkit across information-gathering, inspections, investigative measures, and administrative sanctions.
First, the ECA-MOE may require exporters to provide information and supporting materials both in the context of a license application and, importantly, even where no application has been submitted, if the authority has a reasonable basis to suspect that the exporter intends (or attempted) to export controlled items. This includes authority to demand documents and business records, require periodic reports, and direct Customs not to release goods for export pending completion of the regulator’s review. The draft further authorizes appointment of inspectors and grants them very broad investigative powers.
Importantly, the draft introduces a structured administrative enforcement regime centered on significant monetary penalties for a range of violations (including unlicensed exports and non-cooperation with inspectors), with additional amounts for continuing or repeat violations, coupled with procedural safeguards (notice, opportunity to be heard, written reasoning) and publication obligations designed to enhance transparency and deterrence.
7. Liability and Penalties
The Bill establishes layered exposure, including administrative monetary sanctions, deferred sanctions, criminal liability, and individual accountability for corporate management.
Administratively, the regulator may impose substantial civil fines for violations such as providing incorrect information in licensing or enforcement contexts, failing to provide required information or records, violating reporting/recordkeeping obligations, exporting without a license or in breach of license conditions, unlicensed brokerage, unlicensed technical assistance, and failure to comply with inspectors’ directions; the draft also provides for enhanced liability for continuing and repeat violations.
Criminally, the draft provides for offenses relating to obstruction of enforcement (including materially interfering with an inspector or knowingly providing false information) and more serious export-related offenses in aggravated circumstances, including exports to an “enemy state,” violations of UN Security Council measures adopted into Israeli law, and exports contrary to an express instruction of the competent authority; certain grave violations can carry significant imprisonment exposure and elevated fines.
In addition, the draft expressly addresses liability of corporate officers: an “office holder” (including, for example, an active manager or other person responsible for the relevant field within the company) is required to supervise and take all reasonable steps to prevent offenses by the corporation or its employees. The draft creates a presumption that an officer breached that duty if the corporation (or an employee) commits an offense, unless the officer demonstrates that they did everything reasonably possible to fulfill the duty of supervision and prevention – effectively making corporate governance, internal controls, training, and documentation central to mitigating personal exposure.
8. Implications and Recommended Near-Term Actions
The Dual-Use Exports Bill represents a major step toward aligning Israel’s export control framework with global practice. In its regulatory impact assessment ECA-MOE stated it expects license applications to at least double, on top of a threefold increase due to the transfer of encryption oversight to the Ministry in March 2026. To support implementation, the Ministry has requested both significant increases in its annual budget as well as a 25-person increase to its current staff.
Exporters should therefore treat the consultation period as a meaningful opportunity to influence the final rule set and to begin operational readiness planning. Among other things, the consultation period may be used for the following:
- Identify your exposure to control under the new Bill: Does your organization develop, market, sell, or otherwise support (whether in Israel or abroad):
- “Controlled dual-use items”
- Items that risk falling into the definition of “dual-use items that are not controlled” (e.g., items subject to sectoral sanctions).
- If it does, map out which of your activities in relation to such items may be controlled, whether as ‘exports’, ‘brokering’, ‘technical assistance’, or ‘transshipment’.
- Identify which licensing or reporting obligations would be relevant to your activities: Consider how critical a wide license or an exemption would be to your activities.
- Use the comment window (deadline: April 25, 2026): Use the comment period to provide comments on the scope of the proposed controls, exemption criteria, licensing processes, and other key features of the proposed legislation.
- Update internal compliance program and end-use/end-user screening: Anticipate expanded catch-all exposure and increased enforcement, including recordkeeping obligations. Moreover, as the regulator scales up to handle a projected increase in licensing, exporters should prepare for more structured processes, information requests, and audits – and should prepare to allocate internal resources accordingly. Given the personal stakes for persons in management positions and for compliance officers, personal involvement by relevant managers is key.
