The Trade and Industry Committee has agreed to
the following Report:
STRATEGIC EXPORT CONTROLS
22. The operation of strategic export controls, and
analysis of weaknesses in the system of controls, have been matters
of interest to our predecessors. In its Report of March 1992 on
Exports to Iraq: Project Babylon and Long Range Guns the
Committee inquired into a tangled web of events between 1988 and
1990, which ended with the detention of eight huge steel tubes
at Teesport and the arrest of a number of people involved.
The Committee's conclusions were critical of several aspects of
the performance of DTI's Export Control Organisation (ECO). In
June 1996 the Committee published its Report on Export Licensing
and BMARC, following a debate in June 1995 in which the allegations
of diversion to Iran of naval cannon exported by BMARC to Singapore
in the late 1980s had in effect been referred to the Committee.
The Committee examined export licensing procedures in some detail,
both as they had been in the late 1980s, and as they were at the
time; and came to a number of critical conclusions.
Scott Report and Green Paper
23. In November 1992, following the collapse of the
prosecution of Matrix Churchill executives for alleged export
control offences in relation to the export of machine tools to
Iraq in the 1980s, an inquiry was established by the Government
into the Export of Defence Equipment and Dual - Use Goods to Iraq
and Related Prosecutions, undertaken by Lord Justice Scott. His
Report was published in February 1996, and was highly critical
of both the statutory basis for strategic export controls
the Import, Export and Customs Powers (Defence) Act 1939, passed
as emergency legislation on the outbreak of the Second World War
and many of the procedures and practices followed by departments
in operating those controls.
His recommendation of a comprehensive review was accepted by the
then Government, which published a Green Paper on Strategic Export
Controls in July 1996 .
This sought responses by the end of October 1996, to be followed
by more detailed consultation in late 1996 and early 1997. The
36 responses to the Green Paper were placed in the Library in
February 1997 and subsequently published as a departmental volume
in June 1997.
These responses have been very useful in preparing this Report.
24. The new Government came to power with a number
of commitments designed to be implemented quickly without the
need for legislation, primarily the agreement and publication
of new criteria in considering applications for export licences
announced in July 1997 and the adoption of an EU
- wide Code of Conduct, formally agreed in June 1998. It was not
until 1 July 1998 that it published its White Paper on Strategic
Export Controls, seeking written comments by the end of September
These responses 54 of them were made publicly
available on 30 November 1998.
Copies were made available to the Committee in confidence on 17
November, and have assisted the preparation of this Report. Legislation
in the 1998 - 99 Session should technically be possible, although
responses to the White Paper in some areas, particularly proposed
new controls over the export of intangibles, raise genuinely complicated
issues requiring resolution. The Minister assured us that legislation
would be introduced when parliamentary time was available.
We note that the Queen's Speech makes no reference to the Bill.
Given that almost 3 years have passed since all parties accepted
the strong recommendation in the Scott Report that there should
be a new legislative framework for strategic export controls,
and that controls are still being operated under a barely refurbished
piece of emergency legislation from 60 years ago, we hope that
time can be found for such largely uncontroversial legislation.
25. We decided to inquire into the proposals in the
White Paper and related matters as part of a wider programme of
inquiries into matters connected with ethical trading, and to
take forward some of the detailed concerns raised by our predecessors.
Fortunately, we have not had to delve into the intricacies of
particular past cases. We have benefited from the results of the
Government's own inquiries into two recent cases involving trafficking
of arms in contravention of UN embargoes: in 1995 to Rwandans
in Zaire by Mil - Tec, an Isle of Man - based company, and in
1997 - 98 to Sierra Leone by Sandline, a UK company.
We have also been aware of the inquiry into Foreign Policy and
Human Rights undertaken earlier this year by the Foreign Affairs
Committee, although the results of that inquiry were unfortunately
not available to us in drawing up this Report. The Committee heard
oral evidence on 10 November 1998 from Amnesty International UK
(AIUK) and Saferworld: the Defence Manufacturers Association (DMA):
the Joint Electronics and Telecommunications Security Export Control
Committee (JETSECC) of the Federation of the Electronics Industry:
and the Minister at the DTI responsible for the ECO, Barbara Roche
MP, and her officials. We also benefited from a most instructive
informal briefing and visit to the ECO's offices where we were
able to see for ourselves the processing of licence applications.
We are grateful to all those who have assisted in the inquiry.
26. The new Government is also committed to the production
of an Annual Report on UK strategic exports, setting out the state
of export controls and reporting hopefully in greater
detail than has been the case in the past on their application.
We await its publication with interest and some impatience. The
1998 White Paper suggested that it was "likely that various
Select Committees will wish to examine the Annual Report which,
in turn, may lead to a parliamentary debate".
Several Select Committees are potentially concerned, primarily
Defence, Foreign Affairs, International Development and ourselves.
As we reported to the House in conjunction with the Defence Committee
in July 1998 "we consider that to leave such scrutiny to
the individual exertions of each of these committees would risk
confusion, and would be likely to result in effective scrutiny
being lost in the gaps between committees ..... . It is for all
the committees involved, working through the Liaison Committee
to propose any sort of new joint mechanism. At this stage, we
emphasise our joint belief that it would be desirable to have
some definite mechanism for effective consideration of these matters
by select committees."
Proposals are being considered for some form of joint consideration,
which we hope will bear fruit in due course. We have therefore
refrained in this Report from anticipating the possible outcome
of such joint inquiry, and from attempting to lay down in advance
of its publication a detailed template for the first Annual Report.
The experience we have gained of the process of licensing as a
result of this inquiry will however be of obvious assistance in
scrutiny of the Government's Annual Report in due course.
27. From our examination of the White Paper, the
responses made to it and the evidence submitted to us, it is clear
that it would be foolish to examine the UK system of controls
in isolation from those of our allies and partners. Although there
remain a few areas where the UK pursues a purely national policy
such as the arms embargoes on Argentina and Iran, or in
subjecting some goods to dual - use controls beyond those in multilateral
or where there is within an international embargo a significant
degree of national discretion notably the rather loosely
phrased EU arms embargo on China for the most part UK
controls operate as part of an array of interlocking and overlapping
multilateral regimes, under the auspices of the EU, OSCE and UN.
The EU's role has significantly expanded through adoption, albeit
only as a Council Declaration rather than a legally binding Joint
Action or Common Position, of the Code of Conduct on Arms Exports.
The Wassenaar Arrangement, formally launched in July 1996, with
the aim of promoting transparency and greater responsibility in
transfer of conventional arms and dual - use goods and technologies,
offers great opportunities for concerted international action
not yet fully realised. The 33 participating states include several
states implicated in recent cases of UN sanctions breaches. Other
arms exporters such as China, Brazil and South Africa are not
participating. We hope that the Annual Report will include
details of work underway within the Wassenaar Arrangement, including
efforts to increase the number of participating states, and to
pursue cases where there would seem to have been a failure of
control by participating states.
28. Such internationalisation makes the system far
stronger, but also more rigid, since any change has to be agreed
by a large number of other national and international authorities.
It also facilitates constructive comparison with arrangements
in other nations. Evidence from non-governmental organisations
(NGOs) referred to arrangements for parliamentary scrutiny in
the US, Canada and Sweden: to rules on registration of dealers
in Germany: to the operation of licensing by default in France:
and to end - use controls operated by Belgium and other countries.
If, as we envisage, there develops a coherent form of UK parliamentary
scrutiny of strategic exports, it will hopefully be possible to
learn from such examples, and to develop a constructive relationship
with similar bodies in other national parliaments.
1 Second Report 1991 - 92, HC 86 Back
Report of 1995 - 96, HC 87 Back
115 of 1995 - 96 Back
Deb, 20 February 1997 col 725w: HC Deb, 5 June 1997, cols
236 - 7w: URN 97/752 Back
are referred to by reference to the respondent and date as e.g.
"AIUK, 1996" Back
Deb, 30 November 1998, col 55w Back
Deb, 21 January 1997, cols 536 - 7w: Report of the Sierra
Leone Arms Investigation, HC 1016 of 1997 - 98 Back
3989, 2.1.7 Back
675, para 62 Back
p149 , A1 Back
in particular evidence from Saferworld, Ev, pp 154 - 6 Back