II. LEGISLATION AND PARLIAMENTARY SCRUTINY
The 1939 Act
29. Strategic export controls are operated under
powers given under the Import, Export and Customs Powers (Defence)
Act 1939 "the 1939 Act" as amended by
the Import and Export Control Act 1990. Section 1 provides for
the Board of Trade (now DTI) to make by order "such provisions
as it thinks expedient" for prohibiting or regulating, in
all cases or any specified classes of cases the import or export
of all goods or goods of any specified description. Orders under
the Act are not subject to any parliamentary procedure, and are
not even laid before Parliament. As the Scott Report pointed out,
it was explicitly intended that the Act should continue in force
only until the end of the emergency.[15]
No Order as was envisaged by Section 9 (3) of the Act was however
laid to repeal the Act, and Governments have continued to use
what the then Mr Douglas Hurd described in 1980 as "a block
- buster within the field that it covers".[16]
The Scott Report sets out in detail the sorry story of the failure
over many decades of successive Governments, and of Parliament,
to set this right.[17]
The situation was then made safer at law, but worse in equity
and common sense, by the passage of the 1990 Import and Export
Control Act, which in effect rendered permanent the granting in
1939 of temporary emergency powers. As the Scott Report put it
"The impropriety in using in peacetime wartime powers
of subordinate legislation without Parliamentary control became
entrenched de jure."[18]
Sir Richard was highly critical of the failure to use this opportunity
to import into the Act some provision for Parliamentary scrutiny
of Orders made under the 1939 Act, despite consideration of this
possibility by Ministers, officials and, apparently, Opposition
front - benchers. The question of parliamentary scrutiny of
Orders made under the 1939 Act and its eventual successor is therefore
of central concern both because of a sorry history of 60 years
of failure by Government and Parliament in this regard, and in
the light of the attention devoted to it in the Scott Report.
Parliament must be vigilant to ensure that new arrangements do
not replicate the mistakes of the past.
New or amending legislation
30. The Scott Report recommended "new empowering
legislation in place of the 1939 Act". The 1996 Green Paper
announced that "the Government has no concluded view on the
desirability of introducing new legislation to replace the 1939
Act", noting that the Court of Appeal had recently confirmed
the technical propriety of continuing to rely on the Act. The
1998 White Paper confirms the Government's view that new primary
legislation is desirable but leaves open the question as to whether
this should be by amendment or repeal and replacement. The practical
advantage of amending the Act is that other controls relying on
the 1939 Act such as those on heritage items, personal
firearms and bovine offal would remain in place.[19]
Much of the 1939 Act has however been repealed or is not used
or relied on. While it may be a nuisance to seek new legislative
authority for other export (and import) controls, it can hardly
come as a surprise to those concerned. For example, as long
ago as October 1991 the Review on controls on the export of works
of art concluded that it was "curious" that the legal
framework for such controls was based on the 1939 Act, and strongly
urged specific legislation. In June 1997 the Reviewing Committee
on the Export of Works of Art noted in its Annual Report that
"The need for legislation relating to the export of works
of art not only arises from the fact that the world has changed
a great deal since 1952, but also because some people who have
appeared before us have questioned whether the same willingness
to respect the spirit of the system as well as its letter remains
universal." In its October 1998 Annual Report it stated "Times
have changed and there is a need for new legislation .... . A
legislative slot will be bid for in due course ....".[20]
The Ministry of Agriculture, Fisheries and Food (MAFF) have used
the powers under the 1939 Act, most recently in 1994 and 1995
to prohibit the export of various specified categories of bovine
offal; but these powers have been largely superceded by powers
under other Acts, and we understand that in recent emergencies
MAFF has judged that these powers are sufficient. It would be
in the general interest to have proper new legislative authority
for export and import controls, not only for strategic exports,
but in other areas as well. We consider that it would in principle
be desirable to repeal the 1939 Act and replace it with wholly
new legislation, rather than seeking to amend it.
Secondary legislation
31. The Scott Report devoted considerable space
to criticising the absence of parliamentary scrutiny of the Orders
made under the 1939 Act. Indeed, as long ago as December 1988
our predecessors on the Committee recommended an annual debate
on the Cocom Order made under the 1939 Act.[21]
The 1996 Green Paper stated the then Government's initial view
that "any new legislation should allow for formal parliamentary
consideration of rules and orders made under it."[22]
In response to unanimous support for some form of scrutiny, the
White Paper proposes that the negative procedure
should be used, whereby an instrument comes into force immediately
but is subject to revocation by Parliament within 40 sitting days.[23]
The Scott Report explicitly proposed a form of modified
affirmative procedure, whereby an instrument comes
into force immediately but lapses after a specified period if
not explicitly approved. This would allow for Government to react
urgently, while ensuring that every change was debated in both
Houses, however briefly. The Government based their rejection
of this proposal on grounds of the frequency of amendments of
the lists of controlled goods, which would "impose a significant
burden on parliamentary time" if requiring approval in every
case, and the fact that most amendments were uncontroversial and
technical.[24]
There have been 12 Orders since 1994 amending the Export of Goods
Control Order (EGCO) made in April 1994; and 6 since 1996 to the
Dual - Use Regulations made in February 1995, subject to negative
procedure. None of these six amending Orders subject to negative
procedure has been "prayed against" (the formal mechanism
by which any Member may indicate a desire to have a debate on
such a document). None of the 18 documents would seem to have
been controversial. For example, one recent Order involved the
raising of a computer CTP Threshold: the deletion of controls
on certain machine tools: and the creation of defined exceptions
for specified categories of nuclear - grade graphite. Nor do any
of them seem to have been urgent.[25]
As the White Paper confirms, most "are needed to update the
lists of controlled goods to take account of changing technology,
often as a result of changes agreed in the various international
regimes on export control in which the UK participate".[26]
Most amendments to the Dual - Use Regulations follow at least
several weeks after the related decision taken within the EU Common
Foreign and Security Policy (CFSP).
32. We are not unduly persuaded by the argument that
the form of affirmative scrutiny proposed in the Scott Report
would be unduly burdensome on Parliament, nor by the suggestion
in the White Paper that, in order to avoid excessive numbers of
Orders, amendments would be introduced less frequently, leading
to a "less effective export control regime". We do however
accept that the substance of changes to the lists are for the
most part uncontroversial, and that the modified affirmative procedure
would be likely to lead to further very brief and pointless meetings
of Delegated Legislation Committees in order to debate wholly
technical and uncontroversial measures. In order to ensure
that significant changes are not slipped through Parliament without
debate, we recommend that (a) drafts of Orders under the new Act
be made available to this Committee in advance of their being
made; and (b) that the Government undertake to find time for a
debate on an Order if at least 6 Members so desire. On this basis,
we consider that the negative procedure for orders laid under
the new legislation will be found acceptable.
33. Eight Orders amending the 1994 EGCO have been
made since the Scott Report's publication in 1996. None has been
particularly momentous. None has been laid. While technically
available on request, this means that they are notably less conspicuous
to Members and others. We recommend that should Ministers wish
to make any further Orders under the 1939 Act prior to the passage
of new legislation, they give consideration to laying the relevant
Order before the House.
Parliamentary scrutiny of primary purposes
34. The Scott Report stated that the absence of any
indication in legislation of the purposes for which export controls
could legitimately be used had led "to a dangerous confusion
between the law on export controls and the Government's policy
on export controls," and set out six suggested purposes.[27]
We discuss the purposes further in paras 25 - 26 below. The 1996
Green Paper sought views on whether it would be desirable to set
out the purposes of export control in legislation: and set out
ten suggested purposes on which it invited comment.[28]
The 1998 White Paper records "clear support" for the
purposes being set out, "with most consultees favouring their
inclusion in legislation", although some suggested including
them in guidelines "in order to provide flexibility for Government
to respond to changing situations". The Government proposes
that the new primary legislation should make provision for the
purposes of strategic export control to be set out in secondary
legislation, subject to the modified affirmative resolution procedure.
The Government's concern is to retain "the flexibility to
respond to unforeseen circumstances, potentially at short notice".[29]
The White Paper then sets out eight suggested purposes to be included
in this secondary legislation.
35. It is evident that careful thought has gone into
drawing up these proposed purposes. The 1996 Green Paper added
counter - proliferation, consideration of the economy of recipient
countries, preservation of stability and avoidance of diversion
to the Scott Report purposes. The 1998 White Paper further refines
the 1996 list, omitting separate reference to human rights abuses,
and the reference to achieving "the least diversion for armaments
of human and economic resources." In a parallel process,
national criteria for export licensing and an EU Code of Conduct
have been promulgated, covering similar ground. There have now
been 3 lists of possible purposes for inclusion in the legislation,
with some significant additions, deletions and re-draftings along
the way. It can reasonably be assumed that there are no wholly
distinct purposes omitted through ignorance or neglect.
36. We are very far from persuaded that there could
be a need to respond urgently to unforeseen circumstances such
as to require the immediate entry into effect of a new purpose,
presumably to provide legislative authority to block a particular
class of goods. If such a new purpose were to be thought desirable
for example, to prevent environmental damage, or to avoid
the spread of offensive material we accept that it would
be reasonable for it to have immediate effect, subject to subsequent
ratification by Parliament. The list of purposes for which export
controls can legitimately be used is at the heart of the proposed
new legislation, as the White Paper explicitly recognises.[30]
The primary purpose in enshrining export controls in new legislation
is to give Parliament the opportunity to debate and decide on
the broad purposes for which controls should and should not be
used. If the procedure put forward by the Government were adopted,
it would be impossible for Parliament to amend the list of purposes.
There are genuine and important questions over the phraseology
which Parliament is entitled to scrutinise and amend if it thinks
fit: otherwise Parliament would in practice be repeating its flawed
grant of powers given 60 years ago in an emergency. Even Charles
I might have blushed at asking Parliament for powers and proposing
to set out later the purposes of such powers in subsequent secondary
legislation. We welcome the opportunity to be provided soon
for parliamentary scrutiny of the purposes of export controls,
and urge Ministers to go the extra distance to provide an opportunity
for proper examination and debate. We recommend that the principal
list of purposes be set out in the primary legislation: and that
power be given to Ministers to amend that list by secondary legislation
subject to subsequent ratification by Parliament using the modified
affirmative procedure as proposed in the White Paper for agreeing
the original list.
Scrutiny of destination of exports
37. Orders made under the 1939 Act, and the Dual
- Use Regulations made under the European Communities Act, set
out in exhaustive detail the categories of goods which
require an export licence, as will the combined Orders envisaged
as being made under new legislation. They are however generally
silent as to permitted or prohibited destinations. The
1994 Order includes one curious heading former Group 3
of Part I of Schedule 1 prohibiting the export of various
heavy vehicles to the former Yugoslavia and other provisions relating
to controls on the export of aircraft and some other goods to
specified countries including Libya, Iran and Iraq.[31]
In general, however, control of destinations is composed of several
different but overlapping layers, subject to widely varying degrees
of parliamentary scrutiny.
(a) United Nations binding sanctions regimes
are normally given effect in the UK and Crown Dependencies and
Dependent Territories by Orders in Council under the United Nations
Act 1946.[32] Such Orders
are laid before Parliament but are subject to no parliamentary
procedure. There are eight currently in force.
(b) Sanctions decided upon by the EU under
its Common Foreign and Security Policy, of which there are currently
seven, of varying levels of complexity, are generally first given
effect by EC Regulations and then brought into UK law by secondary
legislation. In the most recent case, the imposition of an EU
embargo on the Federal Republic of Yugoslavia in relation to equipment
which might be used for internal repression and a moratorium on
export credit, one statutory instrument was made under the 1939
Act prohibiting the export of certain goods specified in the relevant
EC Regulation, and was of course not laid before Parliament. A
second instrument, making it an offence to infringe that prohibition
and providing for a licensing and enforcement regime, was made
and laid under the European Communities Act, subject to negative
procedure.[33] The recent
amendments to the system for handling European Business should
in due course ensure some possibility of parliamentary scrutiny
of EU decisions to impose sanctions, albeit we suspect often after
they have been decided.[34]
(c)There are two embargoes as a result of OSCE
decisions, on Armenia and Azerbaijan, subject to no parliamentary
scrutiny.
(d)The UK and other nations also operate embargoes
at a national level, such as the arms embargo on Argentina
in force since April 1982, now under review. In July 1998 it was
also announced in a Written Answer that all export licence applications
for dual - use items on the Nuclear Suppliers Group List would
be denied to nuclear and nuclear - related end - users in India
and Pakistan, as well as other goods.[35]
None of these national embargoes has required legislation or parliamentary
authorisation.
38. In seeking an appropriate degree of parliamentary
scrutiny of secondary legislation on export controls, the absence
of any equivalent level of scrutiny over the geographical application
of controls comes sharply into focus. At a simple level, it
is not easy to discover what embargoes are in place, let alone
what policies exist in relation to particular countries. The Scott
Report reveals the reasons behind the delay in publishing to Parliament
the Guidelines on defence sales to Iran and Iraq. We do not know
how many similar guidelines are currently in force. If recent
amending Orders had been laid and subject to parliamentary scrutiny,
Parliament would at least have had a theoretical opportunity to
consider matters such as the lifting of the ban on aircraft exports
to South Africa and Syria. Were it, to be decided however, to
lift or modify the embargo on Argentina, or to adjust the application
of the embargo on one (or both) of the countries subject to an
OSCE embargo, Parliament would we hope be informed by Written
Answer, but would have no more of a formal role than it had over
the imposition of an embargo. There are gaping holes in the
system of parliamentary accountability governing the framework
within which licences are granted, and in particular the geographical
application of controls. Replacement of the 1939 Act will go only
some way towards improving the situation.
Parliamentary scrutiny of operation of system
39. The 1996 Green Paper sought suggestions for improvements
in the information published on strategic export controls, and
drew attention to the results of the MOD review of information
provided to Parliament on the export of arms and defence - related
equipment.[36]
Beyond that, it did not envisage any significant changes in parliamentary
scrutiny or the provision of information. The responses included
a number of proposals for greatly enhanced scrutiny, including
for systems of prior scrutiny by Parliament and others of applications
for licences, through some form of public register of such applications.
Many drew on equivalent systems of prior scrutiny and approval
in the USA and Sweden.[37]
Exporters on the other hand expressed concern at the prospect
of information on planned exports being made publicly available,
principally because overseas customers often express a wish for
their purchases not to be revealed.[38]
The 1998 White Paper announced the Government's view that there
should not be "parliamentary scrutiny of individual applications
either before or after the decision on whether to grant a licence
has been taken."[39]
40. The voluntary sector expressed in its submissions
to the DTI following the White Paper and in oral evidence to us
its disappointment at the rejection by the Government of proposals
for some form of prior scrutiny of licence applications, and by
implication a power of approval or disapproval. AIUK suggested
that in cases such as the supply of armoured personnel carriers
to Indonesia "there should have been a very good informal
public debate before any licence application was granted."[40]
Saferworld emphasised the potential deterrent effect on officials
and Ministers of the possibility of having to justify a decision
to Parliament, leading them to "err on the side of caution".[41]
The DMA on the other hand was relieved that there would not be
"opportunities for unrepresentative pressure groups unduly
to influence policy or decisions", avoiding "being swept
along by the idealistic and emotive arguments of a vocal minority".
It felt that the White Paper had "exactly the right balance
of openess and Parliamentary scrutiny".[42]
41. We accept the Government's view that a system
of registration of, and parliamentary and public access to, the
thousands of applications every year would not only be administratively
onerous, but of doubtful value. It would be unusual within the
existing informal division of powers between Parliament and the
Executive for casework of this sort, much of it by its nature
containing commercially and diplomatically sensitive material,
to be seen in advance by Parliament. There would also be some
risk that Parliament could be presented in some way as having
at least tacitly endorsed an application technically laid before
it, and on which it had failed to register any reservations. On
the sort of hard cases referred to in oral evidence to us we doubt
if it would be helpful to have a formal parliamentary input prior
to decisions. We are content at this stage to continue to leave
individual decisions on export licences to Ministers who are accountable
to Parliament, in accordance with constitutional conventions.
42. Ministers can however only be properly held
to account for their decisions if Parliament is in possession
of the full facts, and has access on request to detailed casework
on decisions taken by Ministers and those responsible to them.
That requirement is not met by a statistical abstract of decisions,
however useful that may be in providing a broad picture of the
licensing process. Such figures, which have been published annually
for some years in the Annual Report of the ECO, form no more than
the necessary starting - point for parliamentary scrutiny. Nor
can Parliament depend on answers to a random series of parliamentary
questions from individual Members. What is required is a system
of parliamentary scrutiny which combines the greatest possible
access to the details of decisions taken licences granted,
refused and delayed with safeguards to protect commercial
confidentiality in the interests of individual exporters and customers
legitimate demands for confidentiality. As BASIC put it in
its 1996 submission "The Government has itself set guidelines
for arms exports; it should make it possible for those outside
the executive to judge whether those guidelines are being followed."
43. We cannot therefore accept the bald proposition
advanced in the White Paper that there should be no parliamentary
scrutiny of individual applications after a decision has
been taken. It must be open to Parliament, preferably through
some form of committee, to test individual licences, or refusals
of licences, against the Government's own criteria, the EU Code
of Conduct and indeed any other criteria it wishes. That need
not lead to public identification of individual companies, or
indeed individual overseas destinations. It is also important
that any system should not disadvantage UK exporters as against
their competitors. The EU Code provides for a remarkable degree
of communication at a confidential level between Governments.
It would be useful if it could be extended to provide for a common
standard of transparency within each state, to assuage the anxiety
expressed in the White Paper that countries "would seek in
future to buy equipment from countries which would not disclose
details of individual contracts."[43]
44. We do not propose in this Report to seek to establish
in detail either the desirable content of the forthcoming Annual
Report, nor the extent to which, or means by which, detailed information
could be made available to Parliament. In conjunction with other
Select Committees, we have proposed on an experimental basis a
system of joint inquiry by select committees on the first Annual
Report (see para 5 above). The Report of that Committee can be
expected to make detailed proposals, based on experience, as to
how the exercise should be managed next time around. It is however
likely that any system will have to allow for access, sometimes
on a basis of confidentiality, to details of
- licences refused, on at least the same basis
as details circulated to all EU member states
- appeals and their outcome
- licence applications which have raised particularly
knotty points
- licences in particular categories, or in relation
to particular countries, as identified by the Committees.
The aggregated information will also have to be disaggregated
below the main headings used in the current Military List, and
similarly in the listing of Dual - Use Goods, so that needless
effort is not devoted to pursuing details of licences of little
or no sensitivity.[44]
24. Parliament and the public are entitled to have
full confidence that the licensing system is working as intended.[45]
The fundamental requirements include a system of access by parliamentary
committees to confidential information, and a means of reporting
the results of scrutiny of that information to Parliament without
breaching confidentiality. We share the view expressed that
the existence of a robust system of parliamentary scrutiny can
act as a useful prompt to officials and Ministers. We are
confident that such a system can and will be developed.
15 Scott Report, C.1. 26 - 27 Back
16 Quoted
at ibid, C.1. 33 Back
17 ibid,
C.1. 37ff Back
18 ibid
C.1. 67 Back
19 Cm
3349, 1.6: Cm 3989, 1.4.1 Back
20 Cm
4056, para 25 Back
21 Trade
with Eastern Europe, Second
Report of 1988 - 89, HC 51, para 65 Back
22 Cm
3349, 2.6.1 - 2.6.2 Back
23 Cm
3989, 2.1.4 Back
24 Ibid Back
25 The
prohibition of the export of microlight aircraft to any non -
EU destination in June 1995, by SI, 1995, No 1424, may have been
seen as "urgent" Back
26 Cm
3989, 2.1.5 Back
27 K2.1:K2.17
- 18 Back
28 Cm3349,
paras 2.2.1 - 2.2.4 Back
29 Cm3989,
2.2.1 - 2.2.2: Qq 89 - 91 Back
30 Cm
3989, 2.2.2 Back
31 Ev,
p149, A1 Back
32 See
eg Report of Sierra Leone Arms Investigation, HC 1016, paras 3.24
- 3.26: and Inter - departmental Committee Report on Trafficking
in Arms: Controls and Procedures, December 1996 (not published) Back
33 SIs
Nos 1530 & 1531, 1998 Back
34 We
are, for example, aware that the Foreign Affairs Committee is
pursuing a recent problem over the EU ban on flights to and from
the Federal Republic of Yugoslavia Back
35 HC
Deb, 10 July 1998, cols 687 - 8w Back
36 Cm
3349, 2.8 Back
37 Eg
Qq 3ff, 10 - 11: Ev, p6: p103, 2 - 6: Back
38 Eg
Ev, pp48 - 50, Annexes B & D Back
39 Cm
3989, 2.1.7 Back
40 Q2 Back
41 Qq2,
12 Back
42 Ev,
pp29, 32 Back
43 Cm
3989, 2.1.7
Back
44 Ev,
p4: p102, 18 Back
45 see
eg Ev, p100, para 6 Back
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