House of Commons - Trade and Industry

Select Committee on Trade and Industry Second Report

III PURPOSE AND SCOPE OF CONTROLS

Purposes and Criteria

General

25. The Scott Report, the 1996 Green Paper and the 1998 White Paper each set out proposals for defining the purposes of strategic export controls as set out below . Parallel with these are the detailed principles to be applied to licence applications set out in July 1997 — "the Cook criteria" — and the EU Code of Conduct of June 1998. There would be evident advantage both to those administering the system and those monitoring it if the various points of slight contradiction or difference of emphasis could be resolved in a common text. It is also unfortunate that the Cook criteria and the EU Code should have preceded parliamentary legitimisation of the basic principles from which they might in logic have been expected to flow. We have sympathy with those who question whether there is not some incoherence among these lists.

PROPOSED PURPOSES OF STRATEGIC EXPORT CONTROLS

Scott Report	Green Paper	White Paper
(i) complying with international treaty obligations	(a) to adhere to the UK's international obligations and commitments, including international arms embargoes	To adhere to the UK's international obligations and commitments, including international arms embargoes and international control regimes
	(b) to prevent the proliferation of weapons of mass destruction and of missiles and unmanned air vehicles capable of delivering weapons of mass destruction	To prevent the proliferation of weapons of mass destruction and of missiles and unmanned air vehicles capable of delivering such weapons
(ii) protection of our armed forces	(c) to ensure the security of the UK, its dependencies and its armed forces abroad, and of allied countries	To safeguard the UK's security interests and those of allies and EU partners
(iv) avoidance of assistance to human rights abuses in foreign countries	(f) to avoid contributing to human rights abuses
	(d) to avoid contributing to internal repression and instability within the country of destination of the licensed goods	To avoid contributing to internal repression
	(e) to take into account the economic and technical capability of the recipient country, and to achieve the least diversion for armaments of human and economic resources	To avoid seriously undermining the economy of the recipient country
(vi) avoidance of assistance to aggression by foreign countries	(g) to avoid contributing to the prolongation or aggravation of existing armed conflicts between states	To avoid contributing to international aggression
	(h) to preserve international and regional stability	To avoid damaging regional stability
(v) avoidance of assistance to serious crime in foreign countries	(i) to avoid contributing to terrorism and serious crime	To avoid contributing to terrorism and crime
(iii) prevention of terrorism
	(j) to avoid re - export or diversion of goods, likely to prejudice purposes (a) to (i)

26. Sir Richard Scott's remark accompanying his original list of six purposes that "the case for the inclusion of additional purposes remains, in my view, to be made out"[46] is a warning against too ready an assumption that the latest list is perfect. Three particular concerns have been raised:

(c) the phraseology of the purpose of the 1998 list relating to the economy of the recipient country, in view of the differences in the similar passages relating to the economies of recipient countries between the Cook criteria and the EU Code of Conduct.

July 1997 criteria

27. The new Government came to office committed not to permit the sale of arms to regimes that might use them for internal repression or international aggression, and to work for the introduction of a European Code of Conduct. The former commitment was met by the publication in July 1997 of new criteria to be used in considering arms export licence applications.[49] The criteria are to be applied to all military and dual - use exports, including exports by the Government, which do not require a licence.[50] These criteria have no statutory force. They are open to amendment by Government at any time. As we explain at para 5 above , we have not set out to establish how these new criteria have been applied: that will arise in the course of scrutiny of the Annual Report. We do however emphasise to the House the Foreign Secretary's statement that it was not "realistic or practical" to revoke any of the 20,000 valid licences outstanding.[51] Licences under consideration may indeed have been held up close to the point of approval: but the system is such that exports will potentially still be continuing under licences granted prior to May 1997.

28. Before July 1997 there was no clear and comprehensive public statement of arms export licensing policy. FCO desk officers used a guidance booklet listing 13 factors to be taken into account in considering applications: a copy was placed in the Library of the House of Commons in March 1997 and was available to the public on demand.[52] The Memorandum from the FCO printed with this Report sets out in helpful fashion some of the changes in the criteria from these immediately preceding ones. These include —

a "lowering of the burden of proof" when considering the possibility of use of equipment for internal repression or international aggression from "likely" to "might";
guidance on judging what equipment might be so used, including a reference at para 6 to "armoured personnel carriers specially designed for internal security", and three tests of the risk of international aggression
the introduction of more detailed guidance on the criterion relating to regional stability, on which the UK has recently introduced a paper in The Wassenaar Arrangement.[53]

These national criteria will probably have to be adapted in light of the EU Code of Conduct, and of experience gained in their application to the hard realities of difficult cases. We welcome the publication of criteria for the grant of arms exports licenses hitherto only technically accessible, providing the necessary yardstick against which to judge licenses granted or refused. Comparison of the new criteria with their predecessors suggests however that the July 1997 criteria represent a rather less radical break with past policy than is sometimes represented to be the case. As before, Ministerial interpretation of the criteria in difficult cases is the touchstone of their real significance.

EU Code of Conduct

29. The national criteria have since been edited and merged with the pre - existent 8 EU Common Criteria for Arm Exports into the EU Code of Conduct formally adopted on 8 June 1998, with a "no - undercut" mechanism bolted on. The FCO Paper sets out some of the relatively minor differences between the UK national criteria: the Anglo - French draft circulated to partners in January 1998: and the finally agreed version.[54] The differences include

exclusion from the EU Code of the specific exemplification in the UK national criteria and the Anglo - French draft of "protection of members of security forces from violence" as an example of legitimate end - use of potentially repressive equipment:
exclusion from the EU Code of the caveat in the UK national criteria (and the Anglo - French draft) relating to international aggression, that "a purely theoretical possibility" of items being so used will not of itself lead to a refusal;
replacement of a reference to an export "seriously undermining the economy of a recipient country" in the UK national criteria (and the Anglo - French draft) with "seriously hamper[ing] the sustainable development of the recipient country" and addition of consideration of relative levels of military and social expenditure.

The FCO paper notes that "The Code is one of the major common Foreign and Security Policy achievements of the UK's EU Presidency ........the Code should help to ensure a level playing field for UK exporters while ensuring that our own licensing policy should remain basically unchanged."[55]

30. Crucial to the Code are the "no - undercut" provisions set out in operative paragraphs 3 and 4 under which a Member State circulates to all Member States outlines of licences refused and the reason for such refusal. Before a Member State grants a licence for an "essentially identical transaction", it will consult the denying State(s). If it nonetheless proceeds to grant a licence — as any Member State is entitled to do — it will notify the denying State or State(s) with a detailed explanation. The FCO told us that the UK and Germany have circulated first tranches of denial notifications, others have not yet done so. The UK has not been involved in any discussions on potential undercuts.[56]

31. There are self - evident weaknesses and uncertainties in the Code's procedures, many of which have been criticised by the NGOs concerned.[57] The FCO told us that the UK was "not aware" of any consultations between other Member States on potential undercuts. Because consultations are usually bilateral, they have no reason to know.[58] There is however an annual review process, in which the UK intends to play a leading role. It is to be hoped that some of the potential weaknesses identified can then be addressed. We also hope that the countries applying for EU membership are taking active steps towards not only "aligning themselves with the criteria"[59] but also enforcing them: it has to be observed that some Associated States still seem to trade in arms with scant regard to UN or other embargoes.

32. The Minister confirmed in evidence to us that the Code and the national criteria were complementary, but that officials would naturally work to the national criteria.[60] The FCO paper referred to the criteria as "broadly similar" and noted that consideration was being given to adopting a single set of criteria based on those in the Code.[61] We strongly favour the adoption of a slightly modified set of national criteria so long as it was clear that it was no more restrictive than the current set in its practical implementation. We would also welcome confirmation that any proposed changes to the EU Code of Conduct should be subjected to the new parliamentary scrutiny procedures for Common Foreign and Security Policy proposals.

New Controls

Trafficking and Brokering

33. The 1996 Green Paper referred briefly to "growing concern about trafficking or brokering activities" and sought views on future legislation.[62] The 1998 White Paper proposes to extend the controls already in the Chemical Weapons Act to cover assistance by a UK person to a foreigner overseas, and to extend these enhanced controls to any activities in relation to weapons of mass destruction (WMD) programmes, and associated ballistic or cruise missile programmes, except the "official nuclear weapons programmes of NATO members" and "certain missile and rocket programmes".[63] These proposals have not attracted much comment. Evidence from BASIC questioned the legality under the Non Proliferation Treaty of the proposed exemption of NATO nuclear weapons programmes.[64] The legislation on extension of the scope of controls over participation in programmes of weapons of mass destruction could usefully be accompanied by clarification of the legal position under the Non Proliferation Treaty, and of the precise scope of the exemptions it is intended to permit by licence.

34. The White Paper also proposes to take power to exercise some control over trafficking and brokering in conventional weapons. Recent examples which have raised concerns include the brokering by UK companies of torture equipment such as electro - shock batons, the activities in relation to Rwanda of the Isle of Man registered company Mil-Tec, and most recently the arrangement by Sandline to transfer weapons from Bulgaria to Sierra Leone.[65] For conventional weapons, the only current UK controls relate to powers under the United Nations Act in relation to implementing a binding UN decision. The White Paper proposes to extend this control to cover trafficking and brokering in —

(a) controlled goods to countries subject to other embargoes, such as non - binding UN decisions, EU, OSCE or national government embargoes:

(b) controlled goods "trading in which is the subject of widespread national and international condemnation," such as torture equipment: and

The "goods and/or destinations" subject to these controls would be laid down in secondary legislation subject to negative resolution procedure. To the extent that this increases current levels of parliamentary control, it is indeed welcome, particularly if it provides an opportunity for greater accountability over prohibited destinations as well as goods. It would for example render illegal the brokering of arms to the Democratic Republic of Congo, allegations of which have been made in recent weeks.

35. The voluntary sector would like to see these selective proposals for controls on trafficking and brokering extended, in some cases to produce a system of registration of dealers.[66] The DMA supported the Government's efforts to try to do something about brokering, while warning that the scope of any controls would have to be carefully defined, and that there would be difficulties in effective enforcement.[67]As the December 1996 Interdepartmental Committee following the Rwandan arms dealing furore put it — "The principal problems with new legislation to prohibit trafficking generally seem likely to concern enforceability. The offending events will take place principally overseas and there can, therefore, be little or no Customs & Excise regulatory control in the UK to detect illicit activity. Enforcement would be heavily dependent on intelligence - often after the event - about breaches, and evidence to sustain a prosecution might not be easily available in the UK or from abroad. International action might therefore be required to develop effective enforcement against trafficking." We welcome the limited proposals on trafficking and brokering, and recommend that their extension be considered only once experience has been gained of enforceability.

36. In late 1996 in the wake of the Mil - Tec affair and concerned that the Government might be "rushed into introducing some hastily and ill - thought out legislation", the DMA submitted a paper to DTI suggesting that consideration be given to statutory registration of brokers involved in shipping a clearly defined range of lethal goods, and to an obligation of prior notification. The DMA paper recognised that there were responsible and irresponsible brokers, and that some kind of controls was needed, to enable the Government to prosecute transgressors if they had broken the law.[68] The value of a registration system is partly deterrent, to the extent that the availability of criminal sanctions may deter the otherwise irresponsible or indifferent. An obligation on a licensed dealer to notify could conceivably have alerted Sandline — if the directors of that company were genuinely unaware and if they had been licensed — of the stringent nature of the UN sanctions regime on Sierra Leone. Any system would have to be more than merely national; evidence to us suggested that the German system of registration and notification is readily by - passed.[69] It will, as the Minister noted, be difficult to police.[70] We welcome the proposals for new controls on trafficking and brokering, and call on Ministers to explore further within the EU and the Wassenaar Arrangement the benefits and potential pitfalls of some multilaterally agreed form of licensing or registration of arms dealers.

Transfer of Technology by Intangible Means

37. Technology has been subject to some degree of export control under the 1939 Act, but limited to tangible transfers, by paper, diskette or similar.[71] Transfers of technology by fax, e- mail or word of mouth are not covered. The dangers of uncontrolled transfer of technology by intangible means were raised in the 1996 Green Paper.[72] The 1998 White Paper proposes new legislation to make electronically transmitted documents transferred abroad, whatever their form, subject to licensing requirements, if "containing controlled technology": and to support the proposal of the European Commission to extend controls on dual-use goods to cover electronic transfers.[73] There is an irrefutable logic in the proposal which nearly all involved accept; there is no argument in favour of the principle of explicitly exempting such transfers from the licensing regime. Grave doubts have however been expressed as to the practicality of the proposals and fears raised as to their consequences if implemented.

38. There is no clear idea of the extent of the problem which this proposal seeks to address. The Minister told us "There clearly is a gap here which does need to be plugged .... it is difficult for us to give you an exact (category) of how much information we are talking about because it is simply impossible to judge it ..".[74] The White Paper states that "it is difficult to make an accurate assessment of the extent to which UK firms may be exporting technology intangibly without consulting the government ..... such transfers are likely to become more frequent in the future ...".[75] In 1997 there were only 232 individual applications for licences for tangible transfer, much of which is permitted under two existing Open General Export Licences. DTI assume that the increased requirement as a result of the new controls "is unlikely to impose a significant burden on industry particularly as it would be spread over a large number of companies".[76] Existing open licences would permit intangible transfer as they currently permit tangible transfer. Transfer of classified information by any means would potentially be a breach of the Official Secrets Act: the White Paper is therefore intended to catch technology not caught thereby.[77]

39. Defence exporters have made clear their concerns over the potential burden on them, in having to consider for a much wider range of transactions than at present whether they should be seeking licensing, and over the enforceability of the controls. The DMA felt that the proposal required a lot more thought, warning that activities such as "post - sale servicing and maintenance of software, providing update and support of on - line instruction manuals" could be affected. It called for study of the equivalent system in operation in the US and for delay in introduction to provide time for detailed consultations and for international discussions so that any new controls were implemented in concert.[78] The SBAC suggested on the basis of an informal survey among its members that the ratio of intangible transfers to tangible was "very conservatively 4:1, suggesting a major potential burden on firms.[79] One manufacturer, GKN Westland, set out the problems in enforcement — for example, over high technology seminars — and suggested that any legislation would be impossible to enforce.[80] Evidence from Sir Brian Tovey on behalf of JETSECC emphasised the need for multilateral agreements and the impossibility of enforcement without the active co-operation of those involved.[81]

40. Responses to the White Paper also came from a variety of academic sources, fuelled by concerns that the proposals could have serious and possibly unintended effects on the academic research community and on teaching of overseas students, since the transfer of any information with potential applications to a WMD programme would be made subject to licensing. The Committee of Vice - Chancellors and Principals (CVCP) claimed that the proposed extension "poses an unacceptable threat to the operation and standing of UK higher education" and that it "fails to acknowledge that almost any advanced technology has a potential weapons application".[82] The possible threat applies to teaching in a wide range of subjects, not just nuclear physics and chemistry, but all those branches of medicine relevant to a potential chemical and biological weapons programme, and virtually all computer science research, much of which is cooperative. As one respondent put it, "The restrictions that previously only applied to physical hardware objects will be extended to the software used to design, test, control or operate them, or to integrate them into larger systems." It was also implied by some respondents to the White Paper that the proposed extension of controls was a somewhat sneaky attempt to control the transfer of "strong" cryptography. The USA has apparently tried and failed to prevent such transfers. It has also been implied that the new controls sought will be unenforceable unless the Government's agency has access to the necessary decryption, and that this will be used as a justification to obtain sweeping decryption powers: an implication firmly rejected by the Minister.[83]

41. On 14 May 1998 the Commission presented a proposal for a Council Regulation on dual - use export controls, which sought to extend the current authorisation requirement for the export of dual - use items to cover "transmission of technologies via electronic media, telephone and fax", but excluding "the supply of services or the transmission of technology requiring cross - border movement of natural persons."[84] The document is under discussion in a Council Working Party Group, and it is understood that a final version is unlikely to be agreed until the second half of 1999. We have been surprised to discover that the document, specifically referred to in the White Paper, has not apparently been deposited in Parliament, and so has not been through the scrutiny process. Given the degree of controversy raised over the proposals in the White Paper, there can be no question of the United Kingdom agreeing to an extension in the EU's dual - use regime, under whatever legal power, until a consensus has been arrived at on the way forward on controls of intangible transfer of technology generally.

42. We would be disturbed if there were good grounds for suspecting that licensable information was being transferred by intangible means in order to circumvent existing controls: but we understand that there are no such grounds. If there is deliberate evasion, it will remain exceedingly difficult to detect, let alone prevent.[85] The proposed extension might deter deliberate evaders by the distinct threat of a subsequent prosecution, while imposing a burden on industry substantially greater than seems to be recognised by the Department. It presents at worst a real nuisance to the academic world. The Government's proposals are in two legs: the proposal on non - documentary transfer and on publication of controlled technology on the internet is limited to WMD programmes, in view of difficulties of administration and enforcement and given "sensitivities in relation to free speech and academic freedom".[86] The Government should consider limiting the proposed extension of licensing requirements to electronic transfer of documentation to technology related to weapons of mass destruction.

Coverage

43. There are, in simple terms, two classes of goods requiring licences to export: military goods as set out in Part III of Schedule 1 to the Export of Goods (Control) Order as the "Military List", and dual - use goods, set out in Schedule 2 to the Dual Use and Related Goods (Export Control) Regulations 1995.[87] The range of goods covered is vast: from main battle tanks to chemical storage tanks. The Military List is 10 pages long. The relevant part of the Dual - Use Regulations is around 145 pages, with an index of 36 pages. The ECO makes laudable efforts to assist intending exporters through this maze, including an Internet web site which contains a full list of goods subject to export control and the text of OGELs.[88] The 1996 Paper sought comments on "any points of technical detail" on the range of goods subject to export control.[89] The 1998 White Paper refers only to work on agreeing a common definition of the much - used phrase "specially designed" and to the possibility of military end - use "catch - all" control. [90]

44. AIUK seek extension of controls to a wider range of military security and police goods and services than is presently the case, in particular dual - use equipment not hitherto covered which could be used for repressive internal security. Examples given included firearms training systems for the Indonesian police: traffic control cameras used for internal security in China and Tibet: and computers such as those used in the past to automate pass law enforcement in South Africa.[91] A number of bodies seek coverage of training and other non - goods transfers, and of licensed production overseas.[92]

45. Exporters raised a number of issues where the need for licensing is far from self - evident. It is, of course, true that "just because a thing is controlled does not mean to say it is always going to be refused:"[93] but the complaint of exporters is that they should not be obliged to seek licences for some categories of equipment currently covered. One such category is purely defensive equipment. We received evidence from RBR International Ltd, who export ballistic helmets and shields, and, quite apart from fury at losing orders through delays, question why "non - aggressive equipment which saves lives" need be licensable. The "protection of members of security forces from violence" is a specifically excluded area under the Cook criteria, although not under Heading 2 of the EU Code (see para above). An application for a licence to export helmets and face shields to China was, after several months of consideration, refused on grounds of an "unacceptable risk of diversion for use for the purposes of internal repression".[94] An appeal against the refusal was turned down at ministerial level. In written evidence to us, DTI state that "it was concluded that the arguments in favour of allowing the export for the protection of members of the security forces were outweighed by the clearly identifiable risk that the goods might be used represively, for example in the violent suppression of an incident such as Tiananmen."[95] This is not only a peculiarity of policy, but has to be read in the context of the removal in June 1994 by an amending Order of "anti - riot helmets" from the scope of licensing under PL5001.[96] "Military helmets" however require a licence under heading ML13.c. of the Military List, except for conventional steel helmets, and those manufactured before 1945. It seems that "anti-riot helmets" can be exported without a licence, while those designed to stop bullets cannot; but then a licence is refused for military helmets in case they are used as anti - riot helmets.

46. The other categories of equipment whose need for licensing is not obvious is that designed to provide defence against chemical or biological warfare. Such equipment is sought by countries deciding to embark on prohibited programmes of such warfare; but a growing number of countries are increasingly seeking such equipment. In response to the 1996 Green Paper, Graseby Dynamics, a major producer of such equipment, suggested that the Government should be actively promoting the sale of defensive NBC equipment: Stella - Meta, who manufacture water purification equipment, questioned as to why it was licensable: and STI, a major manufacturer of self - injecting syringes including those providing antidotes to nerve and chemical agent poisoning, while not questioning the licensability of such equipment, did call for a simplified system. The DMA repeated in 1998 its 1996 questioning of the need for such rigorous control of purely defensive equipment.[97] More generally, it expressed disappointment at the absence from the 1998 White Paper of any sign of reduced coverage or clearer categorisation as sought in 1996, for example, by the Chemical Industries Association. Responses to the 1998 White Paper also emphasised the sense of dissatisfaction among the NBC community at the requirement for licensing.

47. There are difficulties — as the 1996 Green Paper warned — in contemplating any change to the coverage of strategic export controls, since they are agreed in the EU and other fora, including among the 33 states within the Wassenaar Arrangement. The Minister warned that changes could bring the UK into conflict with internationally agreed standards.[98] As the Director ECO told the Managing Director of RBR, the text of the Military List "has been agreed internationally through the Wassenaar Arrangement, and to include any exemption would require agreement by all 33 Wassenaar parties. This would obviously be a very long term matter — if indeed it was to prove possible".[99] Unilateral national decontrols are evidently undesirable, and purely national controls are of doubtful efficacy. That should not however, lead to a position where the lists are inflexible.[100] The Dual - Use list has been amended on several occasions over recent years, as has the Military List. It may be that there is a need for a more active mechanism within the Wassenaar Arrangement for ongoing technical review and revision. The production of a unified list covering military and dual - use goods under the new Act and the revision within the EU of the basis for dual - use controls present an opportunity for review of the present coverage.

48. We have some sympathy with the concerns expressed by voluntary bodies over the freedom with which licensed production arrangements can be set up overseas for the production and re - export of goods whose export from the UK would have required licensing and which might well have been refused.[101] The two examples most frequently given are of Land Rovers produced in Turkey and exported therefrom as Otokars: and firearms to be produced in Turkey under licence from Heckler & Koch. There must in practice be some controls over the export of the necessary technology and other intellectual property, although if the production is to take place in many countries it will be covered by an open licence. In our view, this concern underlines the need for closer co - ordination within the Wassenaar Arrangement of destinations to which export of sensitive equipment is likely to be prohibited, and for a forum where decisions taken by nations within that Arrangement can be publicly challenged and indeed publicly defended, in a spirit of transparency. We recommend that the question of controls on licensed production of arms and dual - use goods be addressed within the Wassenaar Arrangement.

End - Use Control

49. Controls on the ultimate destination and use of goods licensed for export are intended to prevent diversion to third countries, through re - export, or use within the original country of destination outside any conditions under which a licence has been granted. Licence applications have to be accompanied by "full supporting documentation". The ECO gives guidance on the nature of such documentation under different circumstances, including specimen wordings for consignees to use, such as "the goods are for our own use at (full address of location) and will not be re - exported or sold for export".[102] Reference to end - use "certificates" is unintentionally misleading, since it suggests a degree of formality and commonality of format unfortunately absent. There still seems to be a high degree of flexibility in determining what is required by way of end - user certification.

50. The end - user control regime has been extensively criticised, notably as a result of the revelations in the Scott Report and in our predecessors' BMARC Report. The Scott Report contained evidence to suggest that a number of countries had been notoriously willing to act as conduits for onward re - export to Iraq, so that end - user certification from some countries was effectively meaningless.[103] The Select Committee's inquiry revealed that in the late 1980s most export licence applications had evidently inadequate supporting documentation.[104] Procedures have been tightened. In 1996 the Select Committee expressed satisfaction at the institution of procedures to increase the likelihood of detecting diversion. It recommended, reflecting the Scott Report, that applicants be required "to distinguish between the potential and actual uses of military and dual - use goods". DTI consulted on this; industry concerns as to its practicality led to it not being introduced in the present form. There will however be a reminder to applicants in the new electronic format form to provide as much information as possible about end - use.[105] The Committee also recommended, following the failure in the 1980s to make the necessary connection between BMARC and Oerlikon, that ways should be found of making checks on third parties.[106] We have been briefed in confidence on this during our visit to the ECO, and in writing, and commend DTI for its positive response to this recommendation.

51. The 1996 Green Paper invited views on "the subject of end- use control generally".[107] The 1998 White Paper refers to the Labour Party's Manifesto commitment to strengthening end - use monitoring and to seeking "co - operation to build a common approach on effective monitoring of end - use within the European Union and under the Wassenaar Arrangement": but offered nothing concrete beyond the statement that "the Government is currently reviewing the options".[108]

52. The voluntary sector respondents who had made a number of proposals in their responses to the 1996 Paper, and had variously described existing arrangements as "badly flawed" and "woefully inadequate", are naturally disappointed at the absence of concrete proposals.[109] In earlier submissions, they had made various proposals largely designed to enable either UK authorities or some acceptable independent body to audit end - user certificate compliance, using inspection as a means of verification. Some also sought the introduction of so called "catch - all" military end - use control, similar to the system in operation in Germany, whereby the current obligation on an exporter to refer to any grounds for suspecting that dual - use goods may be used in programmes of weapons of mass destruction is in effect, extended to any military end - use in certain sensitive destinations. They reiterate demands for an internationalised system, based on the allegedly more proactive system used in Belgium and elsewhere for checks in the receiving state.[110] Tapol state that "In the case of Indonesia, there has been no attempt to monitor the use of equipment despite clear breaches of assurances by the Indonesian Government that equipment would not be used for internal aggression".[111] There is indeed no practicable or internationally accepted verification or enforcement regime.

53. Exporters also have a number of reservations about end - use, while sharing the preference expressed for a common internationally accepted format. The DMA suggested in its 1996 response that there might be scope for a WEU harmonised format, noting that the "suggested form" in use was totally unlike any other nation's, and reflecting a view of several firms that the requirements of the statement varied from one individual official to another.[112] The DMA also suggested that an end - user statement should be a condition of the use of a licence, rather than a prerequisite for its grant. Several respondents emphasised the difficulties confronting exporters of components who might well be unaware of the identity of the ultimate end - user or of manufacturers of relatively common products exported by the laboratory supply industry principally to dealers.[113]

54. The principal concern of exporters is that the burden of monitoring end - use should not fall on them, but on Governments, with far greater resources, and that there should not be such a burden of intrusive verification in a recipient state as to lead such states to place orders elsewhere.[114] The DMA stated that companies "should not be held responsible for what use is made of their goods after delivery".[115] EEV, for example, stated that — "We do all we can to make sure that our customers are bona - fide, but ultimately we have no control over what a foreign company or country does".[116] As Lucas Varity candidly observed, an end - user undertaking is ultimately "a piece of paper supplied by the customer stating the intended end use of a product. It guarantees nothing ....".[117] SBAC noted that "it guarantees nothing and should goods be diverted or misused government has no extra - territorial powers to prosecute the customer".[118] Particular dislike was expressed by Sir Brian Tovey of the optional provision in the 1994 EU Dual - Use Regulation, taken up only by the UK and Germany, to require that goods require a licence if the exporter has "grounds for suspecting" that they may be used in connection with a weapons of mass destruction programme — the so - called "catch - all" clause. He suggested that legal advice might unnecessarily discourage firms from exporting, and that firms were being asked to exercise the sort of intelligence function which was the Government's responsibility.[119] It is of course open to Government to refuse to grant a licence.

55. A few well - publicised cases apart, generally dating back a decade or more, no evidence has been forthcoming of widespread breaches of end - user certification. While it is for example possible that both the Indian and the Pakistani nuclear programme may have benefited at some level from British equipment, exported under dual - use licenses, we have seen no evidence to that effect. There is however much to be said for a general EU, or preferably, wider agreement on mutual end - use verification, and systematic certification based on the prevailing best practice. The Minister told us that it was a "very, very difficult issue" and that it was being taken forward within the EU:[120] she reasserted the Government's absolute commitment to taking it forward. Without introducing extra - territorial controls, there are limits on what can realistically be achieved. We share the sense of disappointment that there should as yet be nothing to show on the work done on creating a more effective end - use regime.

46 K2.18 Back

47 Ev, p7: p20: p101, para 12 and Qq 19ff: Appendix 26, see Qq 92 - 3 for Ministerial response and Ev, p111, para 1.4.5 Back

48 Ev, p35: p127, para 1.3 Back

49 Ev, p110 Back

50 Ibid p40, para 1.3.2 Back

51 Ibid, para 1.3.3 Back

52 Ev, p151: House of Commons Library Deposited Paper 3/5026 Back

53 Ev, p110 - 112 Back

54 Ev, pp112 - 114 Back

55 Ev, p113, para 2.4.1 Back

56 Ev, p114, para 2.5.2 Back

57 For a full critique, see Ev, p107 - 110: also pp128 - 9 Back