EEV Limited, a wholly owned subsidiary of GEC Plc, is a major manufacturer of both defence and commercial professional components and systems, many of which are subject to export control in one form or another under the current regulations. Our export business is significant and important to the profitability of the company.

  We believe that EEV has an exemplary record in respect of the considerable resources that it has over the years invested in its export licensing administrative system to ensure compliance.

  We remain keen to be involved in the changes that will affect the UK Export Licensing system.

  In our response to the DTI Consultative document on "Strategic Export Controls" dated 30 October 1996, we stated that "clear definitions should be drawn between Foreign Policy considerations and strategic concerns. This would probably make the granting of export licences less arbitrary and more consistent". This White Paper lays the framework for achieving this purpose and EEV Ltd welcomes many of the proposed changes.

  There are a number of comments and responses that we would like to make on the content of the White Paper and these are as follows.

2.1.4  PARLIAMENTARY SCRUTINY OF EGCO'S

  The first option would be the most effective but processing would take too long. Both of the remaining two options are somewhat unsatisfactory in that there could be the confusing situation of an amendment coming into force and then shortly afterwards being revoked.

  We do not agree with the Government's preference for the third option in that unsuitable legislation could come into force merely because Parliament did not manage to complete the approval process within the allowed time. A fail-safe mechanism for weeding out the controversial ones such as to ensure that they are not missed would help but the filtering procedure would be difficult and somewhat subjective. We believe that this option would move us back into the vagueness of the past.

  We believe that a more positive approach is needed whereby delays are minimal and there is no risk of poor legislation due to time-out situations and we see Option 2 as a way of achieving this.

2.1.7  PARLIAMENTARY SCRUTINY OF INDIVIDUAL APPLICATIONS AND PUBLICATION OF THEM

  We agree with the Government proposal on this. Parliament should not be involved in the scrutiny of individual applications. This would certainly slow things down and they are slow enough already. Also, publication of individual applications could result in commercially sensitive information getting into the wrong hands.

2.1.8  ANNUAL REPORTING

  The annual reporting is acceptable as long as the Freedom of Information Act does not seek to impose obligations to release commercially confidential information which should be excluded from the Act as is the case in USA. The exclusion of pricing information in the Export Licence Application and Export Licence itself (relying on quantity alone) would facilitate this. Pricing seems to be irrelevant and sometimes it is difficult to balance licence value with delivered value, particularly when exchange rates are involved.

2.2.2  SETTING OUT THE PURPOSES OF EXPORT CONTROLS

  It is a good idea that the purposes of Strategic Export Controls be set down in legislation. More transparency in this area will give industry better guidelines for compliance. We agree that it is practical to provide this information by secondary legislation to enable flexibility to respond quickly to changing circumstances. We agree that the proposed affirmative resolution procedure for Parliamentary Scrutiny of the purposes of Strategic Export Controls is the most effective way for this to be introduced.

2.2.3  THE PURPOSES OF EXPORT CONTROLS

  The purposes of export controls need to be unambiguously defined. The FCO's exisiting "Criteria used in considering conventional arms export licence applications" has been suggested by DMA as a good starting point.

3.1.3  THE CHEMICAL WEAPONS ACT 1996 (CWA) AND BIOLOGICAL AND NUCLEAR WEAPONS

  We understand that there is some confusion relating to whether or not France is a member of NATO. If it is concluded that France is not, we may be adversely affected by the Government's proposals in this matter.

 3.2.1  CONTROL OF TRANSFER OF TECHNOLOGY BY INTANGIBLE MEANS

  That there should be such control is reasonable. However it is difficult to assess how it could be effected. We can make employees aware of the controls and re-enforce the importance of being compliant with the regulations. If such a control is made law, exporters should have clear advice and guidance from the authorities on the best ways to prevent an offence.

3.4.1  ENFORCEMENT

  With regard to enforcement of Controls of transfer of technology by intangible means, we believe that it is feasible to keep records for inspection by HM Customs (HNC) but there would need to be more, manpower resource made available to HMC.

4.2.1  RATING SERVICE

  If no licence required (NLR) decisions are to be made legally binding more clarity and feed-back is required in the NLR letter and it should be mandatory that there will be an NLR letter which could be used legally if required. There should also be an appeals procedure as to the classification or licenceability of a company's products.

4.3.2  REQUIREMENTS FOR INFORMATION

  There should be limits agreed as to what information companies would be obliged to give. The release of commercially sensitive information including costings and pricing should be at the company's discretion.

4.4.1  TIME LIMITS FOR PROCESSING LICENCE APPLICATIONS

  We agree with the Government's conclusion that licencing by default should not be adopted. However, changes are needed to ensure a turnaround of licences in 10-20 days. Also, there should be a specified reasonable time limit for decisions on more complex cases and measurable time limits for each stage of the export licence approval process to enable the highlighting of bottlenecks.

  We have found that DTI are keen to suggest that we apply for an Open Individual Export Licence in certain cases but that these have taken 6-12 months to be granted which somewhat nullifies the benefit of their offer.

4.4.2  ELECTRONIC VERSION OF THE EXPORT LICENCE APPLICATION

  There are problems with the electronic version of the Form A Export Licence Application and EEV Ltd, who were involved in a pilot study have fully reported our findings to DTI.

 5.1  COVERAGE OF CONTROLS

  Industry and DTI would benefit from the application of increased resource at DTI to review and refine the classifications of Goods in Export of Goods Control Orders with a view to better definition and exclusion of old technology items no longer sensitive. Also, certain classifications may be excludable for certain non sensitive destinations.

  We commented on this extensively in our response to the DTI Consultative document on "Strategic Export Controls" dated 30 October 1996.

5.1.2  MILITARY END-USE OR CATCH ALL

  Such a change is likely to bring even more low sensitivity product under control, worsen the DTI resourcing problems and lengthen turnaround times.

5.2  END-USE MONITORING

  Standardisation of end user statements would reduce time and cost of the procedure. Also, a means of enabling end user statements where the intermediary's customer is not yet known or confidential should be established as this is a perfectly reasonable way of doing business, especially in the components business.

  DTI or HMC procedures for regularly inspecting/auditing actual end-use against end-user statements would be of benefit. There could be reciprocal arrangements with overseas authorities equivalent to UK DTI.

ANNEX A

  DMA have raised the question as to why "most" is used in relation to nuclear weapons. This needs definition to avoid ambiguity.

SUMMARY AND CONCLUSION

  The greatest areas of impact to EEV Limited due to this White Paper are in 3.1.3 if French business is impacted due to confusions as to whether or not France are in NATO and the additional controls on transfer of technology by intangible means. We do not see these issues incurring significant cost however and such costs we believe would be offset by the benefits gained by industry from the changes.

  Improvements in turnaround times for the approval of individual export licence applications/open individual export licence applications would enhance our competitiveness against foreign companies and a reduction of the number of our products inappropriately classified as export licenceable would streamline the work we have to do in this area.

  We also believe that it is in all our interests that there should be policing by DTI/HMC of the end-use statement procedure.

  Finally, the range of legislative documents that have to be studied (and amendments scrutinised) make the job of understanding the regulations far from easy. The latest versions of EG(C)O, the DUEC and the EC Council regulations all have to be considered and it would appear to us that if the DTI produced a consolidated "manual" summarising (and amending) all of the regulations into one, then we would all benefit.

29 September 1998