Select Committee on Trade and Industry Minutes of Evidence


Supplementary memorandum submitted by the Department of Trade and Industry



1. It would helpful to have an indication of the reason for a UK national list of dual-use goods subject to licensing, and the nature of the goods so controlled.

  Dual-use goods subject to UK national controls include: (to all destinations) certain explosives, detonators, firing sets, explosives detectors, etc., and vaccines for protection against anthrax and botulinum toxin and (to all destinations other than Member States of the EU) mixtures of chemicals that individually are controlled by the EC Regulation and tear gas sprays designed for personal protection. There are also some national controls applying to certain destinations only: aircraft and equipment and components designed therefor for export to Iran, Iraq or Libya, tropospheric scatter communications equipment for export to Iran, Iraq and Libya; vessels and equipment and components designed therefor, for the export to Iran and Iraq; aircraft simulators for export to Libya. The purposes of these national controls vary and include the prevention of proliferation of weapons of mass destruction, and avoiding contributing to internal repression, international aggression or terrorism. The various international regimes continually review the goods and technology that should be under control and the UK Government would, of course, welcome the inclusion in international regimes of any of the goods or technology currently subject to UK national controls.


2. A note would be helpful on the frequency and nature of breaches of the OIEL/OGEL regime, and actions taken in response: and readily available statistics on deliveries under Open Licences.

  The Committee requested a note on the frequency and nature of breaches of the OIEL/OGEL regime, and actions taken in response: and any readily available statistics on deliveries under Open Licences.

Records of exports under open licences

  Companies exporting goods controlled under the Export of Goods (Control) Order 1994 should maintain records of all controlled exports for a minimum of four years; records should be kept for three years of exports controlled under the Community regime on the control of exports of dual-use goods or the Dual-use (Export Control) Regulations 1996. Although there is no requirement on companies to report the details of such exports, the requirements mean that ECO Compliance Officers, when carrying out periodic visits to holders of open licences, may readily check any queries they might have about any transactions under licence and follow through an adequate paper trail for a reasonable period. HMC&E is responsible for compiling statistics on all exports of controlled and other goods but, where the export is made under a licence, do not compile records of the volume of exports under different types of licence (open general, open individual and standard indvidual).

Compliance visits, the detection of possible breaches of the controls and follow-up action

  The ECO's Compliance Unit is responsible for monitoring compliance with the conditions attached to export licences, as opposed to the enforcement of the legislation by which exports are subject to control, which is a matter for HM Customs and Excise. From time to time, ECO Compliance Officers do detect failures to comply with licence conditions and, occasionally, evidence to suggest that there has been a breach of the controls. Monthly summaries of the findings of compliance officers are produced and circulated to Director, Export Control and the Export Control Organisation's Head of Licensing Group. By June 1998 there were around 850 OIELs in total. As mentioned in the main memorandum, compliance visits are made to holders of military OIELs on a yearly basis and to holders of dual-use OIELs on a two-yearly basis. In the year ending 28 June 1998, the Compliance Unit made 354 visits to exporters auditing 517 OIELs. During this year 11 OIEL holders were considered to have seriously breached one or more conditions of their licences. In each case action was required of the company to rectify the problems—generally within 30 days. This can be done against a background of possible withdrawal but in practice this sanction is very rarely carried out as OIELs are valuable to exporters and the threat of withdrawal almost invariably stimulates the company concerned to make great efforts to correct any failings that have been identified. Also in the same period ECO Compliance Officers advised HM Customs and Excise of nine possible breaches of Customs requirements relating to controlled exports.

Open General Export Licences (OGELs)

  A high proportion of exporters holding OIELs are also registered to export against OGELs and their use of the latter is reviewed during the compliance visit. However, the lesser conditions of the OGELs would make breaches less likely. Where breaches are detected, remedial action is taken in the same manner as for OIELs.

  Registered OGEL users not holding OIELs are subject to compliance visits but on a much less frequent basis than OIEL holders.


3.  (a)   The DMA suggested that "tangible" intellectual property has only relatively recently been brought within the licensing regime. It would be helpful to have confirmation of this.

 (b)   The DMA also suggested that transfer of "classified" information electronically or otherwise would be covered by the Official Secrets Act. The Department's view (preliminary if necessary) would be helpful.

  In relation to question (a) by "intellectual property" we take it that by this is meant what is described as "technology" in the control lists in the EGCO. In fact technology has been subject to export control to some degree for as long as the goods themselves. However, prior to the introduction of the 1994 EGCO, some technology controls only applied to "proscribed" destinations and this may be what the DMA had in mind.

  The answer to question (b) is that the DMA is right. Whether a breach of the Official Secrets Act (OSA) occurs is not dependent on the means by which classified information is communicated contrary to the Act. So potentially a breach of the OSA could occur because of oral or electronic communications. There would indeed be some degree of overlap between the proposed controls on the transfer of technology by intangible means in the White Paper and the OSA. Indeed you will see that in paragraph 3.2.1 of the White Paper it is acknowledged that certain transfers by intangible means of controlled technology could be caught by the OSA. However, not all technology controlled under the EGCO is classified information and so the White Paper proposals would catch technology not caught under the OSA.


4.   In view of the attribution to the Indian and Pakistani nuclear tests of the recent deterioration in the speed of determination of ELAs, it would be helpful to have some estimate of the proportion of circulated SIELs which were affected in a typical recent month.

  You asked for an estimate of the proportion of circulated SIELs in a recent typical month which were affected by the problems over India and Pakistan. In October, some 15 per cent of all licence applications circulated to other Government Departments were for exports to India and Pakistan and would therefore have been directly affected. In addition, there will have been a knock-on effect on the processing of other licences as more staff time than normal would have been taken up in dealing with the licence applications for India and Pakistan though it is obviously not possible to quantify this.


5.   Although the Committee understood from its visit to ECO that figures on the "tail" of outstanding SIELs were not kept, it notes a parliamentary answer of 24 July 1998 setting out some such figures. It would be assisted by any similar available figures on the proportion of cases not outstanding for various periods, as most readily available.

  While it would obviously be possible to check the amount of time taken to complete any specific licence application we only record as a matter of course, the percentage of licence applications completed meeting the 10 or 20 day targets (as provided in Annex E of our main memorandum). We are not therefore able to say, for example, what the average length of time taken to complete licence applications is, nor to say how many take, say 19, 21 or 43 days. The parliamentary answer to which you refer gave a snapshot view of how long licence applications outstanding on 24 June had been waiting. Information in this form is possible to obtain from the computer system. While information in this form gives an indication of how long it takes to complete licence applications that miss the targets, it is only indicative as the licence applications in question may take some time more to be completed. If the Committee wanted information on licences outstanding at a specific date, we could obtain this information, though it would take some time to do so. Nevertheless, we are seriously considering whether we cannot find a means of recording timings in every case in order to be able to give a better, more easily recoverable, picture of how long licence applications take to process,

Export Control Organisation

23 November 1998

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