Select Committee on Trade and Industry Minutes of Evidence


Supplementary Memorandum submitted by the Defence Manufacturers Association

  We feel that the question posed by Mr Laxton (no 37) as to what evidence Mr Evans had that delays were being experienced as a result of the FCO's deliberations, and Mr Evans' response, are highly illustrative of the lack of transparency in the current export licensing system.

  The fact that Mr Evans was not in a position to give "chapter and verse" of the delays that his company has been experiencing, and exactly where these hold-ups have occurred within the system, is symptomatic of the lack of transparency that pervades the system.

  It is well known within Industry that the problem does, or, at least, has, lain with the FCO, and a use of the Sherlock Holmes method of finding out where something is by firstly finding out where it is not, and using a process of deduction, clearly demonstrates this to be the case in those instances where direct evidence is not available.

  With regard to Mr Butterfill's question (no 116) to the Minister, we would like to clarify that the concern is primarily not over the technical knowledge of the DTI staff, but rather over that of the FCO's staff. This would be less of a problem if the officials involved contacted the companies direct to get answers.

  However, the current system requires the queries to be put in writing by the "advisers" to the DTI, then from the DTI to the company, with a written response from the firm going back to the DTI, for onward transmission to the "adviser" concerned. Thus, a simple query which should only take a couple of minutes in a phone call to answer, in fact takes up to a week, during which time the application is put on hold.

  Companies are also concerned at the somewhat simple nature of some of the queries—of particular concern is that it is known that DTI officials filter out and deal with the vast majority of queries themselves. Only a small minority "slip through the net" and get passed back to companies—which makes one wonder what the scale of the problem really.

  With regard to the questions (nos 54 and 63) posed on the issue of processing timescales, I can reiterate that the situation had improved since the start of 1998, thanks to the commendable efforts of the FCO, although we noted with concern the figures given in Annex E of the DTI's Memorandum to the Committee, which clearly illustrated that the situation has deteriorated again since June of this year.

  Delays in licence processing are not a recent phenomenon, and Industry has experienced a number of highs and lows and occasions when the system has improved or deteriorated. For instance, a special interest group that we established in June 1993 called the British Defence Manufacturers Export Licensing Group (BDMELG) was seriously considering winding itself up and disbanding in early 1995, because the system was perceived to have improved so much—however, the introduction of a new computer system a DTI in summer 1995 completely reversed the situation. The turn around had improved by late 1996, but, of course, deteriorated again after May 1997, when the new Government decided to review the UK's licensing criteria, and the backlog created took until early 1998 before the licensing authorities really began to get a firm grasp of the problem and clear it.

  The Government has made worthy efforts to try to deal with the problem, and these had begun to have an effect by Spring 1998. However, in concentrating all efforts, and increased resources, in trying to clear the backlog of Standard Individual Export Licence (SIELs) applications officials were forced to put the clearance of Open Individual Export Licence (OIELs) applications on hold. This, in turn added to the flow of SIELs and the general workload on processing them; for instance, we know of one very small electronics components supplier company who, because its OIEL was delayed, was having to submit some 65 SIELS per month. Now, at last, we understand that in recent months officials have been able to try to get the OIEL system back up and running, although the backlog of applications will take some considerable time to clear.

  We were delighted that the DTI has very recently decided to issue a new Open General Export Licence (OGEL) on the return of military goods to their original supplier for repair, the introduction of which effectively makes redundant some of my comments in answer to Mr Cunningham's question (no 59). However, we would state in reply to his observation that he is sure that the processing of SIELs for the return of repaired goods to the customers concerned may, indeed, be fairly simple and expeditious (in the main), the fact that these have to be submitted at all has a wider effect on the licensing system as a whole, as these applications are merely adding to the workload of officials and, thus, delay the system as a whole, generally for limited useful purpose.

  In answer to Mr Laxton's questions (nos 65 and 66) with regard to end-user control, having perused the questions again, in writing, I believe that I can now fully understand the gist and am in a position to answer them more effectively. We believe that all companies can be required to do is to provide, in support of an export licence application, details of all relevant information of which they are aware—they can do no more than this.

  Therefore, we would agree with Mr Laxton that companies should be doing this, and, indeed, we always urge and encourage our Member companies to do just this. Whilst we would not support the withholding of relevant information by companies, we do not believe that companies can do more than provide an end-user statement and any and all relevant information in support of an application. In our response to the Green paper we stated that:

    "Everything stated by companies in their applications must demonstrate the full level of their knowledge, with them being able to be held responsible for the knowing concealment of information, but they cannot be required to do more than this."

  Certainly the seeking out of additional information should be a matter for HMG, and not for Industry. The follow-ups should be done by HMG, using the resources at its disposal. Certainly we noted that the NGOs came up with some ideas as to how this could be undertaken, some of which we would support, provided that they did not at the same time impact upon the resources at HMG's disposal to support export initiatives.

  I noted the questioning of Sir Brian Tovey, especially by Mr Berry, with regard to his strong opposition to the use of the phrase "grounds for suspecting" in the catch-all, end-use control. We would like to state that we share Sir Brian's concerns.

  It is interesting that there are, in many ways, common grounds on which we and some of the NGOs share views. For instance, in his evidence, Mr Eavis of Saferworld called for the re-introduction of the list of sensitive destinations, officially known as the "List of Destinations that are Subject to Special Licensing Considerations", which has been defunct, since its withdrawal earlier this year. We, too, have argued since the demise of this list that it should be re-introduced. Industry found this list invaluable in assisting it in planning marketing campaigns overseas. However, we understand that the FCO required the demise of this list due to diplomatic considerations in the UK's dealings with the countries concerned.

  We have also argued strongly for the introduction of a common end-user form in our responses to both the Green and the White Papers, and are delighted that the NGOs on 10 November stated that they would also like to see this innovation introduced.

  Also, as stated clearly in our evidence and our response to the White Paper, we fully support the proposals to introduce controls on intangible transfer, trafficking and brokering, and to close the loopholes that these activities represent, but merely advise caution and careful through as to how such measures and regulations can be introduced and worded in order to avoid potential confusion and unforeseen implications in other areas, such as Academia, brought about by the hasty and ill-thoughtout introduction of such controls. Whilst Ms Weir of Amnesty International may regard three years' of discussion as being sufficient, given the potential complexity and problems associated with this matter, we are concerned that the wording of the White Paper would appear to imply that more thought on these matters is still necessary.

  Finally, in our response to the Green Paper we stated that Purpose d) "to avoid contributing to internal repression and instability within the country of destination of the licensed goods" and purpose f) "to avoid contributing to human rights abuse" where an unnecessary duplication, and we welcome the White Paper's apparent recognition of this.

  However, we fully accept the necessity to cover human rights abuses, as opposed to internal repression, and would suggest that this Purpose be re-drafted. Some clear guidance on the sorts of equipment, in this context, which cause concern to the likes of Amnesty International would be quite helpful, and may help to preclude a repeat of the stated case described by Mr Garland when RBR International had a licence for the supply of helmets to the People's Republic of China rejected because the material could (apparently) be used for internal repression.

30 November 1998

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