Select Committee on Trade and Industry Minutes of Evidence

Examination of Witnesses (Questions 1 - 19)




  1. Good morning. We are very pleased you are able to join us this morning and thank you for your evidence. One of the things which comes out of your evidence which we should like to start with is the question of parliamentary scrutiny. You are quite clearly disappointed that there is no prior scrutiny of ELAs. Could you tell us what you think is lost as a result of this? Do you really think that there are people who are slipping through all kinds of undesirable kit? If that is the case, can you give us some examples? We are looking at this as select committees; several select committees are concerned about what may well be the outcome of the annual report, so we are trying to address this. Do you think there is any virtue in an ex post facto system or do you think that is simply bolting the door after the horses have galloped away?

  (Fiona Weir) We both have a lot to say on that and you have rolled a lot of extremely useful questions into that introduction. If we go straight into this issue of public and parliamentary scrutiny, one of the reasons this whole process has been set up is the aftermath of the Scott Report. This very much challenged the impact that the secrecy surrounding export licensing was having and the adverse impacts of that. Since that process was set up, we have also had a commitment within Government to an ethical dimension to foreign policy. We now have growing debates around freedom of information. The opinion polling which Amnesty International, Saferworld and other organisations has carried shows very clearly that 90 per cent of the public are opposed to selling arms to countries which commit human rights violations. Interestingly 77 per cent of them feel that there is far too much secrecy surrounding the licensing process. Despite the favourable climate which I have outlined, in the past few years we have seen a number of examples of sales by British companies which fuel the repression and torture trade going on. There have been high profile exposes on TV programmes, there have been expose«s by pressure groups such as Amnesty International. To use the case of Frank Stott from ICL Technical Plastics Limited as an example, he admitted selling electric shock batons to China a year after the Tiananmen Square massacre for copy manufacture. Last year he was prosecuted and fined £5,000 under the firearms legislation. He was only able to be prosecuted for physically holding a single electric shock baton in this country but not for the much more worrying concern we have that at the moment people are able to broker deals whereby as long as these pieces of equipment do not touch British soil, they can in fact take part and profit from organising the export of this kind of torture equipment. You might think after those high profile expose«s that this kind of practice would stop, but it has not. There have been much more recent cases.

  2. May I interrupt you because I think you are confusing two points here? We are looking at export licences from applications by British manufacturers sending kit made in Britain out. We will be looking at brokering. At the moment you are in danger of confusing the two. Perhaps you could take them separately, if you would not mind, so we can deal with each element. There is a blurring here and it might be useful to try to deal with them in discrete boxes. Could you confine what you are saying to us, at this stage at least, to the question of British manufactured defence equipment or British assembled equipment, because we may get parts from other countries? We should like to start with something which has a bit more of a Union Jack on it than you are suggesting.
  (Fiona Weir) If we return to the core licensing procedure, it is fundamental that one of the things which can be effective in ensuring that the right questions are raised and identified about the exports of particular equipment is prior scrutiny. May I give you an example of a high profile deal very recently, the export of armoured personnel carriers to Indonesia where people saw on their TV screens UK manufactured equipment being used against peaceful demonstrators in Indonesia earlier this year, very clear Union Jacks on those kinds of pieces of equipment? There should have been a very good informed public debate before any licence application was granted. If we do not get prior scrutiny, if we do not set up a system which allows NGOs and academics and others to alert parliamentarians to particular licence applications which are coming up, which may have these implications and may be used to commit human rights violations, then you as parliamentarians will be confined to commenting after the event, probably at the moment 11 or 12 months after the event, but without any real ability to stop certain pieces of equipment being exported. That is very much what we want from this process.
  (Mr Eavis) The main benefits of an element of prior scrutiny are that it will lead to more effective decision-making over arms exports and will lead to a more responsible policy because there will be more space to take into account the impact that proposed deals will have on regional security, human rights and development concerns. Most importantly of all, it will provide an added deterrent effect. This came out in the Scott Report. If you leave the decision making to a small group of civil servants, then there is little deterrent effect on their Minister or the civil servants themselves. They may go ahead with the more dubious of deals or they may push the borderline, knowing that they will not actually have to defend that deal in front of parliament. This was mentioned by Lord Justice Scott, and William Waldegrave himself raised the point that if he had had to stand in front of a parliamentary committee to justify the exports to Iraq, then they probably would not have gone ahead. That deterrent effect is really important.

  3. There are two elements here then. There is the customer and whether or not we should be selling to Indonesia for example. Alternatively there is the kit, the military equipment which is being sent. How would you suggest that parliament look at this? What form would parliamentary scrutiny take? We have to get down to the nuts and bolts of it.
  (Mr Eavis) There is a variety of possible systems. It depends how ambitious one is. The US system allows for 30 days' advance notification to Congress of exports above a certain value. That threshold value of US$14 million is far too high in our opinion. However, there is a process whereby 30 days in advance of licences being approved export licences are placed in front of Congress. One idea we have had is that there could be a rolling register; the DTI could produce a rolling register which could be made available to parliament so that parliament could then question proposed licences. Then there is another system, which is not as ambitious but will be very effective and in our opinion it is the minimum which should take place and it is a system which operates in Sweden. There is a small parliamentary group which meets behind closed doors, a confidential discussion; they meet with the Minister once a month and he presents to them the licence applications which they are considering before the decision has been taken. He asks those MPs their views on how these licences match up against the export control criteria. That still has an element of confidentiality but it is still a process which brings in opinions from parliamentarians.

  4. On this question of value, US$14 million is about £8 million and that would not have caught the Chinese electric baton deal, would it? You are not really going to catch much in the way of the kind of offensive weaponry which you were identifying as normally being the means whereby repressive countries police their citizenry unless you go down to a very low level. Is that not the case?
  (Fiona Weir) We would not recommend a wholesale adoption of this particular system.

  5. I am talking about the Swedish one.
  (Mr Eavis) The Swedish one covers all licence applications. There is no threshold; there is not a value threshold. It covers all licence applications. The reality is that the committee is only really interested in those exports to sensitive destinations.

  6. Is it customer driven really?
  (Mr Eavis) Yes.

Mr Butterfill

  7. May I press you on how far you wish to go in the case of exports to regimes of which we disapprove? Clearly there is quite a number. Would you seek to ban all exports? If we are looking at policing equipment, you have said you would clearly put electric batons in that category, but what about conventional batons, walkie-talkies, handcuffs? How far down the line do you think we ought to be going or do you think we just have a blanket ban?
  (Fiona Weir) Amnesty International bases this on very careful research. We would ban some whole categories and they include any kind of equipment produced primarily or solely for the purpose of torture. We would similarly ask for a ban on any equipment used in any form for executions, for implementing the death penalty. When you get on to dual use and other such equipment, what we look at very carefully is which kinds of equipment have been used or can reasonably be assumed to be used in a particular country to commit human rights violations. We examine very carefully, for example, how "disappearances" in Turkey happen, what the use is or is not of armoured vehicles and military helicopters. When we called for the ban on the armoured personnel carriers in Indonesia it was because we had collected very clear evidence that they had in fact been used in this way in that context. We are looking at a very careful assessment on a country by country basis.

  8. But we would not have evidence about how certain things were going to be used. Let us suppose we were asked to supply the sort of baton rounds which have been used in Northern Ireland to a regime which was suspect, would you immediately think we should say no to that?
  (Fiona Weir) We would first carry out an analysis of the situation in the country and what was happening there and combine that with an analysis of what we know about how this equipment has been used and there is no simple matching up of a type of equipment with a country.

  9. How would we get the necessary information other than through you?
  (Fiona Weir) It seems that for parliamentary scrutiny to work well it would have to be informed and parliament would need, as you would with any information you debate, to get views not just from the defence industry but from informed NGOs and academics. All of those bodies would play a role in alerting you to things which might perhaps not otherwise have been spotted. We are not looking at a system where parliamentarians plough one by one through a great number of detailed licence applications, but where there is an opportunity to alert parliamentarians to ones which might be sensitive. Let me give you one example. In Tiananmen Square, traffic control equipment was used to photograph and help capture dissenters. A similar such system has now been installed in Tibet in Lhasa, an area with no traffic congestion. NGOs such as Amnesty International might have alerted you to the possible use of equipment which might otherwise have seemed innocuous. As with anything parliament debates, you will rely on that kind of informed opinion and you will weigh up the differing views which come to you. You have to have the process which allows us to feed that information through to you in advance of a licence application being granted, if we are to be effective and not simply commenting afterwards that we were disappointed with what happened.

Mr Hoyle

  10. I have listened carefully so that we do get it right. My worry is that we could grind the whole of every department to a standstill if it were everything which was exported which suddenly had to be double checked. Would there not be a different approach, whether it be by country, to say this country is one which ought to be questioned and ought to be looked at more seriously, so that anything which is exported there ought to be checked? This country is on the A list which is fine, so you do not worry about that. Do you not think there ought to be some formula? Otherwise the danger is that you would not export anything, we would put people out of work, the danger being that the whole thing grinds to a halt and what we find out is that the French, the Chinese, whoever they may be, South Africans, suddenly fill up the contracts because this country is not processing the orders. How can we short circuit some of the issues you have raised and ensure one which is effective so we actually trade with the right countries and not the wrong countries, but also making sure that we do not put people out of work in this country?
  (Mr Eavis) You could have a list of sensitive destinations on which you are going to focus your attention. Under the previous government the Department of Trade and Industry used to publish a list of sensitive destinations and I would have thought that a parliamentary committee in the first instance could focus on those countries. Clearly there will be a large proportion of the trade with which there will be no problem; very few concerns will be raised with the majority of our NATO allies, barring Turkey perhaps and some other OECD countries. This is what happens in the Swedish example. The idea that things get held up has been rejected by some of the officials in Sweden. They are saying it does not happen like that. One goes ahead with the licensing process.

  11. Are you really comparing like with like? It is very easy to talk about Sweden which is not as comprehensive in defence exports as this country and it certainly does not trade in as many countries. To say this is what Sweden is, is not comparing like with like in fairness. Sweden is on a much smaller scale than we in this country and that is the danger. In fairness you ought to look at this country which is much more dependent jobwise on defence than Sweden ever will be.
  (Fiona Weir) We are not looking to a complex and cumbersome process. We are looking at relying on the expertise already there in the Foreign Office to make lots of sensible recommendations rather than a crude list where political situations change regularly. We are looking for a system whereby applications are posted on the web or publicly available in some form which allows NGOs or academics or others to alert parliamentarians to anything which might have slipped through or may be sensitive which requires a further degree of parliamentary scrutiny. That can be a fast efficient process and it does not need to be tied down a lot of the time. It is vital that this Committee looks very hard at the quality of information which will be available to you. It is not just the issue of prior scrutiny which we think is so essential. It is also about looking at the information you get both before and in the annual report which you will be receiving. Some of that information may be aggregated in a way which entirely obscures the picture you are getting: categories like ML10 which cover parachutes and combat aircraft, ML6 which covers everything from armoured personnel carriers to bullet-proof tyres. This kind of information is simply not useful. You as parliamentarians will want to see in that report comprehensive information which really gives you a picture of what is going on. Will you be told details about licenced production deals? For example, a company in Turkey, Ottocar, is assembling Land Rovers under a licenced production deal with a British company. Once we relinquish control, we are not able to stop those machine tools essentially, 80 per cent of which are exported from the UK, being assembled in Turkey and having the machine guns and other equipment added and being turned into vehicles which are indeed implicated in human rights violations. These vehicles are now being exported to Algeria and Pakistan, but we have no control over the process. How will you get the kind of information which allows you the true overall picture? What will happen about Crown immunity and Crown agents, agencies like DESO and DSA? Will you have information about what they are doing? Will you have information about government to government deals like the Al Yamamah deal, the biggest arms export deal ever? These are all enormous potential holes in the quality of information which you will be receiving and ones which you really need to insist are filled.

Mr Baldry

  12. I want to look at the process of this. If one has an application and it is publicised, you rightly say the quality of advice in the Foreign Office is usually very good. Ministers making decisions as to whether or not to grant export licences are very often having to consider a whole number of sometimes quite grey areas in the advice they receive from the Foreign Office. Are parliamentarians going to do any more than be able to put up a flag that there may be concerns about something? To be able to form a proper value judgement as to whether or not arms should be exported, would depend also on us getting that same quality of advice from Foreign Office officials. It is very difficult to second guess Ministers without the benefit of that advice.
  (Mr Eavis) The added value of parliamentarians being involved in the process is that there are no vested interests as such. Whether it be the DTI, the MOD or the Foreign Office, they each have an element which is concerned with promotion of trade. If some of these decisions are on the borderline, I just wonder, if they knew there was going to be parliamentary scrutiny. whether with the decisions on the borderline they would err on the side of caution and decide they actually needed to say no to this export. It is the fact that they would know that parliament would be involved in the process. It would be those more dubious deals, the ones which are pushing the boundaries on export control criteria, on which parliament would have most impact.

Mr Berry

  13. You rightly drew our attention to the importance of arms traffickers and brokers. In both submissions you call for a register of approved arms dealers. Could you say a little more about how that would work? Who would be included, who would be excluded, should it be UK based or EU wide or whatever? How would that work because it is clearly an important issue?
  (Mr Eavis) What we both call for is that UK persons, domiciled in the UK, should have to register with the DTI and they should have to apply for a licence to be involved in a brokering activity. The controls governing brokering agents would be the same level of control as though a company were trying to export goods directly from the UK. Clearly there is a problem in that an individual could set up residence in Germany or France or another member state, so at the same time we are also arguing that there should be European Union wide agreement on the issue of brokering and trafficking. If you look at the controls in operation of a number of other Member States, some Member States do have effective controls on brokering agents. Sweden is one again but also Germany. Germany is clearly a much more prominent manufacturer and its economy is more dependent on arms manufacture. Both Sweden and Germany ask arms brokering agents to register and to seek a licence. One of the things we are hoping will come out during the German presidency is that they will prioritise the issue of arms brokering and that there can be steps to a European-wide agreement.

  14. Are you aware of any practical problems which have arisen in Sweden and Germany or is it just that it is a matter of political will?
  (Mr Eavis) In Germany one of the practical problems is that people move across the border to bypass those controls and that is why there is a need for national control to go hand in hand with European-wide controls.
  (Fiona Weir) May I say how much we do welcome the White Paper proposals actually to close some of the loopholes in brokering? I wanted to raise this because we are very concerned about the industry responses which you will hear later. This process has examined the issue of brokering for about three years now and officials at DTI and elsewhere have had adequate opportunity to think through the implications. We should be very concerned if this Committee were to accept arguments that somehow this is a hasty new area on which there may be an attempt to rush legislation. We repeatedly hear the arguments, "How can you actually try to close down brokering loopholes without an adequate system of policing? Surely it would be ineffective?". It is important to tackle this one. We do not not call burglary a crime because we do not have police cameras trained on every house in the country. The very act of making brokering illegal would mean that the more reputable end of the industry would immediately distance itself from such practices. That would be a very immediate gain. As soon as you had your first high profile expose« and conviction under the new laws, you would then have the less reputable end of the industry thinking extremely carefully about whether it was going to continue with such practices. I would not underestimate the very powerful way in which making certain practices illegal can really help to stop certain practices occurring.


  15. May I get my mind round this? For someone to be a broker, they would have to put down a sizeable deposit. For example, if you want to act as an agent for football players I think you have to lay down a bond of £100,000. Not that I have views on the subject but I take that just as a simple EU-wide/UEFA approach to things. I am sure there will be brown paper bags in motorway cafes under that system still, but really what I am getting at is that we are talking about the EU to start with. I have heard stories of trading for example using Bulgaria as a conduit. There is evidence apparently that arms have gone to both sides in the Congo using Bulgaria as the conduit. I take the point about the value of deterrence but I wonder whether by having a system of licensing you are actually going to catch the kind of people who have the ingenuity to do this. You might be imposing a system which in theory is worthwhile and important but in fact is irrelevant when it comes to dealing with the bad guys.
  (Mr Eavis) But it is not irrelevant in terms of current practices at the moment. There have been several instances recently which have either involved UK-based companies or European-based companies. The Sandline example, arranging the export of 30 tonnes of arms from Bulgaria to Sierra Leone, is a very good example. If Sandline had had to register with the DTI and had had to seek a licence, then I am sure that many of the recent problems could have been avoided.

  16. Do you think that in a case such as that, where it seemed there were rather important people pulling strings, though we do not know where the strings ended up and we do not know who were pulling them but it is alleged that they were, that these seemingly ingenious and apparently quite powerful individuals would have sidestepped these arrangements you are suggesting?
  (Mr Eavis) I am sure that some people will try to sidestep the arrangements but I support very strongly the point Fiona was making, that you need to have a deterrent effect and a criminal sanction so that you are going to deter a sizeable proportion of those companies who many again be thinking about moving into that area. You will not get all of them, but we would be able to reduce the amount of trade which does take place involving brokers and traffickers at the moment.

  17. You have drawn distinctions: there is the EU, NATO and then there are OECD countries. Who would you wish to get into this? The EU to start with and then NATO or both simultaneously?
  (Mr Eavis) Because a number of discussions are taking place anyway amongst the European Union Member States, they will probably start with the European Union. That would follow on nicely from the recent agreement on the code of conduct governing exports. Brokering was at least referred to and discussed within those debates although the code of conduct itself does not cover brokering agents. Through the European Union one could also begin to address some of the countries of central and eastern Europe through the fact that they will be joining the European Union. One of the conditions of membership could be that they also have effective controls in this area. You can start with the European Union and then you can move outwards.
  (Fiona Weir) It is also very important to understand the dynamics of the various debates on codes of conduct within the arms trade. What we find repeatedly is that when a level one initiative is taken by a country it has a strong impact on debates in other countries and creates a process whereby it is much easier to get similar improvements in that country. You get a constant ratcheting up of those kind of controls. Britain is really in a position at the moment, because we are at the key point in this process of examination which has been going on since Scott, to say that we will take a lead, we will set an example and we will adopt the kind of licensing regime which will have an enormous influence on the EU code and on practices within the US over the coming years.

Mr Butterfill

  18. Just to press you on how you would assess the countries who should be proscribed, clearly you could not proscribe any other EU member country otherwise we would be in breach of our Treaty obligations, even if sometimes we have disapproved of their behaviour. You mentioned Turkey several times. Turkey is a member of NATO so it would be quite difficult to proscribe Turkey so long as it remained a member of NATO. The Turks would probably turn round and say they are dealing with an armed separatist movement which they would say was analogous to ETA or the IRA and that they have a fully functioning parliamentary democracy. How do we draw these rules up?
  (Fiona Weir) This is why we say again and again that we cannot have very simple lists and categories. It does require a judgement, up-to-date intelligence and analysis. Let us say the situation in Kosovo deteriorated and tensions in Macedonia grew. We might reach a situation where we were concerned about Greek involvement in that dispute and where arms to Greece might become a problem. It is not out of the realms of possibility that we would be concerned about other EU countries. In the case of Turkey, if you look at the economic sphere, we regularly use our economic relations through the EU Customs Union to put pressure on Turkey to improve its human rights record. Despite Turkey's role as a NATO ally, we do think it is right that we raise with Turkey its adherence to international human rights law. There is no reason why we should not put the same pressure on Turkey with regard to exports of particular types of equipment from Britain which we know are being used to carry out violations. We simply cannot on a diplomatic level raise our concerns about "disappearances". We are not talking about the legitimate rules of humanitarian law: we are talking about breaches of human rights law and humanitarian law which are going on. We cannot raise concerns about "disappearances" and deaths in custody if we know that UK companies are complicit in supplying the kind of equipment which is carrying these out.

  19. It is certainly perfectly proper for us to raise these issues as we do with all sorts of countries, countries which may be future applicants to the EU, for example, where we have raised human rights issues and countries of central Europe. I understand that. How far would you go? In the case of Turkey you have talked about Land Rovers. Would you ban the export of all vehicles to Turkey from this country?
  (Fiona Weir) We look at equipment which is used to commit human rights violations. May I say that one of the key problems we have with the current draft of the White Paper is this definition of internal repression as one of the key criteria because it is not a term with common currency; it is not an understood term in legal terms and it would miss out exactly this kind of example. For example, in the case of an internal armed conflict, or say Turkish troops were pursuing Kurdish groups across the border into Iraq, there are several instances which simply would not be covered and we would urge this Committee to ask for a definition which is understood in international legal terms and covers any breaches of international human rights law and humanitarian law.

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