Select Committee on Trade and Industry Minutes of Evidence

Memorandum submitted by The Joint Electronics and Telecommunications Security Export Control Committee (JETSECC) of the Federation of the Electronics Industry.


  1.  At the outset, we would like to stress that, as seen from the perspective of the Information and Communications Technology Industry, any regime of Export Controls (and the associated list of controlled goods) must be both practical and enforceable. Controls should be targeted against the unscrupulous exporter, without imposing an additional administrative burden on the majority of responsible and compliant companies. In practical terms, the costs of compliance for Industry are directly related to the scope and complexity of the Export Control regime; hence we shall continue to press for maximum simplification and certainty.

  2.  Our comments related to the following sections of the White Paper:

    (a)  The end-use control (para 3.1.4).

    (b)  Transfer of Technology by intangible means (paras 3.3.2-3.3.3).

    (c)  Trafficking and Brokering (paras 3.3.2-3.3.3).

    (d)  Power to require information from companies (paras 4.3.1-4.3.3).

    (e)  Time limits for processing licence applications (paras 4.4.1-4.4.2).

    (f)  Giving reasons for refusing export licences (para 4.5.1).

    (g)  Appeals (paras 4.6.2-4.6.5).

    (h)  Coverage of controls in Export of Goods Control Orders (paras 5.1.1-5.1.2).

    (i)  End-use monitoring (para 5.2.1).

    (j)  Compliance Costs and Other Costs (Annex A: paras 5-6).

  3.  Where we have not commented, it may be assumed that we endorse the views and proposals set forth in the White Paper: we do, for example, warmly support the proposal that DTI should continue to be the licensing authority (para 5.3.3) and that no charge should be levied for export licences (para 5.4.1).


4.   The End-Use Control

  We wish to reiterate our concern regarding the phrase "has grounds for suspecting" in this context. No other EU state has thought fit to include this tendentious and ambiguous phrase in its legislation and, in view of the proposal to extend export control to the transfer of technology by intangible means (see para 5 below), the prospect of companies being judged culpable, because they failed to "suspect" some ill-intent on the part of their customers, becomes even more obnoxious from Industry's point of view.

5.   Transfer of Technology by Intangible Means

  We consider the cost implications of this proposed extension of the ambit of Export Controls in para 13 below. More generally, it is in our view very important that any new control of this kind should be negotiated internationally and be implemented in concert with other EU Governments and, indeed, with other Wassenaar partners, so as to maintain a level playing-field with our overseas competitors. In addition, any consideration of the practicality and overall impact of such controls must take into account their potentially damaging effects in such fields as the dissemination of commercial software incorporating cryptography—an area of vital importance to the continuing development of global electronic commerce. With regard to the Government's intention of extending export control legislation to cover the conveyance technological information by non-documentary means, we would counsel a considerable measure of caution in view of the potential impact, not only an academic freedom (duly mentioned in the White Paper) but also on the training which companies are expected by their customers to provide as an integral element of an export of a high-technology product. We do note with some relief the Government's intention of limiting this particular new control to WMD-related technology, and sincerely hope that the phrase "for the time being" does not betoken any eventual desire to extend it more widely. Precisely the same considerations apply to the possibility (discussed in para 3.2.3 of the White Paper) of controls on the dissemination of technological information vie the World Wide Web.

6.   Trafficking and Brokering

  Provided that the extended controls are limited to those referred to in para 3.3.2, we would not object to this proposal.

7.   Power to require information from companies where this is needed to meet the UK's international obligations

  We would stress the importance of ensuring that, in exercising its obligations under the UN Conventional Arms Register and the Wassenaar Arrangement, the Government does not inadvertently disadvantage UK industry by revealing commercially sensitive information to our overseas competitors.

8.   Time limits for processing licence applications

  We are bound to express considerable disappointment at the decision to reject Sir Richard Scott's arguments in favour of licensing by default—as is, in effect, already the case in the US and in France: whilst is may be true that this might result in some licences being granted in error, no mention is made of the corresponding risk that inordinate delays in the processing of licence applications can and do result in significant export orders being lost. We do however note with pleasure the Government's intention of comprehensively reviewing the ECO licence processing system, and would ask that, as a matter of urgency and in addition to the measures referred to, consideration be given the adoption of e-mail licensing procedures, to the automated tracking of licence applications, and statutory time limits—measures which have been in force in the US for many years.

9.   Giving reasons for refusal of export licences

  We appreciate that the safeguarding of sensitive sources of intelligence must inevitably be an overriding consideration, but would point out that the facts revealed by intelligence can often be stated without in any way compromising the source. We would ask that this be borne in mind when companies are given the rationale for the rejection of a licence application.

10.   Appeals

  Whilst regretting that the appeals procedure now envisaged will not be completely independent, we do welcome the fact that it will be somewhat more structured than the present arrangements, and trust that it will incorporate the possibility of appealing against excessive delays as well as against refusal of licences. We also note with satisfaction that the possibility of seeking judicial review of export licensing decisions, including the outcome of appeals, remains open to companies which are seriously aggrieved by what they consider to have been a wrong decision.

11.   Coverage of controls in Export of Goods Control orders

  We welcome the Government's intention of seeking to refine the terms "specially designed" and—in particular— "specially designed for military use": we would urge that their intention be translated into action in the very near future. In view of what has been said in para 4 above, however, we are unhappy about the possible introduction of a military end-use (catch-all) clause. With regard to both these items, we would consider it vital that Industry be brought into consultation before any decisions are taken.

12.   End-use Monitoring

  In considering the options for achieving more effective monitoring of end-use, the Government needs to bear in mind the importance of avoiding measures that would be seen by our overseas customers as unacceptably intrusive.

13.   Compliance Costs for Business and Other Costs

  It is entirely correct to state that the extension of controls to transfers of technology by intangible means would impose an increased burden on exporters. However, the suggestion that this would not be "a significant burden", since it would be spread over a large number of companies, is mistaken. First, the impact of export controls—including the putative control of intangibles—is largely concentrated on those companies which live by exporting technology-intensive products, either for military use or for dual use. Second, the task of monitoring what information is sent by fax or e-mail by large numbers of staff—particularly in those companies having a substantial element of people engaged in R & D—is lkely to prove burdensome as to be effectively impossible. And, by the same token, we believe that the resource costs envisaged for Government Departments required to cope with an increased flow of licence applications, following the introduction or control of tangibles, have been seriously under-estimated.


  14.  As remarked earlier, there are many points in the White Paper with which we cordially agree: the fact that, in the interests of brevity, we have not specifically referred to each and every one of these should not be interpreted in any negative sense. We hope that the comments offered by JETSECC on behalf of the FEI, as set out in paras 4-13 above, will be seen as constructive; needless to say, we should be happy to discuss any or all of them with Government representatives if that were considered helpful from the Government's point of view.

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Prepared 10 December 1998