Select Committee on Trade and Industry Minutes of Evidence

Examination of Witnesses (Questions 120 - 130)



  120. Maybe I should put it this way. We had Sir Brian Tovey in and there is a conspiracy theory which is that you wish to police by means of encryption so that you then have access to all kinds of information, that the controlling of electronic communication because of the haemorrhaging of defence materials out of the country by wire is the excuse being used for the introduction of what could well be an intrusive anti-civil libertarian means of spying on people's communications by wire. What would you say to that?
  (Mrs Roche) I would reject that completely. What we are actually talking about here is basically a gap. We are not talking about the technology itself, we are talking about the method of transfer. May I repeat what I was saying to Mr Hoyle. It would seem unreasonable to me that export controls control the transfer of technology on a computer floppy disk but they do not control it when you transfer the same technology by e-mail. All we are doing with this is bringing the legislative framework up to date. Having said that, it is difficult for us to give you an exact category of how much information we are talking about because it is simply impossible to judge it, if it is something we do not control anyway, which is not covered by the licensing regime. We do take very seriously both what the academic world and what industry have said to us in response to the White Paper, which is why it is a White Paper, so that we can gauge response to it and we will look at this.

  121. With respect, do you not think it would be better expending energy on trying to get some kind of effective policing of the brokering system and having proper licensing of arms brokers? We keep hearing stories about, for example, a UK firm which is exporting armaments to the Congo to both sides in the war and using Bulgaria as the conduit. It may be that it is difficult for you to police brokering, but I should have thought it would have been easier to police brokering than to try to bring some order and corridors into the ether in the way that you are suggesting or the way that would be required if we have intangibles policed.
  (Mrs Roche) I think you need to do both. I do not think the two are mutually exclusive. You are quite right to focus on the question of trafficking and brokering. As you will know, there is already control at the moment of trafficking and brokering where there are embargoes subject to UN resolutions. What we have proposed in the White Paper is to extend this to look at UK embargoes and also embargoes as far as the EU is concerned. Indeed we take the points you make very, very seriously indeed and we do want to do something about it, which is why we have made the proposals in the White Paper.

  122. If, for example, evidence were to be provided of arms sales to a country or the area of the Congo, is that covered at the moment?
  (Mrs Roche) The Democratic Republic of the Congo is covered by an EU arms embargo. Yes, the new proposals contained in the White Paper would deal with that.

  123. It has been put to us that there should be a system of licensing for arms brokers. I made the point that in order to arrange the contracts for football players you need to put down a deposit of £100,000. Do you not think we should be establishing the bona fides of armaments brokers and traffickers because it is a shady rather messy business? We have already seen the great embarrassment which the administration in its broadest sense was put to by the Sandline affair for example.
  (Mrs Roche) As far as Sandline was concerned, that certainly did not involve any DTI licensing.

  124. That is why I used the word administration.
  (Mrs Roche) The point I would make there, which actually has relevance, is that it is always very difficult to police anything when there is no licence application. May I just make a move onto what you were saying there? A suggestion has been put forward for a register of those involved in trafficking and brokering and clearly we will look at that in the context of the White Paper. Our initial feeling about this, although we want to look at it, is that it is pretty difficult to do and pretty difficult to police. Therefore we would want to concentrate our efforts on the route of looking at countries which are subject to an embargo, whether it be a UN one or an EU one or a UK arms embargo and concentrate on these. I will not pretend that this is an easy area; it is difficult, but certainly that is the way our thinking is going at the moment.

  125. I do not want to flog this too hard but I do want to make this last point. If you have licensing or if you have some form of effective regulation where the individuals concerned are known to you and known to the public, then the good positive people who operate above the law have nothing to hide. It is the shady ones who are then by definition caught in the net although they may not even register. We know that but it is sometimes to the advantage of government to have these shady operators so that dirty work can be done on behalf of governments. Could this not be the reluctance to have a proper system of licensing and regulation, that it is very convenient to have some of these shady dealers round and about if particular purposes have to be met?
  (Mrs Roche) No, I have to say to you that I would reject that completely. Of course we will look at the suggestions; we will look at any suggestion which has come forward in the White Paper process. That is what the process is about. My concern and our initial concern so far is purely on the practicalities of it.

  126. What are the practicalities?
  (Mrs Roche) If I may say so, your very question to me suggested some of the difficulties. You get some people registering who want to be very open about it, but you get lots of people who would not register at all and how on earth do you police that? This is why, if we are in a situation where we want to concentrate resources, and we are talking about a situation again not just ourselves but we are talking with other Member States in the EU and also in the United Nations, is it not better for countries to concentrate their resources to deal with trafficking and brokering where there are regimes or countries which are subject to an embargo. If you are dealing in an area which is pretty complex and very, very difficult to police anyway, that strikes me as the area in which we ought to focus our efforts and that is why we came to the opinion that we did in the White Paper. As I said to you before at the beginning, we are in a process of evaluating and considering very, very carefully all the suggestions which have been put to us by industry, the academic world and the NGOs in this area and we will look at everything very carefully indeed.

  Chairman: That is helpful because certainly one of the arguments which you have already put forward in defence of the delay which has occurred is the need to consult. One would hope that in consulting and viewing things you might actually pick up some of them and this might be one of them.

Ms Perham

  127. May I touch on the costs of the proposals in the White Paper? You have estimated that the total effect of the proposals is to need one more DTI staff and £0.5 million for Customs. Mr Prest, who led the Defence Manufacturers' Association actually said he sniggered when he read the DTI's estimate. How realistic are those figures? It seems a bit polarised.
  (Mrs Roche) What we would say on this is that those are certainly our figures; those are certainly the figures we estimate. It is difficult to say overall because we do not know what we are going to end up with as a result of consultation. As I have already said in answer to the Chairman and others, clearly the responses which we have received and our consideration of them will frame our approach to the legislation and clearly we shall need to look again at the regulatory appraisal of that. We shall certainly note what he says.
  (Mr Mantle) There is not a lot I can add to that except that of course that those estimates do relate to what we are proposing to do. If one were going to do other things like regulating brokers then those estimates would have to be very considerably revised because we are not through the White Paper, in the sense of the whole compendium of proposals, putting new massive regulatory burdens on this particular area of industry.


  128. Has the Treasury said you had better not go above a certain level?
  (Mrs Roche) I have not had any approaches.

  129. Not in that respect. The annual report is awaited with almost bated breath. Could you give us some idea how transparent this process is going to be? I am sure you are aware there is a rustling in the undergrowth of select committees as to how we will handle your annual report. Certainly we should like to think that when we get down to going over the detail there may well be licences and other things which we would want to look at. Are you relaxed about making this information available to parliamentary committees or committee with the information being in confidence?
  (Mrs Roche) As far as the annual report is concerned, the Foreign Office lead on the annual report. Without pre-empting the content of the annual report, what we will see is more of an understanding of the process and what has been done, particularly because people will be able to see by category of equipment what has been licensed. Your other question related to parliamentary scrutiny of the licence procedure itself. On that clearly we will look very, very carefully as to what the responses have said to us as part of the White Paper procedure. If you look at licences, we are talking about a situation where we get something like over 12,000 a year. It will be very difficult to come up with a process by which those individual licences could be subject to parliamentary scrutiny.

  130. I was not talking about individual ones, I was talking about where there could well be areas of contention which emerge in the report. There may well be ones which some members of an all-party committee might well feel should have been granted and would like to get the reasons why not. It is not the 12,000, it is perhaps the 37 which might be a cause for dispute and of those 37 it might only be eleven.
  (Mrs Roche) It would be a brave Minister who would pre-empt what a select committee may or may not want to do. The thing I have to say without divulging the contents of the annual report is that clearly the annual report will be published and perhaps when you and your colleagues see it you will make your decisions.

  Chairman: Thank you. This is perhaps one of the rare occasions when a member of a select committee was asking a hypothetical question about questions which might be asked in the future. Perhaps we should save the benefit of that for ourselves until then. Thank you very much. I am sorry for the delay in calling you this morning, but thank you for the fulsome replies.

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