Non-EU states: accession
57. The 1998 Annual Report notes that the UK
will continue to work for "the adoption of its principles
by arms exporting countries outside the EU." The first annual
Report on the Code notes that it has "been embraced
by others beyond the Union, with the Associated Countries of Central
and Eastern Europe and Cyprus, the EFTA countries members of the
EEA and Canada all agreeing to align themselves with its principles",
and that "some of these countries have now begun to
circulate information on their conventional arms export control
procedures."[112]
Member States have exchanged views through the Conventional Arms
Exports Working Group (COARM) on "options for enhancing the
participation of countries that have declared their alignment
with the Code's principles" and agreed that such non-EU countries
"which have become involved in the restructuring of the European
defence industry shall be allowed to gain access to the evolving
interpretation of the Code's principles and criteria". The
Foreign Secretary told us that there was no reason to await formal
entry into the Union to draw in applicant countries into the Code
of Conduct, while emphasising its voluntary nature, and stressing
that acceptance of the Code was not a condition of accession.
He saw the process of drawing more countries into the Code as
"the next priority of the Code", noting that it would
be a "big challenge" and not one that would be universally
welcomed.[113]
58. It is of course to be applauded that non-EU countries
should use the EU Code as a benchmark for arms export policies.
Whether those who have aligned themselves with the Code have been
obliged to change their national policies and to refuse export
licence applications remains to be demonstrated. It is also a
substantial step from subscription to general principles to participating
in operational mechanisms of mutual notification of denial. In
response to the Trade and Industry Committee's request for confirmation
that proposed changes to the EU Code would be subjected to the
new parliamentary scrutiny procedures for Common Foreign and Security
Policy (CFSP) proposals, the Government confirmed that the Code
did not fall into the category of either Common Positions or Joint
Actions.[114]
The first annual Report on the Code however reports that its adoption
"ushered in a new phase in the EU development of a common
approach to arms exports, as a component of the EU Common Foreign
and Security Policy in accordance with Articles 11 and 17 of the
Treaty on European Union". Its legal status has apparently
formed part of the exchange of views in COARM. Whatever its formal
status, as a Council Declaration, it is evident that it is indeed
an important political component of the CFSP: and therefore that
countries wishing to accede to the EU can reasonably be expected
to abide by the principles of the Code and the operative paragraphs.
The prospect of accession to the EU and to the WEU and its agencies
is a potentially persuasive instrument. The Foreign Affairs
Committee concluded that the Code should be applied as a condition
of entry for applicant countries to the EU.[115]
We consider that an applicant state's proven willingness to
conform with the criteria of the EU Code of Conduct and comply
with its operative paragraphs should be regarded as a precondition
for its accession to the EU and for membership of European defence
organisations including the Western European Union and the Western
European Armaments Group.
Inter-ministerial consultation
59. The DTI administers the system of strategic export
licensing, and licences are issued by the Secretary of State for
Trade and Industry. The MoD is responsible for offering expert
advice on military and technical matters, on the risk of diversion
to third countries, and on the potential risk to the security
of the UK, British forces overseas and our allies of a proposed
export. DfID offers advice to FCO on the potential impact of proposed
exports on the development of poor countries. The FCO has however
the sole responsibility for considering the foreign policy impact
of any proposed export. It takes the lead on the formulation and
presentation of policy on the export of arms and represents the
UK in the various international fora. The Annual Report, while
signed by 3 Secretaries of State, is published by the FCO. It
was for all these reasons that it was from the Foreign Secretary
we took oral evidence in November 1999.
60. The Government's memorandum to us states that
"Each department has defined its own requirements for the
circulation of individual licence applications by DTI in terms
of the kinds of exports...that they would wish to consider".
Since August 1997 these departments have included DfID. DfID's
main interest is to ensure that proposed exports would not hamper
the sustainable development of the recipient country so that their
efforts are focussed on examining export applications concerning
poor countries. Between 1 September 1997 and the end of the year,
470 applications were circulated for advice to DfID, where the
Aid Policy and Resources Department is tasked with processing
them and coordinating a departmental view.[116]
In evidence to the International Development Committee in December
1998 the Secretary of State for International Development noted
that the department had looked at around 2020 applications and
had raised objections on 17. A list of these cases was given to
the Committee, together with a list of countries for which DfID
has asked to be shown all applications. Several of the licences
to which the department had raised objections were subsequently
granted, including 2 to Indonesia.[117]
The Committee welcomed the publication of the list of licences
on which concerns had been raised, criticised DTI for granting
the licences and called for the Secretary of State to be a co-signatory
to the Annual Report.[118]
In its reply, the Government noted that
"DfID plays a full part
in the licensing process for arms exports to all specific developing
countries, but this means that DfID only considers around 15 per
cent of all licence applications. The Secretary of State for International
Development does not therefore consider it appropriate that she
should co-sign the report".[119]
The Introduction to the 1998 Annual Report repeated
this argument.
61. We reject this argument. DfID plays a
full part in the licensing process for arms exports, with the
ability to view and raise concerns on licence applications. Whilst
the 2000-or-so licence applications that are circulated to DfID
represent only 20 per cent of the overall total, they will contain
a significantly higher proportion of difficult decisions. Furthermore,
DfID has provided funding for a number of the small arms initiatives
referred to in both Annual Reports. DfID has, in the past,
raised concerns on licence applications which may well have resulted
in licences being refused. DfID should be accountable and responsible
for a licensing process of which it is an integral part. We recommend
that future annual reports are also signed by the Secretary of
State for International Development.
62. It is regrettable that there are not figures
available of the number of cases on which concerns are raised
at various levels by departments, nor of the outcome of discussions.
The Trade and Industry Committee was told that only a "very
small number" of applications each year fell to be decided
in inter-ministerial discussion. We recommend that the Annual
Report records the number of licence applications whose complexity
or sensitivity required inter-ministerial discussion or correspondence.
63. The sense that DfID is a junior partner in inter-departmental
discussions is reinforced by the fact that no licence has yet
been refused on the grounds of its effect on the economic development
of the recipient country, as variously defined in paragraph 11(c)
of the UK criteria and in Criterion 8 of the EU Code.[120]
The Government's reply to the recent Report of the International
Development Committee stated that these criteria were "underpinned
by the principle that proposed exports are considered on their
merits on a case-by-case basis, and ... the refusal of the licences
on the basis of cumulative expenditure could be open to challenge
by unsuccessful exporters".[121]
Except in rare cases of a single licence application — such
as for a number of aircraft — which on its own could skew
an economy, this seems to imply that the criteria are virtually
a dead letter. We have a sense that the threat of legal challenge
by a disappointed exporter is sometimes brought up as a justification
for a particular policy in the absence of other arguments. There
has, we understand, never been such a legal challenge. There is
no difficulty in maintaining, and adding to, a list of countries
for which export credits guarantees will not be given for arms
sales. It may be necessary to revise the national — and
in the fulness of time the EU — criteria to ensure that,
where there is a consensus among Ministers that the cumulative
impact of defence expenditure by a poor country is such as to
threaten damage its economy, and where they wish on those grounds
to refuse one or more export licences which even if singly or
together would not be regarded as damaging, they would be free
to do so without the threat of legal challenge being held over
them.
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