COMMUNITY CONTROL OF DUAL-USE GOODS
(21118)
—
| Presidency text of draft Council Regulation setting up a Community régime for the control of exports of dual-use items and technology.
|
| Legal base:
| Article 133; qualified majority voting
|
| Department:
| Trade and Industry |
| Basis of consideration:
| EM of 12 April 2000 |
| Previous Committee Report:
| None; but see (19625) 8888/98: HC 34-viii (1998-99), paragraph 1 (3 February 1999) and HC 34-xx (1998-99), paragraph 3 (19 May 1999)
|
| To be discussed in Council:
| 19 April COREPER; 2 May Telecoms Council as an 'A'point
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| Committee's assessment:
| Politically important |
| Committee's decision:
| Cleared on the basis of information supplied by the Government, but further information requested
|
Background
10.1 The term 'dual-use goods' covers goods
and technologies which are primarily intended for civil applications,
but which may be used for military purposes, or which could significantly
enhance the military capacities of the countries acquiring them.
Before 1995, Member States controlled the exports of these goods
under national legislation, taking into account both national
policy considerations and international agreements. In 1995, a
new system was put in place under a Council Regulation on licensing
and administrative co-operation and a Council Decision containing
lists of controlled products and an indicative list of countries
for which simplified licensing procedures may be applied by Member
States. It was agreed that the régime would be reviewed
after two years.
10.2 In May 1998 the Commission concluded,
having carried out the review, that the régime was too
complex and cumbersome. It proposed a new draft Regulation designed
to simplify and strengthen the system, so as to facilitate legitimate
trade, while respecting the international commitments and responsibility
of Member States and the Community. We considered it on 3 February
1999[26],
after the Government submitted a very belated Explanatory Memorandum
on it at our request, and again on 19 May 1999[26], when
we cleared it. At that time, the Parliamentary Under-Secretary
of State for Competition and Consumer Affairs at the Department
of Trade and Industry (Dr Howells) predicted that the proposal
was unlikely to be adopted until the end of 1999.
The Presidency text
10.3 In an Explanatory Memorandum of 12
April, the Minister now tells us that on 27 March "in an
unexpected development", the Portuguese Presidency tabled
a revised version of the draft Regulation, a copy of which he
has forwarded to us, for adoption. He recalls that the Commission's
proposal has been the subject of detailed discussion among the
Member States and with the Commission over the last two years.
We understand that it was the timing of the proposal that was
unexpected and that it resulted from intensive negotiating outside
the Council Working Group. The Presidency's proposal, he says:
"...reflects ... extensive discussions between
officials of EU Member States which took account of their own
commitments and obligations under the various international non-proliferation
and arms control régimes, such as the Missile Technology
Control Régime (MTCR), Nuclear Suppliers Group (NSG), Australia
Group (AG) and the Wassenaar arrangement. In deciding their response
to the Commission's proposal, Member States have also taken account
of their own individual foreign and security policy concerns."
10.4 The Minister's Explanatory Memorandum
provides a clear picture of the policy implications of the new
text. He says:
"There were six key elements of the Commission's
proposals with policy implications. This is still the case in
the Presidency proposal. They are
- changing the legal structure from a Community
Regulation supplemented by a CFSP Decision to a single pillar
Regulation under Article 133 (formerly Article 113);
- creating a Community General Export Authorisation;
- introducing a military end-use control;
- bringing under control certain transfers of technology
by electronic means;
- reducing licensing requirements for intra-Community
trade; and
- reinforcing administrative co-operation."
10.5 The Minister provides background to
the proposal and its implications and an explanation of how the
new text has been arrived at, in relation to each of the key elements.
The main points he makes are:
— Changing the legal structure to a single
pillar regulation under Article 133
10.6 Some Member States, including the UK,
were concerned that moving to a single pillar regulation under
Article 133 and, therefore, from unanimity to qualified majority
voting on the lists of controlled goods, could affect their ability
to fulfil their international commitments and obligations. After
discussion, representatives of the Commission and Council have
agreed on a Minutes Statement in respect of three Annexes. This,
the Minister says, gives them "a measure of assurance"
that changes to these annexes will be consistent with their obligations
and policy concerns, as well as with their public security interests.
The three Annexes concerned are:
- Annex I which lists goods subject to the Regulation;
- Annex II on the coverage of the Community General
Export Authorisation; and
- Annex III on the items whose transfer within
the Community will continue to be subject to control.
— Creation of a Community General Export
Authorisation (CGEA)
10.7 This authorisation will be equivalent
to the system of open general export licences issued under UK
law and would allow any exporter in the EU to export controlled
goods, other than certain categories of such goods, to a specified
small group of destinations. While the UK has been broadly content
with the substance of the Commission's proposal, replicated in
the Presidency's text, the need to preserve the possibility of
raising objections to any proposals to amend the coverage of this
authorisation in the future was one of the principal factors in
the UK's calling successfully for the Council and Commission to
make the Minutes Statement referred to above, the Minister says.
— Introducing a military end-use control
10.8 In our previous Reports we noted and
concurred with industry concern at the lack of clarity in the
Commission's proposal on the scope of this Article. The UK Government,
too, had concerns and successfully argued for changes to the text.
It includes a definition of military end-use, in Article 4(2),
and specifies categories of destination to which the control applies.
These are countries subject to a binding UN arms embargo, or to
an arms embargo imposed by a Common Position or Joint Action adopted
by the Council or a decision of the OSCE.
— Bringing under control certain transfers
of technology by electronic means
10.9 The new controls proposed would close
a loophole in the current Regulation where it provides for technology
sent by mail, in a "tangible" form, but not if the same
technology is sent by fax or e-mail, that is by "intangible"
means. The UK successfully argued that the new control should
apply to transmission of software or technology by electronic
media, fax or telephone. However, he says:
"... in respect of oral transmission of technology
by telephone, the new control should only apply where the technology
is contained in a document, the relevant part of which is read
out over the telephone, or is described over the telephone in
such a way as to achieve the same result. As a result, the proposed
control — as set out in the Presidency's text — is
now brought more closely into line with the proposals set out
in the 1998 White Paper [on Strategic Export Controls][27]."
— Reducing licensing requirements for intra-Community
trade
10.10 The Commission proposed that nearly
all existing licensing requirements for intra-Community transfers
of items in Annexes IV and V to the present CFSP Decision[28]
should be abolished. However, recognising the sensitivity of certain
items listed in the current Annex IV, the Commission proposed
a notification procedure for their transfer. Although a reduction
in the scope of the current controls was generally welcomed, the
UK and other Member States were unable to accept the Commission's
proposal for a notification procedure as, in practice, this would
amount to a licensing process by another name. The Commission
accepted this criticism. In the negotiations that followed, different
Member States, including the UK, argued for some items to remain
subject to control. The net result is that there will be a significant
reduction in the volume of transfers amongst Member States for
which a licence will be required. The Government is satisfied
with this result.
— Reinforcing administrative co-operation
10.11 All the Member States, including the
United Kingdom, were able to support the thrust of the Commission's
proposal that there was a need to create a continuous exchange
of views to reduce differences in perception and knowledge of
security concerns and allow for more consistent application of
export controls throughout the Community. Several Articles have
been strengthened accordingly.
Conclusion
10.12 The Minister tells us that the
Presidency text reflects extensive discussions and we see
that in many respects it is an improvement on the Commission's
earlier text, which we cleared last May. In clearing that proposal,
we accepted, in principle, the move to a single pillar regulation.
We now note the agreement reached to cater for the concerns of
the UK and others that their ability to fulfil their international
commitments and obligations could be affected by the move to a
single pillar regulation, under which the lists of controlled
goods would be agreed by qualified majority voting rather than
unanimity. The Minister says that this gives the Member States
"a measure of assurance". We hope and expect that the
Statement will be respected in any future difference of views
on the list.
10.13 The proposed Article 4(2) provides
a definition of military end-use which is clearly an improvement
on the earlier text. We ask the Government whether it is intended
that the controls should apply to the People's Republic of China.
10.14 We now clear the document but ask
the Minister to respond to our question in the preceding paragraph.
26 (19625) 8888/98; see headnotes to this paragraph. Back
27 Cm 3989. Back
28 Council Decision 94/942/CFSP (OJ No. L 367, 31.12.94, p.8), as
last amended by Council Decision 98/232/CFSP (OJ No. L 92, 25.3.98,
p.1). Back
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