Select Committee on Defence Minutes of Evidence

Examination of Witnesses (Questions 60 - 79)



  60. There have been examples where we have had to hold information back on, for example, UK collaborative projects with the United States.
  (Mr Gould) Sure.

  61. Some areas where it was thought the Americans would not be happy about that being transferred to other European countries.
  (Mr Gould) Yes.

  62. Are the Americans really content with our involvement in this European R&T initiative when it might, on the one hand, create competitors to American industry and, on the other hand, might involve what they perceive as transferred technology or capabilities from their defence industry through Britain to other countries?
  (Mr Gould) Quite separate issues of competitors to US companies and transfer of technology. US sourced information, which is transferred to us under government to government arrangements, will be, and will continue to be, protected. We will not, because of this, transfer information to the other five LOI nations, that is governed by a US/UK Government technology transfer government to government arrangement. Similarly, US technology which comes into UK firms as a result of US/UK co-operative programmes and is protected by US regulations, US requirements, will continue to be protected. There is no way around that. We do not want there to be a way around that. That is an absolute undertaking we give to the US Government and we are not going to breach it.

  63. What about the impact of the privatisation of DERA. Is that going to affect the MoD's obligations to share research and development information with our Framework Agreement partners in Europe?
  (Mr Gould) The privatisation of DERA does not affect our obligation under the Treaty, it does affect the information generated by DERA. What will happen post DERA privatisation is that DERA is a private sector company.


  64. Part of it is.
  (Mr Gould) I am coming to that. DERA privatised will be a private sector company. There will be a quite separate different organisation, called the Defence Science & Technology Laboratories, which remains part of Government and which will be what is now what we call DERA. That will be the recipient of bilateral research programmes and so forth with the United States, not the new DERA, the privatised company. The situation does change quite considerably.

Mr Gapes

  65. You think it is possible you can have this Chinese wall between the two?
  (Mr Gould) I can tell you that when this happens it will not be a Chinese wall. There is no way the United States Government will allow it to be a Chinese wall. It will be a very, very solid wall.

  Mr Gapes: Okay. We will see.


  66. That is very reassuring. If I could go back a little to an earlier section of questioning initiated by Mr Cohen. I cannot remember - I should remember—when the Ministry of Defence actually gave us the list of what capabilities must be retained in this country. Could you perhaps check with your colleagues in the Ministry of Defence and we will be most interested to know.
  (Mr Gould) I am not even sure that we have given you such a list.

  67. That is why I did not want to trick you into telling us what is classified.
  (Mr Gould) That is right. I am not sure that the list would be constant over time. I am pretty sure it would not be constant over time.

  68. It is a pretty small list. Check it out.
  (Mr Gould) I will have to come back to you on that point.

  69. Please do.
  (Mr Gould) Yes.

  70. Will each country declare its strategic assets on an ad hoc basis or will there be some across the board assessment to ensure that all play by the same rules in the assessment of strategic assets? How will any disagreement be resolved?
  (Mr Gould) Again, I come back, the first port of call in dispute resolution is the Executive Committee always in this Treaty. I do not think it will work that way but I am predicting how the Executive Committee is going to behave now and I am not absolutely sure. What this really boils down to is where a company feels that it is being somehow leant on to retain uneconomic capacity under the guise of national security, then it now has a way of resolving that concern, actually going to a country and saying "Look, we want to close this down but because you have got a security of supply agreement, it does not matter that the remaining plant is in country Y" or wherever it might be. This is slightly more delicate but I will get into it anyway. Very often the security of supply argument is used as a pretext for saying "Well, we do not really want to compete this, we will keep this within national boundaries, we will not even compete it on a European level". I do not think this is a formal undertaking in the Treaty but I think, again, there is a mechanism here for people to actually challenge and say "Come on, you can open your market a bit more, can you not, because you do not have to worry about security of supply", but that will take longer to develop.

Dr Lewis

  71. Have you yet identified the broad areas of research and development in which the UK would have most to gain from collaborative work, that is those areas in which the expense of us seeking a national solution would be most prohibitive? If you have, can you outline them for us?
  (Mr Gould) I can give you a very brief sketch but it will not be complete because I would have to look more carefully to give you a complete answer. I would say that the most obvious and direct area that I can think of would be in military aero engines, I would say in composite structures for use primarily in aero systems in aircraft and other air system manufacture but not exclusively so. I would think a lot of very deep research to be done in unmanned vehicles in the future, the use of unmanned vehicles, and a whole range of electronic areas: seekers, missile seekers, guidance systems, rocket motors, those sorts of areas. I am sure that list I have given you is not a comprehensive one. If I have badly misled you I will let you know.

  72. If you think of anything further.
  (Mr Gould) I will let you know.[3]

  73. Drop us a note, please. Do you envisage these provisions enabling there to be a degree of role specialisation amongst the Europeans on certain specific areas of research and development?
  (Mr Gould) Certainly I would see it, yes, not so much role specialisation. I tend to use that phrase to mean military roles rather than technological roles. In terms of building centres of excellence, which are likely to be centred in different parts of Europe rather than spread across it, yes, I do see that link. It is already happening to some extent. In terms of aircraft technology, if you take the Airbus company, Airbus consortium, it tends to work on the basis of centres of excellence where it has developed the excellence in different parts of Europe, both in economic and in technological terms and sources its work there. I do see that being an inevitable consequence of this and a good consequence of it.

Mr Viggers

  74. I am interested in the treatment of technical, classified and commercially-sensitive information. There is a distinction, of course, between Government owned technical information and commercially owned, privately owned technical information.
  (Mr Gould) Yes.

  75. I understand the Defence Manufacturers Association have some misgivings about whether the provisions will protect industry owned information. The Framework Agreement requires countries to have access to technical information to facilitate transnational rationalisations of defence firms and to allow such firms to tender for defence contracts. Who decides what information must be disclosed? In other words, how would all the parties involved know what it is that they do not know?
  (Mr Gould) That refers to Government information, of course, making Government information available. I think there are really two sources of what is it that we do not know or what is it that we feel is not being disclosed. One source is the recipient of that information, that is industry, who are trying to make a bid or put together a proposal for an armaments system, they would probably know areas of technology where they had been co-operating with Government research laboratories that ought to be able to be exploited. They would know if obstacles were being put in their way and be exploiting that information that they work with. The other area would be because we have an obligation in the Treaty to co-operate on where we put our research and development effort, we have a pretty good idea of what products of those research and technology programmes are. Clearly if it is a programme that we are not involved in and not participating in we will be less well placed to do that.

  76. Articles 39 and 44 govern the provision of transfer of information.
  (Mr Gould) Yes.

  77. Countries are obliged to share Government owned technical information with other countries and their firms for information purposes but not for exploitation. Then there are two huge caveats, except when third party rights or national security would be infringed. Who decides on the scale of these potentially very large loopholes, third party rights or national security?
  (Mr Gould) Third party rights is specifically in there to deal with the point raised by your colleague, Mr Gapes, about overwhelmingly US sourced information. We have to have that provision in there to protect that information.

  78. Turning to the concern of industry, do you sense that UK industry is satisfied that the Framework Agreement will not jeopardise intellectual property or commercial interest?
  (Mr Gould) If it did not protect their intellectual property it certainly would damage their commercial interest. The Framework Agreement itself does not damage them. The practice of sharing commercially sensitive information for information purposes only but not to be exploited is something which will have to be tested over time. I imagine that we will take this reasonably cautiously to begin with to make sure that the procedures in the Treaty are actually working. The obligations are there but the real test will be the practice.

  79. Fair enough.
  (Mr Gould) I think the real sanction is that if there is commercially sensitive information and our industry does not think that it is adequate then it will not share it with us. We have a real interest in making sure we do protect it and that our colleagues do, but time will tell.

3   p. 54. Back

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