Memorandum submitted by the UK Working
Group on Arms[1]
A. INTRODUCTION
1. The draft Export Control and Non-Proliferation
Bill and the accompanying Department of Trade and Industry consultation
paper continues the progress that has been made in strengthening
and developing UK strategic export controls since the publication
of the Scott Report in 1996. The UK Working Group on Arms (UKWG)
welcomes the publication of the draft Bill and the steps Her Majesty's
Government (HMG) is suggesting in order to regulate the activities
of arms brokers and companies engaged in licensed production,
and to control the transfer of technology by intangible means.
2. The UKWG views the draft Bill as a positive
start and hopes that it will move to the top of the parliamentary
legislative agenda. We also welcome the publication of the consultation
paper and the opportunity it provides to engage with HMG on the
further strengthening of controls on UK arms transfers. We discuss
the substantive areas below. Procedurally, we would welcome a
clear indication as to when these proposals are likely to be translated
into the suggested secondary legislation. In the absence of detailed
proposals for operationalising the principles set out in the primary
legislation, parliamentarians, NGOs and the defence industry will
find it impossible to judge the overall impact of the new legislation.
In this regard we support an active role for Parliament in the
process of refining and developing the secondary legislation,
as proposed in the consultation paper.
B. THE SCOPE
OF BROKERING
AND TRAFFICKING
Brokers
3. The proposals on arms brokering set out
in conjunction with the draft Bill represent a significant improvement
on those set out in the White Paper Consultation Document of July
1998. In addition to banning the brokering and trafficking of
arms to embargoed destinations and/or involving specific types
of equipment, the current proposals state that all persons in
the UK or UK persons abroad engaging in the brokering and trafficking
of arms will be required to register and apply for a licence for
each deal they arrange. For many years, British dealers and freight
companies have participated in the transfer of significant quantities
of arms from third countries into war zones, including Angola,
Rwanda, Ethiopia and Sierra Leone. The measures announced will
go some distance towards closing down the operations of these
unscrupulous individuals and companies. HMG has yet to decide
whether these controls will apply where the activities in question
are carried out by UK passport-holders operating wholly
abroad. However, if the Government does not include such activities,
British citizens could evade controls by simply stepping out of
the country to conduct their arms brokering deals.
4. In order to be fully effective in preventing
Britons from engaging in brokering and trafficking of weapons
into conflict and human rights crisis zones, controls must extend
to the activities of all UK passport-holders even if operating
wholly on foreign soil. The US has legislation which controls
all brokering activities by US persons operating overseas, whilst
precedent for the exercise of such extra-territorial powers in
the UK exists in, for example, the Misuse of Drugs Act 1971, the
Chemical Weapons Act 1996, the Sex Offenders Act 1997 and the
Landmine Act 1998.
5. Using the Home Office's own criteria[2],
a very strong case can be made in favour of full extra-territorial
application of the proposed UK arms brokering regulations. The
Home Office states that extra-territorial jurisdiction can be
considered where at least one of the following factors is present:
i. Where the offence is serious;
ii. Where, by virtue of the nature of the offence,
the witnesses and evidence necessary for the prosecution are likely
to be available in UK territory, even though the offence was committed
outside the jurisdiction;
iii. Where there is international consensus that
certain conduct is reprehensible and that concerted action is
needed involving the taking of extra-territorial jurisdiction;
iv. Where the vulnerability of the victim makes
it particularly important to be able to tackle instances of the
offence;
v. Where it appears to be in the interests of
the standing and reputation of the UK in the international community;
vi. Where there is a danger that offences would
otherwise not be justiciable.
6. In the case of arms brokering, there
is a very strong case to be made in five out of these six criteria
(points i, iii, iv, v, and vi). The arguments relating to each
of these points are set out below.
i. That the offence is regarded as serious is
indicated by the fact that the draft Bill sets the maximum penalty
for arms brokering without a licence at ten years imprisonment.
iii. The current negotiations in the lead-up
to the July 2001 UN Conference on the illicit trade in small arms
and light weapons in all its aspects have demonstrated a growing
international consensus that brokering is in urgent need of international
regulation, with the UK Government taking a leading role in pushing
for a legally-binding convention on arms brokering. The USA, whose
legislation leads the way in this field, concluded when drafting
its law that due to the fluid nature of the brokering business,
extra-territoriality had to be incorporated into the law to make
it enforceable.
iv. Anecdotal evidence suggests that arms brokering
tends to be particularly prevalent in areas where the more straightforward
supply methods are unavailable or restricted, typically war zones
or localities where systems of law and order are breaking or have
broken down. In such lawless environments, the victims of the
impact of brokered arms are frequently powerless civilians (an
estimated 80 per cent of all casualties), all too often women
and children. Their vulnerability is absolute, in that the weapons
are used to intimidate and kill, and that the position and status
of the victims of violence in fractured societies often afford
them little protection.
v. HMG has worked hard to position itself as
playing a leading role in international attempts to develop more
responsible attitudes towards the arms trade, and not only through
its work regarding the UN 2001 Conference (see above). The UK
was instrumental in creating the EU Code of Conduct on Arms Exports,
and the Annual Report on Strategic Arms Exports has in many ways
set a benchmark against which other reports can be measured. Within
this context, there can be little doubt that HMG's position is
undermined and the reputation of the country is harmed by scandals
involving UK arms brokers. Until legislation covering arms brokering
has full extra-territorial effect, the international standing
of the UK will continue to be damaged by cases such as Mil Tec
brokering arms supplies for the perpetrators of the Rwandan genocide
in 1994, or Peter Bleach and Border Technology & Innovations
Limited (BTI) of Hexham brokering the supply of hundreds of small
arms and thousands of rounds of ammunition for an insurgent group
in West Bengal in 1995. The UK would garner much international
respect if it put its own house in order by introducing effective
legislation to control the activities of its citizens overseas.
vi. Unscrupulous arms brokers are past masters
at creating a series of shell companies and a confused paper trail
through many jurisdictions to prevent proper oversight of their
work. Indeed, they play off jurisdictions against each other.
If the UK does not act to control their activities, it is highly
improbable that perpetrators will be brought to justice in other
jurisdictions. In order to track the activities of brokers, the
agent rather than the location needs to be at the heart of the
legislation.
7. If the new legislation covers arms brokers
only where at least part of their activities take place within
the UK, it will simply encourage UK passport-holders to travel
abroad to conduct their business, which surely cannot be the intention
of HMG. The case for full extra-territorial jurisdiction, as made
above, more than complies with HMG's own criteria. The UKWG therefore
recommends that the regulation of arms brokers cover all UK persons
irrespective of the location of their operations.
Shippers
8. Effective control over the activities
of UK nationals in the supply of arms to regions of conflict and
tension also requires that the activities of shipping agents be
controlled. In recent years, a number of UK companies have been
implicated in the shipment of arms into regions of conflict. The
draft Bill makes no reference to shipping agents; the inference
is, therefore, that they will be able to continue to engage in
these activities with impunity. However, a number of the measures
relevant to the control of arms brokers are equally applicable
to shipping agents.
9. The UKWG is of the opinion that arms
brokers should be required to disclose information on the companies
they will be using to transfer arms, including relevant sub-contractors,
and to disclose details of the travel routes and special flight
plans for all shipments. Where arms transfers are organised or
brokered by non-UK actors, but the shipment of those arms is carried
out by UK individuals or companies, the shipping agents should
be required to apply for a licence, which should be considered
on the same basis as are licences for direct arms sales or brokered
transfers. In addition, any UK company wishing to ferry arms between
destinations overseas should be registered with HMG as a carrier
of arms.
10. Clause 5 of the draft Bill allows for
the regulation of shipping agents in secondary legislation. The
UKWG urges HMG to include provision for the control of UK passport-holders
and companies involved in transporting arms in the secondary legislation
which is to be formulated to regulate the activities of arms brokers.
C. STRENGTHENING
END-USE
MONITORING
11. The last 10 years have witnessed numerous
instances where arms of UK origin have been diverted for purposes
or to destinations contrary HMG's intentions. The Scott Report
highlights a number of cases of diversion of UK equipment to Iraq,
notably through Jordan. In another high profile case a shipment
of UK naval cannon with an end-user certificate for Singapore
was found in Iranian possession. These cases serve to underline
the need to establish an effective means of certifying and monitoring
end-use in order to prevent the diversion or misuse of UK arms
post-export.
12. The UKWG therefore welcomes the steps
that HMG has made to improve the process of risk assessment at
the licensing stage and the strengthened pre-sales checks on exports.
However, HMG has not addressed any specific measures for monitoring
controlled goods once they have been exported. In February 1999,
the then Foreign Office Minister Derek Fatchett said: "No
formal mechanisms exist at present for monitoring the end-use
that has been made of British defence equipment once it has been
exported". Nevertheless, as HMG had indicated previously
in parliamentary questions[3],
the draft Bill does not contain any provisions for end-use controls.
In order to limit as far as possible the scope for re-export or
diversion of UK arms, the Government must act to strengthen controls
on the end-use of UK arms post-export. Indeed, the Government
in the past has acknowledged that post-export monitoring "may
help to inform future licensing decisions."[4]
Failure to include such provisions is a serious omission from
the draft Bill which HMG should rectify.
13. HMG should strengthen and develop systems
for end-use certification and monitoring, building on current
best practice in other states, for example Belgium.[5]
The most effective system would include provisions whereby an
end-use certificate takes the form of a legally-binding contract
which contains a list of proscribed uses and a prohibition on
unauthorized re-export. Provision should be made for follow-up
checks of end use to be carried out by qualified embassy staff.
Failure to honour the terms of an end-use contract should result
in the revocation of the licence and a halt in further supplies,
provision of spares or other forms of support.
D. CONTROL OF
LICENCED PRODUCTION
OVERSEAS (LPO)
14. HMG has acknowledged the need to address
the problem of controlling the use of arms manufactured overseas
under licence from UK companies. To this end it has proposed that
export licence applications state explicitly if exports are for
use in production overseas under licence. It has suggested two
options for ensuring that goods produced through LPO do not undermine
embargoes to which the UK is a party, both of which would place
the onus on UK companies to effect controls, and has "requested
views" on their respective merits. The first would require
companies to insert a clause in their contracts with overseas
producers prohibiting the resultant arms from being exported to
embargoed destinations. The second option is that the UK company
must obtain end-use undertakings from the overseas companies not
to export finished products to embargoed destinations.
15. Government efforts to improve the level
of information disclosed during the licence application stage
are welcome. However, the UKWG is concerned that neither of the
above-mentioned options would effectively control the ultimate
use of equipment manufactured through LPO. In both cases, the
weaknesses are twofold.
16. First, there are doubts concerning the
practicalities of HMG's proposals. Maintaining control over items
manufactured under licence is clearly more complex and difficult
than controlling direct sales. Yet HMG proposes to delegate controls
in such cases to UK companies, a role which, in other areas of
export control, it reserves for itself. Such an arrangement raises
serious concerns over the enforceability of either option, and
a fundamental question needs to be answered: are UK companies
to be held legally responsible when exports are made in contravention
of the relevant clause or undertaking? The UKWG believes that
HMG must take responsibility for preventing LPO from contributing
to destabilising accumulations of arms and breaches of international
law in the same way it does for direct exports. The best way of
ensuring this is for LPO agreements themselves to be scrutinised
by government and subject to licensed approval.
17. Second, the provisions outlined in the
draft Bill suggest that in the case of LPO HMG is concerned only
to prevent export of goods to destinations under embargo. However,
it is vital that transfers of arms are controlled to human rights
and conflict crisis zones which are not subject to international
embargoes. Embargoes are enforced only against the worst offenders
and when political agreement can be achieved internationally -
often too late to prevent human rights abuses or acts of internal
repression or external aggression. Indications are that unscrupulous
exporters are locating production of arms outside the UK/EU in
order to avoid the strict controls that are applied by the UK
and other EU Member States. HMG should thus take all possible
steps to ensure that overseas producers do not export arms manufactured
under UK licence to destinations to which the UK would not permit
direct arms exports.
18. HMG should introduce legislation that
requires UK companies to seek prior licensing approval for setting
up agreements with other companies when establishing LPO facilities
abroad. The criteria used by HMG for such export licence determinations
should be as stringent as for direct arms exports. Specifically,
licensing of such LPO contracts would not be given:
i. where an export licence application for
a direct weapons transfer would be refused;
ii. where the recipient state cannot demonstrate
sufficient accountability in terms of end-use control; or
iii. to states that have a record of violating
UN and other international arms embargoes.
19. In addition, these licensed production
agreements should contain strict limits on the quantities of arms
that can be produced under these contracts and also must contain
a clause which prohibits sales or transfers to third countries
of either arms or licensed production technology, without the
prior consent of HMG.[6]
As with direct export licences, licensed production agreements
should be reported to and scrutinised by the Quadripartite Select
Committee.
20. Where it is not possible to regulate
on a case-by-case basis, HMG should, at a minimum, enter into
a memorandum of understanding with the recipient/partner government,
whereby the two governments agree a list of destinations to which
exports of resultant goods would be permitted.[7]
This list of destinations should be based on the application of
the EU Code criteria. It should be subject to review on at least
an annual basis, with the UK retaining the right to conduct ad
hoc reviews where necessary owing to a deterioration in the
human rights or political situation in a state on the approved
list. Where the host government allowed the licensed manufacturer
to export arms to destinations not subject to agreement, the licensed
production agreement should then be revoked. Under this system,
the list of approved destinations should be scrutinised by Quadripartite
Select Committee and also be made available to the public.
21. HMG is in favour of amending the EU
Code of Conduct at the EU level to take specific account of the
dangers of LPO leading to undesirable end-use. Moves to strengthen
the EU Code are welcome, but UK action should not be dependent
upon EU agreement. The Annual Report on Strategic Export Controls
is an example of an area in which the UK has taken the lead and
successfully encouraged other EU Member States to follow. The
UKWG urges HMG to take a similar lead over LPO.
E. PRIOR PARLIAMENTARY
SCRUTINY OF
ARMS EXPORT
LICENCES
22. The UKWG is in full support of the continued
efforts of the Quadripartite Select Committee to encourage HMG
to establish a system of prior parliamentary scrutiny. The introduction
of prior scrutiny would enhance ministerial accountability and
would improve the system of checks and balances in the arms export-licensing
regime. The UKWG believe this to be an essential element of ensuring
consistent application of the UK criteria for arms exports and
the EU Code of Conduct, and, once passed into law, the purposes
of the Export Control and Non-Proliferation Act.
23. The Committee's report of 6 March 2001
included a number of revised proposals which take into account
earlier Government objections to prior Parliamentary scrutiny.
Where the Committee suggests a number of destinations and goods
that can be excluded from Stage 1 notification, we recommend that
given constantly changing technology and political circumstance,
these be subject to ongoing review. We also repeat our previous
recommendations that after licences have been granted the Committee
should have the right to publish details of those licences it
has scrutinised - information is, after all, already released
retrospectively in the Annual Report on Strategic Export Controls.
24. HMG committed itself in the consultation
document to examine the Committee's revised proposals regarding
prior Parliamentary scrutiny and to respond in due course. The
UKWG urges full adoption by HMG of the Committee's recommendations,
taking into account the points we have raised above, and believes
that the process is best served by HMG considering its response
within the timeframe of the consultation period for the draft
Bill.
F. THE NEED
FOR LEGALLY
BINDING EXPORT
CRITERIA
25. HMG has addressed one of the main criticisms
of the Scott Report by including a schedule of purposes of strategic
export control in the primary legislation. It is also welcome
that the amendment of these purposes will be subject to an affirmative
resolution procedure, thereby ensuring Parliament will have the
opportunity to debate any proposed changes. However the wording
of the purposes and their relationship to the EU Code leave some
cause for concern.
26. The UKWG believes that making the full
EU Code criteria legally binding would encourage rigorous implementation
of the Code. To this end, we recommend that in order to ensure
the legislation is in keeping with the UK's political obligations
under the EU Code, rather than introduce competing language, the
purposes should be consistent with the EU criteria. However, HMG
has rejected incorporating the EU Code criteria into the legislation
on the grounds that it would "introduce rigidity into the
way in which licence applications are considered" and that
it "would be as likely to require the Government to grant
a licence in a borderline case, as to prevent it from granting
such a licence."[8]
It is unclear from the consultation how HMG has arrived at this
conclusion—the EU Code as currently constituted allows for
considerable flexibility in interpretation, and in addition provision
is made within the draft Bill (clause 3(2)) for orders to be made
that are not subject to the purposes (for example in response
to emergency situations).
27. The UKWG is of the opinion that the
EU Code allows considerable scope for subjective interpretation
in export licensing decisions. Yet the proposed legislation advocates
an even more flexible system, whereby the Secretary of State for
Trade & Industry is given the discretion to impose export
controls, taking into account a number of consequences arising
from the export. Whilst these consequences are, for the most part,
broadly consistent with the EU Code criteria, they are less comprehensive
and leave greater margin for interpretation than the EU Code.
The UKWG regards this as a weakness in the draft Bill and urges
the Committee to push for the adoption of the EU Code criteria
in the primary legislation.
UK Working Group on Arms
April 2001
1 For the purpose of this submission the UK Working
Group on Arms consists of Amnesty International UK, BASIC, International
Alert, Oxfam and Saferworld. Back
2
Home Office Consultation Paper on Reform of the Corruption Law:
"Raising Standards and Upholding Integrity-The Prevention
of Corruption" June 2000. The criteria were a result of review
of jurisdiction carried out in 1996. Back
3
Ms Oona King: To ask the Secretary of State for Trade and Industry
what plans he has to introduce controls on the end-use of arms
exported from the United Kingdom in the forthcoming draft legislation
on arms export controls; and if he will make a statement.
Dr. Howells: The Government rigorously
assess all export licence applications to determine the risk of
any proposed export being misused in contravention of the consolidated
EU and national export licensing criteria. Under these criteria
we will not issue an export licence where there is a clearly identifiable
risk that the equipment could be used for internal repression
or external aggression. Applications are also refused if we assess
that an unacceptable risk of diversion exists. We have taken a
number of steps to strengthen the process of risk assessment at
the export licensing stage. Such improvements have not required
a change in the law and there no plans to include specific measures
on end-use monitoring in the draft Export Control Bill. 22
Mar 2001: Column: 308W. Back
4
UK Annual Report on Strategic Export Controls 1999 (Foreign &
Commonwealth Office, London, July 2000), p 6. Back
5
In Belgium, end use certificates include a written guarantee
by the importing agency that they will not re-export the arms
without the prior written consent of the exporting country. They
also state that the recipient will not use the arms for proscribed
purposes, including the committing of abuses of human rights or
international humanitarian law. Three months after the goods are
exported, the Belgian government monitors the process and requires
proof of delivery, including details of the transit routes and
travel plans. Back
6
Such controls are currently in place in the US where licensed
production agreements are treated as a physical export and require
prior approval from the US State Department. US licensed production
contracts usually limit production levels and prohibit re-export
of arms without prior US government approval. Back
7
In Germany, companies are only permitted to enter into licensed
production arrangements on the basis of a Memorandum of Understanding-which
outlines proposed export markets-and usually only with companies
in other NATO countries. Back
8
Consultation on Draft Legislation: the Export Control and Non-Proliferation
Bill (Department of Trade and Industry, Cm 5091, March 2001),
p 10, para 32. Back
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