House of Commons - Foreign Affairs

Select Committee on Foreign Affairs Seventh Report

SEVENTH, SEVENTH, SIXTH AND ELEVENTH REPORT

The Defence, Foreign Affairs, International Development and Trade and Industry Committees have agreed to the following Report:—

DRAFT EXPORT CONTROL AND NON-PROLIFERATION BILL

I INTRODUCTION

1939 Act

1. On 1 September 1939 the President of the Board of Trade, Mr Oliver Stanley, moved the Second Reading of the Import, Export and Customs Powers (Defence) Bill. The Bill passed all stages in both Houses on the same day, and received immediate Royal Assent. The Act — "the 1939 Act"— provided in section 9 that it should continue in force until "such date as His Majesty may by Order in Council declare to be the date on which the emergency that was the occasion of the passing of this Act came to an end, and shall then expire...". No such Order was ever made. For half a century the emergency wartime powers granted by the Act were used to control imports and exports.

1990 Act

2. In 1990, concerns were expressed within the DTI that the Act might be susceptible to legal challenge. The re-unification of Germany signalled the ending of the Cold War, which by a stretch of imagination could have — and occasionally had — been held to be a continuation of the original "emergency".[1] The use of powers under the Act to enforce sanctions against Iraq following its invasion of Kuwait gave the Act added visibility. A short amending Act— the Import and Export Control Act 1990 — was rushed through Parliament in November and December 1990, with Opposition consent. It removed the subsection which had provided for expiry of the Act on the making of an Order declaring the "emergency" to be over. In effect, it made the 1939 Act permanent.

Scott Inquiry and Report

3. Following the collapse of the prosecution for alleged export control offences of senior executives of Matrix Churchill Ltd, the Government set up in November 1992 an independent inquiry by Lord Justice (now Lord) Scott into exports of defence equipment and dual-use goods to Iraq and related prosecutions. The Report — " the Scott Report"—was published on 15th February 1996.[2] The Report made a number of recommendations on export licensing procedures. It also mounted a stinging attack on the continued reliance placed on the 1939 Act as the basis for Government powers to control exports. It recommended that the Government "publish as soon as practicable a Consultation Paper with proposals both for the content of new empowering legislation in place of the 1939 Act and for an export licensing system and export licensing procedures suitable for the peacetime requirements of a trading nation in the post cold war era".[3]

1996 Green Paper

4. Following a statement to the House on 26 February 1996, the Government published a Consultative Document on Strategic Export Controls in July 1996, seeking responses by 31 October 1996.[4] The Government wished to have "the benefit of the initial views of interested parties before presenting worked-up proposals" and envisaged continuing the consultation process "at a more detailed level...in late 1996 or early 1997".[5] 38 responses were received.

1998 White Paper

5. Following the change of Government in May 1997, a White Paper on Strategic Export Controls was published on 1 July 1998.[6] The White Paper contained proposals for a new legislative framework for strategic export controls, for new controls on electronic transfers of controlled technology and on brokering, and for improvements in licensing procedures. Comments were sought by 30 September 1998. The 54 responses received were made publicly available in November 1998.

Trade and Industry Committee Report, December 1998

6. In November 1998 the Trade and Industry Committee undertook an inquiry into the proposals in the White Paper, drawing on the experience of its previous reports on the Supergun affair and BMARC.[7] It reported in December 1998.[8] The Government replied in February 1999.[9] The Committee expressed the hope that time could be found for such "largely uncontroversial legislation". The Government Response expressed regret that time had not been found in the 1998-99 session and stated that the Committee's support for the early introduction of this legislation would be taken into account.

1999-2000 session

7. There was no reference to the Bill in the 17 November 1999 Queen's Speech, announcing the 1999-2000 legislative programme. In February 2000, in our first Report as the Quadripartite Committee of the Defence, Foreign Affairs, International Development and Trade and Industry Committees meeting together,[10] we expressed our dismay that "the Government should not have afforded greater priority to bringing forward a Bill to implement the recommendations made four years ago in the Scott Report". [11] The Government's July 2000 Response to this conclusion was very similar in tone and content to that given 18 months earlier to the Trade and Industry Committee Report.[12]

2000-2001 session

8. The Queen's Speech of 6 December 2000 stated that "A draft Bill will be published to improve the transparency of export controls and to establish their purpose". On 14 December 2000 the Minister of State at the Foreign and Commonwealth Office (FCO) told the House in Westminster Hall that "we want to publish it as early as possible next year..".[13] In our third Report agreed on 6 March 2001 we concluded that "it would be deeply regrettable were at least a draft Bill not presented for proper parliamentary scrutiny during this Parliament".[14]

Draft Bill

9. On Thursday 29 March 2001 the Government published as a Command Paper— henceforth "Cm 5091"— its draft Export Control and Non-Proliferation Bill and accompanying texts, including a detailed commentary, a draft Regulatory Impact Assessment (RIA) and technical explanatory notes.[15] It soon became apparent that the Dissolution of Parliament widely expected in early April would not take place. In view of the prospect of Dissolution in mid-May, we decided to take the opportunity of an early examination of the draft Bill in late April, so as to be able to report preliminary conclusions to the House. As a result of that timetable, we have not had available to us the written responses to the consultation, as we would have wished. Nor have we been able to issue a general invitation to submit evidence. We heard oral evidence on Wednesday 25 April 2001 from the UK Working Group on Arms (UKWGA), an alliance of various NGOs active in the field of arms control[16]: the Defence Manufacturers' Association (DMA): Universities UK: Lord Scott of Foxcote and Presiley Baxendale QC: and the Secretary of State for Trade and Industry.

House of Lords Delegated Powers and Deregulation Committee

10. On the same morning on which we heard oral evidence, the House of Lords Select Committee on Delegated Powers and Deregulation agreed its Report on the draft Bill.[17] The Committee's Report was made available to us very soon after it had been agreed, and as a result we have been able to refer to some of its findings below. The Lords Select Committee will of course report again on the Bill once presented, and we look forward to seeing the results of its further deliberations.

Consultation and secondary legislation

11. The Government reduced the normal period of consultation from three to two months, with comments sought by 24th May 2001. Cm 5091 attributes this to the amount of previous consultation: to the brevity of the Bill: and to the importance of the related secondary legislation. It states that "there will be an opportunity for further consultation on issues relating to secondary legislation during the Bill's passage through Parliament".[18] The Bill itself is largely an enabling Bill. The meat of the proposals being made will be in the secondary legislation to be made under the Bill. As the DMA told us, the devil will indeed be in the detail.[19] The Secretary of State told us that he fully accepted the need to consult widely on the secondary legislation, and that he was seeking to ensure that the draft secondary legislation would be brought together for a further round of consultation " as quickly as possible".[20] We recommend that every effort is made to ensure that a draft consultative version of the relevant secondary legislation is published before the House is asked to give the Bill a Second Reading.