USA and ITAR
83. It is sometimes suggested that controls on intangible
transfers of technology — and other changes such as controls
on technical assistance (see below) — are being introduced
in order to meet a US requirement that the UK introduce comparable
export controls. As part of a wider programme known as the Defense
Trade Security Initiative (DTSI), particular countries (and companies
in those countries) may qualify for a series of special favours
and exemptions from the US International Trafficking in Arms Regulations
(ITAR). The exemption would be contingent on conformity to various
rules on end use and retransfer of goods and technology. The Committee
Members who visited Washington in May 2000 heard something of
this issue. The UK and Australia have been identified as the two
countries "most ready" to take advantage of this exemption.
84. In some quarters the ITAR exemption initiative
has been seen as driven solely by the potential benefits for US
exporters. UK industry might also benefit, however, from avoiding
delays in US export licencing procedures. This would allow UK
firms to obtain in sufficient time the essential information needed
from the US to bid for American contracts — the application
of existing US export controls is regarded by many UK firms as
one of the biggest hurdles in seeking to enter the US defence
market. For the MoD, an ITAR exemption might allow items to be
obtained from the US more quickly, helping to reduce delays in
introducing new defence equipment into operational service —
a key aim of its 'smart acquisition' initiative.[139]
85. The ITAR exemption discussions have also been
taking place within the wider context of a UK/US 'Declaration
of Principles'. The Declaration, signed in February 2000, deals
with much of the same ground covered by a similar six-nation European
'Framework Agreement', which the Defence Committee examined in
its First Report of this Session.[140]
These two initiatives included a range of measures aimed at facilitating
defence collaborations and industrial rationalisation, and included
arrangements intended to provide security of supply from the other
signatory countries and to streamline the administration of exports
between them. Within the European context, these arrangements
envisage new 'global project licences' to cover exports to third-party
countries of collaboratively produced defence equipment, which
we raised with the Foreign Secretary in January 2001.[141]
Although the 'Agreement' and the 'Declaration' cover much of the
same ground, from the UK and US perspective their separation has
the advantage (over a possible joint European/US framework for
export controls) of making it easier to negotiate ITAR exemptions
for countries seen by the US as sharing its view of the global
security environment.
86. The defence press has reported difficulties over
the negotiations of the UK ITAR exemption in recent months, in
part the result of a hiatus linked to the change of US Administration.
The joint statement following the 17th January 2001 visit to Washington
by the Minister for Defence Procurement recorded that "some
important issues remain". The Secretary of State assured
us that it was a "happy unintended consequence" that
the passage of the Bill might now make it easier to complete negotiations
on an ITAR waiver. The DMA agreed that some of the proposals might
indeed be the price of such a waiver.[142]
We understand that the US Secretary of State has now endorsed
the aims of the ITAR exemption negotiations, which are due to
resume shortly.
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