107. The 1998 White Paper reiterated that the Government
was committed "to strengthen monitoring of the end-use of
defence exports to prevent diversion to third countries and to
ensure that exported equipment is used only on the condition under
which the export licence has been granted".
It provided very little additional information as to how the Government
was seeking to realise that objective, noting only that "the
Government is currently reviewing the options".
108. In evidence to the Committees in November 1999,
the Foreign Secretary elaborated on some of the possible means
by which end-use could be verified: "we have stepped up our
inspections at place of receipt where we do from time to time
inspect to make sure that the weapons are where they said they
In a supplementary memorandum to the Committees, the Foreign Secretary
provided a number of examples of post- export monitoring.
The memorandum stated that "We are unaware of any case in
which arms or military equipment exported from the UK under a
licence issued since May 1997 were subsequently diverted or re-exported
to an undesirable end-user".
The 1999 Annual Report on Strategic Export Controls reveals that
the risk of diversion or re-export to undesirable end-users accounted
for the second highest number of refusals of licence applications
109. Our February 2000 Report looked to the Government
to address concerns over end-use in the next Annual Report.
We returned to the issue of end-use monitoring in our May 2000
evidence session with the then Minister of State at the FCO, Peter
Hain, in relation to the risk of equipment being supplied to Hong
Kong being diverted to mainland China. He told us that officials
from the FCO, DTI, MoD, Customs & Excise regularly visited
Hong Kong to see how effectively its control system is working:
"we do not just stand back and accept their word, we actually
go out and check it."
He went on to state "we consider very stringently the risk
of diversion. We do not close our eyes, as it were, and nod this
stuff through. If we were to find that any such equipment was
being diverted then obviously we would put a stop to it".
110. The 1999 Annual Report set out means by which
the risk of diversion can be minimised.
Cm 5091 states that:
"We have sought to minimise
the risk of a UK defence exports being diverted to undesirable
end-users, by putting in place a number of procedures to strengthen
the process of risk assessment at the export licensing stage.
We regularly seek additional details of proposed end-use and end-users,
including through our overseas posts, to inform this process,
and to satisfy ourselves about the end-users' reliability and
integrity before issuing a licence." 
111. The draft Bill itself does not include any provisions
on end-use monitoring. The Secretary of State told us that he
was confident that measures already in place were sufficient,
but emphasised his readiness to consider proposals put forward
in response to the consultation on the Bill. UKWGA called for
the opportunity offered by the Bill to be used to introduce on
the one hand a standardised end-user documentation system, and
on the other a systematic system of monitoring end-use in the
country of destination.
The former could be included in the proposed statutory basis for
current administrative procedures. On the latter we have doubts
as to whether there is any need for legislation, or indeed whether
legislation would be appropriate. The UKWGA witnesses accepted
that post-delivery monitoring was really a question of political
will. The sort of monitoring sought is already carried out, albeit,
as the Secretary of State accepted, not in as systematic a way
as should perhaps be the case. 
There is a good case for some public assurances that post-export
end-use monitoring is carried out thoroughly and systematically,
and for an explicit commitment to recognise the importance of
that task when, for example, assessing the staffing requirements
of overseas posts, including defence staff.
112. There have been suggestions that there is a
requirement for legal authority for the suspension or revocation
of a licence where there are grounds for suspecting that an end-use
condition has been broken, or for refusal of subsequent licence
applications to that or similar end-users. Where only part of
a delivery has been made, a revocation could be effective. The
Secretary of State expressed his confidence that he had such powers.
We welcome the clear assurance from the Secretary of State
that he has sufficient legal powers to revoke a licence where
there has been a breach of end-use conditions.
113. It is also suggested that the Government should
adopt a system whereby end-use undertakings take the form of legally-binding
contracts which contain a list of proscribed uses and a prohibition
on unauthorized re-export. The difficulty in this is of course
in enforcement. Unless it could be shown that the UK supplier
was culpably negligent in some way, action could hardly be taken
against the supplier where the contract terms were broken. As
Lord Scott put it, "I do not think one could make
the exporter responsible for some diversionary activity of the
purchaser that he, the exporter, genuinely did not know about
or had any reason to expect would happen."
It would be as logical to take action against the Government which
had authorised the export. It is barely credible to imagine pursuit
of a foreign end-user for breach of contract in such cases, especially
where the end-user is the government of that country.
114. The Secretary of State told us that "we
have to be absolutely vigilant that people are delivering on the
commitments that they have given to us...We have go to have effective
end user monitoring otherwise the system falls into disrepute
and that is not going to help anybody".
There may be no need for legislation. We would however welcome
assurance that the Bill's provisions for secondary legislation
on the system of administrative controls are broad enough to be
able to cover the introduction of a more systematic form of end-user
174 para.5.2.1 Back
225, Ev, Q.82 Back
Ev, pp 19-20, para 4 Back
177 ibid Back
225, para 51 Back
467, Q 110 Back
467, Q 111 Back
1999 Annual Report on Strategic Export Controls, pp 6-7 Back
6, para 17 Back
Qq 27ff; Ev, p 3, paras11-13 Back
Q 226, 242 etc; see eg Qq 35-6 Back
Qq 235ff Back
Qq 185-6 Back
226, 242 Back