Examination of Witnesses (Questions 60
TUESDAY 30 JANUARY 2001
MP, MR WILLIAM
60. I just want to get some more information
about these identical transactions. The General Affairs Council
met in December and it gave one of the problems as essentially
identical transactions and it said, "A common understanding
has yet to be agreed". That looks like a big loophole to
me, or potential for a loophole, and I would have thought it not
impossible to get some sort of agreement about what is an identical
(Mr Cook) I agree, it should be possible. Can I say
that I do not think it is a big loophole. We are talking across
the whole of 15 nations on a very small number of cases, some
of which are quite bona fide in that there has been a misunderstanding
of what we are talking about. We do need to try and make sure
we polish up the understandings and administrative procedures,
but given that this system has been up and running for only two
years, we have done well, but there is obviously room for further
61. Improvement has been made and I readily
acknowledge this, but this Code of Conduct some would argue is
somewhat toothless. You yourself said in an oral answer, Secretary
of State, that it is a voluntary code. We voiced the opinion,
I think in our February 2000 Report, that applicant countries
should agree to accept the criteria of this Code as a pre-condition
of entry to the European Union. How are such cases dealt with,
where one Member State objects to, if you like, the improper behaviour
of another state? There is no question of it going to the European
Court of Justice. How are such disputes between two or three Member
(Mr Cook) First of all, can I query your question
of voluntary. You are right it is not justiciable. On the other
hand, I have no criticism or problem with any of our partner states
who are applying to the letter what we agreed. I would not want
the idea of being voluntary to suggest it is permissible or lacks
power. Ultimately there is available a political sanction of exposure
and debate. If we ever got a highly contentious case that would
happen. One of strengths is that we have never had a really contentious
or difficult case of that character. On the EU accession states,
the candidate countries, they have all said that they will abide
by the principles of the code. They are not part of the denial
mechanism, so they do not take part in the notification of what
they denied and they are not liable to consultation by other countries.
Personally, I would like to look at that over the coming period
to see if there are ways we can draw them more into the process
in a structured way, not just simply as an agreement of principle.
I would just add, as with so many other areas, the real problem
in some of the candidate countries will not be a political willingness
to adhere to it but the administrative capacity to carry it out,
where they do not have the administrative machinery or the Custom
& Excise machinery to ensure that what the government wills
actually happens on the ground.
62. There is no chance of a committee of some
kind in Brussels carrying out that function, of overseeing adherence
to the Code of Conduct?
(Mr Cook) I think we would probably be aware of it
if they had not adhered to it and we would get them involved in
the full administration of the code.
63. There are no sanctions?
(Mr Cook) I do think all of the candidate countries
are quite keen to demonstrate their credentials.
64. They are keen to get in, are they not?
(Mr Cook) I often find that international diplomacy
works better than sanctions.
65. Within the European Union how are conflicts
(Mr Cook) Bilaterally.
66. If there is no satisfactory outcome?
(Mr Cook) It is open to the country that feels dissatisfied
to deal with it. We have never got that far. I would not want
to over-dramatise this as a problem or a failure of retention.
By and large the Code of Conduct has worked well, with genuine
goodwill on the part of those taking part. We have no systemic
complaints from our partners. Sometimes there are different national
practices which can prove a bit of a problem in the dialogue.
For instance, we sometimes suspect that some countries have effectively
imposed an embargo on certain countries. You then get into dispute
as to whether or not this is within the rules of the code. Whether
the rules of the code apply I would not say we have been unhappy
67. In the debate in December in Westminster
Hall, Peter Hain said that one of the problems is that the worst
offenders, Bulgaria, Ukraine and Moldova are supplying small arms,
especially to Africa. Bulgaria is an accession applicant to the
EU, are you keeping a close eye on them?
(Mr Cook) We have had dialogue with Bulgaria on these
points. That is a case I referred to earlier where there is not
necessarily the administrative machinery one would wish to see
to carry through all policy. The other two are not accession states,
Moldova is unfortunately ridden by the Transdniester problem.
They have an autonomous region, effectively rebel controlled,
with a large volume of former Soviet weapons.
68. Can you clarify one point, you said, I think,
that they took down two notifications of a possible undercut,
do you know whether they went ahead with those?
(Mr Cook) We had two consultations. I would not wish
to get into the use of the term "undercut". In those
cases they proceeded after dialogue. I would stress to the Committee
it was not particularly traumatic.
Sir John Stanley
69. Foreign Secretary, as you know the four
Committees have consistently sought to build on the success in
establishing the EU Code of Conduct to widen and to bring in the
other major arms exporters with particular reference to the United
States. The British Government's response included this, I thought,
encouraging statement, in paragraph 21, "The US Government
has made it clear it wishes to work with the EU to develop an
international code of conduct on arms transfers." That was
a statement in relation to the previous Clinton administration.
Can I ask you whether you have any intimation from the new administration
they wish to follow the same policy as the Clinton administration?
Can the Committees assume that you will be pressing the new American
administration to adopt the same policy as the Clinton administration
on this point?
(Mr Cook) The last point is certainly, yes, we will
explore it with the new administration. I have not had that opportunity,
it is, perhaps, on my agenda when I visit Washington next week.
We welcome the interest from the United States in trying to work
towards an international code of conduct, it might have to be
something different from the one we have in the EU but we will
be very willing to explore that to see if we can achieve a common
perspective on both sides. The immediate priority with the EU
Code is, as we have already identified, the accession states consenting,
that is quite a big step forward. For it to achieve any comprehensivity
it would be the helpful to get similar agreements with the United
Chairman: That leads us on to the next set of
our inquiries, multi and bilateral agreements. Since we met there
has been a very important Framework Agreement between six European
arms-producing states following on the July 1998 Letter of Intent
and the Defence Committee has been pursuing this issue.
70. I think, Secretary of State, you can see
the glacial speed at which we proceed. You should allow us to
gorge ourselves on 12,000 sets of licence applications, and that
figure will rather sharpishly reduce itself to half a dozen, I
can guarantee you, so I cannot see there is any real problem.
(Mr Cook) If I can have a guarantee in writing my
colleagues might be interested.
Mr George: The Defence Committee would be!
Chairman: Do not break ranks now.
71. We shall not break ranks. There has been
obviously been some progress in the US/United Kingdom relationship
in freeing-up export licences from the US to a favoured group
of allies. Have the moves towards a multilateral arms control
regime, either through the US-led discussions or via the Wassenaar
Arrangement really got anywhere? Secondly, can you tell us who
are the small minority of participating states referred to in
the report on page 7? Who has blocked progress in the Wassenaar
(Mr Cook) Not without notice, for sure. Even if I
knew I am not sure I am at liberty to share it. Perhaps I can
reflect on both these points and write to the Committee. On the
Wassenaar Arrangement, in what is still fairly early days, we
are making some progress towards widening it. We set out, quite
frankly, in our introduction our disappointment that it was not
possible to make more progress and to go wider. Not every country
shares our wish for transparency in this area. On the other hand,
since you ask in general about multilateral agreements, I think
there are some very hopeful signs around. For instance, we have
a Framework Agreement with a number of other European countries
to provide a basis for industrial restructuring. Part of that
will touch on how we approach the external market. There has been
an expression of interest, which we touched on, in the United
States on trying get a wider or international code of conduct.
We hope we can maintain that and pursue that. There have been
statements of EU/US cooperation, which is encouraging. There are
a number of threads around which have not yet, if you like, coerced
into a precise framework, which are, hopefully, promising. You
ask me whether I want to make it an immediate priority looking
for multi-national agreement, it would be in the pure small arms
area. We will have a focus for that this summer in the UN Conference
on Small Arms. I hope we, possibly in cooperation with Europe,
will be able to take to that a number of precise and specific
ideas which could increase the international agreement and the
regulation and also the destruction of small arms.
Chairman: This is the Six Nation European Framework
Agreement, the follow-up to the Letter of Intent. Mr Viggers?
72. The Six Nation European Framework Agreement
is intended to pave the way for greater co-operation in the defence
industries of the countries concerned. It expresses some general
principles of co-operation and brings in points about respect
for confidentiality, but is there a risk we might end up with
less information being publicly available than hitherto as a result
of the Framework Agreement? Can the Foreign Secretary give us
an assurance it will be a point of principle that we will end
up with no less information than before?
(Mr Cook) I think I can give you that assurance on
behalf of Britain. What I cannot give you is an assurance of to
what extent I can be transparent about information I have gleaned
about the other five and the nature of that co-operation, plainly
we cannot go beyond what they are willing themselves to disclose
about their own practices, but we can maintain entirely our own
transparency. I would say that in framing the Framework Agreement
we did take great care, and our colleagues also, to make sure
that it was entirely consistent with the current regime on arms
exports, both our own national criteria and also the EU Code of
73. Will the Framework Agreement make it easier
or more difficult for the UK to export jointly-produced equipment
outside the EU?
(Mr Cook) I would hope it will make it easier for
us to proceed in joint ventures and joint projects and I would
also hope it may strengthen our capacity to promote the product,
but it will not in any way weaken the regulatory regime, in other
words it will not undermine our capacity to say no if we feel
it breaches our criteria, and indeed our five partners who have
the same obligations since they are also bound by the EU Code
74. Could I give you an illustration of how
it will work? For example, if, under this Agreement, we were producing
some parts to a European Union project and the proposal was that
that would ultimately be sold to a country which we had inhibitions
about selling to, how would it work? How would our national arrangements
impact upon the Framework Agreement?
(Mr Cook) First of all, since it is a joint operation,
the decision to go with that market and that contract would have
to be a joint one and therefore I find it hard to see how we could
find ourselves in the position that we are providing components
for a sale on which we ourselves had not been consulted. Secondly,
any such sale would have to be within the EU Code of Conduct which
is wholly consistent with our own criteria because all our partners
in the Framework Agreement are members of the European Union and
are subject to the same code. I do not know, maybe my officials
would like to share their views?
75. If we take the Swedes, for example, they
have more of a hang-up over sales to the Gulf States than perhaps
we have. What if there was a piece of equipment which was jointly
produced, how would we resolve that, where someone like Sweden
had a different view about sales to the Gulf States from the one
(Mr Cook) Sweden, of course, would have an opportunity
to express whatever view it wished to express at an early stage,
when we were pursuing that contract before they discovered they
were being invited to supply the component. I would hope we could
find a common way forward on that. I would just counsel the Committee
against highlighting too much the potential downside of this agreement.
In reality, if we are going to match the competition from the
United States, there is going to have to be a greater degree of
co-ordination and specialisation among the European nations which
have defence industries, and unless we do have that greater co-operation
the probability is that we will lose all orders from the Gulf
States or wherever to the United States. Do you want to add anything,
(Mr Ehrman) Built into this Agreement are provisions
for early consultation on precisely the sort of question you pose,
Chairman, so that at an early stage in the production of any equipment
the partner countries would get together to discuss the questions
of export and what their attitude was to it.
76. So any
(Mr Ehrman) So it is built in at the beginning of
77. So in the end you would come to a composite
view whether you would sell to this particular market this particular
(Mr Ehrman) That is the intention.
78. Can I ask about the reporting arrangements?
Are you satisfied with the reporting arrangements in relation
to these jointly-produced exports? Is it possible that because
there are a lot of countries involved that none might end up putting
it in their report?
(Mr Cook) You mean their annual reports or
Mr Cohen: Yes.
79. Would a licence for a part under this Framework
Agreement turn up in our
(Mr Cook) The answer is, if we have to give a licence,
yes. All licences are here and no licences are exempt. To what
extent the Framework Agreement might reduce the prospect of a
licence being given, I would need to take advice on. I am told
not. The answer is no.