Select Committee on International Development Minutes of Evidence

Examination of Witnesses (Questions 60 - 79)



  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 transaction.
  (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 improvement.

Dr Godman

  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 States settled?
  (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 dealt with?
  (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 about operations.

Mr Cohen

  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 States.

  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.

Mr George

  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.

Mr George

  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 Arrangement?
  (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?

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 Conduct.

  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 of Conduct.


  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 we had?
  (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?
  (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 the process.

  77. So in the end you would come to a composite view whether you would sell to this particular market this particular product?
  (Mr Ehrman) That is the intention.

Mr Cohen

  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.

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