Select Committee on International Development Minutes of Evidence

Memorandum submitted by the UK Working Group on Arms[1]


  1.  The draft Export Control and Non-Proliferation Bill and the accompanying Department of Trade and Industry consultation paper continues the progress that has been made in strengthening and developing UK strategic export controls since the publication of the Scott Report in 1996. The UK Working Group on Arms (UKWG) welcomes the publication of the draft Bill and the steps Her Majesty's Government (HMG) is suggesting in order to regulate the activities of arms brokers and companies engaged in licensed production, and to control the transfer of technology by intangible means.

  2.  The UKWG views the draft Bill as a positive start and hopes that it will move to the top of the parliamentary legislative agenda. We also welcome the publication of the consultation paper and the opportunity it provides to engage with HMG on the further strengthening of controls on UK arms transfers. We discuss the substantive areas below. Procedurally, we would welcome a clear indication as to when these proposals are likely to be translated into the suggested secondary legislation. In the absence of detailed proposals for operationalising the principles set out in the primary legislation, parliamentarians, NGOs and the defence industry will find it impossible to judge the overall impact of the new legislation. In this regard we support an active role for Parliament in the process of refining and developing the secondary legislation, as proposed in the consultation paper.



  3.  The proposals on arms brokering set out in conjunction with the draft Bill represent a significant improvement on those set out in the White Paper Consultation Document of July 1998. In addition to banning the brokering and trafficking of arms to embargoed destinations and/or involving specific types of equipment, the current proposals state that all persons in the UK or UK persons abroad engaging in the brokering and trafficking of arms will be required to register and apply for a licence for each deal they arrange. For many years, British dealers and freight companies have participated in the transfer of significant quantities of arms from third countries into war zones, including Angola, Rwanda, Ethiopia and Sierra Leone. The measures announced will go some distance towards closing down the operations of these unscrupulous individuals and companies. HMG has yet to decide whether these controls will apply where the activities in question are carried out by UK passport-holders operating wholly abroad. However, if the Government does not include such activities, British citizens could evade controls by simply stepping out of the country to conduct their arms brokering deals.

  4.  In order to be fully effective in preventing Britons from engaging in brokering and trafficking of weapons into conflict and human rights crisis zones, controls must extend to the activities of all UK passport-holders even if operating wholly on foreign soil. The US has legislation which controls all brokering activities by US persons operating overseas, whilst precedent for the exercise of such extra-territorial powers in the UK exists in, for example, the Misuse of Drugs Act 1971, the Chemical Weapons Act 1996, the Sex Offenders Act 1997 and the Landmine Act 1998.

  5.  Using the Home Office's own criteria[2], a very strong case can be made in favour of full extra-territorial application of the proposed UK arms brokering regulations. The Home Office states that extra-territorial jurisdiction can be considered where at least one of the following factors is present:

    i.  Where the offence is serious;

    ii.  Where, by virtue of the nature of the offence, the witnesses and evidence necessary for the prosecution are likely to be available in UK territory, even though the offence was committed outside the jurisdiction;

    iii.  Where there is international consensus that certain conduct is reprehensible and that concerted action is needed involving the taking of extra-territorial jurisdiction;

    iv.  Where the vulnerability of the victim makes it particularly important to be able to tackle instances of the offence;

    v.  Where it appears to be in the interests of the standing and reputation of the UK in the international community;

    vi.  Where there is a danger that offences would otherwise not be justiciable.

      6.  In the case of arms brokering, there is a very strong case to be made in five out of these six criteria (points i, iii, iv, v, and vi). The arguments relating to each of these points are set out below.

    i.  That the offence is regarded as serious is indicated by the fact that the draft Bill sets the maximum penalty for arms brokering without a licence at ten years imprisonment.

    iii.  The current negotiations in the lead-up to the July 2001 UN Conference on the illicit trade in small arms and light weapons in all its aspects have demonstrated a growing international consensus that brokering is in urgent need of international regulation, with the UK Government taking a leading role in pushing for a legally-binding convention on arms brokering. The USA, whose legislation leads the way in this field, concluded when drafting its law that due to the fluid nature of the brokering business, extra-territoriality had to be incorporated into the law to make it enforceable.

    iv.  Anecdotal evidence suggests that arms brokering tends to be particularly prevalent in areas where the more straightforward supply methods are unavailable or restricted, typically war zones or localities where systems of law and order are breaking or have broken down. In such lawless environments, the victims of the impact of brokered arms are frequently powerless civilians (an estimated 80 per cent of all casualties), all too often women and children. Their vulnerability is absolute, in that the weapons are used to intimidate and kill, and that the position and status of the victims of violence in fractured societies often afford them little protection.

    v.  HMG has worked hard to position itself as playing a leading role in international attempts to develop more responsible attitudes towards the arms trade, and not only through its work regarding the UN 2001 Conference (see above). The UK was instrumental in creating the EU Code of Conduct on Arms Exports, and the Annual Report on Strategic Arms Exports has in many ways set a benchmark against which other reports can be measured. Within this context, there can be little doubt that HMG's position is undermined and the reputation of the country is harmed by scandals involving UK arms brokers. Until legislation covering arms brokering has full extra-territorial effect, the international standing of the UK will continue to be damaged by cases such as Mil Tec brokering arms supplies for the perpetrators of the Rwandan genocide in 1994, or Peter Bleach and Border Technology & Innovations Limited (BTI) of Hexham brokering the supply of hundreds of small arms and thousands of rounds of ammunition for an insurgent group in West Bengal in 1995. The UK would garner much international respect if it put its own house in order by introducing effective legislation to control the activities of its citizens overseas.

    vi.  Unscrupulous arms brokers are past masters at creating a series of shell companies and a confused paper trail through many jurisdictions to prevent proper oversight of their work. Indeed, they play off jurisdictions against each other. If the UK does not act to control their activities, it is highly improbable that perpetrators will be brought to justice in other jurisdictions. In order to track the activities of brokers, the agent rather than the location needs to be at the heart of the legislation.

  7.  If the new legislation covers arms brokers only where at least part of their activities take place within the UK, it will simply encourage UK passport-holders to travel abroad to conduct their business, which surely cannot be the intention of HMG. The case for full extra-territorial jurisdiction, as made above, more than complies with HMG's own criteria. The UKWG therefore recommends that the regulation of arms brokers cover all UK persons irrespective of the location of their operations.


  8.  Effective control over the activities of UK nationals in the supply of arms to regions of conflict and tension also requires that the activities of shipping agents be controlled. In recent years, a number of UK companies have been implicated in the shipment of arms into regions of conflict. The draft Bill makes no reference to shipping agents; the inference is, therefore, that they will be able to continue to engage in these activities with impunity. However, a number of the measures relevant to the control of arms brokers are equally applicable to shipping agents.

  9.  The UKWG is of the opinion that arms brokers should be required to disclose information on the companies they will be using to transfer arms, including relevant sub-contractors, and to disclose details of the travel routes and special flight plans for all shipments. Where arms transfers are organised or brokered by non-UK actors, but the shipment of those arms is carried out by UK individuals or companies, the shipping agents should be required to apply for a licence, which should be considered on the same basis as are licences for direct arms sales or brokered transfers. In addition, any UK company wishing to ferry arms between destinations overseas should be registered with HMG as a carrier of arms.

  10.  Clause 5 of the draft Bill allows for the regulation of shipping agents in secondary legislation. The UKWG urges HMG to include provision for the control of UK passport-holders and companies involved in transporting arms in the secondary legislation which is to be formulated to regulate the activities of arms brokers.


  11.  The last 10 years have witnessed numerous instances where arms of UK origin have been diverted for purposes or to destinations contrary HMG's intentions. The Scott Report highlights a number of cases of diversion of UK equipment to Iraq, notably through Jordan. In another high profile case a shipment of UK naval cannon with an end-user certificate for Singapore was found in Iranian possession. These cases serve to underline the need to establish an effective means of certifying and monitoring end-use in order to prevent the diversion or misuse of UK arms post-export.

  12.  The UKWG therefore welcomes the steps that HMG has made to improve the process of risk assessment at the licensing stage and the strengthened pre-sales checks on exports. However, HMG has not addressed any specific measures for monitoring controlled goods once they have been exported. In February 1999, the then Foreign Office Minister Derek Fatchett said: "No formal mechanisms exist at present for monitoring the end-use that has been made of British defence equipment once it has been exported". Nevertheless, as HMG had indicated previously in parliamentary questions[3], the draft Bill does not contain any provisions for end-use controls. In order to limit as far as possible the scope for re-export or diversion of UK arms, the Government must act to strengthen controls on the end-use of UK arms post-export. Indeed, the Government in the past has acknowledged that post-export monitoring "may help to inform future licensing decisions."[4] Failure to include such provisions is a serious omission from the draft Bill which HMG should rectify.

  13.  HMG should strengthen and develop systems for end-use certification and monitoring, building on current best practice in other states, for example Belgium.[5] The most effective system would include provisions whereby an end-use certificate takes the form of a legally-binding contract which contains a list of proscribed uses and a prohibition on unauthorized re-export. Provision should be made for follow-up checks of end use to be carried out by qualified embassy staff. Failure to honour the terms of an end-use contract should result in the revocation of the licence and a halt in further supplies, provision of spares or other forms of support.


  14.  HMG has acknowledged the need to address the problem of controlling the use of arms manufactured overseas under licence from UK companies. To this end it has proposed that export licence applications state explicitly if exports are for use in production overseas under licence. It has suggested two options for ensuring that goods produced through LPO do not undermine embargoes to which the UK is a party, both of which would place the onus on UK companies to effect controls, and has "requested views" on their respective merits. The first would require companies to insert a clause in their contracts with overseas producers prohibiting the resultant arms from being exported to embargoed destinations. The second option is that the UK company must obtain end-use undertakings from the overseas companies not to export finished products to embargoed destinations.

  15.  Government efforts to improve the level of information disclosed during the licence application stage are welcome. However, the UKWG is concerned that neither of the above-mentioned options would effectively control the ultimate use of equipment manufactured through LPO. In both cases, the weaknesses are twofold.

  16.  First, there are doubts concerning the practicalities of HMG's proposals. Maintaining control over items manufactured under licence is clearly more complex and difficult than controlling direct sales. Yet HMG proposes to delegate controls in such cases to UK companies, a role which, in other areas of export control, it reserves for itself. Such an arrangement raises serious concerns over the enforceability of either option, and a fundamental question needs to be answered: are UK companies to be held legally responsible when exports are made in contravention of the relevant clause or undertaking? The UKWG believes that HMG must take responsibility for preventing LPO from contributing to destabilising accumulations of arms and breaches of international law in the same way it does for direct exports. The best way of ensuring this is for LPO agreements themselves to be scrutinised by government and subject to licensed approval.

  17.  Second, the provisions outlined in the draft Bill suggest that in the case of LPO HMG is concerned only to prevent export of goods to destinations under embargo. However, it is vital that transfers of arms are controlled to human rights and conflict crisis zones which are not subject to international embargoes. Embargoes are enforced only against the worst offenders and when political agreement can be achieved internationally - often too late to prevent human rights abuses or acts of internal repression or external aggression. Indications are that unscrupulous exporters are locating production of arms outside the UK/EU in order to avoid the strict controls that are applied by the UK and other EU Member States. HMG should thus take all possible steps to ensure that overseas producers do not export arms manufactured under UK licence to destinations to which the UK would not permit direct arms exports.

  18.  HMG should introduce legislation that requires UK companies to seek prior licensing approval for setting up agreements with other companies when establishing LPO facilities abroad. The criteria used by HMG for such export licence determinations should be as stringent as for direct arms exports. Specifically, licensing of such LPO contracts would not be given:

    i.  where an export licence application for a direct weapons transfer would be refused;

    ii.  where the recipient state cannot demonstrate sufficient accountability in terms of end-use control; or

    iii.  to states that have a record of violating UN and other international arms embargoes.

  19.  In addition, these licensed production agreements should contain strict limits on the quantities of arms that can be produced under these contracts and also must contain a clause which prohibits sales or transfers to third countries of either arms or licensed production technology, without the prior consent of HMG.[6] As with direct export licences, licensed production agreements should be reported to and scrutinised by the Quadripartite Select Committee.

  20.  Where it is not possible to regulate on a case-by-case basis, HMG should, at a minimum, enter into a memorandum of understanding with the recipient/partner government, whereby the two governments agree a list of destinations to which exports of resultant goods would be permitted.[7] This list of destinations should be based on the application of the EU Code criteria. It should be subject to review on at least an annual basis, with the UK retaining the right to conduct ad hoc reviews where necessary owing to a deterioration in the human rights or political situation in a state on the approved list. Where the host government allowed the licensed manufacturer to export arms to destinations not subject to agreement, the licensed production agreement should then be revoked. Under this system, the list of approved destinations should be scrutinised by Quadripartite Select Committee and also be made available to the public.

  21.  HMG is in favour of amending the EU Code of Conduct at the EU level to take specific account of the dangers of LPO leading to undesirable end-use. Moves to strengthen the EU Code are welcome, but UK action should not be dependent upon EU agreement. The Annual Report on Strategic Export Controls is an example of an area in which the UK has taken the lead and successfully encouraged other EU Member States to follow. The UKWG urges HMG to take a similar lead over LPO.


  22.  The UKWG is in full support of the continued efforts of the Quadripartite Select Committee to encourage HMG to establish a system of prior parliamentary scrutiny. The introduction of prior scrutiny would enhance ministerial accountability and would improve the system of checks and balances in the arms export-licensing regime. The UKWG believe this to be an essential element of ensuring consistent application of the UK criteria for arms exports and the EU Code of Conduct, and, once passed into law, the purposes of the Export Control and Non-Proliferation Act.

  23.  The Committee's report of 6 March 2001 included a number of revised proposals which take into account earlier Government objections to prior Parliamentary scrutiny. Where the Committee suggests a number of destinations and goods that can be excluded from Stage 1 notification, we recommend that given constantly changing technology and political circumstance, these be subject to ongoing review. We also repeat our previous recommendations that after licences have been granted the Committee should have the right to publish details of those licences it has scrutinised - information is, after all, already released retrospectively in the Annual Report on Strategic Export Controls.

  24.  HMG committed itself in the consultation document to examine the Committee's revised proposals regarding prior Parliamentary scrutiny and to respond in due course. The UKWG urges full adoption by HMG of the Committee's recommendations, taking into account the points we have raised above, and believes that the process is best served by HMG considering its response within the timeframe of the consultation period for the draft Bill.


  25.  HMG has addressed one of the main criticisms of the Scott Report by including a schedule of purposes of strategic export control in the primary legislation. It is also welcome that the amendment of these purposes will be subject to an affirmative resolution procedure, thereby ensuring Parliament will have the opportunity to debate any proposed changes. However the wording of the purposes and their relationship to the EU Code leave some cause for concern.

  26.  The UKWG believes that making the full EU Code criteria legally binding would encourage rigorous implementation of the Code. To this end, we recommend that in order to ensure the legislation is in keeping with the UK's political obligations under the EU Code, rather than introduce competing language, the purposes should be consistent with the EU criteria. However, HMG has rejected incorporating the EU Code criteria into the legislation on the grounds that it would "introduce rigidity into the way in which licence applications are considered" and that it "would be as likely to require the Government to grant a licence in a borderline case, as to prevent it from granting such a licence."[8] It is unclear from the consultation how HMG has arrived at this conclusion—the EU Code as currently constituted allows for considerable flexibility in interpretation, and in addition provision is made within the draft Bill (clause 3(2)) for orders to be made that are not subject to the purposes (for example in response to emergency situations).

  27.  The UKWG is of the opinion that the EU Code allows considerable scope for subjective interpretation in export licensing decisions. Yet the proposed legislation advocates an even more flexible system, whereby the Secretary of State for Trade & Industry is given the discretion to impose export controls, taking into account a number of consequences arising from the export. Whilst these consequences are, for the most part, broadly consistent with the EU Code criteria, they are less comprehensive and leave greater margin for interpretation than the EU Code. The UKWG regards this as a weakness in the draft Bill and urges the Committee to push for the adoption of the EU Code criteria in the primary legislation.

UK Working Group on Arms

April 2001

1   For the purpose of this submission the UK Working Group on Arms consists of Amnesty International UK, BASIC, International Alert, Oxfam and Saferworld. Back

2   Home Office Consultation Paper on Reform of the Corruption Law: "Raising Standards and Upholding Integrity-The Prevention of Corruption" June 2000. The criteria were a result of review of jurisdiction carried out in 1996. Back

3   Ms Oona King: To ask the Secretary of State for Trade and Industry what plans he has to introduce controls on the end-use of arms exported from the United Kingdom in the forthcoming draft legislation on arms export controls; and if he will make a statement.

Dr. Howells: The Government rigorously assess all export licence applications to determine the risk of any proposed export being misused in contravention of the consolidated EU and national export licensing criteria. Under these criteria we will not issue an export licence where there is a clearly identifiable risk that the equipment could be used for internal repression or external aggression. Applications are also refused if we assess that an unacceptable risk of diversion exists. We have taken a number of steps to strengthen the process of risk assessment at the export licensing stage. Such improvements have not required a change in the law and there no plans to include specific measures on end-use monitoring in the draft Export Control Bill. 22 Mar 2001: Column: 308W. Back

4   UK Annual Report on Strategic Export Controls 1999 (Foreign & Commonwealth Office, London, July 2000), p 6. Back

5   In Belgium, end use certificates include a written guarantee by the importing agency that they will not re-export the arms without the prior written consent of the exporting country. They also state that the recipient will not use the arms for proscribed purposes, including the committing of abuses of human rights or international humanitarian law. Three months after the goods are exported, the Belgian government monitors the process and requires proof of delivery, including details of the transit routes and travel plans. Back

6   Such controls are currently in place in the US where licensed production agreements are treated as a physical export and require prior approval from the US State Department. US licensed production contracts usually limit production levels and prohibit re-export of arms without prior US government approval. Back

7   In Germany, companies are only permitted to enter into licensed production arrangements on the basis of a Memorandum of Understanding-which outlines proposed export markets-and usually only with companies in other NATO countries. Back

8   Consultation on Draft Legislation: the Export Control and Non-Proliferation Bill (Department of Trade and Industry, Cm 5091, March 2001), p 10, para 32. Back

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