Select Committee on Trade and Industry Annxes to the Report


Follow-up Information

RECOMMENDATION C: PARLIAMENTARY SCRUTINY OF SECONDARY LEGISLATION

A list of the 1939 Act Orders laid before the House would be helpful

  The Secretary of State announced on 16 December 1999 that "we have considered the Committee's recommendation on this matter and concluded that, pending the introduction of new primary legislation which will provide for Parliamentary scrutiny of secondary legislation on strategic export controls, as proposed in the Strategic Export Controls White Paper, any further Orders made under the Import, Export and Customs Powers (Defence) Act 1939 will be laid before both Houses of Parliament".

  The following Export of Goods (Control) Order amendments were made after that announcement and have been laid before the House:

    —  The Export of Goods (Control) (Amendment No. 6) Order 1999—S.I. 1999 No. 3411;

    —  The Export of Goods (Control) (Amendment) Order 2000—S.I. 2000 No. 109;

    —  The Export of Goods (Control) (Amendment No. 2) Order 2000—S.I. 2000 No. 1239;

    —  The Export of Goods (Control) (Amendment No. 3) Order 2000—S.I. 2000 No. 1396;

    —  The Export of Goods (Control) (Amendment No. 4) Order 2000—S.I. 2000 No. 2140;

    —  The Export of Goods (Control) (Amendment No. 5) Order 2000—S.I. 2000 No. 2264;

    —  The Export of Goods (Control) (Amendment No. 6) Order 2000—S.I. 2000 No. 2618.

RECOMMENDATION J: INTANGIBLES

It would be of assistance to have an account of developments over the past two years in the EU dual-use regime, including any extension of its scope

  The Government is continuing with its review of the proposals in the White Paper on strategic export controls, including proposals relating to controls on the transfer of technology by intangible means. Since the Government responded to the Committee's recommendations on this issue, the EU has reached agreement on new controls on dual-use items, which includes transfers that take place electronically (see below for further details). Clearly in implementing new national legislation on export controls that will apply to military items, it will be necessary to take into account the controls that now apply to dual-use items, as it will be essential to ensure that a consistent approach is maintained to both. The EU also agreed a Joint Action to control technical assistance for weapons of mass destruction, which will require implementation by means of new primary legislation.

  The new EC Regulation (EC) 1334/2000 on the control of exports of dual-use items and technology was adopted by the Council of Ministers on 22 June and published in the Official Journal of the European Communities on 30 June 2000. It came into force on 28 September 2000.

  There are four key elements to the new Regulation which will have an impact on exporters:

    —  introducing a Community General Export Authorisation;

    —  introducing a military end-use control;

    —  bringing under control certain transfers of technology by electronic means;

    —  changes to licensing requirements for intra-community trade.

  The final text of the Regulation reflects the extensive discussions that have taken place between Member States and the Commission. All Member States supported revising the Regulation to apply to exports of dual-use technology by electronic means, on the grounds that without such an extension, the increasing use of e-mail and fax in particular, was undermining the efficacy of export controls on dual-use technology. The Government made clear in the White Paper on Strategic Export Controls that it supported in principle an extension of controls on dual-use exports consistent with the proposals set out in the White Paper. The responses to the White Paper largely recognised the strength of the argument that where a particular document needs an export licence when exported on paper, it should also need a licence when exported, for example, by e-mail, though concerns about the practicalities of controls on such means of communication, particularly for multinational businesses and those engaged in regular collaboration with overseas partners was expressed. Greater concern was expressed in the responses to the White Paper about the implications of introducing controls on oral communications. The Government took account of these concerns in discussion on the application of the Regulation to exports of technology by means of telephone conversations. And the Government believes the best way to deal with the practical concerns of industry about the need to communicate with other parts of their company or partners abroad is through the use, where consistent with the Government's export control objectives, of open licensing.

  The text of the Regulation was the subject of a number of Explanatory Memoranda and a Regulatory Impact Assessment which were cleared by the scrutiny Committees of both Houses before adoption by the European Council of Ministers on 22 June.

RECOMMENDATION R: ELECTRONIC TRANSFER

A note on ELATE would be helpful, addressing in particular—

    (i)  the extent to which applications and/or supporting material are being made by diskette or on-line;

    (ii)  the latest situation on transmission between department by secure intranet;

    (iii)  the latest situation on transmission of information on licences granted to HM Customs & Excise

  DTI introduced the ELATE licensing system in March 1999. This gave exporters the opportunity to submit applications on disk. At present, the disks are accompanied by a paper signature sheet, and paper supporting information, including end-user undertakings and technical specifications.

  The take-up of the disk option quickly reached 80 per cent, and at present over 90 per cent of applications are received on disk, the remainder using the paper application form.

  Licence application information is also sent by DTI to FCO, MOD and other advisory departments on disk, again with paper copies of supporting material. Responses from advisory departments are sent to DTI by fax.

  Building on the success of the ELATE system, the Electronic Licensing via the Internet System (ELVIS) initiative aims to enable exporters to send in licence applications, including appropriate supporting documentation, over the Internet by 2002 so as further to improve the efficiency of the licensing process.

  Over the next year or so, DTI also plans to make greater use of electronic communications for exchanging licensing information with advisory departments in line with increasing availability of the government secure intranet in those departments.

  At present, DTI sends information on new or amended open general licences and open individual export licences to HM Customs & Excise in paper form. HMC&E do not currently have any centralised process for holding and using information in standard individual export licences. Once a paper licence is presented in support of an export, a Customs official can telephone ECO if it is necessary to check any points arising.

  As part of the New Export System project, led by HM Customs & Excise, to enable paperfree export processing, DTI is planning to start transmitting licence information electronically to the Customs Handling Import Export Freight (CHIEF) system in the second half of 2001. HMC&E plan to start rolling out the new system in July 2001.

Annual Reports for 1997 and 1998 on Strategic Export Controls, Fourth Report of 1999-2000, HC 225: Government Response, Cm 4799

  1.  In April 1999 four Committees met to consider the Government's Annual Report for 1997 on Strategic Export Controls. They heard oral evidence in June 1999 from the principal NGOs concerned, and from the Foreign Secretary in November 1999, coinciding with the publication of the 1998 Annual Report. Following further written evidence, the Committees reported in February 2000.

  2.  The Committees' Report covered a range of topics, including the nature and means of parliamentary scrutiny, policy issues such as controls on brokering and licensed production overseas, exports to Indonesia, the EU Code of Conduct, and the format and content of the Government's Annual Report.

  3.  The Government's Reply was received in July 2000. A number of the Committees' recommendations and conclusions were noted, with a view to announcement of decisions in the context of new export control legislation to be published later. A number of others were accepted, including several proposals for additional information to be provided in the next Annual Report. The Government resisted other recommendations for changes in the Annual Report, and repeated its previously expressed position on licences for Indonesia.

Strategic Export Controls: Further Report and Parliamentary Prior Scrutiny, Eleventh Report of 1999-2000, HC 467: Government Response, Cm 4872

  1.  The four Committees heard oral evidence from the Minister of State in May 2000, and decided to report to the House on the matters raised, principally the licensing of aircraft spares for Zimbabwe and the handling of licence applications for Pakistan, as well as the issue of prior parliamentary scrutiny, following a visit to Washington DC in late May 2000 by one Member from each Committee. The Committees also reported on the application of the EU arms embargo on China, a matter originally raised in their study of the Government's Annual Report for 1998, and took the opportunity to respond to several points raised in the Government's Reply to their earlier Report.

  2.  The Report concluded that there had been "an error of judgement" in relation to the grant of certain licences for Zimbabwe, and that the episode revealed "a disturbing degree of muddle and confusion": and that there had been, whatever the formal state of affairs, an informal moratorium on licences to Pakistan. It recommended the introduction of a system of prior scrutiny of arms export licences by a parliamentary committee.

  3.  The Government's Reply was published in December 2000. It rejected the proposal for prior parliamentary scrutiny. It also rejected the Committees' criticisms over the grant of licences for Zimbabwe, and repeated its previous denials of their having been a moratorium on licences for Pakistan. The Reply broadly accepted the Committees' conclusions on the embargo on China and drew attention to the September 2000 announcement of the proposed introduction of controls on arms brokering and trafficking.

  4.  Both the Fourth and Eleventh Reports, and related Replies, were debated on 14 December 2000 in Westminster Hall.


 
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