APPENDIX 9
Supplementary memorandum from the UK working
Group on Arms
NATIONAL BROKERING
REGULATIONS
The following has been compiled by Oxfam and
Saferworld in response to a request from the Quadripartite Committee
during the oral evidence session on the secondary legislation
to the Export Control Act (2002) held on 3 April 2003. Information
is provided on the arms brokering regulations extant in a number
of EU member states, Norway, Poland and the US. It has been gathered
from a range of sources, drawing in a number of instances on the
work of Holger Anders, IANSA European Co-ordinator. Caution should
be exercised, however, in that in some cases we have relied upon
unofficial translations from the original source material.
IN SUMMARY
Full extraterritorial controls are exercised
over arms brokers in:
— Belgium (yet to enter into force);
Extraterritorial controls over the arms brokering
activities of residents exist in:
Germany applies arms brokering controls only
on activities taking place on German territory.
New controls on arms brokers are under consideration
in Denmark, France, Italy and Spain. The proposal before the French
Senate (which is not expected to be opposed), applies extraterritorial
controls on all arms brokering activities carried out by French
residents.
AUSTRIA
Following an amendment in 2001 of the 1977 Federal
Law on the Import, Export and Transit of Weapons of War, any person
domiciled or resident in Austria wishing to mediate Weapons of
War has to apply for a licence. Licence applications are considered
by the Ministry of Interior, which acts on these matters in consensus
with the Ministry of Foreign Affairs and after consultations with
the Ministry for Defence. Mediation is understood as the act whereby
the transfer of weapons is permitted or arranged from a country
outside the customs territory of the EU to another country outside
the customs territory of the EU. (KMG77-01, §1, 1 and 4,
and §3)
BELGIUM
An amendment to the 1991 Law on the Import,
Export and Transit of Weapons and Munitions was passed by the
Senate in 2002, but has yet to come into force through its official
publication. Under this modified law, every Belgian national or
foreigner resident in Belgian engaged in arms brokering must apply
for a license from the Ministry of Justice. Such licences might
be indeterminate or apply to specific operations. The law applies
to brokering activities wherever they take place, whatever the
origin or destination of goods and independently of whether these
goods enter or bypass Belgian territory. Arms brokering is understood
as the negotiation, exportation or delivering to other countries
of weapons, munitions, other material that specifically serves
military purposes and related technology, or the intervention
as intermediary in such operations. An intermediary is understood
as any person who creates the conditions for the conclusion of
a contract with the object of negotiating, exporting of delivering
weapons, or who concludes such a contract when the transport is
undertaken by a third party. The law covers both the brokering
of arms for financial profit, as well as brokering undertaken
free of charge. The Belgian courts have jurisdiction over violations
of this legislation on brokering if the accused is found on Belgian
territory, even if the undertaken activity is not punishable in
the country in which the brokering activity took place. (Projet
de Loi, modifiant la loi du 1991- 0431/014, §10, §13)
DENMARK
So far, Denmark has no specific brokering provisions
in the Weapons and Explosive Act. The Ministry of Justice has,
however, imposed regulations on the approval for businesses and
their employees engaged in commercial trade with weapons and ammunition.
In practice, the police can issue a permit to acquire and own
weapons and ammunition with the aim of resale. The commercial
trade thus requires permission (OSCE Document). In 2001, a Working
Group was established, which, among other issues, is considering
the regulation of arms brokering and is mandated with making appropriate
proposals. Its report and proposals are expected in 2003. (Annual
Arms Export Report)
FINLAND
New legislation on arms brokering in Finland
came into force in 2002, amending the Act of the Export and Transit
of Defence Material. Under the new legislation, a licence is required
for all brokering of defence material taking place on Finnish
territory, as well as for brokering activities by Finnish citizens,
Finnish legal entities or Finnish residents undertaken outside
Finnish territory. Licences are issued by the Ministry of Defence,
which acts in agreement with the Ministry for Foreign Affairs.
Brokers are understood as any private person or legal entity
negotiating or arranging a contract that involves the export or
transfer of defence material from a country other than Finland
to another foreign country. (If weapons are transferred through
Finnish territory, Finnish import, export and transit controls
apply) Brokering is understood as activities where parties are
brought into contact with each other with a view to concluding
a contract involving the export or transfer of defence material.
This covers mediation during which no direct acquisition of defence
material by the broker occurs, as well as the buying and selling
of defence material that enters into the legal possession of the
broker.
Licences are public documents in Finland, and
can be consulted at the Ministry of Defence. There are also plans
to set up a register of arms brokers. (OSCE information)
FRANCE
The regulation of arms brokering in France is
currently based a decree of 2002, which modifies the decree of
1995 relating to the decree of 1939 on Materials of War, Weapons
and Ammunition. This decree of 2002 stipulates that the activity
of mediation requires a licence. Licence applications are considered
by the Ministry of Defence, after consultations with other concerned
ministries. Mediation is defined as any activity undertaken for
commercial reasons or financial benefit that aims to bring together
persons wishing to conclude a contract on the sale or purchase
of weapons of war, or to conclude such a contract for one of the
parties. Arms brokers are further required to maintain a registry
in which are noted, beginning from the first contacts, the names
of the firms that are brought into contact or of other participants
in the operation, the content of the operation and its stages.
The registry must further contain information on buying operations
and sales of weapons if these are located outside France. (Decrét
du 95, modifié par le Decrét du 2002, §1, §12,
§16.1)
A further law project on arms brokering was
proposed in December 2001. It is currently in the Senate, and
is expected to be adopted by the end of 2003 at the latest. This
law will cover the brokering of all military and dual-use goods
undertaken on French territory by French nationals or residents
of France, even if the goods do not touch French territory. It
will also apply to brokering activities carried out offshore by
persons resident in France.
GERMANY
German regulations regarding arms brokering
are defined in the Law on Weapons of War of 1961, last amended
in 2002. Based on this law, brokering activities require a license
from the German authorities, usually the Ministry of Economics
and Labour. Activities that require a licence include the transport
of weapons of war in ships sailing under German flag and aircraft
registered in Germany. This licence requirement only applies to
the transport of weapons of war that are loaded and unloaded outside
German territory without passing through Germany. A licence is
also required for the mediation of contracts for the sale or purchase
of weapons of war which are located outside Germany, as well as
for the conclusion of such a contract by the arms broker. (KWKG,
§4a, §6)
ITALY
Arms brokering regulations are currently dealt
with in Italy at an inter-departmental level. It would seem that
there is currently a proposal within the government regarding
brokering legislation, but no draft or copy of such legislation
could be obtained so far.
NORWAY
The legal basis for control of arms brokering
in Norway is given by the 1987 Export Control Act and the 1989
Regulations relating to the implementation of the export of strategic
goods, services and technology. Covered by this framework are
persons domiciled or resident in Norway and Norwegian companies,
foundations and associations. To engage in trade in, to negotiate
or to by other means assist in the sale of military products from
one foreign country to another requires consent of the Ministry
of Foreign Affairs. Thus, a person who is domiciled or resident
needs permission from the Norwegian authorities to carry out arms
brokering activities, regardless of the country s/he operates
from. Norway has no legal registration requirement for brokers,
however, when brokers apply for permission to execute a brokering
activity, their details will be kept on file.
POLAND
Polish controls on arms brokers are based on
the Business activity law of 19 November 1999 and the Law of 29
November 2000, On international trade in goods, technologies and
service of strategic importance for the state, and also for maintaining
international peace and security. Before being allowed to import,
export or trade in arms and armaments and/or dual-use goods, Polish
persons or companies must meet certain internal compliance standards
(there are currently no more than 100 entities so authorised).
Polish law requires that all brokering transactions organised
on Polish soil, or by Polish entities operating outside of Polish
territory, must be licensed by the Polish authorities.
SPAIN
Similar to Italy, it would seem that the Spanish
government is currently contemplating the adoption of arms brokering
legislation. Again, however, no draft or copy of the discussed
text has been made available to parties outside the government.
SWEDEN
Swedish legislation on the manufacture and export
of conventional arms is based on the 1992 Military Equipment Act
and the 1992 Military Equipment Ordinance. Covered by this legislation
are brokering activities that are conducted in Sweden as well
as activities conducted abroad by Swedish companies and persons
who are resident or permanently domiciled in Sweden. Involvement
in brokering activities requires a permit. A licence is required
for individual transactions. Licence applications are assessed
against the national guidelines for the export of military equipment.
USA
The US brokering statute was passed in 1996
as an amendment to the 1976 Arms Export Control Act. The law
requires US nationals wherever they are located, plus foreign
nationals residing in the US to register and obtain licenses for
all brokering deals.
The amendment reads as follows:
(I) As prescribed in regulations issued under
this section, every person (other than an officer or employee
of the United States Government acting in official capacity) who
engages in the business of brokering activities with respect to
the manufacture, export, import, or transfer of any defense article
or defense service designated by the President...or in the business
of brokering activities with respect to the manufacture, export,
import, or transfer of any foreign defense article or defense
service...shall register with the United States Government agency
charged with the administration of this section, and shall pay
a registration fee which shall be prescribed by such regulations.
(II) Such brokering activities shall include
the financing, transportation, freight forwarding, or taking of
any other actions that facilitates the manufacture, export, or
import of a defense article or defense service.
(III) No person may engage in the business
of brokering activities described in subclause (I) without a license,
issued in accordance with the Act, except that no license shall
be required for such activities undertaken by or for an agency
of the United States Government—(aa) for use by an agency
of the United States Government; or bb) for carrying out any foreign
assistance or sales program authorized by law and subject to the
control of the President by other means.
The Act is administered by the Office of Defense
Trade Controls of the Department of State and enforced by the
US Customs Service under the International Traffic in Arms Regulations
(ITAR). The key definition under this regime is:
(a) Broker means any person who acts as an
agent for others in negotiating or arranging contracts, purchases,
sales, or transfers of defense articles or defense services in
return for a fee, commission, or other consideration.
The penalty for wilfully violating the requirement
to register and obtain a license is a maximum $1 million and imprisonment
of ten years for each transaction.
An up-to-date list of "denied persons"
can be consulted on line at the Bureau of Industry and Security,
Department of Commerce.
It would be fair to note that the US system
has had some problems implementing this new law, in part due to
the lack of similar brokering legislation worldwide, making extradition
a challenge. A full analysis of this can be read in the Fund
for Peace's publication "Casting the Net? Implications of
the U.S. Law on Arm's Brokering" (www.fundforpeace.org).
14 April 2003
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