CONCLUSIONS AND RECOMMENDATIONS
Conduct of the inquiry
1. We recommend that
the Government should suggest how it might provide information
to us on licence applications in ways that would reduce the administrative
burden of doing so. (Paragraph 15)
2. We welcome the
Government's acknowledgment that it is appropriate to supply information
in confidence to select committees which would not be disclosed
to the public. We would expect the Government to refuse to supply
information to us only where there are very strong reasons for
doing so. We recommend that where the Government refuses to make
information available to us in confidence, it should provide a
clear explanation of the reasons for that decision rather than
rely on effectively meaningless references to the Code of Practice
on Access to Government Information. We recommend that the Liaison
Committee should take this matter further. (Paragraph 18)
3. We conclude that
although retrospective scrutiny occurs too late to prevent a particular
export from taking place, it can and should inform future decisions
by the Government. (Paragraph 21)
Export licence decisions during 2001
4. From the information
we have received, including responses to our further written questions,
we conclude that the Government operates a highly specialised
and focused licensing system which ensures, probably as well as
any licensing system could, that equipment at risk of being used
in India or Pakistan (or indeed anywhere else in the world) for
the development of weapons of mass destruction does not receive
an export licence. (Paragraph 38)
5. We recommend that
the Government should explain in its response to this Report how
the supply of military equipment to the United Kingdom's allies
conducting military operations overseas can be supported without
conflicting with the terms of the consolidated criteria. (Paragraph
43)
6. Given the ongoing
tension between India and Pakistan over Kashmir, we recommend
that the Government judge with great rigour whether a proposed
export is likely to be used aggressively. Without seeking to reach
a judgement ourselves on whether it would be right or not to allow
the export of Hawk aircraft to India, we recommend that decisions
on whether to allow or refuse licence applications in the case
of Hawk and other designated training equipment should take into
account the actual and potential capabilities of the equipment,
as well as their intended role. (Paragraph 56)
7. We recommend that
the Government clarify in its response to this Report under what
circumstances it permits the export of production equipment where
it would not be prepared to license the export of the end product.
(Paragraph 58)
8. We conclude that
the failure of officials to identify for a period of more than
a year the fact that an open licence had been issued for the export
to India of Hawk components and production equipment suggests
that the information systems used for retrieving licensing information
are inadequate. We recommend that the Government investigate how
this oversight was possible, and that it report back to us on
what steps have been taken to ensure that such an error cannot
recur. (Paragraph 62)
9. We conclude that
it is doubtful whether the Government should have granted a licence
for oversized handcuffs in one particular case, given the nature
of licence applications which the Government had previously refused.
We do, however, accept that in this case a judgement was reached
after detailed and proper consideration. We have been asked by
the Government not to identify the destination of the cuffs. (Paragraph
67)
10. In another case,
we conclude that oversized handcuffs should not have been licensed
during 2001 for export to a particular destination (which we have
been asked by the Government not to identify). Basic checks on
the end-user of this equipment from information easily accessible
in the public domain would have revealed concerns about how the
oversized cuffs might be used. We therefore conclude that basic
checks were not conducted. We regard this as an administrative
failure that should be investigated. (Paragraph 71)
11. We recommend that
the Government explain in its response to this Report the apparent
discrepancy between the value of the licences issued in 2001 for
export to Tanzania, and the reported total value of the air traffic
control system being sold to the Tanzanian Government. (Paragraph
73)
12. In its response
to this Report, the Government should explain what links exist
between Customs and Excise concerning the actual export of military
equipment, and other Government departments concerning the legality
of their export. (Paragraph 75)
13. It is unacceptable
that it has taken the Government well over a year to decide whether
to provide us with analytical information about the application
to export an air traffic control system to Tanzania. (Paragraph
76)
14. We recommend that
the Government should continue to take measures to minimise the
risk that military equipment supplied to the Sri Lankan armed
forces from the United Kingdom will be misused. (Paragraph 79)
15. We regret that
gifts of military equipment were made to Nepal without Parliament
having been informed beforehand. We trust that procedures are
now in place to ensure that this oversight does not recur. (Paragraph
86)
16. While we support
the Government's decision to provide military support helicopters
and other equipment to Nepal, and the conditions attached to the
use of the helicopters, we conclude that the Global Conflict Prevention
Pool should not have been used to fund the gifting of this equipment.
(Paragraph 90)
Policy issues
17. We recommend that
the Government confirm in its response to this Report whether
all sales and gifts of military equipment by the Government are
considered against the consolidated criteria before being made,
and whether the same arrangements for interdepartmental consideration
of such sales and gifts exist as for exports subject to the licensing
procedure. (Paragraph 93)
18. We conclude that
the use of the F680 procedure as an alternative to an export licence
for equipment owned by the Government risks muddying the Government's
message to industry that F680 clearance is no substitute for an
export licence. (Paragraph 95)
19. We recommend that
the Government explain in its response to this Report what considerations
determine whether a transfer of ownership of military equipment
in the possession of the Crown takes place under the F680 procedure
or by letter of Crown Immunity, and what procedure is followed
for gifts. (Paragraph 96)
20. we recommend
that the Government explain under what circumstances it would
sell or give military equipment for use abroad to an end-user
other than another Government, and to explain what procedures
are in place to ensure that any such transfers are consistent
with the consolidated criteria. (Paragraph 97)
21. We are concerned
that Government transactions could go entirely unreported where
they involve the transfer of military equipment to a third party,
rather than being related either to the operations of the British
armed forces overseas or to collaborative equipment procurement
projects, and we recommend that the Government should consider
amending its reporting procedures accordingly. (Paragraph 103)
22. We recommend that,
in the interests of transparency, future Annual Reports should
include information on all sales, gifts and other transfers of
military equipment by the Government to other end-users abroad.
(Paragraph 104)
23. We recommend that
before any minister becomes personally involved in promoting the
sale of defence equipment abroad, the Government should consider
the proposed export in question against the consolidated criteria
with as much care as it would an export licence application. (Paragraph
106)
24. We recommend that
the Government should publish more prominently the list of countries
in which it considers that sustainable development is most likely
to be an issue, and that it should clarify both the basis on which
the list is compiled and the basis on which it is subject to review.
(Paragraph 110)
25. We conclude that
the guidance published by the Government on its application of
the sustainable development criterion is a welcome step in the
direction of greater openness, but that it is couched in such
a way that it is unlikely on its own to be of much assistance
to industry in judging whether a licence application is likely
to be approved. (Paragraph 114)
26. We recommend that
the Government provide us, in confidence if necessary, with a
copy of the guidance issued to overseas posts and desk officers
on the circumstances in which end-use monitoring should be considered.
(Paragraph 122)
27. We recommend that
one of the central purposes of end-use monitoring should be to
ensure that the Government is made aware when military goods exported
from the United Kingdom have been diverted to unintended third
parties. (Paragraph 125)
28. We conclude that
it is curious that industry recognises that there has been an
increase in the scope of open licensing, given that the Government
has consistently denied that this is the case. (Paragraph 128)
Collaborative defence manufacturing
29. While we applaud
the principle of transparency which led the Government to issue
guidelines on incorporation in July 2002, we conclude that the
guidelines themselves do little to increase the ability of those
outside Government to predict whether particular licence applications
are likely to be approved. (Paragraph 136)
30. We recommend that
the Government clarify whether UK-origin goods in incorporation
cases are more likely to be licensed for export if they are more
material and significant to the goods in which they are to be
incorporated, or if they are less material and significant to
these goods. (Paragraph 137)
31. We recommend that
the Government should set out in its response to this Report the
results of its consideration of how to present information on
incorporation cases in future Annual Reports. (Paragraph 139)
32. We recommend that
the Government should identify in future Annual Reports those
licences for which the additional factors of 8 July 2002 were
a consideration. The final destination of the equipment licensed
for export should be identified in such cases as well as the incorporating
country. (Paragraph 142)
33. We recommend that
the Government explain in its response to this Report why it did
not seek to ensure that Israeli assurances—that British
exports of military equipment direct to Israel would not be used
aggressively in the Occupied Territories—did not also apply
to components permitted for export to Israel via the United States.
(Paragraph 143)
34. We conclude that
it is hard to comprehend the ethical basis for a policy which
allows the export of certain military goods for end-use in Israel
only via the United States with no assurance that they will not
be used aggressively in the Occupied Territories. (Paragraph 146)
35. We conclude that
the new policy on incorporation cases risks undermining other
aspects of export policy. We recommend that the Government explain
in its response to this Report how it will treat licence applications
for the export of spare parts to the end user direct, or indirect
but unincorporated, where the original licence was granted for
incorporation in one country prior to onward export to an end
user in another country. (Paragraph 148)
36. We recommend that
the Government set out in its response to this Report the steps
that it is taking to harmonise the policies of countries which
have responsible and practical arms export controls (such as the
United Kingdom and United States) on the export of defence equipment
to third countries (such as Israel), particularly in cases of
collaborative defence manufacture. (Paragraph 153)
37. On incorporation,
we conclude that the export of components in collaborative defence
manufacturing projects only involves a different balance of considerations
from other defence exports because different countries operate
different licensing regimes. When considering the question of
the export of Head-Up Displays to Israel via the United States,
the Government faced a dilemma: it could allow the export and
risk undermining national policy, or it could refuse the export
and risk undermining the United Kingdom's defence relationship
with the United States. The Government was right to attempt to
find a solution to this dilemma, and right to be open about its
position. But, as we have shown, the Government's solution raises
as many issues as it addresses. In our view, it also had a third
choice: it could have allowed the export, but attached conditions
to its end use. The United States regularly imposes end-use conditions
on its defence exports; it does not seem unreasonable that the
British Government should do the same. (Paragraph 154)
38. We hope that reports
are accurate that agreement is imminent on a British waiver from
the International Trade in Arms Regulations. We recommend that
the 2002 Annual Report should include a progress report on negotiations
towards this waiver. (Paragraph 157)
39. We recommend that,
as a minimum, information should be published in future Annual
Reports showing that a country is a permitted destination under
a Global Project Licence as soon as the Government is aware that
agreement has been reached with an end-user in that country for
supply of equipment produced under such a licence. (Paragraph
163)
40. We note that the
Government has the power under the Six Nation Framework Agreement
to refuse unilaterally to allow the export to a particular destination
of equipment produced collaboratively under the agreement. We
conclude that this element of the agreement is essential to secure
public confidence in the continuing robustness of strategic export
controls. (Paragraph 164)
Format of Annual Reports on Strategic Export Controls
41. We recommend that
the Government should explain in its response to this Report why
it does not publish information on individual denial notifications
under the EU Code of Conduct to the same level of transparency
as the Netherlands. (Paragraph 167)
42. We recommend that
the Government should explain in its response to this Report in
what circumstances it believes that the publication of the identity
of end users of export licences would be to the commercial disadvantage
of the exporter. (Paragraph 171)
43. We recommend that
the Government consider providing more information in future Annual
Reports where this could help to explain licensing decisions which
might otherwise give rise to the suspicion that they had been
improperly granted. (Paragraph 172)
44. We recommend that
the Government should consider publishing information on end users
of licences by broad category. (Paragraph 174)
45. We recommend that
the Government should consider again how it might provide information
on the value of military exports which comes closer to providing
a comprehensive measure of all exports of licensable goods. (Paragraph
175)
Administration of the licensing system
46. We conclude that
the introduction of new controls under the Export Control Act
will be a major test of the efficiency of the licensing regime—a
test that the Government must not fail if it is to maintain the
confidence of industry. (Paragraph 181)
Conclusion
47. Our general assessment
of the strategic export control system is that it usually—eventually—produces
the right results. The principles embodied in the consolidated
criteria seem to be understood and applied in a sensible way which
meets the country's interests. Unsurprisingly, some licensing
decisions are open to argument; occasionally, decisions may be
taken which turn out, with hindsight, to have been mistaken. But
most licensing decisions—including many which may superficially
seem suspicious—are uncontroversial and properly considered.
As we have discovered in the context of the Government's
recent guidelines on incorporation, the increasing globalisation
of trade in military equipment limits the extent to which national
controls on exports can be effective on their own. This is a subject
to which we will return.
The Government deserves praise for the transparency
that it has brought to its operation of strategic export controls
and to the policy refinements it has introduced. But a little
information can be more frustrating than none at all. There is
inevitably a tension between those who seek further openness,
and those who believe that the Government has already gone as
far as it can. We view it as one of our tasks to ensure that the
Government only withholds information from the public when it
has sound reasons for doing so. The Government should not sit
on its laurels—however well earned these may be.
(Paragraphs 182-184)
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