Select Committee on Defence, Foreign Affairs, International Development and Trade and Industry Written Evidence

Memorandum from the Foreign and Commonwealth Office

  Following the Committee's request in March, the Foreign Secretary has given clearance for declassification of some replies to questions from the Committee. I am pleased to attach a version of HMG previous answers that can now be made public.

  I understand that this comes too late for inclusion in your report, and for this I apologise. I hope this will be still of some use to the Committee.

May 2004

  (Question numbers refer to Appendix 13 to the Committees' First Joint Report, Session 2003-04 (HC 390) (Ev 60-73).)

THE WASSENAAR ARRANGEMENT

  14.   The Annual Report states that at the 2002 Plenary meeting a "number of additional proposals aimed at strengthening export controls as part of the fight against terrorism" were made. What were these additional proposals; which country(ies) proposed them; what was the UK's opinion of them; and what prevented their acceptance?

  * * * The recommendations that the sub-group forwarded for consideration were as follows:

* * *

—  That the Wassenaar Arrangement (WA) Secretariat should introduce and maintain a Bulletin Board area within the Wassenaar Arrangement Information System (WAIS) for use by Participating States, on such issues as rogue traders;

—  For other WA working groups to consider (because of their relevance to terrorism) additional explosives and related items for inclusion, as appropriate, on WA control lists;

—  For the Arrangement to focus on measures to increase the capability of licensing and enforcement officers to conduct critical analyses of end-user certificates, including conformation of authenticity and sharing of information;

—  To endorse continued work on marking and tracing/security of stocks, taking into account the Franco/Swiss initiative aimed at improving the capability to identify and trace illicit SALW in a timely and reliable manner.

  In addition the GWG were mandated to continue in 2003 to develop a German proposal for specific terrorism-related criteria for evaluating proposed transfers with a view to states notifying each other when they had denied transfers based on these criteria.

  All of these recommendations were agreed at the Plenary and work is being taken forward * * *.

NUCLEAR SUPPLIERS GROUP AND ZANGGER COMMITTEE

  17.   What was the outcome of consultations within the Nuclear Suppliers Group in 2002 on engaging non-member states and transhipment states on counter-proliferation issues? Which non-member and transhipment states were involved? What role did the UK play in these consultations? What progress in this area has been made since 2002? What progress was made within the Zangger Committee on outreach to non-members?

  * * *

  Discussions on Outreach continued into 2003. At the NSG Plenary meeting in South Korea in May, the Australians announced plans to co-host, with the US, a global transhipment enforcement seminar. This took place in Sydney from 15 to 18 July. Australia invited a number of non-NSG Member States including; Estonia, Egypt, Fiji, Hong Kong, India, Indonesia, Jordan, Lithuania, Malaysia, Malta, Panama, Pakistan, Singapore, Taiwan, Thailand, and UAE.

  * * *

  The UK were involved with NSG Outreach discussions at the Plenary and we have held bilateral talks on export controls with; Hong Kong, China, Russia, Poland, Ukraine, Serbia and Montenegro, Israel and Macao. The UK also consulted with Estonia on providing assistance with their application to join the NSG.

  * * *

INVOLVEMENT OF DFID AND ASSESSMENT AGAINST CRITERION 8 (SUSTAINABLE DEVELOPMENT)

  27.   In 2002 and in 2003 to date, for how many licence applications that were refused was Criterion 8 a relevant consideration, recognising that a licence application may be refused for a combination of reasons? The Committee would be grateful for details of any such applications.

  Criterion 8 considerations have been a factor in one licensing decision to refuse licences. * * *

REFUSALS AND REVOCATIONS

  32.   The Committee would be grateful to receive details of the "licence revoked after it was issued in error and subsequently issued in 2003". Were the circumstances in which the licence was issued in error different from the circumstances in which a licence was similarly issued in error in 2001? Were lessons learnt from the error in 2001 applied in the case of the licence issued in error in 2002?

  * * *

  This licence was issued in error before a final decision had been reached. This was because a piece of advice relating to another case (and giving clearance) was mistakenly attached to this file, leading to the issue of this licence on 12 December 2002. Other Government departments quickly highlighted the error and the licence was revoked on 20 December 2002. A licence was subsequently issued on 20 February 2003 once all the proper checks had been carried and necessary clearance obtained. The circumstances in this case were similar, but not identical to, the circumstances that led to the revocation in 2001. Errors of this sort are extremely rare, but, as with every human process, occasional mistakes are inevitable. The Government has procedures in place to learn from any error.

ENFORCEMENT

  40.   Were any strategic goods intended for export stopped by HM Customs and Excise in 2002 or since? What was the nature of these goods, and did HM Customs and Excise take any further action against the exporters of the goods? How has HM Customs and Excise acted on the rating advice received from the Export Control Organisation in 2002 and since?

  Since January 2002, HM Customs and Excise have dealt with 456 strategic goods cases being exported from, or in transit through, the UK. A list of goods involved is attached (Annex A)[1] It should be emphasised that most of these cases involved technical breaches only. Action taken by Customs varies from case to case and includes:

—  detaining goods pending the issue of an export licence;

—  inviting exporters to withdraw from export goods which the DTI has informed them could assist a WMD programme;

—  seizing goods which have breached the controls;

—  offering restoration of seized goods on payment of a fee and on an undertaking not to re-export without a licence;

—  issuing warning letters; and

—  compounding proceedings on payment of a penalty.

  There has been one prosecution in this period. The defendant pleaded guilty and was issued a fine by the Court.

  Customs would normally seek DTI ratings advice before taking any action. Where the advice is that no licence is required, the goods are released. Where the advice is that a licence is required, action is taken as above. Where the goods are not listed but the DTI decides to notify the exporter that they need a licence on end-use grounds, Customs invite the exporter to withdraw the goods. Goods cannot be seized in these circumstances except where it can be proved the exporter had grounds to suspect a WMD end-use. Where frontier-based officers suspect a deliberate breach cases are referred to specialist investigators.

  * * *

CONSOLIDATED ANSWERS TO QUESTIONNAIRE ON EUROPEAN ASPECTS OF ARMS EXPORT POLICY

  A Questionnaire on European aspects of arms export policy was sent in December 2003 to Governments, Parliaments and Non-Governmental Organisations in France, Germany, Italy, Spain and Sweden.

  All replies received (unless marked confidential) are set out below, grouped under the relevant question.

  Responses were received from:

Governments:

Germany (confidential—not printed)

Italy (Ministry of Foreign Affairs—23 March 2004)

Spain (Ministry of the Economy—letter of 29 January 2004 published as Annex A)

Parliaments:

Germany (Mrs Uta Zapf—letter of 25 March 2004 published as Annex B)

Sweden (Committee on Foreign Affairs—20 March 2004)

Non-Governmental Organisations and private individuals:

Bonn International Center for Conversion (BICC)—26 January 2004

Berliner Informationszentrum fr Transatlantische Sicherheit (BITS)—6 February 2004

Peace Research Institute Frankfurt (PRIF)—29 January 2004

Mr Holger Rothbauer—undated

QUESTIONNAIRE RESPONSES

1.  EU DIMENSION OF EXPORT POLICY

1.(a)   Has the EU dimension of arms export policy helped to reduce the proliferation of arms to undesirable end users?

  (Italian Government)—Yes, thanks to the increased co-ordination and harmonization as a result, ia of the Code of Conduct.

  (Swedish Foreign Affairs Committee)—No response.

  (BICC)—Yes, because of:

(a)  denial notification process;

(b)  increased information exchange among member states; and

(c)  greater transparency.

  (BITS)—Despite government rhetoric claiming improvements there are no publicly available documents directly supporting this. Assuming that the question refers to the EU regulation on dual use items and the Code of Conduct on arms transfers, our answer to your question, based on the information available to the public up to the year 2002 is: No.

  At least in the case of Germany significant change towards a more restrictive policy in most cases is a consequence of the growing public sensibility towards certain destinations, resulting from public debates on a series of scandals rather than the consequence of multinational bureaucratic arm-twisting. After scandals licensing authorities and foreign trade agencies tend to use the existing national legislation to guarantee a more careful approach to arms export to certain states, such as Iran, Iraq or Libya. In the aftermath of the findings on German transfers to Iraq in 1990-91 part of the legal basis was rewritten in a more restrictive language.

  What would be indicators for a reduction of proliferation of arms to undesirable end users, achieved by the EU dimension? Aside from the EU-wide embargoes, the general public doesn't even know which end-users are officially undesirable.

  The available national annual reports on arms exports, as well as the annual report of the EU indicate no real reduction in the value of licensed arms transfers. In general most of the "facts" presented in the annual reports are circumstantial. They possess only a limited value for an analysis of the past and almost none for one of the future. During the last four years (1999-2002) the EU-wide number of licences issued varied between 25,000 and 36,000. These numbers have no correlation with the actual value of the arms transfers, and even less with the registered amount of real exports of arms. The number of denials issued pales against the number of licences approved. (Last year seeing a decline of 40 from the previous year). The number of consultations still remains marginal and the outcome unknown to the outsider.

  Instead, the low number of denials issued allows for the thesis that most European nations must have a licensing system in place which allows for unofficial communication between the licensing agency and the company on the probability of being granted a licence. Here the undesirable end users of a specific military item are identified and kept confidential, since they might be desirable trade partners in the future.

  All in all, with the exception of the countries subject to a Joint Action of the EU in form of sanctions and embargoes, probably few EU states could agree on undesirable end users and would still suspect their fellow EU states from taking advantage of any arms deal rejected.

  According to practitioners, though the year 2003 saw a great improvement in co-ordination between the EU member states. The national policies seem to converge on some technical and procedural issues; the process of confidence-building yields first results. As part of the German experience, the practitioners mentioned a better handling of the denial-procedures. Undercut are being made increasingly difficult. In Germany the Federal Office of Economy and Export Control (Bundesamt für Wirtschaft und Ausfuhrkontrolle/BAFA) has improved affairs by creating a denial registry which helps identify undesired business.

  Furthermore, one practitioner claimed that especially the unwanted proliferation of small arms has been reduced with most of the purchasing states not even contacting EU companies anymore but instead immediately resorting to second rank suppliers (Bulgaria, Belo-Russia).

  (PRIF)—(Also answers 1(b) below). In my understanding the inclusion of an EU-dimension into the national decision making process on arms exports has not had any stimulating or reducing effects on the volume of the arms exports or the proliferation of arms to undesirable end users. The co-operation of the EU-member states in the arms export policy is a voluntary one. They are not legally obliged to obey the rules and criteria of the EU-Code of Conduct (1998). The rules, established by the Amsterdam treaty (1997), have a superior status and maintain the sovereignty of national states in this area.

  It would be desirable, if a common approach and execution of an European arms export policy was part of the Common foreign and security policy under the direction and responsibility of the High Representative. This also could include more responsibility for the European Parliament in scrutinizing this area.

  (Holger Rothbauer)—No, it hasn't.

1.(b)   What shortcomings do you perceive in both the EU and national dimensions of arms export policy, and what further measures would be useful to address these shortcomings?

  (Italian Government)—No response.

  (Swedish Foreign Affairs Committee)—In 2003 the Government set up an inquiry into Swedish Arms Export Regulation (please see the enclosed summary of the terms of reference of the inquiry)[2] The inquiry was to examine the need to redraft national and international control systems and guidelines for arms exports on the basis of the development of Swedish defence and security policy, the development of European co-operation on military equipment as well as the restructuring of the increasingly internationally influenced defence industry.

  According to a report last year by the Committee on Foreign Affairs (between 2002-03: UU9) Sweden should, in the context of EU arms export policy co-operation, promote a higher degree of restrictiveness to be applied also by other Member States. The Committee also found it most important to increase the transparency between the EU Member States within the framework of the Common Foreign and Security Policy. The aim is to increase information about current national decision-making.

  According to a recent report, published in December last year, by the Committee on Foreign Affairs (between 2003-04: UU3), Swedish export control and export of arms should correspond to and be compatible with the goal for Sweden's new policy for global development.

  When developing the Code of Conduct, the Committee emphasised in the report, it is important to reach a consensus between the EU Member States on how attention could be paid to human rights issues and development issues in the recipient countries. According to the Committee on Foreign Affairs, this is in line with the Government's action. The Committee would value further development of the EU Code of Conduct.

  (BICC)—(a) Code should become a legal instrument, defining the minimum of restrictions to be applied by national governments; (b) Rule of no undercutting should be adopted; and (c) European and relevant national Parliaments should be involved in a pre-notification process.

  (BITS)—Please excuse us, if we answer the question with bullet points, limited to the EU and Germany, since the issue as such actually would mandate a thick book.

  Shortcomings are:

—  The greatest shortcoming is the paramount lack of transparency. There still is practically no involvement of the public—not even through its representatives in most European parliaments. Most control bodies established so far are not part of the consultations and decision-making process on arms exports but only designed for an evaluation of the past;

—  In many states EU criteria are only a guideline to be followed by governments and are therefore not legally binding;

—  National interest and national security in the field of arms exports is treated principally as a higher good than regional stability and minimisation of deaths due to internal suppression and violent conflict by many EU states[l1]. Of course there are differences in practice among the EU States with Sweden and the Netherlands on the restrictive side, Italy and Spain on the permissive side;

—  In general, the economic or diplomatic value of arms trade seems to be ranked higher than the social, economic and political costs for the recipient society;

—  The present regulations are based on the good will and co-operation of the increasingly transnationally structured armaments industry;

—  There is still a lack of harmonisation of the regulations and procedures introduced in the Code of Conduct, ranging from the EU-wide introduction of a list of common military items in the export regulation procedures to harmonisation of the licensing procedures;

—  The whole complex are of dual-use items has been excluded from our answers. Dual-use items open up another set of problems and necessitate other approaches than the group of military items (ranging from simple monitoring questions to the consequences for global project licences).

  Additionally, the following shortcomings are at least observable for Germany:

—  The government is unwilling to alter its monitoring and reporting system in such a way as to include military items actually delivered or the companies and destinations of those military items exported through a General Licence for repeated exports (the category of "Sonderverfahren" usable for military items, eg Sammelausfuhrgenehmigung).

—  The dual legal structure of the Foreign Trade and Payments Act (for military items and components) on the one side and the Weapons Control Act (for weapons of war and major components) on the other side leads to a weakening of the originally restrictive arms export standards.

—  The principle of "Wettbewerbsschutz"—the protection of business interests in a running competition—is regarded as a higher good than the protection of human rights and the protection of people in conflict regions. In practice it seems to be ranked politically almost as high as national security.

—  The system of a preliminary inquiry regarding the chance of obtaining an arms export licence (the so-called "Voranfrage") allows companies and buyers to obtain a legally binding assessment on the licensing procedure without a clear and transparent decision-making procedure by the licensing authorities and without any of this process becoming public.

—  The government tends to reduce parliamentary control and influence to a minimum. One example is the six-nation framework agreement of 2000. The government decided to introduce this legally binding document as an international administrative regulation and not as an international treaty, thus avoiding the need for parliamentary approval. There are no modalities to keep the German public informed on the progress of this agreement even though the Federal Government has committed itself in international law to modify German Law to fit future decisions reached inside this agreement. Also the agreement will have repercussions on the export licensing process, again without any involvement by the public.

  Measures to address the shortcomings:

—  The EU Code of Conduct should be the starting point, since EU states have already agreed on it as the common denominator.

—  As a first step: all EU states should agree that the EU Code of Conduct becomes an EU regulation and is incorporated into national law.

—  All eight criteria should become applicable and mandatory in the evaluation process, nationally as well as in the EU context. This includes rephrasing the content of these criteria or negotiating a common procedure for interpretation and/or definition.

—  Arms exports outside of the EU should be treated as the exception rather than the norm. This could mean a harmonisation according to the narrow regulations and laws which some EU states have already incorporated in their constitutions and legal frameworks.

—  COARM or, preferably an agency of the EU Commission should be made the central co-ordinating body for arms trade with an information duty towards the European Parliament(s) and public (not exclusively the EU governments).

—  At the EU level, the European Parliament should be given monitoring rights and later even the right to advise on arms transfers to third countries.

—  Introduction of a European Arms Production and Trade Licence (EAPTL). European arms manufacturing companies should be made to apply for a EAPTL. Any export to subsidiaries or joint ventures in non-EU-and non-NATO states should also need a licence if they want to conduct business with EU-manufactured goods. Any arms broker would need an EU licence. The Swiss export system might provide a partial basis for this.

—  The fines, penalties and punishments for intentional (and unintentional) violations of existing laws should be higher and should not only address the specific person caught in the act but also companies at large.

—  All European governments should be obliged to either destroy surplus materials or restrict their transfer to EU and NATO-states with the necessary independent monitoring. (It should evaluated if the methods established with the CFE can be adopted to this).

—  EU states and companies should work together to make sure that arms delivered to third states are again collected after their disposal (through a monitoring regime) in order to control the whole life-cycle, especially of small arms.

—  Regarding End-Use, an agreement and consent by the importing government should be made mandatory for any transaction abroad (as is already the case in Germany).

—  Until there is no single European arms export control system (and agency) in place, no state should be allowed to forfeit its right to license the export of components through a global production and export licence.

—  No export credits should be granted for arms exports.

  Even though Germany does have a strict arms export control system and only limited waivers for the Federal Government (unlike France and Great Britain), there are a number of grey areas which need attention. This should be done in a fashion reflecting the fact that arms exports are politically very sensitive issues and therefore demand a comprehensive legal approach overruling other existing laws.

—  The armaments-related provisions of the Foreign Trade and Payments Act (AWG) and the Weapons Control Act (KWKG) should be integrated into a single law on armament and related technology exports, thus establishing a clear licensing process and framework, re-emphasising the fact that arms and armament related exports are supposed to be the exception, allowed only if licensed, and including the EU criteria in this law.

—  No export credits should be granted for arms exports.

—  The German monitoring system for foreign trade should be made to include not only weapons of war but also the actual export of military items (according to the Foreign Trade and Payments Act).

—  The Federal Government should strive to introduce a law on transparency and a right of access to information for the public so far missing, similar to the legal situation in the US (FOIA).

—  The system of a preliminary inquiry regarding the chance of obtaining an arms export license (the so-called "Voranfrage") should be either changed to the effect of no longer legally predetermining the outcome of the licensing process and put to public scrutiny or abolished. One way would be to exempt armament related exports from the current law (Verwaltungsverfahrensgesetz) and incorporate a new and special version of it under a reformed AWG/KWKG law.

—  The workings of the Federal Security Council (Bundessicherheitsrat) need to be made more transparent and should be open to the advice of external experts.

—  Global Project Licences (in a sense similar to German "Sonderverfahren") need to be included in any annual report, with the number of companies involved and the destinations.

  (PRIF)—(see answer to 1(a) above).

  (Holger Rothbauer)—The dimension of human rights/abuse as a clear UN-defined criterion that would overrule economic or political criteria. This has to be stipulated in law (binding) and clear publicly accessible guidelines for politicians.

2.  HARMONISATION OF EXPORT POLICY

2.(a)   What differences do you perceive between the arms export policy of your Government and that of the British Government, and other EU member state Governments?

  (Italian Government)—The main difference of the Italian conventional armaments exports control system resides in it being bound by a Law (185/90) that clearly fixes the criteria according to which export licences may be issued, whereas the UK has a more flexible approach according to the political priorities at a given time.

  (Swedish Foreign Affairs Committee)—No response.

  (BICC)—German arms export policy is generally more restrictive than UK government policy, particularly with respect to the Middle East. A number of member countries are similarly restrictive to Germany, such as Austria, Sweden, Finland, Ireland, Italy, Belgium and the Netherlands. Policies in France and Spain seem to be less restrictive than those of the UK.

  (BITS)—It is our impression that the two following questions can't be answered without large generalisations. Any difference between both countries is measurable only in degrees and depending on the very specific circumstances of a single arms export deal.

  Basically each and every EU state has special historic ties and special conditions influencing export decisions. But speaking in broad terms, at the moment states like Spain, Italy and Belgium seem to have a more liberal arms export policy while the Netherlands, Austria and Sweden are more restrictive than Germany.

  The major difference between Great Britain and Germany in this field is the historical approach towards arms exports. In general, the British government and British public seem to regard the issue of arms export as a normal facet of being a former Colonial power, a nuclear power and currently a major regional player. Arms exports are regarded as a legitimate means of foreign and security policy. This has apparently led to a legal system where the only base of contention between government and opposition is the destination of some exports. Great Britain's place among the top arms exporting nations is more a matter of pride than concern.

  This is obviously contrary to Germany's historic experiences and its obligation to never pursue means of nuclear, chemical or biological warfare. From the beginning arms exports were not (officially) regarded as means of Germany's foreign and security policy. While the Federal Government today might be interested in taking an approach similar to that of the British Government, laws written in the early days of the FRG prohibit it from openly pursuing it.

  The difference manifests itself in the wider use of export credits for arms exports by the British Government. Another example are the "gifts", which the British Government can hand out, without any consultation or even any later obligation for listing their value and destination. This indicates that the British Government is still more used to wielding arms exports as a means of diplomacy. Great Britain seems more willing to tie strategic policy thinking to questions of armaments transfers.

  In general, both states prefer EU and NATO members as their markets. There are slight differences in trading partners in the third world as well as the quantities and qualities of goods exported. Here Britain's policy seems to be more attached to older spheres of influence in Asia and the Near East.

  (PRIF)—(see answer to 1(a) above).

  (Holger Rothbauer)—Honestly: none nameable.

2.(b)   In what circumstances would your Government allow or refuse exports, where the British Government or other EU member state Governments would be likely to take a different view?

  (Italian Government)—Generally speaking, and because of the Code of Conduct mechanism, such a possibility should be ruled out.

  (Swedish Foreign Affairs Committee)—No response.

  (BICC)—Germany is less restrictive than most EU governments, including the UKs with respect to Israel, but more restrictive than most with respect to other countries in the Middle East. Germany is also particularly restrictive with respect to poor countries, particularly in Africa. There is one category of arms where the German government is generally less restrictive than most EU member states and that is warships.

  (BITS)—Both governments would be likely to come to different conclusion if the country in question belonged to the specific group of states with which one government enjoyed a long tradition of co-operation, mutual recognition and a common security doctrine while the other government was uninhibited about seeing human rights violations and/or military aggression in the recipient country.

  Both governments increasingly see arms export questions as crucial for the national defence industry base and are therefore inclined to apply similar parameters. Furthermore it will become increasingly difficult to identify which company is British and which is German.

  Differences in export decisions also depend on the military item exported. For instance, the Federal Government regards the naval sector as very uncomplicated, similar to the turbines and motors for ships and armoured vehicles.

  In general, though, the circumstance in which both governments would come to different conclusions can be constructed, but no general dictum is suitable as any government export licence which is granted is the product of a unique setting.

  (PRIF)—(see answer to 1(a) above).

  (Holger Rothbauer)—Britain, France and the Netherlands are more likely to deliver arms to former colonies. The German Government hesitates if an export deal becomes public and public opinion is against it (eg Leo II—Turkey).

3.  EU CODE OF CONDUCT ON ARMS EXPORTS: LEGAL STATUS

3.(a)   What is the legal status nationally of the EU Code of Conduct on Arms Exports?

  (Italian Government)—In Italy the Code of Conduct is a political directive and is not legally binding.

  (Swedish Foreign Affairs Committee)—(Also answers 3(b) below). According to the Government in the terms of reference of the above mentioned Inquiry, the EU Code of Conduct on Arms Export is seen as a declaration of intent. In Sweden the Code is used and taken into consideration within the comprehensive assessment that is made according to the Swedish guidelines on exports of military equipment and various forms of co-operation with foreign partners, including the EU Code. (For more information about the guidelines, please see annex 3 to the enclosed Government Communication 2002/03:114[3] An outline of the guidelines is also available on the homepage of the National Inspectorate of Strategic Products (the Inspectorate), http://www.isp.se/nyaengelska/eallmant/eispintro.htm

  Every export application is individually scrutinised.

  As far as national guidelines are concerned, the comprehensive assessment mentioned above should include, when necessary, an account of the political situation in the recipient country. In this context the human rights situation is of specific importance. Licences should not be granted, for example, to a state in which widespread and serious violations of human rights occur. Also in the EU Code the human rights criterion is emphasised.

  The EU Code of Conduct explicitly constitutes a minimum standard in the national licensing system and is regarded as an instrument to influence in a more restrictive direction how Member States process applications. According to the Government, in the above mentioned terms of reference there are good reasons for the inquiry to investigate the possibility of integrating the criteria in the EU Code of Conduct on Arms Export with the national Swedish guidelines. The inquiry is expected to complete its work in October 2004.

  (BICC)—Has no legal status.

  (BITS)—In Germany the Code of Conduct has been incorporated into the Federal Government's "Political Guidelines" issued in January 2000 as successor to the 1982 guidelines. This means that they are not legally binding but instead should be taken into account whenever the government or its agencies have to decide on particular export licences. However, decisions for and against specific individual licenses based on the criteria will create a legal precedent for similar future cases.

  (PRIF)—In Germany the EU-Codex (1998) is an integral part of the "Political Guidelines of the Federal Government for the Exports of Arms and other Military Goods" ("Politischen Grundsätze der Bundesregierung für den Export von Kriegswaffen und sonstigen Rüstungsgüter" vom 19. January 2000). The German Government's decisions on arms exports are based on these guidelines. The purpose of the guidelines is to improve the transparency of the decisions on arms exports, to maintain coherence in other political areas, and to strengthen the credibility of the German policy.

  The Political Guidelines have no legal status and are not based on decisions by the Deutsche Bundestag. There is no base to take legal actions against governmental decisions. Criminal prosecutions and decisions by courts are only justified by the "Kriegswaffenkontrollgesetz" (law to control arms), "Außenwirtschaftsgesetz" (law on foreign trade) and the respective executive orders.

  (Holger Rothbauer)—No legal status.

3.(b)   What role do the criteria in the EU Code play in licensing decisions, and in the formal justification for refusing licence applications?

  (Italian Government)—Any licensing decision is weighed against the Code of Conduct criteria, and is granted/refused accordingly. In cases where further information is deemed necessary in order to reach a decision, the consultation mechanism is activated.

  (Swedish Foreign Affairs Committee)—(See answer to 3(a) above.)

  (BICC)—The criteria are the basis for the Political Guidelines the government has set for itself. With respect to some criteria (human rights, zones of conflict), the Political Guidelines are more restrictive.

  (BITS)—The exact role of the criterions can't be identified since the government does not publish sufficiently detailed justifications for refusing licence applications. Also, judging from the information submitted by the Federal Government to COARM, not all denials are based on these criterions. According to the Annual National Report, the Federal Government refused to license arms exports to non-EU and non-NATO states in 169 cases during 2002. According to the EU report, the Federal Government notified COARM and other EU-states of denials in 65 cases. Practitioners have explained the difference mainly through examples; where the reasons for the denial were based on national criteria, meaning criteria not mentioned by the EU Code. In some cases the government judged two or more licences to be similar in nature and destination, and therefore only notified Brussels of one denial.

  In our eyes, the criteria mainly matter when an arms export case becomes public since then NGOs and other pressure and interest groups use them as political arguments to generate public awareness and to convince a hesitating government. In addition, it should not be forgotten, that there is no EU-wide common interpretation of the meaning of the EU Code's eight criteria.

  According to practitioners though, the criteria are playing an increasing role internally, too. After four years of slow introduction they are being increasingly cited as reasons for rejecting a licence. Especially the end-user-criterion is often quoted as not being guaranteed. They expect the criteria to gain weight in the formal justification process.

  On the other hand, there are arguments that some states have made tactical use (or non-use) of denials in a number of cases.

  (PRIF)—(see answer to 3(a) above).

  (Holger Rothbauer)—In our "non-binding" political guidelines for arms exports the EU Code is mentioned among other criteria.

3.(c)   Can licence applications legally be refused on the basis of the criteria in the EU Code?

  (Italian Government)—Yes, and many have been, especially in the field of small arms and light weapons.

  (Swedish Foreign Affairs Committee)—An application for an export licence can be refused or granted as a result of the comprehensive case-by-case assessment always carried out. The Code of Conduct is part of the political guidelines forming the basis for this assessment.

  (BICC)—No. However, for weapons of war no legal challenge to licensing authorities is possible. For other types of arms, courts will likely consider the Code as an important ground for denial.

  (BITS)—No, see above. However they can be part of the argument for not issuing a specific licence and thus part of a denial decision that a company theoretically could challenge in court.

  (PRIF)—(see answer to 3(a) above).

  (Holger Rothbauer)—No. Refusals have to be based on the laws and regulations where the EU Code could be mentioned as a criteria to interpret the laws.

4.  SCRUTINY OF NATIONAL ARMS EXPORT POLICY

4.(a)   How are National Arms Export Policy and the European Context of Arms Export Policy Scrutinised in Your Country?

  (Italian Government)—The national arms export policy is scrutinised by Parliament, to which an Annual Report has to be presented by the Government.

  (Swedish Foreign Affairs Committee)—(Also answers 4(b) and (c) below). The National Inspectorate of Strategic Products controls the export of military equipment and dual-use products. The Inspectorate was formed in 1996 following a decision by the Swedish Parliament.

  A parliamentary cross-party advisory body called the Export Control Council (see below) supports the Inspectorate. Concerning technical assessments, the Technical Scientific Council, whose members are highly qualified technical experts, aids the Inspectorate. The role of the Inspectorate is to decide on matters within its field. However, the Inspectorate shall hand over matters of principal or special importance to the Government for a decision. As in all state authorities and agencies, it is the Government which establishes the policy whilst the authority implements it by making decisions in individual matters. Deputy Minister for Finance Gunnar Lund is the Cabinet minister responsible for issues dealt with by the Inspectorate. The Strategic Export Control Unit within the Ministry prepares matters for Foreign Affairs. (Further information about the Inspectorate can be found on www.isp.se.)

  Under the Instrument of Government the Government must, wherever possible, consult the Advisory Council on Foreign Affairs before taking decisions on important matters relating to foreign affairs.

  In the mid 1980s an Advisory Board on Exports of Military Equipment was created to relieve the burden of the Advisory Council on Foreign Affairs. The Board was reorganised in 1996 in connection with the establishment of the Inspectorate and the name was changed to the Export Control Council. Today all the political parties in the Parliament are represented in the Export Control Council, which has 10 members. The Director-General of the Inspectorate who also chairs the meetings convenes the Council. The Export Control Council is consulted before decisions are taken on important licensing applications. Delegates from the Ministry for Foreign Affairs participate in the meetings, presenting assessments of the recipient countries under consideration, and the Ministry of Defence contributes assessments of the defence policy aspects. The Council seeks to interpret the guidelines in a consistent manner in order to provide further guidance for the Inspectorate.

  The members of the Export Control Council are presented, on an informative basis, with a summary of the Inspectorate's decisions. The Director-General can also consult the Council when necessary on matters concerning the application of the Control of Dual-Use Items and Technical Assistance Act (2000:1064). The purpose of the Swedish system, which is believed to be internationally unique, is to build a broad consensus on export control policy and promote continuity in the conduct of that policy. Ten meetings of the Export Control Council were held in 2002.

  Every year since 1985 the Government has presented an annual report to the Parliament on Swedish exports of military equipment. The report presents last year's exports of military equipment and dual-use products as well as provides a background for a broader discussion on matters related to arms exports. The Government aims to present reports on exports of military equipment that are as transparent as possible and has continuously sought to improve its reporting in order to promote increased transparency. This year's report will be presented to the Parliament in March.

  Last year's report may be found at the following website: www.utrikes.regeringen.se/fragor/exportkontroll_krismateriel.htm

  As is indicated in the annual report to the Parliament, the EU annual report, which is issued within the framework of the EU Code of Conduct for Arms Exports, is an important instrument for increasing transparency at the European level. In this context it could also be mentioned that the Swedish Government has continued to provide funding for the Internet database managed by the Stockholm International Peace Research Institute (SIPRI) (www.sipri.se), which contains information on national and international export control regimes and some statistics on holdings and exports.

  Every year the national annual report as well as motions from one or more members of Parliament on this topic are considered in the Parliament by the Committee on Foreign Affairs before a decision in the Chamber. The Committee publishes its conclusions in a report that is also submitted to the Chamber. The decisions in the Chamber are preceded by a debate. Unfortunately, the committee reports are only available in Swedish.

  (BICC)—The government's annual arms export report is debated in Parliament. A number of NGOs regularly follow arms export decision. One church based organisation, the Joint Conference of the Churches on Development (GKKE) publishes an annual report (www.ruestungsexport.info). The media reports on some incidents considered to be "scandals".

  (BITS)—Basically, they are not.

  On a national level the licensing decision for arms exports and dual use items rests with the German Federal Office for Economy and Export Controls (BAFA) under the authority of the Ministry for Economic and Labour (BMWA). In some possibly controversial cases the BAFA must hand an application over to the BMWA. In very controversial cases the Federal Security Council (FSC) deals with the important licensing question. It includes the Minister for Defense, Economics, Finance, Foreign Affairs and Economic Cooperation as well as a representative of the Chancellors Office. There are no protocols available from these meetings. The dates, the agenda and the results of the meetings are secret. Beneath the FSC there is a similar committee staffed with representatives from the respective ministries for lower level decisions. Normally, only the Ministries of Economics and Labour (with overall charge) and Defense will prepare armament export related draft decisions.

  However, once a decision is leaked to the public and caused arguments, the situation might change and some or substantial information might be given, since parliamentarians and journalists begin asking detailed questions.

  (PRIF)—(Also answers 4(b) and (c) below ). It is part of the tradition of German politics that arms export policy is within the domain of the executive. Parliament and its committees do not participate at any stage in the decision-making process. Therefore in Germany no formal procedure exists to scrutinise the day-to-day business of granting and denying export licenses. In this context NGOs and the media play an important part in observing political events and making public those decisions which contradict the criteria established by the Political Guidelines. The history of German arms export policy may be read as a chronology of political scandals. Recent examples have included the delivery of new engines for military ships of German origin to Indonesia or German arms exports to Israel and other states in the Middle East.

  Since 2000 the German Government has annually delivered a report on its arms exports policy ("Rüstungsexportbericht") to the Bundestag. The report contains information about licences granted for arms exports, the volume of arms exports (but not of other military goods) and gives the names of the recipient states during the year before. The reports have gradually developed an accepted structure which delivers some transparency. But for two years the reports have been published after such a delay that the Bundestag only gets to debate them a very long time after the events they report, so that parliamentary involvement has little political impact. If this practice becomes the rule, it would be an effective strategy to protect this area from any form of scrutiny and political importance.

  The annual reports of the EU Council and the related debates and agreed positions within the European Parliament do not meet meet with any further response in the German public.

  As a development-oriented NGO the Joint Conference Church and Development ("Gemeinsame Konferenz Kirche und Entwicklung, GKKE") already in 1997 began to produce its own report on German Arms Exports ("Rüstungsexportbericht der GKKE"), which focusses on the delivery of arms and military goods to developing countries. The main criterion is whether arms exports support the search for and maintenance of peace in unstable regions and states and whether they conform to the proclaimed adherence to human rights and sustainable development. The report by the GKKE is primarily directed at the German Government and members of the Bundestag but also at the broader public. It is well covered by the media.

  (Holger Rothbauer)—The national policy hasn't changed. The realities have.

4.(b)   What Role do National Parliaments and Parliamentarians Play in the Scrutiny of National Arms Export Policy and Licensing Decisions?

  (Italian Government)—Apart of the above mentioned Annual Report, questions may be raised in Parliament to which the Government has to provide answer.

  (Swedish Foreign Affairs Committee)—(See answer to 4(a) above.)

  (BICC)—No role in licensing decisions. Members of Parliament can ask the Government about individual cases and general policy issues. The Annual Report is debated in parliament.

  (BITS)—In general the national Parliament is a passive reviewer and commentator on past arms exports transactions.

  Some Parliamentarians advocate wider transparency or try to make information available to the public. They use their right to question the ministries or put questions in Parliament.

  The relevant ministries are then compelled to provide accurate information. However, issues relating to the procedures of the FSC or which touch on specific companies and their "economic secrets" are never answered.

  The Federal Government has been mandated by the Bundestag to present an Annual Report on disarmament since 1982. In addition, since 2000 National Annual Reports on Conventional Arms Exports are also presented to Parliament. The commitment to present these reports is contained in the "Political Guidelines", agreed in 2000.

  Furthermore there are some parliamentary committees which deal with arms export issues related to their working fields. Some receive annual listings, containing some relevant information on arms exports; eg a sub-group of the Budget Committee receives information on export credits which have been proposed and granted for arms exports. However, they are committed to treating the information as confidential. There is no system in place bringing together information provided to the different Bundestag Committees. However, aside from the Budget Committee's authority to veto plans for export credits, none of the committees have a mandate to veto specific exports or demand prior advice.

  Apart from this, Parliament is able to initiate an investigative commission on illegal arms transfers, such as the one on an alleged transfer of submarine technology to the apartheid South Africa of the 1980s.

  Parliament is informed about the adoption of most treaties and agreements concerning arms trade and defence co-operation, including EU policies.

  (PRIF)—(See answer to 4(a) above.)

  (Holger Rothbauer)—A minor role. They now have the right to receive an annual report from the Government and the right to ask questions.

4.(c)   How much information does your Government publish on arms export policy and licensing decisions, and how much information does it make available in confidence to the bodies that scrutinise this policy and these decisions?

  (Italian Government)—The above mentioned Annual Report contains:

(a)  an overview of the Italian conventional arms trade of the relevant year, with analysis of the type and main destination of arms exports, imports and transits;

(b)  statistical data on:

(i)   Global amount of export, import and transit licences broken down by destination country;

(ii)   Global amount of export, import and transit licences broken down by exporting company;

(iii)   List of licences issued, with value, quantity and specification of the material licensed for export, import or transit;

(iv)   Global amount of actual exports, imports and transits broken down by destination country;

(v)   Global amount of exports, imports and transit broken down by exporting company;

(vi)   List of actual exports, imports and transit, with value, quantity and specification of the material;

(vii)  All data regarding the financial transactions linked to the above listed exports, imports and transits.

  (Swedish Foreign Affairs Committee)—(See answer to 4(a) above.)

  (BICC)—The annual arms export report reports data in slightly more detail than is currently the case in the reports for the EU Code (goods are broken down into 19 categories, and for the 2-3 most important both some more detail on the goods and their percentage share in total licences is given). No actual exports of weapons are reported, as these are not available (incompatibility between licensing and foreign trade statistics). Exports of weapons of war are reported, but breakdown for licences is less detailed than for all arms. More detail is given on the exports of small arms, in a narrow definition. Confidential data is never provided to anybody. The government is restricted in giving information through a number of laws protecting data contained in applications handed in to government authorities. The government argues that providing more information than is currently the case would require a change in the law, which it is not seeking.

  (BITS)—The annual report lists:

—  the number of applications for an arms export licence as well as the approved licences for the previous year by country and by category of military item in economic value;

—  the number of denied applications per year, by country and by category and, if relevant, the number of denials of which other EU states were notified, including the criteria of the Code of Conduct applied (not all national denial criteria are covered by the EU Code);

—  the economic value of exported weapons of war, the top receiving nations and divided into broad political-geographic categories (EU, NATO, Third States); and

—  since 2002, the number of small arms exported, value and destination.

  Generally, all other information shared by the government is treated as confidential. Therefore, it is difficult to judge what information is given confidentially and to whom. While information exchange within the executive seems to be relatively intensive, the exchange between the executive and the legislature is much more limited.

  Therefore, the amount of confidential information given depends on the quality of parliamentary inquiries, on whether their questions are posed privately or publicly and also on their willingness to share information. Only in few cases were the reports to the Committees made available to the public by parliamentarians.

  Since various parliamentary committees are involved in arms exports on a variety of levels and in a variety of fields there is no unified understanding of the direction of arms exports policies. The scrutiny is restricted to an ad hoc process without any coherent information gathering body.

  (PRIF)—(See answer to 4(a) above.)

  (Holger Rothbauer)—Only an annual report and numbers given to the UN Arms Register. No information about individual deals/licences. A certain council of the Parliament can confide/ask for information on certain deals. The Federal Security Council takes decisions on major licences.

5.  DENIALS AND UNDERCUTS

  A "denial notice" is issued to other EU member states when a country refuses to allow the export of particular military equipment. The aim is to avoid an "undercut", the granting of an essentially identical export by another member state. If a member state decides to allow an essentially identical export, it must issue an "undercut" notice to the EU member state that originally issued the denial notice.

5.(a)   How effective are the provisions in the EU Code on denials and undercuts?

  (Italian Government)—Italy fully complies with the Code of Conduct provisions, and they enjoy a high level of compliance by Member States.

  (Swedish Foreign Affairs Committee)—The system of denials and consultations has significantly improved the sharing of information between the Member States regarding national licensing decisions.

  (BICC)—They have had some effect, but would have more effect if there were rules on "no undercutting".

  (BITS)—It is impossible to judge the effectiveness from the outside. From a public point of view: as long as the denials and the resulting consultations are not made public, the provisions cannot be judged to be effective because of a lack of information.

  Nevertheless, among European governments denials seem to be regarded increasingly as a confidence-building measure. Not surprisingly, only a few cases reach the public. One was the German denial for small arms exports to Nepal and Belgium's subsequent granting of an export licence for a similar transaction.

  Again practitioners claim that the provisions are becoming increasingly effective. The number of attempted undercuts is decreasing. One reason for this is the improved information-sharing system among the EU states which has reduced the circulation time of denials from up to one year to a period measurable in weeks.

  (PRIF)—(No response.)

  (Holger Rothbauer)—Non-binding. No information whether this is executed at all in Germany.

5.(b)   To what extent does your Government share information on undercut decisions not only with the member state responsible for the relevant denial, but also with all Member States?

  (Italian Government)—We have no record of undercut decisions in the last three years.

  (Swedish Foreign Affairs Committee)—In accordance with the recently adopted Users' Guide to the EU Code of Conduct, decisions following a consultation procedure are to be notified to all Member States.

  (BICC)—Don't know.

  (BITS)—No information is publicly available.

  However, according to practitioners, Germany and German companies comply fully with the provisions of the EU Code and therefore this question doesn't apply to Germany since there are no undercuts.

  (PRIF)—(No response.)

  (Holger Rothbauer)—No information available.

6.  RE -EXPORT/END-USE

6.(a)   How does your Government implement criterion 7 of the EU Code on undesirable re-export?

  (Italian Government)—Criterion 7 is fully implemented by Italy, and is among the most frequently referred reason for denials. According to Law 185/90 an end-user certificate is requested for each standard export licence with destination outside the EU or NATO.

  (Swedish Foreign Affairs Committee)—The Inspectorate carries out a case-by-case assessment with regard to every application for an export licence. End-user certificates verified by our embassies are required in all cases.

  With regard to weapons and ammunition for hunting and competition, the Inspectorate carries out a bona-fide assessment of the proposed recipient. This is done using reports from our embassies abroad. This is only applicable for certain countries where there is an increased risk for diversion.

  (BICC)—Generally, re-export clauses need to be agreed upon by buyer. Refusal generally is a reason for denial of licences.

  (BITS)—The Federal Government included the criterion of the Code in the "Political Guidelines" in 2000 and added a national provision allowing the exclusion of a recipient who violates the agreed end use from receiving any future licences. Previously, provisions on end use were already contained in the Foreign Trade and Payments Act and Weapons Control Act.

  In general, the Federal Government assumes that it will be contacted before any re-export of German weapons and components occurs. The government demands a end-use guarantee and certificate from the government of the recipient country in every case. This also means that any re-export in general requires a formal written approval by German authorities on an export to the new destination.

  A second criteria for the application of the obligation to give an end use guarantee is, if the exported components can still be regarded as "German components". Although the German government claims that is has retained its right to determine the export destination of any German component incorporated into a foreign weapon systems, historically major arms co-operation agreements applied a percentage value to determine the minimum share: below a 20% share of value of German components in a foreign weapon system it can be re-exported without German consent to EU and NATO states; below 10% to other countries. Some claim this historical rule to be increasingly no longer applied.

  (PRIF)—In my experience as an external observer, Criterion 7 seems to be the most difficult one to scrutinise and to evaluate. It may be possible to identify the end users of big arms such as tanks, ships and planes, but nearly impossible for small arms, even if the first receiver is a state agency. Anyway there is no effective control of transfers of technology, components or dual use goods, which are of great importance within German arms exports.

  (Holger Rothbauer)—Not at all.

6.(b)   What action can your Government take, and what action has it taken, where end-use provisions are breached?

  (Italian Government)—The behaviour of end users is monitored and is taken into consideration in the decision process which leads to the issuing of new export licences.

  (Swedish Foreign Affairs Committee)—If an end-user certificate is breached, the recipient will be cut off from further deliveries until proper actions have been put in place to ensure future compliance.

  (BICC)—In a few publicly known cases the government has stopped further deliveries. One such example concerned Turkey in the early 1990s. In other cases, where NGOs have claimed that end-use provisions had been breached, it is not the clear whether this was the case as the government did not provide relevant information.

  (BITS)—

—  It can immediately halt any further delivery.

—  It can withdraw the given export credit support for the transaction.

—  The customer in violation is "blacklisted" and normally should not receive any further export licence for military items.

  This applies until the recipient country can demonstrate that it has taken appropriate measures to prohibit future illegal re-exports.

  There is no statistical information available on past handling of breaches; however it is known that a number of licences have not been issued because of re-exports occurring from the recipient state.

  (PRIF)—(See answer to 6(a) above.)

  (Holger Rothbauer)—To our knowledge never used/applied even in clear case of breach.

6.(c)   In what circumstances does your Government conduct post-export checks on the goods that it has licensed for export?

  (Italian Government)—The arrival at destination is checked on each export. Further checks may be conducted, but are not in the competence of the licensing unit (UAMA).

  (Swedish Foreign Affairs Committee)—If allegations were made regarding illegal export, diversion of goods or any other action in the recipient state claimed to contravene the intentions behind an export proper, a full investigation would be launched.

  (BICC)—As far as I know, no such checks occur.

  (BITS)—No case is known. In general it is assumed that all involved parties act according to their obligations until proven otherwise.

  Nevertheless there are rumours that a few post-export checks have been conducted—despite the fact that the legal basis for such a check could have been doubtful.

  (PRIF)—(See answer to 6(a) above.)

  (Holger Rothbauer)—Only if the goods declared are the ones that left the country. No further checks known.

6.(d)   What, if any, are the licensing procedures for considering another country's request to re-export goods originally exported from your country? Is information on such licences included in your country's annual report?

  (Italian Government)—The consent to re-export is given after evaluation of all the relevant information, including information from sensitive sources. Requests to re-export are not frequent.

  (Swedish Foreign Affairs Committee)—The same assessment applies as for the original case. At the moment no statistics are available. The inclusion of such information in future annual reports is currently under consideration, however.

  (BICC)—Recipients have to make regular applications to the German authorities. No information on such licences is included in the Government's Arms Export Report.

  (BITS)—Normal procedures according to German law are required if a weapon system of German origin is designated for export. The same holds true for components. Any re-export of military items should be treated formally like a new export. The same rules and criteria apply. Re-exports are not listed separately. They are not listed in the annual report on armament exports.

  A second category of re-exports, those military items delivered for either further processing or repair to a country and then re-imported or vice-versa, are included in the annual report.

  (PRIF)—(See answer to 6(a) above.)

  (Holger Rothbauer)—No. Such requests are unknown and if they are dealt with, occur at a confidential administrative level.

6.(e)   How successful is the sharing of information about end users between member states? Does your Government hold information on end users which it does not share with other member states?

  (Italian Government)—Information about end users is exchanged in the framework of the COARM working group, where Italy provides all relevant information where requested.

  (Swedish Foreign Affairs Committee)—In notifications of denials under the EU Code of Conduct, information is supplied regarding end users.

  (BICC)—Don't know.

  (BITS)—This question cannot be answered using publicly available information. According to practitioners, since 2003 the information sharing system has been increasingly successful.

  (PRIF)—(See answer to 6(a) above.)

  (Holger Rothbauer)—Don't know.

7.  COMPONENTS AND PRODUCTION EQUIPMENT

7.(a)   How does your Government treat the export of components, both within and outside of the EU, differently from finished armaments?

  (Italian Government)—Components fall into the same licensing procedure as finished armaments.

  (Swedish Foreign Affairs Committee)—In co-operation projects where a Swedish manufacturer produces equipment together with a foreign partner, products considered to be of Swedish identity are exported according to Swedish guidelines, whereas products considered being mainly of foreign identity are exported according to the guidelines of the co-operating country.

  Components deemed lacking in identity or visibility are exported with a simplified end-user certificate, merely stating that the components imported will be used as parts of a product and not exported separately.

  (BICC)—Few components are on the list of weapons of war, most fall under the Foreign Trades Act (AWG) only. Licensing policies under the latter law are generally less restrictive than under the Weapons of War Act. One important legal difference was mentioned above (Licence decisions under the AWG can be challenged in court, though this does not happen very often).

  (BITS)—German law differentiates between finished armaments (weapons of war and major components listed in the KWKG) and other components. The standard for the export of components is often somewhat lower in practice.

  The political guidelines differentiate recipient countries in EU, NATO (plus NATO-like countries) and the rest. No limits exist anymore for intra-EU trade with the exception of End Use and potential re-export.

  NATO and NATO-like countries don't fall under all Criteria of the Code, Turkey being the only exception. They are supposed to enjoy the same treatment as EU states. With most NATO states the Federal Government has negotiated special armament co-operation agreements. This group of states and their companies respectively can receive special group licences like the above-mentioned "Sammelausfuhrgenehmigungen".

  So most restrictions apply to so-called "Third States". Here the Federal Government differentiates more between the potential (mis-)use of the components and armaments, such as their potential use in internal conflicts, than between components and armaments itself. Although as a general trend components transfers receive a licence more easily than armaments. Naval weapons systems are licensed with fewer restrictions compared to other weapon systems. However, it needs to be mentioned that, with the exception of some naval platforms, armoured vehicles and small arms, German companies don't produce entire weapon systems anymore. This happens mostly through multinational co-operation.

  Trade in components is becoming increasingly important for Germany's arms manufacturers and here one can differentiate between the different component categories. Components for "Armoured Vehicles", "Ships", "Electronics" and "Training and Simulation Equipment" are easier to export than NBC-gear, explosives and missiles.

  (PRIF)—The German government firmly supports all efforts to strengthen the co-operation of arms industries within Europe, although the "Political Guidelines" contain some restrictions on co-operation in the arms industry sector, demanding that the restrictions which determine German arms export policy be observed. They shall be included in a consultative procedure. But there aren't any prescriptions about how to handle cases, when these restrictions have not been reconsidered by the co-operating partners.

  The Annual Report on Arms Exports by the German government contains information on all licences for the export of arms parts and components. These licences are mostly granted in a comprehensive form, which may be used over a period of several years. There isn't any information on whether they are fully exhausted.

  (Holger Rothbauer)—Yes, different. Most decisive factor for licensing.

7.(b)   What is your Government's policy on the export of spare parts?

  (Italian Government)—Spare parts related to armaments already licensed for export are subject to the same licensing rules and issued following a simplified procedure.

  (Swedish Foreign Affairs Committee)—As regards follow-on deliveries, the guidelines state that "licences should be granted for exports of spare parts for equipment exported previously under a licence, unless a mandatory provision against an export applies". The same applies to other deliveries, eg ammunition, linked to previous exports of equipment, or otherwise in cases where it would be unreasonable to deny a licence.

  (BICC)—Depends very much on the type of spare part, but generally see above.

  (BITS)—Only because of the gravest violations of the agreed conditions or because of German industrial interests will the Government refuse the delivery of spare parts. The security of supply for other states, usually also written into contracts, is almost sacrosanct for the government even though it could perpetuate the escalation of a conflict.

  (PRIF)—(See answer to 7(a) above.)

  (Holger Rothbauer)—Spare parts are not arms!

7.(c)   What restrictions does your Government impose on the re-export of components that have been integrated into a finished product?

  (Italian Government)—In case of components integrated into a finished product the standard procedure applies.

  (Swedish Foreign Affairs Committee)—Once identified as components without identity (qualifying for the simplified end-user certificate as described above), such components may be re-exported without further restrictions.

  (BICC)—The legal fiction is that the origin of goods ceases once they are firmly attached to another good. For goods that are minor parts of weapons, or firmly attached to weapons produced in other countries, German export restrictions no longer apply. There are some exceptions for some parts considered weapons of war, in cases where it is known that first destination is not the final destination.

  (BITS)—According to the Federal Government, even those components are still subject to their veto. But other treaties and agreements negotiated with, for instance, France and Great Britain, allow for a different conclusion. Even if in legal theory Germany still has the right to impose restrictions, it has forfeited this right in practice. And there is no guarantee that the French government will issue licences along the same lines as Germany would do.

  (PRIF)—(See answer to 7(a) above.)

  (Holger Rothbauer)—No restrictions.

7.(d)   Is information published on the export of components in the same way as on the export of finished armaments?

  (Italian Government)—Yes.

  (Swedish Foreign Affairs Committee)—Yes, components form part of the overall annual statistics and reporting.

  (BICC)—Yes, as long as they are on the Military List under the AWG.

  (BITS)—No, since the information published lists all military items and does not allow for a clear distinction between components and finished armaments or the identification of all of the individual transactions.

  Information is published only on the total of export licences for components and finished armaments. Since the former can be part of the latter, it is impossible to determine the licences and value for each of these categories.

  Information is published on the value of actually exported finished armaments according to the Weapons Control Act but not on the whole group of military items and components according to the Foreign Trade and Payments Act.

  (PRIF)—(See answer to 7(a) above.)

  (Holger Rothbauer)—No. No publications on components except in huge statistical listings.

7.(e)   How does your Government intend to publish information on Global Project Licences?

  (Italian Government)—GPLs will be included in the Annual Report, and additional information on the exports in the framework of each GPL will be provided.

  (Swedish Foreign Affairs Committee)—This is currently under discussion between the six LoI-states.

  (BICC)—Details for Global Project Licences are not published, only their total value by year (in many years higher than the value of all single licences).

  (BITS)—Assuming the GPLs will replace or be part of the current German Sammelaus-fuhrgenehmigungen, we would expect that limited summary information would be published in the annual report on the arms trade. Here the government already voluntarily publishes the figure for the total value of the SAGs. However, it does not identify the number of licences or the destinations. In addition, lists of projects for which GPLs will be issued might be given to one or several Bundestag committees. However, it remains an open question whether even the current low standard for providing information will continue to be applied to all projects resulting from the LOI process.

  (PRIF)—(See answer to 7(a) above.)

  (Holger Rothbauer)—No information yet.

7.(f)   What is your Government's policy on the export of production equipment for armaments?

  (Italian Government)—Equipment designed for manufacturing, testing and checking of armaments is subject to the same procedure as armaments material.

  (Swedish Foreign Affairs Committee)—Same as regarding exports of equipment.

  (BICC)—Production equipment for arms is generally restricted under the AWG and not the KWKG, but treated similar to KWKG goods when it comes to licences. The Political Guidelines put this into a special category (goods similar to weapons of war) not found in the respective laws.

  (BITS)—The Federal Government is forced by regulation to treat the export of production equipment for conventional armaments the same way as component exports and transfer of know how of arms technology. But the Federal Government tries to interpret this category as narrowly as possible, shifting a lot of production equipment into the EC regulation on dual use which provides a different (and more permissive) legal basis.

  (PRIF)—(See answer to 7 (a) above.)

  (Holger Rothbauer)—Different than for finished arms itself. So called "dual use" because mostly it is declared for civil purposes. Only if it is 100% sure that laws are applicable as for finished arms exports.

8.  BROKERING

8.(a)   How does your Government intend to implement the EU Common Position on brokering of June 2003, and how does your Government currently control brokering activities?

  (Italian Government)—A working group is currently drafting a bill of law that will incorporate the principles of the Common Position. At present Italy has no legislation that is aimed directly at brokering.

  (Swedish Foreign Affairs Committee)—Sweden has already implemented the above provisions.

  (BICC)—Germany has had a licensing system for some types of brokering activities of weapons of war since the late 1970s, as well as with respect to countries under international arms embargoes. The EU Common Position will require expanding the scope of the licensing requirement to the Military List under the AWG, for which there already is a provision in the law (§40 AWG). Some NGOs have claimed that in addition the German government should adopt a broader definition of brokering than currently used, which is focused on facilitating the signing of contracts between buyers and sellers, but excludes activities such as logistics or financing. It does not seem likely at the moment that the Government will do this.

  (BITS)—The Federal Government is forced by German law to treat any arms broker in Germany or any broker dealing with arms of German origin as subject to German law. Any broker dealing with German weapons or being a German national has to apply for a broker licence. However, this only applies to weapons of war and not to military items in general.

  For military items in general, the Foreign Trade regulation only covers some aspects of issues of transit trade. Presently the Federal Government is preparing a regulation which will cover all aspects of the CFSP- a decision from June 2003.

  (PRIF)—As the German government recently announced, the agencies are preparing to incorporate the propositions of the EU Common Position on brokering into national law. They do not see any difficulty in fulfilling this task.

  (Holger Rothbauer)—No knowledge.

8.(b)   Does your Government currently control any brokering activities which take place abroad?

  (Italian Government)—No.

  (Swedish Foreign Affairs Committee)—In principle, Swedish legislation has an extra-territorial application.

  (BICC)—Largely no. However, as soon as part of the brokering activity begins, for example the German telephone system is used, a licence is needed, and sanctions can be applied if no licence has been granted. Germans brokering abroad generally do not fall under the law, except if they provide their services to contravene an international arms embargo, in which case they can be sanctioned in Germany. Special provision pertains to weapons of mass destruction and anti-personnel mines: all activities of Germans, wherever they live, which further the production and transfer of these weapons are forbidden by the KWKG.

  (BITS)—See above.

  (PRIF)—(See answer to 8(a) above.)

  (Holger Rothbauer)—I don't believe so. Maybe the Foreign Secret Service.

9.  ACTUAL EXPORTS

9.(a)   What national statistics does your Government produce or publish on actual exports of armaments?

  (Italian Government)—(See answer to 4(c)).

  (Swedish Foreign Affairs Committee)—In the annual report (Communication) to the Parliament on Swedish exports of military equipment an annex covering Swedish exports of military equipment is attached

  The Inspectorate continuously monitors Swedish companies' marketing and exports of military equipment, and it supplies the Government with the statistical data for this report on exports of Swedish military equipment. The 120 or so enterprises that are authorised to manufacture military equipment are required by law to submit various kinds of information about their operations to the Inspectorate.

  (BICC)—Only for weapons of war.

  (BITS)—The annual report according to Provision 8 of the EU Code and the UN Register are the only statistical sources. These statistics are limited to weapons of war according to the Weapons Control Act with an aggregated financial value. Destinations for some materiel is listed. It also includes government-to-government transfer. Since the UN Register is limited to some categories of major weapons systems, details for only some government-to-government transfers are available. It is not clear whether the total value of government-to-government transfers of surplus weapons given in the annual report on the arms trade also covers weapons and/or military items not subject to the UN Register.

  Additionally, it is possible to buy information on specific groups of exported goods from the Federal Bureau of Statistics. Here some information is withheld by the Federal Bureau in accordance with the limits imposed by German law. In addition the categories of goods in these statistics is not identical to the categories used in the Export List.

  (PRIF)—(See also answers to Question 4).

  The German statistical office (Statistisches Bundesamt) only covers the exports of arms based on the prices for a new product. The exports of other military goods are not reported as such. In these cases the observer has to refer to the volume of the granted licences.

  The official annual reports informs about the recipient states, but does not give details about the special addressee.

  There are no information on the financial conditions of the arms exports. In several cases German exports were facilitated by granting an official credit protection ("Hermes-Bürgschaft"). This fact is in contradiction of the guidelines for the use of this instrument to promote the external trade and development policy.

  (Holger Rothbauer)—None for actual exports, only for passed exports a year ago in the annual report.

9.(b)   Are these statistics in a form which can be directly compared to export licences issued?

  (Italian Government)—(See answer to 4(c)).

  (Swedish Foreign Affairs Committee)—Granted export licences are reported annually, as are actual exports. There is no link between the individual licence and the resulting future export in the annual report, as these normally do not take place during one and the same year.

  (BICC)—Only limited information is given on licences provided for the category of weapons of war, a few comparisons are made by the government itself.

  (BITS)—No, the statistics can't be compared with each other.

  (PRIF)—(See answer to 9(a) above).

  (Holger Rothbauer)—No.

10.  EU EMBARGOES

10.(a)   How does your Government interpret and implement EU embargoes which are currently in force?

  (Italian Government)—(No response).

  (Swedish Foreign Affairs Committee)—All embargoes, whether national or international, constitute unconditional obstacles for exports.

  (BICC)—In line with the relevant COARM guidelines and German legal provisions (AWG).

  (BITS)—Embargoes usually seem to be followed to the letter by the Federal Government. In some cases the Government even chose wider applications. In general an EU embargo on weapons of war is interpreted to also include the military components of the Export List.

  (PRIF)—In my understanding the German arms export policy respects the embargoes by the United Nations and the EU.

  There is currently a debate within the governing coalition and the German public on the export of arms and dual use goods to China, mainly on the proposal to export a defunct MOX fabrication facility to this country.

  (Holger Rothbauer)—Into the AWG (Foreign Economy/Trade Law).

10.(b)   What is your Government's interpretation of the EU embargo on China?

  (Italian Government)—(No response.)

  (Swedish Foreign Affairs Committee)—Sweden applies a strict interpretation of the embargo on China and does not deliver military equipment of any kind during the validity of the embargo.

  (BICC)—Applies to all goods on the EU Military List.

  (BITS)—See above. However, Chancellor Gerhard Schröder used a recent visit in China to express sympathy for ending the embargo. He caused a major dispute by doing so.

  (PRIF)—(See answer to 10(a) above.)

  (Holger Rothbauer)—Germany wants to open the embargo (Schröder's visit to China, December 2003).

10.(c)   Are there to your knowledge any differences between your Government's interpretation of EU arms embargoes and the interpretation of those embargoes by any other EU member state?

  (Italian Government)—(No response.)

  (Swedish Foreign Affairs Committee)—With regard to China, national differences might well apply, since the present embargo is less than full scope.

  (BICC)—Don't know.

  (BITS)—See answer to (a). Some EU states interpret an arms embargo very narrowly as only applicable to weapons of war while Germany also extends it to cover military items. Here Germany seems to be at the more restrictive end along with Austria, the Netherlands and Sweden.

  (PRIF)—(See answer to 10(a) above).

  (Holger Rothbauer)—No knowledge. Obviously in the China case, where smaller EU Member States have a stricter interpretation than Great Britain, France and Germany.

---

1   Not printed. Back

2   Not printed. Back

3   Not printed. Back

---

Prepared 17 November 2004