Select Committee on Defence Fourth Report


103. There have been three main developments in the course of the last year in the European area as far as strategic exports are concerned. First, a fundamental review of the EU Code of Conduct on Arms Exports is currently taking place. As well as considering the Government's priorities for this review, we also examine the Code of Conduct as it stands, and how effectively its provisions are implemented. Second, there have been calls to weaken or remove the EU's arms embargo on China: this too is currently under review. Third, ten new member states have acceded to the Union, with possible consequences for the application of the Code of Conduct and the effectiveness of EU border controls. In addition we consider the role of the European Commission in the Union's export control mechanisms.

Code of Conduct

104. The European Code of Conduct on Arms Exports was adopted on 8 June 1998. It contains political commitments, but is not legally binding. It represents minimum standards which all member states have agreed to apply to exports of controlled goods. These standards are defined through a common set of criteria to be used in deciding whether proposed exports should be allowed.

105. The main mechanism for achieving consistency in the application of these criteria is a system of 'denial notifications'. EU member states circulate through diplomatic channels details of licences refused in accordance with the Code of Conduct together with an explanation of why a licence has been refused. Before any member state grants a licence which has been denied by another member state or states for an essentially identical transaction within the last three years, it must first consult the member state which issued the denial. If following consultations, and if the transactions are indeed 'essentially identical', the member state nevertheless decides to grant a licence, it must notify the member state or states issuing the denial, giving a detailed explanation of its reasoning (an 'undercut notice'). The decision to transfer or deny the transfer of any item of military equipment remains at the national discretion of each member state.

106. The Code is essentially a means for setting parameters. It is open to some interpretation: the British Government has published consolidated EU and national criteria which explain how it interprets the terms of the Code. The aim is not that all applications to export military equipment should be treated identically across the EU, but that where differences in policy and practice do occur, member states should be in a position to judge whether they need to be addressed, and to take action accordingly if they do.

107. In the course of this inquiry, we have also sought views on the effectiveness of EU mechanisms from Governments, Parliaments and NGOs in those EU countries responsible for the greatest share of defence exports.[120] The response rate to our questionnaire has not been high, but we would like to thank all those who did take the trouble to share their views with us. We will be publishing a consolidated set of answers from those who are willing to allow their views to be made public. We have also taken evidence from British industry on how they are affected by differing approaches to the EU Code, and from British NGOs on how in their view the British Government interprets the EU Code.[121] In addition we sought views on these subjects during our visit to Brussels and Paris, and from the Swedish Export Control Council during their recent visit to London.


108. The Code of Conduct is reviewed annually. This year, however, a more in-depth review is also being conducted, with a final decision on revision of the Code due in the autumn.[122] The UK Working Group on Arms is concerned that this review is being conducted with insufficient consultation with those outside Government; they believe that "the ability of Parliament or other external observers to influence this process will be strictly limited".[123] The Irish Presidency apparently set a deadline of 25 March for proposals for change. This has left those outside Government little or no opportunity to comment. Our Chairman wrote to the Foreign Secretary on 23 March, setting out proposals based mainly on our deliberations and Reports. His letter is published as an Annex to this Report.

109. Given that the Foreign Secretary has told us that he is "in the market for proposals",[124] we are disappointed that more effort has not been made to invite a wider sharing of views on the future of the Code. We recommend that the Government should urge the presidency of the EU to consult as widely as possible on the future of the Code of Conduct on Arms Exports before decisions are taken in the context of the current review.

110. Most of the Government's stated priorities for the review involve incorporating into the Code practices which have evolved since its agreement in 1998:

  • licensed production overseas: "the inclusion of text on licensed production to the effect that member states should carefully consider what might happen to the finished products in licensed production agreements in which their exports or technology or components are the raw materials";[125]
  • arms brokering licence denial notifications: "where a licence to broker strategically controlled goods is denied, … we want those to be subject to the same process as the export of export equipment currently is, so for example if someone is refused a licence to broker in the United Kingdom and then applies for a similar licence elsewhere, the other country would need to consult us before issuing it";[126]
  • intangible technology transfers: "the export of military information and designs … should also be reflected in the common criteria";[127] and
  • transparency standards: "We want to raise transparency standards by including in the Code a provision which obliges member states to publish a publicly available report containing information about equipment exported and not just a breakdown of how many licences they issued for each destination".[128]

111. Only the last of these is likely to be in any way controversial, as it represents the practice of the British Government, but not of all EU member states. We conclude that the Government's priorities for a review of the EU Code of Conduct are sound, if cautious. We recommend that the Government should seek to ensure that a new commitment is included in the Code of Conduct to publish information on arms exports. This should include information by category of equipment matched to country of destination, as in the British Government's Annual Reports. Convergence should also be sought in terms of how this information is gathered, analysed and presented, so that meaningful comparisons can be made between different countries.

112. One of the issues for decision will be the status of the Code. The Foreign Secretary has told us that he is "not in favour of turning [the Code] into part of the acquis of the EU, part of EU law, where that could all end up being subject to QMV and adjudicated before the European Court of Justice".[129] Others, including some member state governments, believe that the Code should be a legal instrument, rather than a non-binding political statement. A compromise would be to give the Code the status of a Common Position. Indeed the Foreign Secretary erroneously referred to it as a Common Position in evidence to us.[130] If it were a Common Position, the Code would technically become a legal instrument, but it would be subject to unanimity and would not be justiciable—like other instruments under the Common Foreign and Security Policy. This would only change if all member state governments agreed to alter the Treaties accordingly—an unlikely event. Defining the Code as a Common Position would raise its profile, but would not have any procedural impact on its status. We recommend that the Government should consider whether raising the status of the Code to that of a Common Position under the Common Foreign and Security Policy would have benefits, in terms of the Code's profile within the EU and the importance that member states would be seen to attach to it.

113. The impetus behind reviewing the Code should be to ensure that it continues to operate as effectively as possible. One of the key aims of the review should be to enhance existing mechanisms, particularly in information exchange. This is not an area mentioned as a priority by the Foreign Secretary, but we believe that it should be. There are two aspects to this in particular. The first concerns the sharing of intelligence and diplomatic resources. As one of our NGO witnesses has pointed out, some of the newer and smaller EU member states have a potential capacity problem: "They do not have a diplomatic presence on the ground so they often find making decisions about certain countries very difficult".[131] The second aspect is to ensure that the sharing of information on licensing policy goes wider than the denial notification system. It might, for example, be appropriate for member states to exchange information relating to early advice on licence applications, such as through the 680 process. We recommend that a priority of the review of the Code of Conduct should be to seek to enhance existing systems of information exchange.

114. We noted last year that we had not been able to gain access to any information on licences refused across the EU under the Sustainable Development Criterion.[132] This year, we have heard informally and in confidence of some such cases in other EU countries. What is clear is that the Criterion is interpreted differently by different member states. The British Government seems to interpret the Criterion to include mainly, if not only, exports of very high value to very poor countries. Other countries have refused licence applications under Criterion Eight for goods of lesser value to relatively wealthy countries and to private end users, apparently interpreting "sustainable development" to include issues such as human security and the proliferation of small arms. Consultations on this criterion have been taking place between member states at EU level, in which the Department for International Development has apparently been taking a leading role.[133] We conclude that the Sustainable Development Criterion remains the least adequately defined of the EU Code Criteria. We recommend that the Government should seek to reach a mutual understanding with other member states of what the Criterion means in practice, and to refine its definition accordingly in the context of the ongoing review of the EU Code.


115. Anecdotal evidence and comment suggest that different EU member states treat certain types of licence application differently.[134] Hard evidence, however, is not easy to come by, because of the degree to which most countries protect information about their arms exports.[135]

116. Perhaps unexpectedly, views differ on whether the United Kingdom has too restrictive or too relaxed an approach to strategic export controls. According to the Defence Manufacturers' Association, "there is a general perception within UK Industry that the British Government's interpretation of the EU Code of Conduct (and EU Embargoes) is amongst the strictest of EU Member states". [136] One of our witnesses from industry told us along similar lines that "virtually the whole of the EU is more liberal in its interpretation than the UK is".[137] Saferworld, on the other hand, has warned of "a weakening of export control policy, and an increase in support to countries that are seen as on-side on the war on terrorism".[138] Our impression is that the position of the United Kingdom is mixed: it is relatively restrictive in a number of areas, sometimes to the dismay of British industry, but there are also circumstances in which it is willing to allow exports where some other European countries would be likely to refuse a licence. In particular, Germany, Sweden and a number of the smaller EU member states seem to refuse licence applications because of general concerns over the human rights in the country of destination more readily than the British Government, which tends to give greater weight to a country's military needs balanced against the possibility that particular equipment might be used to commit human rights abuses.

117. In evidence to us, the Foreign Secretary was sanguine about the Code's effectiveness:

    I came to this system pretty fresh when I became Foreign Secretary two and a half years ago and I think I had a healthy scepticism about whether or not this system, which is based on a political agreement (and it is not legally binding across the European Union but it is in many countries' domestic law) was going to be effective, but I have been pleasantly surprised by the extent of co­operation between European countries. I know there are stories about country X or country Y trying to pull the wool or go behind the rules, but I have yet to see evidence of that. Sometimes different judgments are made on similar applications. We may have decided to agree a licence whilst other countries have said they are not going to and they have sent a denial notification. Sometimes the reverse is the case and we have denied a licence and other EU countries have and a third EU country decides to issue a licence. On the whole, however, I think it works pretty well.[139]

118. While there are continued exchanges of view between member states on "aspects of national export policies including policies on exports to specific countries or regions", it is hard for those not participating in those discussions to know to what extent they "contribute decisively to transparency, dialogue and convergence between member states in the field of conventional arms exports", as the Council has claimed.[140]


119. In some circumstances, differences between member states will become apparent when denial notifications are issued and undercuts contemplated. The risk in such a circumstance is that policy is broadened to meet the lowest common denominator. If country X is prepared to undercut country Y, country Y may decide to allow similar applications in the future so as not to lose the business.

120. But there may also be differences that will not become apparent. If the customer goes to a source in country X first, a licence may be issued which country Y would not have allowed—but country Y has not been approached. Even if country Y was approached, this might well be in such a way as not to trigger a formal licence denial. In general, we would expect business to sound out whether a licence is likely to be granted before seeking the licence itself. The DMA has told us that this is precisely the effect of the British Form 680 system, under which companies seek initial guidance on whether licence applications are likely to be approved so that they can avoid wasting time and money on prospective sales for which they will not be granted a licence:

Differences in policy between member states may often therefore not trigger the denial notification system.

121. Consultation procedures will also only be triggered where two or more member states are in a position to export similar equipment. Specialisation of production within the EU means that in many sectors essentially identical goods are produced by (and are therefore likely to be exported from) only one or a very small number of member states.

122. Published statistics on denials and undercuts are very limited indeed. Annual Reports under the EU Code of Conduct provide statistics for 'consultations initiated' and 'consultations received' by each member state, but these do not seem to be altogether reliable. For example, more consultations were apparently initiated than received in 2002: but logically any consultation initiated by one country must also be received by another.[142]

123. The Foreign Secretary, however, has given us a little more information on denials and undercuts during 2003. There are approximately 15 undercuts of denial notifications annually throughout the EU. According to the Government, this suggests "a pretty considerable convergence in the interpretation which each Member State will have to give to the Code of Conduct and applying the criteria".[143] It is impossible to know to what extent this is true given that this small number of undercuts may also result from the ability of exporters to exploit the differences between the licensing policies of different EU member states without triggering the denial and undercut system. The distribution of undercuts among the member states is roughly proportionate to the size of their defence industries, according to the Government.[144]

124. The United Kingdom consulted other member states 20 times in 2003, but it only actually undercut them five times.[145] This suggests that, in many cases, consultations do not in fact lead to undercuts, and that member states do not apply a 'lowest common denominator' approach to licensing outlined above;[146] although we do not know the extent to which exports might take place without being classified as undercuts where consultations have revealed that the transactions in question are not in fact essentially identical with the earlier denials.

125. The Government has provided us in confidence with information on the five occasions on which they undercut other EU member states. All are 'grey area' cases of the type about which we might expect member states to disagree. They relate to countries about which there is legitimate concern, but where it is not clear that the equipment in question would itself contribute to this concern.

126. One of the main advantages of the denial notification system is that it allows countries to share intelligence on particular licence applications where it becomes relevant to do so. Where consultations on essentially identical transactions have not led to an undercut, this is likely to have been because of information shared in the course of the consultation.

127. One case of which we have learnt in confidence suggests that denial notifications can directly affect how future licence applications are treated by the Government. Two applications were made for the export of identical equipment to the same end user in two successive years. In the first year, the Government granted a licence; in the second year, it refused the application. In the interim, a denial notification had been issued by another EU member state. The Government's confidential evidence to us suggests that the denial itself played little or no part in its decision: rather, the Government's understanding of the situation in the country of destination had changed. We suspect, however, that in this particular case, the Government would have found it politically awkward to undercut a denial notification, and that, had a denial notification not existed, the licence application in question might have been granted.

128. We have heard of occasions on which certain member states have acted contrary to the spirit of the Code, by making only the most perfunctory attempts to consult, and even by undercutting their own denial notifications. The publication of a User's Guide to the Code of Conduct, intended mainly for officials involved in the licensing process, has helped to clarify procedures in areas which previously had not been well defined. We conclude that the publication of the User's Guide to the Code of Conduct is welcome as a guide to good practice for officials across the EU. It is likely to be of particular value to officials in new member states and to other officials who are new to this very specific and complex area.

Embargo on China

129. A Declaration by EC member states in June 1989 (shortly after the Tiananmen Square massacre) imposed an "embargo on trade in arms with China", but because at the time the EC had not agreed on what items were covered under the expression "arms embargo", it was left to individual member states to interpret the embargo themselves. The scope of other EU embargos (on, for example, Afghanistan, Burma, Congo, Libya, Sudan and Zimbabwe) has been much more closely interpreted. The Committee has previously recommended that "the Government should continue to encourage our EU partners to follow the UK's lead in publishing their national criteria for the application of the China embargo".[147] However, different EU countries continue to interpret the embargo in different ways, and only the UK has published its interpretation.

130. The UK interprets the embargo to cover "lethal weapons such as machine guns, large calibre weapons, bombs, torpedoes, rockets and missiles; specially designed components of the above, and ammunition; military aircraft and helicopters, vessels of war, armoured fighting vehicles and other such weapons platforms; and any equipment which is likely to be used for internal repression".[148] However, the UK does grant licences for the export to China of significant quantities of components for military aircraft and helicopters.


131. China is an enormous potential market for military equipment. During a visit to China in December 2003, Chancellor Schroeder reportedly said that Germany favoured ending the EU embargo on China.[149] On 18 December 2003 and again on 10 February 2004, the European Parliament passed resolutions urging the EU not to weaken the existing embargo. During a visit to France by the Chinese President in January 2004, President Chirac reportedly said that the embargo "no longer corresponds with the political reality of the contemporary world" and called for it to be scrapped.[150] The USA has apparently been putting pressure on the EU (as well as on Israel) not to increase sales of arms to China.[151]


132. The policy of the British Government "is to support a review of the embargo", but as of February 2004, the Foreign Secretary had "not come to any final view on the merits of lifting it", awaiting "a full consideration of its effects up to now".[152] No country has suggested strengthening the embargo. The result of the review would "either be a status quo or it would be some lightening of it or its lifting altogether".[153] It is an "open question" whether the review will be completed by the summer.[154]

133. According to the Foreign Secretary, the Council is examining two issues "with great care": first, whether the human rights situation has changed since the Tiananmen Square massacre; second, whether the embargo has been "overtaken" by the agreement of the EU Code of Conduct criteria.[155]


134. The reason for the embargo being imposed on China in the first place was principally one of human rights concern; the original EU Declaration referred to "brutal repression". The Foreign Secretary did, however, tell us when pressed that "arms control" and "wider strategic questions" were also now relevant issues.[156] US concern about lifting the embargo seems to have little to do with human rights, and much more to do with worries about China's developing military capabilities and the risk of armed conflict with Taiwan.[157] The Foreign Secretary also told us that "the purpose of the embargo" is "to prevent China acquiring new systems or equipment" as an explanation of why the British Government interprets the embargo to cover main equipment, but not components.

135. China's human rights record is not one to inspire confidence. According to the FCO's latest Annual Report on Human Rights, the Government continues to have

    concerns about a wide range of human rights issues in China including: freedom of religious belief; the extensive use of the death penalty; the use of torture; arbitrary detention, including the practice of re-education through labour; freedom of expression; freedom of association; the deprivation of religious and cultural rights in Tibet and Xinjiang; prison conditions and the treatment of prisoners; psychiatric abuse; treatment of Falun Gong supporters; and aspects of the implementation of the one child policy.[158]

We conclude that it would seem hard from this litany of continuing abuses to make a strong case for lifting an arms embargo on China which was imposed in the first place because of human rights concerns. We recommend that in current circumstances the Government should resist calls to lift the arms embargo on China.

136. The argument put to us by the Foreign Secretary that the embargo has been overtaken by the Code criteria was repeated in March, when another FCO Minister told the House that while the Government was still "considering [its] position", "lifting the embargo would not remove our ability to control arms sales to China" through the EU Code.[159] But taken to its logical extension, this argument implies that all EU embargoes are superfluous. Removing the embargo on Zimbabwe would not remove EU governments' ability to control arms sales to that country: but we doubt that the Government would put this forward as a reason for lifting that particular embargo. We conclude that if the EU Code of Conduct has superseded the arms embargo on China, then it has presumably also superseded other EU arms embargoes as well, given that sales to any embargoed country could equally well be controlled under the EU Code.

137. The imposition of the embargo on China was a political response to a horrific event: the Tiananmen Square massacre. If that event had not taken place, it is more than likely that no embargo would have been imposed, however tarnished China's human rights record had otherwise been. Many other countries with poor human rights records are not subject to arms embargoes: Saudi Arabia, Syria and Uzbekistan are cases in point. But once an embargo has been imposed, a strong case needs to be made for lifting it, because of the political message that it sends. The US media have claimed that if the embargo were lifted, "the norm against EU arms sales to China would be significantly diminished, sending a strong signal to defense enterprises throughout Europe".[160]


138. Given not only continued human rights concerns, but also concerns about regional stability and proliferation, we would be concerned if EU countries exported a wider range of military equipment to China than they do at the moment. The real problem with the embargo on China is its vagueness. It is more difficult to enforce legally than other EU arms embargoes because it is open to varied interpretation. As we discuss below, it creates uncertainty for business. And it makes the embargo difficult to justify: this is after all, an embargo imposed on human rights grounds which limits Chinese access to equipment and technology whether it is likely to be used for internal repression or not. We recommend that the Government should encourage its EU partners to seek a clearer joint understanding of the purpose and scope of the embargo on China: not in order to lift it, but in order to define it more rigorously and more effectively.


139. Current uncertainty about what the embargo means, and inconsistencies in its application across the EU appear to be having a negative effect on industry. The Defence Manufacturers' Organisation has stated that the British interpretation of the embargo is "amongst the strictest of EU Member states".[161] We have also heard that British companies, unlike companies from some other EU countries, are unlikely to seek to supply security equipment for the 2008 Olympic Games in Beijing, because of "uncertainty as to whether licences would be issued".[162]

140. We have been approached by a British company, Oxley Developments Company Ltd, who have been refused a licence application for the export of night vision equipment to the Chinese armed forces. They claim, however, to have discovered that French, German and Belgian companies have exported very similar equipment.[163] The Foreign Secretary has assured us that he is "assiduous in following up any suggestions that British manufacturers, whether in this field or the non­controlled goods field, are being worsted by other countries not playing by the rules".[164] In the case of this embargo, however, it may be that countries are playing by the rules as they see them. The problem is that the rules are not clear enough. We conclude that a clearer definition of the terms of the arms embargo on China would allow British industry to compete more fairly for contracts in China with other EU member states.

WMD Action Plan and involvement of Commission

141. Military goods, as defined by the European Union, fall under the Common Foreign and Security Policy pillar of the Treaties, and as such, are a competence primarily of member states. Proposals under this pillar must be agreed unanimously by the Council. While the European Commission attends many of the Council meetings relating to the EU Code of Conduct, it has no formal role or decision-making capacity in this area.

142. Dual-use goods and technology, on the other hand, which have both a civilian and a military use, are controlled by Council Regulation under an Article relating to Common Commercial Policy. Although technically decisions under this Article are decided by Qualified Majority Voting, in practice, because of the essential security issues involved for member states, the Council and Commission have committed themselves to a consensus approach. Amendments to the Regulation are proposed by the Commission, in particular to update the lists of items to be controlled at EU level. The Commission also has other functions, especially in information exchange activities.

143. Non-military security and police equipment are not currently regulated by the EU, but a European Commission proposal to regulate some of these goods was published in December 2002.[165]

144. In June 2003, the Council Secretariat and Commission published their WMD Action Plan.[166] This included a number of measures relating to export control. One measure for immediate action was "considering the involvement of the Commission" in the export control regimes. When the Government wrote to us about this proposal in November 2003 the Council was "still considering this issue in the light of Commission proposals".[167] The Government seems to favour a Commission role in a supporting capacity; for example, providing assistance to member states that take up the annual rotating chair in certain international export control regimes.[168] This is a relatively modest interpretation of the Action Plan measure.


145. The European Commission's proposal for a Council Regulation on trade in equipment related to torture and capital punishment would go much further. Article 14 (2) states that under certain circumstances, notably where any Member state objects twice to a licensing decision by another Member state, the final decision on whether to grant the licence in question will be taken by the Commission. The Government's view on this proposed extension of the Commission's competences, shared by at least one other Member State, is that it "does not believe it would be appropriate for the Commission to play such a role and will therefore be seeking changes to this part of the text".[169]

146. Regulation is overdue at the EU level on trade in equipment related to torture and capital punishment. As the UK Working Group on Arms points out, "this is a major issue that has yet to be addressed even after almost six years of the Code's operation".[170] We are surprised that such equipment has not previously been regulated by the European Union, given its involvement in exports of both military equipment and dual-use goods. We recommend that the Government should seek to encourage swift agreement to an acceptable Council Regulation on trade in equipment related to torture and capital punishment.

147. However, we have strong objections to Article 14 of the Commission's proposal. Whether to permit or prevent a strategic export is currently a matter for national decision, and should remain so in our view. This part of the Commission's proposal is misguided on two counts: first, the Commission should not take a deciding role in a dispute between member states; second, member states should not be able to prevent other member states from issuing licences by objecting to them. This part of the proposal also fails to match current arrangements for military and dual-use goods and technology.

148. Happily, the Government appears to be of the same view. A Minister in the DTI wrote to the European Scrutiny Committee in November 2003 to inform them that:

    whilst the UK accepts that the Community has competence to regulate which goods are subject to control, it should be for national licensing authorities to take decisions on individual applications on a case by case basis, and that the aspect of the proposal which would confer such an ability on the Commission is unacceptable.[171]

We recommend that the Government should continue to resist the proposal that the European Commission should have a decision-making role on certain export licence applications for equipment related to torture and capital punishment.

149. A more suitable approach to this area of control would be for the Commission to exercise functions similar to those it holds in the area of dual use, with an extension of the denial notification system and other information exchange mechanisms currently used for dual-use transfers, to encourage convergence between member states' licensing decisions without removing national control over decision-making in this area.


150. The Commission has (or is likely to have) a more important role formally speaking in the regulation of exports of dual-use goods and technology and (as proposed) of security and police equipment than it has in the regulation of exports of military equipment. But there is no clear dividing line between these areas, and the aims of regulating trade in these areas are broadly similar in many ways. The EU now has a Strategy against Proliferation of Weapons of Mass Destruction. But the mechanisms for controlling trade in missiles and their components (conventional arms) are different from those for controlling nuclear or chemical material with which these missiles might be armed. The proposed mechanisms for controlling trade in electric shock equipment would be different from the mechanisms for controlling trade in small arms, even though the risks connected to their end use might be broadly similar in human rights terms. The control of these different classes of equipment and technology raises similar issues and a joined-up approach is essential. We recommend that the Government should encourage broad co-ordination between member states, the European Commission and the Council Secretariat on all issues relating to strategic export controls to ensure a strategic approach to counter-proliferation as well as to the prevention of human rights abuse.


151. The EU's WMD Action Plan also proposed 'peer review' of member states' and acceding countries' export control systems, in teams of two to three countries, to be coordinated by the European Commission.[172] It has taken some time for this peer review to get off the ground. It was suggested that the work was not "attracting the political support [or] human resources that are necessary for the full and thorough implementation of this important exercise",[173] apparently because the Commission lacked the resources to steer the peer review process, and member states were slow to provide the staff and money to assist.

152. The peer review process is, however, now under way:

    Ten cluster groups of three countries per group have been set up. The UK is in two such groups; the first with Ireland and Malta, the second with Greece and Cyprus. Within each group a visit will be made to each country to discuss customs issues, transhipment, identification of goods in the regulation and technical control issues.[174]

The impression we gained from our evidence is that the United Kingdom regards this peer review as one-way traffic, with the more experienced countries imparting their experience to the new member states. We hope that this impression is misconceived. While enlargement was clearly a major impetus behind the peer review process, we recommend that the Government should approach the peer review process as an opportunity to share experiences with other countries, not just to give other countries the benefit of British experience.


153. On 1 May 2004, ten new countries became Members of the EU, some "from a very different tradition of export control".[175] Poland is the major arms producer among the accession countries. The Czech Republic produces mainly aviation technology and small arms, and has also been the subject of allegations that it has exported Soviet-era equipment to countries in conflict zones.[176] Slovakia has a research and development capability for the production and modernisation of major weapons. Cyprus has been cited in the past by British defence industry as a location from which arms brokers operate.[177]


154. The Government has written that it considers the "administrative procedures" of the ten associated countries to be "in line with EU standards".[178] It has not, however, commented on the standard of their implementation of the EU Code of Conduct. The European Commission's 2003 reports on progress towards membership noted that a number of accession countries still needed to alter their legislation to allow for the effective implementation of EU sanctions, and also made the following comments:

—  Czech Republic: "The implementation of the EU Code of Conduct for Arms Exports and the fight against unauthorised weapons transfers should be enhanced."

—  Slovakia: "The implementation of the EU Code of Conduct for Arms Exports and the fight against unauthorised weapon transfers deserve continuing attention."

155. Saferworld has told us that "officials from a number of the accession countries … feel at a bit of a loss as to how they are supposed to apply the criteria" and that there are "issues of capacity" in the accession states, which are generally less wealthy. This can "impact in terms of resources they have available to put into export control" and "increase the economic pressures on them to issue a licence where discretion might be the better part of valour".[179] It has also been suggested in the media that "the control systems among the incoming EU nations are less developed than those of the 15 current members" and that "their admission on May 1 may create weak points in the free trade zone's borders".[180]

156. Since April 2003 the ten new member states have attended meetings of the Working Group on Conventional Arms Exports (COARM), the group that co-ordinates EU arms exports under the Common Foreign and Security Policy (CFSP), and they have also been provided with member states' Code of Conduct denial notification data for the last two calendar years. According to the Government, "this information and interactions with current member states will enable the accession countries to develop an understanding of how EU members regard specific arms export licence applications, and so to further converge their policies".[181] All of the EU accession states are also seeking membership of the international export control regimes.[182]

157. We pressed the Foreign Secretary on whether the accession states' controls were adequate. His response was less than totally reassuring:

    I am satisfied that as from 1 May the regime which these countries will operate under, and its enforcement, will be better than it has been in previous years in these countries. The very fact that they are joining the European Union is a way of raising their standards of law enforcement generally. Whether it is at the level which we would regard as wholly satisfactory is another question, but it is moving in the right direction, and you only have to look at some of the other former Soviet Union nations which are not joining the EU, so we do not have the same control over them, to see what the problems are.[183]

158. We hope that the acceding states have been able to rise to the challenge of effectively controlling strategic exports in accordance with the EU Code of Conduct. But it would hardly be surprising if some of them struggled to do so. Trade in strategic exports—dual-use goods in particular—with countries within the EU is less rigorously controlled than trade with other countries. In the case of many dual-use goods, there are no controls on trade within the EU; and trade in many other strategic goods within the EU is covered by open licences. We recommend that the Government should assess closely whether the controls currently in place are adequate to ensure that exports to new EU member states—dual-use goods in particular—are not at risk of being re-exported under undesirable conditions.


159. Saferworld has told us that it is "quite disappointed by the level of support that has come from EU member states" and that the accession states themselves "are quite frustrated by what they regard as the lack of support from EU member states", with some stating that "they have more support from the US than they have had from the EU".[184] The defence press has also suggested that "efforts to improve invitees' export-control systems have received more rhetorical than substantive support from Brussels and the member countries".[185]

160. We have sought to find out what other steps the British Government has taken to help the acceding countries to understand their obligations under the Code of Conduct and to enforce effective export controls. The UK organised two seminars in Estonia and Slovakia at which current and accession EU member states had the opportunity to share experiences on the application of the licensing criteria in the EU Code of Conduct. As the Foreign Secretary told us, "it is not just what is on the paper it is about what approach individual officials should take when they are looking at arms applications".[186] As enforcement is a potentially serious concern, we were pleased to hear that Customs & Excise has been working closely with the countries.[187] However, as Saferworld rightly says, while two seminars "is more than a lot of other states have done … in terms of preparing a state for this whole instrument, two seminars to which one or two people who may be from different countries are going does not seem like an awful lot".[188]

161. We conclude that it is important to the security of the European Union and elsewhere that all EU member states should have effective export controls. We therefore recommend that the Government should consider whether it could usefully make further contributions to helping the new member states to bring their export control systems into line with the EU system, particularly in terms of access to expert assistance and training.


162. In the next section, we discuss the international export control regimes, but there are particular issues of concern surrounding membership of these regimes by the new EU member states. Of the new member states, only the Czech Republic, Hungary and Poland are currently members of all of the following regimes: the Australia Group, the Missile Technology Control Regime, the Nuclear Suppliers' Group and the Wassenaar Arrangement. All of the other new member states have now applied for membership of those regimes to which they do not already belong. However, their applications did not succeed in 2003. They appear to have been blocked for political reasons by one or more existing members of the regimes. There is no guarantee that these membership issues will be resolved in 2004.[189]

163. This raises two issues: one technical, one potentially of more concern. The EU Dual-Use Regulation assumes membership of the international export control regimes; in granting licences for dual-use goods and technology, member states must take into account "the obligations and commitments they have each accepted as a member of the relevant international non-proliferation regimes and export control arrangements". Many of the new member states will not have accepted these obligations and commitments. The issue of more potential concern is that member states not belonging to these regimes will not receive denial notifications and intelligence from other members of the regimes. Thus a supplier who has been refused an export licence by the US might seek to evade EU dual-use controls by routing any export from the EU via a member state which does not belong to the relevant international regime, on the basis that that state will not have received the relevant US denial notification. We recommend that the Government should do all it can to encourage acceptance of all new EU member states as members of all of the international export control regimes. We further recommend that steps should be taken to ensure that EU member states not belonging to the regimes do not become weak points in the EU's control of dual-use goods and technology.

120   We approached Governments, Parliaments and NGOs in France, Germany, Italy, Spain and Sweden. Back

121   Qq 74-107 Back

122   Q 27 Back

123   Appendix 18 (UKWG) Back

124   Q 24 Back

125   Q 25 Back

126   Q 25 Back

127   Q 25 Back

128   Q 25 Back

129   Q 22 Back

130   Q 27 Back

131   Q 95 (Mr Isbister) Back

132   HC (2002-03) 474, para 107 Back

133   Council of the European Union, Fifth Annual report according to operative provision 8 of the European Union Code of Conduct on Arms Exports, Annex, p 7; Q 93 (Mr Cairns) Back

134   Qq 119, 125 Back

135   Q 96 Back

136   Appendix 19 (DMA) Back

137   Q 133 (Mr Otter) Back

138   Appendix 7 Back

139   Q 22 Back

140   Fourth Annual Report according to Operative Provision 8 of the European Union Code of Conduct on Arms Exports. See 2002 Annual Report, p 485. Back

141   Appendix 23 (DMA) Back

142   Fifth Report under Operative Provision Eight of the EU Code of Conduct on Arms Exports, Table B Back

143   Q 22 (Mr Landsman) Back

144   Q 23 Back

145   Q 23 Back

146   See para 119. Back

147   HC (2001-02) 718, para 55 Back

148   HC Deb 31 March1995, cc 842-843W; available online at Back

149   'Schröder Backs Sales to China of EU Weapons', Wall Street Journal, 2 December 2003 Back

150   'Chirac renews call for end of EU arms embargo on China', Agence France-Presse, 27 January 2004 Back

151   'US pressing EU to uphold arms embargo against China', Washington Post, 31 January 2004 Back

152   Q 28 Back

153   Q 36 Back

154   Q 31 Back

155   Q 28 Back

156   Q 29 Back

157   eg see 'Keep the ban on arms to China', International Herald Tribune, 22 March 2004 Back

158   Cm 5967, p 33 Back

159   HC Deb 25 March 2004, cc 321-322WH. See also HL Deb 12 January 2004, cc 373-376. Back

160   'Keep the ban on arms to China', International Herald Tribune, 22 March 2004 Back

161   Appendix 19 (DMA) Back

162   Appendix 23 (DMA); Q 147 (Mr Otter) Back

163   Appendix 15 Back

164   Q 35 Back

165   See paras 145-149 below. Back

166   Action Plan for the Implementation of the Basic Principles for an EU Strategy against Proliferation of Weapons of Mass Destruction Back

167   Appendix 13, q 4 Back

168   Appendix 13, q 4 Back

169   Appendix 13, q 3 Back

170   Appendix 18 Back

171   European Scrutiny Committee, 38th Report, Session 2002-03, HC 63-xxxviii, para 4.4 Back

172   WMD Action Plan, para 21 Back

173   The European Union: Seeking Common Ground for Tackling Weapons of Mass Destruction, Stephen Pullinger and Gerrard Quille, published in Disarmament Diplomacy, Issue No. 74, December 2003 Back

174   Q 44 Back

175   Q 99 (Mr Isbister) Back

176   See, for example, 'Arms' Length', Prague Post, 20 November 2003. Back

177   HC (2000-01) 445, Q 85 Back

178   Appendix 13, q 1 Back

179   Q 99 (Mr Isbister) Back

180   'EU Invitees Must Improve Export Controls', Defense News, 26 January 2004 Back

181   Appendix 13, q 1 Back

182   Q 45 (Mr Oakden). See paras 162-163. Back

183   Q 45 Back

184   Q 99 (Mr Isbister) Back

185   'EU Invitees Must Improve Export Controls', Defense News, 26 January 2004 Back

186   Q 44 Back

187   Q 44 Back

188   Q 99 (Mr Isbister) Back

189   Appendix 22 (FCO) Back

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