Select Committee on Defence Fourth Report


Co-operation with Government
1.   We conclude that it is regrettable that we were not provided this year with information matching all refusals of licence applications to the reasons for their refusal and with the level of detail on appeals that we have been used to receiving. We trust that this information will be provided where we request it in the future, in accordance with past practice. (Paragraph 12)
2.We recommend that the Government should explain in its response to this Report why it considers that access to the documents requested by the Committee would harm the frankness and candour of internal discussions within Government, given that the documents we have asked to see are not internal discussion documents and do not express the points of view of officials, but rather are simply factual analysis and agreed guidance. (Paragraph 17)
Information and scrutiny
3.We recommend that the Government should explain in its response to this Report how it intends to publish information on licences which do not involve exports from the United Kingdom, including licences for trade between third countries and licences for the electronic transfer of technology to recipients within the United Kingdom. We further recommend that in the case of trade control licences, the Government should publish both the country of origin and the country of destination. (Paragraph 23)
4.We conclude that it is unfortunate that the format of the Annual Report makes a licence for a single end user based in a variety of countries look as if it is much more wide-ranging than in fact it is. (Paragraph 32)
5.We conclude that it would be in the Government's interest to publish more information on end use, because it would enable public debate on export controls to focus on those licensing decisions which are genuinely debatable, rather than to criticise the Government for decisions which appear highly contentious but which are in fact entirely sound. Given the strong support for greater transparency in this area shown not only by us, and not only by NGOs, but also by representatives of the British defence manufacturing industry, we recommend that that the Government should reassess its position that it cannot "go any further in publishing end-user information". (Paragraph 43)
6.We recommend that future supplementary information provided to us on licence decisions should include information on end use where this is requested, as without this information we cannot properly assess the Government's licensing decisions. (Paragraph 46)
7.We recommend that the Government should take a leading role in promoting a joint effort by EU member states and the Commission to establish equivalence between EC customs classification and the lists of controlled dual-use items. (Paragraph 48)
8.We recommend that the Government should help us to improve our retrospective scrutiny of export licence applications by publishing more timely licensing information than is currently the case, and by making it a systematic part of the administration of export controls to provide us in confidence with further information on these licensing decisions, including information on end use. We do not regard this as a substitute for a system of prior scrutiny, but it would be an improvement on the current situation. (Paragraph 52)
Scrutiny of licensing decisions and implementation of the criteria
9.We conclude that the Government's argument is credible that its more extensive application during 2002 of criteria relating to internal tensions abroad and the national security of the United Kingdom was caused by events in the wider world, rather than by a change in the Government's application of the consolidated criteria. (Paragraph 57)
10.We conclude that the Government should give further consideration to its interpretation of the Sustainable Development Criterion. (Paragraph 60)
11.We conclude that it is a welcome development that for the first time all four relevant Secretaries of State have put their names to the Government's Annual Report on Strategic Export Controls. (Paragraph 63)
12.We recommend clarification in response to this Report of whether denial notifications under the EU Code of Conduct are taken into consideration when the Government considers making sales and gifts against the Consolidated Criteria, and whether consultations on proposed Government sales and gifts would be initiated if a denial notification had been issued by an EU Member State for an essentially identical transaction. (Paragraph 67)
13.We recommend that the Government should clarify in its response to this Report under what circumstances transfers of military goods to overseas recipient governments are not reported, including clarification of the circumstances in which transfers would not be reported because of sensitivity on the part of overseas recipient governments or confidentiality undertakings. We further recommend that the Government should give an indication of the type, quantity and value of these unreported exports, preferably in public, but in confidence if absolutely necessary. (Paragraph 70)
14.We recommend that in its reply to this Report, the Government should also set out any circumstances of which the Committee has not expressly been made aware in which information on the type of equipment sold, gifted or otherwise transferred by the Government to other end users abroad does not appear in the Annual Report on Strategic Export Controls, either in the section on export licence decisions or in Tables 7 or 8 of the Annual Report. (Paragraph 71)
15.We recommend that where a Government official makes an announcement to the public or media about a proposed sale or gift of military equipment, the Government should inform us and the House at the same time. (Paragraph 77)
16.We recommend that the Government should continue to keep us informed on a regular basis of occasions on which Ministers promote specific defence sales. (Paragraph 78)
17.We conclude that, from the information we have seen, Government ministers appear to be promoting defence exports predominantly in circumstances which are unlikely to be contentious. (Paragraph 79)
End-use assurances: Indonesia
18.We conclude that there has been a serious lack of clarity in the Government's explanation to us of its rationale for allowing the Indonesian authorities to alter end-use undertakings regarding their use of British-built military equipment. (Paragraph 86)
19.We recommend that in its response to this Report, the Government should explain what steps it has taken to find and examine television footage of Indonesian armed forces' operations in Aceh, including local Indonesian television footage, in the course of monitoring the use of British-built military equipment in Aceh; and what the results of any such monitoring were. (Paragraph 96)
20.We can only conclude that we have seen no evidence that the Government has taken any action (other than talking to the Indonesian authorities) to investigate claims that British built military equipment has been used in violation of human rights or offensively in Aceh. This calls into question the importance of such assurances in the eyes of the Government. (Paragraph 97)
21.We conclude that without more legal or political backbone, end-use assurances are not worth the paper they are written on. (Paragraph 99)
22.We conclude that the Government's reassessment of how it conducts end-use monitoring is welcome. If end-use assurances or undertakings are to have any real value, the Government must be prepared to monitor the end use of the equipment concerned effectively and actively where the suggestion of misuse arises. There is little point in the Government seeking assurances on the end use of equipment if it is not prepared to conduct a thorough investigation when evidence emerges that those assurances may have been breached, or if it is not prepared to take punitive action when assurances have indeed been breached. (Paragraph 102)
European Union: Code of Conduct
23.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. (Paragraph 109)
24.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. (Paragraph 111)
25.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. (Paragraph 112)
26.We recommend that a priority of the review of the Code of Conduct should be to seek to enhance existing systems of information exchange. (Paragraph 113)
27.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. (Paragraph 114)
28.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. (Paragraph 128)
European Union: Embargo on China
29.We conclude that it would seem hard from the litany of continuing abuses noted in the Government's Annual Report on Human Rights 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. (Paragraph 135)
30.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. (Paragraph 136)
31.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. (Paragraph 138)
32.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. (Paragraph 140)
European Union: Role of the European Commission
33.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. (Paragraph 146)
34.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. (Paragraph 148)
35.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. (Paragraph 150)
36.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. (Paragraph 152)
European Union: Enlargement
37.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. (Paragraph 158)
38.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. (Paragraph 161)
39.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. (Paragraph 163)
Wider international arrangements
40.We recommend that the Government should continue to press for the introduction of a denial notification system within the Wassenaar Arrangement. (Paragraph 167)
41.We conclude that international arrangements on export control need to be made to work as channels through which major arms exporters can share information effectively on proliferation concerns. We further conclude that if this cannot be achieved, it may be necessary to rethink the current arrangements. Failure in this area would bode ill for an effective and truly international approach to counter-proliferation through export controls. (Paragraph 170)
42.We conclude that the proposed International Arms Trade Treaty has received disappointingly little international support. (Paragraph 176)
43.Small arms proliferation is a major and increasing threat to human security in many parts of the world. Given the limited progress that the proposal for an arms trade treaty has made, and the clear need for an international solution to this problem, we conclude that the Government must do everything it can to promote workable and effective measures to prevent further proliferation of small arms, including those exported from western countries. We recommend that the Government should use its position as a Permanent Member of the UN Security Council, its forthcoming chairmanship of the G8 and presidency of the European Union to further international consensus in this area. If the proposed treaty is not the right solution, another one needs to be found, and found urgently. (Paragraph 183)
44.We conclude that UN Security Council Resolution 1540 is a welcome first step towards truly international coordination of export controls on nuclear, chemical and biological weapons and their means of their delivery. We recommend that the Government should seek to encourage implementation of the Resolution in states where such controls are weak, and that the Government should explain in its response to this Report what assistance it is prepared to offer to states lacking the legal and regulatory infrastructure, implementation experience and/or resources to enable them to fulfil the provisions of the Resolution. (Paragraph 186)
45.We conclude that international agreement to control man-portable air defence systems (MANPADS) is an important step in limiting the prospects of their use by terrorists and insurgents. (Paragraph 189)
46.We conclude that the Proliferation Security Initiative is an essential tool, but that its use should be limited to extreme and urgent circumstances. We recommend that care should be taken that its use does not undermine efforts to promote an effective multilateral approach to export controls. While it is true that current international agreements in this area are inadequate, we conclude that it is unlikely that a unilateral attempt to control other countries' exports for them by force would be successful in the long term in preserving international stability and preventing the proliferation of weapons of mass destruction. (Paragraph 193)
Enforcement in the UK
47.We recommend that the Government should seek actively to disseminate greater understanding of the export control system, to limit the possibility of companies inadvertently exporting or trading in controlled equipment or technology without a licence. (Paragraph 196)
48.We conclude that if the evidence given to us by industry is correct, then British exporters are losing business to European competitors either because the British export licensing process is unacceptably slow and bureaucratic or because the systems of other European countries are unacceptably lax. We recommend that the Government should examine industry's allegations closely, and should answer them in its response to this Report. We further recommend that the Government should ensure that any discrepancy is minimised between the time taken to grant an export licence in the United Kingdom and the time required to acquire a similar licence in other European countries; and that the Government should seek harmonisation across the EU of types of police equipment subject to export licensing requirements. (Paragraph 203)
49.We conclude that the introduction of a shared IT base for Government Departments involved in export licensing is long overdue, and we recommend that its development should be made a priority. We further recommend that consideration should be given to whether a system able to manage information above the lowest level of classification (RESTRICTED) would be more useful, given the information sharing needs of Government Departments in this field. (Paragraph 206)
50.We conclude that changes in performance targets introduced as part of the JEWEL review may help to encourage those in Government involved in export licensing to apply some urgency to the processing of licence applications which have already missed the basic 20-day processing target. (Paragraph 207)
51.We welcome the improvements made in processing export licence applications against published targets, and we particularly welcome the new emphasis on clearing the backlog of outstanding cases. We recommend, however, that the Government should seek to improve its performance on appeals as a matter of priority. (Paragraph 209)
New controls under the Export Control Act
52.Our suggestion that the Government should take a fresh look at the export control system as a whole has received support from both industry and NGOs. We recommend that the Government should take heed of this and not ignore the possibility that more radical reform of its export and trade control system might allow it to target more accurately those activities of most proliferation concern. (Paragraph 212)
53.We conclude that in applying extra-territorial control to categories of transaction which are supposedly internationally recognised as undesirable, the Government has not only failed to target its legislation at those transactions which are of most concern—in particular the trafficking and brokering of small arms; it is also in fact meeting with precisely those problems which it claimed would make extra-territorial control of trade in small arms unenforceable. (Paragraph 221)
54.We recommend that the Government should reconsider which types of trafficking and brokering activity it subjects to extra-territorial control to identify more accurately those which are of most pressing and genuine concern—in particular those weapons most likely to be used by terrorists or in civil wars. We recommend that trade in such weapons, including MANPADS, rocket-propelled grenades and automatic light weapons, should be subject to extra-territorial control where they are intended for end use by anyone other than a national government or its agent, and where the country from which the trade is being conducted or from which the export will take place does not itself have adequate trade or export controls consistent with the British Government's policy on arms exports. We further recommend that the Government in its response to this Report should explain more clearly how it can justify permitting British individuals and bodies to engage in arms exports outside the UK which if made from within the UK would not be permitted. (Paragraph 224)
55.We conclude that close co-operation with the Government appears to have resolved some of industry's concerns about the regulatory impact of the introduction of the new controls. (Paragraph 227)
56.We conclude that to require British companies to apply for a licence to enter into discussions with the British Ministry of Defence would be a manifest absurdity, which cannot have been the intention of those devising the legislation. (Paragraph 230)
57.We conclude that the new controls as they stand risk imposing an unacceptable bureaucratic burden on reputable companies which the Government should be seeking to support, albeit that they are operating in fields of potential concern. We recommend that the Government should, as a matter of urgency, take action to ensure that the bureaucratic burden of complying with the new controls for companies such as Smiths Detection and MBDA is reasonable, predictable and well understood. (Paragraph 231)
58.We recommend that the Government should explain in response to this Report what action it is taking to identify and inform British citizens abroad who may be caught by the new controls. We further recommend a degree of lenience where British citizens abroad are found to have inadvertently committed insignificant breaches of the new controls. (Paragraph 232)
59.We recommend that the Government should explain in its response to its Report what steps it is taking to ensure that foreign nationals visiting the United Kingdom understand their obligations under the new trade controls, and how it intends to investigate suspected breaches of these controls by visiting foreign nationals. (Paragraph 233)
60.We recommend that the Government should take on board complaints from industry about inconsistency and uncertainty, and should seek to provide as consistent an interpretation as possible of what the new legislation means for business. Companies and individuals should not be penalised for inadvertent lack of compliance where the Government has been unclear or inconsistent about what the law means. (Paragraph 237)
61. We recommend that the Government should re-examine the drafting of the secondary legislation in the light of comments from industry, to ensure that the Orders have the intended legislative effect. If they do not, amending legislation should be urgently made and laid before Parliament. (Paragraph 238)
Role of Customs and Excise
62.We conclude that it is surprising how few prosecutions have been brought recently for breaches of export controls, given the concern expressed by the Intelligence and Security Committee that a small number of UK companies and individuals are trying to breach export restrictions. We recommend that the Government should explain in its response to this Report what efforts it is making to bring those who deliberately breach export restrictions to justice. (Paragraph 244)
63.Given the quantity of communications in the ether and advances in encryption which make such communications difficult to interpret even if they are successfully intercepted, on the very limited evidence available to us, we conclude that it is likely to be very difficult indeed to bring successful prosecutions for illegal exports of technology by intangible means or to successfully disrupt such transfers. (Paragraph 245)
64.We conclude that the Government must ensure that HM Customs & Excise and the Intelligence and Security Agencies are adequately resourced to detect and prevent the illegal export of controlled goods if the country's export control system is to function effectively as a tool in the fight against proliferation. (Paragraph 246)
65.Limiting the proliferation of weapons, from small arms to biological agents, is one of the major political issues of our time. It is, quite literally, a matter of life and death. Export controls are only a part of the solution, but are a crucial part of it. To be reasonably effective, such controls must be applied internationally, and countries must have the skills and resources to identify and to stop illicit exports. But, as international drugs trafficking shows only too clearly, it is unrealistic to expect legislation and border controls to do more than slow proliferation. (Paragraph 247)
66.Over the last five years, we have probably given more sustained and detailed attention to the Government's policy and administration in the area of export controls than any parliamentary select committee has previously given to any specific area of policy. But few areas of policy have so deserved to be subjected to the searchlight of parliamentary scrutiny. Decisions in this area can affect the national security of our country, the ability of industry to trade competitively, whether distant parts of the world live at peace or at war, whether individuals live or die. (Paragraph 248)
67.Before we began our inquiries, this was an area of government best known for its secrecy. With the publication of Annual Reports on Strategic Export Controls, a little light has been visible from behind the closed door. But sometimes the impression of openness is misleading, and information has been published which has led commentators, quite reasonably, to the wrong conclusions. (Paragraph 249)
68.Our task has been to ensure that secrecy is only maintained where it is genuinely justified. Secrecy engenders mistrust, and it is in the Government's interest to be as open as it can be in this area. As the Government has discovered, negative public comment will not be prevented by a lack of openness, or partial transparency. Our confidential investigations into the Government's decisions have suggested to us that the Government has little to be ashamed of. The prize of greater transparency is therefore one worth winning: the prize of public trust. (Paragraph 250)

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