Appendix 9: Memorandum from the Director
of the Export Control Organisation, Department of Trade and Industry
ADMINISTRATION OF
THE EXPORT
LICENSING SYSTEM
I wanted to bring you up to date on various
aspects of the administration of the export licensing system which
I know are of interest to the Committees. Full details will be
given as usual in the 2003 Annual Report in due course but Ministers
thought you might find it helpful to have some preliminary information
at this stage.
First I can report that in 2003 the Government
processed 76.3% of SIEL applications within 20 working days, against
the target of 70%. This is an improvement on performance in previous
years, eg the 59% achieved in 2002. We also reduced the number
of cases in the system which are older than six months, from 21
at the end of 2002 to seven at the end of last year. Performance
on processing appeals within the 30 day target has continued to
be disappointing and we are looking at ways of streamlining this
system as a priority.
Second as you know officials have been reviewing
ways of improving cooperation between the various Government departments
involved in the licensing process so as to deliver collectively
a more efficient service to exporters consistent with achieving
the Government's policy aims through the licensing system. The
"Jewel" review recognised that while performance had
been improving as a result of management effort there were systemic
issues which needed to be addressed if performance was to be maintained,
particularly as the scope of controls is broadened with the introduction
of the Export Control Act 2002. Ministers have therefore accepted
to introduce changes which can be summarised as follows:
— a proposed change in the business
process with the introduction of a "smart front end"
(SFE) which will provide a quicker service to exporters and also
make the system more robust by concentrating specialist advice
on certain applications. All incoming applications are subject
to the usual checks by DTI but in addition now pass through a
filter mechanism which sorts them into those which are suitable
for consideration by the SFE—ie, the more straightforward
cases—and those which should be sent to the full range of
FCO and MoD advisers in the normal way. The SFE consists of an
inter-departmental committee of officials from DTI, FCO and MoD
which meets daily to review cases which the filter has shown to
be suitable for accelerated decision. The SFE decides whether
to provisionally approve or refuse the application or refer it
for full circulation to MoD and FCO. The SFE's provisional decisions
are circulated to FCO and MoD whose specialist advisers have up
to five days to request to review the case in full if they so
wish, as a quality control check. Similarly, provisional refusals
are reviewed by the normal weekly refusals meeting. Applications
which are sent DfID to consider against Criterion 8 will continue
to be circulated to them in the normal way and not considered
by the SFE;
— the SFE will undergo a six-month
trial period starting 12 January during which we shall monitor
closely its operation closely to ensure it is working as expected.
At the end of the trial we shall assess its effectiveness. I should
make clear that it is not the Government's intention to reduce
the effective level of scrutiny of applications. The SFE is designed
handle those cases where the judgement of its members can be substituted
for that of the full range of advisers in FCO and MoD;
— a project to develop a shared IT
base. This will begin with a shared file store, SPIRE, accessible
by the relevant Government Departments through the GSI Depending
on the outcome of this first phase, further IT integration could
be gradually developed as specific needs are identified and as
resources allow. SPIRE will store and manage export applications
and supporting information up to RESTRICTED level. This will eliminate,
for documents on SPIRE, the current practice of employing couriers
to deliver by physical means information from DTI to OGDs and
tackle the problems associated with transferring data from one
type of media to another and between different systems. It will
allow common access to centrally held case files, which is not
the case at present, and make it easier for advisors to refer
to previous related decisions. It will also be the primary shared
repository for documentation in support of developing a cross-departmental
working culture including training and development; joint communications
and performance management;
— new joint-working procedures such
as common staff induction and training programmes, joint performance
review meetings at official level and cross-departmental channels
of communication to create a shared culture and de facto "single
export licensing community". As part of this programme, a
joint mission statement "promoting global security through
strategic export controls, facilitating responsible exports"
has been devised, together with guiding principles which focus
on transparency and customer service (see Annex);
— a series of measures to improve the
interface with exporters. An initial survey of exporters shows
that they want not only a rapid turnaround of applications but
also better information about our legislation, procedures, reasons
for refusal, the likelihood of getting a licence and on what timescale.
A series of measures are being taken forward, such as the production
of a DVD/CD Rom on export control, improvements to the website,
a customer survey and feedback form and establishment of an export
control advisory committee;
— a new published performance target
that we shall aim to process 95% of all standard-type licence
applications within 60 working days. This will sit alongside the
current target of processing 70% of applications within 20 working
days and give an incentive to process the more difficult cases
which go beyond 20 days in a reasonable time. We shall also publish
the average time taken to process licences which have taken more
than 20 days (so as to create an incentive to take progressively
less of the next 40 days).
We are starting to implement these measures
now and expect to have made significant progress on them by the
end of this year.
Finally I wanted to set out the position on
the implementation of the Export Control Act 2002, which the Committees
identified as a major test of the efficiency of the licensing
regime. The main pieces of secondary legislation, ie the Export
of Goods, Transfer of Technology and Provision of Technical Assistance
Order and the Trade in Goods (Control) Order were laid before
Parliament on 31 October and will come into force on 1 May, together
with the substantive provisions of the Export Control Act 2002.
We are also preparing the third piece of secondary legislation
concerning trade in goods to embargoed destinations with a view
to laying this before Parliament shortly. Copies of the legislation,
guidance prepared by DTI and also of associated Open General Licences
(in particular the Open General Trade Control Licence) were posted
on the ECO website in early November.
Industry will therefore have had an extended
period to prepare for the new controls in the light of the detailed
implementing legislation. During this transitional period officials
are continuing to work closely with industry representatives to
raise awareness of the controls. DTI has hosted a series of seminars
on the controls and will also participate in regional seminars
being organised by the DMA and SBAC this month and next. DTI has
sent a notice about the controls to those companies registered
with us for update information and we are enclosing fliers with
all new licences and ratings issued. We shall issue a second notice
later this month and are searching our databases to identify any
exporters who may not have been contacted previously. In addition
ECO officials are meeting direct with certain companies and sectors
to go through the controls in detail with them. Ministers undertook
in the House of Lords in December to work with representatives
of the academic and research communities on how the controls on
intangible transfers may affect them. DTI compliance officers
are raising the Act during compliance visits and have brought
forward the scheduled visits of certain companies thought to be
particularly affected. We are encouraging exporters to submit
individual licence applications as soon as possible and register
now for the OGTCL rather than waiting until May. We have re-deployed
staff within ECO to accommodate this. Staff from other Departments
have also been seconded to the relevant part of ECO to train in
the new controls. So far there have been very few applications
for licences under the new controls and officials will proactively
chase those exporters who might have been expected to need licences.
January 2004
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