Appendix 11: Further memorandum from the
Foreign and Commonwealth Office
I am writing in response to your letters of
22 October (on the provision of information to the Committee and
prior scrutiny). I also take this opportunity to provide the Government's
responses to the Committee's questions on the Government's response
to your Annual Report (forwarded by the Clerk on 22 October).
I am pleased to inform you that all of these answers are publicly
disclosable.
In your letter about provision of information
to the Committee you mention that I had previously assured you
that the Government based its decision in the Tanzania case on
sound factual information. I remain convinced that the right decision
was made, and I was keen to provide the Committee with as much
information as possible, in order that you might better understand
how we reached that decision.
While it is not always possible for the Government
to provide all the information requested of it, I can assure you
that we do not withhold information lightly. Matthew Hamlyn's
letter of 28 August to the Committee clearly sets out the reasons
for withholding the requested information and reflects the outcome
of consultations with a number of interested departments and with
the Cabinet Secretary. I very much regret the delay these consultations
caused to our reply. The Government, however, stands by the reasoning
in this letter. The information provided with regard to the sale
of the Consul General's San Francisco residence does not set a
precedent here, since it does not relate to the commercial transactions
of a third party.
In your letter, you also refer to the withholding
of information regarding the Government's guidance for the application
of Criterion 8. Again, the Government stands by the decision and
reasoning in Matthew's letter of 28 August. The Secretary of State
for Trade and Industry's statement to Parliament of 19 September
2002, which set out in detail the factors to be considered when
making assessments under Criterion 8, gives sufficient basis on
which the Government can be held to account for its assessments
under this Criterion.
The Government has acted consistently with the
Code of Practice on Access to Government Information in considering
the two requests mentioned above. I hope you will agree that an
enormous amount of information has been provided by the Government,
particularly over the last year, in response to your Committee's
questions. As I mentioned to you earlier in the year, the resources
involved in meeting these requests are very considerable and impact
directly on those available to do licensing policy work.
On your wider point, it is quite natural for
the Government's responses to select committee questions, including
those from individual departmental select committee reports, to
be agreed between the departments concerned. Given the unprecedented
level of co-operation and openness shown by the Government to
Parliament in the field of strategic export controls, I hope it
will be possible to dissuade your colleagues on the Committee
from thinking that the Government has "something to hide"
in this area.
In your letter about parliamentary scrutiny
of export licences, the Committee asks how the Government intends
to take this issue forward. We hope to be able to write to you
with further information in the near future.
Jack Straw
EXPORT LICENCE
DECISIONS DURING
2001
A. The Government's response to the Committees'
recommendation 5 (paragraph 43) states that "Allied forces
have . . . taken direct military action abroad, but consistent
with international law such actions cannot be characterised as
infringements of human rights as defined in Criterion 2, or as
`external aggression' as defined under Criterion 4". Could
the Government identify the international law that prevents direct
military action abroad by Allied forces from being characterised
as "external aggression" as defined under Criterion
4?
The response was not intended to mean that there
is a specific international law that prevents the use of force
by Allied forces from being characterised as infringements of
human rights or "external aggression" in all cases.
We do not consider, however, that Criteria 2 or 4 limit the export
of strategic goods to Allied military forces, where those forces
are taking military action in conjunction with UK forces, for
example by virtue of UN Security Council resolutions or the inherent
right of self-defence under customary international law.
B. The Government's response to the Committees'
recommendation 6 (paragraph 56) does not address the Committees'
recommendation that decisions on licence applications "should
take into account the actual and potential capabilities of the
equipment, as well as their intended role". Do the consolidated
criteria allow the Government to take licensing decisions with
this in mind?
The Consolidated Criteria do allow the actual
and potential capabilities of equipment to be taken into consideration
when assessing export licence applications. Moreover, it is a
routine part of the assessment process to consider equipment's
potential end-use as well as the end use stated by the exporter.
C. The Committees would appreciate further
comment on their recommendation 10 (paragraph 71). Does the Government
agree with the Committees that "basic checks on the end-user
of this equipment from information easily accessible in the public
domain would have revealed concerns about how the oversized cuffs
might be used"? Are the Committees correct in their conclusion
that these "basic checks were not conducted"? Does the
Government believe, in line with the Committees' recommendation,
that an "administrative failure" took place in respect
of this licence "that should be investigated"? The Committees
note that the information sent to the Government by Mr Chidgey
is not directly relevant to this case.
The Government invests significant resources
in operating a rigorous system of end-user risk assessment at
the export licensing stage, using information from a variety of
sources. We are aware that oversize handcuffs can be used as leg
restraints, and this possibility is specifically taken into account
in the consideration of relevant ELAs.
It appears that the information provided by
the Committees was not taken into account in this case. However,
had we assessed that there was a clear risk of these handcuffs
being used as leg-irons, the export licence would have been refused.
We always strive to ensure that all relevant
information is taken into account, but are nonetheless strengthening
internal mechanisms to ensure that all necessary end-user checks
have been carried out and properly recorded.
POLICY ISSUES
D. With respect to the Government's response
to the Committees' recommendation 16 (paragraph 90), the Committees
would be grateful to be kept informed of purchases of military
equipment using funds from the Conflict Prevention Pools.
The Government is happy to undertake to provide
this information to the Committee twice each financial year, around
April and October, on each occasion listing the military equipment
purchased using Pool funds in the previous 6-month period.
E. The Government's response to the Committees'
recommendation 19 (paragraph 96) seems to imply that goods owned
by the Crown which are transferred overseas under letter of Crown
Immunity, and then transferred to another party overseas, would
not be assessed against the Consolidated Criteria. Is this the
case, and have there been instances in which this has happened?
In their report published on 20 May, the Committee
enquired about the transfer of ownership of licensable equipment
(Recommendation 19) owned by the Crown. The Government's response
explained that the transfer of ownership of Government-owned goods
took place under contract, or as arranged with the customer or
recipient. The transfer of ownership was not accomplished by means
of the letter of Crown Immunity, or an F680. The question did
not specifically address the export of an item under a letter
of Crown Immunity and its subsequent transfer to "another
party overseas".
In referring to transfers to "another party
overseas", the Committee may also have in mind the procedure
for gifting, where an item is "exported" under letter
of Crown Immunity and handed over to another government or, occasionally,
an organisation. In their Recommendation 17, the Committee asked
whether gifts of military equipment were considered against the
consolidated criteria. The Response confirmed that in future all
gifts of strategically controlled equipment would be assessed
under the F680 procedure. Records do not show whether gifts listed
in the letter of 15 January 2003 from the Minister of State for
the Armed Forces, Adam Ingram, to Llewellyn Smith MP were assessed
against the Consolidated Criteria.
F. On a similar point, in relation to the
Government's response to the Committees' recommendation 20 (paragraph
97), the Committees would be grateful for confirmation that goods
subject to strategic export controls being sold by the Government
for export to a non-Government end-user in another country are
always subject to the usual export licensing procedures, and are
never exported by the Crown (without a licence), with transfer
of ownership taking place overseas.
The Government confirms its policy that such
cases should be subject to the usual export licensing procedures.
G. The Government's response to the Committees'
recommendation 22 (paragraph 104) states that "while we may
publish the broad details of certain Government to Government
agreements, some overseas recipient governments may be sensitive
about the reporting of all the transfers of goods, and confidentiality
undertakings may form part of such agreements". The Committees
would appreciate a broad indication of the extent to which transfers
of goods go unreported because of the sensitivity of overseas
Governments.
Information on Government to Government exports
not already included in the lists in Tables 7 and 8 of the Annual
Report on Strategic Export Controls, was recently given to the
Committee in answer to Question 43 of the Committee's questions
outlined in their letter of 22 September. For reasons of confidentiality
information on exports was given by category of equipment. This
is in line with the presentation of information on goods licensed
for export recorded in Section 2.6 of the Annual Report.
H. The Government's response to the Committees'
recommendation 23 (paragraph 106) states that "where support
is given to a specific bid to export an item of equipment manufactured
in the UK this is generally after the company has obtained a Form
680 approval in support of a marketing campaign". On what
occasions during the current Parliament has support been given
to a specific bid to export an item of equipment manufactured
in the UK before the company had obtained F680 approval for marketing?
Although the Government strongly encourages
industry to use the F680 procedure to gain approval for their
marketing campaigns, especially where there might be any doubt
about the prospect of obtaining a licence, such approval is a
formal requirement only where authority to release classified
information is needed. As previously advised, it is normally the
case that F680 approval is obtained at the same time as support
is given to a specific export prospect. Records show that a small
number of occasions have arisen in the present Parliament where
this has not been so, when the prospective customer was the Government
of another NATO country.
I. The Government's response to the Committees'
recommendation 27 (paragraph 125) states that "It is not
in importing countries' interests in the long term to give end-user
assurances and then not comply with them". How does the Government
ensure that it is "not in importing countries' interests
in the long term to give end-user assurances and then not comply
with them", and how does it ensure that it is aware when
end-user assurances have not been complied with?
The Government specifically takes any substantiated
evidence of misuse of equipment into account when assessing future
export licence applications for that end-user. In addition, the
Government has the power to revoke licences where evidence of
misuse subsequently comes to light. Revocations would prohibit
any further exports to that purchaser under the licence. We could
also revoke any open licences for exports to that destination
country, obliging exporters to apply for individual licences for
each export, or refuse to accept any assurances given by that
country about the end-use of an export. We may also liaise with
the Government in the country concerned, encouraging them to control
or sanction the purchasers in question. If the end-user were a
Government, we would have a wide range of foreign policy tools
at our disposal.
As regards the Committee's second question on
breaches of end-user assurances, the Government's policy on end-use
monitoring has been communicated to the Committee before, in for
example, our written response to the Committee's most recent report
[HC 474] on strategic export control (recommendation 26). The
Government would, however, reiterate that we are committed to
effective monitoring of the end-use of UK defence exports where
this can make a genuine contribution to preventing their diversion
or misuse.
COLLABORATIVE DEFENCE
MANUFACTURING
J. The Committees' recommendation 30 (paragraph
137) asked for clarification of whether UK-origin goods in incorporation
cases "are more likely to be licensed for export if they
are more material and significant to the goods in which they were
to be incorporated, or if they are less material and significant
to these goods". The Government's reply seems to suggest
that the meaning of "material and significant" in additional
factor (c) as announced by the Foreign Secretary on 8 July 2002
relates to whether the British components could be easily sourced
from elsewhere, or are supplied as part of a long-standing supply
programme; rather than to significance in terms of size, cost
or utility. Is this the case?
As the Government's reply made clear, no definitive
generalisations can be made in this area. Materiality and significance
do not necessarily relate only to the factors to which the Committee
refers. The Government cited these as examples of factors that
might be relevant in this analysis.
K. In its response to the Committees' recommendations
33 and 34 (paragraphs 143 and 144), the Government states that
"it would be unrealistic for the UK to attempt to exercise
extraterritorial control over the end-use to which all of its
components that are incorporated overseas for onward export might
be put". Why would it be unrealistic for the UK to attempt
to exercise this control, given that the US already attempts to
exercise such control?
As stated in our previous response, we believe
that the increasingly complex structure of the globalised defence
industry means that it is simply not feasible to control every
single UK component of an item of defence equipment extraterritorially
throughout its life. We believe that the correct approach to controlling
the ultimate use of strategic exports from its territory is as
set out in the Foreign Secretary's statement about incorporation.
The United States' export control policy is a matter for that
Government.
Even if it were feasible to exercise effectively
the kind of extraterritorial control the Committee suggests for
all exports of components, this would have a number of consequences.
Amongst other things, it would have significant resource implications,
which may have to be found within existing budgets for export
control activity, therefore leading to a significant reduction
in the number of pre-licence checks of the kind described above
being carried out, and a serious downturn in performance.
L. The export provisions in the Framework
Agreement allow the Government to refuse unilaterally to allow
the export to a particular destination of equipment produced collaboratively
by more than one country. The Government acknowledges in its response
to the Committees' recommendation 40 (paragraph 164) that these
provisions "recognise the changes in the defence industry,
where more strategic export equipment is produced multinationally
and under collaborative arrangements". What scope is there
for extending this right to other projects incorporating British
components? Is there any form of control that the UK can exercise
over the end use of finished equipment containing British components
but exported from another country?
As the Committee will be aware, the UK assesses
export licence applications for incorporation and onward export
against the Consolidated EU and National Arms Export Licensing
Criteria, and the factors set out in the Foreign Secretary's statement
on incorporation, which include rigorous assessment of the intended
end use and end-user, and assessment of the export control policies
and effectiveness of the export control systems of the incorporating
countries. However, where the nature of the involvement of UK
companies in a collaborative project is such as that covered by
the Framework Agreement (FA), export control arrangements such
as those stipulated in the FA may be appropriate. We do not exclude
similar arrangements being used for future projects where appropriate.
In terms of other projects incorporating British
components, we take into consideration in the licensing process
whether the goods are to be used in a licensed production facility
(and our export licence application forms now include a specific
question asking this) and, if so, whether there is a risk that
the finished products of the licensed production arrangement could
be delivered to an undesirable end-user.
M. On the other hand, if the Government has
(as it seems to claim) no control over the use of the equipment
into which British components have been incorporated, how does
the Government ensure that components are licensed for export
for incorporation overseas only where it is content with the standards
of export control exercised by the incorporating country?
The Government does not accept that it has no
control over this area. As referred to above, all applications
to export components from the UK for incorporation overseas are
rigorously assessed both against the Consolidated EU and National
Arms Export Licensing Criteria, as announced to Parliament in
October 2000, and the Incorporation Statement, as announced to
Parliament on 8 July 2002. The criteria specifically include assessment
of the proposed end-use and end-user of the exported goods, and
the Incorporation Statement of export control policies and the
effectiveness of the export control system of the incorporating
country.
N. The Committees remain convinced that future
Annual Reports should include as much information as possible
on the final destination of equipment exported under Global Project
Licences. Will the Government seek agreement to the publication
of information in line with the Committees' recommendation 39
(paragraph 163) within the Working Group on Export Procedures
under the Framework Agreement?
The Government reiterates its previous response.
However, it has now had an opportunity to raise the issue of publication
with Framework Agreement partners. No consensus has yet been reached.
The Chairman invited partners to consider this further with commercial
confidentiality constraints and their respective reporting mechanisms
in mind. The Committees should bear in mind, however, that whatever
details of Global Project Licences are included in the Annual
Report, these would relate only to UK licences.
FORMAT OF
ANNUAL REPORTS
ON STRATEGIC
EXPORT CONTROLS
O. The Government believes, according to
its response to the Committees' recommendation 41 (paragraph 167)
that "to publish details on licence applications that have
been denied would give unscrupulous arms manufacturers and dealers
knowledge about which goods are wanted by whom. They could then
use this information to provide the specified goods to the proposed
end-user". Does the Government therefore believe that the
Dutch Government is wrong to publish details of the denial notifications
that it has issued?
The Government stands by its previous response.
The procedures of the Government of the Netherlands are a matter
for that Government.
P. The Committees welcome the Government's
response to their recommendation 42 (paragraph 171) that it is
considering "whether it can publish information on individual
licences broken down between Government and non-Government end
users whilst still protecting commercial confidentiality".
The Committees hope that the Government will be able to take this
suggestion forward, although they would prefer it to go further
and consider publishing information on end users of licences by
broad category (cf recommendation 44 (paragraph 174))—given
that other EU countries already publish this information. Does
the Government believe that the Danish government's publication
of information on end users of licences by broad category damages
commercial confidentiality?
The Government is still considering whether
we can publish information on individual licences broken down
by Government and non-Government end users. The Government's response
in September (Cm 5943) to the Committee's Report (HC 474) made
clear why we do not consider that we can go any further in publishing
end-user information, but that we are nevertheless continuously
reviewing what information we can place in the public domain.
The information contained in the Annual Reports
published by the Danish Government or indeed the Government of
any other EU country is not a matter for the UK Government, and
we do not consider it appropriate to comment on their procedures.
We remain convinced that in the light of our individual circumstances,
we have taken the right approach with our Annual Reports. As has
been recognised by the Committee, we already have one of the most
transparent reporting procedures in the world. Our Annual Report
already gives more information than any other national report
of which we are aware. This does not, however, mean that we are
not open to assessing what other useful information could be included
in future editions, notwithstanding our duty to protect commercial
and other confidentiality.
Q. The Committees welcome the Government's
response to their recommendation 45 (paragraph 175) and would
be grateful if the Government would keep them informed of progress
made towards improving the data available on the value of defence
exports made.
In the Government's response, the Committee
was informed that ongoing discussion with EC Partners included
consideration of changes to the Tariff Codes, to enable a greater
level of transparency in the information provided on the value
of strategic exports. At a recent meeting in Europe, EC Partners
indicated that they were not at present in favour of any further
change to those codes. In the UK, the Government will continue
to explore opportunities as they arise to improve the data available
on the value of defence exports.
January 2004
| 
