Appendix 24: Further memorandum from Mr
Tim Otter, NBC UK
I promised to follow up in writing with further
information on three issues following my evidence to the Quadripartite
Committee on 21 April. The first is increase in overheads as a
result of the burden of the new Export Control Act regulations,
the second is where we have identified clear cases of "undercutting"
by other EU Member States, and the third is differences in operating
procedures between German legislation and the UK's.
OVERHEADS
The current burden on companies imposed by the
new regulations is for training, licence application and record
keeping. Our experience so far is that the original half-day's
training that we were advised would be adequate to meet our needs
as a background awareness training is insufficient. This reflects
the views of several companies outside the NBC sector too. (See
evidence from Mr David Hayes of Rolls-Royce.) This is partly prompted
by individuals' fear of the penalties of contravention. However
it is mostly due to the sheer complexity of the new legislation,
which even has long-standing experts (including people in the
DTI) in export control issues, with many years' experience in
this sphere behind them, disagreeing about fundamental aspects
of the new regulations and what they actually mean.
Comments from companies across the trade interest
group have shown that the general awareness training of all staff
now affected by the new regulations needs to be at least one day,
preceded by at least one module, lasting one to two hours to complete,
of computer-based training. For those who are in more regular
contact with customers and end users, and, thus, with the commercial
activities which will now be caught by the new regulations, the
training needs have to be extended by a further two to four days.
Conversations with colleagues in the rest of the Defence Industry
indicate that to deal with all the questions and answers normally
raised at such training sessions requires an average total of
five days for these people. (Again see Mr Hayes' evidence.)
It is worth pointing out that these existing
employees are experienced in working with the existing regulations
and, therefore, the training has already been jump started. When
we move to training new employees this time will have to increase.
Some figures are at the annex to this letter. The interesting
thing is that these figures are roughly in line with the figures
that I gave to the Minister (Nigel Griffiths) at a DMA meeting
on the issue and which he rejected.
"UNDERCUTTING"
WITHIN THE
EUROPEAN UNION
We have evidence from colleagues in the Defence
Industry which clearly shows that countries to whom Smiths Detection
were refused 680s or licences, viz Egypt and Israel, have had
their requirements fulfilled by French competitors. Similarly,
licence rejections for India where we know Smiths Detection were
the selected supplier and had an order for detection equipment,
have resulted in Finnish and French, and possibly US competitors,
being able to tender for this business, instead.
We have similar evidence that requests to provide
filtration equipment to India and Pakistan for armoured vehicle
and ship platforms have been fulfilled by French competitors.
Whilst there was not a rejection in writing from HMG for this,
the verbal advice, from both DTI and DESO, was that there was
little point in applying, as there would be a rejection.
We know that protection equipment has been supplied
by Belgium to Israel. This followed advice that there would be
a licence rejection by UK and the company concerned informing
the customer of this.
In addition, as I mentioned to the Committee,
I have previously supplied original photographic evidence of Chinese
officials using equipment supplied by Smiths Detection's French
competitor. Smiths Detection currently only has clearance to deal
with the Chinese Demilitarisation programme through the Japanese
Government.
There is also the problem of using identical
equipments declared as "civil defence" equipment. These
are probably being used in the cases referred to in Egypt and
Israel.
GERMAN REGULATIONS
Discussions with our colleagues in the same
industry in Germany show that German competitors do need a licence
to take their equipment to overseas exhibitions and seminars.
However, and this is the key difference, because of the temporary
nature of the export the company only has to phone and obtain
an authorisation (presumably number) to get the export licence.
The only restrictions are those of security: what the company
is allowed to discuss in public and what is permitted for discussion
with government officials. The Government updates the advice on
both security and licence availability to the company on a fairly
regular basis. Often this is done verbally. Whilst the regulations
appear, at first glance bureaucratic, they are easy to operate
and quick to implement. The company can get approval for a rapid
despatch of goods or intangible information by a simple telephone
call to the German authority, which will issue an approval number
immediately with paper work following in due course. Apart from
the recording of the changes in status and the licence applications
the demands of record keeping are much less.
It is also worth pointing out that the UK NBC
industry as a whole lost out to the German when the Czech Republic
first applied to join NATO. This was because Germany rescinded
restrictions on provision of equipment to the Czech Republic some
11 months earlier than by the UK.
The point that is that the regulations and their
implementation are more flexible and lighter than those applied
outside the UK.
| 
