Examination of Witnesses (Questions 108
- 119)
WEDNESDAY 21 APRIL 2004
MR DAVID
HAYES, MR
TIM OTTER,
MR DAVID
BALFOUR AND
MRS SUSAN
GRIFFITHS
Q108 Chairman: Good morning. Welcome.
Thank you for your written submissions which we appreciate very
much. Mr Hayes, would you like to introduce your colleagues and
yourself and then we will get down to business?
Mr Hayes: Thank you for the invitation,
gentlemen. My colleagues are Mr David Balfour, a Director of SABRE
Ballistics, an SME in the defence industry; Mr Tim Otter who is
with NBC UK, the DMA's NBC Defence Interest Group and Vice President
of Business Development working for Smiths Detection; Susan Griffiths,
the Export Compliance Manager for MBDA particularly in relation
to the restricted goods aspect of joint controls, and I am the
Chair of the CBI Working Group on Export Controls, a member of
the Exporting Licensing Group of the DMA and the Export Compliance
Manager for Rolls-Royce.
Q109 Chairman: Thank you very much
indeed. We will try and keep our questions brief and to the point
and we would appreciate it if you could keep the answers similarly
brief and to the point. Could I kick off with the Government's
recent review of the export licence application system, the JEWEL
review. How effective has that review been?
Mr Hayes: The review of the export
licensing system and the improvements to the export licensing
process?
Q110 Chairman: Yes.
Mr Hayes: From an industry perspective
that has been quite effective particularly in respect of the FCO
and the improvements that we have seen there in licence turnaround.
There has been a marked improvement in licence turnaround in the
FCO and they are to be congratulated.
Q111 Chairman: Have there been any
other improvements apart from turnaround? I know that is pretty
fundamental. Has that been the main benefit?
Mr Hayes: Yes.
Q112 Chairman: What can you tell
us about why the number of appeals that companies are making against
licensing decisions has increased substantially in recent years?
Is this because outrageous decisions are being made by the controllers
initially or is it more companies having a go?
Mr Hayes: I am not sure that it
is an across the board increase in the sense that if you look
at the particular countries you will see that the actual percentage
in terms of appeals and refusals has remained fairly constant,
it has increased slightly but it is a less marked increase. If
you look at some of the actual processing, the figures for 1997
are one refusal for dual use out of 110 applications, and moving
on to 2000, there were three refusals out of 194 applications,
so it has gone up from 0.9 to 1.5%. By 2002 we get to 84 refusals,
67 of them military for 24 applications processed, that is 34%
and it is particularly in relation to Israel. It is that sort
of statistical glitch which is distorting the overall picture.
Whilst there has been a small increase, I think the overall picture
has been distorted by certain aspects of foreign policy.
Q113 Chairman: Industry presumably
wants a high degree of predictability in the system; you need
to know where you are. How close are you to feeling that you are
getting that from the system now?
Mr Hayes: In some senses we are
perhaps moving a little away from it. The Foreign Office had adopted
a policy of having nominated contact points to which industry
could refer if we were encountering difficulties with export licence
applications being processed, but they are moving away from that
position now and that is regrettable. Having said that, the general
improvement in turnaround and their willingness to engage with
industry in seminars are to be welcomed, but the overall picture
in relation to certain countries is one where the picture is becoming
less rather than more certain.
Q114 Chairman: Can you give us examples
of British companies that you feel have suffered unreasonably
as a result of the bureaucracy of the system?
Mr Hayes: On that point I would
refer to my colleague, Mr Otter, as he has got more examples than
I have on that issue.
Mr Otter: There are a number of
segments to the answer. Firstly, I have a member—and I am
actually treading on difficult commercial ground here because
there are a number of court cases that are still to be resolved—and
that particular company, which was in financial difficulties anyway,
it was a privately owned company, took one look at the emotional
and administrative effort that was required to introduce the new
export licence system and said it was not worth it. The two major
shareholders have pulled their money out of the company and 50
people are now redundant as a result of that. If I was to give
you a second segment, last week I was at an exhibition in Malaysia
and I sat down with my German competitor—this was a direct
company to company discussion—and we compared the German
export licence regulations and the British export licence regulations
as they would be in about a week's time and what I found is that
our bureaucracy is so much greater than theirs, it is unbelievable.
Their system is so much more simple to operate than ours will
be.
Q115 Chairman: Is it the system that
is different rather than the policy decisions?
Mr Otter: I think it is a bit
of both.
Q116 Chairman: Mr Hayes, you referred
to some countries where there are problems, delays, lack of predictability.
You mentioned Israel as one such country. Could you name the other
countries where industry has experienced particular difficulties
or delays?
Mr Otter: Egypt, India, Pakistan,
China.
Chairman: That is helpful. Thank you
very much indeed.
Q117 Mr Davies: Mr Otter, you said
something very significant, which was that the Germans have a
more efficient or a lighter bureaucracy in dealing with this and
although there may be no policy differences, the implication is
that we have a cost handicap as a result of our system being more
onerous. Is that what you are saying?
Mr Otter: Very much so.
Q118 Mr Davies: I would like to know
specifically in which ways the German system differs because there
may be lessons that we should be taking on board here.
Mr Otter: There is a simple one
that springs to mind immediately. If I take equipment from my
company to an exhibition overseas I need a temporary licence and
very frequently it does not arrive in time so we are left with
a plinth with no equipment on it. The Germans do not need a licence
to go to an exhibition, all they need at the very most is some
temporary documentation to take the equipment out of the country.
Q119 Mr Davies: That is one example.
Have you any more?
Mr Otter: Some of the countries
that we would not be allowed to export to they are exporting to.
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