Appendix 15: Further memorandum
from the Foreign and Commonwealth Office
PART ONE:
General questions and follow-up to the evidence
session on 12 January, and the Government's responses to the Committees'
report on the 2002 Report and the written questions dated September
2004.
FORMATTING AND
AVAILABILITY OF
INFORMATION:
1. The fact that the Government is now supplying
refusals information on a quarterly basis is very helpful. Could
details of end-user name and stated end-use be included in these
tables in future, as it was for refusals in 2003 (see file Q.13
refusals & revocations 2003)?
The Government agrees to provide the Committee
with this information in confidence.
2. The Committees have reviewed the information
received regularly on a quarterly basis and wonder if, in future
quarterly reports, information on incorporation SIELs to particular
countries (as in Q14 of the last set of written questions) could
be supplied instead of a list of extant OIELs. The Committees
would also like to receive information on appeals quarterly if
possible.
The Government agrees to provide the Committee
with confidential information on incorporation SIELs to particular
countries (to be decided) instead of a list of current OIELs,
and also to provide information on appeals quarterly, in confidence.
3. Could the Committees automatically receive,
in future, all export control-related UK submissions to international
and regional organisations, for example the OSCE, and export control
regimes?
The Government agrees to provide the Committee
with all annual and questionnaire returns it presents to those
organisations. We will be in contact with the Clerk of the Committee
to identify for each organisation, what returns we make, and the
best means of providing this information to the Committee.
LICENSING
The Government's written response to the Committee's
September 2004 questions shows that the number of applications
for SITCL licences differs significantly from that predicted in
the RIA (81 between November and August, compared to 900-1500
estimated for the year). The Government notes that this is more
in line with pre-consultation estimates, and this is borne out
by information supplied by the Government quoted in paragraph
72 of the Committee's Report on Secondary legislation. Nevertheless
it does differ significantly from the amended RIA.
4. Why does the Government think that the
number of applications for SITCLs is much lower than that predicted
in the post-consultation RIA? Could this mean that some people
do not know about the new controls, or are evading them? Also,
why does the Government think that the number of Miltech OGEL
registrations is much higher than predicted in the post-consultation
RIA?
It is still too early to draw any conclusions
about the level of licence applications under the new controls.
The figures Government provided in the post-consultation RIA reflected
a balance between our earlier and industry's subsequent estimates
on anticipated numbers of SITCL applications. We believe the discrepancy
between the actual numbers of applications and the RIA can be
explained by industry now having a better grasp of the activities
that are licensable and more importantly, what activities are
covered by the Open General Trade Control Licence (OGTCL), and
Open Individual Trade Control Licences (OITCLs). The OGTCL gives
licence coverage for many of the routine transactions which exporters
feared would require an individual licence.
We believe there is a good level of awareness
about the new controls. The DTI and HMCE have carried out several
awareness visits to brokers to inform them of the activities that
are controlled.
The Government believes that the higher than
predicted number of registrations for the Miltech OGEL, is due
to the success of our awareness campaign on the new controls.
Companies have a better understanding now not only of what activities
are controlled, but also of what the Miltech OGEL covers, and
are therefore registering to use it, where previously, some were
unnecessarily applying for Standard Individual Export Licences
(SIELs).
5. Has the Government received any information
to indicate that businesses involved in the transfer of goods
or technology subject to the new controls have relocated their
operations outside the UK to avoid regulation under the Export
Control Act? (Q155-156)
We are not aware of any cases where businesses
have relocated their operations to avoid UK controls. Naturally,
in the normal course of events there will be some movement in
where businesses are located, and some may relocate from the UK,
but for reasons unconnected with UK export controls.
PUBLISHING END-USE
INFORMATION: FOLLOW
UP FROM
Q101-104
6. Mr Landsman commented during the evidence
session that the automatic provision of end use information would
be considered "when the next generation of software is introduced"
(Q102). He added that "Dates for implementation of the project
will depend in part on decisions which are taken about the future
restructuring of the Export Control Organisation in the DTI."
Could the Committee have further information on the likely timescale
of this exercise, given the uncertainties referred to above?
The Government's Command Paper response, Cm
6357, noted that the Government had looked at whether we could
provide information on categories of end-user but concluded that
it was not cost-effective within the limitations of our current
licensing databases to extract the relevant information. Nonetheless,
the issue was being considered in the longer term in the context
of gradual improvements to databases. It is to this that Mr Landsman
was referring during the 12 January 2005 evidence session.
As Mr Landsman noted during the evidence session,
the restructuring of ECO, along with any other implications on
ECO of the DTI Efficiency Review will need to be finalised before
ECO can give proper consideration to introducing new databases
and IT. However, there are also policy considerations that need
to be resolved, concerning the level of information about end-users
that can be released.
DEVELOPMENTS IN
EUROPE
7. A number of important reports and initiatives
are due very shortly. Could the Government give the Committees
the latest state of play on:
(1) Revision of the EU Code of Conduct: 0107:
"it may be the Luxembourg Presidency. . . is able-to complete
the review." (see below for further specific questions on
this point)
The Code of Conduct review is now close to completion.
The Government attaches, in confidence, a document with the latest
state of play. We fully expect that the review of the Code will
be completed during this Presidency. It should be recognised,
however, that the timing of the review of the Code is being linked
to the review of the EU arms embargo on China.
(2) Review of EU torture regulations Q147:
"the regulations . . . should be adopted later this year."
The Committee would also be grateful for a list of equipment to
be covered as mentioned in Q148.
Negotiations concerning the proposed EU Torture
Regulation are ongoing. It looks likely that the Regulation will
be finalised some time later in the year.
There is, at present, some debate in the EU
about the composition of the Annexes. Annex II lists items whose
export will be banned by the Regulation. Annex III lists items
that will be licensable. The UK has been attempting to persuade
other Member States to accept the same strict control on these
goods that the Government applies at a national level. This is
proving difficult, as a number of Member States do not currently
control the export of some of the items in Annex III (particularly
handcuffs). Therefore, to enable us to keep our national ban on
the export of shackles, leg irons, and gang chains, the UK has
asked that Member States be able to apply stricter controls at
a national level. This proposal is currently under discussion,
and we have made it clear that the UK cannot accept the composition
of the Annexes without the inclusion of this provision.
The equipment that is to be covered by the Annexes
is as follows:
ANNEX II
1. Goods designed for the execution of human
beings, as follows:
1.1 Gallows and guillotines;
1.2 Electric Chairs for the purpose of execution
of human beings;
1.3 Air tight vaults, made of eg steel and
glass, designed for the purpose of execution of human beings by
the administration of a lethal gas or substance; 1.4 Automatic
drug injection systems designed for the purpose of execution of
human beings by the administration of a lethal chemical substance;
2. Goods designed for restraining human
beings, as follows:
2.1 Electric-shock belts designed for restraining
human beings by the administration of electric shocks having a
no-load voltage exceeding 10,000 V.
ANNEX III
1. Goods designed for restraining human
beings as follows:
1.1 Restraint chairs and shackle boards;
1.2 Leg-irons, gang-chains and shackles
Note: Item 1.2 does not control `ordinary handcuffs'. Ordinary
handcuffs are handcuffs which have an overall dimension including
chain, measured from the outer edge of one cuff to the outer edge
of the other cuff, between 150 and 280 mm when locked and have
not been modified to cause physical pain or suffering;
1.3 Individual cuffs or shackle bracelets,
designed for restraining human beings, having a minimum internal
perimeter exceeding 190 mm when fully locked;
1.4.4 Thumb-cuffs and thumb-screws, including
serrated thumb-cuffs;
2. Portable devices designed for the purposes
or riot control or self-protection, as follows:
2.1 Portable electric shock devices, where
not specified in Annex II item 2.1, having a no-load voltage exceeding
10,000 V, including but not limited to electric-shock batons,
electric shock shields, stun guns and electric shock dart guns
(tasers) Note: This item does not cover medical-technical goods;
2.2 Portable devices for the purpose of
riot control or self-protection by the administration of an incapacitating
chemical substance such as tear gas, OC (oleoresin capsicum or
pepper spray) and PAVA (pelargonic acid vanillylamide, synthetic
pepper spray).
3. Substances used for the purposes of self
protection or riot control, as follows:
3.1 Pelargonic acid vanillylamide (PAVA)
or synthetic pepper spray;
3.2 Oleoresin capsicum (OC) or pepper spray
(CAS 8023-77-6) Note: these items do not control pepper spray
individually packaged for personal self-defence purposes.
(3) Review of Criterion 8 Q151: "in
the Luxembourg Presidency"
We envisage that the Users Guide to Criterion
8 will be completed during the Luxembourg Presidency, as it is
being considered in line with the review of the Code of Conduct.
(4) EU dual-use regulation September 2004
Written Answers page 7: "The Task Force overseeing the Peer
Review process is currently working on an action-oriented final
report."
On 13 December the Council agreed the Task Forces'
recommendations for follow-up to the Peer Review. The recommendations
cover:
(i) transparency and awareness of legislation
implementing the EU system;
(ii) minimising significant divergence in
practices amongst Member States;
(iii) investigating possibilities for adding
controls on transit and transhipment;
(iv) providing assistance to those states
that need help in recognising dual-use items that are subject
to control;
(v) improving exchanges of information on
denials and consideration of the creation of a database to exchange
sensitive information;
(vi) agreement of best practices for the
enforcement of controls;
(vii) improvements in transparency to facilitate
harmonisation of the implementation of controls on non-listed
items (catch-all);
(viii) enhancement of interaction with exporters;
(ix) agreement of best practices for controlling
intangible transfers of technology.
This programme of work will be pursued vigorously
by Member States and the Commission during 2005 and 2006.
8. In his answer to Q93 on 12 January, the
Foreign Secretary offered to supply the Committees with information
about charges for licences elsewhere in the EU: "I am not
aware of the level of charges and I do not know whether either
of the officials here are, but we could get you information about
that." The Committee would be grateful for this information.
The Government has contacted several EU Member
States to discover their position in respect to charging for licenses.
We have gained the following responses:
France—No charge.
Germany—No charge (Charges for ancillary
services, which provide guidance and assistance).
Italy—
11 charge per application, plus an annual registration
fee of
258.
Netherlands—No charge.
Following this initial survey, we will now be
conducting a wider study within the EU. We will provide the Committee
with a copy of our findings.
9. Following up recommendation 12 of the
Committees' Report on the 2002 Report, and the Government's response,
does the Government intend to press for a harmonised approach
to gifts and other government-to-government transfers across the
EU?
The Government is studying the policy of other
Member States on this issue, and will then consider further discussion
at COARM in light of its findings.
10. The Committees gather that issues emerging
from the SIPRI Policy Paper on improving the annual Code report
and the expert meeting held (which is referred to under the Government's
response to recommendation 24 of the Committee's report on the
2002 Report) included:
— The study showed that it is impossible
to produce reliable figures on actual exports using customs data.
What thought has HMG given to requiring industry to gather data
on actual exports, rather than seeking to gather this data itself?
The data produced on the export of military
goods shows an approximation of the level of trade with individual
countries.
The Government publishes information on the
value of exports of military equipment to named countries in the
Annual Report on Strategic Export Controls. The identification
of exports by HM Customs & Excise is based on the classification
of goods in EU tariff codes that do not match exactly the classification
of goods subject to strategic export controls. In respect of those
codes that cover civil and military usage, Custom Procedure Codes,
and knowledge of exporters active in the defence sector, are used
to identify actual exports.
The Government does not believe it would be
justified in asking industry to take on an additional record-keeping
burden for this purpose, particularly given the extra work required
of industry by the new export controls.
— Is the UK seeking ways to harmonise
reporting on open licences with other EU countries? Neither the
UK nor Germany include such licences in their total figures for
value of exports licensed. While Germany could do so, it hesitates
since the figure constitutes a maximum value rather than the approximate
actual value. The UK does not assign a value to these licences
in the first place.
The Government will consider, in discussion
with other EU Member States ways to harmonise reporting on open
licences in the EU Annual Report.
11. Following up the Government's response
to the Committee's recommendation 22 of its report on the 2002
Report, punitive action by all EU member states if end-use conditions
set by one EU government are breached would be more effective.
Is the UK ready to suggest this in COARM?
The Government will look to raise this issue
at COARM.
The EU Code of Conduct: Further Questions
12. Can the Government comment on whether
the issue identified by the Committees on the legal status of
the Code (recommendation 25 of the Committees' report on the 2002
report) will be under discussion as part of the final negotiations?
(EU officials were quoted by Defense News as stating the voluntary
code would not become a legally binding document in the foreseeable
future—"EU to bolster arms export guidance", Defense
News, 15 November 2004).
The Government can confirm this. The status
of the Code has not been discussed in detail by officials for
a number of months, but it is expected that the issue will be
revisited in Brussels in the near future.
13. Can the Government give the Committees
further details on the "toolbox" referred to in Mr Oakden's
reply to Q108? "we are negotiating in the EU a so-called
"toolbox" which would essentially set in hand this series
of procedures which would involve both consultation and three-monthly
mutual notification about export procedures and what each country
has done over the previous three months."
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14. In response to a question from Mr Colman
about the G8 Global Partnership, in particular the proposal for
a further parliamentary assembly (Q112), Mr Landsman said that
the Government would "revert to you with some more thoughts
on that in due course." Could the Committees have the Government's
latest position on this?
Whilst Counter-Proliferation remains at the
very top of the Government's international security agenda and
is an established and important element of the G8 programme, the
Committee will know that the Government has identified Africa
and Climate Change as its two headline priorities for the UK's
Presidency in 2005. The Government is not therefore planning a
further G8 InterParliamentary Conference specifically on Counter-Proliferation
issues. Instead, our focus will be to use our Presidency role
to take forward work agreed at Sea Island in the G8 Action Plan
on Non-Proliferation. As part of that approach, the UK is co-sponsoring
with the European Commission a pilot project entitled "Reinforcing
EU Cooperative Threat Reduction Programmes: Community action in
support of the EU Strategy Against Proliferation of Weapons of
Mass Destruction". Under part of this project, ISIS Europe,
organisers of the G8 InterParliamentary Conference in 2003, plan
to hold an International Conference in Brussels in November 2005.
This conference will assemble experts of the European Commission,
the European Parliament, the EU Member States, specialized agencies,
and other international experts to present the results of the
research and to make practical proposals for the reinforcement
of the Community contribution to cooperative threat reduction.
Full details of the project are attached.
The Speaker of the House of Commons will host
a G8 Speaker's Conference in September. More details should be
available from the Speakers office.
15. Industry have expressed concerns about
the following points relating to WMD controls:
— the OGEL (Exports or Transfers in
Support of UK Government Defence Contracts) (sometimes known as
the Mod Cons OGEL) covers only technical assistance and technology
transfers in relation to programmes under contract to the MOD.
It excludes pre-contract technical discussions.
The Government has made it clear that the new
controls in Articles 8 & 9 of the Export of Goods, Transfer
of Technology and Provision of Technical Assistance (Control)
Order 2003 only apply where technology is actually transferred
and is for WMD end-use outside of the EC. For example,
the controls do not" apply to routine sales and marketing
discussions that may have a technical element.
The activities listed in the definition of technical
assistance are all qualified by the words "technical support".
Therefore, if an activity is not technical support, it falls outside
the definition of technical assistance. It is a misreading of
the provision to say that technical support can be provided to
an individual who does not possess the item for which the assistance
is being provided. For example, the following activities would
not be caught:
(1) Planning how to deploy and use detection
equipment in advance of its supply;
(2) Simply describing the possible uses
of a piece of NBC equipment (although some such descriptions could
qualify as an Article 9 technology transfer if all the conditions
for such a transfer were met, ie if technology was actually transferred);
The Government, therefore does not consider
that there is a significant gap in the Exports or Transfers in
Support of UK Government Defence Contracts OGEL. If there is an
actual pre-contract transfer of WMD-related technology to the
MOD, this can be covered by an OIEL, for the few individual companies
where this may be a relatively common occurrence. Indeed a handful
of such OIELs are in place. The Government is not aware of any
widespread problem for companies dealings with MOD.
— Blue light emergency services are
excluded, although there are emergency deployments outside the
UK which brings them within the scope of the controls.
Exports of NBC equipment, or transfer of NBC
technology from the UK by blue light services would be subject
to normal export controls, as regards the export of goods/transfer
of military or dual-use technology, insofar as the goods and technology
are listed or fall under the end-use control. If blue light services
are transferring NBC technology within the UK for subsequent use
outside the EU, or are providing technical assistance in support
of NBC equipment deployed outside the EU, then this activity will
be licensable under Articles 8, 9 or 10 of the Main Order.
The Government does not consider it unreasonable
that if companies provide Article 10 WMD end-use technical assistance
to the UK or foreign blue light services outside the EC they should
apply for a licence, given the sensitivity of the equipment/technology
in question. We do not think that blue light services are suitable
for inclusion in the Deployed Forces OGEL's given the diversity
of these services and the rarity of these situations.
The Government would assure the Committee, however,
that were an emergency to occur overseas, for example a WMD attack,
which required the overseas assistance of UK blue light services,
we would expect to quickly put licences in place covering any
Article 8, 9 and 10 transfers, provided we were happy with the
handling arrangements for any WMD detection kits.
— The narrower scope of "relevant
use" does not apply to equipment incorporating detection
papers or other NBC detection kit, as most protective suits do.
Industry therefore consider there to be an inconsistent approach
to the treatment of platforms, such as ships or vehicles, which
are not treated as for relevant use if they carry detection/identification
equipment.
Exports of NBC detection equipment from the
UK, or transfers of NBC detection technology from the UK, require
an export licence if the goods/technology are on the control lists.
Where any controlled NBC item is incorporated into a larger platform,
or a protective suit, an export licence will be required. A single
licence would cover the entire export and should be obtained by
the exporter of the platform or the suit.
It is possible that where NBC detection equipment
is incorporated into a larger platform, or a protective suit,
that a transfer of the NBC detection technology may take place
in the UK between the NBC supplier and the platform manufacturer.
This transfer is potentially caught by article 8 and 9 of the
Order, insofar as the technology is for a relevant use outside
the EU. However, DTI has stated that Articles 8 and 9 would not
apply where the transfer is for the purpose or manufacture
in the EC of a final product because the technology or software
being transferred is not in itself for use outside the EC by the
supplier of manufacturer but rather for use in the EC to construct
the final product. This applies to NBC detection equipment whether
incorporated into a ship, vehicle or protective suit. Article
8 and 9 would on the other hand apply where the NBC supplier
transferred NBC detection technology to another person in the
UK, knowing that that person intended to transfer that technology
outside the EU for a relevant use rather than for the purpose
of incorporating the NBC equipment into another product within
the EC for subsequent export.
Therefore we do not consider there to be any
inconsistency in our approach between these different items.
— Difficulties in interpretation surrounding
transfers taking place during conversations—the definitions
of technology and information are broad and imprecise.
The Export Control Organisation (ECO) has published
extensive guidance on its website (www.dti.gov.uk/export.control)
covering this point. In addition, ECO officials are always happy
to meet with companies should they have any uncertainty about
the controls on intangible technology transfers; indeed they have
already had numerous discussions and meetings with industry on
this issue.
— Support for HM ships, whose precise
location in relation to territorial waters of countries covered
by the OGEL may be unknown. Industry contend that HMG's observation
that this is not a new situation is misleading because until 2003
"it was believed, both by Government and by industry, that
transactions in support of HM Government, broadly defined, were
covered by Crown Immunity, even if the goods concerned were not
necessarily owned by the Crown." The current position appears
to be that Crown Immunity is only conferred on good owned by the
Crown, and therefore a licence is required for goods and technology
leased to, or exported in support of, HMG.
It is not correct, "that transactions in
support of HM Government, broadly defined, were covered by Crown
Immunity, even if the goods concerned were not necessarily owned
by the Crown". Crown Immunity applies in respect of the export
or transfer of military goods or technology owned by the Crown.
Crown Immunity does not attach to exports or transfers to the
Crown as in these circumstances the licensable act is not carried
out by the Crown.
In respect of dual-use exports and transfers
there is no Crown Immunity for anything licensable under the EC
Regulation.
However, where a dual-use control is properly
a domestic control, then Crown Immunity would apply, ie in respect
of Articles 8 and 9 (with the exception of 90)).
Where possible we have put in place new OGELs
to cover those transactions where Crown Immunity does not apply,
for example the Exports or Transfers in Support of UK Government
Defence Contracts OGEL, the OGEL Military Goods: UK Forces Deployed
in Embargoed Destinations and the OGEL Military Goods: UK Forces
Deployed in Non-Embargoed Destinations.
16. Can the Government comment on the information
supplied to the Committees regarding Avient Air? (Q157)—material
sent to the Government on 20 January.
The Government advertised its requirement for
an aircraft to our brokers on Boxing Day. Contrary to the assumption
in the question, many operators were closed and not in a position
to quote before the following day at the earliest. Of twenty operators
contacted, twelve were not working over the holiday, and only
three had aircraft available in the timeframe that we required.
Of the aircraft offered, one was too big for
the task (AN-124), others had insufficient payloads and would
have required us to apply for CAA exemption from EU noise regulations
(IL-76), which would not have been possible over the Christmas
holiday period. This left the Government with the option of the
Avient DC-10 that would carry 60 tons of freight and was available
for loading the following day (27 December).
The Government does have a system for clearing
individual aircraft and operators with the Sanctions Unit of FCO.
On this occasion, as a result of the Christmas holidays, DFID
was unable to reach anybody on their contact lists. We now are
in the process of improving our contact system, so this problem
should not happen again.
DFID had no previous knowledge of the allegations
against Avient. Therefore, bearing in mind the extreme urgency
of booking an aircraft, and the excellent payload and availability
offered, we made the decision to go ahead with the flight. The
plane departed on the evening of 27 December, the day after the
tsunami struck Sri Lanka.
17. Can the Government inform the Committees
when and where the Foreign Secretary's speech on the International
Arms Trade Treaty is going to take place? (Q132)
The Foreign Secretary will give a speech on
the Arms Trade Treaty in mid-March, at an event to be held by
Saferworld.
18. Industry have criticised the "seemingly
ad hoc and uncoordinated way in which HMC&E officers around
the country implement the regulations." Does the Government
agree with this assessment? How will the Government ensure that
those responsible for the merger of Customs and the Inland Revenue
place sufficient emphasis on the need for a joined up approach
to the export control system?
HM Customs and Excise has a duty to deploy its
controls in the most efficient and cost effective way and to match
resources to risk. Goods being exported outside the EU are declared
to Customs together with accompanying documents such as licences.
Regulatory customs controls at intra Community frontiers were
abolished on completion of the single market on 1 January 1993.
For those goods still requiring export licences for intra Community
movements, a condition was introduced on the standard individual
export licence requiring it to be presented at the local customs
office for checking. Since this requirement was introduced, Customs
has restructured and the number of inland offices rationalised
in response to modern working practices and risk based controls.
Customs are aware that the need for licences to be presented at
inland offices can create practical difficulties, particularly
when that office is located at some distance from the trader's
premises. We therefore intend to review, with the DTI, the current
arrangements for processing licences for intra Community movements
with a view to reducing the burden on business and adopting a
more risk based approach.
The Government assures the Committee that the
new HM Revenue and Customs Department will continue to place a
high priority on strategic export controls and work to ensure
that operational effectiveness is maintained.
19. The Committee would be grateful for an
update of the information supplied by the Government in the autumn
of 2004 on action by Customs and Excise since January 2004 (see
answer to written question 17 to the Government dated September
2004).
Prosecution case
On 18 February, at Southwark Crown Court, a
man was convicted of 12 separate counts of being knowingly concerned
in the exportation or attempted exportation of aircraft parts
to Iran, via Singapore, in breach of an export prohibition or
restriction. He was sentenced to 18 months imprisonment on all
counts, to run concurrently, suspended for two years. The defendant
was also banned from being a director or manager for 10 years.
The confiscation process has been initiated.
Cases adopted by specialist investigators
Specialist investigators have adopted two new
cases. This figure does not include those cases dealt with by
Customs investigators that for one reason or another do not result
in a criminal investigation.
Small arms and light weapons
Customs stopped the following small arms and
light weapons: 12 firearms, six firearms parts, 140 rounds of
ammunition, two stun guns and 6 capacitor blasting machines.
20. The Foreign Secretary told the Committees
on 12 January that "it transpires that most of the applications
for arms exports to China which have been refused in recent years
have been refused under the EU Code of Conduct and not under the
embargo which is narrow in its scope and, moreover, most of the
refusals under the embargo would have fallen to be refused under
the Code of Conduct in any event. As far as the latter is concerned,
I think I am right in saying that for the UK there were only two
refusals under the embargo, and those were not particularly significant,
which would not have been refused under the Code of Conduct"
(Q114) Can the Committee please have details of these refusals?
Mr Rammell told the House during Foreign Office
questions on 25 January that "I repeat, however, that no
arms sale that has been refused until now under the embargo would,
to all intents and purposes, be possible under the code of conduct."
[Hansard column 160]. Is there an inconsistency here?
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21. The Government did not accept the Committee's
conclusion 18 of its report on the 2002 Report, which related
to end-use undertakings regarding the use made by the Indonesian
authorities of British-built military equipment. In particular
the Government cited "the fact that the assurances predated
the introduction in 2000 of the Consolidated EU and National Arms
Export Licensing Criteria." Can the Government be more specific
on this point, given that the EU Criteria were adopted in 1998,
and are based on EC criteria adopted in 1991 and 1992, and UK
criteria adopted in 1997?
In 2000 the Government consolidated the UK national
export licensing criteria with those in the EU Code of Conduct
on Arms Exports. The Government announced the original UK national
export licensing criteria in July 1997. Following this, and as
a result of a joint UK-French initiative, the Council of the European
Union adopted the EU Code of Conduct on Arms Exports on 8 June
1998. From that date the Government assessed all licence applications
against both the UK's national criteria and those in the EU Code
of Conduct. While the criteria in the EU Code of Conduct were
compatible with those which the Government announced in July 1997,
there was a large degree of over lap between the two sets. The
consolidation which used the EU Code of Conduct as a basis, and
incorporated elements from the UK's national criteria where appropriate,
continued to assess all export licence applications on a case
by case basis. The Consolidated Criteria does not specifically
regulate where in the importing country the equipment is to be
located. Although, where the equipment is likely to be used will,
however, be one factor in assessing an export licence application
against the Consolidated Criteria.
In terms of the end-use undertakings that the
Committee refers to, the Government of Indonesia had informed
the UK that if, against expectations, they had to contemplate
the use of such equipment in Aceh they would inform the Government
in advance. In August 2002, the Indonesian government approached
the UK government saying that they wished to deploy British-built
military equipment to Aceh, which would have represented a breach
of existing assurances. The Indonesian government subsequently
gave a new assurance that British-built military equipment would
not be used for offensive purposes, nor to infringe human rights
either in Aceh or elsewhere in Indonesia. The Indonesian Government
had been open in announcing their intention to deploy equipment
to Aceh. We were satisfied with the substance of the new assurances,
since they explicitly rule out the use of British-built military
equipment offensively and for internal repression in Aceh and
throughout Indonesia. Advance warnings of deployment to Aceh alone
was subsumed as soon as the assurances became applicable to the
whole of Indonesia.
When writing to the Committee in October 2002,
the Government's concern was to bring to Parliament's attention
the Indonesian government's proposal to use British-built military
equipment in Aceh, which would have been in breach of the assurances
then in place. The letter to the Committee did make clear that
all export licence applications for Indonesia would continue to
be rigorously assessed on a case-by-case basis against the Consolidated
EU and National Arms Export Licensing Criteria. There was therefore
no change in the policy in which export licences are assessed,
and no practical change in the way in which UK controls of exports
to Indonesia are implemented.
22. The submission by the Export Group for
Aerospace and Defence responding to the Government's comments
in its response to the Committees' most recent report is attached.
The Committees would like to give the Government an opportunity
to respond to the points made.
The Government has already made its position
clear on the majority of the issues raised in this Memorandum
submitted by industry, in our September 2004 Command Paper response
to the Committee, Cm 6357. We would nonetheless make the following
comments:
Guidance on technical assistance
The DTI has published extensive guidance on
its website (www.dti.gov.uk/export.control) covering this point.
Export Control Organisation (ECO) officials are however always
willing to, and indeed regularly do, talk to companies who have
specific enquiries.
German licence requirements for exhibitions
Our September 2004 Command Paper response to
the Committee, Cm 6357, set out the German authorities' response
on this point which suggested they do not give licences over the
telephone. If industry has evidence to the contrary, they should
supply us with the details such as the number of the licence,
the date of the call, and the name of the German official, so
that we may take this up again with our German colleagues. We
would however make clear that whatever the practice in Germany
is, we do not consider it acceptable, from a risk management point
of view, to grant licences by telephone for WMD-related kit to
sensitive destinations.
French NBC licensing requirement in the non-military
sector
Again, the Government would invite industry
to provide it with the evidence to support their previous comments
so that we may approach our French partners with it.
Inconsistent advice on the new trade controls
The Government's intention is of course to provide
consistent advice on the new controls. We have looked into what
we believe is the specific alleged example of inconsistency referred
to in the industry memorandum. The first calls the company made
were to relatively junior staff. The facts of the case in question
were complex and took some time to establish. The answer to the
company's enquiry was not immediately obvious to those staff.
Quite quickly more senior staff became involved and gave a definitive
answer, having confirmed the facts of the case with the company.
This resulted in a licence being issued to the company, in time
for them to exhibit at the trade fair they wished to attend. This
was an instance of a complicated licensing query getting moved
up the ECO management chain to an appropriately senior level,
and resulted in a licence being issued. We do not accept it constitutes
conflicting advice.
Initial advice on the new controls and the licensability
of specific transactions is sometimes provided over the telephone
in order that licensing officials can provide as helpful a service
as possible to those affected by the new controls. Some enquiries
however raise particularly difficult issues which require careful
consideration, and exporters should always bear this in mind.
The alternative is for ECO to insist on written rating enquiries
in each case and not give any guidance over the telephone to exporters,
but we do not believe exporters would welcome such a policy.
EU level playing field in the area of strategic
export controls
The approach adopted by EU Member States to
strategic export controls is broadly similar through their application
of the EU Code of Conduct, the EC Dual Use Regulation, the EU
Common Military List and EU Embargoes. However, Member States
may introduce additional controls, such as nationally applicable
embargoes and they retain the ability to reach their own decisions
according to the Code of Conduct as a matter of national sovereignty.
We do not believe that UK industry, that is the second largest
defence exporter in the world, is treated more harshly overall,
compared with their EU competitors. The system of open licensing
in the UK gives them a significant advantage compared with most
of their competitors.
Harmonisation of controls on tangible and intangible
technology exchange
EU member States are committed to the EU Common
Military List and to apply the EU Code of Conduct. The EC Dual-Use
Regulation 1334/2000, as amended, sets out EU-wide controls on
goods and technology exports and transfers. There is a Joint Action
on technical assistance to WMD programmes and proposals are currently
under consideration to broaden the EU Code of Conduct to include
wording on Intangible Technology Transfers. Together this creates
an environment where the scope and application of the controls
is already pretty well harmonised across the EU.
The new WMD end-use controls in Articles 8 and
9 of the Main Order go further than is required by the EU Dual-Use
Regulation reflecting the UK's commitment to prevent WMD proliferation.
However, we have specifically sought to address any unnecessary
burdens in this area by putting in place a number of new OGELs
to cover technical assistance eg OGEL Exports or Transfers in
Support of UK Government Defence Contracts, OGEL Military Goods:
UK Forces Deployed in Embargoed Destinations and OGEL Military
Goods: UK Forces Deployed in Non-Embargoed Destinations and wide
ranging OIELs precisely for the purpose of facilitating the pursuit
of legitimate new business and co-operation with overseas partners.
Cases Four, Five and Six
The Government will approach its counterparts
regarding these allegations.
Case Seven—licensing of samples
The Government will approach its main EU exporting
counterparts to seek clarification on how they licence the export
of samples. We would make clear however, that in the WMD context,
samples can be significant.
Case Eight—delays in licensing personal
body armour to a British private security company/British personnel
operating in Iraq
The Government is well aware of the situation
in Iraq and the need to expedite legitimate applications. Equally,
however, we need to assure ourselves that any exports are genuine
and are not going to end being diverted to terrorists.
Government officials have been proactively looking
at how to speed up the process of certification by the Iraqi authorities
(a legal requirement under the UN Sanctions Order) so that these
licences can be processed as quickly as possible, with the proper
checks. It is hoped that these measures will result in a significant
reduction in the turnaround times for applications over the next
few months. In addition, the Government has introduced an Iraq
OGEL covering pre-export activity, which takes place, either
within the UK or overseas, where the end-user of the intended
goods will be the Government of Iraq or the Multinational Force
(this includes bodies contracted to either) and those goods are
to be supplied from the United Kingdom.
Discussions with MOD
The Government would reiterate, as noted in
our September 2004 Command Paper response to the Committee, Cm
6357, that a licence is only required under Articles 8 and 9 of
the Export of Goods, Transfer of Technology and Provision of Technical
Assistance (Control) Order 2003 where it is proposed to transfer
in the UK, software or technology which has a "relevant use"
(ie is WMD-related) and where the transferor has reason to believe
the technology or software may be used outside the EU. While this
could apply in certain circumstances to transfers of technology
to the MOD if they intend to use that technology outside the EU,
this will only be the case where technology is actually transferred.
It does not apply to routine sales and marketing discussions which
may have a technical element, for example if the MOD discusses
with a supplier the general capabilities of particular types of
equipment, contractual arrangements. Also, discussions prior or
subsequent to a transfer are not in themselves licensable and
so would not need to be recorded. In addition, a licence would
not be required for the transfer in the UK if the subsequent use
outside of the EU by MOD is of hardware which incorporates that
technology/software (eg NBC detection equipment), rather than
of the technology per se. The Government still maintains that
the number of situations which are licensable are in practice
relatively few.
In respect of Article 10 of the Order which
requires a licence for the provision of technical assistance related
to anything with a "relevant use" outside the EU. In
certain circumstances this could catch the provision of technical
assistance to UK Armed Forces, eg where a UK supplier is providing
assistance directly from the UK by telephone or e-mail. However,
the Government has put in place an Open General Licence to cover
all such assistance (and indeed exports) to UK Forces on deployment
which has facilitated this assistance without the need for individual
licences.
The low numbers of export licence applications
the Government has received for such discussions with the MOD
since the new controls came into force supports this conclusion.
DEFCON 126
The Government agrees that the DEFCON 126 allows
MOD to issue information supplied under a contract for the purpose
of promoting the establishment of an International Collaboration
Agreement. It introduces a presumption that MOD may provide such
information outside the UK and that a UK export licence may be
required. The DEFCON also contains a release clause that if enacted
for controlled information would require an export licence if
transferred by a company. We do not see that this conflicts with
export control regulations.
Exemption for the supply of equipment and technology
to UK Armed Forces
The Government maintains its position that to
introduce exemptions into the legislation would risk creating
loopholes and would be difficult to draft. Instead, tailoring
OGELs and OIELs for specific purposes provides a much more flexible
approach, while maintaining legislative control over the activities.
Case Nine
The Government has introduced OGELs to specifically
address this issue.
User-friendliness of HM Customs & Excise
HM Customs and Excise are responsible for administering
a wide range of national and EU taxes, duties and reliefs as well
as enforcing a wide range of prohibitions and restrictions on
the import and export of goods. Customs' enforcement priority
in export controls is to seek out those deliberately attempting
to breach the controls, rather than to place excessive regulatory
burdens on compliant trade. We aim to prevent the export of dual-use
goods to countries of WMD concern, and the export of military
goods to destinations subject to arms embargoes. Customs have
had much success in disrupting attempts to supply sensitive goods
to countries of concern, though this activity is not always visible
as it does not result in a criminal prosecution or the seizure
of goods. Customs are always willing to consider positively, suggestions
from exporters as to how customs controls can be made more effective
or how the burden on compliant trade can be reduced.
Staff from the posts cut in ECO under the Efficiency
Review should be redeployed into compliance
The function of compliance and awareness is
of significant importance, and the Government considers great
progress has been made over the last year in this area, not least
due to the tremendous support of the DMA in holding regional roadshows
on the new Act. While there are no plans currently to cut the
number of compliance officers, equally it is unlikely that the
posts to be cut from elsewhere in the ECO could be redeployed
in a compliance role as this would defeat the purpose of the headcount
reduction.
PART TWO:
SPECIFIC LICENSING
DECISIONS 2003 AND
FIRST TWO
QUARTERS 2004
All except the last question in this section
are follow-ups to answers in the memorandum and disc supplied
to the Committees in the autumn of 2004. The file references are
taken from the disc supplied to the Committees. The Committees
appreciate that these questions may take longer to answer than
those in Part one.
****
February 2005
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