Appendix 9: Further memorandum
from the Export Group for Aerospace and Defence
THE GOVERNMENT'S
RESPONSE TO
OUR PREVIOUS
EVIDENCE
Is UK Industry is being disadvantaged in China
vis-a"-vis our EU competitors and is the UK's interpretation
of the EU Embargo on China more strict than other EU members;
Please see the attached memo from Tim Otter,
on behalf of NBC UK, and also a memo outlining some publicly available
information from the latter half of 2004.
In addition, we know that one of our Member
companies has given an in-depth briefing to their local MP, The
Rt Hon Sir John Stanley (who, of course, sits on the Committee),
about a particularly interesting and illustrative case in which
they have been involved in China where they have been refused
a licence for the export of a single item of limited capability
dual-use equipment, whilst French and Dutch companies appear to
be supplying similar equipment of even greater capability into
China, including through the use of local licensed production
and assembly facilities in that market. We believe that this case,
alone, represents very strong "evidence in support of the
claim" that we made about the UK's interpretation of the
EU Embargo and the Code of Conduct being much stronger.
Are the German licence requirements for exhibitions
as strict as the UK ones and does the German system allow the
issuing of export licenses over the phone;
Please see the attached memo from Tim Otter,
on behalf of NBC UK.[6]
Are France's NBC licensing requirements in the
non-military sector as strict as the UK ones;
Please see the attached memo from Tim Otter,
on behalf of NBC UK.[7]
Is there a lack of consistency in EU Members'
control lists;
****
Are there any examples of there being inconsistency
or uncertainty in any advice that it is being given to companies
by DTI
****
WHAT EXPORT
CONTROL-RELATED
INITIATIVES COULD
THE BRITISH
GOVERNMENT LAUNCH
IN 2005?
Please find attached a copy of a memo of our
thoughts on some possible ideas.
The 680 system
We believe that the Government's response to
our observations (at item k on page 26 of their response to the
Committee) misses the whole point of our concerns. Whilst we fully
realize the status of the 680 and that it is not a licence, we
would argue that a 680 refusal should be allocated the same status
as an export licence refusal, in terms of the non-undercutting
provisions of the EU Code of Conduct. At present this is not the
case and British firms are walking away from potential business
opportunities because the 680 refusals indicate that a licence
would be refused, which other EU competitors are not in any way
inhibited from then pursuing and supplying, without any (even
slight) encumbrance upon them under the terms of the anti-undercutting
provisions of the EU Code of Conduct. Whilst the Government states
that "Exporters who are not seeking to release information
covered by a security classification are not obliged to use the
F680 procedure", in fact, under the terms of the Cabinet
Office's Manual of Protective Security (MOPS)—at Supplement
9, Section 84, covering Overseas promotion and sale of defence
equipment or technologies—it is a mandatory requirement
that companies must ensure that they always have 680 clearance
from DESO for any and all promotional or contract
negotiation activities associated with goods and technologies
on the UK's Military List.
We hope that this additional information may
be of assistance to the Committee.
Exports Director
EXPORT LICENSING—TAKING, ADVANTAGE
of 2005 A PAPER BY EGAD DRAFT DATED 4 JANUARY 2005
INTRODUCTION
1. Industry were invited by the Quadripartite
Select Committee to put forward some export licensing initiatives
which the UK could take in 2005 in its roles of Presidency of
the EU and Chairmanship of the G8. Some ideas follow of initiatives
in which HMG could take the lead.
THE "CERTIFIED"
OR "TRUSTED"
ENTERPRISE OR
ORGANISATION
2. Industry faces considerable difficulties
and costs from the fact that goods and technology exports are
controlled on a national basis when the supply base is increasingly
international in nature.
3. One proposal widely discussed over the
past few years for mitigating these difficulties is that of the
"certified" or "trusted" enterprise or organisation.
An enterprise or organisation which demonstrated the required
standard of compliance would be permitted to move goods and technology
between subsidiaries in different countries, or on to other trusted
enterprises or organisations (and end-users), without a licence.
A licence would only be required when the goods or technology
left the "trusted" perimeter. The system would be analogous
to the ISO 9000 arrangements for quality assurance. The concept
of the `qualified' company included in the ITAR Waiver agreement
between the US and the UK offers a kind of precedent, though admittedly
only on a bilateral basis.
COMMON PROCESSES
AND DEFINITIONS
4. No national export control system is
the same as any other. Regulations, systems, procedures and forms
are all different. There is not even a common and agreed international
definition of what constitutes an "export". This weakens
overall controls and creates loopholes which can be exploited
by the ill -intentioned, while increasing costs for companies,
which have to establish export control and compliance staff in
every country in which they operate.
5. There is therefore a need for the principal
exporting countries to commit themselves to a more homogeneous
approach. This will not be easy but at the moment it is not done
at all.
6. We would also like to propose that the
British Government could very usefully take the lead in the creation
of a publicly available, regularly updated, centralised internet
database of different countries' export control systems and procedures,
starting with the EU and G8 and building from this core, to assist
organisations in seeking out export control information on the
practical mechanics of different nations' frequently highly diverse
systems.
MUTUAL ACCEPTANCE
OF LICENCES
7. At present, export licences are valid
only for exports from the country by which they are granted. A
partial exception is the EU Dual Use Regulations, where the Community
General Export Authorisation (CGEA) is applicable throughout the
EU and, theoretically at least, individual licences are also valid
in all EU member states.
8. It would be a useful extension of the
EU Code of Conduct if military export licences, at least for an
agreed range of goods and destinations, granted in one country,
were valid in all the EU States.
AN END
TO "ARMS
EXPORT TOURISM"
9. Industry strongly supports the work of
the international regimes in their efforts to control proliferation
of sensitive technologies. There are however four of them—Wassenaar,
Missile Technology Control Régime, Australia Group, Nuclear
Supplies Group—with different memberships, meeting places
and methods of work. We do not believe that this represents the
best use of resources or the best way of ensuring comprehensive
application of the resulting controls.
10. We suggest therefore that HMG should
promote a decision in principle to merge the régimes, recognising
both that the practical implementation of a merger will take some
time, and that the resulting structure is likely to require sub-groups
covering much the same ground as the existing régimes.
AN INTERNATIONAL
DATABASE OF
SENSITIVE EXPORTS
11. International discussion of arms control
issues increasingly emphasises information sharing. This is understandable
in a world where non-state actors may be trying to develop weapons
of mass destruction. There are obvious difficulties about wider
distribution of intelligence information but we see no reason
why this should prevent the development of an internationally
accessible database of sensitive exports. We suggest that the
focus should be in the first instance on materials and products
of relevance to the development of WMD.
12. This would have two benefits. First
and obviously, it would enable procurements from one country,
in themselves possibly unexceptionable, to be linked to those
of another. Secondly, it might give governments the confidence
to decouple from WMD controls defensive products, such as detection
and identification systems, which are necessary but not sufficient
components of clandestine WMD programmes, and to reduce the amount
of bureaucracy attendant on their export to legitimate users.
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