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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 145-ii

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

DEFENCE, FOREIGN AFFAIRS, INTERNATIONAL DEVELOPMENT

AND TRADE AND INDUSTRY COMMITTEE

 

 

STRATEGIC EXPORT CONTROLS

 

 

Wednesday 12 January 2005

 

RT HON JACK STRAW MP, MR EDWARD OAKDEN CMG

and MR DAVID LANDSMAN

Evidence heard in Public Questions 82 - 163

 

 

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Oral Evidence

Taken before the Defence, Foreign Affairs, International Development and Trade and Industry Committee

on Wednesday 12 January 2005

Members present

Mr Roger Berry, in the Chair

Donald Anderson

Tony Baldry

John Barrett

Mr John Bercow

Mr Tony Colman

Mr Quentin Davies

Mr Nigel Evans

Mike Gapes

Mr Bruce George

Mr Fabian Hamilton

Mr Piara S Khabra

Mr Bill Olner

Mr Martin O'Neill

________________

Witnesses: Rt Hon Jack Straw, a Member of the House, Secretary of State for Foreign and Commonwealth Affairs, Mr Edward Oakden CMG, Director, Defence and Strategic Threats, and Mr David Landsman, Head, Counter-Proliferation Department, Foreign and Commonwealth Office, examined.

Q82 Chairman: Foreign Secretary, welcome. Perhaps for the record and for the benefit of the public, you could introduce your two colleagues.

Mr Straw: Edward Oakden, though I am not sure of the title now.

Mr Oakden: Now Director for Defence and Strategic Threats, which means counter-terrorism.

Mr Straw: We have had a reorganisation where the jobs are the same and the titles have changed, so he is Director for Counter-Terrorism and Strategic Threats. David?

Mr Landsman: Head of Counter-Proliferation Department.

Mr Straw: His title has not changed. I am the Foreign Secretary!

Q83 Chairman: You are very welcome. Thank you to yourself and your colleagues for the replies you have provided to again a substantial list of questions which we submitted and you kindly responded to. Could I perhaps just say that there have been a number of issues in the media recently in relation to arms exports, some of which we are not going to cover this morning. For example, the Export Credits Guarantee Department and allegations of transparency or the lack thereof is an issue which I know the Trade and Industry Committee is going to be pursuing. I mention that primarily for the benefit of the public. There are some issues which you might think we would question the Foreign Secretary on, but in fact other committees are pursuing them with appropriate Ministers, so I thought I should mention that. Foreign Secretary, could I just start by asking you about the Export Control Organisation in relation to the job cuts following the Budget Statement this year. How will that affect the number of people employed in this activity?

Mr Straw: It will not have an effect on the Foreign Office where we are making efficiency savings, but this is an important aspect of the Foreign Office's work. It is a matter of public knowledge that the savings required of the Department of Trade and Industry are greater and this is more of a problem for them. It is the determination of Patricia Hewitt, the Trade and Industry Secretary, and myself to ensure that the current standard of service continues at its present level and improves and we work around it.

Q84 Chairman: As we understand it, the Export Control Organisation faces cuts of 25 per cent this year and then further cuts a year later. Both the NGOs and the defence manufacturers have expressed concern about this and, at face value, it does seem an alarming thing to do if we want to be very effective in terms of dealing with arms export licence applications.

Mr Straw: I will ask Edward or David to comment in more detail, but can I say that I have had a lot of experience in efficiency exercises over the years and I think there are colleagues here in different guises who have done so serving on their local authorities or as Ministers. My experience of that is that they are worthwhile exercises. Often if you do drill down into an organisation, you end up with a more efficient organisation, employing fewer staff. Both Patricia Hewitt and I accept that there are plain limits and the key here is that we deliver an appropriate level of service, but my own view is that we will be able to achieve that and there are plenty of organisations you can point to where at the same time as staff numbers have been reduced, you end up actually with a more efficient service. I cannot guarantee that that is going to happen here, but I can tell you that, as I say, we are determined that the current level of service should continue. Edward, is there anything you wish to add?

Mr Oakden: I think what is absolutely clear is that between the different departments there is a shared commitment to retain the coherence of the present system, the integrity of the regime and the integrity of the controls. We have seen over the years a number of incremental improvements and the introduction of the Smart Front End over the last year or so has been a real success and we have seen that in the performance figures. There is almost always with an organisation of this size a better way of doing things in some particular aspects.

Q85 Chairman: Sorry to interrupt, but we have only just had the JEWEL exercise, which stands for "joined-up and more efficient ways of export licensing". Your latest report says that you have reviewed these processes via the JEWEL exercise and you then go on to say that the JEWEL review has confirmed that, "whilst performance has been improving, we can do more to make it better", and then within a few days of that being published, effectively there is the announcement that the Export Control Organisation is going to face 25 per cent job cuts in the near future. You will understand, Foreign Secretary, why I ask the question.

Mr Straw: Of course, absolutely.

Q86 Chairman: In these circumstances, is there not some risk that the export control regime will not function as you wish?

Mr Straw: I understand the question. All I am saying and Mr Oakden is saying is that it does not follow that because you are securing efficiencies, the result of that is going to be a lower level of service. You are right to point to the sequence, but I also just say this: that whilst comparisons between government, central or local, and business should not be taken too far because they are performing different functions, the Government has to be much more accountable than business. In business operations, businesses, if they are going to stay alive, have constantly to seek better and more efficient ways of performing.

Q87 Chairman: Foreign Secretary, we all understand the reason for making efficiency savings, but we have had the JEWEL review, the process has just been undertaken, and now we are told that there will be 25 per cent job cuts.

Mr Straw: Mr Chairman, you are right to point that out and we are both acting as soothsayers about the future, but my response to that, just to repeat, is to say that the Trade and Industry Secretary, Patricia Hewitt, and I understand our statutory parliamentary responsibilities about ensuring that this system works efficiently and we are determined to ensure that that happens. Let us see, but I take on board obviously the concern that you have expressed, which I dare say is shared around the table, that of the NGOs and that particularly of the industry.

Q88 Chairman: I was going to ask if at this stage you know where the cuts are going to take place, which particular activities?

Mr Straw: We do not know. The purpose of them is that this is an administrative operation and it is quite a complicated one. It aims to be very efficient and it aims to deal with the scores and scores of very, very detailed questions which we have received from your Committee as efficiently and as effectively as possible which, I have to say, does add to the burden, but it is maybe a necessary part of all this. Anyway all I can say is that having witnessed all sorts of administrative systems which have both reduced their numbers and improved their efficiency, I do not believe that there is a level of staffing which has to be fixed and what we are also trying to do all the time is to improve the use of information technology in this area.

Q89 Donald Anderson: You will understand the suspicion, Foreign Secretary, that, having survived an efficiency operation, the cuts are simply a mechanical cut across the board.

Mr Straw: Of course I understand that. You may want to get more detailed evidence from Patricia Hewitt because the responsibility for this is split principally between the DTI and ourselves, but obviously MoD and DFID have an involvement as well, but what I have said is what I have said and, as I say, I am well aware of our responsibility.

Mr Landsman: As far as the Foreign Office is concerned, the Foreign Secretary mentioned some changes of name and some organisation changes which we have been making, what we call the Organisation Project, reallocating resources. May I suggest that we are operating within the JEWEL framework of the Export Control Organisation, but we, as part of our efficiency changes and reorganisation, have made some changes very recently in the way that export controls are handled in the Foreign Office side. That, we believe, will save us some resources by, in this case, concentrating the processing work and the bureaucratic work within my department rather than scattering it around the whole of the FCO and the geographical departments. That will save us some resources and we believe it will actually make us more efficient and effective.

Q90 Chairman: I understand that and my question really about the Export Control Organisation was to do with joined-up government and all of that, but let me just ask you two very quick questions. Do you believe reduced staffing will result in the greater use of open licences?

Mr Straw: I see no evidence to that effect. We have to make judgments about open licensing on the basis of the merits of the case.

Q91 Chairman: Fine, that is what I was hoping you would say, Foreign Secretary, thank you. Have you considered charging for the Export Control Organisation's services?

Mr Straw: Some other countries do charge and that includes the United States, Australia, I think France, and Germany charges as well. It is possible. We have not done so. I would need a lot of persuading, and I think so would the Trade and Industry Secretary, about the case for charging. Obviously we need to take the industry with us and the industry, as you are aware, have got complaints about the way the process operates and we are constantly in contact with them to try and alleviate those concerns. We do not happen to believe that the system is more onerous than those of other countries, though we are always willing to look at where they think it is, but there are no present plans to bring in charging.

Q92 Mr O'Neill: On the question of charging, it is the case that your embassies do charge companies for trade information when they want to get involved in non-defence activities, so it is not a matter of principle, it is just a matter of pragmatic judgment, I take it.

Mr Straw: The charging for trade information is a way in which UK trade and industry can recoup its costs, but also it is about ensuring a level playing field between those companies which seek to use or choose to use the British Government's trade and investment services and those which may go to private consultants. This is actually different. This is a control established not for the convenience of the industry, but for public purposes. You could argue that there are charges for licences in many other areas, for example, there are charges which are imposed, and quite substantial charges these days, in respect of planning applications, so I am not saying that it is a black-and-white issue, but we have to think it through very carefully and, as I say, be aware of the potential consequences for the industry if we are to go down that route.

Q93 Donald Anderson: Foreign Secretary, are there any suggestions within the European Union to harmonise the position in respect of charges, otherwise there might be unfair advantages to some countries?

Mr Straw: No, I have not seen anything about that. We may come on to deal with the issue of the EU arms control system for China, but one country in the EU at least which is quite a substantial arms exporter, Germany, does charge. 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. I doubt there would ever be an argument in favour of the harmonisation of charges in any event because the level of the charge relative to the total value of any arms sale would have to be fairly low and you could not get, as it were, forum-shopping by arms exporters; arms exporters have to apply for a licence in the country of origin.

Q94 Mr O'Neill: If we could go on to the transparency of government reporting, Foreign Secretary, and I do not want to appear churlish because I think most of us would agree that the Government has broken new ground in being open ----

Mr Straw: Good.

Q95 Mr O'Neill: ---- although I think some of us are a wee bit concerned because the detail which is offered is tantalisingly inadequate in a number of areas. For example, parts and components of electronic and communications equipment, there is not much information about that. There is information about brokering, about the source, but not the recipient, and there is little information about end use. As I say, some of this information could be in greater detail and at the moment we are seeing the tip of the iceberg and I think we would, therefore, be asking if you could provide us with more information because there is a feeling that perhaps having been asked to provide more information, what you have done is provide a little information about a lot more things, but not really very much about what they want to do with it.

Mr Straw: Well, you said you did not want to be churlish, Mr O'Neill, but I think you are being a tiny bit churlish.

Q96 Mr O'Neill: You know the spirit in which it is intended.

Mr Straw: Sure. I have always sought to be very open and properly so in my dealings with Parliament and the public. We now have, my guess is, the most transparent system of arms control in the world. There is a limit to the amount of information that can be put on the public record because you have to take account of the concerns of the industry and legitimate end users, but if there are proposals from the Committee for an increase in information, I will look at them, but I also say that there has to be, since you are concerned about the efficient operation of this system and, with different hats on, everybody around this table, regardless of Party, has a responsibility to ensure that there is, a limit to the amount put on the public purse. The necessary duties of this Committee do themselves add significantly to the overall cost of running the operation. In those countries where they do not have parliamentary scrutiny, the system is very much more straightforward. It is self-evident that there would be much less systematic record-keeping, much less concern about consistency and so on. I happen to believe in this system, but there has to be a limit and there is a balance to be struck.

Q97 Mr O'Neill: Given that we can agree between us as to the quality of the substance of the information you are providing and against the backdrop of job cuts, can you give an assurance to the Committee that the standards that you have already reached, not the ones we would like you to aspire to, will be sustained and defended through the changes?

Mr Straw: Yes, I can. Can I just say that we have altered the reports in two respects. One is that we now provide quarterly reports and I think we are the only country to do so. I may say, just adverting to the issue of EU arms control, when I took to the Foreign Ministers' meeting the annual report which is two or three centimetres thick and showed it to colleague Foreign Ministers and took them through the detail, they were astonished about the amount of detail that we are providing. I think we may get to a position where they are also under an obligation to provide similar detail which would be a very good thing, so we have done that. We now make quarterly reports on the website which, as I say, is a major improvement and instead of simply listing the aggregated goods items licensed by country SIEL, the quarterly reports show the number of SIELs issued for each specific goods summary. If we take both the quarterly reports and this change, this adds significantly to the transparency of the reports.

Q98 Mr O'Neill: I think we would accept this and we would hope that you might encourage EU colleagues to publish reports on a quarterly basis.

Mr Straw: I am because with, as it were, competitive advantage, that transparency across Europe is absolutely essential if there is to be a consistent standard in the application of the EU Common Criteria.

Q99 Mr O'Neill: One of the undertakings that was given to the Committee was that information on new types of licences created under the Export Control Act would be more comprehensive and that they would be not dissimilar to those available for OIELs, but it does not include any information on the type of equipment or technology being licensed. Do you think that there could be scope for greater information there? Well, maybe you could come back to us on that point because undertakings were given that there would be more information.

Mr Straw: We always stick to our undertakings, Mr O'Neill.

Mr O'Neill: Eventually!

Chairman: And we always chase them!

Q100 Mr O'Neill: Sometimes we have to qualify what your undertakings actually mean.

Mr Straw: There is no more assiduous select committee than this one, in my view, and you have got the cream of four other select committees!

Q101 Mr O'Neill: In your response to our last report, you said that providing more information on end use would be an unjustifiable diversion of limited resources. Is it only possible to extract this information from databases manually? One would have thought with the amount of money that the Government spends on software that there might have been something within the system which could be incorporated to avoid the use of manual extraction, not least at a time when you are trying to achieve staff cuts.

Mr Landsman: It is the case that with the present software it is simply impossible to extract this information automatically and it would have to be done manually with, we believe, a disproportionate amount of effort. Clearly when the next generation of software is introduced, this is something that we will be aiming to take account of. I think it would be difficult to justify replacing the software early purely for that particular purpose, but it is obviously something we will take fully into account.

Q102 Mr O'Neill: When do you anticipate changing the software?

Mr Landsman: Those decisions have not yet been taken. Work is progressing on the next generation of software. 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 DTI.

Q103 Mr O'Neill: And could you give us an assurance that the kind of software that would be required to end the manual extraction will be given consideration as far as the incorporation is concerned, even if as yet you have not really scoped the exercise?

Mr Landsman: Officials will certainly take into account all of these aspects and obviously Ministers will need to decide what is done.

Q104 Mr O'Neill: And you will let us know in due course?

Mr Landsman: Sure.

Q105 Chairman: End use is important. Indeed arguably end use is all that matters when it comes to arms export controls. We have really got to know where the stuff is going, so there is a degree of urgency about having as much information in the public domain as possible about end use. My question, Foreign Secretary, is about the Freedom of Information Act. Do you expect that to influence what you publish in future?

Mr Straw: No, because I doubt it and I cannot anticipate decisions under that Act and you are aware of how it works. If you are not, as the author of the Act, I am very happy to provide you with an extensive seminar.

Q106 Chairman: Thank you. I look forward to it!

Mr Straw: The Act makes clear that information which is due to be published in any event cannot have early or advance publication, so I am quite clear that were it not for this very open system that we have at the moment, we would be expected under the Act to publish the kind of information we publish in the quarterly reports, but since it is published in the quarterly reports, I am quite clear that we would be justified in refusing any prior application which obviously would just be chaotic and could serve no particular purpose. In terms of more detailed information, well, it may be that there will be individuals who will seek further information about individual licence applications and their consideration. The final decision on those would be subject to the tribunal and then to other provisions in the Act, but when the Act was drafted, a number of clear exemptions were introduced and agreed by Parliament. Some of them were absolute exemptions about the security service for the Royal Family and others, which you are about to talk about, were qualified ones where there is a public interest harm test, but those are issues of commercial confidentiality, general confidentiality and international relations. My own view is that I am certain we have one of the most, if not the most, transparent systems in the world, number one, and, number two, to go further than this would be to compromise, to damage the necessary commercial interests or commercial confidentiality of the industry and this is an important industry which sustains a large number of jobs and we all around this table have a responsibility to ensure that it continues and that is why there is an export control system, not an export prohibition system.

Q107 Mr Bercow: Foreign Secretary, during the British Presidency of the European Union, can you tell the Committee, because we have had quite a lot of evidence on this subject and other aspects of the strategic export control system, what you judge to be the priorities? If you look at strengthening the legal control of arms exports, tackling arms brokering and trafficking and building capacity to address the availability and the misuse of weapons within Africa and you have got six months, you have got to prioritise.

Mr Straw: There is completing what the Luxembourg Presidency have on the agenda and a lot of the agenda for any Presidency is completing work already in hand and it may be that the Luxembourg Presidency, which has already started, is able to complete the review of the Code of Conduct which has arisen in the context of the decision made in December 2003 to review the China arms embargo. A number of Member States, of which the UK has been in the lead, have used that decision to look again at the China arms embargo to seek to upgrade the way in which the Code of Conduct operates, and that is obviously very important. There is a user's guide on Criterion 8 of the Code of Conduct and this has prompted some Member States and the UK industry and NGOs to call for guides to other criteria, and we are happy to consider that. There is the issue of the candidate countries and also the new Member countries, the ten, where although, by definition, the ten have to sign up to these criteria, the standard of enforcement and transparency may in practice be less than in the former 15 existing Member States, so there is that. Then there is the whole issue of building up a consensus for the International Arms Trade Treaty which I personally am very committed to and that will be an international arms trade treaty and, as I spelled out in my Party's conference, is there to build on the work of the EU Code of Conduct in which we played a leading role when Robin Cook was in my seat seven years ago, so it is part of a wide agenda.

Q108 Mr Bercow: There is the issue of quality and enforcement, but equally importantly there is the issue, is there not, Foreign Secretary, of the extent of the provisions? What I would like to try to tease out of you, if I may, is the question of whether and, if so, to what extent you regard it as incumbent upon the British Government to look at how other Member States of the EU are behaving possibly within the terms of the Code of Conduct, but in a way which is, nevertheless, damaging? For example, if memory serves me, and I am sure you will correct me if I am wrong, there is an arms embargo within the EU on the export of weapons to Burma, but there is suspicion, and I put it no more strongly than that, that that embargo is currently being circumvented by Germany via the Ukraine. It is marvellous to have a Code of Conduct and it may have real merit and a great deal of attention may be paid to enforcing it, monitoring it and seeing if it needs to be updated in line with the concerns of the NGOs as well as of the industry, but what about things which perhaps do not fall within its purview at all, but the effects of which are very damaging?

Mr Straw: Comparative testing is very important in all areas of government, but particularly here where, Mr Bercow, you are right to imply that having the Common Criteria in plain text is one thing, but having common enforcement of those criteria is a separate thing, and the first is a necessary, but by no means an efficient, part of the second. The advice I have received is that on the whole other countries are assiduous in their application of the Criteria, but there is a difference which is about transparency, and this has arisen acutely in respect of the China arms embargo and has wider application. That is that we share information where one or other of us is refusing a licence, so if I get an application, and you will be familiar with the arms system, and I decide that that application should be refused, that information is then pooled on a confidential basis inside the EU and I think I am right in saying that if one has notice of denial by another country, which sometimes happens, and I then decide nonetheless to agree an export, we pool that information as well, I think. That circumstance is the only one in which at the moment there is effective pooling of information about positive decisions to license rather than negative decisions to refuse licences. Now, the number of licences granted greatly exceeds the number refused because obviously in each country the industry has a pretty clear idea of what the market will bear. We do publish details of all the applications approved, though we do not formally give it to the EU, but it is on the public record, whereas some other countries do not, so it is for that reason that I have been very committed to having a fully transparent system both of refusals and of positive decisions on licences. On the end user point, I have seen no information whatever suggesting that Germany has licensed arms to the Ukraine which have then been shipped to Burma. I have to say that the German Foreign Minister, Joschka Fischer, has been very supportive and was very supportive of extending the sanctions, the common measures against the Burmese regime given their failure to meet the undertakings which they had made in April or around April of last year to release Aung San Suu Kyi and to allow the NLD to participate in the national convention, but we are always happy to follow these up.

Mr Oakden: Perhaps I can just add two points. Firstly, we are looking for greater information-sharing and the fact is that because we have got a more extensive network around the world, we sometimes get more information and there is potential for us to share that more with other Member States. The other is a slightly different area which is what happens when a country comes out of sanctions and one wants to avoid a situation where you go from very tight control under an embargo to any sort of lurch, so 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.

Q109 Tony Baldry: Apart from the EU, the G8 and the Prime Minister's Commission for Africa, a lot of NGOs and a lot of us know that the scourge of Africa is the AK-47 and I just wondered what the FCO was doing in the context of the Commission for Africa on tackling and brokering and the presumption of denial. What is your input to the Commission for Africa and conflict prevention?

Mr Straw: The key thing I think for controlling small arms is an arms trade treaty because you have got to deal with a few countries in Africa who manufacture weapons. South Africa does and maybe other countries do and will certainly maintain them, but the main manufacturers are outside sub-Saharan Africa, so simply getting the African countries on board will not resolve the problem and we have to have an international arms trade treaty. We will be using the Commission for Africa, however, as a forum in order to build up support for this Arms Trade Treaty which will certainly include small arms, but will have to include other arms as well. You are right, Mr Baldry, to say that the scourge of Africa is the AK-47, but it is the landmine, it is rocket-controlled grenades and all of the other terrible relatively small arms which wreak such havoc and destruction on the continent.

Q110 Donald Anderson: Foreign Secretary, a number of the countries which joined the European Union on day one are traditional arms exporters, such as the Czech Republic.

Mr Straw: Sure.

Q111 Donald Anderson: Are you satisfied that the administrative procedures are sufficient in those countries, and of course there are coming in two or three years' time Bulgaria and Romania? At what time will the export control on arms kick in in respect of those countries?

Mr Straw: On the satisfaction about the new ten, I am able to give you a detailed answer. Am I personally satisfied? I am not sure is the answer. What is the case is that each of those countries had to meet criteria, very, very detailed criteria in 32 separate sections or chapters of the EU acquis and it was that that the European Commission were measuring when they were determining whether or not each candidate country had met a sufficient standard in order to be recommended for membership of the EU. The process is a very, very rigorous one. The Czech Republic has, to give you my impression, quite a good level of public administration, I think, of the EU ten and I have seen no reports of their system failing, but I also would accept that it is probably the case that for all the new ten, it will take some time for their systems to be quite up to the level of the previous existing 15. As for the new candidates, the two new ones coming forward, Bulgaria and Romania, we have now agreed a date and in the period between now and accession, they have to show that they are implementing all the standards that they have agreed in those 32 chapters. I think formally the system only kicks in on the day of accession, but there is a glide path and this issue arose quite acutely in respect of Romania, not Bulgaria, when there was some discussion in the margins of the meetings before the last European Council as to whether or not, because there were concerns about the level of public administration in Romania, the corruption and so on, we should not give a differential date or impose differential conditions in respect of Romania compared to Bulgaria. We decided not to and the reassurance there is that it is open to the European Commission at any stage before the date of accession to say, "This applicant nation is not meeting its trajectory on the glide path and, therefore, we should delay further the date of accession".

Q112 Mr Colman: During the G8 Presidency, you mentioned that in a sense you are following previous initiatives. Can I ask you about the Kananaskis Ten Plus Ten Plus Ten and will you intend to push this forward, particularly in terms of a further parliamentary assembly, and there was one held in December 2003 at which I represented this Select Committee and the idea was in fact that after the European Parliament had reconvened, as it were, after the elections, in our Presidency we would move forward significantly on that arms control initiative. Can I ask, Foreign Secretary, what is proposed?

Mr Landsman: Mr Chairman, Mr Colman is referring to the so-called 'G8 Global Partnership' for addressing the threats from the weapons of mass destruction from existing stocks primarily, but not exclusively, in the former Soviet Union. We certainly intend to take forward that initiative during our G8 Presidency and we have plans for two specific initiatives, one to address implementation of existing projects to ensure that any obstacles there are addressed, removed and the projects move forward, and we also intend to promote a threat-based assessment of priorities, as it were, for the next generation of projects under the G8 Global Partnership. As far as to the parliamentary conference, I am afraid we will have to revert to you with some more thoughts on that in due course.

Q113 Mr Bercow: Very briefly on the subject of the EU's WMD Action Plan, how do you intend to take that forward, not least with regard to the results of the peer review of dual-use export control systems?

Mr Landsman: Specifically on that issue of the Action Plan, that exercise feeds into ongoing work in the EU on implementation of the Code of Conduct of the export controls and we will want to do some more work on ensuring that the Code of Conduct is being implemented as part of the work which we will oversee during our EU Presidency.

Q114 Mr Evans: Foreign Secretary, on the arms embargo on China, France and Germany are very keen to get it lifted and your opposite number in the Netherlands, Bernard Bot, said he hoped that it would be lifted this year. What is your view?

Mr Straw: When this issue first arose in the EU European Council Summit on the 18th December 2003, I, because I happened to be there in our seat at the time, supported the proposal from President Chirac and Chancellor Shroeder that we should review the EU China arms embargo because, on the face of it, it had run its course. First of all, it was imposed in the light of the specific circumstances following Tiananmen Square and, secondly, at the time of its imposition, there was no EU Code of Conduct, so you either had an embargo across the EU or you had nothing consistent across the EU. Now, the human rights situation in China has eased, though I am not pretending it is fully acceptable and it is not as we spell out in our Human Rights Report, but it is certainly significantly better than it was 15 or 16 years ago. Secondly, there is now the EU Code of Conduct and what has been interesting in terms of the work that has been done both in the UK and across the EU is 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, so that is the background to this. What the Council decided this December, just three and a half weeks ago, and we supported this language both by definition, but also because we did, was this: "In this context, the UK Council reaffirmed the political will to continue to work towards lifting the arms embargo. It invited the ex-Presidency to finalise the work...in order to allow for such a decision. It underlined that the result of any decision should not be an increase of arms exports from the EU Member States to China neither in quantitative nor qualitative terms and in this regard the European Council recalled the importance of the criteria of the Code of Conduct on arms exports, particularly in relation to human rights, stability and security in the region and the national security of family and allied countries". That is where we are and, as I have always intimated, we are currently working on the revised Code of Conduct and the new instrument on measures related to what is called 'the toolbox'.

Q115 Mr Evans: So now that we have got the Presidency of the European Union, are you actively promoting the lifting of the arms embargo?

Mr Straw: Our decision in principle is that subject to satisfaction on the issues laid out by the European Council in December, we called, also, for a lifting of the arms embargo and that has always been the case and that was why, for the reasons I have intimated, we supported the original reconsideration of it. Indeed if it is lifted, we will end up with as effective arms control in respect of China in practice as we have now, but they will be ones which will apply to every other country, apart from one or two, like Burma, and also we will have a strengthened system across the EU. I have to say that I have long understood China's argument which is that to lump them in with, say, Burma and Zimbabwe is not appropriate and I do not think it is.

Q116 Mr Evans: Is there a likely timescale on this?

Mr Straw: I am a betting man on big races, but I do not bet on these things, not least because it would be viewed as insider information, but I think you would get relatively short odds on the decision happening over the Luxembourg Presidency. In other words, it is more likely than not that this will be decided under this Presidency.

Q117 Mr Evans: The final point then on this is that clearly you have got a very close working relationship with the United States of America. They are not keen on the lifting of the arms embargo along with one or two other countries, so what are you going to do to pacify them that the options that you are announcing today that you argue in order to see this lifted this year will satisfy them?

Mr Straw: The United States have an entirely legitimate and understandable interest both in the effectiveness of the European Union's system of arms control and in issues of regional stability in that area and it needs to be borne in mind that we often think of the United States as an Atlantic power, but it is also very much a Pacific power and China and Taiwan and other countries are across a pond, albeit quite a large pond. So there have been intensive discussions with the United States because it is a point I have often made in the room in talking on this issue in the European Foreign Ministers' meetings and in the European Councils that we have to do our very best to provide reassurance to the United States. They are our closest ally and it would be ludicrous to turn this into an issue of aggravation between these two allies, so a lot of effort is going into that. Part of the difficulty has been, frankly, a lack of information and an understanding in Washington and elsewhere about how our system works, so, for example, there was a report by a congressional committee, I think, last May about the UK system which was critical and based on a number of clear misunderstandings about the nature of our system. Our embassy weighed in and provided a point-by-point rebuttal of the system. I have on many, many occasions pointed out, number one, that the EU arms embargo itself has no legal force, that it is an agreement. People may say, "What about the Code of Conduct?" The Code of Conduct is backed by our law and the laws of other countries, so it has a different level of legal application. Also, and this is a critical point, what is not realised in the US, and why should it be until we explain it, is this central issue which is that since the embargo was imposed, you now have the EU Code of Conduct, the interpretation in most countries of the embargo, including the UK, has been a narrow one, that most of the decisions to refuse arms licensing to China have in any event been made under the Code and, as I said, most of the decisions which have been made to refuse under the embargo would have been made under the Code anyway and we also then take through our United States interlocutors a criterion in the Code relating to human rights, relating to regional security and so on.

Q118 Mr Evans: So you hope to satisfy the United States, but if at the end they still are not satisfied and they are still pressurising you to keep the arms embargo there, you will carry on with your policy?

Mr Straw: It does not work that way. In the United States there are many issues where the United States Government makes a decision which we would not necessarily have taken ourselves because our political and economic circumstances are different. The same applies in respect of decisions made by European countries, including the UK. The crucial issue is not to say to the US, "Are you going to vote for this?" anymore than they ask us to vote for some of the decisions they have made; it is to say to them, our very close allies, "We hope that we have provided you with both an explanation and a reassurance of why we are supporting this decision and why, in our judgment, there is good evidence that it will not do the thing which you fear it might".

Q119 Mr Davies: Foreign Secretary, are you saying that the American attitude towards the EU giving up its arms embargo on China is based either on a misconception, a misunderstanding because the Americans wrongly believe it will have some actual concrete and specific impact on the flow of arms exports, whereas you are saying it is not, or that it is based on a worry about the psychological effect of this embargo being abolished at this particular time and that will be seen as a very favourable gesture to the regime in Beijing?

Mr Straw: Well, it is based on both and obviously different people within the Administration and Congress have different opinions about it.

Q120 Mr Davies: So it is not based at all, in your view, on substance? In other words, there is not a danger that there would be any significant increase in arms?

Mr Straw: I understand their starting point and it is hardly a secret that whilst there is lots of suspicion about the UK's motives in relation to Third Countries, there is suspicion in the United States in many ways across parties about the motives of some other countries inside the European Union, so I understand their concerns. It is the case that the level of information about the nature of the arms embargo and how it operates was lower than I had anticipated. There was genuine concern about whether a lifting of the embargo would, first of all, lead to a significant increase in arms sales by European countries to China and it is for that reason that we got unanimous agreement by the European Council at the Summit last month to those words that there should not be any "quantitative or qualitative" increase. There has also been concern about whether the lifting of the embargo of itself could exacerbate tension across the strait between China and Taiwan. Now, to some extent those concerns have now lessened in any event as a result of the elections held in Taiwan on 8th December which led to the election of a President who is less exercised about relations with China than his predecessor.

Q121 John Barrett: If I can move on to Libya, in a way it is linked, because their arms embargo was lifted, to our discussions about whether to lift China's arms embargo or not. You mentioned in your previous answer that the EU Code of Conduct in fact restricts a number of weapons systems and equipment which may have been exported to places like Libya or China, but it is up to the individual EU States to interpret that EU Code of Conduct. Do you think that under the UK Presidency this is something which should be addressed because if, for instance, there is an EU-wide arms embargo in place, it could be that if the administration of that arms embargo was dealt with at an EU level, there would be consistencies throughout the EU, but when the arms embargo is lifted and we are then relying on the EU Code of Conduct, it is then up to Member States to look after this?

Mr Straw: First of all, by definition, if there is an embargo then the answer in every case, provided the application comes within the terms of the embargo, is no, so there is obvious consistency. If you go back to the China arms embargo, there is quite a lot of room for interpretation about the scope. As it happens, the UK interpreted the China arms embargo in a narrower way than some other Member States. The second thing is, for the avoidance of doubt, you could have a system of arms exports run by the Commission and turn that into a competence of the European Union. I am, and so is the British Government, wholly opposed to that because it runs straight into the rights of individual nation states within the EU to run their own defence policy and defence forces, and their arms industries are a very important part of that nexus. On your key point, Mr Barrett, about consistency, because the criteria are open to interpretation, there is an issue of consistency. I have to say that the advice I receive and what I have observed is that all Member States, particularly the large arms exporters, seek to take their responsibilities under the criteria seriously. There may be suspicions about one or other Member States across the water, but I have seen no evidence of Member States treating the Code in a cavalier way. However, there has been this issue of transparency. We have not had enough information about how it has been applied. That is why improving the transparency of the system by using the revisions to the Code in the toolbox are very important generally as well as in relation to China.

Q122 John Barrett: The arms embargo to Libya has been lifted, and in many walks of life the future performance of any administration is often such that you have a good idea as to how it is likely to go, based on what they have done in the past. Libya has a bad track record for passing on arms to other sub‑Saharan countries, eg the DRC and Sudan. Now that the embargo has been lifted, what concerns do you have that when they are modernizing their equipment their old equipment will not be passed on to some of these countries?

Mr Straw: Libya did have a bad track record, but on 19 December last year there was this dramatic historical announcement --‑

Q123 Donald Anderson: December 2003?

Mr Straw: Of course, yes. There was a dramatic announcement on behalf of the leader acknowledging Libya's previous bad record, giving a full disclosure of what they had been doing and turning over a new leaf in the most dramatic way. It was a very, very courageous decision and they have co‑operated fully with the international community and particularly with the US and the UK and the IAEA in fulfilling their obligations. Do you want to add anything to that?

Mr Oakden: Two things if I may. Firstly, there is a continuing dialogue with Libya, with ourselves and the Americans about particularly the implementation of the WMD side but also other aspects too. And we have said in addition that bilaterally we want to work with Libya to help it develop its legitimate defence needs, such as border security and so forth. If you put that together with the EU Code of Conduct, they result in our developing a dialogue with Libya, which other EU Member States would have as well, to ensure that precisely the concerns that you have mentioned do not happen.

Q124 Mr Davies: Foreign Secretary, can I come on to the matter of the ITAR waiver. The US Congress's apparent wish to resile from the promise we received from the administration on this is a considerable blow in the face, is it not? It is something which our record of dealing with America on defence exports or defence generally, which has always been a very fine record and conducted in very good faith from our point of view, in no way merits.

Mr Straw: I agree with you. We were greatly disappointed that the Congress deleted the provisions for an ITAR exemption from the Defence Authorisation Act. We welcome the fact that language was included in support of the expeditious processing of export licence applications and we were discussing the way forward with the US administration. It has been a constant source of discussion between the Prime Minister and President Bush, Secretary Powell and myself and our officials. It is disappointing. The administration did its best. On these issues it is for the Executive to propose and for Congress to dispose and they came to a different view. It is disappointing, particularly given what a close and reliable ally we have been for the United States through thick and thin.

Q125 Mr Davies: Do you think this prospect being held out of providing us with a promise of more expeditious processing as an alternative to the ITAR waiver actually does amount to an effective substitute for an ITAR waiver or was it just a meaningless sop to us?

Mr Straw: No, it is something, but it is in no sense an effective alternative to it.

Q126 Mr Davies: A reversal like this is something of a challenge to British diplomacy. Can you tell us what sort of instruments you have been trying to use to try to reverse this decision?

Mr Straw: There is not an issue about the position of the US administration; they are on the same page as we are. We are dealing with Congress. Without going into detail, let me say that there are particular members of Congress who are in powerful positions and who have a different view from both that of the UK Government and also the United States Government. As you are aware, Congress works in a slightly different way from the way in which the British Parliament operates. Here we simply make a good argument and, in regards to the party, if it is a good argument it is accepted.

Q127 Mr Davies: I am well aware of that, but this is the second occasion this morning we have come up against a situation where what you are telling the Committee is that members of the US Congress had misapprehensions about the workings of our export controls system and therefore their concerns are unreasonable in relation to that. That is a challenge to British diplomacy. We have a very expensive embassy in Washington. We have a very expensive diplomatic service. The idea that the US Congress should be making decisions on the basis of misapprehension of the facts, in other words a failure of information, is a very serious one.

Mr Straw: I do not wish to endorse particular adjectives you have adopted. There are plenty of occasions, if I may say so, where members of the British Parliament may come to an unreasonable misapprehension about the position of US Congress and administration. I constantly find myself trying to put the record straight on behalf of the US administration. So these things happen. Mr Oakden is writing me a note.

Q128 Chairman: I am not sure we are going to get much further on that.

Mr Straw: Mr Oakden's writing is very neat but sometimes a little bit difficult to follow. Anyway, what he is saying is that protectionism is a real point and that is a key element of it. You would not have to talk to the members of Congress themselves. They will say they are not under any misapprehension of the facts. They simply come to a different conclusion about the US's national self‑interests.

Q129 Mr Davies: The other day I put to one of the industry representatives who came before this Committee the idea that there might possibly be an element of quid pro quo here, an element of leverage we could use and that was to link in some way the ITAR waiver to the US Congress's strong view that we should not go along with a proposal to abolish the arms embargo for China. Is there a prospect for using this linkage effectively with the US Congress, indicating subtly, no doubt, that if the ITAR waiver, which we were promised, is withdrawn by the Congress then we might feel much less inclined to use our influence with our colleagues in the EU to prevent the arms embargo with China being removed? He gave me the answer that that was above his pay grade. I do not imagine it is above your pay grade. Perhaps I can put the idea to you and see what your reaction to that suggestion is.

Mr Straw: There may be those in the US who say that the two are linked. I have to say, however, that opposition in some quarters in the US Congress to the ITAR waiver predates any suggestion of a lifting of the China arms embargo and moreover, as I have explained, on the basis of the decisions made at the European Council this December, there is no reason for there to be anxieties in the US system. Our embassies around the world, including in Washington, are efficient and effective. We are also going through an exercise to cut their costs. I have to say that in my view in Sir David Manning we have one of the best ambassadors of any country around the world and he has very, very good access to the administration. That is not the issue. It is about members of legislative assemblies, including in this Parliament, having strong opinions.

Q130 Mr Davies: What about the linkage?

Mr Straw: That is my answer to the linkage. I do not think there is one, although it may be presented in that way. We are working very closely with British industry and with the administration and members of both Houses of Congress to try and find a way forward. I have had frustrating conversations with some members of Congress and I have also had very good conversations with other members of Congress who are going way beyond the call of duty to support the British Government's position and British industry.

Q131 Donald Anderson: You should not have written off a change in the Congress because there are influential senators, who you will know, who have sought ways and means of circumventing the House opposition.

Mr Straw: No, of course. I have not written it off at all.

Q132 Mr Colman: I would like to take you back to the international arms trade treaty. You mentioned that you were personally committed to this going ahead. Could you share with the Committee perhaps what you are personally committing to do in your leadership role this year?

Mr Straw: Let me put flesh on the bones of the proposal. I am very happy to receive ideas either formally or informally from this Committee and from NGOs with whom I have had discussions. In a speech which I intend to make next month I will set out my thoughts about the overall architecture of this and part of that is that it should have standards which apply to all arms transfers. There have been some suggestions it should simply be a small arms treaty and whilst it is true that small arms are a major part of the problem in places like Africa, they are not the whole of the problem. If you have a cut-off you then have got problems. It should take account of the need to avoid arms being used for, among other things, internal repression, international aggression, civil war, breaching international humanitarian law and being used by terrorists. There is then the issue of how it would work. I have already said that we would draw on the experience of the EU arms embargo (a) because it has worked and (b) because that is the best way in my judgement to do it.

Q133 Mr Colman: Is this an arms embargo or a Code of Conduct?

Mr Straw: A Code of Conduct. That is the best way of getting a consensus inside the European Union. We are working particularly with Finland which has also been actively supportive of this and I have had a number of informal conversations with Erkki Tuomioja who is the foreign minister of Finland. There will be further discussions in other international fora to try and build up a consensus so that it will reach a state where we can put it forward more formally.

Q134 Mr Colman: I understand you were in a meeting with UK‑based NGOs on December 16. How would you wish them to campaign on this in the current year? "We have to make poverty history" is one of the slogans of 2005. Is there a slogan? Is there a campaign? Is there part of their briefing you wish to share with us?

Mr Straw: I have not got a slogan for it. I am always slightly allergic to slogans if they are a substitute for careful thought. I have good discussions with the NGOs. We have got to campaign for this very widely. It is not an issue in this country, nor is it an issue between parties so far as I know in the UK. We have got to build up support for it in the European Union. We have got to seek to get the United States on board. We have got to get former CIS countries on board who are major arms exporters, one in particular. There will come a moment when I believe there will be a sufficient international consensus that we can move forward with formal proposals.

Q135 Mr Bercow: Foreign Secretary, I look forward to hearing your speech on the subject of arms control with eager anticipation. Perhaps we can just have an advance glimpse of your thinking. Would you agree that any arms trade treaty which allowed the continuing supply of arms to the Government of Sudan whilst deliberately and calculatedly denying them to rebel forces really would be nonsense?

Mr Straw: There has just been the signature of a peace deal in Sudan, this was over the weekend, on the north‑south access, with the deal being signed by Dr Garang and Vice President Taha. I am not going to anticipate decisions which I think we ought, or the international community ought, to be making in respect of the Sudan. What I would say, however, is that so far as the situation in Darfur is concerned, recently there have been more transgressions in ceasefires by the rebels, according to the UN Secretary General Special Representative, than there have been by the Government. I think the implication of your question was that it is the Government which is in the wrong and the rebels which may be entirely in the right. That is not the case. The Government of Sudan has a prime responsibility for security because it is the Government and a point I keep making to Government ministers and to the President is that it is unwise for them to seek to be compared with the rebels in that sense because they are the Government, but there is wrong on both sides. We have been very careful about arms embargoes and arms supplies. In terms of if there were a treaty in force and how that would apply in respect of the Sudan, frankly, it is too hypothetical, Mr Bercow, because we are not going to get a treaty in force for some time. I hope and pray that we are able to resolve politically the conflict in Darfur well before that.

Q136 Mr Bercow: I understand that it is hypothetical but it is such a practical example of where progress has to be achieved for the text to be meaningful that I hope it will at least be in the forefront of your mind as discussions proceed.

Mr Straw: Indeed. Getting a text and getting it agreed and implemented will be really important. It will not mean then that there will be a bonfire of all the weapons that are around Africa for example, but establishing much, much better standards and universal standards of control over the supply of arms and ensuring, too, that as a result of that there is much more intensive focus on the unofficial criminal arms dealers who make millions and millions of dollars trading in arms across Africa, that will be very important.

Q137 Mike Gapes: Foreign Secretary, we have already touched on the review of the EU Code of Conduct. Do you expect the revised Code of Conduct to be agreed under the British presidency in the second half of the year? What are the aims of our Government with regard to that Code of Conduct and any review? Will it be likely that we will have fewer national undercuts by this country and by other countries of any agreements than there have been in the past? We had that evidence from Save the World who were saying that there have been 25 per cent undercuts by EU states. You yourself gave evidence to us about five undercuts in 2003 by our Government. What are we doing to get out of this?

Mr Straw: First of all, as I indicated to Mr Evans, I think it is more likely to be agreed in this presidency than any other, but who can say. Where we have got to so far is that there has been an increase in the scope of the Code so that its criteria cover all applications for brokering, trans-shipment and intangible technology transfer licences, as well as physical exports, as at the moment. An obligation on Member States to refuse export licences if they consider that there is a clear risk that the items covered by the licence will be used to commit serious violations of international humanitarian law is a proposal that has been suggested by the International Committee of the Red Cross. I think it is a good idea. There is an obligation on Member States to take particular account of the final use of any products which they know are being exported for the purposes of licence production in third countries and an obligation on Member States to produce a national annual report. I think those are all good moves. Will it lead to fewer undercuts? I am not certain, Mr Gapes, but I think over time it will do, because the more transparency we have the more there is shared information about not only why countries are refusing applications but also which applications they are agreeing. Then over time there will be greater consistency. I have to say that this is an inter‑governmental Code because defence is a competence of sovereign Member States of the EU and although it is in force and people take their obligations seriously, because it is us and it is not the competence of the Commission and it should not be, there are bound to be some areas where, with the best will in the world, two Member States on the same information will come to different decisions. This happens with ministers. You get very, very finely balanced arguments. Sometimes I will say we should refuse an application and then there will be more information and I will say we should accept it or vice versa. There can be some inconsistency.

Q138 Mike Gapes: In this process of the review have you taken account of these national variations in legislation or interpretation?

Mr Oakden: We have taken account of them, which is why we are doing it at European level. That is the best way to address them.

Q139 Mike Gapes: Has there been a move towards greater convergence of approach? We were told by industry representatives that there are quite different interpretations of the Code in different EU states and that this could aid the proliferation of weapons in certain areas.

Mr Straw: There may be, which is why we need more information about that and changing the Code is not going to get more information.

Q140 Mike Gapes: Are we going for the highest common factor or the lowest common denominator here?

Mr Landsman: I think there is an ongoing discussion within the EU at working level on the way the Code is implemented, so there is discussion between the officials who make the recommendations to the ministers in each country on an ongoing basis. That is something which has an incremental effect over time regardless of the specific changes that you make to the Code of Conduct itself.

Q141 Mike Gapes: You talked about transparency and presumably that involves the sharing of information between different EU states. One issue that has come up is where one government might deny a licence but then another government grants it without knowing that the other state has denied it. Do you think we need to have much more notification of denials and more information given to other states about the basis on which applications have been dealt with?

Mr Straw: Whenever I get an application to deal with I am told whether there has been a denial by another state.

Q142 Mike Gapes: Are you always aware of that?

Mr Straw: I cannot prove a negative. Could there have been a denial of which we were not made aware? How on earth could I tell? I am always made aware of the denials of which the office is aware. I have not seen any evidence that other countries are holding back denials from us, if that is what you mean.

Q143 Mike Gapes: What about if the Government decides to have a transfer directly on weaponry to another state which is outside the licensing system, do you know about that?

Mr Straw: I do not see how we could.

Q144 Mike Gapes: How much exchange of information is there really between the EU states about what is going on?

Mr Landsman: We have a system for checking that transfers are government‑to‑government transfers. Gifting or whatever it might be are consistent with the criterion. The F680 process is used for that in our case.

Q145 Mike Gapes: We produce quarterly reports and we give very much the best information, but not all states have the same level of reporting as we do.

Mr Straw: One of the elements of the new revised Code is an obligation on Member States to produce an annual report and we want to get more transparency and then we will learn much more about the patterns of licensing and decision‑making on other Member States. At the moment the only consistent information we have is about their denials. If I may say so, Chairman, you have asked me to be brief. I think I may have explained this point on a number of occasions.

Q146 Chairman: Could I ask about equipment that I do not see listed in the EU Code, ie equipment that could be used primarily for torture. When the Government introduced a very welcome ban on exports of torture equipment in 1997 the then Foreign Secretary said that there would be attempts to encourage other EU Member States to have a similar ban. Where are we on that point?

Mr Straw: We certainly enforce the ban.

Q147 Chairman: The Government made a claim in 1997 to encourage other EU Member States. Is this part of the discussion on the EU Code?

Mr Landsman: The EU torture regulations specifically covering this point should be adopted later this year. So the work has been taken forward.

Q148 Chairman: So there is a similar list of equipments such as that that the Government has published. So it will be a common policy throughout the EU?

Mr Landsman: Yes.

Q149 Tony Baldry: Secretary of State, the working group reviewing Criterion 8 was due to finish its work last month. Has it finished? What has been the outcome? Are you concerned that, in relation to Criterion 8, because the threshold set is for serious risk of undermining sustainable development, by setting the threshold so high it will become meaningless?

Mr Straw: I do not think so. These countries are entitled to have defence forces. Indeed often it is precisely because they are in areas of instability they need them. It would be impossible for them to operate without defence forces. I think that the current criteria and the way it is worded are satisfactory, but there is this working group on its implementation.

Q150 Tony Baldry: Has it finished its work?

Mr Straw: It will do so shortly.

Q151 Tony Baldry: It is always a good line to take, shortly!

Mr Straw: In the Luxembourg presidency.

Q152 Chairman: Is there a similar review of Criterion 2 on human rights because Criterion 2 will be interpreted in very different ways by those controlling arms exports? Has there been any discussion of trying to clarify when Criterion 2 kicks in?

Mr Straw: There has not been up to now. There is no reason why there should not be in the future.

Q153 Chairman: Given that the UK is going to become the presidency of the EU in the second half of this year, would that not be an opportunity to try to flesh out Criterion 2?

Mr Straw: I am happy to think about that, Chairman. It depends on the resources available that we have to pursue it and whether we can get a consensus to start looking at it, but I am happy to think about it.

Q154 Mr Hamilton: Foreign Secretary, can I move back to the question of extra‑territoriality because I think that is something that exercises many of my colleagues on this Committee and many of the people we have interviewed from the NGOs. In light of the allegation that UK companies were brokering the export of arms to Sudan, are you confident that current legislation on extra‑territorial trafficking and the brokering of arms by UK nationals is adequate? Do you intend to strengthen that legislation?

Mr Straw: There is a big issue about extra‑territorial jurisdiction and it has caused a lot of problems for perfectly legitimate exporters (not of arms) from the UK to third countries where a ban on trade with those third countries has been put in place by the United States administration and the US has adopted an extra-territorial jurisdiction not just over their nationals but over third country nationals. There are a number of examples of this which have caused real problems for British business. If all countries start to claim extra‑territorial jurisdiction over third country nationals you have got some really serious difficulties in terms of international order. People do not seem to be aware of this. It is not a simple issue, extra‑territorial jurisdiction. Our policy is that extra‑territorial jurisdiction should be applied only to the most sensitive transfers and obviously the export of torture equipment is banned as are exports to embargoed destinations, save in exceptional circumstance, according to the terms of the embargo and it is therefore appropriate to impose strict controls on brokering torture equipment and to embargoed destinations to prevent UK people overseas who may circumvent the UK ban. We also should apply it to other groups which are not necessarily banned from export from the UK which are extremely sensitive, ie intangible transfers and technical assistance related to WMD and also to trade in long range missiles. It is an issue which is complicated.

Q155 Mr Hamilton: Last month, as you will know, we interviewed a number of representatives of non‑governmental organisations. They suggested that in some cases UK nationals may have relocated their operations to avoid regulation under the Export Control Act. Have you got any evidence that this is happening?

Mr Straw: I personally have seen no evidence of this. I do not know whether officials have.

Mr Oakden: I do not have details. It is clearly a possibility that we would need to have taken into account.

Q156 Mr Hamilton: Is it possible to let us know more in writing if you have got any more information?

Mr Straw: Yes.

Q157 Mr Hamilton: I want to ask one final question relating to a company called Aviant Air. I understand that this company has admitted to being involved in flying arms and other defence logistics for the governments of both Zimbabwe and the DRC and yet they were pictured in television pictures in December being contracted by the UK Government to deliver humanitarian aid to the victims of the tsunami disaster. I wonder if you have got any comment on that at all.

Mr Straw: I have no comment on that, Mr Hamilton. This is the first I have heard about it. If you want to send me more details because obviously you have more details, I will give you an appropriate reply.

Mr Hamilton: I would be pleased to do that.

Q158 Mr Evans: You may remember that when the industry came before us last as part of our report we included some of their allegations about the fact that we are stricter than some of our other EU counterparts and then in the Government's response the Government hit back at industry and said "piffle". They gave us some extra evidence when they came to see us and they have written to us since to say the allegations that they made were absolutely true and they have got evidence that it seems as if the French and the Dutch are supplying arms that could be interpreted as dual use when companies in this country have been denied. Do you have anything to say in response to that?

Mr Straw: We certainly did not say either to you or to the industry "get lost". We would not dream of doing so. I have a very high regard for the defence industry and what it does. They happen to know that. We would not dream of saying "get lost" either to the industry or to this Committee.

Q159 Chairman: I think Nigel was paraphrasing.

Mr Straw: I am just making this point. We did not say that. Neither could that inference be drawn from our response. We did say this as the answer to some of their concerns. I am always happy to look at detailed evidence which the industry has got about the regulatory burden on the UK industry in comparison with other European countries. This Committee has a very important responsibility in terms of the regulatory burden that is imposed because we have this much more transparent system than other countries. That requires a much higher degree of record keeping, of accuracy and ministerial involvement than applies in other countries. So it does not lie in the mouth of this Committee to start criticising the Government for the fact that if there is an additional regulatory burden, it is there unless you, the Committee, are going to seek to play your part in lightening that burden. I tell you very seriously, when you decide to put in hundreds of detailed questions you need to be aware of the staff time that is going to be involved. At one time last year about a month's work was contained in one letter from this Committee and although I will always seek to answer questions from the Committee and we did there, you have to make your own judgements. It does not lie in your mouth to complain about the fact that there have been hold ups in applications because we all know what the Germans and the French are doing, which is to spend so much time answering these questions. Big questions, yes; smaller questions, no. I am in favour of and I have got a good record in lifting regulatory burdens.

Q160 Chairman: As Chairman of this Committee you would expect me to say this because we had the discussion 12 months ago. We ask questions that we need to ask to do our job and one of the problems has been our surprise at the lack of some information that we thought would have been readily available using the kind of technology available these days and that answering some of those questions seemed to us to take longer than we would have expected. We know perfectly well that if we request greater regulation there is a cost involved in terms of time and money and so forth. You can be assured we know that. We are always conscious of it. I think I have to stress that the Committee has its responsibilities as well as your department. Nigel's question is still open for further responses.

Mr Straw: May I also refer you to page 25 of Command 6357 where we say, "Evidence suggests that the United Kingdom's refusal rate is comparable to that of our European counterparts. Specifically dating from the 2003 Annual Report and the Code of Conduct ... shows that in 2003 0.91 per cent of the UK's decisions were to refuse compared to 1.57 for France and compared to 0.57 for Germany."

Q161 Mr Evans: When the industry came to see us on two occasions when I have been sitting on this Committee they gave examples where they believe that we are stricter in interpretation than our European Union counterparts. When you are talking to other European Union countries you take very seriously what the industry has to say, do you?

Mr Straw: Of course. A criticism of me is more likely to be that I have erred on the side of granting a licence rather than refusing it where it is a marginal case, not where the issue is marginal, but the judgment is very finely balanced. I would draw attention, for example, to the incorporation statement which I made in June 2002 which was potentially very controversial but I thought was justified given the way in which the industry has changed its international configuration. I am very happy always to take account of concerns of the industry.

Q162 Mr George: Secretary of State, industry has expressed some concerns about uncertainties relating to WMD controls over them. Do you have any observations to make on this? There are a limited number of instances where industry has had restrictions imposed on them as a result of the Government's insistence on more complete controls over possible implications for WMD exports.

Mr Oakden: I think that may be referring to the need for a licence when it is being transferred to UK forces operating outside the UK.

Q163 Mr George: That is the second question. I hope this does not impose too much on you, but I am sure the Chairman will write a letter and maybe you could answer.

Mr Straw: If you have got specific concerns, I will follow those up, yes.

Chairman: We have finished slightly earlier than anticipated. Foreign Secretary, could I thank you very much indeed for your presence this morning. There are one or two issues arising that we will pass on to you in writing ever aware of the fact, very sincerely, that it does take time for your officials to respond, but we only ask questions that are important for this Committee to do its work and so a few more of those will be coming in your direction. Thank you very much indeed.