Quadripartite Select Committee Minutes of Evidence

Examination of Witnesses (Questions 160-179)


13 MARCH 2006

  Q160  Sir John Stanley: How are we picking up electronic devices that could be used as triggers for explosions?

  Malcolm Wicks: Technically I do not know the answer to that.

  Mr Williams: When you say "picking up"?

  Q161  Sir John Stanley: Catching them in the control system.

  Mr Williams: There are certain trigger devices which are controlled. I am not expert enough to tell you now what they are and where they are on the control list. We would have to give you a written answer on that.

  Sir John Stanley: If you would, please.

  Malcolm Wicks: I imagine it is a difficult area because presumably a lot of rather innocuous things could be used as trigger devices.

  Q162  Sir John Stanley: It is an important area and that is why I am asking the question. It is a crucial area.

  Malcolm Wicks: I am not technical either, but it is a question of what you then have to stop, I guess, but let us look at that. If we can write to the Committee, Mr Chairman, on that we will probably have something useful to say.

  Q163  Chairman: Yes, we would be grateful.

  Malcolm Wicks: Can I just go back to the earlier question because recently there has been a development on Iranian end-users of concern. The purpose of a list is to alert UK exporters to end-users that we are concerned about in Iran. That is an example of how, when there is a concern, we disseminate that concern to appropriate companies.

  Q164  Judy Mallaber: When representatives of the industry gave evidence to us in January they cited a very worrying case which highlights a very difficult problem which is hard to resolve which we would like to explore with you. Their case was about a car dealership which had a very large order from a country, to which they did not normally export, for certain components, and the company was puzzled by the order so they checked up on it and it turned out that the reason was that the components were ideally useable in low-grade, low-cost missile systems. We understand that the order did not go ahead. That company was clearly very on the ball. What was alarming was that, without any knowledge of, or intention to breach, the Export Control Act, that could easily have gone through. How do you reach sections of British industry which have never regarded themselves as defence manufacturers and who could unwittingly supply components for military systems? I realise that is a very difficult issue and I wonder how you tackle that?

  Malcolm Wicks: Obviously we know about this case, so again if I could ask Mr Williams to answer that point?

  Mr Williams: We have within the EU Dual-Use Regulation the so-called `catch all' control, end-use control, which allows us to make something licensable which is not otherwise licensable where it may be going into a WMD programme. I am not familiar with the specifics of the car parts case, but there is a frequent problem which is that proliferators, having been denied access to controlled goods because of the export licensing rules, will seek goods which are slightly less sophisticated and which are not normally controlled; things like machine tools which have three axis instead of five axis. In a way that is a good thing because they are having to procure sub-optimal goods. We essentially use intelligence which is our source of information about these things and then we will target awareness accordingly. It is not sensible to target the whole of the UK car dealers for the sake of one case, but if we heard about something like that then we would home in on it.

  Q165  Judy Mallaber: You clearly have the powers to deal with it, but does it not just show the weaknesses of the system? Are you just dependent on somebody fairly on the ball picking it up within the industry?

  Malcolm Wicks: As I said earlier, we have to act on intelligence but, put the other way, how difficult would it be—you are talking about car parts, which are fairly common—to make sure that every car part going to country X does not end up two stops later in country Z. There is an issue about proportionality here, is there not? The only safe way to do it would be to ban all exports from the country more or less. At the end of the day, Mr Berry, there will be—when I say anecdotal evidence, I do not mean that pejoratively—I mean important evidence where things do not go right and things get through or are exhibited at exhibitions. The more general issue is whether we have got any overall worrying evidence from intelligence, customs stops, what has been found or not found in Libya and Iraq, what we know about AQ Khan, all of that to suggest that our system at the moment is not doing a reasonably good job. That is one of the judgments we need to bear on this and weigh it against the important specifics that inevitably are brought to us and brought to a committee like your own.

  Q166  Judy Mallaber: More generally, the representatives gave us an estimate of how they saw the size of the problem because of the Act and they said that some years ago the DTI estimated in the region of 35% of UK companies who should be applying for export licences were not.

  Malcolm Wicks: Who gave that estimate?

  Q167  Judy Mallaber: This was the representatives of the industry at the January meeting, EGAD. They said that your estimate was 35% of UK companies should be applying. That was some years ago and I am not sure exactly when. Does that sound like a plausible figure still?

  Malcolm Wicks: First of all, through you, Mr Chairman, it is not our estimate. We believe, but I am not sure that we are absolutely certain, that it is an ex-ECO staff member—we think we know who—who estimated that it is 35% of UK customers. I am advised that he did work for ECO about 15 years ago.

  Q168  Chairman: That is what your current estimate is?

  Malcolm Wicks: We do not have a current estimate.

  Q169  Judy Mallaber: Can you make a guess?

  Malcolm Wicks: No.

  Q170  Chairman: If there is no current estimate then I think we ought to move on.

  Malcolm Wicks: Mr Chairman, my current judgment, as I alluded to earlier, is that given what we know about the general situation in terms of Iraq and Libya and the things I have mentioned, my judgment is that we are doing pretty well. Are we perfect? No, we are not. I would be interested in the Committee's judgment as to how you weigh the anecdotal and specific cases against the overall picture. That is the issue.

  Q171  Judy Mallaber: Your judgment would not be that this is an endemic problem.

  Malcolm Wicks: It is not an endemic problem. I am agreeing with you that that is my judgment.

  Q172  Richard Burden: Given the problems that you have identified on a couple of occasions now of identifying exactly what is or what could be a dual-use item, could you tell me is there written down anywhere any criteria for what should be included on the list of dual-use items of regulation and, secondly, who adds items to that list?

  Mr Williams: The EU Dual-Use Regulation has a specific list attached to it—the annex—those are the goods for which you require a licence in order to be able to export them. Does that answer your question?

  Q173  Richard Burden: How do you actually get something added to the list and who would do it?

  Mr Williams: There are the International Export Control regimes such as Wassenaar, the Nuclear Suppliers' Group, the Australia Group and MTCR.[2] They are the four in which the experts decide to negotiate on what should be controlled or de-controlled as well and then that is transposed back into the EU regulation that then takes effect in UK law for the dual-use. For the UK military we do it directly ourselves into our military list.

  Q174 Richard Burden: Do you think it works? Are you happy with the way that whole process works?

  Mr Williams: Yes. The important point is that it has to be an international process because obviously if we are doing one thing and other countries are doing another it is not going to be very effective. It has got to bring in the international community. Globalisation is mentioned.

  Q175  Richard Burden: I am just saying whether that process, which seems a bit long and drawn out, works?

  Mr Williams: Yes, it is long and drawn out. There is an annual cycle. The control lists are there and they exist all the time. They are being added to and subtracted from annually but the fact that that annual process might be drawn out I do not think matters. I do not think there are gaps in the control lists that are causing these difficulties.

  Q176  Malcolm Bruce: Is there a danger with small companies very often who are innovative in their own area—I am talking about reputable companies not trying to export illegally—who might not fully appreciate these dangers where things might go as second or third user? Is there some kind of promotional campaign you could or should run to alert companies in that situation that they should seek guidance?

  Malcolm Wicks: In general we are doing a great deal on that. A lot of outreach work, seminars, DVDs and all the rest of it. That is a very important point because I am generally aware, but not least from my work with my energy portfolio, that some of our best and most entrepreneurial companies in terms of science and technology are often preciously small and many could be forgiven for not knowing about this particular legislation. We have got to ensure that they do know about it because they could be at risk of being hoodwinked into wrong exports. We do need to reach them and we are doing our best. That is a very important point.

  Q177  Mr Borrow: Following on from that, in the evidence we have received before there is only one full-time post at the ECO dedicated to outreach work for the UK industry and two staff supporting the website and telephone helpline. Do you think that is sufficient, given the scale of the problem and the complexities that we have been hearing about?

  Mr Williams: There are two members of staff who work full-time on organising and running the seminars and training sessions that we do for exporters. We bring in other staff from around ECO and MoD, FCO, Customs, to support those activities. It is slightly misleading to home in on the figure of two, but that is enough for what we do.

  Q178  Mr Borrow: Following on from the gist of my earlier question, which was that if evidence comes to light as the new system beds down that resources are not adequate to do the job properly, whether the department would be prepared to look at representations seriously for improvements of further resources in this area?

  Malcolm Wicks: I have a note here that since June 2004 a total of well over 1100 individuals from 461 companies have attended various seminars and training courses run by the ECO. No doubt someone will say that is only X% of all the companies, but it does show that we are working quite hard in this area.

  Q179  Peter Luff: I have an issue with this discussion because one of the problems here is, say you were this car dealer and you did not know and you just exported them, that is obviously a problem you have to deal with in this promotional activity. If you had a suspicion at the back of your mind that there might be an issue, but you were quite strapped for cash and would not mind an export order, you would be tempted not to. If you thought you might take a long time to reach a decision on whether or not there is an issue here, how quickly would you have turned round that car dealer's enquiry when he made it to you? If he made a tentative enquiry saying "I think I may need a licence. What is your advice?" what would be the timescale?

  Mr Williams: Our target is to turn around 70% of such applications within 20 days.

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