Memorandum from the Export Group for Aerospace
and Defence (EGAD)
At present we believe that Industry is currently
quite satisfied with the overall level of service being provided
by HMG in the processing of export licence applications, although,
of course, there will always be occasional cases where problems
may arise. As this performance has been achieved at a time when
there has been considerable resource pressure on those departments
involved (especially the Export Control Organisation), we believe
that this should be acknowledged and applauded. Naturally, there
are concerns about the future and whether the excellent level
of service which is being provided to Industry can be maintained
in the face of the resource staff cutbacks which have been faced
within the Export Control Organisation, especially. We have seen
a highly noticeable improvement in the turnaround of licences
over the last two years or so within the Foreign and Commonwealth
Office (for which they are to be warmly commended), resulting
from investment in new IT systems and processing changes, and
this is to be welcomed, as any example of a Government IT programme
which actually works should always be!
We have been discussing with the ECO [Export
Control Organisation] the issue of the need for a Compliance Manual,
for issuing to all companies to ensure that they are aware of
exactly what is expected of them in compliance terms, and which
could also be used by the ECO's own compliance officers to ensure
consistency in what they look for during compliance audits of
companies, and we are taking the action to endeavour to work on
drafting such a document, for the ECO's approval.
The ECO's highly commendable on-going initiative
of running compliance workshops around the country to promote
awareness within Industry of best practice has been continuing,
and EGAD has been discussing ways in which we can further assist
in enhancing these activities.
One thing which HMG in general, and HM Revenue
& Customs in particular, could do to assist in promoting greater
awareness and commitment to compliance would be (as is the practice
in the USA) to publish details of actions which have been taken
against non-compliant companies and individuals. We know from
discussions with HMRC and the ECO that there is a large amount
of enforcement activity against the non-compliant which is being
undertaken all of the time, but very little information on this
ever gets into the public domain.
In 2005 details were published by HMG of successful
prosecutions which had been taken in two cases. Details on these
two cases can be seen at:
http://www.dti.gov.uk/export.control/applying/praetorianassocscustomsfine.htm
and
http://www.dti.gov.uk/export.control/applying/multicorecustomsfine.htm
We believe that the publication of more information
on a regular basis of actions which have been taken against the
non-compliant, which have resulted in disruption of their commercial
activities, or the imposition of fines, etc would be invaluable
in demonstrating both nationally and internationally the seriousness
with which HMG takes export controls, and would assist greatly
in promoting compliance.
At present all too often cynics will clearly
believe, given the scarcity of information in the public domain
about enforcement actions which have been taken, that the likelihood
of being caught is negligible. This is further exacerbated when
cases are reported in the media of alleged apparent breaches of
export or trade control regulations which do not seem, to the
public at least, to have been actively and forcefully pursued
by the authorities, or resulted in any action having been taken
against those involved. Such cases, which have been reported on
since the new regulations came into force, have included, amongst
others:
— TLT International and the alleged
sale of electric shock batons to Zimbabwe, see:
http://www.guardian.co.uk/zimbabwe/article/0,2763,1445345,00.html
— TAR Ideal Concepts (and others) at
the DSEi 2005 exhibition, see:
http://www.guardian.co.uk/armstrade/story/0,,1571455,00.html
— Ashok Leyland's alleged deal for
the sale of "military trucks" to Sudan, see:
http://www.timesonline.co.uk/article/0,,2087-1678581,00.html
The lack of any public reports of any follow
up actions which have been taken in these high profile, and other
media-reported cases, as well as the lack of information made
publicly available about the considerable amount of enforcement
activity which we have been led to believe by ECO and HMRC is
taking place on a regular basis, does not assist in efforts to
convince people that they must take export controls seriously,
and that the consequences of non-compliance could be costly.
Interestingly, one issue which is coming to
the fore is a need for greater awareness of US export and re-export
controls within British companies who are seeking to do business
with the USA, for instance through participation in the Joint
Strike Fighter programme. EGAD is now looking at ways in which
it can assist in this, including by working closely with the US
Department of Commerce and the US Department of State, and our
sister US Industry body, the Society of International Affairs
(SIA), on the organization of workshops here in the UK.
EGAD has also been invited by the House of Commons
Defence Committee to work on producing a paper to propose, from
the Industry perspective, ways to address the current impasse
in reducing the amount of bureaucracy involved in transatlantic
defence trade and collaboration with the USA, in light of the
lack of progress with the proposed ITAR waiver, and work is beginning
on this.
We hope that the above additional comments may
be of interest to the Committee.
January 2006
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