Memorandum from the Society of British
Aerospace Companies (SBAC)
1. SBAC is the UK trade association representing
companies supplying the civil air transport, aerospace defence,
homeland security and space industries and has members who are
exporters. SBAC is a contributor to the Export Group for Aerospace
and Defence (EGAD) which plays a key role in ensuring that UK
companies are aware of their obligations under UK export control
rules. EGAD has made a detailed submission to the committee highlighting:
(a) the importance of a good level of service
that is being received by customers from the Export Control Organisation
(ECO) in turning around licences;
(b) joint activities with the ECO to develop
a compliance manual and deliver workshops;
(c) the need for greater awareness of US
export and re-export controls by British companies working on
programmes such as the Joint Strike Fighter (JSF); and
(d) opportunities to reduce bureaucracy in
transatlantic trade and collaboration with the USA.
2. We do not intend to duplicate the information
provided in EGAD's submission but would like to take this opportunity
to provide some additional information that specifically relates
to the aerospace sector.
UK AEROSPACE
3. Aerospace defence exports are an important
part of the economic landscape, as they tend to offer higher profit
margins than domestic sales. According to the Government's Defence
Industrial Strategy, the UK is the world's second largest defence
exporter with a 20% share of the global market.
4. Aerospace is one of the few globally
competitive and successful manufacturing industries based in the
UK, with a turnover of £18 billion and employing some 250,000
(2004). Innovation in production techniques, design and technology
is crucial to the continued competitiveness of the sector and
aerospace companies invest heavily in research and development.
11% of turnover was invested in R&D in 2004. [1]Crucial
to the retained competitiveness of the sector is an ability to
take part in projects with external partners and to supply equipment
overseas. The ability to export technology and equipment efficiently
is crucial to this and the speed at which applications are processed
by the Export Control Organisation therefore has a bearing on
the competitiveness of UK aerospace.
5. UK aerospace exports a range of equipment
that falls under export controls including aircraft engines, avionics
equipment, ejector seats, missiles, sensors and detection equipment,
parachutes, landing gear and command control, communications,
computers, intelligence, surveillance, reconnaissance (C4ISR).
C4ISR is an area of major growth potential for UK industry. The
major elements of the C4ISR opportunities in Europe include intelligence,
surveillance, target acquisition (ISTAR) and command and control
integration (C2) are estimated to be worth €900 million per
annum, of which a considerable proportion will be developed by
the aerospace sector, [2]and
presents a considerable opportunity to SBAC members.
6. Cooperative programmes undertaken with
partners in the USA, Europe or elsewhere can bring together governments
and industry. Opportunities such as these offer benefits in both
economic and technology terms and bring with them the ability
to share development costs through economies of scale in production.
Other benefits include enhanced interoperability with allies and
through strengthening bilateral relationships, including security
relationships.
UK EXPORT CONTROL
7. SBAC is committed to promoting full compliance
with export control legislation and considers it very important
that there is widespread confidence in the way the system of licensing
operates. The reduction in the number of employees at the Export
Control Organisation as a result of the Gershon recommendations
is a concern to SBAC as it could lead to an erosion in the quality
and efficiency of administering licence applications. Forecast
cut backs come at a time when members are relatively content with
the level of service being provided by the ECO.
8. EGAD, in conjunction with the DTI, is
working hard to promote further compliance amongst UK operators.
It is logical to assume that, if these activities are successful,
this will lead to an increase in demands upon the ECO. It is not
in anyone's interests to bring about a situation where there are
question marks over the ability of the ECO to deliver its function
effectively and efficiently.
PROPOSED PRIVATISATION
OF THE
EXPORT CONTROL
ORGANISATION
9. SBAC is opposed to the privatisation
of the Export Control Organisation as this would open up questions
of confidence in the licensing process both by member companies
and partner countries. The main function of export controls is
to define jurisdictions to where exports cannot be sent, fitting
with wider Government policy aims that reassure members of the
public. In addition, export controls contribute to the Government's
wider defence strategy in ensuring that defence exports are not
being supplied to potential adversaries.
TECHNOLOGY SHARING
10. SBAC members are greatly disappointed
that no material progress has been made in improving arrangements
for defence technology sharing between the US and UK. SBAC, in
conjunction with EGAD, is exploring other avenues that may be
pursued to ease the burden of export control red tape between
the US and UK.
January 2006
1 UK Industry Survey, 2005, SBAC. Back
2
C4ISR Market Analysis, Strategic Review, Frost and Sullivan, September
2005.
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