Quadripartite Select Committee Written Evidence

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.


  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.


  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.


  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.


  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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