House of Commons - Defence

Select Committee on Defence First Report

12 ANNUAL AND QUARTERLY REPORTS ON STRATEGIC EXPORT CONTROLS

369. We concur with the view of the UK Working Group that "for effective parliamentary and public scrutiny to take place in this area, information covering all forms of UK transfers is required and the information needs to be current, precise, and comprehensive".[498] We consider that the publication of current, precise, and comprehensive information is essential for the effective operation and scrutiny of the system of strategic export controls. The Government can be rightly proud of its achievements and has a good story to tell on the publication of information but the account is not finished and there is room for more improvements. We are disappointed that the Government has not made the publication of information and transparency part of the 2007 Review of Export Control Legislation.

Date of publication of the Annual Report

370. The 2005 Annual Report on Strategic Export Controls[499] was published in July 2006 and therefore does not take account of any of the recommendations we made about the form or content of Annual Reports in our last Report which was published in August 2006. In reply to our recommendations the Government indicated that it was "always looking for ways to improve the content of the Annual Report and will consider these suggestions in the context of the 2006 Annual Report".[500] We had hoped that the 2006 Annual Report on Strategic Export Controls would be published before we completed our deliberations on this Report. In the event this did not happen. While we appreciate that the Annual Report has to be cleared by five departments,[501] it would considerably assist scrutiny of strategic export controls if the Government were to publish future Annual Reports by the end of April. This would allow us to carry out at least a preliminary examination of the Annual Report within six months of the end of the year rather than report 18 months after the end of the year. We recommend that the Government publish future Annual Reports on Strategic Export Controls by the end of April each year.

2005 Annual Report on Strategic Export Controls

371. Without the 2006 Annual Report on Strategic Export Controls our assessment is therefore unfinished business. We set out below the recommendations which we made last year and, where indicated, reaffirm them or having reviewed the 2005 Annual Report on Strategic Export Controls set out fresh recommendations.

ANNUAL REPORT: SECTION ON RESOURCES

372. We recommend that future Annual Reports on Strategic Export Controls set out in a consistent and systematic manner the resources made available by the Government to implement and enforce strategic export controls with details of enforcement actions.[502]

373. The Government replied to this recommendation last year:

503

374. We welcome the Government's response. Given indications that departments will face a squeeze on their resources as a result of the current Comprehensive Spending Review we consider that it is essential that the resources made available for strategic export controls are set out in future Annual Reports. We shall review the information on resources provided in the 2006 Annual Report. We reaffirm the recommendation at paragraph 372 which we made last year.

ANNUAL REPORT: SECTION ON POLICY OVERVIEW

ii. include an assessment of the effectiveness of arms control policy and enforcement during the year covered by the Report, including a review of risks and of areas where improvements are required;

iii. provide an analysis of trends in, and volumes and values of, strategic exports;

iv. identify areas where the Government has concerns about the supply of arms and the adequacy of its controls;

v. set out changes in policy since the last Annual Report; and

vi. provide a detailed overview of outreach and assistance to overseas countries.[504]

375. The Government replied:

Regarding [paragraph 374.i] (i), (ii) and (iv) above, the Government considers that this need is already met through the significantly expanded Section 1 of the UK Strategic Export Controls Annual Report 2005. In addition to this, a form of analysis of licences refused and processing times is already provided in the "Information on Refusal Percentages and Standard Individual Export Licence Application Processing Times by Destination" which is available from the ECO's website. This is published at the same time as the Quarterly Reports.

Concerning [paragraph 374.i] (iii), although the Government is confident that its export control regime is one of the most robust in the world, the 2007 review will provide an opportunity to look again at the adequacy of its controls.

In relation to [paragraph 374.i] (v), the Government has done and continues to do much in terms of outreach. Although the Government would be content to brief the Committee on the detail of its outreach programme, it may not be appropriate diplomatically for this information to be placed in the public domain. The Government will consider the possibility of providing a "Restricted" report to the Committee.

376. We have carefully read section 1 of the 2005 Annual Report on Strategic Export Controls and we welcome the additional information provided. It does not, however, fully meet our recommendation. In our view section 1 should be broadened to include a detailed report on UK export control policy as a whole along the lines of that provided in the Swedish Annual Report, which includes, for example, information on market developments and trends and detailed information of transfer of manufacturing rights outside Sweden and cooperation agreements with foreign companies.[505] We recommend that section 1 (Policy Issues Relating to Strategic Export Controls) of future Annual Reports be widened to include a detailed report on UK export control policy as a whole along the lines of that provided in the Swedish Annual Report. We welcome the Government's offer of a "Restricted" report on outreach and recommend that the Government provide such a report at the same time that it publishes its Annual Reports on Strategic Export Controls.

ANNUAL REPORT: SECTION CONTAINING "COUNTRY BY DESTINATION" STATISTICS AND ANALYSES

377. In our Report last year we recommended that the "country by destination" section of future Annual Reports provide, for each country, a summary of export policy with tables containing total figures for arms exports and licence applications as follows:

i. a statement on the general arms transfer control approach or policy toward the recipient state, along with any policy changes that have occurred over the year;

ii. a table providing the total number of applications and value of Standard Individual Export Licences (SIELs) for the previous year and a breakdown by quarter for the current year; and

iii. a summary information on the types of transfer authorised during the reporting period and explanation of how these reflect the Government's stated commitments.[506]

378. The Government replied:

The Government applies the Consolidated Criteria to every destination country. This is the basis of all export licensing decision. The Government also publishes in the Annual Report a list of its International Commitments, setting out country specific policy. Consequently, the Government believes that it already meets this information need.

Information on the value and number of SIELs by quarter is already published. The Government sees no benefit in repeating the previous year's data tables on value and number of SIELs, where that data is already in the public domain.

379. We are disappointed by the Government's response which misses the point we made last year: that the Annual Report provides an opportunity for the Government to set out summary figures and to identify trends as well as provide a statement of export policy towards individual countries. As we have already stated the Government's reliance on the case by case response is opaque and unhelpful.[507] The country by destination section of the Annual Report provides a clear opportunity to explain policy, and changes in policy, on exports to individual countries. The problem with the data in the Quarterly Reports is that it is laborious to organise for analysis. If summary information can be provided via a route other than summary tables in the Annual Report—for example through a database—that would be acceptable. We recommend that the "country by destination" section of future Annual Reports provide, for each country, a statement on the general arms transfer control approach or policy, along with any policy changes that have occurred over the year. We also recommend that the Government bring forward proposals to allow the data in the Quarterly Reports to be easily extracted in order to be summarised and analysed.

2006 Quarterly Reports on Strategic Export Controls

380. The Government produced four Quarterly Reports in 2006.[508] Each Report was produced about three months after the end of the quarter and the Government also supplied us with additional classified information each quarter, which we found useful. As we are looking back to the 1990s it is worth making the point that the information supplied in 2006 has come a long way since the first Annual Report which was produced for 1997.[509] The Quarterly Reports now provide

a description of the goods covered by the licences issued, broken down by type of licence;

the financial value of licences issued, broken down by type of licence;

the number of licences issued, broken down by type of licence and Military List items and 'Other';

additional information on the type of end-user for licences granted to embargoed destinations;

an indication of whether the licence was for a temporary of permanent export; and

separate information on 'incorporation licences'.

381. The quantity, detail and usefulness of the data provided have improved greatly since 1997 and the Government should be commended for its openness and achievement.

382. In the late 1990s the UK Government set the standard for transparency in reporting on strategic exports. But this is no longer the case. For example, the German Annual Reports provide more detailed descriptions on which items account for the bulk of licences granted to a particular destination including what percentage of the overall financial value they account for.[510] The Danish Annual Reports break down licences granted by type of end-user: private companies, the military, museums or peacekeeping missions.[511] The Dutch Monthly Reports provide separate information on each licence issued, giving the category of goods covered, a description of the goods covered, and the financial value.[512] The Dutch Annual Reports give separate information on each licence denied, giving a description of the goods, the destination country, recipient, end-user and the reasons for the denial, citing the relevant EU Code criteria.[513] We consider that these countries are now setting best practice and that the UK Reports will benefit if they adopt their approaches. We recommend that the Government make the following changes to its Quarterly Reports.

Divide up information on financial values and descriptions between Military List items and "Other".

Combine the information on financial values, number of licences issued and descriptions to give a better indication of the volume of each type of goods licensed for export.

Provide more systematic information on the type of end-user.

Provide information on the final destination of goods covered by "incorporation licences".

Provide separate information on each license denial with a description of the goods covered the reasons for the denial.

383. The EU itself also publishes an Annual Report on strategic exports.[514] It includes data on the value of licences issued and actual exports for all EU governments, broken down by Military List category. From these reports it appears that UK, unlike many other EU States, cannot produce information on the value of exports broken down by Military List category but that it can produce data which excludes dual-use goods. We recommend that the Government produce data on the value of exports broken down by Military List category and data on the value of dual-use exports, which is published in future Annual Reports. In addition, as the EU Code of Conduct on Arms Exports applies to dual-use goods we recommend that the UK press the EU to produce an EU reporting standard for data on conventional dual-use exports and for the data on dual-use goods to be included in the EU's own Annual Reports.

STATISTICS ON DEFENCE EXPORTS

384. In the 2005 Annual Reports the Government said that it "continues to explore opportunities to extend the data available on defence exports".[515] We asked what opportunities had been identified and they replied:

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385. We continue to be concerned about the accuracy of the data on defence exports. One of the options open to the Government would be to amend the customs code either to include a sub-category of controlled items in each relevant category or to add a digit that indicated that a good was listed. This could be done at WCO[517] level or via a European customs agreement. In our view better figures recording what actually leaves the country, and better linking up of the customs and licensing authorities and their relevant data will also strengthen enforcement. We recommend that the Government consider amending customs codes either to include a sub-category of controlled items in each relevant category or to add a digit that indicated that a good was listed.

Database of decisions

386. In response to our recommendation last year that the Government evaluate the production and maintenance of a fully searchable and regularly updated database of all licensable decisions with a search facility that would allow the user to sort licences by country and by goods[518] the Government said in the longer term it would consider whether such a facility could be provided, whilst still maintaining the integrity of the searchable data, and subject to cost and resource constraints. It added that, if this did prove feasible, it would have to consider the value and practicality of continuing the Quarterly Reports in their current format. In its evidence this year the UK Working Group called as a matter of priority, for the Government to develop a fully searchable, periodically-updated database of all licensing decisions.[519] We concur with the Working Group and take the Government's point that a database may supersede and replace the Quarterly Reports. We recommend that the Government bring forward a proposal for a fully searchable and regularly-updated database of all licensing decisions. If the Government propose that the database replace the Quarterly Reports it must demonstrate that there will be no loss of functionality or data. In addition, the Government will need to make a proposal for supplying the classified information that it provides to us each quarter.

Specific cases raised with Government

387. Following press coverage the Committees raised with the Foreign and Commonwealth Office reports that the Israeli Defences Forces (IDF) had found British-made thermal imaging equipment during the war in south Lebanon in 2006. In its response the Government stated that the equipment found by the IDF was not exported to Iran, as the media have speculated, nor did it include night vision goggles. The Government explained that "the circumstances surrounding this matter will be factored into our consideration of export license applications in the future".[520] We conclude that the Government's explanation about the breaches of export control in respect of UK-manufactured imaging equipment found in South Lebanon was satisfactory.

388. Following the military coup in Thailand in September 2006 we asked whether the Government had changed its assessment of the application of the criteria for export licenses. The Government explained that it had issued 36 SIELs and 7 OIELs between 20 September 2006 and 08 February 2007 for Thailand and that its policy remained that all export licence applications were assessed against the Consolidated Criteria. Following the military coup on 19 September, all export applications for Thailand continued to be considered on their merits against these Criteria, on a case by case basis. It added that the situation was being kept under review.[521] We found the Government's response unhelpful. It appears to mean that the coup in Thailand did not result in any greater restriction in the issuing of export licences to Thailand but that the Government is watching developments and may tighten the controls to refuse licences which previously it would have granted. The Government's response reinforces the recommendations we made at chapter 10 about the explanations which the Government gives for its decisions to grant or withhold licences.

389. We also raised the volume and monitoring of assault rifles from the former Yugoslavia—see paragraph 305.

498 Ev 44, para 42 Back

499 Cm 6882 Back

500 Cm 6954, p 4 Back

501 Departments of Defence, Foreign and Commonwealth Affairs, International Development, Business, Enterprise and Regulatory Reform and HM Revenue and Customs Back

502 HC (2005-06) 873, para 34 Back

503 Cm 6954, p 5 Back

504 HC (2005-06) 873, para 35 Back

505 Strategic Export Controls in 2006-Military Equipment and Dual-Use Products, Swedish Government 2006/07:114, 15 March 2007 Back

506 HC (2005-06) 873, para 35 Back

507 See above, para 329-330. Back

508 Four reports for January-March 2006, April-June 2006, July-September 2006 and October-December 2006 were published by the Foreign and Commonwealth Office on the Internet at http://www.fco.gov.uk/servlet/Front?pagename=OpenMarket/Xcelerate/ShowPage&c=Page&cid=1119522594750 Back