Supplementary memorandum from the Export
Group for Aerospace and Defence (EGAD)
CBRN-RELATED REGULATIONS
As promised at the time, we did action the NBC(UK)
special interest group to submit a separate memo of its own to
the Committee, after the hearing, about the impact of the regulations
on the specialist CBRN sector of UK Industry, and we understand
that this was, indeed, drafted and submitted to the Committee
last week.
The additional level of restrictive controls
which are in place on the CBRN sector, which are entirely understandable
given the enormous strategic importance and sensitivity involved,
do make those companies who operate in this sector subject to
much sympathy from the rest of Industry!
Whilst we do not believe that any rational person
would query the essential need for CBRN weapons/delivery system-related
technology to be subjected to the very strictest and most restrictive
form of stringent control, the logic behind the very same levels
of control being imposed on technology related to the detection,
identification and disposal/handling of CBRN weapons, increasingly
being sought around the World by Governments to help them to deal
with the enhanced threat posed by them, does, at times, seem to
be confused.
EXPORT LICENSE
PROCESSING PERFORMANCE
We understand that the official figures for
the processing of export licence applications during 2006 reveal
that some 81% of SIELs were processed within the target timescale
of 20 working days (against the target figure of 70%) and that
75% of OIELs were processed within the target timescale of 60
working days (against the target figure of 60%).
EGAD, on behalf of UK Industry, warmly welcomes
these figures, which are believed to be the best ever achieved,
and congratulates all of those within HMG who have made this possible
though their hard work.
UK LICENSING REFUSALS
During the evidence session given by the NGOs
(before our own), there was an exchange concerning the comparison
of the numbers of export licences which have been refused under
the terms of Criterion 8, on sustainable development (Q7-Q9) across
the EU, and the UK Government was criticised for not having refused
more export licences on these grounds, whilst the French appear
to have refused far more.
Whilst this observation may be strictly true,
it does not, of course, reveal the whole picture. Under the French
export licensing system military exports are prohibited unless
a governmental authorization is granted (Art 13 of the legislative
decree of 18 April 1939), and the French export control system
is implemented in several stages:
— prior authorization to negotiate;
— authorization to conclude a sales
operation;
— authorization to export equipment.
Therefore, a French export licence refusal,
against any of the criteria, can take place right up front, when
French firms apply for permission to promote their products to
a potential overseas customer. Under the UK's system, export licences
are only needed for actual exports of goods and technology. However,
in the UK we have, in place of the French system's formal prior
authorization, the informal 680 system, as well as other informal
consultative mechanisms which exist, for companies to use to assess
whether it is worth pursuing export business opportunities or
applying for export licences. A 680 refusal against one of the
criteria (including Criterion 8), or informal advice from British
Government officials to an exporter that a potential business
opportunity is not worth pursuing, including on grounds of sustainable
development, will not show up in the official published figures.
Therefore, criticism of the British Government's own implementation
of Criterion 8 is based on only part of the picture being visible.
LICENSED PRODUCTION
OVERSEAS AND
OFFSHORE SUBSIDIARIES
Whilst we strongly believe that there are many
inherent practical problems with trying to impose UK export/trade
controls extraterritorially on overseas licensed production facilities
and subsidiaries, we have been in discussions with the British
Government and the NGOs, when assessing the plans for this year's
review of the Export Control Act 2002, about what the issues are
that it is perceived need to be addressed, what the practical
problems involved are, and what possible solutions may be possible.
As an illustration of the practical difficulties
we have alluded to above, we have already told the Committee before,
in our memo of 28 March 2006:[28]
"... whilst the USA does, indeed, have
various extraterritorial controls of its own on re-exports of
US technology as well as on the exports of offshore subsidiaries
of US firms, it also has in place the Foreign Ownership, Control
or Influence (FOCI) regulations, enforced by the USDoD's Defense
Security Service (for details of which see: www.dss.mil/isec/FOCIFAQs.htm)
which can, and does, prevent offshore interests (including UK
firms) from being able to exert control over (or even, in some
circumstances, to be able to be made aware of) the activities
of their US subsidiaries."
INDUSTRIAL EXPORT
CONTROL ASSOCIATION
The Committee has recommended the creation of
an Industrial Export Control Association, along similar lines
to that of Sweden. As indicated in our evidence to the Committee,
we believe that EGAD already fulfills such a function. However,
if the Committee had any specifics of activities which it thought
we should usefully be performing but are not already doing, please
do not hesitate to let us know, and we will be delighted to have
these discussed by EGAD's Executive Committee, with a view to
these also being taken on by the group.
JOINT INDUSTRY/NGO
COMMENTS ON
THE EXPORT
CONTROL ACT
REVIEW
The discussions which we have had over the last
12+ months with the NGOs have been highly constructive and we
believe that we will be able to submit to the Government some
joint proposals for the Review of the Export Control Act 2002,
arising from these discussions, in the near future.
We hope that the above comments may be of interest
to the Committee.
February 2007
28 Quadripartite Committee, First Joint Report of
Session 2005-06, Strategic Export Controls: Annual Report for
2004, Quarterly Reports for 2005, Licensing Policy and Parliamentary
Scrutiny, HC 873 Ev 73. Back
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