Further memorandum from the Department
of Trade and Industry
EXPORT CONTROL
REVIEW: POTENTIAL
CHANGE OPTIONS
REQUIRING PRIMARY
LEGISLATION
During the Committee's meeting with Malcolm
Wicks MP on 8 March, we undertook to obtain definitive legal advice
on which of the potential options for changes to the controls
would require changes to the Export Control Act 2002. That advice
has now been received.
There are three areas where new primary legislation
would be required. These are:
— some possible approaches to the introduction
of a control on UK companies granting production rights to an
overseas production facility (in other words licensing a licensed
production agreement);
— publishing a register of traders,
should such a register be created (our view is that merely creating
such a register could be permitted as "regulation" of
the acquisition or disposal etc of goods within section 4(2) of
the 2002 Act); and
— some possible approaches to changing
the Military End Use Control, if introduced as a UK, rather than
as an EU measure.
Primary legislation is or may be required in
these areas because:
— in the case of granting of production
rights, if this involved granting intellectual property rights,
this is not an activity that amounts to export, transfer, technical
assistance or trade (the activities we can control under sections
1 to 4 of the 2002 Act);
— as to publishing details on a register,
section 7(f) of the 2002 Act allows us to make provision in an
order under the Act "about the persons to whom [information
held in connection with anything done under or by virtue of the
order] may be disclosed". However, this section of the
Act is not conclusive as to the extent to which such information
can be published; and
— the Government's powers under the
2002 Act provide for national controls to be introduced only in
relation to exports, trading, etc in military items or items that
are capable of having a "relevant consequence". Because
"military use", is not, in itself a "relevant consequence",
the existing powers would not accommodate some approaches to changing
the Military End Use Control.
Although new primary legislation would not be
required to set up (as opposed to publish) a register of traders,
the Committee will wish to note that there is another potential
legal issue. Such a register would be an authorisation scheme
under the EU Services Directive (2006/123/EC). Articles 9 and
16 of this Directive (which would apply respectively to traders
established in the UK; and to traders established elsewhere but
carrying on business in the UK) would require the UK to justify
creating a register in order to be able lawfully to do so. In
the case of Article 9 there would need to be an "overriding
reason relating to the public interest" for creating
a register. Such an interest might be difficult to demonstrate
because the Government already collects information about traders
through licence applications.
I hope this is helpful. Please let me know if
the Committee requires any further detail.
May 2007
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