Memorandum from the Department for International
Development (DFID)
SUMMARY
1. This memorandum provides an overview
of DFID's role within the UK Government's export control system.
It explains DFID's interest in arms export control, and how DFID
assesses licence applications for their potential impact on sustainable
development (known as Criterion 8). It provides information on
how the UK's application of Criterion 8 compares to that of our
EU partners, and it outlines DFID's view of the impact of arms
exports on developing countries.
2. As a major exporter of conventional weapons,
and a significant provider of development assistance, the UK has
a particular responsibility to ensure that its arms exports do
not undermine development. DFID works closely with other government
departments to do this. The Department leads on the assessment
of licence applications under Criterion 8, which deals with the
impact of the proposed export on sustainable development and the
recipient country's economy. DFID also contributes to assessments
against the other criteria, particularly when the proposed export
might increase the risk of human rights abuses or violent conflict.
DETAIL
DFID's interest in arms export control
3. All states have a right to self-defence,
and to provide for their national security, including through
the procurement of conventional weapons. But irresponsible arms
transfers can have a detrimental impact on development. Excessive
expenditure on conventional weapons can divert scarce resources
from much-needed social spending in developing countries. As a
country that is consistently in the top five in terms of both
arms exports and international development assistance, the UK
has a responsibility to ensure that our arms exports do not hold
back development.
4. In some cases, arms transfers have a
hugely destabilising impact on stability and security, which in
turn reverses development gains. The House of Commons International
Development Committee stated in its 2006 report into Conflict
and Development that, "While the link between conflict and
development is a relatively new field, it is an area to which
the Government must give priority in order to improve development
outcomes among the poorest."[29]
The forthcoming DFID Conflict Policy Paper is a reflection of
the importance that the Government gives to this.
5. The 2006 White Paper on International
Development, "Making Governance Work for the Poor",
sets out the UK Government's commitment to prevent conflict, and
enhance good governance, safety and security in the developing
world. Our work to prevent armed violence and reduce the proliferation
of conventional weapons, especially small arms and light weapons,
contributes to these objectives. DFID works to control small arms
and reduce armed violence through our country programmes and through
the Small Arms Strategy of the Global Conflict Prevention Pool,
which DFID manages on behalf of the Foreign and Commonwealth Office
(FCO) and the Ministry of Defence (MOD).
6. The White Paper also reaffirmed the Government's
commitment to ensure that UK arms exports do not undermine these
goals, including by endangering human rights or increasing the
risk of violent conflict.
7. The relevance of development concerns
for arms export control was recognised in the UK Government's
national criteria for export licensing, announced on 28 July 1997. These
were reinforced by the EU Code of Conduct on Arms Exports, which
was agreed on 5 June 1998, during the UK's Presidency of the European
Union. The Code committed all EU Member States to adhere to the
same eight criteria for licensing defence exports, and to work
towards a common interpretation of these criteria. The last of
the criteria placed an obligation on member states to consider
the compatibility of the proposed arms exports with the technical
and economic capacity of the recipient country, taking into account
whether the proposed export would seriously hamper the sustainable
development of the recipient country. On 26 October 2000, the
UK Government included all eight criteria in the Consolidated
National and EU Arms Export Licensing Criteria. The Consolidated
Criteria were later published as guidance under the Export Control
Act (2002). Criterion 8 is included in the Consolidated Criteria
as follows:
The compatibility of the arms exports with
the technical and economic capacity of the recipient country,
taking into account the desirability that states should achieve
their legitimate needs of security and defence with the least
diversion for armaments of human and economic resources.
The Government will take into account, in the
light of information from relevant sources such as United Nations
Development Programme, World Bank, IMF and Organisation for Economic
Cooperation and Development reports, whether the proposed export
would seriously undermine the economy or seriously hamper the
sustainable development of the recipient country.
"The Government will consider in this context
the recipient country's relative levels of military and social
expenditure, taking into account also any EU or bilateral aid,
and its public finances, balance of payments, external debt, economic
and social development and any IMF- or World Bank-sponsored economic
reform programme."
8. DFID has the lead responsibility within
Government for applying Criterion 8, working closely with the
Department of Trade and Industry (DTI), FCO and MOD. Other departments
may also provide advice on Criterion 8, just as DFID may contribute
to assessments against any of the other seven criteria, particularly
those on human rights and conflict.
DFID'S ANSWERS
TO THE
COMMITTEE'S
ADVANCE QUESTIONS
Q1. Explain DFID's role in assessing applications
for export licences
9. Licences are passed to DFID by DTI for
an assessment against Criterion 8 when the destination is on a
list of countries where sustainable development is most likely
to be an important factor, and where the value of the licence
is above a certain threshold for that country. This threshold
is determined on a country-by-country basis. The list comprises
those countries that are eligible for concessional loans from
the World Bank's International Development Association (IDA),
taken to represent the world's poorest countries (the list of
IDA eligible countries is at Appendix 1). This list is kept under
constant review by the World Bank. An explanation of how DFID
makes an assessment made against Criterion 8 can be found in the
response to Question 3.
10. Since 2002, DTI has referred 858 Standard
Individual Export Licences (SIELs) and 767 Open Individual Export
Licences (OIELs) to DFID for such an assessment. The following
table shows the figures for each year.[30]
Year
| No. of SIELs
referred to DFID |
No. of OIELs
referred to DFID |
| 2002 | 258 | n/a[31]
|
| 2003 | 204 | 209
|
| 2004 | 133 | 200
|
| 2005 | 114 | 198
|
| 2006 | 149 | 160
|
| | |
11. This constitutes a relatively small proportion of
all the export licence applications received by the DTI as the
licensing authority. For example, in 2006, 1.5% of SIELs and 27%
of OIELs were referred to DFID.
12. DFID has the right to comment on any export licence
application against any of the other criteria. Because of the
inter-relationship between human rights, conflict and development,
DFID takes a particular interest in Criteria 2 (human rights),
3 (internal tension or conflict), and 4 (regional peace and security).
DFID maintains a list of countries for which the country threshold
is set very low or at zero, ensuring that most or all licence
applications for these countries will come to DFID for analysis.
The list is kept under regular review.
13. Development concerns can also be raised through the
F680 process, through which the Government provides advice to
industry, at their request, on proposals for marketing or promoting
products overseas. An F680 approval form is not obligatory, and
does not constitute an export licence, but it is an important
part of the pre-approval process that can give companies an indication
about the likely success of an export licence application were
it to be submitted, and provided there is no intervening change
in circumstances. There is no guarantee that any subsequent export
licence application would be approved, even if the F680 response
is positive.
14. The Defence Export Services Organisation (DESO) in
the MOD refers all F680 applications for proposed exports to IDA
countries to DFID for a Criterion 8 assessment. DFID uses the
same analysis as that used for licence applications. Where Criterion
8 is a possible or probable cause for concern, the MOD would warn
exporters of this. This may deter exporters from submitting applications
for licences that would fall foul of the criteria.
Q2. Explain the perceived "weaker" status of
criterion 8 compared to other criteria?
15. Equal weight is given to the application of each
of the criteria. However, it is clear that more licences are refused
under other criteria than under Criterion 8. For example,
in 2006, there were 80 refusals with the vast majority based on
Criteria 2 (human rights), 3 (internal tensions), 4 (regional
peace and security) and 7 (risk of diversion). By contrast, there
were no Criterion 8 refusals. This has created the perception
that the Government takes some criteria more seriously than others.
This is not the case. Clearer procedures for inter-departmental
consultation on all the criteria, and guidelines for the application
of Criterion 8 in particular, have helped ensure that all criteria
are taken into account in the final decision on whether to grant
a licence. The application of Criterion 8 is assisted by an inter-departmentally
agreed methodology.
16. The fact that more licences are refused under other
criteria is not a reflection of how seriously Criterion 8 is taken,
but more of the nature of the UK's arms export industry and the
global market. Exports to developing countries make up a relatively
small proportion of the global trade in military equipment, and
of the UK's military exports (see table at paragraph 29). In addition,
many potential licence applications can be deterred at the pre-approval
stage if they are likely to be rejected under the criteria. This
is explained more fully in the answer to Question 5.
Q3. How does DFID assess the impact of a licence against
the technical and economic capacity of the importing state?
17. DFID's assessment of licence applications under Criterion
8 takes into account four main areas. These are economic capacity;
levels of military expenditure; technical capacity and the potential
diversion of resources; and the legitimate security and defence
needs of the recipient country. All departments involved in the
export licensing process have agreed guidance for officials to
assist with this process. This guidance does not interpret policy,
which remains as set out in the Criteria, but it does set out
procedures to help compile the data necessary for the Government
to make decisions.
18. Overall, DFID makes a judgement on a case-by-case
basis, if necessary taking into account cumulative purchases by
the country concerned. A number of indicators are used to make
a judgement in each area. For example, an assessment of economic
capacity would focus on the impact of the arms import on the financial
and economic resources of the recipient country in the immediate,
medium and long term. An assessment of technical capacity, on
the other hand, would examine whether the recipient country has
the requisite skilled personnel to use and maintain the equipment.
Advice on operational technical capacity is provided by
MOD, which will look at the technical complexity of the proposed
export and its compatibility with the recipient country's military
infrastructure.
19. The indicators provide a picture of the state of
the recipient country's economy, and the extent to which it is
dependent on Official Development Assistance (ODA). Examples of
indicators include the level of external debt; the country's ranking
in UNDP's Human Development Index;[32]
the degree of ODA as percentage of Gross National Income (GNI);
and the level of military spending.
20. The initial assessment is carried out in DFID's Conflict,
Humanitarian and Security Department (CHASE) in London. Officials
examine whether the value of the proposed export exceeds the value
threshold for the recipient country. The value threshold is based
on the value of the export as a proportion of health and education
spending in that country, as well as the other indicators in the
methodology. The procedure varies slightly according to whether
the licence application is a SIEL or an OIEL. As the initial Criterion
8 assessment is based on the value of the export, a SIEL licence
application, which includes a value, is relatively straightforward.
Making an assessment against Criterion 8 is more complex for an
OIEL, as OIELs do not specify a value. DFID will therefore usually
ask DTI to obtain an estimate of the cost from the exporter. The
estimated cost provides a basis for a Criterion 8 assessment.
21. If the analysis in CHASE reveals that the proposed
export exceeds the value threshold for the recipient country or
it triggers any of the indicators, the licence application is
passed to the DFID country desk or office for a more detailed
examination using the agreed guidance. Country specialists then
look at (a) the extent to which the value of the export licence
application exceeds the country threshold; (b) the number of indicators
that have been exceeded, and the extent to which they have been
exceeded. Country specialists will make a judgement, based on
their knowledge of the recipient country, on whether and how the
proposed export would impact on the indicators for Criterion 8.
22. Other departments may also offer opinions on Criterion
8. In particular, MOD will consider the proposed export in
the light of legitimate defence needs, taking into account any
security sector reform programmes or strategic defence reviews.
Consideration of this aspect is usually conducted against Criterion
4 (regional peace and security) but can also feed into Criterion
8.
23. As with all export licensing applications, DTI, as
the licensing authority, will assess whether, in the light of
advice from DFID and other Departments, issuing or refusing a
licence is consistent with the Consolidated Criteria as a whole.
Q4. What is the expertise of DFID's staff in assessing
applications?
24. Expertise within DFID can be divided into three broad
groups. First, DFID has expertise on export licensing and arms
control in CHASE, where the initial assessment is carried out.
Additional advisory capacity is drawn upon from within CHASE on
economics, conflict, governance and social development.
25. Second, when licences are referred to DFID country
offices or desks, economists working specifically in or on that
country will normally lead on applying the guidance and feeding
advice back to CHASE. Our economists are members of the Government
Economic Service. They not only have specialist skills on a variety
of micro and macroeconomic issues, but also have an in-depth knowledge
of the economic conditions in the countries on which they are
working.
26. Finally, DFID draws upon a range of expertise in
order to comment on the other criteria. Social development, conflict
and governance advisers with country expertise are able to provide
advice on the potential impact of the export on human rights,
internal tensions and conflict, and regional peace and security.
Q5. Why so few applications appear to be turned down on
grounds of criterion 8, and how the UK compares to other EU countries
27. Only one application has been turned down on Criterion
8 grounds, in 2003. We note that in their evidence to the
Quadripartite Committee on 7 December 2006, Oxfam argued that
this showed the criterion was not being applied rigorously enough.
This is not the case.
28. Criterion 8 is designed to pick up high value applications
to the poorest countries. The Government receives relatively few
of these, so we would not expect to refuse applications on Criterion
8 grounds on a regular basis. This is an indication of the relatively
low volume of UK exports of military equipment to developing countries.
The majority of these exports are for non-lethal equipment or
for dual-use goods, or for exports to peacekeeping operations.
29. In 2006, only 6.9% of the value of military list
export licences issued was destined for IDA-eligible countries.
Information for the last two years is shown in the table below.[33]
It should be noted that this information is based on military
list licences granted. Some of these military list licences may
not be used at the time of issue but must be used within two years;
others might not be used at all. Figures based on actual exports,
using Customs Commodity Codes, show a different percentage of
exports to developing countries (6% in 2005).[34]
| Year | 2005 |
2006 |
| Total value of licences granted worldwide (£ million)
| 1,063.7 | 1,639.6 |
| Total value of licences granted to IDA countries (£ million)
| 111.3 | 113.3 |
| Percentage of value of licences issued to IDA countries
| 10.4% | 6.9% |
| | |
30. As explained in paragraph 14, it is possible to deter
prospective exports through the F680 process before they reach
the licence stage. Where Criterion 8 is likely to be a consideration,
the Government warns exporters of this. This may deter some companies
from pursuing a sale.
31. Annual reports on the implementation of the EU Code
of Conduct demonstrate that some member states have more Criterion
8 refusals than the UK.[35]
In their session with the Quadripartite Committee on 7 December
2006, Oxfam noted that out of 52 refusals on Criterion 8 by EU
member states, the French Government had refused 42 and the UK
only one. Although the Government cannot comment on the detailed
processes followed by individual EU Member States, some interpret
Criterion 8 differently. Our interpretation, and that of the vast
majority of our EU partners, focuses on the impact on the recipient
country's economy, rather than on the UK's national security.
We have sought to minimise these differences by leading the identification
of best practice on Criterion 8 as part of the EU's Users' Guide
to assist with implementation of the Code of Conduct.[36]
It is worth noting that the UK is one of only two EU member states
to routinely involve its development department or agency in licensing
decisions.
Q6. What difference the changing of the EU Code of Conduct
into a Common Position would make for criterion 8?
32. If the EU Code of Conduct were to become a Common
Position, it would place an obligation on member states to ensure
that national laws are in compliance. Although UK legislation
contained in the Export Control Act (2002) would not need updating
as a result of the Common Position, the Government would update
the Consolidated EU and National Export Licensing Criteria. However,
this will not affect the wording of Criterion 8, which would remain
the same. This is because the wording of Criterion 8 in the UK's
Consolidated Criteria is more comprehensive than that of the EU
criterion, since it requires the Government to take into account
the impact of a proposed export on the recipient country's economy
as well as on sustainable development.
Q7. The impact of irresponsible and illegal arms transfers
on developing countries?
33. Calculating the impact of irresponsible and illegal
arms transfers on developing countries is extremely difficult,
and is dependent on accurate information on the scale of the legal
and illegal arms trade. Although governments increasingly publish
reports on their arms exports, and much of this data is captured
in the UN Register on Conventional Weapons, the information available
is not comprehensive. Information on illegal arms transfers, or
transfers that are not government authorised, is far patchier.
34. Nevertheless, it is possible to use the data available
to make an estimate of the impact of the global arms trade on
development. DFID is working to improve our understanding in this
area. In 2004, we commissioned research from Bradford University
on the impact of armed violence on poverty, which looked in part
at the impact of the international arms trade. The research showed
that responsible transfers of conventional weapons can create
space for development by helping governments provide security
for their populations. On the other hand, irresponsible transfers,
and the costs of maintaining and using these weapons, can divert
resources from development spending on areas such as education
or health.
35. How the weapons are used can also have a significant
impact on development. Although weapons themselves do not cause
war, they can play a significant part in tipping conflict into
violence or in facilitating the abuse of human rights. The damage
caused is compounded by the negative impact on development. A
2003 report from Oxfam and Amnesty International stated, "Weapons
in the wrong hands have acute, immediate impacts on personal,
economic, social and civil rights, which translate into longer-term
effects that prevent development".[37]
This is why DFID also comments on licence applications against
the criteria covering human rights and conflict. DFID is also
leading work in the OECD's Development Assistance Committee to
develop guidance for donors on the reduction of armed violence
and arms availability in developing countries.
36. However, developed and developing countries alike
have the right to provide for their own legitimate defence and
security needs. This principle is enshrined in the UN Charter.
Yet few developing countries have their own indigenous arms industries,
so they are often dependent on arms imports.
37. An international Arms Trade Treaty would create a
regime to regulate the trade in conventional weapons in line with
the principles described above. DFID is working closely with the
FCO and MOD to promote an Arms Trade Treaty, and is focusing in
particular on building support among developing countries. The
UK Government worked hard to secure support for the UN General
Assembly resolution of December 2006. The resolution established
a Group of Governmental Experts in 2008 to examine the scope,
feasibility and parameters of a treaty. We look forward to working
with other government departments, with civil society, and with
our developing country partners, in working towards a treaty.
29
Conflict and Development: Peacebuilding and Post-Conflict
Reconstruction International Development Committee, Sixth
Report of Session 2005-06, HC 923-1, Volume 1. Back
30
Data provided by Export Control Organisation, DTI. Back
31
Data on the circulation of OIEL applications among Government
departments was only collected from 2003 onwards. Back
32
The Human Development Index is a comparative measure of life
expectancy, literacy, education, and standard of living for countries
worldwide. It is used by UNDP in its annual Human Development
Report. See http://hdr.undp.org/hdr2006/statistics. Back
33
Information provided by the Export Control Organisation, DTI. Back
34
Calculated using table 4.4 of the Annual Report on Strategic
Arms Exports, 2005. Back
35
Information from Annual Reports on according to Operative Provision
8 of the European Union Code of Conduct, 2003-2005, in the Official
Journal of the European Union, http://europa.eu.int/eur-lex/lex/JOIndex.do?ihmlang=en. Back
36
Users' Guide to the EU Code of Conduct on Arms Exports, 18 December
2006, 16440/06,http://register.consilium.europa.eu/pdf/en/06/st16/st16440.en06.pdf. Back
37
Shattered Lives: the Case for Tough International Arms Control,
Oxfam International and Amnesty International, 2003, p 34. Back
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