Examination of Witnesses (Questions 20-31)
MR OLIVER
SPRAGUE, MR
SIMON GRAY
AND MR
ROY ISBISTER
7 DECEMBER 2006
Q20 Mr Borrow: You feel that the amount
of work involved for the exporter in doing that is not too great
and would not place too big a burden. Have you carried out any
enquiries to work out the number of dual-use components that have
been exported each year that are ending up in a non-military use
as a starting point because obviously every one of the those exports
will need to have been tracked to ensure that it is a non-military
use rather than a military use?
Mr Gray: We have not done the
calculation in total but Ollie has an example.
Mr Sprague: I will just preface
the answer by saying that the 2002 Export Control Act actually
recognises that these kinds of areas are important. If you refer
to it it actually says, "Export controls may be imposed in
relation to any goods, the exportation or use of which is capable
of having a relevant consequence". Within those words there
is always an understanding that there may be certain categories
of goods which need to be controlled because of the effect they
have. I do not want to talk about the Land Rover example—we
have talked about that an awful lot—but I will give you
another example which is in our submission. It is the Predator
UAV and the fact that a British company called Radstone makes
computer technology for that UAV. UAV themselves are subject to
the most restrictive controls that there are; currently it is
on the list of prohibited goods. If you wish to put an advert
for such equipment in your publications you need to apply for
an export licence to do so. However, as I understand it, the computer
systems that this British company supplies (the managing director
of the company has said that without this equipment the product
would not fly and if you look at the brochures and things they
publish around it it is quite clear that they see it is pretty
central to the whole communication, command and control of these
kinds of items) there is no licence required because the category
of goods does not fall within the certain specification to make
it listed. Yet this company specialises in what is called COTS
technology (Civilian Off The Shelf technology) and a significant
proportion of this business is around supplying components for
military systems of this kind. To me that is exactly the kind
of equipment that needs to be controlled in a catch-all.
Q21 Malcolm Bruce: I have a particular
concern about companies (not the ones who are deliberately trying
to evade it; they will find their way) who are inadvertently exporting
products which could be put to military use particularly perhaps
in the oil and gas industry not least because quite a lot of oil
and gas activity takes place in dubious areas and conflict areas.
In fact the Export Group for Aerospace and Defence in their memorandum
said, "We know that there are large numbers of companies
and individuals currently operating outside the regulatory framework".
They know because they come to them. They cannot tell us who they
are because there is a confidentiality rule but they estimate
that 10 to 15% of an audience at a particular conference they
had were people who stood up and said, "But we've been doing
this for years"; they had clearly been in breach of the regulations.
What is your take on the extent to which equipment that can be
adapted is not really being picked up? In your own memorandum
you suggest a threshold system as there is in the United States;
could you explain how that would work?
Mr Sprague: The threshold system
applies in the US and it is clearly one area we could look at.
They have two categories of threshold. They have a 25% threshold
system, 25% of the value of the goods of US origin that goes into
these systems requires control. For a group of their sensitive
destinations which are published on their websites that threshold
goes down to 10%.
Q22 Malcolm Bruce: You have to know
where the goods are going.
Mr Sprague: Yes, but the whole
principle around catch-alls and military end-use is: is the exporter
aware? I am not a lawyer but there is clearly a reasonableness
issue: is it reasonable for the supplier to have known that its
goods are going to end up in military systems? There are all sorts
of guidance notes on the DTI website mainly around the WMD side
of things, which is essentially a whole trigger list of questions
that exporters can ask themselves about a particular customer,
the nature of the payment, all of those things which might help.
What we are not saying is that every item that could have a dual
use that is not on the list should be licensed, clearly not.
Q23 Malcolm Bruce: You would like
every exporter to look at the website.
Mr Sprague: Yes. There comes a
point where it is reasonable to assume that your goods may be
ending up in a military system and you should ask the Export Control
Organisation to see whether those goods require a licence or not.
Q24 Judy Mallaber: You have urged
the Government to look again at whether re-export controls can
be applied to overseas subsidiary companies but in your evidence
you also accept that that is a challenge and clearly a complex
legal area because those subsidiaries are also required to operate
within the legal framework of the countries where they are based.
Can you tell us what controls you wish to see applied and how
you think that would work?
Mr Sprague: Again it clearly is
a very difficult area. The good news is that we, as NGOs, are
not alone in recognising that this is a difficult area. These
issues are now formally part of the Export Control Review that
is going to take place next year so government, industry and us
are thinking about these issues. I think it is worth going back
to the first principles. Every country is responsible for ensuring
that the arms and the military equipment it exports are not used
in contravention of international humanitarian law or human rights
law. In a globalised defence market I think it is quite logical
to see if you can apply these principles along the supply chain
where there is the UK connection. The one example that was raised
last year was about the supply of military trucks to Sudan. The
fact is that the company responsible for that was an Indian company
but 71% controlled by a UK company. In terms of ownership it was
a British company but because the law did not apply—even
though the Sudan has been subject to an EU arms embargo since,
I think, 1994 and the reason why it is subject to an EU arms embargo
is the clear risk that any military equipment that you supply
to Sudan would be used in gross violations of human rights or
indiscriminate attacks on civilians and so forth—there is
no power to stop that deal going ahead. In very clear cut examples
like that I think most people accept that that is something we
should look at in the control system and see whether it should
be controlled. In terms of embargo legislation I think our starting
point is that we must at least see if we can amend the embargo
legislation to capture activities of overseas subsidiaries as
a minimum level.
Mr Isbister: If I could just follow
up on that, the fact is that as far as I understand it parent
companies do control the activities of the subsidiaries in all
kinds of ways. I think it is a bit disingenuous to claim that
that kind of parent to subsidiary relationship does not exist.
Something we have to look at more and which may work is that the
relationship between the parent and the subsidiary would set out
at the beginning that if the subsidiary is planning transferring
controlled goods or strategic goods then it must seek the permission
of the parent company to do so. That would then be about establishing
a relationship between the UK Government and the parent company.
If you start with the principle that parent companies do control
the activities of subsidiary companies maybe we could work forward
from there.
Q25 Judy Mallaber: So you are setting
down an additional criteria on that relationship to fit on top
of the legislation of whichever country they are operating in.
Mr Isbister: Potentially.
Q26 John Bercow: You want to extend
the catch-all clauses from applying only to nuclear, chemical
and biological weapons to items which will be used for the purposes
of torture, degrading treatment or executions or in connection
with terrorist offences. Can I put it to you that this is not
merely a semantic dispute but a substantial one? The term "catch-all"
is something of a misnomer in that, as I understand it, it applies
only to situations and anticipates only situations in which authorities
want to prevent a transfer of an unlisted item or to prosecute
those responsible for its export if there was a clear intention
and knowledge on the part of the exporter. That leads me to enquire
how effective would catch-all provisions be if they were extended
to items used for torture unless they were done on a different
model from that which currently applies.
Mr Sprague: You are right to say
that "catch-all" is a misnomer but unfortunately that
is the acronym that is applied to these things, it is the buzz
word for it. I do think there are certain areas where the activity
should be rightly prohibited. Government policy, especially on
torture equipment, is to outlaw the UK's involvement in the torture
trade and acts facilitated to torture. I do not think that anyone
would dispute that that is the proper and reasonable thing. Therefore
there is a problem with systems based on lists; things will always
fall off the list. We heard last year of the sting stick; there
is interrogation equipment like foot heaters; there are things
like handcuffs. All of these things can be supplied without a
licence and can be used to facilitate torture. I just want to
go back to the point I was making about the dual-use items for
military systems. It is about the end-use and whether the exporter
ought to be aware that the outcome of his transaction is to facilitate
these acts. This is not saying that a list based system is not
something we should be pursuing, of course we should; this is
belt and braces, it is to make sure that the activity is brought
under control and not necessarily just the goods themselves.
Q27 John Bercow: Handcuffs are a
pertinent but, if I may say so, easy example to use because their
potential use is fairly readily imaginable. Let us take a slightly
more vexed issue and that would be electric drills which could
of course be used to inflict the most terrible injuries. Is it
to be expected that the secret police of a brutal regime would
be so maladroit and transparent as to order drills directly from
a UK manufacturer? Would I be guilty of the grossest and most
unjustified cynicism in supposing that they might conceive of
the idea of using a building company as a front? I do not seek
to introduce levity; I am trying to put a humorous slant on what
is a massively serious matter. How could the manufacturer possibly
know for what the drills were going to be used?
Mr Sprague: The point of a catch-all
clause is not designed to bring the whole DIY trade into the scope
of export controls. In that particular case you could see that
there was no way that the exporter could have known what its drills
were used for, but by having such a clause it means that once
it does become known you can put whatever information you need
to put around the DIY community that certain end-users may well
be using electric drills for torture. When you go to this particular
area all sorts of things could be used for torture and it is not
fair to expect industry to know the outcome of everything. It
is this question of reasonableness; where is it reasonable to
expect that they should have known? If such controls were in place
when it does become known we have the power to stop it.
Q28 John Bercow: To summarise this
very important point, what you are saying is that in a sense in
the worst case scenario an abuse—including potentially lethal
consequences for its victim—might take place but should
probably be able to do so with impunity only once?
Mr Sprague: At the moment there
is nothing to stop it happening. There is no legal impediment;
there may be some other instrument of international law you could
use and I hope if the violation was that grave there would be.
At the moment there would be no control to stop it. It is a bit
like death penalty equipment before the EU controls came in. At
least if we'd had something like this you could do something about
it and stop it. Terrible as the initial act might be, it would
then cease from that moment.
Mr Isbister: You would not catch
all but you would hopefully catch some and the cost to do this—the
administrative costs, et cetera—would be insignificant
on a cost benefit analysis.
Q29 John Barrett: My question very
much follows up on that because it is about end-use controls.
The Government has argued against end-use controls because they
say if they identify a degree of risk they would have had a licence
in the first place. If there is always some risk of equipment
or technology being misused or diverted and end-use controls were
to come in, how would these be implemented and who would actually
do it?
Mr Isbister: I think you are right,
there is always risk and it is ridiculous to suggest that there
is not a risk. I think it is perfectly doable. I think it is a
case of including the obligations on the contract, making it very
clear in advance what the obligations of all parties to the transaction
are. If there is reason to suspect that there is a problem then
you request a monitoring inspection. This is done in other areas.
In weapons of mass destruction that is an accepted way of operating
by the UK Government in terms of biological weapons, protocols,
et cetera, but with conventional weapons it seems to be
different and I do not understand what the problem is. It is not
about making for a less extensive pre-licensing assessment; that
should carry on as it is at the moment. The Government is to be
congratulated on having very thorough pre-licensing assessment
but should go the extra mile.
Q30 Chairman: You have called for
the end of Crown exemption from export controls. Do you have any
evidence that exports covered by the exemption have been made
in breach of the Consolidated Criteria?
Mr Isbister: There are a number
of exports that have gone through under Crown exemption that we
raised concerns about at the time, for example equipment to Nepal,
the military helicopters, the short take-off and landing aircraft.
Eventually we do get to find out about this equipment through
the reporting mechanism. We are told that basically the same standards
are applied for government sales as for commercial sales, but
then in that case I do not understand why we cannot follow the
same process. It seems a more elegant way of operating, that you
always follow the same process. It also has transparency issues
in terms of reporting. The system of reporting on licences is
that you know what the government was willing to allow. The system
of reporting on government sales tells you what was exported but
it does not necessarily tell you what the government policy was
because, just as for licensing, a lot less can end up being exported
than the government was willing to allow so you lose a level of
transparency there. There is also a timing issue, it takes longer
to get that information now we have reporting on licences than
it used to do.[1]
Q31 Linda Gilroy: This is probably an
issue we can talk about at some length but as we do not have the
time perhaps a brief response from each of you on what are the
prospects for the International Arms Trade Treaty (ATT).
Mr Gray: The prospects are good.
The prospects are good for an international arms trade
treaty; whether the prospects are good for the kind of treaty
that we all want to end up with is a different question. The prospects
are particularly good this afternoon because the resolution that
went through first committee came in front of the UN General Assembly
last night in New York and the "yes" votes went up from
139 in favour to 153 in favour, so we now have 80% of the world's
governments who have formally stood up there and stuck up their
hands and said, "Yes, we are in favour of a process working
towards an arms trade treaty". That includes all of the EU,
all of ECOWAS[2]
(which is very important), most of North Africa, certainly most
of Sub-Saharan Africa, most of Eastern Europe as well and most
of Central Asia. There are obviously certain abstaining countries
and I think that is why I prefaced this with an ATT will
probably now happen but whether it is the ATT that we all want
will depend, I think, on whether or not the supporters of the
treaty grab the metal right now and say, "We have a massive
opportunity to turn this treaty into a reality which will actually
make a difference for millions of people on the ground".
What the resolution has done is set up two processes, the first
is a Secretary General's consultation which will probably start
in February and run through to July and we are hoping that the
UK Government will work together very closely with the six other
co-authors in ensuring that we encourage as many supportive states
as possible to respond to that Secretary General's consultation
in a positive way, particularly from Africa and Latin America
who will be able to come back and tell the story of how the uncontrolled
trade in weapons is actually affecting the people in their country.
We hope that a good number and a good quality of response will
set the right atmosphere for the second stage of the process which
is a group of governmental experts which starts in January 2008.
We know that this group of governmental experts will be difficult
because we know that most of the countries who have abstained
or the one country that has voted against certainly have a right
to be on the group. The reservations that some states have already
expressed will come out in that group but what we need to make
sure is that we maintain the momentum that we have right now and
we will certainly be working as closely as possible with government
to make sure that happens.
Chairman: On that positive note can I
thank you very much indeed for your presence this afternoon and
again for the memorandum. If you wish to submit any further written
information on this important topic please do not hesitate to
do so. Thank you very much indeed.
1 Note by witness: "There is also a timing
issue; now we have quarterly reporting on licenses it takes longer
to get information on Crown exemption transfers than licensed
transfers." Back
2
Economic Community of West African States. Back
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