Examination of Witnesses (Questions 60-76)
MR DAVID
HAYES, MR
BRINLEY SALZMANN,
MRS SUSAN
GRIFFITHS AND
MR BARRY
FLETCHER
7 DECEMBER 2006
Q60 Mr Keetch: How do you justify
that circumstance where, as the Chairman said, the end result
of that is a vehicle, a military vehicle that is used in a barbaric
massacre and the end was not controlled? Had Land Rover sought
to export that vehicle to that end-user it would have been controlled.
The way in which it was done, because of licensed production overseas,
it was not controlled.
Mr Hayes: This is a very difficult
scenario and not representing Land Rover it is a difficult one
for me to answer. The Land Rover could just as easily have been
any other vehicle; it could have been a Jeep, a Toyota Land Cruiser,
anything you care to name. I think the answer to your question
is that you have to draw the line somewhere. Whether it is drawn
in the right place is a very proper topic for the review. A system
which seeks to control absolutely everything which is currently
not on a controlled list would be unworkable.
Q61 Mr Keetch: Do you think that
line is drawn in the correct place?
Mr Hayes: That is a matter for
government.
Q62 Mr Keetch: I am asking you. Do
you think that line is drawn in the correct place?
Mr Hayes: I think at the moment
it is probably approximately in the right place. There will always
be hard cases and, as the saying goes, hard cases make bad law.
Mr Fletcher: My concern would
be that because the Land Rover case has had a very high profile,
but when you actually look at the components that were actually
exported they are not dual-use components. Dual-use components,
unlike what the NGOs were suggesting, are goods which are under
control, which have in their own right significant military application
and that is one of the criteria to bring them under control within
the Wassenaar arrangement. We are talking here about commercial,
not controlled, items. To draw up legislation that would actually
suggest listing those things, there are I would suggest thousands
of items exported every day from the UK—nuts, bolts and
washers—which end up on military equipment. You tell me
where you draw the line?
Q63 Chairman: If it were the case
that Land Rover knew that the company that had purchased the flat
packs was going to transform these into military vehicles and
not non-military vehicles, and if Land Rover knew that Turkey
had a specific military relationship with Uzbekistan that would
mean that should there be civil disturbance these vehicles could
be used, would you think it would be a good export control policy
for government to seek to control what Land Rover was doing, if
they knew that was the chain.
Mr Keetch: After all, it is not
unknown for a Land Rover to be used for military purposes. It
is hardly a dual-use item that is regarded as not having a military
capability.
Mr Hayes: I do not think anyone
is arguing that the outcome in this particular case was desirable;
no-one would argue that, but whether or not there is a realistic
way in which an export control could be drafted which would prevent
that sort of export taking place without having a lot of unintended
consequences is a very difficult question.
Q64 Judy Mallaber: I have a couple
of questions on enforcement. There was a very interesting reply
to a parliamentary question a couple of months back, answered
by the Financial Secretary of the Treasury. He was asked what
percentage of breaches of export control legislation involved
goods that would have been granted an export licence if the exporter
had got round to applying for one. The answer for the last year
that he gave, which was fairly typical of previous years, was
83% which meant that eight out of 10 items seized by customs for
breaching export controls could have been exported if the exporter
had applied for a licence first. Would you like to comment on
that and what implications you would draw from that figure?
Mr Fletcher: We were surprised
that the figure was that low. We had expected the figure to be
much higher. That is based on the fact of how few licences are
actually refused by the DTI.
Mr Salzmann: When you have 17%
in that particular case of attempted shipments which were caught
which would not have received a licence, that is a very high proportion.
Q65 Judy Mallaber: How much of the
issue there is the fact that the companies are not applying for
the licences?
Mr Salzmann: The 83% were not
aware of export controls sufficiently, but also the level of the
17%, how many of those were a deliberate attempt to evade regulations
because they knew they would not get a licence. We are constantly
working with the DTI on awareness aspects both with UK regulations
and also US regulations, organising workshops and other initiatives.
We have an Awareness Outreach Activity Sub-Committee which is
looking at initiatives which we can run to try to help with the
awareness side.
Q66 Judy Mallaber: Are you aware
whether there has been any analysis of that 17%?
Mr Hayes: No, we are only aware
of the same figures as you have.
Q67 Judy Mallaber: After you had
given evidence last session the Committee put your comments about
the lack of checking of goods to Revenue and Customs and Mr Mark
Fuchter, Head of Publications and Restrictions Policy Group, said
they were very anxious to establish good relations with EGAD;
it was a most useful session and they were going to go off and
do so. Has anything happened as a result of that?
Mr Salzmann: Yes, there have been
a couple of meetings. We have an HM Revenue and Customs Sub-Committee.
We had a previous liaison which has been enhanced since then.
We have had a couple of meetings since then including one that
was held at our request to try to get confirmation from HM Revenue
and Customs about how the actual procedures of the new National
Clearance Hub in Salford are going to work in practice so that
we are then in a better position to give advice to our member
companies on what they have to do to comply with the new regulations
using the NCH.
Q68 Judy Mallaber: So that has helped
to clarify the position so far as you are concerned. Is that now
an on-going relationship?
Mr Salzmann: Yes it is.
Q69 Judy Mallaber: What are your
views on their level of resources in terms of enforcement? Overall
what would your view be on the question of their resources?
Mr Fletcher: I would have thought
they were under-resourced but then most government departments
are under-resourced these days. It is a horrendous job. You have
the officers who are checking the paper work using the new computer
systems and such like. The computer systems are supposed to free
up customs officers, but actually physical customs officers checking
goods—I do not know whether any of you have ever been to
the goods sheds at Heathrow and seen the horrendous problems that
they have between trucks arriving, goods being packed on pallets
and put onto aircraft, you can count in minutes the time they
have to check the physical goods against paperwork if they are
doing checks—is a horrendous problem. One of the other areas
which ties their hands behind their backs is with the potential
export of tangible technology using the mail system. My understanding
is that under the Telecommunications (Lawful Business Practice)
(Interception of Communication) Regulation 2000, unlike a physical
good which they can look at and see whether it meets the paperwork,
they would have to have a warrant to look to see whether there
was controlled technology in mail.
Q70 Malcolm Bruce: In your evidence
to us you said that the defence industry is a compliant and easy
target for the British Government and you would like to see some
other sectors—dual-use sectors and freight forward couriers—receive
more attention. You also suggested that more could be done using
UKTI Chambers of Commerce and Business Links and so forth, and
people taking responsibility for themselves. In our report we
suggested an industrial export control association on the Swedish
model; do you think that would help and perhaps take the pressure
off you?
Mr Salzmann: Essentially between
ECAC (Export Control Advisory Committee) which meets with the
DTI and EGAD itself (which represents all the trade bodies you
can see on the letter heading) effectively we have already got
a similar model.
Q71 Malcolm Bruce: I thought you
might say that but you have also acknowledged nevertheless that
there is still a lot slipping through. Perhaps I can ask you as
a supplementary, what more do you think could be done to reach
those companies that are not complying in most cases out of ignorance
but also providing cover for those who are not complying but can
use the argument that nobody knew (because so many people clearly
do not).
Mr Salzmann: Certainly our Awareness
Outreach Activity Sub-Committee is looking at that. The Chairman
of that is actually from the Export Control Organisation and we
are actively looking at initiatives, on how to try to engage with
them. With regards to the freight forwarders what we are planning
to do is undertake a survey of our members to produce a list of
recommended freight forwarders who are aware of export controls.
Q72 Malcolm Bruce: What about non-members?
Mr Salzmann: It will be open on
our website to list any freight forwarders that our members can
recommend.
Mr Fletcher: It is extremely difficult
to try and find out who out there perhaps wants this advice. I
have done some research because there is potential business for
me to find these people and it is extremely difficult. You do
not know until they come out of the woodwork by one means or another
and make contact. You cannot force people to look at the DTI website.
A good customs case often brings a lot of people out of the woodwork
and that can be publicised in the proper manner (which again DTI
is trying to do through the website).
Q73 Mr Borrow: It is a few years
now since the talks with Congress on the ITAR waiver came to an
end and I think the conclusion at the end of that was that the
Government needed to work with the US Government on alternative
arrangements. Lord Drayson is in the States next week trying to
finalise progress on the JSF but I am more interested in the extent
to which alternative arrangements have been or are being put in
place, not just for the JSF but for the whole of the defence sector
in terms of the transfer of intellectual property and technology
from the US.
Mr Hayes: It continues to be a
very difficult area in which to work. We are coping with the existing
systems and that really is the best that we can say at the moment.
We have provided briefings to various groups and continue to do
so on possible ways forward that we see. Whether or not any of
those will be taken up or deemed workable is another question.
Q74 Mr Borrow: Is there no feeling
from the US side that some sort of change in arrangements needs
to take place?
Mr Salzmann: From the US industry
side, yes.
Q75 Mr Borrow: Not from the Hill.
Mr Salzmann: No, not necessarily,
but we are waiting to see what happens with the new constituency
on Capitol Hill after the mid-term elections.
Q76 Chairman: Thank you very much
indeed, not just for this afternoon but also for your memorandum.
It was very helpful indeed. It clearly took time to prepare and
it was very helpful to us. You know we are reviewing the export
control legislation and this process will take a bit of time and
if there are any further views that you have please do get in
touch with us again.
Mr Hayes: We will certainly get
in touch with you with some detailed information from NBC UK.
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