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Westminster Hall

Thursday 27 March 2008

[Hywel Williams in the Chair]

Strategic Export Controls

[Relevant documents: First Joint Report from the Defence, Foreign and Commonwealth Affairs, International Development and Trade and Industry Committees, Session 2006-07, HC 117, and the Government’s response, Cm 7260; the Minutes of Evidence taken before the Business, Enterprise and Regulatory Reform, Defence, Foreign Affairs and International Development Committees on 17th January 2008, HC 254-i, and 20th March 2008, HC 254-ii.]

Motion made, and Question proposed, That the sitting be now adjourned.—[Ms Diana R. Johnson.]

2.30 pm

Roger Berry (Kingswood) (Lab): It is a pleasure to introduce the latest report of the Committees on arms export controls and the Government response under your chairmanship, Mr. Williams. I think that this is the first time that I have spoken when you have been in the Chair. I hope that it will happen on many more occasions. The Committees on arms export controls used to be known as the Quadripartite Committee or, more familiarly, the Quad, but we have rebranded in an effort to be more transparent. At least when we say that we are the Committees on arms export controls, the public, the media and perhaps even hon. Members have a clearer idea of what we are about than was the case when we were called the Quad. Obviously, we are four Select Committees—hence the Quad—which come together to consider arms export policy.

May I start with a few thanks? First, I thank my colleagues on the Committees for yet again securing a unanimous report. I thank the staff of the Committees for all their efforts. I give particular thanks to our Clerk, Glenn McKee, for his excellent service to the Committees. Finally, I thank all those who gave written and oral evidence to the Committees, and the officials of Departments who had responsibility for preparing answers to our many extremely interesting questions. I am grateful to them all.

In the course of the inquiry for the report, we held evidence sessions with the UK Working Group on Arms—a coalition of non-governmental organisations, including Amnesty International UK, Oxfam GB and Saferworld—the Export Group for Aerospace and Defence, which rejoices in the acronym EGAD and is often known as the defence manufacturers; officials from Her Majesty’s Revenue and Customs and the Revenue and Customs Prosecution Office for their expertise on the enforcement of export controls; the then Secretary of State for Foreign and Commonwealth Affairs, my right hon. Friend the Member for Derby, South (Margaret Beckett); and last, but certainly not least, my hon. Friend the Minister, who was at the time an Under-Secretary of State for International Development. I think that he has now been rebranded and is the Under-Secretary of State for trade and development. I hope that I have got that right. I am delighted that he will respond to the
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debate today. I thank all those who gave evidence to the Committee in one form or another. Self-evidently, our work would have been impossible without their efforts.

The Export Control Act 2002 in effect came into force in 2004 and, in accordance with best practice, the Government announced that they would review the legislation last year. That review is under way. There has been the public consultation process. The Government have published their initial response to that consultation, and the debate continues. Inevitably, given the time at which it was published, much of our report is concerned with reviewing the legislation and making proposals that we hope the Government will take up in relation to that review. As I said, we have had an initial response from the Government. I would be grateful if the Minister told us when the Government’s final response will be published and when drafts of any secondary legislation will be made available to the NGOs, EGAD and the Committees.

There is good news. Let me start with torture equipment. It might sound odd to say that there is good news in that respect, but for the past 10 years, since 1997, there has been a ban on the export and transhipment from the UK of certain equipment designed for the purposes of torture—for example, electric shock batons, stun guns, leg irons, gang chains and electric shock belts.

In our previous report, as a result of evidence supplied by Mark Thomas and Amnesty International UK, we called for the immediate banning of additional instruments of torture, including sting sticks. For those who have not seen them, sting sticks are metal rods about 2 to 3 ft in length with barbs sticking out of them. There is not much that a person can do with one of those things other than hit somebody. I am delighted that the Government have announced that they intend to add sting sticks to the list of restricted goods. The Export Control (Security and Para-military Goods) Order 2008 was laid on 10 March and comes into effect on 6 April—I will probably for ever regard it as the Mark Thomas order. Introducing that order is a good thing to do. Sting sticks are another instrument of torture on the restricted list.

As the Government say in paragraph 2.2 of their initial response to the consultation:

I am not sure about the choice of the word “legitimate” there, but I think that we all know what the Government mean. I commend them, as do my colleagues on the Committees, for taking that decision.

I also congratulate the Government on their decision to introduce an end-use control on torture equipment. Again, the Committees had been pressing for that. It will enable the UK to license, and therefore refuse, the export of any goods from the UK designed for use in torture or similar acts. For the first time, those who knowingly trade in torture equipment, whether or not it is on the specific list of controlled items, will be covered by the law. The Government need to be congratulated on that. It is a very welcome development in our system of arms export controls.

I understand and welcome the Government’s intention to introduce that control at EU level. The arms trade, like business generally, is global, and political institutions
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struggle to catch up with that. One reason why I have a strong interest in international affairs is that I think that, increasingly, countries have to co-operate to arrive at sensible solutions. I therefore welcome the fact that the Government are seeking to introduce the control at EU level, but I would like to make the obvious point about what would happen if by any chance the UK were to be rebuffed by our colleagues in the European Union, and that sane, sensible and long-overdue proposal were not to be agreed by other member states—admittedly, today is not a day to be talking of disagreements in the EU. Will the Minister commit the Government to introducing such a control unilaterally, as they have done in other areas, because that is the right thing to do and would set a good example? I hope that we do not have to do it, but we have to address the need for a general end-use control on torture equipment.

Arms brokering and extraterritoriality is another issue that the Committees have been exercised about for many years. We welcomed the extraterritorial controls introduced in the 2002 Act, but we have consistently argued that they should be extended to cover all items on the military list, not just some. Today, UK persons abroad are subject to control only if they trade in long-range missiles—missiles with a range of more than 300 km—or torture equipment, or if they trade to an embargoed destination. It seems to us that any UK person who seeks to avoid UK arms export controls by the simple device of leaving the country should be subject to extraterritorial controls. I am delighted to see that the hon. Member for Cotswold (Mr. Clifton-Brown) is nodding vigorously. He is right.

Labour’s 2001 manifesto said:

It does not say control “some” activities and it does not exclude some of the most damaging activities. What were excluded, until the Government’s recent announcement, and what are excluded until this provision is introduced through secondary legislation, are small arms, light weapons and man-portable air defence systems. Small arms and light weapons kill a person every minute in the world today; 500,000 people—men, women and children—are killed by small arms. Small arms are the current weapons of mass destruction. As of today, they are excluded from our extraterritorial controls. I am delighted—as are the Committees—that the Government have now proposed that UK persons who broker small arms, light weapons and MANPADS are to be controlled no matter where they are operating. That is absolutely right. I have to confess that I cannot understand why all conventional weapons are not controlled in that way. The Committees have consistently pressed for that.

May I ask the Minister why all items on the military list are not to be listed under the new category 2 and subject to extraterritorial controls? Also, will components, small arms, long-range missiles and MANPADS be included in the category 2 controls?

Sarah Teather (Brent, East) (LD): I am listening to the hon. Gentleman with great interest. Does he agree with me that the consequence of not putting conventional weapons into category 2 might be that someone may
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trade in helicopters to a country such as Chad and then find that they are being used on the border with Sudan? Whether or not we introduce re-export clauses would be irrelevant because we would not need a licence for the trade in those particular weapons.

Roger Berry: The hon. Lady makes a significant point, and I will come to re-exports in a moment. On why we should not include other conventional arms, I offer her the Government’s comment. In paragraph 1.7 of their initial response to the public consultation on the review, they said that action was being taken on light weapons

That is precisely the point that we are both making.

An obvious way for unscrupulous traders and business people to avoid UK domestic export controls is simply to carry out the business elsewhere. That argument is as valid for other conventional weapons as it is for small arms and light weapons. That is precisely why there should be full extraterritoriality in relation to policy towards brokers. This is the same reason, moreover, why we are concerned about licensed production overseas, why we want to ensure effective end-use monitoring and why we want to tighten up on re-export deals. What is that reason? As I said, it is

the Government’s own words. I welcome and do not wish to diminish the importance of their proposals in relation to small arms. The decision has been welcomed by Amnesty International as a major victory for arms control campaigners. I like to think that our Committees deserve a small bit of credit, as well. However, we need to consider extending those controls to all conventional weapons.

On the basis of the evidence that the Committees have received, we have concluded that controls over licensed production overseas are inadequate and need to be extended. We believe that there are advantages in pursuing the third option that the Government proposed in their consultation document, namely that they make export licences for supplies to licensed production facilities or subsidiaries subject to conditions relating to the relevant commercial contracts. For example, permission should be secured before making any onward supplies.

Will the Minister tell us when the Government will reach their final conclusions on the options that they identified for controlling licensed production overseas, and will there be an opportunity for comment before the conclusions are finalised? In the past, those of us who argued that this was a major issue have had a response from Government that suggested, “We understand the point that you are making, but it is all very difficult.” I see movement here, but I would like to know when we are likely to get some final thoughts from Government and whether there will be an opportunity to pass comment before those thoughts are finalised.

One of the concerns about licensed production overseas is the lack of control over ultimate end use. That takes me to end-use monitoring. The Committees have, for a long time, argued that we need appropriate end-use monitoring. In the past, we have recommended that the
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Government establish a pilot programme of end-use monitoring, focusing on cases in which some degree of risk has been identified. The Government’s standard response has been to say that end-use monitoring is no substitute for a rigorous assessment of a proposed export at the time of application. Therefore, it is all about investigating applications on a case-by-case basis. They indicate that that is the key thing and that there is not a lot we can do about end-use monitoring thereafter. Again, I detect some progress. This time last year, I drew attention to the case of Land Rover Defender military vehicles, which were used by Uzbek troops during the Andijan massacre in May 2005. The Committees raised the matter with the Government, who confirmed that Land Rover had sold flatpack civilian Land Rover Defenders to the Turkish company Otokar. Otokar then assembled them and added its own components to produce a military vehicle. We understand that the vehicles were given to Uzbekistan by Turkey and were used against civilians in the Andijan massacre in 2005.

The Government informed the Committees at the time that the UK had no power to control the export of civilian specification Land Rovers, which is entirely true. However, in light of the concerns that have been expressed, the Foreign and Commonwealth Office sent us a memo, which is the last memo in our evidence, page 159. It said:

Evidently, the Government accept the importance, in certain circumstances, of end-use controls and, evidently, they have introduced them. It may have been a voluntary arrangement with Land Rover, but the only conceivable reason for persuading Land Rover into a nice arrangement with the Government was that if it exported any more flatpacks to Otokar there would be some dialogue about where what might turn out to be military vehicles would end up. If that is not about end use, or an attempt at end-use control, I do not know what is. Do the Government accept that, in certain circumstances, there is a case for end-use monitoring, not unlike that which we have discovered the Government have been practising, and for which I praise them?

I tend to think that the only thing that matters with the arms trade is end use. The only thing that matters when we talk about controlling trade in weapons is who gets the weapons at the end of the day, and what they do with them. End use is all that matters; everything else is an attempt to control that end use. I accept the Government’s logic on Otokar and Land Rover. I agree with the Government that we should not ignore end use if it is felt that a UK company is responsible for only the first part of the manufacture of a vehicle in a civilian context. If there are doubts, or if there is evidence to suggest that a UK company might—inadvertently or otherwise—be involved in providing a major component for a military vehicle that might, for example, end up in an embargoed country, the Government should be concerned. I hope that the Minister will confirm that there are circumstances in which end-use monitoring is essential.

The hon. Member for Brent, East (Sarah Teather) raised the question of re-exports. The example that springs to mind from the last 12 months arose from
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media reports that maritime patrol aircraft that had been exported from the UK to India were to be sold by the Indian Government to Burma. There was a lot of media coverage of that and right hon. and hon. Members may recall the case. We suggested to the then Foreign Secretary, my right hon. Friend the Member for Derby, South, that the export licence for sending the aircraft to India should require a restriction on resale. I shall come to the general argument about re-exports later, but we made that point in light of the fact that the Indian Government were said to be planning to re-export to Burma. In her evidence to the Committee, the then Secretary of State responded to question 232 by saying:

I think, with the benefit of hindsight, that it was desirable. We all learn from experience, so I suggest, and the Committees agree, that it would be desirable for a standard requirement of licensing whereby export contracts for goods on the military list contain a clause to prevent re-export to any destination that is subject to a UN or EU embargo, and for all export contracts to make provision to allow for end-use inspections. I would be grateful if the Minister could advise right hon. and hon. Members what conclusions the Government have reached on those recommendations.

There is not much point having laws if they are not enforced so the question of whether it is worth while breaking the law and paying the fine in the UK environment arises. Penalties for breaching export controls in the UK seem to be rather modest compared with other countries. We received an example in a written submission from the UK Working Group On Arms and, as far as I know, no one has challenged the facts of the case. In the US, for example, the ITT Corporation was convicted and fined $100 million for illegally sending classified night vision technology that is used in military operations to China and Singapore and setting up a front company to escape detection. I repeat: that company was fined $100 million. By contrast, last year, a UK company, Avocado Research Chemicals Ltd, was found—despite its attractive name—to have unlawfully exported two controlled chemicals. I shall not attempt to pronounce the name of the first of those, but it is a possible precursor to VX gas; the other was hafnium, which can be used in the production of nuclear fuel rods. They were exported to a broker in Egypt, which is not a signatory to the chemical weapons convention, yet the company was fined only £600 plus £100 costs.

It is not only members of our Committees who think that there might be companies out there that think that it is okay or more economical to break the rules and pay the fine. When EGAD gave evidence a week ago, it was asked about the contrast in the penalties between the US and the UK. EGAD replied that

I put it to the Minister that that is an indictment of the UK’s enforcement regime. It is not a criticism of those who seek to enforce the law but of the nature of the penalties that are handed out. I would appreciate it if the Minister commented on the issue.

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