Select Committee on Business and Enterprise Eighth Report


3  REVIEW OF EXPORT CONTROL LEGISLATION

Introduction

21. Our Report this year contains a second instalment to the chapters on the 2007 Review of Export Controls in last year's Report.[46] The background to the legislation and to the Review was set out in Chapter 3 of last year's Report. In summary, the origin of the Export Control Act 2002 was the Report of the Scott Inquiry published in February 1996, which criticised the export control regime at that time for its lack of accountability and transparency. The report recommended that "the present legislative structure, under which Government has unfettered power to impose whatever export controls it wishes and to use those controls for any purposes it thinks fit, should […] be replaced as soon as practicable".[47] Following a White Paper on Strategic Export Controls[48] in 1998 and the draft Export Control and Non-Proliferation Bill in March 2001,[49] the Export Control Act 2002 (as the draft Bill became) passed all its parliamentary stages and received Royal Assent in 2002. As the 2002 Act was primarily an enabling power the new export control regime was enacted under secondary legislation which came into operation on 1 April 2004.

Research

22. We have in our past two Reports highlighted the need for the Government to commission independent research into the operation of the export control system.[50] In our view it is essential that the review of the legislation is informed with the best available assessment of the effectiveness of the export control system. In our Report last year we recommended that the Government carry out a government-wide assessment of the effectiveness of the operation of export control legislation since 2004 and that the Government in responding to our Report produce detailed evidence to demonstrate the effectiveness of export controls.[51] To assist the Government, we highlighted a number of areas where we considered further research would be profitable:

a)  what volume and categories of the goods falling within definitions on the Military List and in the dual-use regulations were being exported without licences in breach of export controls;[52]

b)  the extent to which dual-use goods not subject to control were exported from the UK and were then incorporated into equipment which had it been exported from the UK would have been subject to export control;[53]

c)  whether the controls on the transfer of software were adequate, practicable and enforceable;[54] and

d)  the reasons for the small numbers of applications for trade control licences from British citizens overseas.[55]

23. The Government's response in November 2007 to our recommendations went some way to accepting our concerns. It recognised that the Export Control Organisation's (ECO's) internal assessment of the controls included in the 2007 Consultation Document did not provide "complete assurance that the system is working effectively".[56] Although it did not rule out commissioning independent research, the Government considered that it would be in a "better position to assess the effectiveness of the controls once it has the responses to the current consultation" and "in the light of the ongoing inter-departmental discussions on the review, as well as the Government's research into comparisons with other EU Member States".[57] It pointed out that the 2007 Consultation Document specifically asked respondents to provide evidence on the effectiveness of the current export controls.[58] We accept that answers to such questions in the Consultation Document may be useful but the respondents were self-selecting and the answers to some measure were unstructured. We are therefore not surprised that the Government said that it "did not get quite as much as we had hoped"[59] in response to the 2007 Consultation Document. From the oral evidence session with the Department for Business, Enterprise and Regulatory Reform (BERR) on 19 May we noted that the Government might carry out some research to establish which ancillary services should be brought within export control.[60] But for other key aspects of export control the Government is now in the position that it has no independent research to inform the next stage of the review of the legislation. Given the importance that the Government attaches to evidence-based policy and the use of best practice, which must include some research,[61] we find this situation surprising and regrettable. Nor, because of the absence of research, is the Government able to point to sound evidence to refute the allegations—many based on anecdotal evidence[62]—that the system is ineffective. There is time for the Government to commission research before the final tranche of secondary legislation is formulated, in order to provide it with the assurance that the export control system is working effectively. We recommend that the Government take steps to demonstrate the effectiveness of the export control system.

Brokering, trafficking and extra-territoriality

24. Where a company or person acting within the UK arranges or negotiates contracts (or agrees to do so) between others for trade in "Controlled Goods"[63] between overseas countries this is commonly known as brokering. Where a company or person acting within the UK trades (or agrees to trade) between overseas countries on his or her own behalf principally buying, selling or arranging the transfer across borders of "Controlled Goods" this is commonly known as trafficking.[64] Under the Export Control Act 2002 and the accompanying secondary legislation that came into operation in April 2004, there are two categories of extra-territorial control. First, actions by UK persons abroad are regulated where they relate to trade in missiles with a range greater than 300 kilometres and torture equipment, or trade to an embargoed destination. This is the "Restricted Goods" category. Second, for other trafficking and brokering to fall under the scope of the Act, part of the transaction has to take place in the United Kingdom. In the 2007 Consultation Document the Government identified possible changes to the extra-territorial controls, including:

  • A new "Middle Category": The "Restricted Goods" controls would be reserved for items for which the Government would never normally grant a licence. A new category, "Partially Restricted Goods" would be created for more sensitive goods but where there was legitimate trade. Under this category, the core activity of trading in these goods would still be controlled if carried out by a UK person anywhere in the world, as would other acts calculated to support that trading, including transportation, financing/financial services, and insurance or re-insurance; but the more peripheral acts, such as the promotion or advertising of these goods at trade fairs or in periodicals would not be controlled.
  • Extension of controls on some categories of equipment: The Government said that certain types of military equipment were widely viewed as being of greater concern than others: in particular, small arms, light weapons (SALW) and man-portable air defence systems (MANPADS) and cluster bomb munitions.[65]

25. Last year we took evidence on, and considered, the Government's proposals. In our Report last year we concluded that the Government should bring forward proposals to extend the extra-territorial provisions of the export control legislation to encompass trade in all items on the Military List. In our view the experience of the past three years had shown that the existing arrangements had failed and that the extension of the extra-territorial provisions was overdue. We therefore recommended that the Government require all residents in the UK and British citizens overseas to obtain trade control licences, or be covered by a general licence, before engaging in any trade in the goods on the Military List.[66]

26. In its Initial Response to the 2007 Consultation published in February 2008 the Government concluded that the existing two tier structure for regulating brokering was no "longer the most effective model" and it said that it was going to introduce a three-tiered structure:

  • Category 1 would include only goods whose supply is inherently undesirable. For Category 1 goods, the following activities would be controlled:
      • trading activities by any person within the UK;
      • trading activities by UK persons anywhere in the world; and
      • any act calculated to promote the supply or delivery of such goods.

    Category 1 would cover torture equipment, plus those cluster munitions "which cause unacceptable harm to civilians" and the supply of any Controlled Goods to an embargoed destination.

  • Category 2 would include goods in respect of which there is legitimate trade, but which, on the basis of international consensus, have been identified as being of heightened concern. It was envisaged that the following activities will be controlled:
      • trading activities within the UK;
      • trading activities by UK persons anywhere in the world;
      • other activities directly related to that trading, including direct and targeted acts of promotion;

    but not peripheral acts such as general promotion or advertising at trade fairs or in periodicals.

    Category 2 would cover small arms and light weapons, long-range missiles (including Unmanned Air Vehicles) and MANPADs.

  • Category 3 would include any items on the Military List which did not fall within Categories 1 or 2. For Category 3 goods trading between two countries overseas only if carried out from within the UK would be controlled.

    Under Category 3,   indirectly associated activities, including the provision of transport, financing/financial services, insurance or re-insurance and general advertising and promotion would not be controlled.[67]

27. When he gave evidence the Minister, Malcolm Wicks MP, indicated that the next tranche of secondary legislation coming into operation on 1 October 2008 would extend extra-territorial control on small arms, MANPADS and also cluster munitions.[68] We and our predecessor Committees have consistently and persistently recommended that the extra-territorial controls be extended to all items on the Military List.[69] We received a draft of the Trade in Goods (Categories of Controlled Goods) Order 2008 and the Chair's reply to the Minister is at Annex 1. We conclude that it is necessary to extend extra-territorial controls to cover the export of, and trading in, small arms, MANPADS and cluster bombs and we welcome the Government's decision to do this in the Trade in Goods (Categories of Controlled Goods) Order 2008.

28. The question now, as the Minister pointed out it in his oral evidence, is "do we now need to move further" than the Trade in Goods (Categories of Controlled Goods) Order 2008.[70] He said that the "the door is wide open on this for us to take further steps should we deem that necessary".[71] In calling for the extension of extra-territorial controls our main concern has been to bring within the ambit of the law activities which, if they had been carried out in the UK without a licence, would be criminal activity. We also had a concern that by attempting to define trade in terms of the items that could be reasonably identified in advance as those which would not generally be granted a licence in the UK the Government produced a regime that was too tightly and inconsistently drawn. One obvious example is the inconsistency in the treatment of missiles—those with a range greater than 300 kilometres were included within the 2004 extra-territorial controls but those with a range below 300 kilometres were excluded—which is baffling and confusing.[72]

29. The starting point has to be Category 2—now category B in the draft Trade in Goods (Categories of Controlled Goods) Order 2008— which is essentially a new category that the Government has brought forward in response to representations about the inadequacy of the controls on extra-territorial transactions. When it gave evidence, the UK Working Group on Arms welcomed the decision to create the new category[73] to extend extra-territorial brokering controls to small arms and light weapons and encouraged the Government to extend the controls "to cover at a minimum other equipment generally recognised to be of particular offensive utility".[74] The Export Group on Aerospace and Defence (EGAD) did not share the UK Working Group's approach and it considered a widely drawn Category B "unworkable".[75] It preferred an international arms trade treaty:

    because by definition it is far easier to effectively enforce a domestic law than it is to enforce a law extra-territorially. If arms were being moved between two countries, those arms would be an export from one of the countries and an import to the other by definition. If we could get to the stage where that transaction was being controlled effectively by the countries directly involved, that would be a far more efficient means of enforcement and far more likely to result in a successful prosecution than would the UK trying to control that transaction from one stage removed.[76]

30. In an ideal world where all states were in a position to apply export controls broadly in line with the UK's controls EGAD's analysis and approach would have much to commend it. But we are not, and, as we note in chapter 8, the prospects for a comprehensive, fully-enforced, universally-applied treaty may be some time off. Moreover, control and policy are different. An overseas government may have a perfect control system, and take a policy decision to license an export to a country which it considers friendly, but the UK would not. In addition, countries outside the EU are not bound by EU sanctions. And even if a treaty came into operation which was based on the EU Code of Conduct on Arms Exports, there would be scope for interpretation and for assessments based on differing foreign policy evaluations by governments. In the absence of a wide-ranging and enforceable international arms trade treaty we conclude that there is an overwhelming case for the UK to extend its extra-territorial controls further.

31. The creation of the new intermediate category—Category B—which will cover goods such as small arms[77] means that the Government now accepts in principle that the reach of the UK's controls on extra-territorial transactions includes trade in goods for which there is a legitimate market. We agree with this principle and welcome the Government's acknowledgement of it. The Working Group pointed out, however, that the Government appeared "reluctant to extend this principle to its logical conclusion, i.e. that the brokering of all Military List goods should be subject to a form of extraterritorial control".[78] The Government indicated that it wished to include in Category B goods that, "on the basis of international consensus, have been identified as being of heightened concern".[79] In its oral evidence the UK Working Group pointed out that brokers "are increasingly offering a whole range of military equipment on the list, not necessarily the entire Military List but there are clearly items such as tanks, vehicles, rocket launch systems and helicopters which you may want to control".[80] We agree with the UK Working Group's analysis. While we welcome the Government's intention to control the extra-territorial transactions of people based in the UK and of British citizens overseas carrying out legitimate brokering in arms, we consider that its proposed restriction of Category B to trading on items causing "heightened concern" is problematic. It is a subjective definition which is likely to throw up as many inconsistencies as the existing regime. For example, missiles might be within Category B but tanks outside. We reiterate the recommendation we made last year that the Government bring forward proposals to extend the extra-territorial provisions of the export control legislation to encompass trade in all items on the Military List and that all residents in the UK and British citizens overseas be required to obtain trade control licences, or be covered by a general licence, before engaging in any trade in the goods on the Military List. In order not to undermine the employment prospects of British citizens working for reputable organisations, we further recommend that the Government issue general licences covering British citizens working overseas and engaged in categories of trade between specified countries or in certain activities such as advertising.

Control of transport and ancillary services

32. The Minister recognised "the integral nature of transport" when it came to extra-territorial controls and he promised "that we will look at it again before reaching a definitive conclusion".[81] He said, as we have noted, that the Government would "carry out some research to establish which supporting activities should be controlled in relation to the new Category B trade controls which […] include small arms. There may well be a case to include transport services because obviously transport services are vital to this trade, so we are certainly looking at this".[82] The Government also indicated that it was working with the industry "to try and get costings that are as accurate as possible".[83] The UK Working Group on Arms regarded as a matter of urgency the extension of the extra-territorial controls to transporters[84] and it argued that the "roles of broker and transporter can be tightly linked, with the dividing line between them difficult to draw".[85] EGAD, however, considered that "control in the peripheral activities such as transportation is fraught with difficulties".[86]

33. Last year we took the view that bringing ancillary services beyond those that were provided in relation to restricted goods and to the supply of controlled goods to embargoed destinations or for WMD[87] end-use within export control would improve the regulation of strategic export transfers. But a general extension would add to UK service providers' costs and, as services were increasingly globalised, could place them at a competitive disadvantage.[88] We made no recommendation last year and we make none this year on the extension of extra-territorial controls to ancillary services. We do, however, reach a conclusion. We conclude that the Government should make its decision whether or not to include the control of transport and ancillary services within new Category B provided by the Trade in Goods (Categories of Controlled Goods) Order 2008 on the basis of evidence made available to the Committees, including any practical experience in other countries of implementing such provisions. In addition, the Government should consider not only the services to include but the nature of the control and the duties and liabilities that can reasonably be placed on those providing ancillary services.

Registration of brokers

34. We concluded in our Report last year that the EU Common Position on the control of arms brokering adopted on 23 June 2003 provided best practice and we recommended that the Government establish a register of arms brokers. We also recommended that any brokering or trafficking in arms by a person in the UK or a British citizen abroad who was not registered be made a criminal offence.[89]

35. When he gave evidence the Minister made it clear that the Government was not opposed to a register in principle and he could see certain advantages in a register.[90] We pointed out that some EU countries operated registers and he indicated that he was prepared to examine practice across the EU.[91] His reservations concerned "practical difficulties" and he said that "we will have to consider those before reaching a conclusion".[92] John Doddrell, Director, Export Control Organisation, set out the advantages of a register. He could envisage advantages:

    in terms of increasing compliance, particularly if it is linked to some kind of awareness test in relation to the controls that people would have to satisfy us before they could be registered that they understood what the controls are. There is also a potential advantage in that if somebody commits a particular offence, demonstrates that they are not a suitable candidate to be conducting business in this area, the register would provide a means of preventing them from going about that activity in future, so there are advantages. [93]

If a register were established, Mr Doddrell explained that the arrangements that would have to be considered:

    what the criteria would be to accept somebody on the register; what the mechanism would be for removing them and stopping them from continuing their practice in that area; whether we might charge a fee for people being on the register; whether the register would be a public document freely published and made available or whether it would be something that would be just available for the department itself, and perhaps a final point to make on this is that there is a real balance on this as to whether the benefits […] outweigh the extra regulatory hoop that we will be imposing on business that they would have to go through in order to go about their business.[94]

36. From the oral evidence it is clear to us that the Government is considering whether to introduce a register of brokers. We welcome the detailed consideration that the Government is giving to the question of introducing a register for arms brokers. The arguments, which the Government itself summarised during its oral evidence, amounted, in our view, to a convincing justification for the introduction of a register of arms brokers. We reiterate our recommendation made previously that the Government establish a register of arms brokers.

End-use control for torture equipment

37. We recommended last year that the Government bring forward proposals for an end-use control on equipment used for torture or to inflict inhuman or degrading treatment. In its Initial Response to the 2007 Consultation published in February 2008 the Government stated that it had:

38. The UK Working Group on Arms understood the "logic behind doing this through the EU" but considered that, if the Government was rebuffed by its EU partners, "such a control should still be introduced unilaterally (thereby setting an example for others to follow)".[96] We welcome the Government's response to the proposal, in principle, to introduce an end-use control on torture equipment. This is an issue that we expect to return to. We conclude that the Government is right to seek to introduce an end-use control on torture equipment through the EU. If this is not possible, we recommend that such a control should be introduced by the UK.

Re-exports

39. Following press reports,[97] we asked in 2007 the then Foreign Secretary, Rt Hon Margaret Beckett MP, about reports that maritime patrol aircraft which had been exported from the UK to India were to be sold by the Indian government to Burma and suggested that the export licence should have required a clause in the contract restricting resale. She said that "with the benefit of hindsight I suppose one could say it might have been desirable" but she pointed out that the original contract had "been rather a long time ago, possibly even decades".[98] In our subsequent Report, while we accepted that little could be done in respect of the proposed export of British-made maritime-patrol aircraft from India to Burma, we recommended that it should become a standard requirement of licensing that export contracts for goods on the Military List contain a clause preventing re-export to a destination subject to UN or EU embargo. In addition, we recommended that the contracts included a subrogation clause allowing the UK Government to stand in the place of the exporter to enforce the contract in the British or foreign courts.[99] In its response to our Report the Government indicated that it would consider these recommendations in the post-consultation analysis of the Review of Export Controls.[100] The issue was not addressed in the Government's Initial Response to the 2007 Consultation and so we raised it in writing[101] and with the Minister when he gave oral evidence in May 2008. The Minister said that "where we understand that goods will be re-exported by the recipient country we assess the risks associated with that".[102] Mr Doddrell explained:

    it is the practical difficulties. Once the goods have left the UK it is very difficult to stop them going anywhere else. Our preferred approach for some time has been to factor all these considerations into the initial licensing decision, and if we judge that there is a risk that helicopters going to a recipient in India would then be re-exported on to Burma then our preferred approach is to stop them going to India in the first place.[103]

40. From our work scrutinising export controls since 1999 we are aware of the key role that pre-licensing checks play in export controls. Our concern highlighted by this Indian case was where defence goods are exported to a "friendly country", used by the authorities in that country and after many years then sold on. We cannot see that the system of pre-licensing checks could anticipate, or should prevent, an unobjectionable export on the grounds that it might be re-exported to another country which might in the future be subject to an embargo. When this point was put to the Minister he said that it came down to practicalities[104] and that he would look at the matter again.[105] Amnesty International UK, the Omega Research Foundation and Saferworld pointed out that Austria, Belgium, Bulgaria, Finland, France, Germany, Italy, Poland, Romania, Spain and Sweden used "re-export controls to differing degrees".[106] In our view, a standard requirement of licensing that export contracts for goods on the Military List contain a clause preventing re-export to a destination subject to UN or EU embargo would provide increased protection against undesirable re-exports. Such a clause would underscore any diplomatic efforts the UK made to prevent objectionable re-exports and, as the non-governmental organisations pointed out, provide grounds for "refusing transfers to the same end-user […] and revocation of existing licences".[107] It could also act as a deterrent if export licences were to be refused where a UK company had in breach of the requirement previously exported items under a contract not containing a re-export clause. We reiterate our recommendation that it should become a standard requirement of licensing that export contracts for goods on the Military List contain a clause preventing re-export to a destination subject to UN or EU embargo. In addition, we recommend that the contracts include a subrogation clause allowing the UK Government to stand in the place of the exporter to enforce the contract in British or foreign courts.

Licensed production overseas

41. In our review of export control legislation last year we concluded that the existing controls over licensed production overseas were inadequate and needed to be extended. We were attracted to the option set out by the Government in the 2007 Consultation Document to make export licences for supplies to licensed production facilities or subsidiaries subject to conditions relating to the relevant commercial contracts.[108] In its Initial Response to the 2007 Consultation the Government concluded that the option's

    flaw was that ultimately, a contract is only as good as the will of the two parties to abide by it. If the parties have no real collective interest in preventing onward supplies of concern, the overseas entity is unlikely to advise its UK link of breaches and the UK exporter will be less inclined to pursue such matters through the courts, particularly in an overseas jurisdiction. And even if legal action was pursued on the basis of the contract, it is far from certain that the remedy would do anything to prevent the export of concern; damages or other financial remedies might be granted, but that would not solve the problem of goods or technology ending up in a destination we were unhappy about. So, from an export licensing perspective, any follow up action by the UK exporter serves little purpose other than as a warning to the overseas entity not to export to undesirable destinations in future. But the UK Government already has the ability to revoke licences or refuse future applications—which is a very powerful sanction—and in addition, any control specifically linked to licensed production could give rise to arguments over the status of the facility in question and thus whether the control applied. So the Government therefore considers that in practice, [the option] imposes extra burdens and complications without giving the licensing authorities any significant additional leverage.[109]

42. We raised the issue during the oral evidence session with the Minister, who told us that the "door is open".[110] We invite the Government to reconsider. As we noted above in respect of re-exports, the system of pre-licensing checks may not pick-up or prevent an unobjectionable export on the grounds of circumstances that might change in the future—for example, if a producer overseas in receipt of British goods or technology who faced with severe financial pressures decides to sell to an objectionable buyer, in order to avert insolvency. In our view, a safeguard against this occurrence would be a standard requirement of licensing that export contracts covering the supply of goods and technology to overseas production facilities contain a clause preventing re-export to a destination subject to UN or EU embargo. We recommend that the Government make export licences for supplies to licensed production facilities or subsidiaries subject to a condition in the export contract preventing re-export to a destination subject to UN or EU embargo.

"Single action" clause

43. In their evidence this year Amnesty International UK, the Omega Research Foundation and Saferworld drew attention to the "Einzeleingriff" or "single action" (or individual intervention) clause used in Germany, whereby the transfer of an unlisted item can in principle be refused.[111] They pointed out that the Einzeleingriff had been applied to non-listed communication equipment to a country under UN arms embargo, where it was believed the equipment would be used for internal repression. As the equipment had no military end-use (i.e. no use in the development of or incorporation into weapons), the catch-all clause under the Dual-Use Regulation did not apply. In the non-governmental organisations' view, this approach had considerable advantage as it did not establish an obligatory licensing requirement for industry, while at the same time it allowed the authorities to prevent suspicious transfers in specific cases.[112]

44. EGAD said it had carried out research into the "single action" clause used in Germany and had reservations about it. Industry was looking for an export system that was "clear and predictable", not "a situation where there was carte blanche to stop any shipment of anything at any time on the surmise that it might be used for a purpose that was claimed to be adverse to the policy of the day".[113] The Minister had also examined the "single action" clause. He said that the advantage of the German approach was that it gave the German authorities "significant flexibility" but, on the other hand, it gave "virtually no certainty to exporters about what is and what is not controlled".[114] He explained that:

    What we would like to do is to negotiate an approach through the European Union and that is what we are seeking to do. It is difficult to assess timescales on this for the usual reasons. It includes a level of support within the Commission and the role of Presidency and other Member States, but that would be our preferred approach.[115]

We conclude that we should return to the issue of the "single action" clause—empowering the Government to refuse the transfer of an unlisted item—once the Government has pursued the matter through the EU and we recommend that in its response to this Report the Government state its current position in negotiations with the EU.

Military end-use control

45. As an alternative to the "single action" clause or to an increase of the controls on licensed production overseas and of the overseas subsidiaries of UK companies, the Government explained that it was examining whether it "can enhance controls on non-controlled goods under the military end-use control" [116] and it aimed to clarify its position in a "further response later this year".[117] EGAD told us that there was "misconception that most military equipment is manufactured using specially designed or modified military components" and while that "may have been the case 20 years ago […] the case today is, particularly in the electronics industry, so many components which are manufactured for industrial use are finding their way into military equipment".[118] In its evidence the UK Working Group on Arms pointed out that the Government was "already running an informal military end-use control system".[119] The UK Working Group said that the system went beyond the case of Turkey, which we raised in previous Reports,[120] where Land Rover as a company were informing the "ECO of all exports of non-licensed vehicle kits going to Otokar in Turkey for turning into military vehicles and then passing information about onward export from Otokar to other destinations" and "that is working across all of Land Rover's arrangements".[121] The UK Working Group told us that there were "similar arrangements in place for Pakistan and Malaysia" and it argued that if the system "is working then there is already recognition within government that military end use controls of this nature need to be applied".[122]

46. The UK Working Group makes a telling point: it appears that a military end-use control applying to non-controlled goods is developing. We raise no objection to this development and we applaud the cooperation of UK industry. The operation of the control should, however, be transparent and, where cooperation is refused, the Government needs to be able to prevent non-controlled goods exported from the UK being put to military use for purposes at variance with the EU Code of Conduct on Arms Exports and the National Export Licensing Criteria. We conclude that a military end-use control applying to non-controlled goods is evolving. We welcome this development. We recommend that the Government bring forward proposals for a systematic military end-use control regime.

47. Amnesty International UK, the Omega Research Foundation and Saferworld raised a concern about military utility and transport vehicles. They told us that there had been frequent reports of these vehicles which were not in themselves of a specification that required an export licence being adapted for military use with armouring, gun mounts and other military fittings and then being used to play a central support and logistics role for forces involved in serious and persistent human rights violations. The non-governmental organisations proposed that the ML6 category of the Military List should be amended "to cover 'utility and transport vehicles supplied for military, security or police use', including those supplied as complete items or in kit form; and the ML10 category to cover 'utility and transport aircraft supplied for military, security or police use'".[123] We recommend that the Government consider as part of a package of proposals for a military end-use control regime whether (i) the ML6 category of the Military List should be amended to cover utility and transport vehicles supplied for military, security or police use, including those supplied as complete items or in kit form, and (ii) the ML10 category should be amended to cover utility and transport aircraft supplied for military, security or police use.


46   HC (2006-07) 117, chapters 4-8 Back

47   Scott Report, HC (1995-96) 115, Vol IV, Chapter 2, para K2.1 Back

48   Strategic Export Controls White Paper, Cm 3989, July 1998 Back

49   Consultation on Draft Legislation: The Export Control and Non-Proliferation Bill, Cm 5091, March 2001 Back

50   HC (2005-06) 873, paras 76 and 100; HC (2006-07) 117, paras 25-32  Back

51   HC (2006-07) 117, paras 29 and 31 Back

52   HC (2005-06) 873, para 76; HC (2006-07) 117, para 25 Back

53   HC (2005-06) 873, para 100; HC (2006-07) 117, para 25 Back

54   HC (2006-07) 117, paras 90-91  Back

55   HC (2006-07) 117, para 59 Back

56   Departments for Business, Enterprise and Regulatory Reform, Defence, Foreign and Commonwealth Affairs and International Development, Strategic Export Controls: HMG's Annual Report for 2005, Quarterly Reports for 2006, Licensing Policy and Parliamentary Scrutiny Response of the Secretaries of State for Defence, Foreign and Commonwealth Affairs, International Development and Business, Enterprise and Regulatory Reform, Cm 7260, November 2007, p 3 Back

57   Cm 7260, p 3 Back

58   Cm 7260, p 3; we note that the response section (section 3) of the 2007 Consultation Document contained questions inviting respondents' views on the effectiveness of the system-for example, Q27: Do you have any other comments or evidence on the effectiveness of the trade controls on trading in "Controlled Goods" carried out from within the UK? If so, please provide details; Q32 Do you have any other comments or evidence on the effectiveness of the trade controls on the activities of UK persons operating overseas? Back

59   Q 149; the responses were published at http://www.berr.gov.uk/europeandtrade/strategic-export-control/legislation/export-control-act-2002/review/page42883.htmlBack

60   Q 148; see also below, para 32 and following.  Back

61   Cabinet Office, Modernising Government, Cm4310, March 1999, for instance, stated at para 6: "Government expects more of policy makers. More new ideas, more willingness to question inherited ways of doing things, better use of evidence and research in policy making and better focus on policies that will deliver long-term goals". Back

62   For example, HC (2005-06) 873, Q 198 Back

63   Military, paramilitary or certain explosive-related goods Back

64   Definitions drawn from "Export Control Act 2002: Trade (Trafficking and Brokering) in Controlled Goods including to Embargoed Destinations: Guidance" issued by the ECO, June 2004.  Back

65   2007 Consultation Document, para 2.1 Back

66   HC (2006-07) 117, para 76 Back

67   Government's Initial Response to the 2007 Consultation, paras 1.2-1.3 Back

68   Q 134 Back

69   Defence, Foreign Affairs Committee, International Development and Trade and Industry Committees, Third, Second, Third, Fourth Reports of 1999-2000, Annual Reports for 1997 and 1998 on Strategic Export Controls: Report and Proceedings of the Committee, Appendices to the Report and Further Appendices to the Minutes of Evidence, HC 225, para 46; Defence, Foreign Affairs Committee, International Development and Trade and Industry Committees, Eleventh, Seventh, Seventh, Eleventh Reports of 1999-2000, Strategic Export Controls: Further Report and Parliamentary Prior Scrutiny: Report, Proceedings and Minutes of Evidence and Appendices HC 467, para 64; Defence, Foreign Affairs, International Development and Trade and Industry Committees, Report for Session 2000-01, Draft Export Control and Non-Proliferation Bill, HC (2000-01) 445, para 96; HC 390 (2003-04) paras 221 and 224; Defence, Foreign Affairs, International Development and Trade and Industry Committees, First Joint Report of Session 2004-05, HMG's Annual Report for 2003, Licensing Policy and Parliamentary Scrutiny, HC 145, para 156; HC (2005-06) 873, para 195; HC (2006-07) 117, para 76 Back

70   Q 145 Back

71   Q 145; see also Ev 68. Back

72   HC (2006-07) 117, para 76 Back

73   Ev 55, para 12 Back

74   Ev 54, para 6 Back

75   Q 66 Back

76   Q 62 Back

77   The Government stated that Category B would be extended in April 2009 to include light weapons-Ev 68. Back

78   Ev 55, para 13 Back

79   Draft of Review of Export Control Legislation (2007) Supplementary Guidance Note on Trade ("Trafficking and Brokering") in Controlled Goods, Department for Business, Enterprise and Regulatory Reform, May 2008, para 5 Back

80   Q 100 Back

81   Q 150 Back

82   Q 148 Back

83   Q 149 Back

84   Ev 54, para 6 Back

85   Ev 55, para 15 Back

86   Q 60 [Mr Hayes] Back

87   Weapons of mass destruction Back

88   HC (2006-07) 117, para 258 Back

89   HC (2006-07) 117, para 82 Back

90   Q 151 [Mr Wicks] Back

91   Q 153 Back

92   Q 151 [Mr Wicks] Back

93   Q 151 [Mr Doddrell] Back

94   Ibid. Back

95   Government's Initial Response to the 2007 Consultation, para 2.3 Back

96   Ev 54, para 7 Back

97   HC (2006-07) 117, para 215; the press report was "Curbs apply only to aircraft spares: UK", The Hindu, 4 February 2006, http://www.hindu.com/2006/02/04/stories/2006020403311300.htm; see also Ev 66, para 37. Back

98   HC (2006-07) 117, Q 232 Back

99   HC (2006-07) 117, para 217 Back

100   Cm 7260, p 21 Back

101   Ev 87, para 15 Back

102   Q 185 Back

103   Q 186; see also Q 188 and Ev 69. Back

104   Q 190 Back

105   Q 191 Back

106   Ev 65, para 33 Back

107   Ev 66, para 40 Back

108   HC (2006-07) 117, para 238 Back

109   Government's Initial Response to the 2007 Consultation, para 7.6 Back

110   Q 195  Back

111   Foreign Trade and Payments Act of 28 April 1961 (Federal Law Gazette I p. 481, as amended by Article 1 of the Law of 28 March 2006 [FLG I p. 574]):

Part 1, Chapter 1, Section 2, para. 2 of the Foreign Trade and Payments Act:

(2) The Federal Ministry of Economics and Technology, in agreement with the Federal Foreign Office and the Federal Ministry of Finance, may decree the necessary restrictions on legal transactions or acts, in order to avert a possible danger, which may arise in certain cases, for the legally protected rights referred to in Section 7 para. 1 of this Act. In case of measures related to the trade in capital assets, payment transactions or the trade in foreign valuables and gold, agreement with the German Federal Bank shall be made. The decree shall expire six months after its enactment, unless the restriction is laid down through statutory order.

(3) Restrictions shall be limited in nature and scope to the extent necessary to achieve the objective stated in the licence. They shall be framed in a way hampering the freedom of economic activity as little as possible. Restrictions may affect existing agreements only if the desired objective is in substantial jeopardy.

(4) Restrictions shall be revoked as soon as, and insofar as the reasons warranting their imposition do no longer apply.

(5) Where independent obligations to act may be substantiated under this Act, paragraphs 2 and 3 above shall apply mutatis mutandis.

Section 7, para 1 which is referred to above:

Legal transactions and acts in foreign trade and payments may be restricted in order to 1. guarantee the vital security interests of the Federal Republic of Germany, 2. prevent a disturbance of the peaceful coexistence between nations, or 3. prevent a major disruption of the foreign relations of the Federal Republic of Germany. Back

112   Ev 61, para 7 Back

113   Q 76 [Mr Hayes] Back

114   Q 204 Back

115   Ibid. Back

116   Q 198; and see also Qq 197, 204. Back

117   Q 204 Back

118   Q 64 [Mr Fletcher] Back

119   Q 101 Back

120   HC (2005-06) 873, paras 96-99; HC (2006-07) 117, para 235 Back

121   Q 101 Back

122   Ibid. Back

123   Ev 62, para 12 Back


 
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