Supplementary memoranda from the Ministry
of Defence
I am writing in reply to your e-mail of 25 January
in which you asked for information following the Defence Secretary's
evidence on 17 January. The follow-ups concerned the criteria
for inviting foreign government delegations to defence exhibitions
in the UK; a 1976 directive from the MOD's Permanent Under Secretary
to the Head of Defence Sales; and disclosure of the Government's
discussions with industry on the transfer of defence export promotion
responsibilities from MOD to UK Trade and Investment.
Q14: a note on the criteria for sponsorship
of visits to arms fairs
As the Defence Secretary said in his evidence,
John Reid's letter to Dr Berry of 17 February 2006 sets out the
process we follow and how we went about considering the case of
China in relation to the Defence Systems and Equipment International
(DSEi) exhibition in 2005. This example illustrates how the Government
takes account of all relevant considerations. The starting point
is potential export market opportunities, based on each country's
known requirements and the UK's ability to meet them. The latter
is a function of what our industry can offer and the Government's
likely stance on licensing of such equipment to that country.
The licensing criteria thus inform our deliberations, but we do
not rule out inviting representatives from a country to an exhibition
purely because only a limited range of items are likely to be
licensable for export to it. Wider factors may also be taken into
account and may cover, as John Reid indicated, aspects of bilateral
military dialogue, including involvement of the country in peacekeeping
operations or our wish to encourage a contribution to international
efforts to enhance global security. However, a country would not
be considered where that would be contrary to the UK's international
obligations and our wider defence and security interests.
The Foreign and Commonwealth Office (FCO) conducts
its own assessment of the value or risk of inviting countries
on the list. This will involve considering the approach and behaviour
of a country on human rights and whether a company might reasonably
expect to obtain a licence to export defence goods to the country,
even if for a limited range of goods, in accordance with any current
measure. Our Embassy staff in the country will be contacted if
that is thought to be necessary. FCO agreement to invite certain
countries on the list, such as China, is given at Ministerial
level.
We do continue to have serious concerns about
the human rights situation in China, and our engagement on these
issues is a long-standing priority for the Government. There is
a strategic policy on human rights in China which identifies a
number of key priorities for Government action. A multi-layered
approach is taken to working with China to achieve substantive
improvements in human rights protection, including high-level
messaging to encourage progress at the top, detailed discussions
on sensitive issues through the UK-China Human Rights Dialogue
and project work to deliver longer-lasting results on the ground.
We cover human rights issues in depth with the Chinese during
our regular biannual UK-China Human Rights Dialogue, the last
round of which has recently taken place in Beijing. Ministers
regularly raise human rights issues during meetings with their
Chinese counterparts. During his visit to China last month, the
Prime Minister raised our concerns with Chinese Premier Wen and
President Hu Jintao.
After 1 April 2008, responsibility for defence
export promotion will transfer to UK Trade and Investment (UKTI).
In future, the UKTI Defence and Security Group will draw up the
list of delegations for UK defence exhibitions. These will continue
to conform to our international obligations and invitations will
be issued with the agreement of the MOD and FCO.
Q23: a copy of the 1976 directive
The 1976 Directive from Sir Frank Cooper, the
then Permanent Secretary, to the Head of Defence Sales, gave guidance
on the standards of conduct in commercial or business deals that
were expected of Defence Sales staff and of others who may have
been acting on behalf of the UK Government in defence sales, including
Government-to-Government arrangements. It explains that this special
guidance for Defence Sales staff recognises the importance of
maintaining strict standards in this area. It was released in
August 2006 under Freedom of Information.
Q41: details responses to consultation on
moving DESO to UKTI
The Committee asked about the possibility of
publishing in some form the discussions with industry on the implementation
of the transfer of responsibility for defence export promotion
from MOD to UKTI. The following summary of these discussions has
been prepared with the help of BERR, which was the lead Department
for the Government's dialogue with industry.
The Prime Minister's statement of 25 July 2007
(HC Deb, 25 July 2007, col 83WS) announced a machinery of government
change moving responsibility for defence trade promotion from
the Defence Export Services Organisation (DESO) to UK Trade and
Investment (UKTI). The statement made clear that the new arrangements
would need to take account of the specific features of defence
exports, including the continuing role of the Ministry of Defence.
Accordingly, in order to implement the change
and to gain a better understanding of the requirement for support,
a number of meetings were held with representatives of the defence
industry and relevant Government departments (BERR, MOD, UKTI
and Cabinet Office) between August and December 2007. John Hutton
and Digby Jones met senior industry representatives in August
2007 and there were a further five meetings involving departmental
officials. The matter was also discussed at meetings of the National
Defence Industries' Council in October and December 2007 and in
a number of conversations which took place between individual
companies and trade associations and officials from MOD and BERR
in the normal course of business.
This dialogue covered the following points:
— the Government's continued strong
commitment to supporting defence exports and to the defence sector
generally, as reflected in the Defence Industrial Strategy;
— the importance of defence exports
to the UK economy, including the attractions of an effective DESO
to inward investor companies;
— industry's concern about the
perceived lack of consultation ahead of the decision and the implications
for the defence sector;
— the particular requirements
of defence export support where customers are overseas governments,
rather than businesses;
— the continued need for defence
export support for smaller companies, including availability of
market data derived from information received from British Embassies/High
Commissions;
— the role of defence exports
in the MOD's objectives in the future;
— the role of Government Ministers
in supporting defence exports in the future; and the working arrangements
for this between relevant Government departments;
— how DESO would be resourced
in future under UKTI and how strong links with the MOD could best
be maintained. This included agreement that military staff would
continue to serve in the new organisation on loan to UKTI and
access to MOD Service and civilian manpower and equipment to support
defence export campaigns; the terms on which such support might
be provided; the retention of First Secretary Defence Supply posts
overseas; and the need for personnel in the new organisation to
maintain defence knowledge and experience;
— the importance of DESO providing
"business as usual" to overseas customer governments;
— how support for defence exports
could be delivered more effectively within UKTI;
— how DESO under UKTI would support
major trade events such as the Farnborough International Air Show
2008;
— the DESO "brand" and
how the new organisation should be named and promoted;
— the scope for the existing UKTI
activity to combine better with defence exports in the future—for
example on homeland security and offset/industrial participation;
— corporate governance issues:
how the new organisation should be led and the constitution of
the top level management structure; and
— how some negative public perceptions
of the industry could be improved; how to build on the sector's
work in producing a code setting out common standards of good
business practice; and how UKTI could work together with the defence
industry to promote strong standards of business conduct and corporate
governance in the sector.
The dialogue assisted the Government departments
in developing the implementation plan, "Creating UK Trade
& Investment Defence & Security Group—Implementation
Plan" published in December 2007. The plan can be viewed
at:
https://www.uktradeinvest.gov.uk/ukti/fileDownload/UKTIDESO
ImplementationPlanFINALEXCROPS.pdf?cid=412665
John Hutton also made a Ministerial statement
on 11 December 2007 about the arrangements under which the transfer
will take place, which also reflects some of the points covered
in our dialogue with the defence industry. This can be viewed
at:
https://www.uktradeinvest.gov.uk/ukti/ShowDoc/BEA+Repository/345/412664
Further information was also contained in a
Government press release on 11 December which can be viewed at:
https://www.uktradeinvest.gov.uk/ukti/ShowDoc/BEA+Repository/345/412660
As the implementation plan makes clear, further
dialogue with the defence industry will take place up until the
UKTI Defence and Security Group is launched in April. This will
assist in designing and putting in place appropriate delivery
mechanisms, a principal purpose of which will be to provide the
highest standard of defence and security export support under
the new organisational and Government arrangements which will
come into force on 1 April 2008. This dialogue will also help
scope out how best to build on existing work to further promote
strong standards of business conduct and governance of the sector.
February 2008
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