Select Committee on Defence Written Evidence

Memorandum from the Ministry of Defence


  1.  The aim of the Treaty is to further strengthen and deepen the UK and US defence relationship, allowing greater levels of cooperation and interoperability that will help support our Armed Forces operating side by side around the world. The Treaty will allow both nations to better leverage the respective strengths of their security and defence industries.


  2.  The Treaty will deliver a range of benefits to both the UK and US Governments and both countries' defence industries. In the summary, these are:

    (a)  A major improvement in the ability of the UK and US to work together to support our forces fighting together on operations.

    (b)  Allows UK and US companies and other entities to share information and expertise in order to develop new capabilities that can overcome the threats faced by troops on the ground, both today and in the future.

    (c)  Greater cooperation between UK and US companies will help deliver greater efficiency, as duplication of effort in collaborative programmes is reduced through better information sharing.

    (d)  Removal of the need for individual US export licences for the majority of defence and security exports to the UK. The current process can be time consuming and adds significant delays to UK procurement projects that have US content.

    (e)  In addition, there will be a considerable reduction in the administrative effort needed by defence companies to apply for and by the US Government to process licence applications.

    (f)  The Treaty will help to provide a wider supplier base for both the UK and US Governments whilst continuing to control defence material.


  3.  The Treaty will create a framework for closer defence and security co-operation between the UK and US, reducing the barriers to exchanges of defence material within a trusted community (the Approved Community), while ensuring that there are proper safeguards against unauthorised release beyond that community.

  4.  Currently, all defence and security equipment being exported from the US requires an export licence, under the US Government's International Traffic in Arms Regulations (ITAR). Licences are required for all equipment listed on the US Munitions List, leading to around 8,500 applications each year for transfers of UK-US material alone. This equates to around 12.5% of the total number of applications the US deals with each year. Over 99% of UK applications are currently approved, however they can take weeks or months to approve, leading to delays and complications in UK procurement programmes.

  5.  Under the Treaty, the need for the majority of individual US export licences will be removed. Instead, material will be able to transfer from US to UK Government entities (eg the MOD), approved companies and other approved entities without further authorisation. This will remove a major administrative burden from the US Government, reducing associated costs and allowing the US to focus on licence applications of greater concern.

  6.  US material will be protected using security measures and for certain material, issuing it with a specific Treaty-related security caveat. It will be protected from unauthorised release by the UK's current security processes, in accordance with the existing security arrangements between the UK and US covering classified material (the General Security Arrangement and its Security Implementing Arrangement). All applicable laws, including the Official Secrets Act will apply. These arrangements already include tried and tested processes for protecting classified material from each country that have been operating successfully for over 50 years.

  7.  Defence material being moved under the Treaty will also be clearly marked or accompanied by appropriate paperwork to identify it as being sent under the terms of the Treaty. The UK Government's Manual of Protective Security will also be updated to include the new handling procedures for Defence material exported under the Treaty.

  8.  UK companies or other entities wishing to use the Treaty will need to apply and be approved to join the Treaty UK Approved Community. Applicants will be assessed against several criteria, including:

    (a)  Membership of the UK `List X' group, the group of establishments that have been cleared by the UK Government as being able to handle classified material.

    (b)  An appropriate level of Foreign Ownership, Control or Influence (FOCI), as decided by the UK and US Governments.

    (c)  Past performance on export controls, judged against UK and US records of violations.

    (d)  Any potential national security risks for the US, due to interactions with countries proscribed in US law and regulation.


  9.  The Treaty will cover defence and security material required for:

    (a)  US and UK combined military or counter-terrorism operations.

    (b)  US and UK cooperative security and defence research, development, production and support programmes.

    (c)  Mutually agreed specific security and defence projects where HMG is the end-user.

    (d)  US Government end-use.

  10.  Some of the most sensitive technologies are expected to be excluded from the Treaty, as well as technologies that are specifically controlled under existing international arrangements. Certain goods which are controlled by EU regulation will also be excluded. In these cases, the existing export licence system will remain, to allow appropriate Governmental approval to be given.

  11.  There will be no obligation for companies to use the Treaty, and they will continue to be able to apply for US licences if they choose.

  12.  Should a member of the Approved Community wish to transfer material outside the community (whether to a recipient in the UK or overseas), permission must be obtained from the US Government.


  13.  The Treaty will not impact on the UK's current export control laws. All exports of controlled goods from the UK to the US will still require appropriate UK authorisation. However, items subject to international arrangements such as the Missile Technology Control Regime will continue to require a license. The UK's system of Open General Export Licences (OGELs) already allows for the movement of the majority of defence material without the associated bureaucratic burden of the current US system.

  14.  To ensure US material cannot be re-exported from the UK without US Government permission, the current UK mechanism for the release of classified material by contractors, the MOD form F680, will be updated. The company will have to provide proof of re-export permission before the MOD will grant authority for a company to proceed with such a release.


  15.  The Treaty will be managed in the UK by the Ministry of Defence and in the US by the Department of State. In the UK, detailed governance arrangements are being developed, however it is envisaged that a Management Board will oversee the Treaty's implementation and operation to ensure it is effective. Practical management of the Approved Community will be carried out by the Industry Security Service (ISS), part of Defence Equipment and Support(DE&S). The British Defence Staff (US) and MOD Integrated Project Teams will assist in maintaining an up to date list of joint UK-US operations, projects and programmes that the Treaty applies to.

  16.  Companies will be able to identify which projects and operations are covered by the Treaty (probably via a secure website). In addition, a clear Point of Contact will exist within MOD to deal with specific queries.


  17.  The security management processes and procedures associated with the MOD List X group will be the principal mechanism for compliance and enforcement of the terms of the Treaty. MOD ISS has existing procedures for approving company security procedures and physical security protection, and this system will be extended to cover the Approved Community.

  18.  Items received in the UK under the Treaty will be for HMG or USG end-use. In the UK they will be handled exclusively by either HMG personnel or the pre-cleared personnel of non-governmental entities that, together, comprise the UK Approved Community.

  19.  Membership of List X requires that the company report all suspected material losses or information compromise to ISS and the relevant Home Department police force. This obligation will apply to the Approved Community.

  20.  Home Department police will review on request circumstances of any incident and lead the investigation where criminal activity is suspected under a range of legislation including the Official Secrets Act, Fraud and Theft Acts. The police will advise the Crown Prosecution Service if there is a case to answer. ISS is fully engaged on police investigations and will coordinate associated actions including damage assessment.

  21.  If no Police involvement is required, then ISS will require the Company to undertake an initial investigation and to report the findings within 24 hours. An ISS investigator is assigned to monitor progress and assist the company in any disciplinary processes that may be involved or to lead action to recover lost materials.

  22.  In addition to any prosecution or disciplinary action against individuals, sanctions or penalties arising from loss or compromise of protectively marked material could include loss or suspension of List X status accompanied by removal of material and cancellation of contracts.

  23.  Review of procedures always runs in parallel with the disciplinary/legal process to ensure that risk of any future loss or compromise in similar circumstances is minimised. Follow up inspections are made to assure compliance with revised procedures.

  24.  It is noted that the US Government will consider any transfer that breaches the terms provided for in the Treaty as a breach of Arms Export Control Act (AECA) and associated International Traffic in Arms Regulations(ITAR).

  25.  Where there are breaches of the terms of the Treaty, the UK and US will cooperate, where relevant, on investigations, in accordance with existing law enforcement cooperation agreements and with the principle set out in the existing GSA.


  26.  The Treaty was signed in June 2007 by Prime Minister Blair and President Bush. Since then, both Governments have been engaged in negotiating the detailed Implementation Arrangements (IAs) and are working to complete expeditiously by the end of the year.


  27.  The Implementing Arrangements describe the way the principles embodied in the Treaty will be practically achieved. The Implementing Arrangements will be contained in a supporting MOU between the UK and US.

  28.  UK Industry (through a Defence Industries Council working group) have been kept up to date with progress on the development of the Implementing Arrangements and their comments and concerns have been taken into account during the negotiations. Their views have proved helpful in identifying elements of the Implementing Arrangements that may have proved difficult to implement.

  29.  Once Implementing Arrangements are finalised, the MOD will develop appropriate processes and procedures to manage Treaty business. Wherever possible, these processes will be based on existing arrangements that are already in place and are proven to work. Industry will be fully engaged in the development of the new processes.

  30.  There will also be a coordinated communications programme to build awareness and understanding of the Treaty and the new Implementing Arrangements. Training on the new procedures, both within Government and Industry will also take place.

  31.  There will be a clearly defined mechanism to help companies and other entities that are eligible, and wish to take advantage of the Treaty, to move from their existing export licence arrangements to those envisaged under the Treaty.


  32.  In the US, a resolution covering the Treaty must be voted on by the Senate before it can be ratified. A two-thirds majority is required to secure the vote. A narrow window of opportunity exists for the Senate to address the Treaty before the first session of the 110th Congress comes to a close in December 2007, but that will depend on securing time in an already heavily compressed schedule.

15 November 2007

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2007
Prepared 11 December 2007