Memorandum from the Ministry of Defence
AIM OF
THE TREATY
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.
BENEFITS
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.
TREATY MECHANISM
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.
TREATY SCOPE
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.
IMPACT ON
UK EXPORT CONTROLS
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.
MANAGEMENT STRUCTURE
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.
ENFORCEMENT
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.
PROGRESS TO
DATE
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.
IMPLEMENTING ARRANGEMENTS
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.
RATIFICATION IN
THE US
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
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