Examination of Witnesses (Questions 40-59)
MR IAN
GODDEN, MR
DAVID HAYES,
DR JERRY
MCGINN,
DR SANDY
WILSON AND
MS ALISON
WOOD
21 NOVEMBER 2007
Q40 Mr Jones: You are representing
UK industry though, Mr Godden, so would you not actually have
a situation whereby it would be okay for BAE Systems and others
to be part of this but to exclude foreign-owned partners of the
likes of Thales and other people?
Mr Hayes: I think the same situation
would exist currently in any event in relation to the handling
of classified material in those companies which carried a national
caveat. Although the company is foreign owned it is fair to assume
that in certain circumstances they will be handling data that
is classified "UK eyes only" and they must have the
means for handling such data. I can see a logical case for extending
similar sorts of arrangements to this kind of data.
Q41 Mr Jones: Dr McGinn, any observations
from the other side?
Dr McGinn: I think I would echo
the comments of David because again we have not been privy to
these discussions between the Governments. I think that they are
going to handle this in the way they handle the situation now
in dealing with UK licences in support of operations where you
have got US secret programmes that are released UK eyes only.
I think a similar type of arrangement will be established.
Chairman: Huge proportions of British
defence industry like EADS, Thales, Finmeccanica, GD, BAE Systems
are not entirely British. This strikes me as being a fundamental
issue to which nobody knows the answer and is it not rather crucial
to the future of this Treaty?
Mr Havard: Can I interject.
Q42 Chairman: Because from GD UK's
point of view, you will have a view.
Dr Wilson: Indeed. I think it
is essential that foreign-owned companies get onto the approved
list because we cannot imagine working without them in the UK.
There is a wider context to this discussion however. There are
Anglo-French initiatives on-going and if you wanted to take a
view, that will greatly help the transport, if you like, of French
technology into the UK. What this Treaty will do is work against
the imbalance that exists today on getting US technology into
the UK, and sometimes such US technology will be of great value
to the UK operationally. I think there is a wide range of pluses
for this in that it will eliminate some of the barriers that currently
exist. And that might favour US-owned companies if they sit on
the approved list, but then again there are other things going
on in the country in terms of the Anglo-French thing which would
help French companies do it. So there is a whole series of pluses
and minuses if the actual Treaty became quite restrictive, which
we do not know.
Q43 Mr Jones: In terms of GD, I would
be very surprised if you were not on the approved list.
Dr Wilson: Indeed.
Q44 Mr Jones: But it is a bit different,
for example, for Thales, Finmeccanica, MBDA and others and it
would make this Treaty pretty worthless to UK plc if these companies
were not on that approved list.
Mr Godden: It is absolutely our
ambition that they are on there.
Dr Wilson: I think it becomes
quite difficult if they are not on there because GD UK would be
working with Thales UK on a variety of programmes.
Q45 Mr Jones: I am not asking you
to write the little paragraph I am trying to write in the report,
but what I want to offer you because you are representing UK industry
is that you would actually want all UK industry irrespective of
where they are owned on the approved list.
Mr Godden: Yes we would like that
but obviously the Governments have to decide whether that is appropriate.
Q46 Mr Jones: Hang on, fight a bit
harder, come on! Let me write in the report that you actually
want all these on because, frankly, if I was Thales and I got
that response I would not be paying my membership to your organisation.
Mr Godden: We want it on, and
we are absolutely clear.
Mr Jones: Good, but it took some getting,
did it not!
Q47 Mr Hancock: Have they given you
an indication that they will support that view? Is that an issue
that you have raised with them?
Mr Godden: Yes.
Ms Wood: Yes.
Q48 Mr Hancock: And what has the
Government's response been?
Mr Godden: They have not promised
anything or said anything back; they have listened.
Q49 Mr Hancock: But they have not
said, "We are wholly supportive of that principle"?
Mr Godden: Not to me. I do not
know whether to any of my colleagues.
Mr Hancock: That is a pretty difficult
situation for us to be in then, is it not?
Mr Jones: That is one we need to ask
the Minister.
Q50 Chairman: We will ask the Minister.
Mr Godden: I can only tell you
what has happened to us.
Q51 Mr Hancock: Will this lead to
a greater dependency on the part of the UK to be forced into a
position of buying from the United States? Will this not have
a detrimental effect on research and development in the UK?
Mr Hayes: No, because I think
the whole concept is optional. Just because the Treaty exists
it does not mandate its use. We are still free to shop in whatever
market-places we choose.
Q52 Mr Hancock: But will it act as
a deterrent then against UK/European collaboration?
Mr Godden: Not that we can see.
We have debated that and not that we can see.
Q53 Mr Hancock: You have debated
amongst yourselves and with Government presumably?
Mr Godden: And we have mentioned
that and made the point and we do not think so.
Q54 Mr Hancock: What was the Government's
response to that? Sandy, you wanted to come in, and then maybe
we can come back to find out what the Government said to you about
it.
Dr Wilson: I think I would just
reiterate a point I made earlier that if you are producing a system
in the UK you do have a choice of where you go for the technology.
It might be indigenous to the UK, it might be from Europe, it
might be from the US. Currently there are many advantages to not
using US technology because the administrative burden on that
and the way that it slows down the through-life evolution of the
system—having to go back for TAA reapproval and the like—is
very negative. We consciously have made decisions not to actually
use US technology coming from the greater GD in certain programmes
in the UK. You have to take a pragmatic view of that. Sometimes
the US has fantastically good technology and it would be very
useful and beneficial to the UK to have that here, and it would
still be fought for in the competitive market-place that is UK
defence, but I just think it is a sensible way of getting rid
of a barrier that has prevented us from offering some things into
the UK because it is such a difficult process.
Dr McGinn: I would like to underscore
the importance of looking at this Treaty as very much a two-way
street. It very much goes in both directions. I can speak for
my company and we do business with a lot of UK companies for some
of the systems that we build for the US and UK Governments and
UK technology will allow US companies to be more collaborative
with UK companies as well. It goes very much in both directions.
Q55 Mr Hancock: Have you looked at
the way in which a bilateral treaty with the US like this would
affect EU treaties which the UK has signed up as being in conflict
with them?
Mr Godden: We have not specifically
looked at that subject because I think that is a subject of law
which certainly the SBAC has not, and I do not think any of the
companies have, taken a judgment on how this relates to EU law.
Q56 Mr Hancock: Nobody has raised
that as a potential problem? None of your European partners have
raised an issue of you being—
Mr Godden: No, they have not raised
it in any collective forum that I am aware of.
Q57 Mr Holloway: Would that not be
quite an important point to clarify particularly from the point
of view of the United States?
Mr Godden: Yes, but I see that
very much as a Government point. I am not trying to duck it; I
do not see how a company or our association could actually make
judgments except to mention it.
Chairman: Fair point. Willie Rennie?
Q58 Willie Rennie: The US spends
a much higher percentage of GDP on science and research than the
UK does and some parts of the British science base are quite fragile.
Is it not logical that with a bigger critical mass of scientists
and science organisations and defence organisations in the US
that it is going to act as a sucking mechanism where all the best
science is going to be done over in the States and therefore this
breaking down of the barriers will just mean it is a one-way street
and it will all go over there?
Ms Wood: As we have been thinking
about what the Treaty will do to create benefit, that issue has
been a debate about how do we make sure that for the whole of
the UK industry footprint, in which I would include the universities
and the science community, that we manage that going forward to
make sure that we actually benefit on a reciprocal basis and that
we are able to move the technology and the people and that we
put the UK industry, alongside our customer, in the position where
we have got more choice. We view the Treaty as being able to have
more bilateral co-operation but being able to do it by not losing
UK scientists to the US but rather the reverse; having US scientists
co-operate with ours and us move technology and research partnerships
across. It is not without risk but it is something we believe
is managed in the benefit of it. It goes back to the question
of it is important to us that the whole of the UK defence industrial
footprint is able to participate in this Treaty because that is
the way we will be able to preserve critical mass.
Q59 Willie Rennie: Do you think universities
know about this Treaty?
Ms Wood: I actually do not know
the answer to that question.
Mr Godden: I am not sure either.
Dr Wilson: Just one comment, I
think compared to about three or four years ago we are in a much
stronger position because the Defence Industrial Strategy, with
its focus on through-life sovereign control of technology and
capability. And the link of that to the Defence Technology Strategy
gives us a framework for managing it. It is now firmly in everybody's
minds that having the R&D and the management of capability
in-country is the right thing to have. I think that is a good
framework.
| 
