Select Committee on Defence Minutes of Evidence

Examination of Witnesses (Questions 60-79)


21 NOVEMBER 2007

  Q60  Mr Havard: I do not want to prolong this but that is the whole point, is it not? Is this not therefore a mechanism whereby if you choose to enter it—and it will be industry that chooses to enter it—that could undermine the exact point that you have just made and government would effectively abdicate control to you on the basis of your individual needs and whether you decide to participate or not, so strategically we actually lose control rather than reinforce control and the benefits you put out about the Defence Industrial Strategy are lost?

  Dr Wilson: I could not see that happening.

  Mr Godden: Neither could I.

  Dr Wilson: I think there is such a thrust within the Ministry of Defence on sovereign through-life control that I cannot imagine that happening, no.

  Q61  Chairman: Can I make a point about the tone of what we do in select committees. What we do in select committees is we probe, we ask questions, and we therefore do our best to reveal weaknesses, and that tends to create an atmosphere whereby whatever we are asking questions about looks rubbish, but clearly your overall view is that this Treaty is a thoroughly good thing, it is a step forward. I wanted to make that point in the middle of this exchange in order to rebalance the tone.

  Mr Godden: Yes, that is absolutely right.

  Chairman: Bernard Jenkin?

  Q62  Mr Jenkin: Thank you for that preamble to my question, Chairman, because I was almost going to say the same thing! Personally, I am a huge supporter of the principle behind this Treaty, but concerns have been expressed to us about the unequal nature of the Treaty—that effectively the US gains, by proxy or by actual fact, control over what we export in terms of technology, but we are giving them a blank cheque to export any technology that we transfer to them. Would you describe that as an unfair caricature of the Treaty?

  Mr Godden: Yes!

  Q63  Mr Jenkin: Can you reassure us?

  Mr Godden: I think it is. I think the whole principle here is that UK-based operations will have an advantage in the US versus what they have at the moment in that for the very reasons we mentioned—the slowness and the overheads—behaviourally it means that the US is less likely to use the resources here, so in that sense it is reciprocal, there is a reciprocity about it.

  Q64  Mr Jenkin: But it is absolutely true, is it not, that whatever technology we transfer to the United States—this is part of the problem of being a very unequal partner—as part of this arrangement whatever we give them we no longer control their export of that technology to another country, a third country, and we do not have a say over that?

  Dr McGinn: That is not correct.

  Q65  Mr Jenkin: That is not correct?

  Dr McGinn: That is not correct.

  Q66  Mr Jenkin: Could you show me within the Treaty text itself or is that too complicated?

  Dr McGinn: The Treaty talks about an approved community and the approved community is approved US and UK entities. Within that approved community you can transfer goods and services under mutual agreement, but when things leave that approved community, either on the US side or on the UK side, then the licensing laws fall into effect, the ITAR.

  Q67  Mr Jenkin: Our own licensing laws or American licensing laws?

  Dr McGinn: For a UK product that went to the US it would fall under US ITAR.

  Q68  Mr Jenkin: That is the point, is it not, we might have different arms export policies from the United States but once we have transferred our technology to the United States, which we are obliged to do under this Treaty, if you are in the approved community, they can export it to a country that perhaps we would not have exported it to, but we do not have the same freedom to export technology that they have given to us?

  Mr Hayes: That is exactly the situation that exists today, it is no different.

  Q69  Mr Jenkin: I think that is the key point.

  Mr Godden: It is no different, it is just taking what we currently have.

  Q70  Mr Jenkin: Except that we can choose not to export certain items to the United States now.

  Mr Godden: We can choose not to do so under the Treaty.

  Q71  Mr Jenkin: So how does this Treaty make any difference?

  Mr Hayes: It makes it easier for goods and technology to flow from the United States to the UK.

  Q72  Mr Jenkin: I understand. What you are saying is that this Treaty is necessary to enable the United States to change their arrangements; it really will not make much difference to the arrangements we already have in this country?

  Mr Godden: That is close I think.

  Mr Hayes: I think it is important to appreciate that we are looking at two sides of the same coin effectively. This is an export control situation from a US perspective; it is a security situation from the UK perspective.

  Q73  Mr Jenkin: Can I just ask one final question on this which is the export of the technology from the approved community requires the consent of the United States, but does that then bring British technology under the control of the United States so we cannot then export British technology to a third country of our choice because it is not part of the approved community?

  Mr Hayes: Only if it is co-mingled with US technology.

  Q74  Mr Jenkin: So it has to be "contaminated" with US technology? I think that has been of great reassurance

  Ms Wood: Again that is today's situation.

  Mr Godden: It is the same.

  Q75  Chairman: You said this was in the UK a security issue and in the US an export control issue, so if in the UK something is passed outside the British approved community, then the sanction is the Official Secrets Act?

  Mr Hayes: Yes.

  Q76  Chairman: There is no similar sanction in the United States if in the United States something is passed outside the American approved community is there, or is there?

  Mr Hayes: Being passed outside the American approved community within the United States or outside of the United States?

  Mr Jenkin: Outside.

  Q77  Chairman: Either probably.

  Mr Hayes: If it is passed outside of the US approved community outside of the United States then it would be punishable under ITAR unless there was a licence or agreement in place. If it was passed outside of the approved community of the United States, depending on how that approved community is defined, it may still be an offence under ITAR because you are required to register under ITAR if you are a manufacturer of defence articles in the United States, regardless of whether you export them, so it would be a case of the recipient company holding military and technical—

  Q78  Chairman: I see so the Official Secrets Act in the UK and ITAR perhaps in the US?

  Mr Hayes: Yes.

  Q79  Mr Jenkin: Very briefly to make sure that we have absolutely understood it, basically we are depending on the ITAR system to be gatekeeper to British technology in the United States, but what you are saying is that we have such an intense technology-sharing relationship at the moment that really amounts substantively to no change?

  Mr Hayes: Correct.

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