Select Committee on Defence Minutes of Evidence

Examination of Witnesses (Quesitons 87-99)


21 NOVEMBER 2007

  Q87 Chairman: This is a continuation of the session into the UK/US Defence Trade Co-operation Treaty. May I begin, Minister, by welcoming you to your first meeting of this Select Committee, so new into your job. You are particularly welcome since you and I were Whips together and that is a community which nobody ever can break. I understand that you would like to begin by saying something to the Committee.

  Baroness Taylor of Bolton: Thank you, Chairman, and thank you for those comments. I do look forward to working with the Committee. I am afraid that before I introduce the team to the Committee this morning I have to say that there was a loss of an RAF Puma helicopter near Baghdad in Iraq last night and two Service personnel were killed. Their next of kin have been informed. Two other personnel were seriously injured and they are being treated in hospital. Obviously we cannot speculate about the cause of the incident but an RAF Board of Inquiry has been convened and is en route to Iraq to start that investigation. I thought it right to tell the Committee because obviously this will become public news and you have an interest in all of these issues.

  Q88  Chairman: I am grateful. We on this Committee have travelled regularly on those Pumas in Baghdad and we were and remain utterly astonished at the things that they do and the perils that they face, so thank you for telling us. Minister, would you like to begin by introducing your team and then would you like to go on to tell us how the Treaty is likely to work and what the arrangements will be?

  Baroness Taylor of Bolton: Can I introduce the team. Tony Pawson is head of the Defence Export Services Organisation. Gloria Craig is Director General International Security Policy and has been leading for the MoD on the transfer of the defence trade promotion function of the MoD to UK trade and investment. Stephen French is Director General of Acquisition Policy—all these wonderful titles—and he has been leading within the MoD on the Trade Treaty. Paul Lincoln is Head of Defence and Security Policy from the Cabinet Office, who has been leading on the negotiation of the Treaty. They are here to answer detailed questions as well as add any other information that they think is appropriate. Obviously I am new to this position but I am quite impressed with what I have inherited in terms of the discussions that have taken place on the Defence Trade Co-operation Treaty. I think everyone will recognise that we have very close links with the United States and that defence relationships between the UK and the US are very good. We are always seeking to improve them, not least for the benefit of our front-line troops. Part of the benefit that will come from going down the route that is being suggested is that access to the best technology would help us to support even more our troops on the front-line. We do believe that the Treaty represents a major opportunity to improve our ability to operate alongside the United States. It is a long-standing policy of both sides that that is the direction in which we should go and we think that both UK and US forces operating together will benefit from further co-operation. Obviously the threat that we are facing is an evolving one, it is changing, no-one anticipated ten years ago the nature of the threats that we have today, so flexibility and being up-to-date are absolutely essential to everyone. At present, in regard to UK/US defence trade, or indeed any trade, there are barriers, there are administrative hurdles that have to be overcome, and we think if we tackle those administrative barriers properly and can remove those barriers, it will allow the UK and the US defence industries to co-operate in new ways. As I said earlier, there is a great deal of co-operation at present but we think that there is scope for more and we think that there is real benefit to come from this Treaty on both sides. Discussions have been going on for some time, it is not a new issue, but I think that the approach that has been adopted this time is one that those working on it are quite confident can lead to some agreement. We had visitors from the States last week talking about some of the detail (because there are still some detailed arrangements that have to be worked out). There is agreement in principle. Prime Minister Blair and President Bush did sign the Treaty so there is agreement in principle and there is goodwill on both sides. Most of the implementing arrangements have been agreed but there are still some outstanding issues which officials have been working on very closely with their American counterparts.

  Chairman: Thank you very much, Minister. I think it would be right, because you said you were impressed by what you had inherited, for us to express our gratitude to your predecessor who had worked incredibly hard and very effectively on this Treaty and also to Tony Blair who signed the agreement with the President. Key to the Treaty will be the implementation arrangements; Mike Hancock?

  Q89  Mr Hancock: Minister, you actually said that the implementation arrangements were nearly completed. When would you envisage that process being completed and when would you expect to publish them? We heard from the defence industry prior to you coming in that they were wanting to know and wanting to see what had actually been finally decided. Can you update us on when you would expect to complete them and when you would expect to publish them?

  Baroness Taylor of Bolton: As I said, we did have officials from the States over here last week. I did meet them but my officials obviously spent a great deal more time with them. Officials are going over to Washington next week to try to finalise some of those arrangements. There are a couple of issues which are outstanding which will require some discussion and we are hopeful that we will make progress, but we cannot at this stage absolutely guarantee it because we have to protect our position on these issues. It is looking optimistic. In terms of the actual publication of the implementing arrangements, it is not anticipated that they will be a published document. Obviously we will have to be willing to discuss these with the Committee and one possibility might be to share with the Committee in confidence what actually is agreed once those are concluded, but it is not anticipated that that will be a published document.

  Q90  Mr Hancock: Would that be different to what the Americans will do? We heard previously that the anticipation was that the American Senate, in particular, would not agree to ratify this Treaty without seeing the published implementation arrangements. So how can it be that we would only get them in an unpublished form through a confidential meeting, whereas—

  Baroness Taylor of Bolton: There will be a Memorandum of Understanding when this is completed. Perhaps Paul would like to comment.

  Mr Lincoln: Indeed. We are still in discussion with the US on exactly the form in which we will place those implementing arrangements to either the Senate or to the Committee here. Clearly, we are prepared to share that. Of course, the difference is—and there will be concerns by industry on whether or not we need to share those as well—the implementing arrangements set out the commitments between the two governments are not necessarily the commitments which we place directly to industry. We will, of course, share and work up in detail with industry the exact requirements which need to be put in place with them. So, clearly, those will be done in detail with those who will be affected by this.

  Q91  Mr Hancock: My question was that we were told that the Senate made it quite clear that they would only ratify this Treaty subject to full documentation on the implementation arrangements. As far as I know, they offered no caveats to that, it was as straight as that, but you are now suggesting it is different to that.

  Mr Lincoln: I cannot speak for my US counterpart about the arrangements which they have come to with Congress. They will be speaking to them to give them briefings, I believe, starting Monday next week, to talk through, in exactly the same way as we doing now, where we have got to on any outstanding issues. However, it will be for them to decide whether or not to give detail, but I would expect, quite clearly, we would not expect the situation to be different on each side of the Atlantic, with one side putting the Treaty implementing arrangements into the public domain and the other side not.

  Q92  Mr Hancock: Would the implementation arrangements be simply an addition to the Treaty or would they have to be subject to further ratification?

  Mr Lincoln: As we envisage it now, the implementing arrangements will be a Memorandum of Understanding between the two governments which, as such, would not require further ratification.

  Q93  Mr Hancock: But if that Memorandum of Understanding is not a public document how will industry know that this Treaty is beneficial to what they hoped it would deliver?

  Mr Lincoln: Having the Memorandum of Understanding between the two governments is very different, as I said, to what we then put to industry and say: "These are the requirements which will be placed on industry as a result of this Treaty", which they will have very public access to.

  Q94  Mr Hancock: Would you expect the British Government to ratify this Treaty without those implementation arrangements being made public, at least to this Committee?

  Mr Lincoln: I am not going to answer that.

  Baroness Taylor of Bolton: I did say that it was clear to me that the implementation arrangements—

  Q95  Mr Hancock: Before ratification.

  Baroness Taylor of Bolton:— would have to come to this Committee.

  Q96  Mr Hancock: Before ratification.

  Baroness Taylor of Bolton: I cannot see any reason why not, but I would take advice on that before I made an absolute promise. Can I just go back to one point you said about industry knowing? I think it is important to stress that industry has been involved in the background to a lot of these discussions and it is not envisaged that we will be agreeing to anything that will take industry by surprise or which will cause them difficulties. Their approach and their concerns, if there are any—their situation—has been taken into account in all of these discussions. So industry will not be unsighted or surprised by the kinds of things that are being discussed.

  Q97  Mr Hancock: Were there issues that they have raised during the consultation on this that you have not been able to get a satisfactory response from the US on?

  Mr Lincoln: I am sorry. Could you repeat the question?

  Q98  Mr Hancock: Were there issues raised by industry in this country on the implementation arrangements on which you have not been able to negotiate a satisfactory conclusion with your US counterparts?

  Baroness Taylor of Bolton: There are two issues that we have not absolutely got conclusion on, and they are not issues that industry would be concerned about, as opposed to government. They are issues we have got to work through.

  Q99  Mr Hancock: So, for the record, would it be fair to say that all of the issues raised by British industry in respect of the implementation arrangements for this Treaty you have been able to satisfactorily conclude with your US counterparts?

  Mr Lincoln: I think it would be fair to say that we have taken account of industry's concerns throughout this and discussed with them—

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