Memorandum submitted by the Export Group
for Aerospace & Defence (EGAD)
1. Below is a paper compiled for the Committee
in response its inquiry on "Cross-departmental working on
development and trade", as promulgated in Press Notice No
52, submitted on behalf of the Export Group for Aerospace &
Defence (EGAD), which is the UK Industry focal group on all export
control issues.
2. We would wish to restrict our comments
to the aspects, which are most pertinent to our area of interest
and expertise, namely:
Development aspects of defence exports
— Impact of the changes in ministerial
responsibilities on defence export licences and application of
the "consolidated criteria" on such exports, particularly
criterion 8 on sustainable development.
3. We feel that we must point out, right
at the start, that it is incorrect to believe that export controls
and the need for export licences only relate to "defence
exports"—this ignores the vast swathe of export controls
which relate to "Dual-Use" equipment and technologies,
and seemingly seeks to perpetuate the ill-informed myth that export
controls only relate to "arms".
4. There is nothing intrinsically unique
to the export of defence materiel, either in terms of excessive
expenditure or allegations of bribery and corruption, which can
affect sustainable development, which cannot similarly relate
to most other sectors.
5. We warmly welcome efforts by the British
Government to strengthen our own national regulations against
bribery and corruption, and enhance their effectiveness further.
When an official from DfID reportedly stood up in front of an
audience in 2005-06 and stated that it was their aspiration to
achieve in the next three to five years the successful prosecution
of a "British defence company" for bribery and corruption,
we were somewhat concerned, and our suspicions remain about their
intentions.
It would have been better if the official had
stated that they wished to achieve the successful prosecution
of a "British company" for bribery and corruption, without
stating the target sector. We would hope that officials would
share our view that discrimination is distasteful and that laws
should be enforced dispassionately, rather than on such a basis.
6. We welcome the closer involvement of
DfID in making and implementing trade policy, in liaison with
the Minister of Trade and the Minister of Trade Promotion and
their respective Secretaries of State. We hope that they will
play a constructive role in successfully achieving this. At a
time when, with the intended demise of the Defence Export Services
Organisation (DESO), there is uncertainty about how UKTI is going
to fulfill the role of supporting the export activities of the
British Defence Industry, we believe that there is merit in involving
DfID more closely.
7. The role of DfID in setting out clearly
and authoritatively the British Government's interpretation of
Criterion 8 is invaluable, as this whole area is highly subjective:
"The compatibility of the arms exports with
the technical and economic capacity of the recipient country,
taking into account the desirability that states should achieve
their legitimate needs of security and defence with the least
diversion for armaments of human and economic resources.
The Government will take into account, in the
light of information from relevant sources such as United Nations
Development Programme, World Bank, IMF and Organisation for Economic
Cooperation and Development reports, whether the proposed export
would seriously undermine the economy or seriously hamper the
sustainable development of the recipient country.
The Government will consider in this context
the recipient country's relative levels of military and social
expenditure, taking into account also any EU or bilateral aid,
and its public finances, balance of payments, external debt, economic
and social development and any IMF- or World Bank-sponsored economic
reform programme."
DfID's involvement in the MoD(UK)'s 680 procedure
in assessing potential exports against Criterion 8, right up front
at the start of a company's intended potential marketing campaign,
and providing clear and authoritative guidance to the exporter
on this highly subjective subject is invaluable and assists in
avoiding launching nugatory, highly expensive efforts in pursuing
potential business opportunities for which the necessary export
licences will be turned down. We believe that this may be one
reason why there have been so very few export licences turned
down by HMG on the grounds outlined in Criterion 8 of sustainable
development, as the 680 procedure may have helped in weeding these
out before an export licence application has been submitted.
8. It has to be pointed out that almost
no exports of a level that they could be deemed to impact on the
customer's national economy and sustainable development would
ever be achieved without considerable political lobbying support
from the British Government (if only to offset the similarly vocal
lobbying support that other national Governments almost invariably
give to their own national champions in the defence arena). Therefore,
the apparent failure by HMG to refuse export licences on the grounds
that they would infringe Criterion 8 should not cause undue concern,
as this would be the result of effective communication between
Government departments; and this can only be further enhanced
by involving DfID more closely in trade activities.
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