Select Committee on International Development Eighth Report

8  THE EU AND THE INTERNATIONAL PERSPECTIVE

Introduction

124. The pattern of our Report of following-up issues we raised last year, or earlier, emerges in this chapter too. On the European level we report on reviews underway, or in one case stalled, as well as emerging proposals which potentially could affect the UK's export controls. Beyond Europe, the arms trade treaty, which the UN started work on in 2006, has now reached a critical phase.

Review of the EU Code of Conduct on Arms Exports

125. The EU Code of Conduct on Arms Exports adopted on 8 June 1998 forms the basis of the UK's decision-making process for licence applications. The Code contains political commitments, but is not legally binding. It represents minimum standards which all Member States have agreed to apply to exports of controlled goods. These standards are defined through a common set of criteria to be used in deciding whether proposed exports should be allowed. The Government has published consolidated EU and National Criteria which explain how it interprets the terms of the Code.[295]

126. As we, and our predecessor Committees, have noted the EU Code was subject to a fundamental review which was drawing to a close over three years ago.[296] A revised code was agreed at a technical level and it has also been agreed in principle that the revised text should be adopted as a Common Position under Article 18 of the Treaty of European Union. But there was no consensus as to when this should be. This Common Position would be legally binding on Member States, who would be obliged to ensure that their domestic legislation conformed with the Common Position.[297] We have welcomed the revisions to the EU Code.[298] This year we asked the Foreign and Commonwealth Office (FCO) if there had been any progress on the adoption of the revised EU Code. The FCO said:

We are in discussions at official level with all EU member states to see how to overcome the reservations some had previously expressed about the Common Position. These discussions are moving forward and we hope they will lead to consensus being reached in the course of the next six months. […] Once consensus is reached, the Government will move quickly to implement, having already subjected the Common Position to parliamentary scrutiny.[299]

We recommend that the Government continue to press determinedly for the revised EU Code of Conduct on Arms Exports to be adopted as a legally binding Common Position under Article 18 of the Treaty of European Union.

Peer review of implementation of EU Council Regulation 1334/2000

127. Last year we recommended that the Government set out the progress that had been made in carrying out the recommendations arising from the 2004 peer review of the implementation of EU Council Regulation 1334/2000 on the control of dual-use items in an enlarged EU. We also recommended that the Government considered whether the EU review's conclusions had implications for its own 2007 Review of Export Control Legislation.[300] In a memorandum this year the Government said it had concluded that:

there are no implications for domestic legislation arising from the review of the implementation of the EU Regulation. Examination of the Commission's proposals for amending Council Regulation 1334/2000 is on-going in Council Working Groups. It is hoped that this process will be complete by the end of 2008.[301]

We are grateful for the Government's memorandum commenting on the effect of the review on legislation. The review also had implications for the operation of the export control. We recommend that in responding to this Report the Government explain whether the conclusions and recommendations from the peer review of the implementation of EU Council Regulation 1334/2000 on the control of dual-use items have led to changes in the operation of the export control system to improve its effectiveness.

Changes to dual-use regulations

128. Last year we expressed concerns about the European Commission's proposals for changes to the dual-use regulations and recommended that the Government in its response to our Report explain its policy to the changes emerging from the Commission.[302] In reply, the Government said that Member States had yet to agree formally on any of the proposals, and "discussions are likely to continue until at least the end of 2007" and that "the UK will develop any new policy that is required once the Presidency has drawn up draft conclusions".[303] We asked the Government for updates on progress and when the Presidency's proposals would emerge. The Government said that in February 2008 discussion on the Commission's proposals for a "revision of the Council Regulation on the control of exports of dual-use items [took] place at official level in the Presidency-chaired Dual-Use Working Party. The UK has contributed positively to these discussions and seeks to disseminate UK best practice and experience where this is appropriate. Member states have yet to agree formally on any of the proposals, and discussions continue."[304] This is an issue that we shall keep under review.

Intra- EU transfers

129. We recommended last year that the Government needed to formulate a policy to respond to any proposals emerging from the European Commission to remove the barriers to the free movement of military goods and technology that currently exist within the EU. Our concern was that the policy needed to address the effect that any changes would have on export controls and to ensure that UK and EU export controls were not weakened.[305]

130. In its memorandum the Ministry of Defence (MoD) addressed EU defence industry restructuring. It explained that with pressure on defence budgets throughout Europe, it was "essential that work be undertaken to develop a rationalised, integrated and efficient European industrial base that can responsively and cost-effectively meet capability requirements".[306] To achieve this goal the MoD pointed to a number of steps taken by EU Member States collectively:

• EU Member States that participate in the European Defence Agency (EDA) have agreed that work must be undertaken to develop an effective European defence industrial base through aligning and combining States' needs in shared equipment requirements and meeting these through an integrated, interdependent but less duplicative European Defence Technological and Industrial Base (EDTIB). In September 2007, National Armaments Directors approved a series of roadmaps that would take forward the initiative in the areas of:
  • clarifying the key defence-related industrial capabilities for the preservation or development in Europe;
    • achievement of mutual confidence on security of supply between EDA Member States;
    • increasing competition in the European Defence Equipment Market;
    • developing diversity and depth of the European defence related supplier base; and
    • increasing Armaments Co-operation amongst participating Member States.[307]

131. On the face of it greater intra-EU transfer could impact on the UK's export controls. We therefore asked the Secretary of State for Defence about the proposals. He said that:

we did not agree with the early proposals. We argued for a set of proposals which were much more akin to the scheme that we have in this country. Those proposals have broadly been accepted, which we are pleased about. They are reflected in the current document which is out for consideration by other countries, including some who supported the earlier proposals. So this is a dynamic process. Insofar as the actual documentation, it shows that we have been persuasive in our arguments; we have won a lot of the arguments and we are pleased about that. Broadly we welcome the direction of this but we are alert to the possibility that it could slip back at any time and we will make sure that we try to prevent that from happening.[308]

132. When he gave evidence in January 2008 the Secretary of State said that he did not have all the details, which were supplied subsequently in a memorandum from the FCO:

On 5 December 2007 the Commission published a Defence package which included 2 draft legislative measures […] The package is intended to improve the efficiency and competitiveness of the European defence industry by addressing the conduct of business and the effectiveness of the market.

The objective for the Defence and Security Procurement Directive, where MoD lead, is to establish new, more flexible public procurement rules specifically adapted to the defence sector. This will not only ease the conduct of business in this area but, it is hoped, will encourage some Member States away from invoking Article 296 of the Treaty to exempt their procurements from the public procurement rules due to the inadequacies of the current rules. The Government supports the Commission's aims of improving competitiveness, transparency and efficiency in the European defence equipment market although the proposed measure clearly needs to be carefully balanced with the need to ensure adequate protection of legitimate national security concerns.

Separately, The Intra-Community Transfers Directive aims to simplify national export licensing procedures, so as to facilitate cross-border trade within the EU and thereby improve competitiveness and security of supply. The Directive generally proposes to use as its basis the simplified licensing arrangements that are in operation within the UK.[309]

133. On the basis of the evidence given by the Secretary of State for Defence and by the Foreign and Commonwealth Office we conclude that the Government has reached the view that neither the Defence and Security Procurement Directive nor the Intra-Community Transfers Directive as published on 5 December 2007 will lead to a weakening of the UK's export control system. This is an issue that we shall keep under review.

Slovak arms to Sri Lanka

134. Criterion 3 of the EU Code of Conduct on Arms Exports states that EU states should not grant export licences where "the arms could provoke or prolong armed conflict in the country of final destination".[310] It was reported in April 2008 that the Slovak Economy Ministry had approved a shipment of 10,000 military missiles to the Sri Lankan Government.[311] We asked the FCO whether the export violated the EU Code. It explained:

When these reports came to light, the FCO immediately sought to establish the facts. Staff at our Embassy in Bratislava discussed the reports with officials from the Slovakian Ministry of Foreign Affairs. They confirmed that the export of 10,000 rockets had taken place, but a licence to ship a further 30,000 rockets had been revoked.

The original Slovakian export is not in itself technically a breach of the Code of Conduct, but clearly would be considered undesirable when considered against Criterion 3. And under similar circumstances the UK would have refused the export of this type of military equipment to Sri Lanka at this sensitive time. We are now liaising with the Slovenian Presidency and other EU partners within COARM[312] to consider how best to ensure that the Code of Conduct is applied in a uniform manner across the all Member States, thereby avoiding this type of anomaly in future.[313]

135. We do not understand how an export which would be considered undesirable in the light of Criterion 3 is not a breach of the EU Code of Conduct on Arms Exports. The case raises concerns that the EU Code may be applied inconsistently by EU States. We recommend that the Government provide us with a report on the outcome of its contacts with the Slovenian Presidency and EU States within the Working Party on Conventional Arms Exports (COARM) to consider how best to ensure that the EU Code of Conduct is applied in a uniform manner across the all Member States.

International arms trade treaty

136. On 6 December 2006 the UN General Assembly resolved to establish a Group of Governmental Experts (GGE) in 2008 to assist the Secretary General produce a draft international arms trade treaty. The resolution was approved by 153 members in favour, 24 abstentions and 1 vote against (the USA). Following this decision the Secretary General requested States to submit their views on the form and content of a treaty. In 2007 102 responses had been received. The FCO told us that the UK had worked hard to encourage countries to respond. A report is expected after the third meeting of the GGE to the Secretary General for the consideration by the First Committee of the UN.[314]

137. The Government provided us with an informal briefing on the arms trade treaty in May 2008, which we found informative and useful. As we have stated previously,[315] we commend the Government for its energy and skills in encouraging other countries to support the treaty. The next stage in the process will be the report from the GGE later this year. We hope that a comprehensive and effective treaty emerges, though we recognise that this may take some time to achieve. We conclude that the Government is to be commended and supported in its efforts to achieve a comprehensive and effective international arms trade treaty.

Proliferation Security Initiative

138. The Proliferation Security Initiative (PSI) aims to stop illegitimate trade in weapons of mass destruction and WMD[316] technology. The Government told us that the UK continued to participate actively in PSI and it had recently hosted a meeting of the PSI Operational Experts Group in London in February 2008 and had sent a cross-departmental team to the PSI 5th Anniversary events in Washington in May 2008.[317]

139. At present the UK has no powers to seize goods subject to export controls on the high seas, or to interdict ships on the grounds that they are carrying such goods. The 2005 Protocol to the 1988 Convention for the Suppression of Unlawful Acts Against the Safety of Maritime Navigation (the SUA Protocol) will strengthen the international legal basis to impede and prosecute the trafficking of WMD, their delivery systems and related materials on the high seas in commercial ships by requiring state parties to criminalise such transport. The Protocol also establishes a mechanism to facilitate the boarding in international waters of vessels suspected of engaging in these activities. The SUA Protocol will only come into force after ratification by 12 countries. The Government said that currently only three countries—Spain, Cook Islands and St Kitts and Nevis—had ratified it. The UK had signed the Protocol but has not yet ratified. Legislation will be required to enable the UK to ratify the SUA Protocol. The Government said that the necessary legislation was contained in the Transport Security Bill, which had a place in the Draft Legislative Programme for the next session of this parliament.[318]

140. We are concerned that the Government has yet to ratify the SUA Protocol and that the legislation to effect ratification is only at a draft stage. We recommend that the Government bring forward legislation in the next session to ratify the 2005 Protocol to the 1988 Convention for the Suppression of Unlawful Acts Against the Safety of Maritime Navigation (the SUA Protocol).

Arms embargo on China

141. China has been subject to an arms embargo since 1989. We noticed from examination of quarterly reports that the value of standard individual exports licences (SIELs) issued for exports to China increased from £85 million in 2006 to £227 million in 2007 and we asked the FCO whether the embargo had any economic or commercial effect. The FCO replied that:

The EU embargo on China was imposed after the Chinese suppression of the Tiananmen square pro-democracy demonstrations in 1989 and its scope covers lethal weapons that could be used for internal repression. It is important to note that it is not a "full scope" embargo. The export of some controlled goods to China was always envisaged and thus, increases in the volume of exports for controlled goods that are not covered by the terms of the embargo should not be seen as a barometer of the effectiveness of the embargo. It is also difficult to assess the economic and commercial impact of the embargo based on one year's figures, and this needs to be assessed against a longer period.[319]

142. The FCO supplied the table below showing the value and number of standard individual export licences from 2004 to 2007.[320]

SIELs to China
Year	Number of SIELs	Value of SIELs
2004	180	£100 million
2005	238	£61 million
2006	284	£85 million
2007	310	£227 million

143. The FCO explained:

The table shows that since 2004 there has been a steady rise in the number of SIELS approved, although the value has fluctuated.

In 2007 three unusually high value UK exports to China took place. One was for enriched uranium (£124 million) to be used by the Yibin Nuclear Element Plant for the fabrication of commercial nuclear fuel in support of the Chinese civil nuclear power programme. Another was for cryptography software (£23.8 million) that would enable the provision of Voice Over Internet Protocol Services to be used by UT Starcom Telecom Ltd in China. The final high value export was for nickel powder (£10 million) to be used by Jinco Nonferrous Metals Co Ltd. for use in the process of making nickel sulphate and chloride. These three high value exports have distorted the overall figures for 2007 compared to previous years. All three export licence applications were assessed against the Consolidated EU and National Arms Export Licensing Criteria and were approved following consultations with the appropriate government departments and agencies. None were submitted to FCO Ministers.[321]

144. We note the Government's explanation for the increase in the value of SIELs in 2007. If the three "unusually high value" value items are removed the value for SIELs in 2007 would have been about £80 million, which would have been slightly down on 2006. But as the Government acknowledges the number of SIELs continues to grow.

145. In the political field the most recent development has been unrest in Tibet. The FCO told us that it continued to "have serious concerns about human rights in China" and that it covers "human rights issues in depth with the Chinese during our regular biannual UK-China Human Rights Dialogue, (the last round of which took place in Beijing in January 2008)".[322] But the Government judged that overall that "the human rights situation has improved significantly in China since 1989".[323] It pointed out that the US had dropped China from its list of "countries of concern" in its annual human rights report.[324] The Government made it clear, however, that its "willingness to enter into dialogue does not influence our policy on arms exports to China".[325] On Tibet, the Government urged:

substantive dialogue between the Chinese authorities and the Dalai Lama to resolve the underlying human rights issues there. We believe that engagement with China, not isolation, is the best way to encourage this. Strengthening the arms embargo would do nothing to encourage dialogue, and would risk isolating the Chinese Government in a way which would make it significantly more difficult for us to raise human rights concerns.[326]

146. We conclude that the British Government and the EU should maintain their arms embargo on China.

Criteria for sponsorship of visits to arms fairs

147. In our Report in 2006 we expressed dismay that a Chinese military delegation visited the DSEi[327] arms fair in London in 2005 with the support of the UK Government.[328] We asked about the criteria for sponsorship of visits to arms fairs. In a memorandum to the inquiry the Government explained the criteria:

The starting point is potential export market opportunities, based on each country's known requirements and the UK's ability to meet them. The latter is a function of what our industry can offer and the Government's likely stance on licensing of such equipment to that country. The licensing criteria thus inform our deliberations, but we do not rule out inviting representatives from a country to an exhibition purely because only a limited range of items are likely to be licensable for export to it. Wider factors may also be taken into account and may cover […] aspects of bilateral military dialogue, including involvement of the country in peacekeeping operations or our wish to encourage a contribution to international efforts to enhance global security. However, a country would not be considered where that would be contrary to the UK's international obligations and our wider defence and security interests.

The [FCO] conducts its own assessment of the value or risk of inviting countries on the list. This will involve considering the approach and behaviour of a country on human rights and whether a company might reasonably expect to obtain a licence to export defence goods to the country, even if for a limited range of goods, in accordance with any current measure. Our Embassy staff in the country will be contacted if that is thought to be necessary. FCO agreement to invite certain countries on the list, such as China, is given at Ministerial level.[329]

148. We are grateful to the Government for its explanation of the criteria it applies in deciding whether or not to sponsor the visit of a delegation to an arms fair in the UK. In his oral evidence the Secretary of State for Defence made the points that the Chinese knew that any goods they ordered would be subject to the "export licensing process" and that the EU embargo on China was "partial in scope" and so equipment on display which did not come within the scope of the arms embargo could easily have been "sold appropriately to the Chinese".[330] He also made the point that the Government had "been encouraging the Chinese to play a part in peacekeeping operations and they are now playing a part in peacekeeping operations across the world".[331] In our view the matter is straightforward: if a country is subject to an international arms embargo, the representatives of its government should not be entitled to official sponsorship to attend an arms fair in the UK. China has been subject to an arms embargo since 1989 and it should receive no official sponsorship to attend arms fairs in the UK. We recommend that the Government adopt a policy that, where a country is subject to an international arms embargo, the UK Government does not provide official sponsorship for the representatives of the State under embargo to attend arms fairs in the UK.

Cluster munitions

149. In our last Report we congratulated the Government on its support for a ban on "dumb" cluster munitions and on its commitment to withdraw the UK's stocks of "dumb" cluster munitions with immediate effect.[332] As part of the process which began in Oslo in February 2007 a Diplomatic Conference on Cluster Munitions was held in Dublin in May 2008. The purpose of the conference was to negotiate a new instrument of international humanitarian law banning cluster munitions that cause unacceptable harm to civilians. On 28 May the Prime Minister issued a statement:

In order to secure as strong a Convention as possible in the last hours of negotiation we have issued instructions that we should support a ban on all cluster bombs, including those currently in service by the UK.

This Convention will be a major breakthrough, and builds on the UK's leadership on landmines and the Arms Trade Treaty. We will now work to encourage the widest possible international support for the new Convention.[333]

150. On 30 May more than 100 countries, including the UK, agreed to the text of the Convention on Cluster Munitions.[334] The parties to the Convention undertook never under any circumstances to:

a)  use cluster munitions;

b)  develop, produce, otherwise acquire, stockpile, retain or transfer to anyone, directly or indirectly, cluster munitions; and

c)  assist, encourage or induce anyone to engage in any activity prohibited to a State Party under this Convention.[335]

151. There have been reports that the draft treaty agreed in Dublin "incorporated a number of important, last-minute amendments that diminish the effectiveness of the protocol—and these changes were at the behest of the UK" and that:

Britain has negotiated a loophole that will allow the MoD to deploy a new generation of cluster bombs […] the draft has subtly redefined what counts as a cluster weapon. For the purposes of the treaty, a cluster bomb is no longer a cluster bomb provided it contains fewer than ten bomblets; is designed to hit a single, identifiable target, and is fitted with a fail-safe device to self-destruct the bomblets so as not to maim children […] This means that while the MoD will scrap its existing M73 and M85 weapons—which it does not use anyway—it is free to develop a new generation of these munitions provided they fall within the strict terms of the treaty. Surprise, surprise: the MoD's next generation anti-tank cluster shell does precisely that.[336]

152. In the time available we were not able to put these points to the Government but it pointed out that "Article 2 of the Convention makes clear that other munitions which have sub-munitions, but which meet a set of cumulative criteria designed to avoid indiscriminate area effects and the risks posed by unexploded sub-munitions, are not cluster munitions".[337] We recommend that in responding to this Report the Government explain whether it pressed for a restriction in the Convention on Cluster Munitions agreed in Dublin in 2008 that would allow it to develop a new generation of anti-tank cluster shell.

153. The use of cluster munitions has terrible humanitarian consequences. We conclude that the Government is to be commended for its support for, and agreement to enter into, the Convention on Cluster Munitions agreed in Dublin in 2008, which bans all types of cluster munitions, including so-called "smart" cluster munitions.

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295   European Union Code of Conduct on Arms Exports, Council Document 8675/2/98; see also HC Deb, 26 October 2000, col 203W. Back

296   HC 390 (2003-04) paras 108-14; HC 145 (2004-05) paras 83-86; HC (2005-06) 873, para 139 Back

297   HC (2005-06) 873, Ev 126; see also HC (2005-06) 873 Q 303. Back

298   HC (2005-06) 873, para 141 Back

299   Ev 96, Q 19 Back

300   HC (2006-07) 117, para 314 Back

301   Ev 87, para 16; see also Cm 7260, p 30. Back

302   HC (2006-07) 117, para 323 Back

303   Cm 7260, p 30 Back

304   Ev 87, para 9 Back

305   HC (2006-07) 117, para 320 Back

306   Ev 43 Back

307   Ibid. Back

308   Q 50 Back

309   Ev 89, para 22 Back

310   Cm 7141, p 73 Back

311   Sme, Bratislava, reported on 7 April 2008 by BBC Monitoring Back

312   EU Working Party on Conventional Arms Exports Back

313   Ev 96, Q 20 Back

314   "Towards an arms trade treaty: establishing common international standards for the import, export and transfer of conventional arms", UN resolution 61/89, 6 December 2006; "Arms trade treaty, 'nuclear-weapon-free world', outer space arms race among issues, as general assembly adopts 54 first committee texts", GA/10547, 6 December 2006; "Government Experts hold their second meeting in New York to discuss a possible Arms Trade Treaty" Office for Disarmament Affairs (UNODA) Update, May 2008; Foreign & Commonwealth Office, Departmental Report 1 April 2007 - 31 March 2008: Better World, Better Britain, Cm 7398, May 2008, p 59; see also http://disarmament.un.org/update/index.html. Back

315   HC (2006-07) 117, para 354  Back

316   Weapons of mass destruction Back

317   Ev 94, Q13 Back

318   Ev 94-95, Qq 13-14 Back

319   Ev 90-91, Q 2 Back

320   Ibid. Back

321   Ev 90-91, Q 2 Back

322   Ev 91, Q 3 Back

323   Ev 91, Q 4 Back

324   Ibid. Back

325   Ibid. Back

326   Ev 91, Q 3 Back

327   Defence Systems and Equipment International Back

328   HC (2005-06) 873, para 166 Back

329   Ev 45, Q 14 Back

330   Q 12 Back

331   Q 12; and see also Q 13. Back

332   HC (2006-07) 117, para 368 Back

333   The Prime Minister's comments on the Dublin Diplomatic Conference on Cluster Munitions, 28 May 2008, http://www.number-10.gov.uk/output/Page15608.asp  Back

334   Diplomatic Conference for the Adoption of a Convention on Cluster Munitions, CCM/77, 30 May 2008, http://www.clustermunitionsdublin.ie/pdf/ENGLISHfinaltext.pdf  Back

335   Convention on Cluster Munitions, CCM/77, 30 May 2008, Article 1(1) Back

336   "How cluster bomb ban was robbed of its impact", The Scotsman, 5 June 2008, p 24 Back

337   Ev 92, Q 6; see also Q 8. Back

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Prepared 17 July 2008