House of Commons - Committee on Arms Export Controls

Select Committee on International Development Written Evidence

Memorandum from the UK Working Group on Arms (UKWG)

INTRODUCTION

1. The following submission from the UK Working Group on Arms (UKWG)[5] to the Committees on Arms Export Controls (CAEC) focuses primarily on the ongoing review of the Export Control Act (ECA). We first consider the review process itself, before addressing the recent 2007 Review of export controls: Government's initial response to the public consultation (Initial Response), at which point we focus specifically on arms brokering. There are, however, other issues discussed in the Initial Response that are not addressed in this submission that the UKWG is pursuing in other contexts, eg controlling subsidiaries and licensed production agreements.

2. The submission then looks at two issues that the UKWG believes the Government should be addressing as part of this review process, but which the Government regards as outside its Terms of Reference. These are:

— Sustainable development

— Use of open general licences (OGLs)

3. In addition, in light of the recent developments regarding the Oslo Process, and the important role played by the UK therein, this submission considers what the UK Government could do to play a more constructive role in negotiations for an international treaty to ban cluster munitions.

4. This submission should be read in conjunction with the March 2008 submission from Amnesty International UK, the Omega Research Foundation and Saferworld, which also focuses on the review of the ECA.

THE ECA REVIEW PROCESS

5. The Government is to be commended for the way in which it has so far managed the ECA review process. It has shown a willingness to engage with external stakeholders in a serious and open manner, far more so than was the case during the original passing of the ECA. The UKWG looks forward to continuing to engage in a constructive manner throughout the rest of the review.

6. In terms of the content of the Initial Response, the UKWG welcomes in particular the decision to extend extraterritorial brokering controls to small arms and light weapons (SALW). We note that the Government is still considering whether to extend extraterritorial controls to other Military List items, and to ancillary services such as transportation. We encourage the Government to extend such controls to cover at a minimum other equipment generally recognised to be of particular offensive utility. Extending extraterritorial controls to transporters should also be regarded a matter of urgency by the Government.

7. The UKWG applauds the decision, in principle, to introduce an end-use control on torture equipment. We understand the logic behind doing this through the EU. If, however, the Government is rebuffed by EU partners on this issue, such a control should still be introduced unilaterally (thereby setting an example for others to follow), and a commitment in this regard from the Government would be welcome.

8. It is also encouraging that the Government has demonstrated a willingness to grapple with some other difficult transfer control issues, such as how to manage the export of non-controlled goods which might subsequently be militarised or used for a military purpose, and to continue to explore how best these might be dealt with. At the same time, on issues such as licensed production arrangements and transfers by foreign subsidiaries, the Government appears opposed to change. In some cases, the arguments put forward against change are not persuasive. For example, the reason identified in the Initial Response for not controlling licensed production agreements is that such controls could not be applied retrospectively[6], an argument which if applied across the board would militate against any new legislation regardless of purpose.

9. The UKWG believes the review should have been cast more widely. The Government has been reluctant to consider changes to primary legislation. This is perhaps reflected in the failure to even mention in the Initial Response the issue of sustainable development, which the UKWG believes should be given greater weight in the Schedule to the ECA. The Government has also been reluctant to address issues that it believes do not require changes to the control orders, eg enforcement and use of OGLs.

10. The requirement to review the export control legislation three years after its entry into force was the perfect opportunity to see how well the new regime is working as a whole. The decision to limit the focus of the review to only one level (ie secondary legislation) of the (at least) three levels at which the regime operates risks undermining the effectiveness of the review process. The UKWG recommends that the Government either reconsiders this limited approach, or makes provision for a further, broader review at a specified time in the future.

ARMS BROKERING AND THE GOVERNMENT'S INITIAL RESPONSE

11. While there are a range of issues covered in the Initial Response, for the purposes of this submission the UKWG has chosen to concentrate on arms brokering, in part because the proposed changes on this are among the most significant contained in the Initial Response. The UKWG accepts the principle set out in the Initial Response of distinguishing between the brokering of certain items or to destinations that will always, apart from in exceptional circumstances, be "inherently undesirable"[7], and brokering other equipment or to other destinations where it is regarded that there can be legitimate trade.

12. The UKWG welcomes the decision to create a middle category (category 2) of items to which extraterritorial controls will be applied with regard to their trade with the exemption of "peripheral acts such as general promotion or advertising."[8] This change is based on the presumption that there are some items for which there is "legitimate trade, but which, on the basis of international consensus, have been identified as being of heightened concern".[9] The Government is to be congratulated for including SALW among the items to be included in this category. (According to the Government's Initial Response, most Military List items will be category 3. For category 3 goods, trading between two countries overseas will be controlled "only if carried out from within the UK."[10])

13. This expansion of the range of goods to which extraterritorial brokering controls will be applied further acknowledges the principle that it is legitimate for the Government to control the arms brokering activities of UK persons regardless of where those activities are conducted. Unfortunately, and despite previous manifesto commitments, the Government appears reluctant to extend this principle to its logical conclusion, i.e. that the brokering of all Military List goods should be subject to a form of extraterritorial control. Moreover, the Government is so far undecided as to whether to control "supporting activities | under category 2, including transport and promotional activities."[11]

14. The UKWG urges the Government to expand the range of goods to be included in category 2 as far as possible. As the Government itself states in the Initial Response, without extraterritorial control it is a simple matter to escape UK regulation: "unscrupulous traders [can] pursue deals that concern the UK simply by carrying out the business from another country."[12]8 First among other items to be added to category 2 should be those with particular offensive utility, such as (non-SALW) munitions, artillery, attack helicopters and armoured vehicles.[13] The Government should also ensure that the means by which the list of items included in category 2 can be changed is straightforward and simple to manage.

15. Furthermore, just as for category 1 situations (ie those regarded as inherently undesirable), involvement in the transportation of category 2 items should be subject to control. The roles of broker and transporter can be tightly linked, with the dividing line between them difficult to draw, and indications are that the role of certain transporters (of whom Victor Bout is the most infamous) has been critical to the supply of SALW to rival factions in many African conflicts. Exempting the transportation of SALW from the transfer control regime leaves open a dangerous loophole.

Brokering and open licences

16. For arms brokering, as for direct exports, the Government through the use of open licences has sought to focus its attention on the most sensitive proposed trades, while allowing the defence industry to carry out its less sensitive business with a "lighter touch". While the UKWG understands the rationale behind this approach, there are concerns that the current regime may be too permissive (particularly with regard to brokering). According to the Export Control Organisation (ECO) website, the Open General Trade Control Licence (OGTCL) is likely to cover about 90% of all arms brokering situations. It "allows trade in most activities in respect of military and paramilitary goods on the UK Military List"[14] where these are (1) sourced from almost any state to 32 specified states (including most EU Member States and a few other states that might be regarded particularly "friendly"), or (2) sourced from that same list of 32 states to all but 39 named states (countries to which the UK is bound by national or international obligations to prevent the supply of some military goods). This is a far more liberal regime than is applied to direct exports, and when combined with the weaknesses in terms of registration and reporting (as highlighted in the section below on the use of OGLs, paragraphs 29-34), must raise concerns regarding the risks of diversion if nothing else.

17. The UKWG also has concerns regarding the use of Open Individual Trade Control Licences (OITCLs). For example, in 2006, OITCLs authorised the brokering to Angola of components for launching equipment for surface-to-air missiles, components for heavy machine guns, components for combat aircraft, components for combat helicopters, components for general purpose machine guns, components for small calibre artillery, components for airborne electronic warfare equipment, components for weapon control systems, and armoured all-wheel-drive vehicles; and to Nigeria of components for large calibre artillery; components for general purpose machine guns, components for naval light guns, and armoured all-wheel-drive vehicles. In addition, China, Guinea, Libya, Niger, Pakistan, Rwanda and Turkmenistan were all authorised destinations for brokered armoured all-wheel-drive vehicles.

18. Two OITCLs were issued (one in 2006, the other in first quarter 2007) covering the trade of military components for equipment ranging from submarines to heavy machine guns between a large number of countries including C¼te d'Ivoire (then as now under UN arms embargo).[15] The UKWG notes that when trade control licences were introduced ECO stated that "we do not expect to issue licences for trafficking and brokering to embargoed destinations except in exceptional circumstances."[16] While it is hoped that these licences specified end-users and consignees falling outside the embargo[17], the latitude and lack of transparency regarding quantities and time-scale of transfers under OITCLs makes the inclusion of such destinations within such licences problematic.

19. The UKWG urges all stakeholders to explore how the open licensing system can be used more effectively, not only to lighten the regulatory burden but also to encourage higher standards within the defence industry. Measures could include:

— restricting the use of OGLs to those companies that are correctly applying prescribed internal compliance and due diligence programmes (such an approach would likely involve a system of registration to operate as a broker)

— advance notice of trades made under open licences

— a range of graduated sanctions for addressing imperfect or non-compliance.

20. Critical to any system, however, is that there is no relaxation in the rigour with which licence applications are assessed, and also that there is no drift over time to an increasing use of open licences as opposed to standard licences. In order to guarantee the ongoing integrity of the regime, as well as regular and thorough audits of industry compliance there is a need for regular monitoring and evaluation of the way the authorities are applying licensing standards.

Other issues for consideration as part of the ECA review

21. In addition to the issues addressed in the Initial Response, the UKWG believes the Government should be using the opportunity of the ECA review process to undertake a more comprehensive review of the UK transfer control regime. Other issues that we believe merit further examination include sustainable development and the use of open general licences (OGLs)

Sustainable development

22. Excessive or inappropriate arms purchases are a drain on social and economic resources that poor countries can ill afford. Weapons in the wrong hands have acute, immediate impacts on personal, economic, social and civil rights, which translate into longer term effects that destabilise development. In 2006, the FCO made sustainable development one of their key priorities in their White Paper Active Diplomacy for a Changing World: The UK's International Priorities. In July 2007, Prime Minister Gordon Brown joined with the UN Secretary General to call for a renewed international effort to achieve the Millennium Development Goals. The UK Government has acknowledged that as a major exporter of conventional weapons it has a particular responsibility to ensure that its arms exports do not undermine development.

23. Despite evidence from DfID last year detailing its role in the licensing procedure, UKWG remains concerned about the way sustainable development has been included in the ECA. The omission of sustainable development from the table of Relevant Consequences gives the issue a secondary status, evidenced by the fact that hardly any licences have been refused solely or in part on sustainable development grounds since the ECA entered into force. Despite the fact that these issues were raised in the UKWG submission to the recent consultation exercise undertaken as part of the ECA review, the Initial Response makes absolutely no mention of sustainable development. This further suggests that the issue is regarded as a secondary concern within the licensing regime.

24. Calculating the impact that a transfer of controlled goods has on sustainable development can be difficult, but this difficulty makes it all the more important that sustainable development receives full protection under the law. The current wording of the legislation allows a future administration to remove easily all references to the issue. Elevating sustainable development so that it is included in the Schedule as a Relevant Consequence would eliminate this possibility.

25. While the UKWG is of the opinion that sustainable development should be a Relevant Consequence, if reference continues to be limited to section 9 of the ECA, it is essential that the ability of the Secretary of State to remove this reference is restricted, and that the term "if any" is replaced with "so far as relevant". According to legal advice, this would impose a duty to consider sustainable development where relevant. This would give the Government considerable flexibility, allowing the option of not considering sustainable development in cases where it is clearly not relevant, (such as an uncontroversial low-monetary-value shipment of arms to, for example, Canada) but it prevents the Government from ignoring sustainable development where it is relevant.

26. Furthermore, in order for the legislation to accurately reflect the UK's commitments under international law, specific language should be inserted to reflect the commitment in Article 26 of the UN Charter that all governments "should promote the establishment and maintenance of international peace and security with the least diversion for armaments of the world's human and economic resources". A specific reference to this commitment would decrease the likelihood that UK weapons would be transferred to destinations where they would undermine sustainable development or indeed undermine the UK's political and economic support for the alleviation of poverty in the developing world.

27. The UKWG welcomes the CAEC's recommendation that the Government should consider including an assessment in its criterion 8 methodology to test whether the contract behind an application for an export licence is free from bribery and corruption. People living in poverty are disproportionately vulnerable to and disadvantaged by corruption. Corruption diverts public resources away from social sectors and the poor, increasing the cost and lowering the quality of public services, and often restricting access to such essential services as water, health and education. Corruption acts as a drag on the development and economic growth of a country, and perpetuates unequal distribution of power, wealth and resources. Corruption in one sector of the economy can also lead to an increase in corrupt practices across the board in the form of extortion, bribery and intimidation, many of which disproportionately affect poor people. While corruption impacts negatively on most segments of society, people living in poverty lack the economic, social and political power necessary to challenge corrupt practices and are more vulnerable to extortion, bribery, double-standards and intimidation. Incorporating a corruption methodology into criterion 8 would make it even more important to give sustainable development an equal status in the law to the other Relevant Consequences.

28. It should be noted, however, that reference to corruption within the "sustainable development criterion" will need to be very clearly worded to ensure that consideration of the risk of corrupt practices is not confined only to those transfers where sustainable development is an issue: the risk that an arms transfer will involve corrupt practices must be considered in all cases.

Use of open general licences (OGLs)[18]

29. The UKWG is concerned about both the coverage and, crucially, the operation of OGLs. Data provided by the Export Control Organisation indicates that OGL registrants constitute the largest and fastest-growing body of "users" of the UK's export control machinery, rising from 779 licence-holders in January 2003 to 3114 licence-holders by December 2007.[19] Yet almost no information is published regarding exports and trading activity taking place under OGLs. As detailed below, this may partly be because this information is not systematically collected by ECO or HMRC.

30. It is likely that much trade taking place under OGLs involves relatively non-sensitive equipment being exported to uncontroversial end-users in European and NATO countries, and the UKWG recognises that many licensable exports, often unconnected to military, security or police activity—from camera lenses to desktop computer parts—should not be unduly impeded. Nonetheless OGLs can in certain circumstances be used to export lethal military and security equipment to sensitive destinations. Open General Export Licences (OGELs) could be used to export, for example, military small arms and their components to Guinea, if imported from the Guinean government to be repaired or replaced;[20] or instruction manuals and blueprints for military equipment to inter alia Burkina Faso, Congo (Brazzaville) and Guinea (Conakry).[21]

31. The UKWG is not suggesting that such exports take place frequently under OGLs. But since OGLs authorise not only the export of innocuous components to "friendly countries", but also "hard" military and security equipment to sensitive destinations, they should not be regarded as blanket authorisations for export or trade, essentially exempting particular kinds of transactions from effective governmental scrutiny.

— OGLs should instead be treated as licences in the proper sense, requiring meaningful pre-registration screening of their users, and oversight of exports taking place under their authorisation. This is not currently the case.

Absence of control over OGL users

32. According to the ECO, "all registrations [for OGLs] that are correctly completed [on the ECO website] are accepted so there is no question of invalidity at the registration stage".[22] Indeed, in July 2007 the ECO stated that goods could be shipped even before an exporter's OGEL registration had been checked and acknowledged by ECO, effectively removing any prior scrutiny over users.[23] This renders such registration essentially meaningless as a way of preventing OGL use by unreliable or unscrupulous traders. According to figures provided to the Quadripartite Committee, 202 companies (around 8% of all registered OGEL users in 2006)[24], were found to have breached the terms of open licences during 2006.[25] Yet despite such problems, it seems that unsuitable users cannot be excluded from using OGLs post-registration.[26]

— Registrants for OGLs should need authorisation from ECO staff prior to use. Such authorisation should not be automatic: registrants should have to meet certain standards as part of the registration process, with issues such as prior export record considered. If found to have misused licences in the past, they should be required to apply for individual licences rather than use general licences. OGLs should also provide for registrants' removal, for example if they are found to be in breach of the terms of such licences or guilty of arms export offences.

Inadequate monitoring of exports under OGLs

33. In its consideration of OGELs during the 2006-07 session, the Quadripartite Committee concluded that it had "found no evidence that the open general licences were being abused or that they provided a conduit for the export or transhipment of goods into the wrong hands."[27] Given the lack of systematic oversight of exports taking place under OGLs, such lack of evidence or detections of illegal use is unsurprising. The architecture of ECO's and HMRC's data systems appears to mean that neither ECO nor HMRC is able to produce systematic data regarding exports under particular OGLs. When asked by UKWG researchers for details of shipments under nine OGELs, HMRC explained that "retrieving accurate information from CHIEF [the national Customs database into which export shipments are logged] on individual OGELs is not practically possible", since shipments are not categorised in the Customs database according to the specific OGEL used.[28] Thus in order to scrutinise shipments under a particular OGL to ascertain whether these shipments have complied with the terms of that licence, the original customs documentation which accompanied each shipment would have to be examined manually. This would be an enormous task, given that in December 2007 HMRC reported that it "hold[s] more than 8,000 Customs export declarations for the last 6 months alone, relating to OGELs".[29]

34. It is therefore difficult to see how HMRC or ECO can determine whether exports under OGLs comply with the terms of those licences, unless unauthorised exports are detected by an ECO compliance check, well after the export has taken place. Even this limited oversight has detected a steadily increasing number of breaches of OGLs since 2004: by 2006 over one in ten checks on exporters found OGELs being used incorrectly.[30]

— HMRC's CHIEF database should categorise shipments authorised by OGLs according to the particular licence used. Shipments authorised by OGLs and recorded on CHIEF should be systematically checked according to the terms of the licence used.

UK Government and cluster munitions

35. A new landmark international treaty to ban Cluster Bombs will be agreed in Dublin in May 2008. The UKWG welcomes the UK Government's support for the Oslo process, but remains concerned that it is part of a small grouping still pushing for certain exemptions which would seriously weaken the treaty. The Oslo process was initiated in February 2007 by a group of 46 governments frustrated and disillusioned with the failure of the UN Convention on Certain Conventional Weapons (CCW) process to deliver any meaningful progress on cluster bombs, despite several years of negotiations. The Wellington Declaration, which provides the draft treaty text to be negotiated and agreed at the Dublin conference, was signed by 80 governments on 22 February 2008.

36. The most contentious issues to be taken to the Dublin conference include possible exemptions to the ban for some types of cluster munitions, possible transition periods in which cluster munitions could still be used after being banned, and the use of cluster munitions in joint military operations by states that are not party to the future treaty. The responsibility of countries with regard to clearing up the cluster munitions they have used in the past is also at issue. The UK Government is part of a small group of states that support these limitations.

37. In particular, the UK Government maintains that two types of cluster munitions it holds in stock, and one type it has recently placed orders to procure, should be exempted from any international treaty prohibition on cluster munitions negotiated in Dublin.

— The munitions the UK currently holds in stock should not be exempted from an eventual cluster bomb treaty. The case has not yet been made as to why the UK's recently ordered munitions should be exempted.

38. The details of these munitions are as follows:

CRV7 rockets with M261 warheads containing M73 submunitions

39. In 2007 the Government sought to reclassify these as "not cluster munitions" even though they had been categorised as cluster munitions previously.[31] The Government argued for this reclassification, and still argues for an exemption from prohibition, on the basis that each warhead contains only nine submunitions.[32]

40. However, these rockets are fired from pods of 19 rockets, and four such pods are typically mounted onto an attack helicopter—providing a capacity for 684 submunitions.[33] The UK argues that, in practice, such a deployment is not done—this provides little reassurance as the basis for an exemption to an international treaty.

41. Even under controlled testing environments, the M73 has an unacceptably high failure rate of approximately 6%.[34] Evidence from numerous conflicts such as Afghanistan, Iraq, Kosovo and Lebanon clearly demonstrates that under actual battle conditions, cluster bomb failure rates are significantly higher.

42. The UK has neither made a detailed case for the specific military utility of these weapons nor explained why other unitary CRV7 rocket warheads might not be used to provide the same capability. The UK has never used these munitions in combat.

43. An exemption for a cluster munition with 10 or fewer submunitions would be a major treaty loophole. It would allow the development and continued use of weapons that have exactly the same problematic effects as have been associated with cluster munitions for decades. In a short-term effort to secure an exemption for one specific weapon, the UK seems prepared to create loopholes that will result in long-term shortcomings for an international treaty.

L20A1 artillery shells with M85 submunitions

44. The UK continues to claim that these submunitions should be exempted from prohibition because their "self-destruct" (SD) mechanism means they do not cause significant post-conflict contamination. However, M85 submunitions with SD were used by Israel in Lebanon in 2006 and have caused contamination and subsequent casualties. Analysis by the head of the UN mine action programme in southern Lebanon, by NGOs, by government defence research bodies and independent ordnance analysts has all concluded that the performance of M85 with SD in Lebanon demonstrates that the presence of SD mechanisms does not provide an adequate basis for civilian protection.[35]

Ballistic Sensor Fused Munitions

45. The UK has recently placed orders for Ballistic Sensor Fused Munitions. These weapons have not yet been used in combat and little data on them is publicly available. If the UK believes these weapons will not cause unacceptable civilian harm they should make a case to this effect within the Dublin negotiations.

— The UK Government should sign the treaty to be agreed in May 2008 to ban cluster bombs. The Government should commit to banning all existing stocks of cluster munitions, including its current stocks of M85 and CRV-7 rockets armed with M261 warheads. The UK should join the majority of governments within this process and not seek other limitations to the treaty that would only serve to weaken it and create loopholes for the future.

March 2008

5 For the purposes of this submission, the UK Working Group on Arms comprises Amnesty International UK, the Omega Research Foundation, Oxfam GB and Saferworld. Back

6 "2007 Review of export controls: Government's initial response to the public consultation" (Initial Response), para 7.5. Back

7 Ibid., para 1.2. Back

8 Ibid. Back

9 Ibid. Back

10 Ibid. Back

11 Ibid., para 1.10. Back

12 Ibid., para 1.7. Back

13 Note that the Export Control Organisation (ECO) in February 2008 circulated a letter to defence companies regarding the likely business costs and impact of two models that encompass additional equipment beyond SALW that could be covered by further extensions to extraterritorial trade controls. One model was all items on the Military List, the other was for a more restricted range of equipment, which it may be reasonable to assume reflects Government thinking in terms of a possible initial extension. This equipment included: mortars with a calibre greater than 75mm, non-man portable guns, rocket and missile launchers, aircraft-launched weapons (eg bombs, rockets) (as defined in ML2/4); ground vehicles (as defined in ML6) and vehicle-mounted weapons (as defined in ML2/4); body armour (as defined in ML13); police and paramilitary equipment (as defined in Human Rights Annex III/PL5001); training equipment (except where this is modified firearms used for training) (as defined in ML14); manufacturing equipment (as defined in ML18), and test and maintenance equipment for the above (as defined in ML11 & PL5017), and specially designed components therefor; and ammunition described in ML3 (and rockets in missiles in ML4) for any of the above and specially designed components therefore. Back

14 "Trade Controls Licences: General", ECO website, http://www.berr.gov.uk/europeandtrade/strategic-export-control/licensing-rating/licences/ogels/trade-controls/index.html. Back

15 The 2006 OITCL covered equipment traded to and from Angola, Belgium, Brazil, Cameroon, Canada, Cape Verde, Chile, Colombia, Denmark, Ecuador, Egypt, Finland, France, French Guyana, Germany, Greece, Guinea-Bissau, Guyana, Haiti, India, Italy, Ivory Coast, South Korea, Malaysia, Martinique, Mexico, Mozambique, Namibia, Netherlands, Nigeria, Norway, Paraguay, Peru, Philippines, Poland, Portugal, Puerto Rico, Russia, Senegal, South Africa, Spain, Surinam, Sweden, Trinidad and Tobago, Turkey, United States of America, Uruguay and Venezuela. It is unclear precisely when this licence was issued, as it was not included in the DTI's quarterly strategic exports reports, but only in its 2006 Annual Report. The Q1 2007 OITCL covered equipment traded to and from the above countries, plus Argentina and South Korea. Back