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Mr. Geoffrey Clifton-Brown (Cotswold) (Con): It is good to serve under your chairmanship, Sir Nicholas, and to follow the hon. Member for Montgomeryshire (Lembit Öpik), and it is nice to see the Minister in his place today.
This has been an interesting debate, and I sincerely congratulate the hon. Member for Kingswood (Roger Berry) on the way in which he chairs a quite difficult Committee. It is not easy to chair a joint Committee of four Committees, to secure a unanimous agreement and to come up with a constructive report within the constraints of the Official Secrets Act, which we have all heard about today. So, I welcome the opportunity to reply to this debate on behalf of the Opposition for the second time running. It is a pity that more right hon. and hon. Members are not present, considering its importance.
This country should have three arms exports controls objectives: first, that our export policy is concurrent with our global status as a trusted and reliable trading partner, but equally, as a nation that recognises its role in fostering and developing peace and upholding the highest standards of human rights; secondly, that the reporting and scrutiny of our arms exporters occurs without providing an unnecessary burden on the industry, which is a vital part of our economy; and thirdly, that our export policy considers the interests of our defence exporters.
In recognising the need for the comprehensive scrutiny system that we have in place, we must not underestimate the importance of our defence exporters to this country. Although it is right that we scrutinise, we must not ignore the skills of those in the industry or the excellent quality of the equipment that they produce. It is of huge benefit, not least to our own armed forces. Defence exports assist the UK in strengthening our relations with allies and in reducing the unit cost of equipment to our own armed forces. Given that our defence manufacturers produce some of the most respected military hardware anywhere in the world, and given the current need for such equipment within our overstretched armed forces, that point simply cannot be ignored. The capacity to produce the best kit for our troops is dependent on a world-leading and thriving defence export industry.
Figures for 2006-07 show 25,000 jobs dependent directly on the defence export industry, with a further 30,000 people indirectly employed in the supply chain, as sub-contractors or as suppliers, as part of a £5 billion industry. The industry is very important to this country, and it is therefore equally important that we strike the right balance with our regulatory regime. I have just returned from India, where I found that the country spends 2 per cent. of its GDP on defence, an increase of 34 per cent. on last year, and plans to spend $29 billion on major acquisitions over the next five years. BAE Systems is targeting that major industry, and it will be of considerable benefit to this country, notwithstanding the remarks made by my hon. Friend the Member for Buckingham (John Bercow) about Indias re-export of arms to Burma. Our regulatory regime should be well capable of dealing with that.
Roger Berry: Does the hon. Gentleman therefore conclude, as the Committee concludes, that the way to deal with that issue is to include in the licence agreement a re-export clause of the kind to which I referred?
I shall not rehearse what I said about the historic nature of the debate when I intervened on the hon. Gentleman. The Minister will have heard it, and I shall not quote from the report, which makes criticism of the issue, but I hope that in future the Government will produce a reply, so that the debate can include consideration of the reply and be more up to date.
There was some criticism of the statutory instrument that the right hon. Member for Kilmarnock and Loudoun (Des Browne) introduced on sting sticks, because only 14 days consultation took place. The Government must think carefully about how they respond to such matters and provide the Committee and others with adequate time to reply not only to their responses but to statutory instruments.
Mr. Clifton-Brown: I was not going to, but to make the point completely clear I shall quote from the report that the hon. Member for Kingswood produced and in which my right hon. Friend the Member for Tonbridge and Malling (Sir John Stanley) participated. It says:
In the past the Government produced the annual report about seven months after the end of the calendar year around the time (in July) that we are usually finalising our Report. This has meant that we have not been able to carry out any detailed scrutiny of the annual report until the following year. This year the Government indicated that it would produce the 2007 Annual Report on Strategic Export Controls in May 2008. In the event it was not able to produce the 2007 report by the time that we concluded our deliberations. The latest indication we have is that the 2007 Annual Report will be produced in July. This is no improvement on previous years.
The Defence Export Services Organisation has been moved from the Ministry of Defence to UK Trade & Investment within the Department for Business, Enterprise and Regulatory Reform, but todays debate has not mentioned how the licensing regime affects DESO, whether DESO is happy with the regime and what criticisms DESO has of it. In considering these regulatory matters, one needs to take particular account of the Government organisation that is responsible for our defence exports.
Two points that were raised in last years debate still feature in this report, and the Minister of State, Department for International Development, did not comment on them when he responded last year. I have already commented on the timings of the Select Committees reports and, on intervention, about the issue of defence attachés, but the report says that
all of the departments concerned with the scrutiny of export licences need to keep under review whether the cutbacks in defence attaché posts is having a detrimental effect on the UKs export controls.
Indeed, the then Secretary of State for Defence, the right hon. Member for Kilmarnock and Loudoun, said in evidence on 17 January 2008 that only about 5 per cent. of a defence attachés role was associated with any aspect of that work. But, as I stated last year, no one
knows when that 5 per cent. of time occurs, given that 100 per cent. of a defence attachés time is spent dealing with defence matters.
Sir John Stanley: I wholly agree with my hon. Friend about defence attachés, but I offer a further point of clarification to him. He will recall that, after intervening, he was rebuked by the hon. Member for Kingswood for advocating additional public expenditure, but does my hon. Friend not agree that that was a mistake on the hon. Gentlemans part, because the issue was about a transfer of expenditure from the Foreign Office to the Ministry of Defence, which, in public expenditure terms, was neutral? I am sure that what my hon. Friend requireda transfer backwould be equally public-expenditure neutral.
in 2004, 5 per cent. of OGELs were seen to be misused; in 2005, 8 per cent. were seen to be misused; and in 2006, 11 per cent. That is, just over one in 10, from compliance visits, are shown to have problems with their use.
Indeed, David Hayes, the chairman of the Export Group for Aerospace and Defence, felt that it was a consequence of ignorance about the controls and a lack of concern for the consequences of non-compliancean issue that the hon. Member for Montgomeryshire raised.
That feeds nicely into the issue of enforcement, which the hon. Gentleman also raised. It is surely one of the most important issues, because, without effective enforcement, the rest almost become meaningless.
50% of the complaints were about...bribery, even though that is only about 1% of the world trade.
Rightly or wrongly, a large number of people view the defence trade with suspicion, because of allegations of bribery or because of the equipment that is traded. A good way of redressing this balance in the eyes of the public is to offer sizeable penalties for breaking the rules, as hon. Members have said. Paragraph 51 of the report notes that David Hayes from EGAD said:
non-compliance with the UK system can make economic sense but non compliance with the US system never makes economic sense.
That quote was also used by the hon. Member for Montgomeryshire to prove that the US system is tougher than the UK system. Does the Minister agree that the potential damage to this business caused by breaching the rules would be a far greater deterrent than any excess legislation or red tape?
in a case where subsequently an exporter is convicted of corruption the Government revoke all his or her export licences.
set out the timetable for bringing a fully searchable and regularly updated database of all licensing decisions into operation and publish details of its functionality and operating arrangements,
Cluster munitions were mentioned by the Committee Chairman, I think. We Opposition Members support the agreement that was reached at Dublin and the treatys subsequent ratification at Oslo. Cluster munitions have caused far too many indiscriminate casualties over the years. We saw that, as has been mentioned, in Lebanon; the maiming and killing caused by cluster munitions was a disgrace. However, it is also essential that the operational capability of our armed forces and their safety in a battlefield situation are not compromised. Therefore, alternative solutions need to be found.
In an intervention, the Chairman raised the issue of re-exports, which is a serious matter for concern, particularly in view of the allegations relating to Indias re-exporting maritime aircraft to Burma, which we need to consider carefully. The Committee suggests at paragraph 40
that it should become a standard requirement of licensing that export contracts for goods on the Military List contain a clause preventing re-export to a destination subject to UN or EU embargo.
That seems to me to be not only eminently sensible but a vital requirement. If there is an EU or UN embargo, why on earth are we even contemplating that somebody should be able to re-export arms to such regimes?
preferred approach for some time has been to factor all these considerations into the initial licensing decision.
That is the Governments procedure at the moment, so perhaps the Minister will tell us whether that remains their preferred option or whether he would be prepared to put in a clause physically preventing re-export to those countries with sanctions on them. There remains the concern that items may not be sold on for maybe 10, 15 or even 20 years, until the first trading partner has finished with them. The threat of re-exporting is now far easier to assess, through predicting how a country will behave in 20 years time. Given our better knowledge these days, collected on the ground, surely it should be possible to assess such matters.
Extraterritorial and dual-use regulations, internal agreements and end use have been mentioned. The report also raises other hot issues in terms of arms exports in respect of extraterritoriality and dual-use regulations. These areas are obviously a matter of concern and, as with previous subjects, we should not overlook them. But it is imperative that we remember that the British defence industry already adheres to some of the highest trade standards in the world.
As a nation with a proud heritage and respect abroad, I feel that our high standards are well recognised abroad. Although we must not take our eyes off our own exporters, it is vital that we expend a significant amount of time continuing to pursue agreements with our partners in the EU and beyondI am sure that the Minister will say something about this in his summing upwithout which continued domestic regulations and restrictions will put British defence exporters at a disadvantage. That will happen if we have a higher regulatory regime
than is common for the rest of Europe. Furthermore, that will enable funds to go into the hands of nations without the principles that we adhere to, which will then have the funding to produce ever more abhorrent weapons, leaving our own armed forces, as a corollary, less well equipped to respond to potential threats. Surely we are in the businessI encourage the Minister to say this in his responseof trying to encourage others to live up to the highest standards that we set ourselves.
Although good work has obviously been done with the international arms trade treaty so far, there remains much to be done in ensuring a high-level consistent approach to arms trading across the globe. The arms trade is worldwide and there is a clear limit to the effectiveness of national controls. Perhaps the Minister will say something about the progress on the arms trade treaty.
Criterion 8, sustainable development, remains a key feature of this report and merits further consideration. Last year, as has already been mentioned by my right hon. Friend the Member for Tonbridge and Malling, Oxfam produced a report entitled Africas Missing Billions, at the heart of which was the fact that armed conflict costs Africa around $18 billion per year, seriously derailing development. Some 95 per cent. of the weapons and ammunition used comes from outside Africa. Interestingly enough, because of our arms control regime, British arms exports to Africa in 2007 totalled a mere £44 million. That is still a substantial figure, but small in relation to the whole trade.
There seems to be quite a flaw in scrutiny when an export that should be subject to assessment by the Department for International Development as part of Criterion 8 can be sidestepped, to use the words of the Committee, if the end user is a private company, seemingly regardless of the companys ties to the Government. Perhaps the Minister, with his DFID and DBERR hats on, will say something about that.
Once again, I congratulate the Committee Chairman on this excellent report. He has done well to get agreement across the four Committees, butthere is always a but, isnt there?it is a shame that so many of the issues discussed last year remain as part of this report. Given the importance of the subject of the debate, it should be up to date, highlighting again the importance of the defence industry to our country without ignoring the importance of scrutiny. Tied to this, there is concern that the report gives too much weight to the views of the public sector directly tied to the industry and non-governmental organisations, but contains little about the views of the defence exporters, which, I have to say to the Committee Chairman, is a weakness. Where are the views of defence exporters and the Defence Export Services Organisation? What do those bodies find are the problems with this licensing regime? It would be interesting to hear from them about those problems.
Roger Berry: Does the hon. Gentleman acknowledge that the report publishes the minutes of the evidence sessions and that every year we take evidence from the defence manufacturersand their views are there? I shall be grateful if he lets me know about any area in our recommendations where we have ignored the views of the defence manufacturers.
Mr. Clifton-Brown: I accept that the evidence is in there and published, but their evidence is given less weight, shall we say, in the conclusions than that of others. The Chairman looks somewhat puzzled. Inevitably, it is a matter of judgment as to how the reader sees the report. I came to my conclusion on reading the report, although I could be mistaken; I do not know. Nevertheless that is how it is.
The report is right to highlight hon. Members key areas of concern for debate, but where there is a shortage of case studiesmy right hon. Friend the Member for Tonbridge and Malling mentioned this in respect of the case of the EU consolidated criteriaone needs to be careful about what conclusions one comes to. My right hon. Friend came to the conclusion that, with the possible exception of arms exports to Israel, this country is broadly compliant with those criteria, because of the lack of evidence to the contrary. That should be a guiding star to us. Unless there is clear evidence to the contrary, one should assume that things are working. We must continue our drive to ensure higher global standards. The arms trade is global, and unilateral arrangements in this country will not necessarily halt that.
Sir John Stanley: For the record, I made it clear that, apart from Israel and China, I thought that across the board the Government should further examine component control in relation to EU criteria.
Mr. Clifton-Brown: Without being able to paraphrase the whole of my right hon. Friends speech, he is entirely right to raise components, which are an important part of the arms trade and should be regulated as such, in the same way as an entire fabricated article. One component might be the important one in making the entire fabricated article effective. I entirely agree with my right hon. Friend, and I look forward to hearing the Minister.
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