Scrutiny of Arms Export Controls (2009): UK Strategic Export Controls Annual Report 2007, Quarterly Reports for 2008, licensing policy and review of export control legislation - Defence Committee Contents


EXPLANATORY NOTE 4: CLARIFICATION OF THE DEFINITIONS SURROUNDING THE RECEIPT OF FEES OR COMMISSIONS

ATTACHMENT 4: ARTICLES 21(7) AND 22 (3) AND ARTICLE 3 (INTERPRETATION):

  The Further Response concluded that "there is not a case for removing the provision, and that there are risks associated with doing so. However, given that there does appear to be some uncertainty over exactly what constitutes "commission or other consideration", we will amend the wording of the legislation to clarify this".

Articles 21(7) below (in respect of Category B goods) and 22 (3) (in respect of Category C goods) are designed to achieve this by describing the relevant activities as "contract promotion activity" in Article 3 (Interpretation). Parts (a) and (b) of Articles 21(7) and 22 (3) set out the circumstances in which "contract promotion activity" is not controlled.

The exception no longer depends on whether the activity was carried out "in return for a fee, commission or other consideration", but whether it was carried out "for payment". We have made this change firstly, because the term "consideration" was not well understood, and secondly, because the previous formulation of legislation did not specifically cite the situation in which a person might be paid periodic fees or a retainer not related to any one act. In this new draft, "payment" is therefore defined very broadly in Article 3 ("a payment in money or money's worth or in kind whether referable to a particular act or made from time to time by way of retainer or otherwise"). If "payment", in this broad sense, has been received, then the control applies. The control will (as now) not apply to various activities where no "payment" changes hands, such as where a UK business which cannot supply the requested goods passes on details of potential suppliers to the person making the enquiry; or—in the context of transport—where a UK provider who is approached to move goods between two overseas countries simply redirects the enquirer to another overseas provider who, for logistical reasons, is better placed to pick up the business.

  The second test, set out under Articles 21(7)(b) and 22(3)(b), exempts contract promotion activity carried out "in the course of employment". This is a necessary balance to the broad definition of payment as explained above. Since the new definition includes payments made "from time to time", it would have arguably encompassed salaries paid to UK employees carrying out various inconsequential acts which ultimately contribute to a movement between two overseas countries (eg preparing invoices, loading vehicles, putting customers in touch with suppliers and so on) without this compensating text.

ATTACHMENT 4: EXCERPT OF 1ST DRAFT OF LEGISLATION ON TRADECONTROLS

PART 5

TRADE CONTROLS

Category B goods

  21—(1)  This article applies to—(a)persons carrying out activities in the United Kingdom; and

(b)United Kingdom persons.

  (2)  Subject to paragraphs (3), (4) and (7) and to articles [24] and [251*, no person to whom this article applies shall directly or indirectly—

(a)supply or deliver;

(b)agree to supply or deliver; or

(c)do any act calculated to promote the supply or delivery of any category B goods, where that person knows or has reason to believe that such action or actions will, or may, result in the removal of those goods from one third country to another third country.

  (3)  Nothing in this article shall be taken to prohibit the provision of—

(a)financing or financial services;

(b)insurance or reinsurance services; or

(c)general advertising or promotion services

by a person whose only involvement in the activities described in paragraph (2) is to provide or agree to provide such services.

  (4)  A person ("the transporter") whose only involvement in the activities described in paragraph (2) is to provide or agree to provide transportation services in relation to category B goods ("the relevant goods") only contravenes the prohibition in this article if paragraph (5) or (6) applies.

  (5)  This paragraph applies if the transporter arranges, otherwise than in the course of employment, the removal of the relevant goods from one third country to another third country.

  (6)  This paragraph applies if the transporter otherwise than—

(a)in the course of providing services to another person—

(ii)to whom this article applies; and

(iii)who has agreed to provide transportation services in relation to the relevant goods; or

(d)in the course of employment removes or agrees to remove the relevant goods from one third country to another third country.

  (7)  Nothing in this article shall be taken to prohibit any contract promotion activity that is carried out—

(a)otherwise than for payment; or

(b)in the course of employment.

  *Article 25 is not reproduced here, but deals with licensing

Category C goods

  22—(1)  Subject to paragraphs (2) and (3) and to articles [23, 24] and [25], no person shall directly or indirectly—(a)agree to supply or deliver; or

(b)do any act calculated to promote the supply or delivery of any category C goods, where that person knows or has reason to believe that such action or actions will, or may, result in the removal of those goods from one third country to another third country.

  (2)  Nothing in this article shall be taken to prohibit the provision of—

(a)transportation services;

(b)financing or financial services;

(c)insurance or reinsurance services; or

(d)general advertising or promotion services by a person whose only involvement in the activities described in paragraph (1) is to provide or agree to provide such services.

  (11)  Nothing in this article shall be taken to prohibit any contract promotion activity that is carried out—

(a)otherwise than for payment; or

(b)in the course of employment.

EXCERPT FROM 1ST DRAFT LEGISLATION—LISTING OF DEFINED TERMS IN THE INTERPRETATION SECTION

STATUTORY INSTRUMENTS

2009 No. 0000

CUSTOMS

The Export Control Order 2009

Made ................... 00th January 2009

Laid before Parliament 00th January 2009

Coming into force .................. 6th April 2009

  The Secretary of State is a Minister designated for the purposes of section 2(2) of the European Communities Act 1972[1] in relation to—(c)measures relating to trade in dual-use items, including the transmission of software or technology in intangible form;[2] and

(d)matters relating to trade in certain goods, including technical assistance, which could be used for capital punishment, torture or other cruel, inhuman or degrading treatment or punishment.[3]

  It appears to the Secretary of State that it is expedient for the references to Council Regulation (EC) No 1334/2000,[4] Council Regulation (EC) No 1236/2005[5] and Article 3 of Council Regulation (EEC) No 2913/92[6] to be construed as references to those instruments and that provision as amended from time to time.

  [To the extent that this Order regulates the communication of information in the ordinary course of scientific research, the Secretary of State, having considered the reasons for the relevant controls and the need to respect the freedom to carry on the relevant activities, has determined that such regulation is necessary.]

  The Secretary of State, in exercise of the powers conferred by section 2(2) of the European Communities Act 1972, by paragraph 1A of Schedule 2 to that Act[7] and by sections 1, 2, 3, 4, 5 and 7 of the Export Control Act 2002,[8] makes the following Order:

PART 6

INTRODUCTORY

Citation and commencement

  19.  This Order may be cited as the Export Control Order 2009 and shall come into force on 6th April 2009.

Interpretation

  20.—(1)  In this Order, the following expressions have the meanings given below, save where an expression is also defined in a Schedule where it has, for the purposes of that Schedule, that meaning—"acquire" means buy, hire, borrow or accept as a gift and cognate expressions shall be construed accordingly;

"aircraft" means a fixed wing, swivel wing, rotary wing, tilt rotor or tilt wing vehicle or helicopter*;

"category A goods" means goods specified in Part I of Schedule I that are outside the United Kingdom and the Isle of Man [or are in transit];

"category B goods" means goods specified in Part 2 of Schedule 1 that are outside the United Kingdom and the Isle of Man [or are in transit];

"category C goods" means—

(a)military goods other than goods specified in Schedule 1; and

(b)portable devices for the purpose of riot control or self-protection by the administration or dissemination of an incapacitating chemical substance

that are outside the United Kingdom and the Isle of Man [or are in transit];

"CEMA" means the Customs and Excise Management Act 1979[9]*;

"the Commissioners" means the Commissioners for Her Majesty's Revenue and Customs;

"the Community General Export Authorisation" means the authorisation constituted by Article 6(1) of and Annex II to the dual-use Regulation*;

"competent authority" [definition outstanding.]*;

"contract promotion activity" means any act calculated to promote the arrangement or negotiation of a contract for the acquisition, disposal or movement of goods or any agreement to do such an act;

"country" [includes territory];

"customs and excise Acts" has the same meaning as in section 1 of CEMA;

"the customs territory" means the customs territory described in Article 3 of Council Regulation (EEC) No 2913/92 as amended from time to time*;

"dispose of' means sell, let on hire, lend or give as a gift and cognate expressions shall be construed accordingly;

"dual-use" in relation to goods, software or technology, means usable for both civil and military purposes*;

"the dual-use Regulation" means Council Regulation (EC) No 1334/2000 as amended from time to time*;

"embargoed destination" means a country listed in Part I or 2 of Schedule 4;

"exportation" shall be construed as follows—

(c)unless the context otherwise requires, it only includes removal from the United Kingdom to a destination outside the United Kingdom and the Isle of Man;

(d)it includes shipment as stores;

(e)in relation to a vessel, vehicle, submersible vehicle or aircraft, it includes taking it out of the United Kingdom, notwithstanding that it is conveying goods or passengers and whether or not it is moving under its own power

and cognate expressions shall be construed accordingly*;

"financial services" includes financing;

"general advertising services" includes general promotion services;

"goods" means tangible goods[, both used and unused,] and, [except in the definitions of category A goods, category B goods and category C goods, includes otherwise uncontrolled goods on which software or technology is recorded.];

"goods subject to trade controls" means category A goods, category B goods and category C goods.

"importation" in relation to a vessel, vehicle, submersible vehicle or aircraft includes taking it out of the United Kingdom, notwithstanding that it is conveying goods or passengers and whether or not it is moving under its own power and cognate expressions shall be construed accordingly;

"insurance services" includes reinsurance services;

"licence" means a licence granted by the Secretary of State;

"microprogramme" means a sequence of elementary instructions, maintained in a special storage, the execution of which is initiated by the introduction of its reference instruction into an instruction register;

"military" in relation to goods, software and technology, means listed in Schedule 2;

"normal commercial journey" means a journey providing transport services in the ordinary course of business;

"payment" includes a payment in money or money's worth or in kind whether referable to a particular act or made from time to time by way of retainer or otherwise;

"prescribed sum" and "proper" have the same meanings as in CEMA;

"programme" means a sequence of instructions to carry out a process in, or convertible into, a form executable by an electronic computer;

"in the public domain" means available without restriction upon further dissemination (no account being taken of restrictions arising solely from copyright);

"registered user" means [];

"scheduled journey" means one of a series of journeys which are undertaken between the same two places and which together amount to a systematic service operated in such a manner that its benefits are available to members of the public from time to time seeking to take advantage of it;

"shipment" (and cognate expressions) and "stores" have the same meanings as in CEMA;

"software" means one or more programmes or microprogrammes fixed in any tangible medium of expression;

"surface effect vehicle" means any air cushion vehicle (whether side wall or skirted) and any vehicle using the wing-in-ground effect for positive lift;

"technical assistance" means any technical support related to repairs, development, manufacture, assembly, testing, use, maintenance or any other technical service;

"technology" means information (including but not limited to information comprised in software and documents such as blueprints, manuals, diagrams and designs) that is capable of use in connection with the development, production or use of any goods;

"a third country" means any country that is not the United Kingdom or the Isle of Man except that, for the purposes of Part 4 of this Order, goods that are goods in transit are considered to be located in a third country;

"the torture Regulation" means Council Regulation (EC) No 1236/2005 as amended from time to time*;

"transfer", in relation to any software or technology, means the transfer by electronic or non-electronic means (or any combination of electronic and non-electronic means) from a person or place within the United Kingdom, except in articles [1 and [Ito the extent that those articles make provision in respect of transfers other than from a person or place within the United Kingdom, [and cognate expressions shall be construed accordingly]*;

"transfer by electronic means", in relation to software or technology, means transmission by facsimile, telephone or other electronic media (except that oral transmission of technology by telephone is included only where the technology is contained in a document the relevant part of which is read out over the telephone, or is described over the telephone in such a way as to achieve substantially the same result as if it had been so read);

"transfer by non-electronic means", in relation to any software or technology, means disclosure of software or technology by any means (or combination of means), including oral communication, other than as the exportation of goods or the transfer by any electronic means; "in transit" [means imported into the United Kingdom for transit or transhipment].

"transit or transhipment" means transit through the United Kingdom or transhipment with a view to re-exportation of the goods in question or transhipment of those goods for use as stores;

"UK controlled" in relation to dual-use goods, software and technology, means listed in relation to dual-use goods, software and technology, means listed in Schedule 3;

"vehicle" includes a railway carriage;

"vessel" includes any ship, surface effect vehicle, vessel of small waterplane area or hydrofoil, and the hull or part of the hull of a vessel;

"WMD purposes" means use in connection with the development, production, handling, operation, maintenance, storage, detection, identification or dissemination of chemical, biological or nuclear weapons or other nuclear explosive devices, or the development, production, maintenance or storage of missiles capable of delivering such weapons.

  (2)  Any reference in this Order to time after an event is a reference to a period of that length of time beginning on the day of that event.















1   1972 c. 68; section 2(2) was amended by the Legislative and Regulatory Reform Act 2006 (c. SI), section 27(1). Back

2   S.I. 2000/1813. Back

3   SI. 2006/1461. Back

4   OJ No L 159, 30.6.2000, p1; relevant amending instruments are Council Regulation (EC) No 2432/2001 (OJ No L 338, 20.12.2001, p1) and Council Regulation (EC) No 1183/2007 (OJ No L 271, 22.10.2007, p1). Back

5   OJ No L 200, 30.7.2005, p 1. Back

6   OJ No L 159, 30.6.2000, p 1. Back

7   Paragraph IA of Schedule 2 was inserted by the Legislative and Regulatory Reform Act 2006, section 28. Back

8   2002 c. 28. Back

9   1979 c.2. Back


 
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