House of Commons - Defence Committee

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

Memorandum from the UK Working Group on Arms [16]

CONTENTS

Summary of recommendations

Introduction

UK ECA Review:

— Trade controls

— Anti-Vehicle Landmines

— Transportation

— Transit/transhipment

— Torture end-use control

— Military end-use control

— Post-export controls

— Licensed Production Overseas

— Subsidiaries

Other domestic issues:

— Open General Licences

— Components policy

— Licensing transparency

— Enforcement

— Imports

European Issues:

— Common Position

— Intra-community transfers

— Outreach

Arms Trade Treaty:

SUMMARY OF RECOMMENDATIONS

The Government should continue to explore ways of extending the range of Military List equipment to which extraterritorial brokering controls are applied.

Anti Vehicle Landmines should be classed as Category B goods at the earliest opportunity. The decision not to include them runs counter to the UK's existing commitments in this area; they have been clearly identified as categories of heightened international concern and the UK Government is at the forefront of efforts to reduce proliferation risks associated with these types of mines.

The Government should revisit the possibility of extending controls on trading in Category C goods to the arrangement or carrying out of transportation once it has had the opportunity to assess the impact of the new transportation controls on Category B goods

The controls on transit/transhipment should be redrafted to:

— State clearly that all subsequent and final destinations of the items in question are relevant in determining the need for a licence;

— Require stronger documentary evidence of the legality of the consignment in the original exporting country and of its ultimate legal end-use.

The destinations covered by the Open General Transhipment Licence need to be drawn more tightly and subject to ongoing review and assessment.

The Government should pursue a torture end-use control as a matter of urgency, through the EU if possible, but unilaterally if progress is blocked in the EU.

The Government should pursue an expansion of the EU Military End-Use Control to both complete items and components which the exporter knows are intended for use in listed destinations by the military, police or security forces, or has been informed by the Government that the goods are or may be so used, where there is a clear risk that the items or finished goods might be used for internal repression, breaches of human rights, or against UK forces or those of allies.

The Government should:

— introduce a system of post-export controls, including more specific contractual limitations on end-use and re-export, and provision for end-use monitoring;

— work with others to develop a forgery-proof internationally standardised end-user and delivery-verification certification process;

— provide details to the CAEC regarding the number of end-user checks carried out by overseas posts each year, the number of physical post-export checks undertaken, the reasons for them and their outcomes.

British companies that wish to license the production of weapons overseas should first have to apply to the UK Government for authorisation.

The UK Government should explore and establish ways of regulating exports from overseas subsidiaries of UK companies, for example on a UK parent company where it can be proved to hold de facto control over the subsidiary. At a minimum, these controls should apply to exports from subsidiary companies to embargoed destinations.

The Government should withdraw the Open General Trade Control Licence (small arms) and more strictly limit the range of destinations covered by open general licences in general.

The UKWG recommends that the CAEC:

— Examines all relevant export licences issued for components for Unmanned Aerial Vehicles (UAVs) to Israel to ascertain whether or not the Government has issued licences for UAV engines for use by the Israeli Defence Forces (IDF);

— Ascertains the status of end-use assurances contained within these licences, especially stipulations that components for UAVs are not to be used in aircraft operated by the IDF;

— Investigates what end-use monitoring the UK Government has undertaken to ensure that no UK engines are incorporated into any UAVs currently operated by the IDF;

— Identifies what alternative engines are being used in these UAVs by the IDF and whether these have been developed or enhanced with the assistance of UK technology and-or components.

UK national strategic export control reports should specify the type of end-user of equipment covered by each licence, and any excluded end-users (such as certain end-users in embargoed destinations), unless there is a specific, compelling reason for withholding such information.

The UK Government should introduce a system of civil penalties for export control violations.

The Government should also initiate a viability study into the creation of a single regulatory agency, drawing together the personnel, experience and authority of the Export Control Organisation (ECO) and the controlled-goods section of HMRC, to create a unified organisation for the compliance and enforcement of export controls.

The UKWG recommends that the CAEC revisit the question of the import of tens of thousands of assault rifles from Bosnia Herzegovina, Croatia and China, and ask the Government to fully account for these weapons, and to establish how many of these weapons have been exported, to which destinations and how many still remain within the UK. The CAEC should also investigate whether or not these weapons have formed part of either UK or US government-sponsored weapons supplies to forces in Iraq and Afghanistan.

The Government should consider all import licences for Military List goods against the consolidated criteria on a case-by-case basis and import licences for such goods should automatically be circulated to relevant export licensing officials within the ECO. Details of import licences should be included in the Government's annual and quarterly reports on strategic exports.

Clear procedures should be drawn up by the Government to ensure that all relevant government departments (the Home Office and local Police firearms units, Import Licensing, the ECO and Her Majesty's Revenue & Customs) are co-ordinating effectively in cases such as these. A central database of imported weaponry, particularly SALW, should be established to enable relevant government departments to trace and monitor all firearms movements into, within and from the UK.

EU Member States should as a matter of urgency ensure their national legislation is in compliance with the requirements of the Common Position.

EU Member States should commence as soon as possible a further review of the EU arms transfer control regime, focusing on:

— Improving convergence of export licensing decision-making and policies;

— Improving post-export controls; and

— Addressing challenges posed by the internationalisation of arms production.

The UK Government should insist that the eventual review of the EU Directive on the intra-community transfer of defence-related products should include an analysis of its impact on transfer controls, with particular attention paid to the consequences of the certification process on the unauthorised export of defence equipment.

The UK should work with its EU partners to develop a prioritised, well-resourced and comprehensive EU arms transfer control outreach strategy for 2010 and beyond.

The UK and its ATT allies should make an explicit public commitment to establish by 2011 an ATT founded on core principles of international human rights, humanitarian law and sustainable development and covering all aspects of international arms transfers, including import, export, leasing, gifts and aid, transit, transhipment, overseas production and arms brokering activities.

The UK should respond to the change in the US administration by increasing its engagement on the ATT with the US at the political level and through contacts among officials, and by encouraging the UK defence industry to engage their US counterparts.

The Wassenaar Arrangement military list should be utilised as the basis for the equipment covered by an ATT, as it is comprehensive, multilateral, enjoys the support of a majority of arms exporting states, and is an agreed international standard for the classification of conventional weapons.

INTRODUCTION

1. This year's submission from UKWG looks at developments at domestic, EU and international levels. Firstly, we deal with the ECA review process, considering in particular further changes that the UKWG feels the Government should make to strengthen domestic export controls. We also examine several domestic issues which are outside the scope of the ECA review process, namely:

— Use of open general licences (OGLs).

— Enforcement.

— Imports.

2. We then consider developments at the EU level: the adoption of the EU Common Position defining common rules governing the control of exports of military technology and equipment; the EU Directive on the intra-community transfers of defence-related products; and EU outreach efforts. Lastly, we turn to the Arms Trade Treaty, with an overview of progress in 2008 and priorities for 2009.

UK ECA REVIEW

3. The UKWG congratulates the Government on the way the ECA Review process has been managed. There has been a welcome willingness on the part of the Export Control Organisation (ECO) to engage in a meaningful and sustained consultation with stakeholders (most notably to our knowledge with ourselves and the Export Group for Aerospace & Defence (EGAD)), which is perhaps best demonstrated by the fact that a number of the changes to legislation have come about as a direct consequence of the discussions held among Government, industry and NGOs. Nonetheless, the UKWG believes there are a number of further changes that the Government could and should be implementing.

TRADE CONTROLS

4. The UKWG welcomes the shift from the former two-tier system of trade controls to a more sophisticated three-tier system, a change first proposed following discussions between the UKWG and EGAD.

5. The new system categorises military list equipment as follows:

— Category A—where the goods or destination concerned are such that a transfer would never be approved apart from in exceptional circumstances, and to which full extraterritorial controls are applied on all trading and trading-related activities

— Category B—where the goods may be legitimately traded but are of a particularly sensitive nature, and to which extraterritorial controls are applied but over a narrower range of trading-related activities.

— Category C—all other military lists goods, to which extraterritorial trading controls are not applied.

6. Within this framework, we regard it appropriate that so far the following goods are included in category B:

— Small arms and light weapons (SALW) within ML1 and ML2, and accessories and ammunition therefor;

— Light weapons within ML4 and ammunition therefor;

— Hand grenades;

— MANPADS, missiles for them, associated equipment and their specially designed components;

— Long-range missiles; and

— Components for all those goods listed above.

7. The UKWG would like to see the range of goods included in category B extended further, and is in ongoing discussions with EGAD in an effort to find a mutually agreeable formula by which this might be achieved. Should agreement be reached, we will forward to the CAEC a relevant supplementary memorandum.

8. The Government should continue to explore ways of extending the range of Military List equipment to which extraterritorial brokering controls are applied.

ANTI-VEHICLE LANDMINES

9. The UKWG is convinced, however, that the Government should as a matter of urgency extend the range of goods included in category B to include Anti-Vehicle Landmines (AVMs).

10. The Joint Declaration on AVMs following the 3rd Review Conference of the Convention on Certain Conventional Weapons (CCW) in November 2006, which the UK has signed, includes specific commitments to preventing the transfer of AVMs to certain end-users.[17] While we recognise that the Joint Declaration was issued following a failure to adopt by consensus a new legally-binding protocol on AVMs, the Foreign & Commonwealth Office (FCO) currently lists the November 2006 Declaration on AVMs as an export control "policy restriction" on its website.[18]

11. The Government apparently regards a 15-year transition period as necessary to implement some of the Declaration's commitments regarding the use of AVMs. We see no compelling argument, however, why the commitments relating to their transfer should not be immediately implemented.

12. We also find it hard to accept the argument that "Category B is reserved for goods that have been identified through international consensus as being of heightened concern", and that because "anti-vehicle landmines have not been identified as such at this time", they are not to be included in Category B.[19] For example, the UK has rightly committed to prohibiting their use and transfer of cluster munitions despite some notable governments remaining opposed to their prohibition and they have accordingly been placed in Category A.

13. Placing AVMs in Category B would assist efforts to meet the commitments contained in the 2006 Declaration. Meeting such commitments for a Category C item would be impossible, as Category C goods are subject to a range of more liberal trade control measures, including inclusion in the Category C Open General Trade Control Licence (OGTCL). The Category C OGTCL makes it perfectly lawful for a UK trader to arrange a shipment of AVMs from, for example, Cyprus (a non-signatory to the 2006 Declaration) to a non-state consignee in Chad (established by the UN Panel of Experts on Sudan as a diversion point for arms to parties fighting in Darfur),[20] without any prior or case-by-case Government scrutiny.

14. In addition to the UK's explicit commitments under the 2006 Declaration, consideration should be given to the compelling humanitarian and security arguments for stricter controls on the brokering and transport of AVMs to which we alluded above.

These include:

— The ease with which they can be transported.

15. These concerns are directly comparable to those relating to SALW, and we see no reason why AVMs should be excepted.

16. AVMs should be included within Category B at the earliest opportunity. The decision not to include them runs counter to the UK's existing commitments in this area; they have been clearly identified as categories of heightened international concern and the UK Government is at the forefront of efforts to reduce proliferation risks associated with these types of mines.

TRANSPORTATION

17. The provision of transport of Category B goods by persons carrying out their activities in the UK, or by UK persons wherever located will now be subject to control. In effect, this means that for control purposes, arranging or carrying out the transportation of Category A or B goods will be regarded in the same light as brokering them. This is something for which the UKWG has long argued, and which we duly welcome.

18. In discussions with Government, a potential problem with the new controls was identified: distinguishing between those with meaningful managerial responsibility and those engaged in lower-level routine administrative or logistical tasks. It was agreed that while the controls should apply to management activities, it would seem unreasonable to apply them to, for example, a forklift driver at an overseas airport. The Government suggested using open licences as a way around this problem. The UKWG accepts that this could prove an acceptable solution; however our general existing concerns over the eligibility, implementation, enforcement of open licences, as well as the ease with which they can be changed in future, are valid in this context (for more on this, see below). The Government has chosen not to extend controls on trading in Category C goods to the arrangement or carrying out of transportation.

19. The Government should revisit the possibility of extending the new transportation controls to Category C items once it has the opportunity to assess the impact of the new transportation controls.

TRANSIT-TRANSHIPMENT

20. The Government has gone some way to improving the existing controls on transit-transhipment.

21. Under the new system, the more sensitive the goods and-or the more sensitive the destination, the more likely it is that the transit will require a licence. For example, all Category A goods transiting the UK require a licence; all Category B goods to a list of 49 countries require a licence.

22. For other less-sensitive cases, an Open General Transhipment Licence (OGTL) has been introduced which provides for multiple, unlimited transits without prior or case-by-case Government scrutiny on the basis once again of the type of equipment and on condition that the destination country is not one of 50 states named in a schedule to the licence. For those transits not eligible for the OGTL, a trader may apply for an individual transhipment licence.

23. While this at first glance appears complicated, with effective guidance from the ECO and Her Majesty's Revenue & Customs (HMRC), and if transit actors are willing to engage properly with the system, it should be relatively easy to determine whether a licence is required and, if so, which type.

24. However, the UKWG believes a number of potential problems remain with the regime.

25. These include the fact that the principals involved in a transit-transhipment are likely to be based outside the UK and thus are more likely to lack detailed knowledge of the UK system. There is also a plethora of transit systems in use in different countries, frequent difficulty in finding out how these different systems work, frequent confusion over which party to a shipment is responsible for ensuring compliance with transit regulations, and a widespread lack of enforcement of transit rules. All these factors encourage non-compliance with the transit controls.

26. Beyond the risk that the relevant actors will not engage with the system, the UKWG is concerned that certain elements of the transit-transhipment controls need to be rethought.

27. The list of destinations eligible for use of the OGTL is too broad, and there is no indication of how often or on what basis it will be subject to review.[23]

28. We are concerned that the conditions which avoid the need to apply for a transhipment licence completely are too permissive. No documentation is required to prove the legality of the transfer in the country of original export, nor need any documentary proof of end-use be provided.

29. Finally, neither the Control Order nor the OGTL make it entirely clear whether "exportation of goods" refers to the movement of goods only to their next destination or whether this includes their ultimate destination. The former meaning could allow goods to transit to an intermediate destination without a transit-transhipment licence, yet still be destined for an embargoed destination. It should thus be stated explicitly that "export" in this context refers to the final and all post-UK intermediate destinations of the goods in question.

30. The controls on transit-transhipment should be redrafted to:

— State clearly that all subsequent and final destinations of the items in question are relevant in determining the need for a licence.

— Require stronger documentary evidence of the legality of the consignment in the original exporting country and of its ultimate legal end-use.

31. The destinations covered by the Open General Transhipment Licence need to be drawn more tightly and subject to ongoing review and assessment.

TORTURE END-USE CONTROL

32. The UKWG applauds the UK Government's work to develop support for an EU-level end-use control on equipment suspected to be destined for use in torture and ill-treatment; and also its swift addition of "sting sticks" to the Category A goods list. We strongly support this flexibility in response to the emergence of new technologies and items of concern, and the pursuit of a workable catch-all. We also believe that a workable torture end-use control might present a valuable preliminary model for the kind of military-security-police end-use control which the UKWG has advocated in previous submissions to the CAEC.

33. The UKWG hopes that progress is made on the torture end-use control within the EU during 2009. If, however, such a catch-all is rejected by EU partners, it should still be introduced unilaterally at a UK level, and we welcome the Government's statement that it will consider doing so unilaterally.[24]

34. The Government should pursue a torture end-use control as a matter of urgency, through the EU if possible, but unilaterally if progress is blocked in the EU.

MILITARY END-USE CONTROL

35. The UKWG welcomes the Government's stated intention to seek an expansion of the EU Military End-Use Control beyond its current coverage of non-listed goods intended for the use in or production of listed goods to be supplied to certain destinations.

36. The Government has stated that this would allow governments to require licences for non-controlled goods "which the exporter knows are intended for use in listed destinations by the military, police or security forces, or has been informed by the Government that the goods are or may be so used, where there is a clear risk that the goods might be used for internal repression, breaches of human rights, or against UK forces or those of allies".[25]

37. These discussions are highly important to the conceptual framing of export controls in the future, placing increasing focus on the use of equipment rather than purely on its technical specifications. We are therefore disappointed that such discussions have not yet been initiated by the Government, despite announcing in February 2007 its intention to develop EU policy in this area.

38. We also welcome the fact that this end-use control is envisaged to extend beyond embargoed destinations. However, at present the Government has stated that it intends to seek this expansion to control non-listed "complete equipment".[26] We are not convinced that such a measure would prevent some of the transfers detailed below, involving the export of significant components or unfinished vehicle kits.

39. While a list-based system is an important cornerstone of most transfer control regimes, the UKWG believes that the ultimate purpose of transfer controls must be to prevent certain types of activity or consequences, rather than simply to control particular technologies.

40. End-use catch-all controls not attached to a specific list can help avoid loopholes whereby items not included on control lists are beyond regulatory reach in cases where they are to be supplied to clearly undesirable end-users or end-uses

41. The UKWG have provided DBERR and the CAEC with examples in recent years of uncontrolled UK-made parts and components for military and security equipment—and in some cases complete finished goods—being used in regions of instability and by human rights abusers.

42. Two further cases emerged during 2008 which once again illustrate the vital importance of a workable military-security-police end-use catch-all control in:

preventing the transfer of some non-listed UK-origin equipment to military end-users in embargoed destinations; and

controlling the transfer of non-listed components ultimately posing grave threats to both civilians and UK forces, including those in regions of current conflict such as Iraq and Afghanistan.

43. Land Rover vehicles used by Azeri military

Members of the UKWG have in the past reported in detail on exports of Land Rover "Defender" vehicles, or "Defender" components or vehicle kits, which have been supplied to parties to conflicts in embargoed countries (such as Sudan in 2006-7);[27] or to overseas production partners in Turkey, where they have been converted into military vehicles and subsequently supplied to forces engaged in grave human rights abuses (as in Uzbekistan in 2005).[28] The current "catch all" clause within the EC Dual-Use Regulation is severely limited in its ability to regulate transfers either of complete non-listed items to embargoed destinations; or non-listed components or kits destined for sensitive but non-embargoed destinations, or re-exported from non-embargoed destinations.[29]

44. This pattern appears to have continued. On 23 June 2008, a military parade in Azerbaijan revealed that the Azeri army had a number of military Land Rover "Defender" vehicles.[30] Since 1992 Azerbaijan has been subject to an OSCE arms embargo due to fighting with Armenia in the Nagorno-Karabakh region.[31] The UK Government states that it continues to adhere to the OSCE embargo.[32]

45. The UK has reported issuing only one export licence to Azerbaijan since 1997 which might cover such military utility vehicles, "for humanitarian end-use … de-mining equipment" in 2003. As in the cases above, the vehicles or vehicle kits may have been exported from the UK and assembled in another country for onward export, or may have arrived via another end-user.[33] In any event the photographs clearly demonstrate that military utility vehicles or vehicle chassis of UK origin are being used by military forces in another embargoed destination; and that a number of routes exist through which such exports can lawfully have taken place.

46. UK traders allegedly involved in transfer of electronic components for Improvised Explosive Devices (IEDs) in Iraq

IEDs constitute a major threat to civilians in armed conflicts in Iraq, Afghanistan, Colombia,[34] Sri Lanka and elsewhere. IEDs are often positioned on roads and in areas used by civilians, and sometimes positioned to deliberately target civilians.[35] They also constitute a major threat to UK forces operating in Iraq and Afghanistan.

47. In September 2008, eight companies and eight men, including two British nationals, were indicted in a Florida court for allegedly conspiring to export goods from the US in violation of the US's Economic Administration Regulations (EAR).[36] The defendants allegedly conspired to supply to Iran, via the UK, Malaysia and Dubai, a range of instruments and electronic components. Some of these goods were of the kind used in the construction of IEDs: the indictment was reportedly the result of an investigation launched after the same electronic micro-controller[37] as those allegedly exported by some of the defendants was found in IEDs recovered in Iraq.[38]

48. In contrast to end-use-based elements of US law, UK law would not prevent the export of inclinometers or many other of these components to Iraq, Iran or elsewhere, unless it was known or suspected that they were:

— destined for weapons of mass destruction, or

— destined for the production of a standard military item listed on the UK's military list and destined for an embargoed destination.

49. Since IEDs are improvised, non-standard weapons, they may not be covered by the UK military list, which only covers devices associated with IEDs (for handling, operating, detonating or jamming them) which are "specially designed for military use".[39] Exporting unlisted components for improvised IEDs, however sophisticated and however deadly their consequences, may therefore not be controlled, even with intelligence that the components were destined for the production of IEDs.

50. The Government should pursue an expansion of the EU Military End-Use Control to both complete items and components which the exporter knows are intended for use in listed destinations by the military, police or security forces, or has been informed by the Government that the goods are or may be so used, where there is a clear risk that the items or finished goods might be used for internal repression, breaches of human rights, or against UK forces or those of allies.

POST-EXPORT CONTROLS

51. The UKWG remains in profound disagreement with the UK Government's assertion that "the introduction of a process that allows for the issue of licences based on future end use monitoring militates against the effective application of the criteria at the licensing stage."[40]

52. There is always some risk that exported equipment or technology will be misused or diverted, even when it stays in UK hands.[41] Equal or greater concerns exist for equipment exported to other end-users. The March 2008 submission from Amnesty International, the Omega Research Foundation and Saferworld highlighted the case of re-exports from India to Myanmar of military equipment originally supplied by the UK.[42] Other instances have included diversions of UK-exported arms which directly threaten UK forces: for example, in 2006 credible reports emerged that UK-supplied Beretta 92S semi-automatic pistols, originally supplied to the Iraqi police, had ended up in the hands of supporters of Abu Musab al-Zarqawi, then al-Qaeda's leader in Iraq.[43]

53. The UK Government has repeatedly countered calls for post-export checks and remains confident that its system of pre-export risk assessments of the likelihood of diversion is adequate. The UKWG reiterates its belief that the great weight of evidence demonstrates the inadequacy of relying on pre-export risk assessments alone. For example, a DTI spokesman, commenting on the Beretta case, stated that the export licence was granted only after considering "the risk that the equipment will be diverted within the buyer country [Iraq]". This risk assessment was plainly flawed.

54. The importance of post-export checks is increased by the Government's resistance to requiring explicit re-transfer clauses in end-user undertakings: a position which puts it at odds with many other major arms exporters, including the US.

55. We are disappointed that since the committee's last inquiry, no progress has been made on the introduction of effective post-export controls. This must now be an urgent priority for the Government.

56. The Government should:

— Introduce a system of post-export controls, including more specific contractual limitations on end-use and re-export, and provision for end-use monitoring;

— Work with others to develop a forgery-proof internationally standardised end-user and delivery-verification certification process; and

— Provide details to the CAEC regarding the number of end-user checks carried out by overseas posts each year, the number of physical post-export checks undertaken, the reasons for them and their outcomes.

LICENSED PRODUCTION OVERSEAS (LPO)

57. The UKWG is disappointed with the Government's statement in its July response to the ECA Review that there is not a convincing case for enhancing current controls on the export of controlled goods in the context of LPO.

58. In several previous submissions, the UKWG has provided evidence showing that overseas licensed production facilities of UK-origin equipment have exported items to undesirable end-users. These examples include the case of Land Rovers produced under licence in Turkey reaching Uzbekistan, where they were used by Uzbek troops in the Andijan massacre in May 2005.

59. The current regulations for licensing intangible transfers and physical exports (including many types of production equipment) do not address the most critical aspects of the licensed production issue: how to apply controls on the equipment itself that is produced under licence. While controlling licensed production is clearly more difficult than controlling direct exports, if the Government feels it is right to exert full control over direct exports of strategic goods from the UK then it is equally important that controls are also applied to LPO. This is because the consequences of a lack of regulation of an overseas production facility producing and exporting military equipment for many years are potentially much more severe than in relation to one-off exports. British companies that wish to license the production of weapons overseas should first have to apply to the UK Government for authorisation. Any such authorisation should be dependent on the overseas company in question providing a legally-binding undertaking limiting the number of weapons to be produced and their ultimate destination.

60. Other countries have successfully placed controls on LPO agreements without damaging the competitive edge of their national defence industries. Most notably, the US imposes and enforces controls on LPO, while Sweden and Germany also control licensed production agreements. Russia, too, has begun to introduce stringent post-production controls on goods produced under licence.

61. British companies that wish to license the production of weapons overseas should first have to apply to the UK Government for authorisation.

SUBSIDIARIES

62. The issue of foreign subsidiary companies presents a challenge for the UK export control system, not least because subsidiaries are separate legal entities from their UK parents and therefore are regulated under the jurisdiction of the state in which they are located. In the case of overseas-based, UK-owned subsidiaries, it appears that UK controls do not apply at all—even to embargoed destinations. This is despite the fact that they may be controlled as well as owned by a UK-based company.

Elsewhere, unless it was known or suspected that they were:

63. The UK Government should explore and establish ways of regulating exports from subsidiary companies. While clearly a complex legal area, the UK should be able to apply UK regulations on a UK parent company where it can be proved to hold de facto control over the subsidiary. We repeat our previous recommendations to the CAEC that, at a minimum, these controls should apply to exports from subsidiary companies to embargoed destinations.

OTHER DOMESTIC ISSUES

Open general export licences (OGELs)

64. Open general export licences (OGELs) allow for repeated, unlimited transfers of controlled items to (usually) unspecified recipients within a list of national jurisdictions. Open general trade and transhipment licences (OGTCLs and OGTLs) work similarly, though including an additional list of acceptable "source" countries from which goods can be transferred. Use of open general licences is open to all, subject only to an online registration process which the Government has stated "does not currently involve a pre-licensing vetting procedure".[47] Transfers under these licences do not involve prior or case-by-case Government scrutiny. In the hypothetical example cited above in the section on AVMs, it was noted that a UK person may broker repeated deliveries of Category C goods under an Open General Trade Control Licence (OGTCL) from Cyprus to a non-state consignee in Chad. Under the OGTCL (small arms) a trader or transporter could still move SALW from, for example, Cyprus to Israel or Haiti: both destinations to which we assume SITCLs for SALW would be most unlikely to be granted.

65. The Government has taken welcome steps to tighten the use of OGLs, for example by asserting the power to prohibit named individuals or companies from using them and by making it easier for overseas entities to meet their obligations by applying for UK licences. Moreover the UKWG accepts that careful use of OGLs can allow regulatory authorities to focus their attention on more sensitive transfers. However, the UKWG is concerned that the destinations covered by OGLs should be more strictly limited. It is also unclear how frequently and on what basis the OGL country lists will be reviewed; current indications (based on the dates of entry into force of extant OGLs) are that reviews are infrequent. Furthermore, given that the Government has already acknowledged that transfers of SALW are especially sensitive, the UKWG recommends that the OGTCL (small arms) should be withdrawn, and that all trading of SALW should require individual licensing.

66. The Government should withdraw the OGTCL (small arms) and more strictly limit the range of destinations covered by OGLs in general.

Components policy

67. In January 2009, evidence was published suggesting that Unmanned Aerial Vehicles (UAVs) operated by the Israeli Defence Forces and manufactured by Israeli company Elbit Systems, may contain engines manufactured in the UK.[48] This included a statement by an Israeli Air Force member referring to the performance of these UK engines in operations undertaken in 2006.

68. UAV Engines (UEL), based in Lichfield near Birmingham, has stated that it manufactures the engines for Hermes 450 UAVs produced by its parent company, Elbit Systems of Israel. Specifications displayed by Elbit Systems beside a Hermes 450 aircraft at a 2006 defence exhibition, photographs of which have been obtained by Amnesty International, also state that the Hermes 450 is powered by a "UEL AR-80-1010" engine manufactured by UEL. Respected defence industry media, such as Jane's Information Group, have also stated that Hermes 450 UAVs are powered by engines manufactured by UEL.

69. The Israeli Defence Forces (IDF) have used UAVs to targeted civilian homes, hospitals and shops, and have documented significant civilian casualties from such strikes.[49] The UN Relief and Works Agency in the Gaza Strip has reported the use of drones by Israeli forces in the recent Gaza conflict.[50] Hermes 450s were reportedly deployed for surveillance and targeting missions in Gaza prior to 2006, and according to Elbit Systems were central to IDF operations in Gaza and Lebanon during 2006.[51] Shortly after the 2006 conflict, defence media quoted Israeli Air Force sources discussing the performance of the Israeli Air Force Hermes 450's "50hp (40kW) UEL engine".[52]

70. A spokesperson for Elbit Systems has denied these claims, stating that while the UK company does provide engines for Hermes 450s that are destined for export, the UK Company does not provide the engines for any of the drones used by the Israeli armed forces. The Foreign Secretary, in a Statement issued to the House of Commons on 12 January 2009, said there is no truth in the suggestion that UK arms are being used by the IDF.[53] At a subsequent CAEC evidence session of 21 January 2009, BERR added further clarification by stating that: "Our licensing database shows that we have only issued licences for those particular engines for incorporation in Israel and then onward export to a third destination. If the engines had stayed in Israel, then that would be a contravention of the licence condition and that would be an offence. Whilst we cannot categorically confirm that we physically checked that the engines have been incorporated [emphasis added], we have only licensed them for incorporation in Israel and onward export to another destination.[54]

71. However, the UKWG can find no other publicly available source to suggest that alternative engines are fitted into Hermes 450 UAVs operated by the IDF. Respected defence journals, company information and statements issued by Israeli defence personnel all point to use of engines supplied by UEL in the Hermes 450. In light of these concerns, the UKWG are asking the CAEC to investigate the matter further.

72. The UKWG recommends that the CAEC:

— Examines all relevant export licences since issued for components for UAVs to Israel since 1998 to ascertain whether or not the Government has issued licences for UAV engines for use by the IDF;

— Ascertains the status of end-use assurances contained within these licences, especially stipulations that components for UAVs are not to be used in aircraft operated by the IDF;

— Investigates what end-use monitoring the UK Government has undertaken to ensure that no UK engines are incorporated into any UAVs currently operated by the IDF; and

— Identifies what alternative engines are being used in these UAVs by the IDF and whether these have been developed or enhanced with the assistance of UK technology and-or components.

TRANSPARENCY

73. The UKWG acknowledges that the amount and format of information about export and trade control licences included in the Quarterly and Annual reports has developed substantially in recent years. We also welcome the ECO's ongoing initiative to make licence information available through a searchable electronic database.

74. However, the UKWG remains concerned that information is seldom given regarding the approved end-user and end-use of licensed goods. This makes it difficult for public or parliament to assess whether the Consolidated Criteria are being effectively and consistently applied; it may also have the effect of exposing the Government to criticism about export licences issued for sensitive destinations where goods are in fact destined for innocuous end-users such as humanitarian agencies, UK Embassy personnel, or peacekeeping forces. The Government does on an occasional ad hoc basis provide information on end users, especially in cases of supply to embargoed destinations, however this should be extended to other destinations as a matter of course. Indeed, just as the Government publishes data on the number of SALW authorised for transfer under standard individual licences unless expressly asked not to by the exporter, so too should it apply the same rules to the provision of information on end-use and end-users.

75. The problem is illustrated by the example given above of export licences granted for "UAV components" to Israel, both as standard and incorporation (re-export) SIELs. It is impossible to prove or dispel these concerns without data on whether the stated end-user of any of those licences was a military end-user in Israel.

76. Similarly, the CAEC enquired during 2007-8 about an Open Individual Trade Control Licence (OITCL) issued in 2006 for trade in components for equipment, ranging from submarines to heavy machine guns, between a large number of destinations which included the Ivory Coast (under UN and EU embargo since 2004). The Government stated only that "the licence was granted to the UK office of an overseas government, and the end-user is the navy of that government", and that further details could not be given except in a Restricted briefing to the Committee, due to the information being commercially confidential.

77. Without further assurances that equipment moved under this licence would not be transferred to end-users embargoed by Common Position 2004/852/CFSP or UN Security Council Resolution 1472 (2004), we cannot be certain that the licence does not undermine these EU or UN embargoes. The UKWG also regards it as inappropriate that open licences—under which the quantities of equipment which can be moved are generally unlimited, and whose use is not systematically monitored outside of compliance visits—should include destinations covered by EU or UN embargoes, particularly when such licences cover SALW. We are also uncertain why information about equipment movements organised by the navy of an overseas government would be commercially confidential, rather than confidential on national security grounds.

78. The UKWG also notes that other European governments, such as Denmark, already list the broad nature of the end-user of export licences (government or industry) in their annual licensing reports.[55]

79. UK national strategic export control reports should specify the type of end-user of equipment covered by each licence, and any excluded end-users (such as certain end-users in embargoed destinations), unless there is a specific, compelling reason for withholding such information.

ENFORCEMENT

80. We are pleased that the Government has recently amended the automatic eligibility to use OGELs, so that their use by named entities can now be either removed or suspended, especially where serious breaches in export controls or non-compliance with specific licences have been identified.[56]

81. As in previous years, the UKWG is concerned that insufficient resources are being allocated to implementing transfer controls, thus undermining the proper enforcement of these controls. Concerns remain about an apparent lack of action to enforce controls even when credible evidence comes to light that companies or individuals are in breach.

82. We urge the CAEC to ascertain the status of enforcement activities undertaken by HMRC in light of these concerns. There appears to have been no further action on several prospective prosecutions, described to the CAEC in previous evidence sessions. We recommend in particular that the Committee requests an update from HRMC (in confidence if necessary) regarding the status of the prospective "WMD trafficking and brokering" case, described to the Committee by HMRC's Head of the Publications & Restrictions Policy Group in 2005. If the case has not been prosecuted, it may be that valuable lessons can be drawn from it regarding obstacles to prosecution in the ECA.[57]

83 . To our knowledge, there have been ten reported prosecutions under the ECA since 2000. Virtually all of these have been for relatively minor and, on occasion, procedural offences. They have been subject to relatively small penalties, with only two custodial sentences awarded: to Mr. John Knight, for the unlicensed export of MPT9 sub-machine guns between Iran and Kuwait; and to Mr. Mehrdad Salashoor, for the supply of gyro-compasses to Iran.[58]

84. The level of enforcement of UK export controls and the reliance on criminal prosecutions remains in stark contrast to enforcement in the USA, where strong and genuinely punitive criminal and civil penalties are used. For example, in January 2009, the US Government fined the Qioptiq group US $15million for more than 160 alleged breaches the US Arms Export Control Act and International Traffic in Arms Regulations (ITAR). The companies were formally part of Thales High Technology Optic Group when these offences took place.

85. Thales Optical Coatings Ltd UK (now Qioptiq in Wales) was also cited for allowing various subcontracting companies based in Belgium, Germany, Netherlands, Singapore, Switzerland and the UK to access ITAR-controlled data without the necessary licences. The US authorities also criticised the UK company for having inadequate compliance, awareness and training available on US ITAR controls.[59] This action was taken following a prior investigation into the US defence group ITT Corporation, which in March 2007 received a record civil penalty fine of US $100million for ITAR violations over exports to China. Thales High Technology Optic Group companies were part of ITT Corporation's supply chain.[60]

86. The UK Government should introduce a system of civil penalties for export control violations. These would create a lesser test for prosecutors and therefore enable a greater number of breaches to be successfully prosecuted, creating stronger deterrent against transgressing the control regime. In cases involving transfers of controlled goods, given the opacity and complexity of many such deals, establishing the evidence sufficient to meet the burden of proof necessary for a criminal conviction through the court system is often very difficult, especially when offences are committed overseas or involve non-UK actors.

87. The Government should also initiate a viability study into the creation of a single regulatory agency, drawing together the personnel, experience and authority of the ECO and the controlled-goods section of HMRC, to create a unified organisation for the compliance and enforcement of export controls. This would assist in the implementation, detection, investigation and prosecution of offences under the ECA.

IMPORTS

88. The UKWG notes with some concern that the Government has still not fully accounted for a large number of licences issued between 2003 and 2005 for the import into the UK of assault rifles from Bosnia and Croatia. We note that the CAEC has asked for more information on these licences in both its 2007 and 2008 reports.

89. In addition, according to information provided by Amnesty International, a further consignment of 20,000 assault rifles was imported from China, arriving into the UK in February 2007. Sources have indicated that this Chinese shipment was part of contracts to supply the Iraqi Police Force.[61]

90. The CAEC should ascertain whether or not these imports were part of Government contracts to rebuild the Iraqi police force, and if so, why China was chosen as a suitable supplier of these weapons.

91. The UKWG would like to draw the CAEC's attention to the answers contained in a 2007 memorandum from the ECO regarding the import of assault rifles into the UK. The UKWG considers this answer to be misleading and inaccurate. The following extract is highlighted:

"THE OBSERVER ARTICLE OF 25 JUNE

"The facts of this case are as follows:

"A registered UK firearms dealer did import approximately 20,000 assault rifles from Bosnia in May-June 2005. In this context is it important to bear in mind that the removal of weapons from the Former Republic of Yugoslavia is an agreed objective of both NATO and the UN, and is fully supported by the UK. The UNDP has been active in running a programme for the destruction or removal of weapons from the Former Republic of Yugoslavia, and NATO has also played its part in arms reduction in the region, under Project Harvest (formerly Operation Harvest). The UK fully supports both the UN and NATO in their objectives."[62]

92. This reply does not accurately reflect the facts of the case as known. Following the publication of the Observer article, it was revealed that number of assault rifles imported was approximately 78,000, and not 20,000 as stated in the article.[63] The weapons were imported into the UK in July 2005. Interviews conducted by Amnesty International have made it clear that the UK Government was fully aware of the total number of weapons imported into the UK on that particular shipment. It is not clear why, in a formal letter to the CAEC, the Government did not reveal the total shipment that was known to them, given the heightened significance of small arms proliferation.

93. The answer also implies that these imports were part of a wider policy of weapons collection and destruction. However, these weapons were not in any way connected with any efforts to destroy surplus weapons stocks from the former Yugoslavia and were imported by private companies.[64]

94. The UKWG recommends that the CAEC revisit this issue, and ask the Government: to fully account for these weapons; and to establish how many of these weapons have been exported, to which destinations and how many still remain within the UK. The CAEC should also investigate whether or not these weapons have formed part of either UK or US government-sponsored weapons supplies to forces in Iraq and Afghanistan.

95. All import licences for ML goods should be considered against the consolidated criteria on a case-by-case basis and import licences for ML goods should automatically be circulated to relevant export licensing officials within the ECO. Details of import licences should be included in the Government's annual and quarterly reports on strategic exports.

96. Clear procedures should be drawn up to ensure that all relevant government departments (the Home Office and local Police firearms units, Import Licensing, the ECO and HMRC) are co-ordinating effectively in cases such as these. A central database of imported weaponry, particularly SALW, should be established to enable relevant government departments to trace and monitor all firearms movements into, within and from the UK.

EUROPEAN ISSUES

EU Common Position

97. In December 2008 the EU at last adopted a Common Position defining common rules governing the control of exports of military technology and equipment (Common Position).[65] This was the culmination of a review process that began in 2003. The text of the Common Position was largely agreed by early 2005, but the process then became mired in attempts (principally French-led) to make the adoption of the Common Position dependent on the EU lifting its arms embargo on China. Unfortunately the Common Position sets no deadline for national compliance, which is of concern given (a) the length of time the EU Code review process took, and (b) that eight Member States are still not in compliance with the 2003 Common Position on the control of arms brokering almost six years since its adoption.

98. The most welcome specific change to the regime is that states are now obliged to "deny an export licence if there is a clear risk that the military technology or equipment to be exported might be used in the commission of serious violations of international humanitarian law".[66] There are other improvements over the previous EU Code, however these tend to be compromised by caveats that in effect allow national opt-outs. For example, although each Member State which exports technology or equipment on the EU Military List must now publish a national report on these exports, the content of the report is completely at the discretion of the individual Member State.[67] Member States also continue to have discretion over the circumstances under which arms transfer licences are required.[68]

99. It was hoped that one of the main tasks of the EU Code review would be to promote convergence of licensing decision-making (as is set out as a stated intention of the Common Position in its preamble[69]) through development of the EU Code criteria. However, aside from the fresh references to international humanitarian law (see above), there has been very little change to criteria language.

100. A significant part of the Common Position is therefore in essence a carry-over from the original EU Code. Therefore, while its legal force is welcome, this cannot hide the fact that the Common Position is a modest achievement, with its substantive content in effect either four-to-five or more-than-ten years old.

101. Member States should be looking once again at reviewing and updating the text, with a new focus on improving convergence of export licensing decision-making and policies. This need is made even more urgent by the recent decision to liberalise intra-community transfers of defence-related goods (see below).

102. EU Member States should as a matter of urgency ensure their national legislation is in compliance with the requirements of the Common Position

103. EU Member States should also commence as soon as possible a further review of the EU arms transfer control regime, focusing on:

— Improving convergence of export licensing decision-making and policies;

— Improving post-export controls; and

— Addressing challenges posed by the internationalisation of arms production.

INTRA-COMMUNITY TRANSFERS OF DEFENCE-RELATED PRODUCTS

104. In December 2008 the EU agreed a new Directive on simplifying terms and conditions of transfers of defence-related products within the Community.

105. The Directive is supposed "to simplify rules and procedures applicable to the intra-Community transfer of [EU Military List] products in order to ensure proper functioning of the internal market".[70] Individual licences are still applicable where essential security interests require protection, however the Directive establishes new types of general and global licences for the repeated transfer of items around the EU to certain recipients (eg armed forces of other EU Member States, to "certified" European defence companies, and to recipients participating in "an intergovernmental cooperation programme"[71]). Within limits, each transferring Member State sets the terms and conditions of their general and global licences, eg relating to the subsequent export of products from the EU.

106. The Directive stipulates that Member States are responsible for certifying companies within their territory, on the basis of certain criteria.[72] It seems, however, that there is no mechanism to ensure that all Member States' certification processes are equally rigourous. Where concerns exist about the conduct of a certified company a Member State of origin may suspend transfer licences to that company or the receiving state may suspend exports from its territory for up to 30 days, however the expectation is that certification should be respected by all Member States. Moreover, the Directive does not provide for any systematic means whereby receiving Member States are routinely informed about relevant re-export conditions; it is up to the certified recipient company to abide by and to alert its government to any export restrictions associated with the original transfer licence. There would thus appear to be a significant risk of unauthorised export in cases where companies either wilfully or inadvertently neglect to inform their authorities of any re-export restrictions that apply to particular defence-related products.

107. The UKWG believes that Member States should adopt a system of peer review to make sure that the certification process is working correctly and to a common high standard. This would help build trust and confidence on the part of the Member States in the operation of the new regime.

108. In addition certified recipients should be required to keep detailed information about transfers received and any relevant restrictions; these records should be inspected annually by the certified recipients' national authorities. Another option could be to create a searchable on-line licence-information database in order to collate the details (including export restrictions) of relevant licences for each Member State. This would allow those dealing with export licence applications to easily verify the nature of any restrictions that apply to exports of defence products that have originated in other Member States.

109. At some point (as yet undetermined) the Directive is to be reviewed, which could provide the opportunity to introduce the measures suggested above. However the stated purpose of the review is to examine whether the Directive has lowered barriers to intra-community defence trade, not its impact on effective transfer controls.

110. The UK Government should insist that the eventual review of the Directive should include an analysis of its impact on transfer controls, with particular attention paid to the consequences of the certification process on the unauthorised export of defence equipment.

EU OUTREACH

111. In March 2008 the EU adopted a Joint Action on support for EU activities in order to promote the control of arms exports and the principles and criteria of the EU Code of Conduct on Arms Exports among third countries (Joint Action).[73] The Joint Action, which runs for the calendar years 2008 and 2009, allots approximately €500,000 for a series of outreach seminars involving countries in South Eastern Europe, Eastern Europe, the Caucasus, North Africa and Turkey (though Turkey has so far chosen not to engage with this process) to promote the principles and criteria of the EU transfer control regime. Also, in June 2008 Member States agreed to develop an informal roster of arms transfer control experts who could be called upon for EU outreach duties.

112. Both these steps represent welcome developments in EU arms transfer control outreach. Historically, outreach by Member States has been ad hoc, uncoordinated and with little apparent thought for prioritisation. Member States have failed to take full advantage of the leverage they have at their disposal to influence arms transfer control practice in states with aspirations to EU membership, or at least to closer relations with the EU.

113. However, although the Joint Action is a positive step, rather than comprising an outreach strategy it simply mandates a series of one-off seminars. The transformation of the EU Code into a legally-binding Common Position gives Member States increased leverage over those with EU ambitions, as it provides the opportunity for including arms transfer control obligations for the first time within the EU acquis communautaire. EU Member States should take advantage of this new context and build on the Joint Action by developing a prioritised, well-resourced and comprehensive strategy for 2010 and beyond. To its credit the UK has been one of the most active of the EU Member States in terms of outreach activity; it should continue to play a leading role in further developing the EU outreach agenda and in supporting outreach activity. All relevant Government Ministries should be involved, including BERR, Customs, DfID, the FCO and the MOD.

114. A comprehensive strategy should include inter alia:

— Effective co-ordination, not only across member states and EU institutions, but also with other relevant support programmes including those identified through the OSCE and other actors or institutions.

— Prioritisation of target states-regions based on a careful assessment of likely impact.

— In-depth consultation with the proposed partner countries.

— Political-level engagement from within the EU.

— Consideration of all of the various themes that make up a comprehensive effective national arms transfer control system, including legislation-regulation, policies, implementation and enforcement, information-sharing (with other governments), and transparency and accountability.

— Detailed workplans for each partner country/region.

— A monitoring and evaluation framework-mechanism.

— Strong references to arms transfer controls within the EU's various bilateral stabilisation, partnership and association agreements, as well as co-operation and development agreements.

— Engagement with civil society in the partner countries

115. The UK should work with its EU partners to develop a prioritised, well-resourced and comprehensive EU arms transfer control outreach strategy for 2010 and beyond.

ARMS TRADE TREATY

116. The need for a global Arms Trade Treaty (ATT), to help curb flows of arms contributing to abuses of human rights and international humanitarian law and undermining sustainable development, remains acute. The UKWG is encouraged by continuing progress within the UN system towards this goal. We also appreciate the commitment of the UK Government, reiterated by the Foreign Secretary at a stakeholders' meeting in September. Alongside its international partners, the UK has continued to play a lead role in promoting the ATT on the international stage. However, the UK must continue to work hard to drive the ATT process through the UN system and to increase efforts to secure widespread and active international support, particularly among Southern governments.

117. In 2008, as instructed by the UN Secretary General, a Group of Governmental Experts, comprising representatives from 28 states, was convened in New York for three one-week meetings to discuss the feasibility, scope and draft parameters of an ATT. The GGE process was difficult, given the presence of states (eg China, Russia, India, Pakistan, Egypt) that remain, to varying degrees, sceptical about the ATT. However, a consensus report was produced—essentially a narrative of the sessions—which concluded that "further consideration of efforts within the UN to address the international trade in conventional arms is required".[74]

While the GGE reached consensus on the point that "principles enshrined in the Charter of the UN" would be central to any potential ATT", "differing views" were expressed on the "applicability of existing international human rights law and international humanitarian law".[75] It is critical that the ATT process does not pay undue heed to the concerns of a small minority of states at the expense of the opinions of the wider international community as expressed in the submissions of almost 90 states to the Secretary General.

118. In December 2008, a large majority of governments voted in favour of a UN General Assembly resolution which endorsed the GGE report and decided to establish an Open-Ended Working Group (OEWG) on the ATT. The only state to vote against the resolution was the US, with nineteen abstaining. The OEWG is mandated to meet in six one-week sessions, with the first two set for March and July 2009. These 2009 sessions are tasked to consider "those elements in the GGE report where consensus could be developed for their inclusion in an eventual legally binding treaty." Meanwhile, the EU has agreed a Decision mandating the UN Institute for Disarmament Research (UNIDIR) to organise a series of regional meetings to take place over the next 15 months. This will provide states with an alternative platform to discuss elements that are further from GGE consensus, such as criteria based on human rights, international humanitarian law and sustainable development.

119. Over the course of 2009, the UK Government must work hard to ensure that both the OEWG and the EU-UNIDIR regional meetings generate positive outcomes that reflect the prevailing views of the vast majority of states. The UK must not only maintain its leading role but should also use its position to build a regionally diverse and regionally powerful core group of states to share the burden of leadership and create bridgeheads of proactive support around the world. This approach will be necessary to ensure that a substantial majority of UN Member States vote for a resolution on the ATT that drives the process forward. A resolution in 2009 will need to mandate the OEWG to move in 2010 to discuss more contentious items such as arms transfer criteria. This mandate will be necessary to speed the process towards the negotiation of a comprehensive, meaningful ATT.

120. An ATT will only save lives and protect human rights if it is truly comprehensive, robust and effectively implemented. UKWG does not support an ATT at any cost; we believe that the eventual treaty must enshrine the core principles of international human rights, humanitarian law and sustainable development if it is to be effective in saving lives.

121. The ATT must cover all aspects of international arms transfers, including import, export, transit, transhipment, overseas production and arms brokering activities.

122. Any ATT must also be as comprehensive as possible, applying to all conventional arms; including their components, manufacturing technologies, production equipment and relevant dual-use goods. It is of great concern that governments are discussing limiting the scope of an ATT to the seven categories on major conventional weaponry from the UN Register of Conventional Arms (UNRCA), plus SALW, often referred to as "7+1". This would exclude many categories of weapons, police and internal security equipment that are used in the commission of human rights violations, including ammunition and explosives, many types of military vehicles, vessels and aircraft, and many categories of ordnance including short-range missiles and bombs. Nor would it include components and parts, which are central to international supply chains that dominate the increasingly global nature of the production of conventional weapons.

123. Finally, the ATT must enshrine effective reporting, monitoring and verification mechanisms and dispute settlement provisions—drawing on the significant experience developed in the context of many other international regimes such as the 1997 Chemical Weapons Convention and the 1992 UN Framework Convention on Climate Change and subsequent Protocols—to ensure that all states parties abide by the spirit and letter of the agreement and to build confidence in the effective implementation of the Treaty.

124. The UK and its ATT allies should make an explicit public commitment to establish by 2011 an ATT founded on core principles of international human rights, humanitarian law and sustainable development and covering all aspects of international arms transfers, including import, export, transit, transhipment, overseas production and arms brokering activities.

125. The UK should respond to the change in the US administration by increasing its engagement on the ATT with the US at the political level and through contacts among officials, and by encouraging the UK defence industry to engage their US counterparts. Persuading the world's most powerful state and biggest arms exporter to move from a stance of outright opposition would be a major step forward in securing the ATT's eventual agreement.

126. The Wassenaar Arrangement military list should be utilised as the basis for the equipment covered by an ATT, as it is comprehensive, multilateral, enjoys the support of a majority of arms exporting states, and is an agreed international standard for the classification of conventional weapons. While a number of states view the Wassenaar Arrangement as politically suspect—on the grounds that it dominated by the "North" and discriminates against non-Wassenaar members—there is nevertheless widespread recognition of the technical validity of the Wassenaar list.

3 March 2009