Scrutiny of Arms Export Controls (2011): UK Strategic Export Controls Annual Report 2009, Quarterly Reports for 2010, licensing policy and review of export control legislation - Committee on Arms Export Controls Contents

Written evidence submitted by The Export Group for Aerospace & Defence (EGAD)


EGAD recognises the importance of an efficient export control system. This submission focuses on the mechanics of the system, and how it operates, and particularly the timescales involved in processing export license applications which has deteriorated in recent years. Delays in processing licenses, by the Export Control Organisation (ECO), has resulted in contractual penalty clauses being enforced against UK companies. EGAD has received an increase in the number of companies that have experienced such delays over the last year. This situation does appear to be getting worse and is affecting the reputation of companies within the UK. This is a serious issue.

The number of applications that the ECO is processing far exceeds the levels expected. In 2010 we understand that 17,000 license applications are expected by the ECO, compared to c.15,000 applications which were processed in 2009. Resources have been allocated by the ECO on the basis of processing between 9-10,000 Standard Individual Export Licence (SIEL) applications per annum.

The ECO should be credited for managing such a large increase, but this situation is clearly unsustainable. Furthermore, it is at odds with the Government's ambition to increase UK exports.

The ECO and advisory departments are so focused on processing SIELs that other aspects of the UK's export control system, such as "Ratings" and processing of Open Individual Export Licence (OIEL) applications is suffering.


Some Members have now informed us that their customers (including the United Nations) have become so disenchanted with the delays in delivering equipment that they are seeking to purchase what they need from outside the UK.

In addition, we are aware of at least one inward investment decision which is at risk as a direct result of the export control system. A UK-based company has been considering returning manufacturing work to the UK from Latin America. This would bring significant benefits in terms of jobs, export sales and strategic capabilities. Having being persuaded of the business case, the company is currently reconsidering this investment because of the frustrations that they are already experiencing in other areas of their business in working through the UK's export control system.

From an Industry perspective there are two steps which are necessary to improve the efficiency and maintain the effectiveness of the current system:

(1)  Increase the resources of the ECO and its advisory departments so that they can cope with the increased demand. Increased UK exports are an ambition of the Government and deliver both jobs and greater income to the Exchequer in the form of increased tax receipts.

(2)  ECO and its partner organisations should identify improvements in the current system for processing licensing applications.

The Government's policy of proactively seeking to encourage UK Industry to export more will result in further pressure on our export licensing system, not only from defence and security companies, but also from dual-use firms.

With some 98% of SIEL applications being successful each year, there is a strong case for removing a large number of current SIEL applications from the system and into the Open General Export Licences (OGELs) process without undermining of the effectiveness of our national export control system.

EGAD believes that the existing suite of OGELs needs to be reviewed, to ensure that these licensing products are as effective as possible.


After nearly three years of deliberation, the US/UK Defence Trade Cooperation Treaty (as well as its US/Australia equivalent) was ratified by the US Senate Foreign Relations Committee (SFRC) on 21 September, and confirmed by the US Senate on 29 September 2010.

It aims to streamline and improve defence export processes and allows for the export of defence articles, without a license or other written authorisation, from the US to an "approved community" of recipients in the UK and US and the subsequent transfer of these articles within that community without further US authorisation.

There is some uncertainty within industries on both sides of the Atlantic on the full implications of ratification and what steps companies need to take to benefit from the treaty. The US Department of State announced that it intended to undertake a formal public consultation immediately after the Treaty was ratified, on its implementation.

As is usual with such complicated matters, the finer details of the Implementation Arrangements, which were published separately from the Treaty on both sides of the Atlantic in February 2008 need to be understood in detail. Some examples of the analysis which is required by individual companies is set out below:

¾  The equipment under consideration must not be on the very extensive "Excluded Technologies" List, which was published in early-2008;

¾  The intended end-user for the items covered by the Treaty must be either the UK and/or US Governments only; the Treaty will not cover items for onward export to other third countries;

¾  The UK companies who want to use the Treaty, including any and all sub-tier suppliers and freight forwarders who receive Treaty items, must be part of the "Approved Community", and, therefore, have X-List Security-vetted status from the UK MoD;

¾  Individuals within UK X-Listed companies who need to have access to the controlled US technology must be UK citizens with SC Security Clearance from the UK MoD.

At the behest of the UK MoD, A|D|S and EGAD are planning on organising a series of half-day workshops in early-2011 to brief UK firms so that they can be better informed on what the impact of the Treaty may be on them and their commercial activities. This will allow them to make an informed decision on whether they want to apply to be part of the Treaty's "Approved Community".

November 2010

Written evidence submitted by Alistair Burt Parliamentary Under-Secretary of State, Foreign and Commonwealth Office

Thank you for inviting me to give evidence to the Committees on Arms Export Controls on Monday 24 January 2011. I am writing to follow up a number of issues in respect of which the Committees have requested further information. For the convenience of the Committees, I thought it best to provide a single reply from HM Government. This letter therefore also serves as a response to your letters of 1 February 2011 to Rt Hon Vince Cable MP and Rt Hon Liam Fox MP.


I welcome the Committees interest in the Arms Trade Treaty, an issue where cross party support has helped us to make real progress. The Government is fully committed to securing a robust and effective Arms Trade Treaty (ATT) and hence is keen to ensure sufficient resources are in place for the negotiation of the Treaty. I can confirm that multilateral arms control and disarmament continue to be a high priority for FCO.

Following an internal reorganisation to our multilateral diplomatic posts in Switzerland, the Responsibilities currently held by the Ambassador for Multilateral Arms Control and Disarmament have been redistributed to ensure that FCO resources are best placed to service both Geneva and non-Geneva based work. When the current ambassador's term ends in July 2011, we will continue to retain a dedicated ambassador for the arms control and disarmament work that takes place in Geneva via the post of UK Permanent Representative to the Conference on Disarmament. However we have decided that leadership of the UK delegation to the ATT negotiations, which take place elsewhere, should revert to the head of Counter Proliferation Department at the Foreign and Commonwealth Office in London who will report to me as the Minister with lead responsibility. Hence I can confirm that leadership of ATT work will continue at the same level of seniority.

We will also continue to operate as a cross-government team under an FCO lead, including experts from BIS, MOD, DFID and others. This cross government team is proactively engaged in our efforts to achieve a robust and effective ATT, and continues to consult with, and draw in expertise from, NGOs and industry. This consultation, which is at both a strategic and technical level, greatly adds value to UK efforts on ATT by enabling us to benefit from the expertise of others outside government, and to work in a co-ordinated way as we approach the critical UN Negotiating Conference on an ATT in 2012. I will be participating in a panel discussion at an NGO Parliamentary Reception on the ATT on 16 February.


There are three issues regarding UK exports to Israel arising from the recent Evidence Session and earlier correspondence relating to recommendation 23 (para. 141) of the CAEC's Annual Report published in March 2010: clarification of current UK policy concerning arms exports to Israel; the outcome of any investigations by the Government into reports that UK origin military-listed goods have been used by Israel in contravention of the Consolidated Criteria; and what monitoring the UK Government carries out in respect of the end-use of UK origin military-listed goods and equipment.

I can confirm that UK policy on the export of controlled goods and equipment to Israel has not changed since the Coalition Government took office. All export licence applications to Israel are considered on a case-by-case basis against the Consolidated EU and National Export Licensing Criteria.

The Consolidated EU and National Arms Export Licensing Criteria were announced to Parliament on 26 October 2000 by Peter Hain MP the then Minister of State for Foreign and Commonwealth Affairs. On 29 November 2000, the previous Government obtained an assurance from Israel that UK origin equipment was not being used in the Occupied Palestinian Territories (OPTs). Following reports that Israel was in breach of this assurance in relation to an incident in the OPTs in March 2002, the then Foreign Secretary, the Rt Hon Jack Straw, made a statement on 15 April 2002, stating that the UK "will no longer take the Israeli assurances given on 29 November 2000 into account" and that the UK will "continue to assess export licence applications for the proposed export of controlled goods to Israel on a case-by-case basis against the consolidated EU and national arms export licensing criteria".

In the period since 15 April 2002 all export licence applications to Israel have been considered on a case-by-case basis against the Consolidated EU and National Export Licensing Criteria.

UK end-use monitoring of UK-origin military-listed goods takes place in three important contexts. Firstly, the information gathering process which takes place in making the case-by-case assessment of each licence application. This takes account of the past record of the stated end-user, particularly with regard to the military-listed goods which are the subject of the application. Secondly, detailed monitoring, review and reporting around incidents of concern, the results of which are factored into judgements about whether or not to revoke extant licences and issue new ones. Thirdly, general monitoring takes place on a continuous basis, with information received in-country being fed back to the export licensing community and other relevant government departments in London. FCO Posts abroad play an active and vital role in monitoring and information provision in all three contexts, but information from other government sources and non-governmental sources (for example from the media and Gas) is also reviewed and used to ensure the robustness of the UK's export controls.


It is clear from the reports we have received that Royal Saudi Air Force Tornado aircraft, supplied by the UK, were used during the recent border conflict in 2009. We followed the situation at the time closely and, after consulting a number of information sources, conclude that the Saudi response and use of British supplied military equipment was not inconsistent with the UK's export licensing Criteria.


We welcome US Congressional approval of the Defence Trade Cooperation Treaty and are grateful for the US Administration's support in achieving this. The Treaty should simplify the export licensing arrangements between the US and the UK for the end-use of either Government, and improve interoperability and the delivery of capability to our Armed Forces. Specifically, the treaty offers benefits by removing the need, under certain conditions, for US export licences under their International Traffic in Arms Regulations (ITAR) for the export or transfer of certain categories of US-sourced technology including both equipment and information. These conditions are that the items must be destined for UK or US government end-use and transferred only within an "Approved Community" of UK and US government establishments and pre-approved Industry facilities and overseas in support of operations. For exports from the UK to the US under the Treaty, there will be a specific open general export licence created.

Congressional agreement has enabled preparations for implementation to begin. We need to consider the application of the Treaty to programmes and projects, with industry, and to understand the US regulations underpinning the Treaty to assess how it can most fully bring benefits.

Key activities, to be conducted with the US, will be developing and trialling the detailed processes, assessing the applicability of the Treaty arrangements to current and planned projects and considering applications to join the Approved Community. There is a considerable amount of work which may take up to 12 months before the Treaty can come into force, The Government will continue to engage with industry on implementation activities through the Defence Industries Council.

I am aware that UK Industry representatives raised concerns with the CAEC about the length of time it has taken to adopt the Treaty and the possible benefits to industry of the Treaty during their evidence session on 15 December 2010. Officials at the MoD (who lead on the issue) are currently engaged in discussions with the US State Department about the implementation of the Treaty; we will keep the Committees updated with the progress of the necessary implementation work as it progresses.


I can confirm that the EU Council Common Position 2008/944/CFSP "defining common rules governing control of exports of military technology and equipment" is fully applied in the UK strategic export licensing process. Whilst the wording of the UK's Consolidated EU and National Arms Export Licensing Criteria does differ in some minor respects from the EU Common Position, particularly in relation to Criterion 2 and International Humanitarian Law, in practice the licensing decisions we make are fully in accord with the provisions of the Common Position. We are currently examining these differences with a view to updating the wording of the Consolidated EU and National Arms Export Licensing Criteria before the end of 2011.


The UK proposal for the introduction of a Torture End-Use Control has been with the EU Commission Legal Services for some considerable time. The Head of FCO's Counter Proliferation Department wrote to Richard Wright (Director Security Policy at the ED Commission) on 5 April 2010 asking that the consideration of the proposal be expedited. In its response, the Commission highlighted a number of difficulties around a new control; specifically, compatibility with WTO regulations, and the new twin track approach to the legislative process post-Lisbon.

On 17 June 2010 the European Parliament adopted a resolution on implementation of Council Regulation (EC) No 1236/2005) concerning trade in goods which could be used for capital punishment, torture or other cruel, inhuman or degrading treatment or punishment. The issue is now back with the EU Commission for them to consider further.

The UK's clear preference remains for an EU-wide control and indications are that there is significant support for our proposal. Although there are dearly a number of complex issues here, we are hopeful that pressure from the EU Parliament will help encourage the Commission to come forward with concrete proposals. We will continue to monitor progress on this issue and to make whatever interventions are appropriate, at an EU level, to expedite the matter.

Should it prove impossible to secure an EU-wide control (and we are certainly not at that point yet), we could consider introducing a control at a national level. We would however need to be sure that any proposed national control would be effective. A national control would only cover exports and would not be a trade control; the nature of the goods involved, such as rope and other commercially available equipment, would mean that a trade control of this type would be virtually impossible to enforce.


In relation to recommendations 7 (para. 47) and 8 (para. 51), of the CAEC's Annual Report, published in March 2010. I understand that my Hon Friend Mark Prisk MP, Minister of State at BIS set out the Government's position on the general question of a register of arms brokers, at the recent evidence session.

You asked specifically what options the Government was considering to address the particular challenges posed by brass plate companies. The Government's position is that any company with a registered office address in the UK is a UK legal person and therefore subject to UK law. However, it can in practice be difficult to take enforcement action against a company which has no meaningful physical presence in the UK. The Government is exploring the possibility of using the Secretary of State's powers under the Companies Act 2006 to ask the Court to dissolve a company which is operating against the public interest.

There would of course need to be an adequate level of evidence against a particular company before such a case could be brought.


In relation to recommendation 9 (para.59) of the CAEC's Annual Report, published in March 2010, there have been no further discussions on this issue and we have nothing to report to the Committees at this time.


In relation to recommendation II (para.74) of the CAEC's Annual Report, published in March 2010, I can confirm that the revised requirement for End-User Undertakings was announced to industry at the end of March 2010 and use of the revised Undertakings became compulsory from 1 July 2010.


In relation to recommendation 24 (para. 142) of the CAEC's Annual Report, published in March 2010, I believe I have addressed the concerns raised by the CAEC, both in the responses I gave at the recent evidence session and also, on Israel, above.


In relation to recommendation 27 (para. 160) of the CAEC's Annual Report, published in March 2010, I believe I covered the concerns raised by the CAEC in the responses I gave at the recent evidence session. Additionally, my officials have provided the CAEC with a copy of the UK presentation made by DFID at the Criteria 8 Seminar hosted by the Dutch Government on 24 November 2010 on the basis that its content and distribution is limited to the CAEC only.


I understand there are four outstanding questions concerning specific licences (SIEL2008/003265, SIEL2010/005107, SIEL210/001223 and SIEL2009/011222) which we have; as yet, been unable to respond to because of difficulties matching the original details in the CAEC's requests with information on our systems. We are currently working to resolve these differences and to provide the information requested. In order not to delay this response, I would propose to include the answers to these questions as part of the Government's response to the CAEC's questions on Quarter 3 2010.


I would also like to lake this opportunity to extend again the invite to you and your Committee colleagues to visit the FCO. Such a visit would enable the Committees' members to meet FCO export licensing officials, to get a first-hand sense of how the export licensing process works in practice, and also get an update from the UK team working on UN negotiations towards an ATT.

10 February 2011

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