UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 686-ii

HOUSE OF COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE THE

COMMITTEE ON ARMS EXPORT CONTROLS

STRATEGIC EXPORT CONTROLS

MONDAY 24 JANUARY 2011

MR MARK PRISK MP, CHRIS CHEW and TOM SMITH

ALISTAIR BURT MP, DAVID HALL and DAVID VINCENT

USE OF THE TRANSCRIPT

Oral Evidence

Taken before the Committee on Arms Export Controls

on Monday 24 January 2011

Members present:

Sir John Stanley (Chair)

Mr Bob Ainsworth

Malcolm Bruce

Richard Burden

Katy Clark

Thomas Docherty

Mike Gapes

John Glen

Margot James

Mr Michael McCann

Penny Mordaunt

Ian Murray

Anas Sarwar

Mr Dave Watts

Chris White

Nadhim Zahawi

Examination of Witnesses

Witnesses: Mr Mark Prisk MP, Minister for Business and Enterprise, Chris Chew, Head of Policy, Export Control Organisation, and Tom Smith, Head of Export Control Organisation, gave evidence.

Q66 Chair: Minister, may we welcome you to the first ministerial oral evidence session of the Committee on Arms Export Controls? We also welcome your colleagues, Mr Tom Smith and Mr Chris Chew.

Minister, I want to start by asking a question that I know you won’t take personally in any way, because it is not meant in that way. The last report to this Committee and the House by the four Departments came under the names of the four Secretaries of State-David Miliband, Lord Mandelson, Douglas Alexander and Bob Ainsworth-and it was a substantial document of about 100 pages. The first report from the new coalition Government comes from yourself and junior Ministers in the other Departments-Alistair Burt, Alan Duncan and Nick Harvey-and it is half the size. I appreciate that size is not everything, but the Committee might conclude from that that the coalition Government attach less weight to arms export controls and arms control policy than the previous Government. How do you respond to that?

Mr Prisk: Thank you, Sir John, for your welcome. I wouldn’t, and I certainly never have in my career before politics, measure the position of an organisation, let alone a Government, on the length of their documents, nor, indeed, on the specific signatories to a document. You will know that we are very keen to ensure that, while we promote exports vigorously as a Government, those exports must nevertheless be responsible exports. If the initial response to your substantive report is short, I hope that is because it is concise rather than insubstantial. Generally speaking, I hope that that will be a welcome quality in a Minister, although I will leave whether I achieve being concise but not insubstantial this afternoon to you and your fellow Committee members to judge.

Q67 Chair: What is the significance that under the previous Government this report was signed off by the four Secretaries of State-the four Cabinet Ministers-but that under this Government that is not the case?

Mr Prisk: Personally, I would not place any significance on that. If that is something that the Committee feels is inappropriate, I will certainly take it back and report it to my Secretary of State. I am sure that Mr Burt, when he is before you, will wish to do so as well. My own personal view is that, when it comes to the details of how export controls are handled, Ministers of State, such as myself and others, are closely involved and have very good support from our Secretaries of State. I would not suggest to you that the fact that the signatories are not Secretaries of State means that somehow this is of no interest to the respective Secretaries of State of the Departments of which the Members present represent their Select Committees.

Chair: Thank you. Malcolm Bruce has some questions on the new Government’s policy in this important field.

Q68 Malcolm Bruce: Good afternoon, Minister. I was taken to task after the last evidence session, which was with the industry and NGOs, because we asked them about the export promotion policy of the Government and were told that the target markets are basically the United States and the European Union. One of the NGOs that wasn’t present complained that it was actually a much wider market than that, and we have since received a list of the Government’s priority markets. It includes Algeria, Iraq, Libya, Pakistan-these are the ones that I have identified-and one might include Saudi Arabia and Mexico in brackets. In other words, these are not immediate, natural allies. What is the Government’s policy, and what safeguards are there in promoting exports to countries such as the ones that I have identified?

Mr Prisk: If I may, Mr Bruce, you are absolutely right to ensure that that full list is there. Our view is that defence exports are legitimate-I suspect that that is also the view of many members of the Committee-not least if one looks at the UN charter, which is very clear that nations have the right to defend themselves. Sometimes, they will be in areas where there is considerable tension or, indeed, where there has been conflict-that is understood. We will wish to make sure that British manufacturers, who are successful, can export successfully, but that we will always look at this with due care and with particular attention to the risks in the market and the risks with the regime involved. Obviously, we will look at the local region into which the exports are being promoted, but the key issue is that we must always, and will always, seek to comply with our international obligations and the due process of law and make sure that we have taken the greatest care to look, for example at the question of the end-user, which is always very challenging.

Q69 Malcolm Bruce: Why do you think that the industry and, indeed, some of the NGOs were of the opinion, and comfortable with the fact, that you should promote arms exports and the arms trade? Clearly, some NGOs are totally opposed to the arms trade, but the ones we were talking to were not in that category. My response to them was that if we’re talking about the EU and the United States, most of us are fairly comfortable, but some of the countries I have identified, which are on the Government’s target promotion list, would, I think, be more questionable. First, was the industry trying to mislead us, or has it been misled? Secondly, what assurances can the Government give the wider public and those of us who, although not opposed to export promotion, are concerned that we might be selling to countries that are not entirely stable, where we cannot really be sure that exports will be used properly or will not be illegally passed on?

Mr Prisk: That’s an entirely legitimate concern, so I wouldn’t be surprised if NGOs looked at a list and asked themselves whether the risk in country A or country B is acceptable. That has to be a judgment call based on the information one has. What I’d go back to is the fact that there are clear consolidated criteria in this area around where exports can and cannot be undertaken and what we will not support. The criteria obviously relate to the issues that we’re all worried about-things such as the promotion of international terrorism, internal repression or, indeed, cases where it’s clear that there’s a danger that the UK’s national security could itself be jeopardised.

There is a wish in the new Government to grow manufacturing. As part of that, we recognise that we have strong UK manufacturers in the defence and security fields. We want to support those, where the end-use and the end-user are legitimate. We will follow, as have previous Governments, the appropriate criteria. We want to make sure that, while we’re enthusiastic to ensure that British businesses can do well abroad, we do not short-circuit in any way the appropriate processes and laws.

Q70 Malcolm Bruce: Finally, Sir John, may I just home in on what’s happened in the last couple of weeks in Tunisia? Are we really comfortable that Algeria and Libya are proper markets for promoting UK exports in the present climate?

Mr Prisk: We must always judge each country on the basis of the information-open information and other information-that the Government have, and I am sure the right hon. Gentleman understands that. That risk assessment has to change as events change. Had we had this conversation three weeks ago, events in Tunis would not perhaps have raised that issue. Other countries on the list may suddenly become even more pertinent. The appropriate approach is to make sure that we look at the risk in each country on a case-by-case basis and use that judgment accordingly.

Q71 Malcolm Bruce: So this is a working list?

Mr Prisk: This is a list that we are working to, yes.

Q72 Thomas Docherty: Can I tease out your thinking a bit more, Minister? If I heard you correctly, you said that there were growing markets for exports. Could you expand a bit on whether you see those as existing markets with further opportunities? Is this a case of new technologies that UK companies had not previously sold? Is it a combination of the two?

Mr Prisk: Inevitably, it is a combination of the two, in the sense that it’s a question of the opportunities that are there and of UK businesses being able to export to those places. They then need to make a judgment about that. Our view would be that we need to make sure that they are doing their job properly, and we are then able to support them where we’re confident that they are doing that and that the end-use and the end-user are legitimate. All those considerations have to come into play.

Q73 Thomas Docherty: If we separate the existing contracts that are being extended from new types of contract, would it be right to say that the Government, for obvious reasons, would be more comfortable with an extension of existing contracts, because you broadly know what is involved with that and there are perhaps additional challenges or additional levels of scrutiny that would be needed for new markets or new types of contract?

Mr Prisk: Inevitably, when you’re trying to make an assessment of the risk, if it’s an established business with an established transaction with a known end-user for an established use, clearly the risk is different from the risk if it’s a new user, a new technology or a new market. Again, this is why I think that a case-by-case approach, looking carefully at the different elements of risk that exist within any transaction so that we can understand that they are genuinely compliant with our treaty obligations, is the appropriate and sensible approach to take.

Q74 Nadhim Zahawi: Minister, how important does BIS consider the promotion of UK arms exports? How important is that to BIS?

Mr Prisk: Our view is that this is an important part of the overall wish to see an increase in the export of manufacturers’ goods and services. Clearly, manufacturing makes up already, as a whole, over half the UK’s exports, so it is an important part of our economic strategy.

Q75 Nadhim Zahawi: What is the role of BIS in co-ordination? We know from one of the quotes from the Secretary of State for Defence that "we will seek to increase Britain’s share of the world defence market." Is co-ordination led by the Ministry of Defence? How does co-ordination work? In an earlier evidence session, one of the manufacturers said that obtaining export licences is a bureaucratic nightmare. Is that something that your Department focuses on versus, say, the Ministry of Defence?

Mr Prisk: There are two issues here, and this is why the Trade Minister leads on promotion and the Business Minister leads on export control-so that we get that distinction, which is an important one. In terms of the promotion, that obviously is central to UK Trade and Investment and the Trade Minister, although obviously the Ministry of Defence and other parts of Government will be involved. In terms of the export-control process, that is the direct responsibility of the Export Control Organisation. I’ll ask its director, Mr Smith, who’s sitting on my right, to respond. We are aware that the number of licence applications has increased quite substantially. As a new Minister, I’m certainly keen to make sure we have an efficient process, but we also have to recognise the balance between an increase in demand, which there has been in licence applications, and the pressure on resources, so we need to look at how we can be more efficient. There’s room for improvement in that area, and we’re very mindful of that. I don’t know whether Mr Smith wants to add to that.

Tom Smith: Absolutely there is room for improvement. What I would also say, though, is this. Since I took over the ECO, I’ve looked at our main competitor systems-for example, in the USA, France and Germany. Our customers tell us that we compare very well-for example, because we’re the only export licensing authority in the world to have full end-to-end electronic export licensing. I think our processing times compare very well and our use of open licences, which don’t require prior approval for exports, compares very well; I think we’re a world leader. But yes, there’s quite a bit of work still to be done in terms of improving what we do and boosting efficiency.

Mr Prisk: It’s worth bearing it in mind as well that nearly two thirds-64%-of applications in the last year were dealt with in our target area of 20 days. We’re aiming for 70%, so there’s work to do, but we need to achieve a careful balance here. I’m talking about being thorough, so that we don’t fall into the trap of not doing our work appropriately given our need to ensure that we don’t breach our international legal obligations, but equally making sure that business can do its job properly.

Chair: Thank you, Minister. We have a lot to try to get through and we have you for only an hour, so we shall move on as quickly as we can if that’s all right. Margot James has some questions on the ECO.

Q76 Margot James: My questions follow my colleague’s questions on the ECO. You have alluded to the rising number of applications and the increased demand. The Export Group for Aerospace and Defence told us at our last hearing that the ECO is resourced to process around 10,000 licence applications, but that 17,000 applications are expected. You are shaking your head, Mr Smith. Is that not the case?

Tom Smith: I don’t know where the figure of 9,000 to 10,000 comes from. Volumes of export licences have gone up year by year and, through a variety of efficiency measures, we have coped with that very well. We struggled a bit in 2010, which is why we fell slightly short of our processing target. The figures on median processing times for licences showed that we had a couple of wobbles over the course of last year where the median processing time went up from about 13 days to 19 days, and that was where a lot of the concerns from industry came from. Overall, if you look at the past year, the worst you can say is that, on average, it took a couple more days in 2010 to process an export licence that it did in 2009.

Q77 Margot James: That is certainly not the impression that this Committee received from the Export Group for Aerospace and Defence, so there does seem to be a big disconnect between what you are telling us-no doubt, absolutely as you see it-and what we are hearing from other organisations. In addition to that, on a visit to Birmingham, the BIS Committee visited a firm that was manufacturing and exporting things that might be for dual use. It told us that it was an absolute nightmare even to find out if you needed an export licence, and that God help you if you did. There is a big disconnect here, which the Minister might care to look into at some point.

If I could just go on to the issue of charging, we understand that you are considering charging companies for these licences, and I wonder what your view of the pros and cons of that is.

Mr Prisk: Let me just come back to the issue. I read the evidence that you had, and it is clearly something that I want to keep a firm eye on. I need to be careful to ensure that the ECO can do its job and that we don’t go in any direction that is dealing with illegitimate or inappropriate end users or end uses while, at the same time, making sure that the organisation is efficient. I am mindful of that balance and I would certainly want to talk to the various trade bodies involved.

With regards to charging, as the numbers of licensing applications have grown substantially and, inevitably, as Government have pressures on their resources, the question is whether the taxpayer should pick up the full balance of that process-as citizens, we require Government to impose effective export controls on military equipment and so on-or whether businesses should contribute to that process, if only to make sure that they then get an even higher quality of service. This is one of the areas where if a service is free, the treatment or engagement of it will be different than if it has a charge related to it, even if it is a de minimis charge. It is not the intention of the Government to do anything that would be any more than seeking to look at the possibility of charges for the costs of the service. This is not intended to be some sort of back-door charge over and above that, and we would want to consult industry. We must look at the balance of these issues to see whether, in fact, there is a different finance model which would make more sense.

Q78 Margot James: Will you also update us on the review that you are undertaking on the open general licensing system? We have heard that some quite large companies have decided not to use the system at all because it is so complicated.

Tom Smith: I have also read the evidence that was given to you by the representatives from the Export Group for Aerospace and Defence. What they were referring to was the introduction of the new military goods open general export licence. Overall, the evidence that I have seen-obviously I have looked very closely at this-suggests that this new open general licence has, on balance, been very successful. We’ve had 333 new companies signing up to use it, and it was only introduced in September. For an open general licence, that is quite impressive.

I’ve also heard a few voices, including some of the people who gave evidence to you, saying that it is very complicated. So I’m not getting carried away but, obviously, what I am looking to do is to tackle the whole complexity and ease of use point. That is precisely one of the things that the review of open licensing, in relation to which we met business representatives last Thursday, is intended to do. We want to check that OGELs are written in plain English, that they are easy to understand, that the conditions are standard and that there isn’t overlap. We also want to ensure that the coverage is right and that we cover all the types of export licence in relation to which, in practice, we always end up saying yes, rather than covering those that pose risks to the security or foreign policy agenda of the UK.

Chair: We come to the US-UK defence trade co-operation treaty. I call Mike Gapes.

Q79 Mike Gapes: Minister, you are aware that this treaty has a very long history and that great efforts were made to get it finally ratified in the United States but, in practice, isn’t it a damp squib? We had evidence that it would only be beneficial to a very small number of companies, and it was doubtful whether it represented a sea change in UK defence exports to the UK. Would you agree?

Mr Prisk: Inevitably, any treaty-as you rightly say, Mr Gapes, this one has been on the cards for some time and goes back through this Government and the previous one-relies on the willingness of the various parties involved to fulfil that treaty in full. There has been a long debate about just how two way the street is across the Atlantic in terms of military exports. I am aware that Mr Burt of the Foreign Office will be reporting-or giving evidence-to you shortly. I suspect that he will want to set out the Foreign Office’s view on this. I wouldn’t take such a negative view as you have perhaps expressed there, Mr Gapes. There is an opportunity; we have that treaty in place; now we’ve got to make it work. Like most treaties, it relies on being persistent and making sure that the treaty works in full.

Q80 Mike Gapes: What benefits will it tangibly bring to UK exporters?

Mr Prisk: If we have set out a proper process, as we have, by which that trade can be genuinely pursued-in the past, it has tended to be rather word of mouth or informal-that gives us a stronger opportunity to press the case for good UK manufacturers.

Q81 Mike Gapes: We were told by the Export Group for Aerospace and Defence that our own Government’s ECO places obstacles in the way of exports of UK equipment to the United States, but that comparable obstacles from the US to the UK do not exist.

Mr Prisk: I would like to see some examples of that from the industry and to have the opportunity to discuss that with them.

Q82 Mike Gapes: We did have some examples quoted. They talked about laptops in particular and technology of that kind.

Tom Smith: If I remember, what the industry reps were talking about was the question of cryptography exports generally. Cryptography is a complex area and is something on which we work with businesses on an ongoing basis to get the detail right. It is something where we have recently introduced a new open general export licence to remove the requirement to apply for licences from a wide range of cryptographic goods. The question about whether our system or the US system is better is a matter of opinion. I have met some companies who say one and some who say the other. That is a fair challenge that we are continuing to address.

Q83 Mike Gapes: Perhaps you will write to us on that.

Finally, I understand that although the US has now ratified this arrangement, it has set up some kind of consultation internally as to how it will work in practice. What are we doing to prepare our manufacturers-our industry-to take advantage of the treaty, so that we can make sure that the US doesn’t by other means bring in restrictions that we thought had been lifted by getting this agreement?

Tom Smith: Basically, we are now in the implementation phase of the treaty, which will involve my team and the MOD working together to work with the industry to go through the detailed arrangements of the treaty-for example, how the approved list of companies will work-precisely to try to maximise the benefits.

Q84 Mike Gapes: When will that come into effect? Do you know?

Tom Smith: I think that the process is going forward during the next six months, isn’t it?

Chris Chew: Yes, the process is ongoing now. I do not know the target date for having the treaty fully implemented, but that work is ongoing.

Tom Smith: I know that in shorter time we are planning to bring in a new open general licence precisely for exports to the US under the treaty. So it will not happen all at once, but the whole process of engagement with business will take place over the next few months.

Q85 Mike Gapes: So, by the middle of the year we can expect some things to be better?

Tom Smith: Certainly the arrangements will be in place. Quite when the benefits start flowing will partly depend on industry’s readiness to take it up.

Q86 Richard Burden: Minister, what proportion of companies do you reckon are compliant with arms export regulations?

Mr Prisk: There is a lot of evidence in this area and inevitably that is a very difficult number to judge. You will be aware that in 2009 we had a survey that was looking at a limited sample-coming into this as a new Minister, I looked at the evidence-and the reality is that, like a lot of these surveys, it relied on people being compliant to fill in the form and therefore inevitably it was partial. So, I think there is a problem with that.

What we have tried to do-certainly, it is my approach here-has been to encourage the ECO and the Government as a whole to focus on increasing awareness. That is because an exact robust measurement of knowing how many appropriate businesses-the number of which we may not be able to calculate-are able and willing to comply is a very difficult number to secure. It is like asking what is the total of x and y when you do not actually know what either x or y add up to. So we have tried to focus on the awareness side of things and to strengthen that. In the last year, there has been quite a substantial amount of progress in that area, in terms of reaching out to business.

So the aim is not necessarily to try to be confident that you have got a robust statistic but rather that you are continually working with industry to ensure that as many businesses as possible are indeed compliant. So it is difficult; it is slightly like searching for a needle in a haystack, if I may say so.

Q87 Richard Burden: Perhaps we could come back in a minute to what is being done to raise awareness. I am glad that you said that about statistics, because it troubled me a little bit that the survey showed that an estimate of 80% of companies were compliant but it also showed that only 40% of companies had any knowledge of the SPIRE system, which is the way you go about getting a licence. I did not see how you can have only 40% that know how to do it but 80% are compliant. Given the fact that, whatever the total number, there is a big variation between those two figures, what are the Department or the ECO doing to try to get their statistics to be a bit more robust, because that contradiction rather hits you in the face, doesn’t it?

Mr Prisk: Let me just tell you what we are trying to do in terms of raising awareness and I will ask Mr Smith or Mr Chew to comment on some of the statistical aspects of this. I felt that it was important that we should be looking at awareness. So, over the last year, the ECO has been responsible for some 40 seminars, going out and engaging with industry, particularly trying to focus on the sectors that we know are more likely to find those seminars relevant. The ECO has also been focusing-quite rightly, I think-on work with chambers, trade bodies and so on, expanding that work. The ECO has had 16 separate events to ensure that it is informing and advising prospective businesses that could be involved with this work, and ensuring that it is available to them.

That kind of work is something that we as Ministers need to engage with as well, to get this message across. It is the best way of getting the profile up, so that businesses realise what they need to do, understand how to do it and have the right information available to them.

I do not know whether you want to touch on the statistics.

Chris Chew: In terms of the statistics, the survey was targeted at companies that manufacture or sell certain types of goods, and we found that only 40% were exporting. So, if a company is not exporting, there is no reason why it would have heard of SPIRE. You can argue the figures any way you like, but we looked at companies that manufacture because we wanted to find out if there were companies out there that were completely outside any knowledge of export control. We looked at a very broad range of businesses, and we found that when you look at the numbers of people who export versus the numbers that have heard of SPIRE, it is probably not that unusual to see the numbers that we did.

Tom Smith: To address the particular contradiction that the business group, I think, highlighted-namely, this number compliant with export controls and this number have heard of SPIRE-I think that 53% said that they had heard of SPIRE. What we do not know is how many of the other 47% export controlled goods. We selected companies based on customer tariff codes, and you cannot tell from those codes whether a good is controlled. If you take a digital camera, for example, if it meets a certain specification it is export controlled and if it falls below that specification it is not. That is the problem that we have in getting the statistics together. So, what we go on is all the intelligence that we get from all kinds of sources, about where people think that there is a compliance problem, but inevitably the data tend to be more qualitative than quantitative.

Q88 Richard Burden: Finally, on the criteria that licensing officials use, do they use the EU common position or the consolidated criteria of 2000?

Tom Smith: We work according to the consolidated criteria-those are the ones that are laid down in UK law-but in practical terms there is little or no difference. The main difference highlighted by the NGOs was the question of international humanitarian law under one of the criteria. I checked that specifically with the Foreign Office experts who look at these kinds of cases, and they assured me that they do, in practice, address considerations of international humanitarian law. It is not specifically spelled out in our criteria that that is what happens, but in practice that is what they do.

Q89 Richard Burden: Why not? As it’s in the common position, why don’t you just adopt that position?

Tom Smith: We will. There is going to be a revision of the consolidated criteria fairly soon and, when we do that, precise alignment of the criteria with the common position is, I think, one thing that will be looked at very closely.

Q90 Chair: Are you giving us a particular date for that? This is quite an important issue.

Tom Smith: It is. I do not know precisely; you might wish to ask our Foreign Office colleagues.

Q91 Chair: We’d like a written note from you, Minister, perhaps with your FCO colleague, on the timetable for producing that alignment between the common position and the consolidated criteria.

Mr Prisk: Certainly, Sir John. I’ll speak to Mr Burt personally to make sure that we get that sorted out.

Chair: Thank you. We’re going to turn now to the question of reinforcement, first on the civil side-civil penalties.

Q92 Chris White: Minister, as I am sure you know, since April the Government have had in place a revised compound penalty system, expanding its use for minor breaches of export controls. What is your assessment of that revised scheme?

Mr Prisk: Well, to be fair it is early days, and clearly it is something that is principally under the aegis of Her Majesty’s Revenue and Customs in terms of operation. But, we have seen a number of cases brought with a range of fines, one, as I understand it, in the region of £500,000. So, so far so good. My view is that it takes a little while-perhaps a year or so-especially as the frequency of different types of cases is not necessarily consistent. You tend to need a period in order to get an understanding of how it works in different instances, and it can take a little while, I suspect, before we have a rounded knowledge as to whether this is working as well as we would like it to.

Q93 Chris White: So, do you think that businesses are aware of the new criteria?

Mr Prisk: The short answer is that one would have to ask the businesses to check on that, but it certainly is an important part of our communication. I would imagine, given that it was the wish of Her Majesty’s Revenue and Customs to go in that direction, that it would also be doing so.

Tom Smith: It does publicise it.

Q94 Chris White: Finally, what would your view be regarding the naming and shaming of people who break the new rules?

Mr Prisk: Which type of people, before I answer that?

Q95 Chris White: The people who have broken the new criteria.

Mr Prisk: I think what’s important is that when someone is found to have broken those criteria and they are fined, it’s in the public domain, and that may be made crystal clear. I think that’s the best way of doing it. Whether we go beyond that-I think it would be of questionable value, to be honest with you.

Q96 Chair: Sorry, Minister, could you clarify that? Are you saying that you are making the fact that penalties have been imposed public but not referring to the name of the company, or are you saying that you think it’s appropriate to name the company that has received the civil penalty?

Mr Prisk: I am saying that I think the penalty, the compound fine, is sufficient.

Q97 Chair: Without naming the company. That is your view, is it?

Mr Prisk: Yes.

Q98 Chair: May I ask one further question on this? We had criticisms from the EGAD people. They said to us, "We have absolutely no idea what criteria it"-that is, your Department-"uses for imposing the penalty or how the penalties are arrived at." I think it’s very important that the Government are transparent as to the criteria they are using and how the calculations are done. Can you give us an assurance, Minister, that that will happen?

Mr Prisk: Certainly. I think we hear a variety of opinions on that, I have to say to you, but if that is their concern, it’s certainly my assurance to make sure that the people who should be aware are, and I will certainly be establishing whether in fact that is followed across Government.

Chair: Thank you. May we now turn to the issue of enforcement with criminal penalties?

Q99 Katy Clark: The Export Group for Aerospace and Defence also told us that they thought the best way to raise compliance was for there to be publicity about and, basically, vigorous criminal prosecution of those who have not complied. Is that something you agree with?

Mr Prisk: Again, we have to be clear as to which particular crimes we are talking about. Clearly, the most significant ones need to be dealt with in the most rigorous way possible.

Q100 Katy Clark: Basically I think what they were saying was that whatever else Government do, the most effective way of getting companies to comply is for them to see companies being prosecuted in the courts. The fear associated with that raises awareness of the system. Do you agree with that?

Mr Prisk: I do. I think you are quite right, especially in terms of the larger businesses, where their reputation is a very important part of their value as a business. They will be very mindful of the fact that prosecution can be very damaging in that context, let alone financial or other considerations.

Q101 Katy Clark: So what further steps are you taking to press criminal charges against those who breach export regulations?

Mr Prisk: Our view at this stage is that we want to deal with each on a case-by-case basis, where we have robust evidence. Again, I would say that I am always anxious not to try to come up with a rule, because the moment you do that in this area, it seems to me that immediately, either there is an exception that avoids the thing you’re trying to deal with or the rule does not work effectively. What we would try to do is make sure that we look at these matters very carefully, on a case-by-case basis.

Q102 Katy Clark: But what we do know from all our experience is that the more resources you put into these issues and the more staff time that goes into investigation, the more cases you will be able to take forward, because we know people are not complying with the regulations now. Are extra resources and extra funding being put to HMRC for this work?

Mr Prisk: Not only is HMRC involved, but the City of London police are already involved, particularly in terms of the whole question of bribery and the related issue. Also, in the last 12 months, we have seen a record number of prosecutions, and I think it is fair to say that, inevitably, that has been very resource-intense.

Q103 Katy Clark: So has there been extra funding?

Mr Prisk: Inevitably, having had additional prosecutions, we have been able to make sure they have had the resources needed to do that, yes.

Q104 Chair: To what do you attribute the fact that you have had a record number of prosecutions?

Mr Prisk: I pay tribute to the officials who are involved in this process. Whether it’s simply their work or whether there has been a growth in the market overall and therefore, perhaps, a commensurate increase in illegitimate activity on the edge of that market is difficult to judge, but I think it’s fair to say that officials have been able to bring record numbers of prosecutions, and they should be commended for that.

Chair: We shall turn now to pre-licence registration of UK brokers and so-called "brass-plate companies".

Q105 Anas Sarwar: I have a brief question: why are the Government not copying other EU countries in introducing a pre-licence register for arms brokers and brass-plate companies?

Mr Prisk: We do not have a completely closed mind on this issue. Our view is that while, obviously, the common position in the EU allows or permits member states to establish such a register, the question is whether it would make any difference to the kind of rogues we are trying to deal with here. I think it is important to question whether, if they are not applying for appropriate trade licences, they will, in reality, apply to a register of brokers. I have my doubts. There can be a case for looking and keeping this under our attention-as it were-but I have to say that I am quite sceptical as to whether this would work in practice. We are dealing with people who are not reasonable or usually law-abiding; therefore, if they are not complying with the licence arrangements, I very much doubt they will comply with a register of this kind.

Chair: May we now turn to extraterritorial controls? Penny Mordaunt will question you on this one.

Q106 Penny Mordaunt: Do the Government accept Amnesty’s argument that there is a case for putting things such as military vehicles, attack helicopters and combat aircraft into category B, thus increasing the controls on those items?

Mr Prisk: Our worry is that, in essence, extraterritorial trade controls should, on the whole, be the exception rather than the rule. If one had a wholesale approach to this, the danger is that we would be asking ourselves to believe that beyond our jurisdiction we could realistically maintain such controls, and I am not convinced. There could be an argument, and we are in discussions with Amnesty about the practicalities of each of the elements you have talked about. Indeed, last summer-August, I think-we put in place such an extension for anti-vehicle landmines. We have followed what Amnesty has said, and I want to look at it more carefully.

Q107 Penny Mordaunt: Is it possible to outline a rough timetable of those discussions with Amnesty?

Tom Smith: Discussions are sort of on an ongoing basis. Obviously, we saw the evidence that Amnesty gave in December to the effect that it wanted to move forward with these specific items. I have been meaning to contact Amnesty and the other NGOs pretty soon in any case to invite further proposals in this area. We would then want to get round the table with business as well. Because I do not know precisely what the arguments and the complexities might be at this stage, I would be slightly wary about committing to an outcome, let alone a timetable. We are not sitting on this; there is no merit in delay.

Q108 Penny Mordaunt: I wonder, Chair, whether once a timetable is set and there are some meetings, it would possible for us to hear about them or receive an outline of the timetable in writing?

Mr Prisk: Sir John, I would be happy to try to set that up for the Committee.

Q109 Chair: This is a very significant issue for this Committee, as it has been for previous Committees almost since the inception of the Committee on Arms Export Controls. We wish to be kept closely informed by the current Government on the development of policy on this subject. There is a further question I want to put to you, Minister: the Committee has not taken a view yet because it’s only just been formed, but its predecessor Committees always found it inexplicable that across a wide range of extraterritorial legislation, which covers organised crime, drugs, child abuse and so on, Governments of the day have had no difficulty in accepting the proposition that UK residents, if they commit such crimes overseas, which would be criminal offences in the UK, should face criminal prosecution for those crimes. The Committee finds it inexplicable why the Government of the day would not accept that a UK arms dealer, who manages to go overseas and take part in an arms trade, which would be a criminal offence in the UK, should not face criminal prosecution. We cannot understand, as a matter of principle, why some arms should be the subject of extraterritoriality and some not. Taking the most extreme and ludicrous example-but I put it to you anyway-as the legislation stands at the moment, if a UK resident sells a ground-to-ground missile overseas, which is in excess of 300 km in range, he or she faces a criminal prosecution. If they sell the same missile that is 299 km in range, they escape criminal prosecution altogether. Can that be a sensible basis for legislation?

Mr Prisk: I understand that point of principle, and as you say, that is an extreme example. Nevertheless, it is one that makes the case and I appreciate that.

In principle, Governments have taken the view that in cases of terrorism or murder, clearly extraterritorial controls and the ability to enforce the law should be considered. They have tended to take the view, and I think it is an appropriate one, that a wholesale ban in this field would be incredibly difficult to enforce and might undermine the other work that we are doing to deal with the particular rogues in this field. As I say, however, my mind is not wholly closed in this area. I think we want to make sure that we are engaged properly in having a dialogue, but I note the strongly held views that you have expressed, Sir John, not least on behalf of the Committee as a whole.

Chair: I hope, Minister, that you will reflect as to whether the enforcement of a total application of extraterritoriality in this area is any more difficult than the present legislation, under which extraterritoriality applies to the totality of drugs and the totality of child abuse, entirely rightly.

May we move on to end use controls? Malcolm Bruce has some questions on this.

Q110 Malcolm Bruce: The Government had been negotiating to amend the EU regulations on military end use, specifically for whole items, and for items which were going to countries where there might be question marks. Is that process ongoing?

Perhaps before you answer that, I could link it to the specifics of torture end use, where there was a slightly different situation. There was an undertaking that the Government would negotiate for an amendment to the EU regulations, but they would consider acting unilaterally if that were not agreed. Can you indicate what the status of the negotiations is, and whether this Government take a different view between the two?

Mr Prisk: The Commission is progressing with regards to the broader picture, and we are encouraging it to do so, but we cannot force its hand in that context. However, we have been very positively engaged with encouraging it to do so on the broader question.

On the question about execution-

Q111 Malcolm Bruce: I will come to that. I am asking just about instruments of torture at the moment.

Mr Prisk: Okay. Torture is an area on which we, as a country, have a strong position. We said to the Commission that, if it wishes to, it can make progress on the current situation, and we support the position that it has taken regarding an EU-wide torture end use control.

Q112 Malcolm Bruce: Would the Government consider acting unilaterally if there were not an EU agreement? The indication had been-

Mr Prisk: With respect, I probably ought to let Mr Burt, who leads on foreign policy, lead on that, rather than me.

Q113 Malcolm Bruce: That would be helpful.

Mr Prisk: Absolutely, I understand that.

Q114 Malcolm Bruce: One issue that is obviously in your Department’s responsibility is the recent revelation that sodium thiopental and other drugs were being exported to the United States, among other places, for use in lethal executions. It came to light in 2010 that batches of the drug were being exported by Dream Pharma and, at that point, a restriction was imposed. We now learn, however, that supplies had been sent to Arizona, and we have heard today of further supplies.

Can you indicate first of all when this information came to light from the Department’s point of view; how long it took to take action; when that action took effect; and whether the revelations that are now coming out about supplies being used today pre-date or post-date those restrictions?

Mr Prisk: With regard to sodium thiopental, the Secretary of State received a request at the end of October of last year about its potential ban in the light of apparent evidence regarding its use for execution. We looked at that carefully and put in place an order that came into force on 30 November, which we debated in the House, I think, on the 29th, so that for end use in the United States sodium thiopental was indeed under full control. We have gone slightly further-this comes back to the point I was raising with regard to the EU-and we have also pressed the EU officials to seek an adoption of an export control across the EU in that instance. When we looked at the United States, this was a substance that actually was not being used for any purpose other than execution, so it was a relatively straightforward decision.

The less straightforward decision relates to the other two substances that I know were part of the item that I heard about this morning on the radio, which I suspect hon. Members and right hon. Members also heard. The substances have of course been the subject of some previous allegations. This relates to potassium chloride and-I am demonstrating my O-level chemistry here so I will need to read this carefully-pancuronium bromide. These two, alongside sodium thiopental, are the substances that are alleged to have been exported by Dream Pharma. We have received a request from Reprieve with regard to this matter. That is the organisation that has been talking on the radio and to other people. Our view is that at this stage there is no suggestion that anyone has broken the law, because those two substances are under consideration but are certainly not under any control. I would also say that potassium chloride and pancuronium bromide are slightly different from sodium thiopental, for the simple reason that if you look at most NHS hospitals they are used perfectly legitimately on a routine basis. So they have potential uses other than the one that we are all concerned about.

Having received the request from Reprieve, we have sought to undertake a prompt and concise consultation with the industry to look at what the unintended consequences might be were we to pursue a potential control in the United States. That will conclude very shortly, and then the Secretary of State will have the evidence to make a decision as to what we do next.

Q115 Malcolm Bruce: There is slight concern and surprise in this. The surprise, I suppose, is that the United States-which after China is the greatest practitioner of state execution-has preferred this method and, despite having the largest pharmaceutical and drug industry in the world, does not have the capacity to produce these drugs for itself, and that they are apparently difficult and rare enough to have to be sourced from outside. In addition, the Government said that an export licence would be refused if the Department had any suspicions that the drug would directly or indirectly be used to facilitate the death penalty. Again, we are getting the information from sources outside Government, which imply that the UK supplier was completely aware of what was being used and said that he was happy to help. That is something that he may have to live with himself. What is the status of knowledge? If I may say so, Minister, you are leaving me less than reassured that it will not happen again, or indeed that we are in control of the situation-or that as of today anybody is prevented from exporting a batch for these purposes.

Mr Prisk: Where an allegation is made, we have to investigate it thoroughly and robustly, because sometimes there may be an instance where the allegation is incorrect, or there may be other evidence that the person in question is not aware of. I am aware also of some of the allegations about the supplier, Dream Pharma. We have an inspection system through the Medicines and Healthcare products Regulatory Agency to make sure that businesses are appropriate. Those inspections are robust and I regard them as very important. They are looking at the business as well as looking at the materials-in this case the drugs concerned. We will shortly have the conclusion of our consultation with the industry. I think we just have to balance, here-and I do understand it’s a very sensitive issue, and a very significant and important one; we just need to make sure that in wanting to stop an illegitimate use, as many people would see it, we do not proceed to destroy a perfectly legitimate trade that takes place elsewhere. And that’s why, I think, before we rush into a control order we need to make sure that we have looked at the implications of us banning the export of those substances to the United States. So that’s why we’re just taking some care; but with respect, we received an allegation and request to ban sodium thiopental at the end of October and on 30 November the ban was in place, so we can and do act promptly.

Q116 Malcolm Bruce: One assumes therefore what’s been revealed today was supplied prior to that date.

Mr Prisk: Yes.

Q117 Malcolm Bruce: And that you are confident that no further supplies could be made, or would be made, other than criminally.

Mr Prisk: Yes, what I’m saying is-you are quite right, and perhaps I hadn’t gone back into that point-the supplies in question were made before the control orders were in place. Certainly, we have had no evidence that anything other than that has been the case in this instance; but we will obviously look at the substances to make sure that we’re satisfied that the current arrangements are appropriate.

Q118 Chair: Minister, the allegation that was made on the "Today" programme this morning was that the Secretary of State and your Department were too slow in acting on the information that was given, and that a substantial consignment of sodium thiopental was taken out of the Acton premises and sold off to the US in the period between when you were notified of the trade and applying the control order. Can you respond to the point that you were too slow? And can you give us, perhaps in writing afterwards, because you may want to look at the documentation, the precise date when the order left the country?

Mr Prisk: Well, I heard the allegation made on the radio, like you, Sir John. I think that the fact that the request for the control order occurred at the end of October, and the action took place by the end of November, is a reasonable period of time. Had it been three or four months, I think the allegation might carry greater weight, but we will certainly undertake, as you have requested, to come back to you with the dates, and so on, so that you can see precisely what was undertaken within the Department, and particularly by the ECO.

Chair: Thank you very much. Just one final topic, if we can cover the important issue of bribery and corruption reasonably rapidly.

Q119 Ian Murray: We’ve heard a little bit already about the EU common purpose, and Transparency International has been looking at perhaps introducing a ninth criterion to that, in order to cross-cut the rest of the criteria that are in place, where clear corruption practices exist in a country. What would your view be on this proposal, and do you think there’s any realistic opportunity of that being pursued by the EU and coming into force?

Mr Prisk: I don’t think it’s something that we would be minded to support, and I doubt whether it would be successful. I think on the whole we’ve got to distinguish here between dealing with the risks of an unacceptable use or an illegal use, and how a contact is secured, and they’re actually two distinct things, so I think we shouldn’t confuse in law those two different elements. My instinct is that this is something that is unlikely to progress, and it’s not something that we would support.

Q120 Ian Murray: So just to pursue that point, in terms of the corruption criteria, where would that be sought specifically with the common purpose regulation?

Mr Prisk: That depends on whether you’re talking about, as I have said, the way in which a deal is secured. The questions in my mind are, "What is the use we’re dealing with? Who is the organisation we’re dealing with? What are the country and region? And what are the potential risks?" I regard those as being distinct from the specific issue of corruption. I think once we start confusing those two as being one and the same, there’s a danger of actually losing our focus on making sure that we’re involved in responsible and legitimate exports.

Q121 Ian Murray: There’s been some significant talk in the papers and in previous reports of this Committee about criterion 8 methodology and how that refers directly to bribery and corruption. Criterion 8, as I understand it, refers mainly to developing countries, so if the corruption issue being looked is not in a developing country, how would that fit in and how would it be dealt with?

Mr Prisk: I am just reminding myself of the various criteria. Criterion 8 is, as it says, very much focused on the question of "the technical and economic capacity of the recipient country". My view is that, as they stand, these various criteria-we went through them to be confident about them when starting as Ministers-are quite robust. Therefore, they serve the purpose very well.

Chair: Minister, thank you very much to you and your colleagues, Mr Smith and Mr Chew. We will await the additional material that you have offered. If we have any additional written questions we want to follow up regarding your evidence, we shall send them to you. Thank you very much indeed.

Mr Prisk: Thank you, Sir John.

Examination of Witnesses

Witnesses: Alistair Burt MP, Minister of State, Foreign and Commonwealth Office, David Hall, Deputy Head, Counter Proliferation Department (Strategic Export Controls), and David Vincent, Head of Arms Trade Unit, Counter Proliferation Department, gave evidence.

Q122 Chair: Minister, welcome to your first appearance before the Committee on Arms Export Controls. Welcome also to Mr David Hall and Mr David Vincent. Just to reassure you, Minister, I asked our previous ministerial witness the same question that I am going to put to you. As I said to the previous Minister, you should not take this question in any way personally. The point I wish to put to you is that the last report from the previous Government, which was the United Kingdom strategic export controls annual report 2008, came with the signatures of the four Secretaries of State-David Miliband, Lord Mandelson, Douglas Alexander and Bob Ainsworth-and was 100 pages in length. The first report from the present coalition Government is signed off, not by the Secretaries of State, but by junior Ministers-apart from yourself, there is Mark Prisk, Alan Duncan and Nick Harvey-and is about half the length. My question to you is whether that is an indication that the coalition Government have downgraded the importance attached to arms export controls and arms control generally?

Alistair Burt: No, I don’t think it is. First, the conciseness of the report is a reflection of the fact that the present Government have clearly been involved for rather less time and were offering an opinion on work done by the previous Government. Secondly, I don’t think conciseness in itself is a matter for concern, providing all the information is there. I also don’t think the change in personnel in relation to the Ministers is of significance. Clearly, everything that junior Ministers do falls under the overall aegis of their Secretaries of State, but perhaps it is helpful to have those Ministers who are actively engaged with the work on a day-to-day basis signing off the report, rather than just the Secretaries of State. Perhaps that will provide a nice pattern for others, but absolutely no sense of downgrading at all is conveyed by how it has been handled.

Chair: Thank you. I would make the point that, from the inception of this Committee, I think I am correct in saying that it has always been signed off by the four Cabinet Ministers concerned. You and your colleagues might want to reflect on whether that practice should be restored or not. It may be an issue that the Committee will want to reflect upon when it makes its report.

Alistair Burt: Indeed.

Chair: First, we want to address the new Government’s policy in this important area. Nadhim Zahawi will start.

Q123 Nadhim Zahawi: Thank you, Sir John, and welcome, Minister. How much importance does the Foreign and Commonwealth Office give to the promotion of UK arms exports? In dealing with that question, will you focus on what the role of the Foreign Office is in promoting and facilitating arms exports, and in what ways this Government’s policy on arms export will differ from that of their predecessors?

Alistair Burt: Thank you, Mr Zahawi. I have a brief opening statement that covers much of the ground, and I should like to read it if I may, Chairman. It is meant to be brief.

Chair: Minister, may I say for the future that we attach great importance to using the time for Members to put questions to you? I don’t think there’s any good reason normally why, if Ministers want to make a statement, they should not commit it in writing to the Committee before its proceedings start. I hope it is a short statement.

Alistair Burt: It is, and I think that it effectively covers the question raised.

Chair: Please proceed, Minister.

Alistair Burt: First, if it does not take up too much time, I should like to congratulate you, Sir John, on your role as Chair, and to thank you all for giving me the opportunity to deal directly with your questions. I greatly value the role that the Committees perform in scrutinising the
Government’s strategic export controls policy and practice. My officials and I look forward to working constructively with the Committees in this important area, and we would be very happy to host a visit by the Committees to the Foreign and Commonwealth Office on strategic export controls, should members find that helpful.

The Government are committed to ensuring that the UK’s strategic export controls are robust, effective and transparent. Effective export controls are essential for the maintenance of the United Kingdom’s security, and for the promotion of our increased prosperity in these challenging economic times. Effective strategic export controls ensure that the UK’s defence industry can compete internationally in supplying the legitimate defence needs of countries around the world, while at the same time ensuring that the supply of UK defence equipment does not undermine sustainable development in the developing world and that UK arms do not reach the hands of those who would use them for internal oppression, external aggression or human rights violations.

Effective export controls are also central to the core agenda of the Foreign and Commonwealth Office of protecting the UK’s security, pursuing commercial diplomacy and promoting UK values abroad. This Government’s approach to strategic export controls will remain firmly based on a case-by-case assessment of all licence applications for the export of controlled goods and equipment, and the Foreign and Commonwealth Office will continue to play an important role in the provision of information against which informed assessments are made.

Finally, the Government are also committed to ensuring high global standards. I am aware of some concerns that the incoming Government might not have an arms trade treaty as a similar priority to that of the previous Government. I hope that both the remarks of the Foreign Secretary on values and on the ATT and the practical evidence of activities suggest that those fears are unfounded. The United Kingdom will continue to play a leading role in helping to ensure that ATT negotiations progress to a successful conclusion at the diplomatic conference in 2012. As in July last year, the United Kingdom will play an active role in the UN negotiations in February and beyond, and officials in the Foreign and Commonwealth Office will continue to work energetically for a robust and effective arms trade treaty in close co-operation with colleagues across Government, the NGO and faith communities, the UK defence industry and our international partners.

I hope, by that, that the Committee will see that our approach to arms control matters will be very similar to that of the previous Government. It is a central priority to what we consider to be important in terms of values and British interests around the world.

Q124 Nadhim Zahawi: Thank you for that, Minister. Does the Foreign Office have any concerns about boosting the list of priority markets? Obviously, selling to Europe or America is much easier and safer. The list that we have been provided with includes countries such as Algeria, Pakistan and Libya. Thinking through the recent events in Tunisia, does the Foreign Office have any concerns about boosting the list? In answer, Minister, can you tell us how you ensure that there is no conflict of interest between the dual roles of foreign diplomats who are expected to work at conflict prevention and, at the same time, to promote arms exports to those countries?

Alistair Burt: They are both fair questions. First, we firmly believe that the robustness of the criteria with which we deal will continue to cover new areas where there might be opportunities of exports. One of the things that we might come back to time and again-I am sure that you have considered this with my predecessors-is the importance of a case-by-case consideration against the various criteria rather than of external circumstances as a special case, which relates to particular conditions within emerging new markets. If the criteria are robust enough, those issues will be covered. The short answer to the first question is that there are no worries about expanding the opportunity for exports, because there is a firm belief that the robustness of the criteria will protect the values that we uphold in dealing with the system and ensure that we do not run into trouble or put other people in trouble. That is clear.

To your second question about any possible dilemma or contradiction in the role of those who operate the policy, particularly those abroad, I would again say no. Ultimately, it is the criteria for arms export that trump everything else. Sales are important. We believe that a legitimate arms industry, as with all the NGOs with which we deal, has its place in securing effective defence for those countries that need it, and it is a perfectly straightforward business for us to be involved in. None the less, the commercial does not trump the criteria. By the very nature of their work, colleagues are used to dealing with applications that will force them to consider, as they do their work, the balance of an application. That, of course, comes back to those who are charged with the responsibility of dealing with the criteria on a case-by-case basis when an application has been made. You could legitimately ask me whether I have the same things in mind when I’m taking a view on an application. Indeed, I am aware of both drivers, but clearly the criteria, and the importance of the criteria, to safeguard the whole concept of arms exports is overwhelmingly the most important factor.

Nadhim Zahawi: Thank you very much.

Q125 Chair: Minister, will you address the conundrum that is behind these questions? In the real world, is it not the case that if diplomats around the world follow the Prime Minister’s instruction, as they will, the first priority is to go out and sell for Britain. That includes selling arms exports and supporting those contracts. Is it not the case in the real world that you don’t conclude a successful arms deal with some of the countries that are on your target list if, at the same time, you stand up very firmly to them on their human rights violations?

Alistair Burt: Again, Chair, we must be clear about this. The criteria clearly cover that issue in terms of those with whom we will deal. In the real world, both those who are out seeking entirely appropriate business for the United Kingdom and those who have to sign off applications are well aware of the increased transparency and inquiries that surround the matters with which we are engaged, not least you yourselves and others who take a keen interest in this matter. I don’t think any diplomat or Minister wants to be placed in a position in which they could be accused of taking a decision for the wrong reasons, if something subsequently went horribly wrong and a decision was examined minutely, as decisions should be and must be. So I fully understand the dilemma that you and the Committee are seeking to get to, but I think real-world pressures exist not only before a decision is reached, but after a decision is reached. We’re well aware of the importance of the scrutiny and that any decision needs to stand up months or even years afterwards, so I hope that sense of responsibility would also be a significant driving factor in decisions that colleagues were being asked to make.

Chair: We come now to the criterion regulating arms exports-criterion 8. Malcolm Bruce.

Q126 Malcolm Bruce: Thank you, Sir John. Criterion 8 is designed to ensure that we do not export to countries with weak economies, where the cost of buying the exports would be unbalancing to their economic or political situation. I have two questions. One relates to the evidence that we were given last time, which was that there was a recognition that there needs to be some agreement across Europe as to the use of this criterion. As I understand it, on 24 November in Brussels, the Dutch Government promoted a seminar to discuss that and determine whether there should be a change of policy. Can you give us an indication of what happened at that seminar and whether there are any implications of policy change? We have a copy of the slides from DFID and Oxfam that were presented there, and my next question might derive slightly from those, but what was discussed at the seminar and what effect might it have?

Alistair Burt: Absolutely. It was an important seminar, and I appreciate your drawing attention to it. The seminar was well attended, by a number of EU member states as well as by ourselves. The agenda comprised the presentation from Oxfam, followed by questions and answers and then a closed session involving member states, with presentations given both by ourselves and by the Netherlands. Our presentation was given by a representative of DFID, which is the lead Department. The presentation explained how we applied criterion 8 in our domestic export controls, and the methodology used.

We believe that the seminar was successful in its objective of sharing best member state practice. It was recognised that the criterion is one of the most difficult and complex of all the criteria to apply, and it was agreed that we would benefit from further discussion on the issue, particularly to ensure uniformity of applications. We will be returning to the issue. Can I also say this? We see it very much as a matter for member states. The issue is difficult. We don’t currently see the need to use the expertise of the EU External Action Service in assessing these applications. So the short answer is, the seminar was very important; the issue is still being considered; it is a very difficult matter to apply; and we are looking at how best we can co-ordinate the use of it.

Q127 Malcolm Bruce: When you say "difficult", you mean diplomatically and politically difficult, rather than objectively, in that France apparently has little difficulty and seems to use it with considerable enthusiasm, yet Sweden won’t use it at all, because it thinks it’s impertinent to determine what the arms export or import policy of a Government should be. That suggests there is a pretty wide range of opinion.

Oxfam-this has been of concern to me-presented the case study of Pakistan, making the point that the estimated combined budget for health, social protection and the environment of Pakistan for 2010-11 is €77 million, and the EU arms exports to Pakistan in 2008 were €685 million. That seems to be pretty clear evidence that criterion 8 is very relevant but doesn’t appear to be applied.

Alistair Burt: First, in response to the suggestion that some countries use it more than others and therefore what are we doing, our experience is that, in applications to the United Kingdom, a number of cases where ultimately criterion 8 might be applied are stopped from getting that far because, in the discussions taken forward, it becomes clear that a licence is not going to be issued. Accordingly, we rarely have to apply criterion 8 as the final decision maker.

Q128 Malcolm Bruce: Have you made any comparison between the UK and France?

Alistair Burt: Yes.

Q129 Malcolm Bruce: It seems that we are very comparable countries-France uses it a lot and we use it a little.

Alistair Burt: I think it says more about how the process is approached and at what stage decisions are reached than anything else.

Q130 Malcolm Bruce: Does that mean that you apply other criteria before you get to criterion 8?

Alistair Burt: Yes. That is absolutely right. In our dealings with those who are seeking the licence, the stages we go through knock out some applications that, if they had gone all the way, might have attracted a criterion 8 decision. They are dealt with before that stage is reached, which is why we don’t have so many criterion 8 decisions on the books, as it were.

Q131 Malcolm Bruce: May I finally pursue the Pakistan point, which concerns me? I can understand from a foreign policy point of view-from our engagement with Pakistan for security and other reasons-why we might have a judgment about our relationship and, indeed, our arms relationship with Pakistan. Pakistan is pretty well on the threshold of being a low-income country, and yet it is a priority in terms of export promotion. Is that what Pakistan really needs, when it is one of the poorest countries on the planet and is suffering all those disasters? Are weapons from Europe really what Pakistan needs?

Alistair Burt: You raise in your question two of the more difficult issues surrounding this. The first is the subjective nature of the consideration. Secondly, there is the replacing of a local judgement with an external judgment outside. The charge can be made that developing countries need to be able to take their own decisions in some of these areas. Whatever Pakistan’s other difficulties may be, it is also an area where security and defence are matters of the utmost consideration to its governance.

We concede that this is a very, very difficult subjective criteria to apply. If it were to be applied ruthlessly from one particular standpoint, it might make a significant difference to arms exports-perhaps an unfair one. That was the reason for the seminar and for the concern. Your concern about the potential risk of these exports, bearing in mind the development needs of the country, are very real and we share them. That is why the criteria is there, but there are also other factors to consider. In highlighting Pakistan, we are discussing a country with so many difficult issues, including security and protection. That is just an example of how difficult it can actually be.

Chair: Minister, in your opening statement, you referred to the arms trade treaty. You won’t be surprised to know that we have some questions for you on that important issue. I call Mike Gapes.

Q132 Mike Gapes: Minister, you have said that concerns that the coalition Government are pursuing a weaker policy than that of their predecessor are unfounded. When the previous Committee asked Ministers in the previous Parliament about making a choice between a weak consensus-based arms trade treaty or a robust treaty that had fewer countries involved, we were told that they would prefer a robust treaty to a weak, consensus-based one. Yet, the statement that has been attributed to the present Government is that you are going to strive for consensus to ensure that the correct balance is struck between the strongest possible treaty and the widest participation of states. May I put it to you that that is a shift of position?

Alistair Burt: It’s always a dilemma, if you’ve got lots of people around the table and you’re trying to get a common objective that we all know very well. If by consensus we mean that we want to ensure that it is a robust treaty because the key players are a part of it, that might in a way give you a sense, Mr Gapes, of squaring the difference. To have a treaty that doesn’t have the major players involved and part of it will negate its value and all the work that’s been done. Equally, to have something that isn’t worth the paper it’s written on won’t do the job. At present, my understanding is that the degree of interaction with the major players involved-the industry, the NGOs and respective Governments-is very strong, and the determination among all to produce an effective and viable treaty is something that drives everyone.

Accordingly, I think at present, our position that we should strive to get both a robust and a consensual treaty is a good one. I don’t think we’ve yet reached the point of saying, "We now have to decide between these two objectives," but certainly, if the treaty lacks the support of key and important players, then I’m not sure that our work won’t have been in vain. That’s where we are at present.

Q133 Mike Gapes: But you’re aware that China, India and Russia all abstained on the vote to begin formal negotiations on the treaty, aiming to get the treaty signed in 2012? I put it to you that you will have to pay a price if you want China, India and Russia to sign up to that treaty.

Alistair Burt: Well, at this stage, we’re putting a great deal of faith in the negotiation process that is under way. I was asked at the beginning about our attitude toward it and our determination, and whether or not there had been any changes in the way in which we were dealing with it. The first phase of the process-the negotiation phase-we think has been successfully concluded. That was the work that John Duncan was principally engaged in. We now go on, having reached that first stage, to take it forward with the outline timetable leading through to 2012.

I think it should be noted that the countries that you have mentioned are all engaged in preparation for the July meeting. I think that indicates that patient negotiation work can bring other people back into play. So, although not everybody was on board at the start, the whole point of this process, if it’s effective, is to help convince people that there is something that we all very much want to see. I think we have a degree of faith that the process on which we’ve embarked and in which the United Kingdom is such a key player will bring other people round, but it will be a continuous process. Like so many of these things, we might not know any potential trade-offs until quite far down the road.

Q134 Mike Gapes: You said the United Kingdom is a key player.

Alistair Burt: Yes.

Q135 Mike Gapes: I think it’s fair to say-the NGOs have said it over the past couple of years-that the UK is a key player within this process. Since the election of President Obama, we now see that the UK is no longer the lead on this process. The United States has taken a much more important role. Doesn’t that mean that our influence is actually less? Given that the US has a different attitude to the possible outcome and what concessions will be made, isn’t the reality that we are now following an American lead on the treaty rather than providing the lead ourselves, as we were? For understandable reasons, we were providing that lead until the change in the US Administration.

Alistair Burt: I think it’s a bit tough to be accused of being successful at the kick-off to get people engaged when a significant player, encouraged by the success that we have shown, subsequently comes on board. The size and importance of the United States in these matters can’t be denied, but it’s probably a measure of the success of the United Kingdom that we’ve been able to take the lead that we have. The United States is clearly engaged, after the success of what we’ve been doing, but I don’t think the Committee should necessarily fear that the influence of the United Kingdom in these matters has been affected.

I was in New York for the end of the non-proliferation treaty discussions-not the ATT, but just as a reasonable parallel. Seeing colleagues at work in New York and the way other countries were working with them on such a key aspect-it has parallels with this-convinced me that the way in which we were engaged, we were successfully involved. I take your point, but I don’t think that necessarily indicates a complete absence of United Kingdom influence.

Q136 Mike Gapes: But it is true, isn’t it, that the American approach is much more orientated towards a consensus than the position that we had before?

Alistair Burt: I go back to what I said before. It is clearly a matter of policy for the United Kingdom that we want to see a robust arms trade treaty. We set that out very clearly and the Foreign Secretary, in his recent speech relating to both values and commerce, used the ATT as an example of what we could do to promote both values and commerce. As I indicated before, the point of consensus is to ensure that we have all the major players involved, to ensure that the treaty is effective and does its job.

At this stage, trying to make the split between a robust approach and consensus is probably not necessary, and it has got to be in the interests of the US to want a strong and robust treaty as well. So I do not think that that factor should be taken out of the equation either.

Q137 Mike Gapes: What role are we playing within the negotiations? Are we, if you like, an outrider for a more robust treaty, or are we a close associate to assist the Americans in providing the leadership?

Alistair Burt: I think that the right way to characterise it is to say that we are still led and driven by the values that put us in the driving seat in relation to the initial negotiations; those values are what we are guided by. We do not see ourselves either as anyone’s outrider, or as taking a role on a white charger going off in the opposite direction.

If this treaty is to be effective, and bearing in mind the degree of interest in and support for what the Government have been seeking to do over a number of years and are seeking to do now-from the industry, from other Governments and from NGOs-it ought to be something on which we are all moving generally in the same direction. I think we see ourselves as further promoting the values that brought us to this stage, rather than going off in a separate direction.

Q138 Mike Gapes: May I ask you about our own team? Has there been any reduction in the resources available for our team that is negotiating on the arms trade treaty, given the financial pressures and other pressures that the FCO faces at the moment?

Alistair Burt: No, I don’t think so. We have changed the structure slightly, as you are aware, because of the change in the position of the negotiations. That is why John Duncan’s role has been changed. We keep the permanent representative in Geneva, but the discussions are going to move more to New York than Geneva, and they have been brought back in-house to the heads of the respective departments in the FCO. I am not aware-

Q139 Mike Gapes: Perhaps you could send us a note about this. That would be helpful.

Alistair Burt: I can do that. Genuinely, I am not aware that that change in structure reflects a change in resources. This is a significant priority for the Government and for the FCO.

Q140 Mike Gapes: Finally, will Ambassador Duncan remain in post as the UK ambassador for multilateral arms control and disarmament until the signing of the treaty?

Alistair Burt: No. I think that his role comes to an end this summer.

Q141 Mike Gapes: So, for the key period after these preparatory meetings in 2011, he will be leaving and somebody else will then have to deal with the actual conference in 2012.

Alistair Burt: Yes.

Q142 Mike Gapes: Clearly, he has huge experience.

Alistair Burt: He has, but there is also huge experience within the Department and among his colleagues who have been working on this treaty with him. I do not think that we can say that any one individual should necessarily always be associated with one thing and continue with it beyond a particular point. It is the right point. He has made a huge contribution to non-proliferation, particularly the conclusion of the treaty last summer. He has done his time in this particular area. Again, I think that John Duncan’s retirement from this area is not to the detriment of the work, and there are structures in place to continue to ensure that the expertise we have in the Department is appropriately deployed.

Q143 Mike Gapes: He will have an equally high-powered successor?

Alistair Burt: Yes. I believe that the structure we have will enable us to do the job.

Mike Gapes: Okay. Thank you.

Q144 Chair: Sorry-can you just clarify that answer to Mr Gapes? Are you assuring us, Minister, that Mr Duncan will be replaced in post, in the same position, by somebody of equal seniority and capability?

Alistair Burt: The short answer is yes. As I indicated before, Sir John, the structure is changing. We are keeping the permanent representative in Geneva. The leadership is being transferred to the heads of two departments in the Foreign and Commonwealth Office. But the whole team is a cross-Whitehall team and includes members from the FCO, the MOD, the Business Department and DFID, all working closely with experts in the NGOs and the defence industry. That has not changed. That expertise is there in those who will robustly put the case forward.

Q145 Chair: And we will have the same level of senior representation in Geneva-correct?

Alistair Burt: No, that representation will be in London, as I indicated, because most of the work is moving from Geneva and, effectively, to New York and capitals. We have changed the structure accordingly. The focus of the attention of the treaty, now that we have reached the stage we have, moves away from Geneva. That’s why there’s been the change in structure.

Q146 Chair: Can we have a note, please, as to what we will keep in place covering arms control issues in Geneva, where a great deal of important activity takes place?

Alistair Burt: Of course.

Chair: Thank you.

Q147 Malcolm Bruce: May I ask a couple of specific questions on small arms? Obviously, it is very welcome that America has come on board for the treaty, but it is also well known that it is opposed to including ammunition in the small arms agreement. Do the UK Government go along with that, or are they still arguing the case? There is evidence that where ammunition is in short supply, that saves lives, to put it at its simplest. There is genuine concern that ammunition should not be excluded. There are also practical considerations about the registration and marking of weapons and a view that the basic, simple agreement should be that if a weapon is not marked, it’s illegal, but if it is marked, it can be recorded and registered. That won’t solve the problem, but it makes things easier to control.

Alistair Burt: On the specifics of the treaty, you might highlight a series of issues that have not yet been decided and all of which are complex, and ammunition is one. Our discussions with the United States have highlighted a number of areas where we have a great deal of common thinking, and there are a range of views among UN member states as to what should be the scope of the treaty. We support a wide scope, which would include ammunition. As to much of the talk on the detail of the treaty-that’s now what people are getting into-some of the areas are so complex that, at this stage, distinguishing between our views won’t clarify the situation for anyone. But on ammunition, as I say, we have a clear view that we would like the scope to include it.

Malcolm Bruce: Okay. Thank you.

Q148 Chair: Is the Government’s policy to try to secure the inclusion of dual-use items or not?

Alistair Burt: It’s not our view at the moment, no.

Q149 Chair: Dual-use items should be excluded-that is the Government’s policy position, is it?

Alistair Burt: That’s our present position.

Chair: Turning now to individual countries, Richard Burden.

Q150 Richard Burden: I would like to cover two countries, the first being Israel and the second being Saudi Arabia. You’ll be aware that the use to which arms exports to Israel may have been put has been a matter of some concern to this Committee for some time and, indeed, appeared to be a matter of concern to the last Government, as well. You will know that, in 2000, assurances were given by Israel that UK-originated equipment would not be used by the Israeli defence forces in the occupied territories. In 2002, it transpired that that assurance was not being followed by Israel. In the last report by the previous Committee on Arms Export Controls, there was fairly clear concern expressed that "arms exports to Israel were almost certainly used in Operation Cast Lead…in direct contravention to the UK Government’s policy that UK arms exports to Israel should not be used in the Occupied Territories", and we asked that broader lessons be learned from that. Could you give us an update on where UK policy is in relation to UK arms exports to Israel being used in the occupied territories?

Alistair Burt: The use of arms in a specific area or a specific territory is not part of the criteria. What the criteria seek to make clear is that it’s the end use of the arms which is the determining factor.

Q151 Richard Burden: So is that a change?

Alistair Burt: No, it’s not a change.

Q152 Richard Burden: So why did we seek an assurance from Israel in 2000 that UK-originated equipment would not be used in the occupied territories-and receive such an assurance?

Alistair Burt: The criterion as drawn, because it allows us to look at past behaviour and to take into account what has happened, is sufficiently robust to ensure that, in a situation where arms may have been used in the occupied territories, it would be highly likely that the criterion that affects the application would ensure that there probably would not be an export licence granted. What we seek to make clear is that it isn’t about the territory, at the end of the day; it’s the end use. The criterion is sufficiently robust to cover any external factor like the territory in which arms might be used; and that would always be covered by the criterion. Our policy has not changed from the previous Government’s in relation to the use of arms in the occupied territories, or the criteria that would be applied in making a decision about whether or not an arms export to Israel would be likely to end up being used there.

Q153 Richard Burden: Given the fact that Israel is in occupation of the West Bank and arguably is still in occupation of Gaza-despite the fact that settlers are no longer there-in contravention of successive UN resolutions, to which we are a signatory, could I ask what activities you, the Government, feel would be acceptable for the use of UK-exported arms to Israel in those territories?

Alistair Burt: Well, it’s impossible to say, because I don’t think we can produce a list and say that if the export licence was for this particular set of goods, they would be automatically accepted as something for which a licence would be granted; but as we know, humanitarian equipment, for example, is something which might be asked for and might be used.

Q154 Richard Burden: Humanitarian equipment isn’t the subject of arms export controls, is it?

Alistair Burt: No, but there are some items that can be used which turn out to be used for humanitarian purposes, but I don’t think I want to get drawn down there. The point is, an application would be made for the use of certain equipment. We believe that the licensing criteria are sufficient, and sufficiently robust, that application for goods destined to be used outside the criteria of the licensing would be rejected. I don’t think it’s a question of producing a list and saying, "If it was x, y and z products it would be acceptable; if it’s a, b and c it isn’t." All the criteria that are effective in relation to our consideration of arms export licences apply as robustly to Israel and the occupied territories as they would do anywhere else in the world. It’s not the territory, it’s not the place, that makes the difference; it’s the end user.

Richard Burden: The end user?

Alistair Burt: It’s the end use. Any deployment of arms within the occupied territories would be a significant factor to be taken into account in any licence application.

Q155 Richard Burden: Of course, the previous Government did revoke a number of licences, particularly after Operation Cast Lead.

Alistair Burt: Indeed.

Q156 Richard Burden: We have been assured that there would be rigorous monitoring of what UK arms exports for which licences had previously been given were being used for, and could still be used for. What monitoring is taking place?

Alistair Burt: Exactly the same monitoring as has been in place up to now.

Q157 Richard Burden: Well, we were a bit unclear about what that was.

Alistair Burt: We get information from NGOs and those who would see the use of weapons on the ground. I don’t believe that the monitoring process has changed in any way since that of the previous Government.

Q158 Richard Burden: Are there any results from the monitoring in the period the coalition has been in office?

Alistair Burt: I am not aware of any licences that have been changed to date, but remember-

Q159Richard Burden: No, no, no: this is about the use of equipment for which licences have already been given. That is where the concern has arisen.

Alistair Burt: Where applications are new, plainly, we can take a view on whether they fit the criteria. If information is available to us which leads us to believe that licence criteria have been breached, then that allows for a revocation of the licence. We do not go through continuous monitoring of how equipment may be used, but if it comes to notice through NGOs and others who watch on the ground that there is a potential breach of licence, that would be investigated. At present, I am not aware that any such information has come to us over the past few months. That information is not, as it were, routinely collected, but we are always available to collect it.

Q160Richard Burden: Okay. Tell me if I’ve got this right about the Government’s position: despite the fact that Israel is in occupation in contravention of UN resolutions to which we are a signatory, the fact that UK-originated arms are used in those territories is not of itself a problem for the British Government. It would only be what those arms or components are used for that may be a problem. However, the British Government do not proactively check what those arms or components will be used for, but rely on other people giving reports to them, and, in those cases, they may or may not take a view. Is that the Government’s position?

Alistair Burt: If there are any such arms there, first, they will have been used under licences granted by a previous Government-

Q161 Richard Burden: Well, it’s pretty clear that there has been. The previous Government acknowledged that that was the case in relation to the armoured personnel carriers in 2002. It’s pretty clear that UK-originated arms were used in Operation Cast Lead, isn’t it?

Alistair Burt: Yes, but that results in the revocation of licences.

Q162 Richard Burden: Of new ones.

Alistair Burt: No, of extant licences. Where there are still goods to be supplied under a licence application that had been granted, those would be stopped in the case of evidence coming to light of how they had been used. It would be extant licences, as well as new licences, that would be affected by information that came to the Government about the use of goods.

Q163 Richard Burden: But I’m still trying to establish if you are doing any proactive monitoring at all. Are you just waiting for somebody to say, "Look, we think there’s a problem here"?

Alistair Burt: In the current process, as you will know as well as most, there is intense scrutiny of what happens on the ground in the occupied territories, and rightly so. That information feeds back to posts. If information comes in that indicates that a licence criterion has been breached, it would result in an inquiry that would allow for the revocation of a licence. I do not believe it is a process that, at present, we need to be more proactive on than is already the case. There is an extensive and, as I indicated, quite proper network of scrutiny of what happens in the occupied territories to give us the information we need. It is important for the Committee to know that we would take exactly the same view of breach of criteria as that taken in the past, because, again, the criteria allow for that. Where information is found that shows that there has been a breach of the criteria, existing licences can be revoked and that feeds into information on new licences.

Q164 Richard Burden: Okay. I want to move on to Saudi Arabia, but perhaps I could ask, because you wouldn’t have this information at your fingertips, if you could check where allegations have been made and given to the UK Government about UK-originated arms for which licences have been given and which have been investigated, and what the results of those investigations are.

Alistair Burt: Yes.

Q165 Chair: Richard, just before you move on to Saudi Arabia, may I ask the Minister one further thing? One can debate the merits of two different policies, but I find it impossible to understand your position and your argument that you feel there has been no change of policy.

The previous Government were absolutely clear that they wished to have a categorical assurance from the Israeli Government, and they got that in writing, dated 29 November 2000. It was reproduced in the House, and it said, "No UK originated equipment nor any UK originated systems/sub-systems/components are used as part of the Israel Defence Force’s activities in the Territories". Yet, the new Government-the present Government-in their formal response to our last report said, "The UK Government does not have a policy that UK arms exports to Israel should not be used in the OPTs." Surely, Minister, it is absolutely crystal clear that there has been a significant change of policy between the two Governments.

Alistair Burt: No. All export applications for Israel are assessed on a case-by-case basis against the consolidated EU and national arms export licensing criteria. The end use of the arms that are the subject of the licence application is a relevant fact in that assessment, but it is not the only factor. The Government’s answer was intended to emphasise that Government policy on Israel is determined by a case-by-case assessment against the criteria, not by the final destination of end use alone. Critical factors in that assessment include the nature of the equipment and its stated end use.

For Israel, any likely deployment of arms within the OPTs by Israel is, of course, a significant factor in our case-by-case assessment of export licence applications, but the determining factor in whether a licence application is granted or refused remains whether the application breaches our export licensing criteria, and that was always the case.

Q166 Richard Burden: Moving on to Saudi Arabia, you will probably be aware that quite a lot of concern was expressed in a number of quarters about the attack by the Saudi armed forces on northern Yemen in autumn 2009, and about the possibility that UK-supplied equipment could have been used in that attack. There have been a number of allegations that the military action was itself illegal. Against that background, could you give some indication of what the UK Government take into account and what risk assessments they make when determining whether to provide licences for arms exports to Saudi Arabia?

Alistair Burt: The fundamental importance and robustness of the criteria remain the guide. The policy on arms exports to Saudi Arabia remains to assess all licence applications on a case-by-case basis, and it is inherent in the process of assessing all our export licence applications that past behaviour is factored into judgments about whether to issue a licence. The Government will not issue an export licence when to do so would be inconsistent with the criteria.

We do believe that Saudi Arabia had a legitimate right to respond proportionately to incursions into its territory resulting from the conflict between the Houthi rebels and the Government of Yemen. The Government followed the situation closely at the time and, after consulting a number of information sources, concluded that the Saudi response and the use of British-supplied military equipment was not inconsistent with the export licensing criteria. So, the short answer to your question is that we use the same criteria as we do for everyone else, which take into account past behaviour in considering any new licences.

Q167 Richard Burden: Right. I’m not entirely sure what you’re saying. If I may gently suggest it, there has been a slightly circular logic in your answers on both Israel and Saudi Arabia, which appear to say that at each stage you make an assessment based on past behaviour but then you don’t make an assessment of that past behaviour. Is that what you’re saying in relation to Saudi Arabia? Are you saying, for instance, that when the licence for Typhoon combat aircraft was being considered, the attack in relation to Yemen was considered to be not contrary to the UK’s criteria, and therefore it was fine to go ahead with the licence? Or did you look at the attack and say, "It probably was contrary to the UK’s criteria but we don’t think that it would do the same again"? Or did you say, "We think that it was contrary to the UK’s criteria and we are not sure whether it will do it again, but we will consider it if it does it again"?

Alistair Burt: My understanding is that we took a view on the application, based on all the information at the time, that the threshold for refusal-say, under criteria 2, 4 and 6 of the consolidated criteria-had not been met.

Q168 Richard Burden: Clearly, that was the case because the licence went ahead. Did you take the view-it might be a reasonable view to take; I make no comment on that-that the Saudi Arabians’ actions in the autumn of 2009 were not in contravention of the criteria, or did you think that they might have been, but you still felt that it was acceptable to go ahead with the new licence?

Alistair Burt: It was the former. It was that the activity was not in contravention, or inconsistent with the licensing criteria.

Q169 Richard Burden: Okay. Had it been in contravention, that probably would have affected the licence?

Alistair Burt: Yes. Absolutely right.

Q170 Richard Burden: You would take the same view about Israel?

Alistair Burt: Yes.

Q171 Richard Burden: So, if Saudi Arabia had done something that was in contravention, it would affect a future licence application, but in Israel, it might.

Alistair Burt: No, it would. Exactly the same rules are applied. The criteria are robust enough to give a guide on new applications but they also allow for past behaviour to be taken into account. Clearly, where there have been breaches in the criteria, that is a material factor in taking into account a new application or a renewal of a licence, so it is entirely consistent and exactly the same.

Richard Burden: So, we very much look forward to receiving from you the details of the investigations that have been undertaken.

Chair: In the few minutes remaining, we should like to cover Sri Lanka, Georgia and China. Katy Clark, you are going to deal with Sri Lanka and Georgia.

Q172 Katy Clark: You will be aware that the previous Committee was very critical of the fact that the arms exported during the ceasefire period in Sri Lanka were subsequently used in the civil war. What is the current Government’s policy on exporting arms to Sri Lanka?

Alistair Burt: If I may say, it is exactly the same as I have set out. It is a case-by-case consideration based on the criteria in which previous behaviour has to be taken into account. The Committee will be aware that immediately following the conflict in Sri Lanka, all the extant applications to Sri Lanka were reviewed in the light of the policy and eight extant licences were therefore revoked. It remains exactly the same as the approach that I have set out-a case-by-case consideration based on the criteria.

Q173 Katy Clark: So, are we exporting arms?

Alistair Burt: We are only approving licences that fall within the criteria. In 2009, the UK issued six licences, refused 17 and revoked eight. In the first three quarters of 2010, we have issued 13 single individual export licences, and all the goods are intended for humanitarian, safety, commercial or civil end use.

Q174 Katy Clark: So, you are saying that we are not exporting any arms that could potentially be used in conflict?

Alistair Burt: Correct.

Q175 Katy Clark: Shall I move briefly on to Georgia? I know that a number of Members have to leave, so I will be brief. In a previous report, the Government referred to lessons learned from Georgia. Will you outline what that meant and what lessons were learned?

Alistair Burt: Yes, straightforwardly. It is inherent in the process of assessing all export licence applications that past behaviour is factored into judgments about whether or not to issue a licence. Licensing decisions for Georgia take into account our analysis of Georgia’s actions during the 2008 conflict. More than two years on, we note that security on the ground has improved and that the affected areas are more stable. We don’t think it likely that there will be a return to large-scale conflict in the near future. Accordingly-again, we go back to the criterion that it will be assessed on a case-by-case basis-past behaviour will be taken into account, and again, as the Committee will know, six extant licences for Georgia were revoked in the past.

Q176 Katy Clark: So what were the lessons learned?

Alistair Burt: The lessons learned, again, are whether the processes to discern whether or not there were breaches to the criteria work. Otherwise, the licences would not be revoked. But in addition to being robust in relation to the past use of equipment that was granted under the licensing, you also look at a change in conditions on the ground and so on. I think that, in terms of the lessons learned, the determination is to continually make sure that you have enough information available, so that the application of the criteria will be accurate in all particular cases, but that the processes are robust and must continue to be kept robust.

Q177 Katy Clark: So you are saying that the lesson learned was that the policy was correct all along-is that what you’re saying? What has changed?

Alistair Burt: As far as I’m aware, I don’t think anything’s changed in the approach or the process. The results of an investigation to show that licences should be revoked don’t, of course, necessarily imply that the conditions were apparent at the time the licence was granted, which would have meant that an application was granted wrongly. Circumstances arise after an application has been granted where the criteria have been perfectly properly fulfilled, but the use of equipment granted under a licence can mean that, when you look back, you see clearly that the criteria have been breached. But that doesn’t indicate that a mistake was made in the first place. I think that our review of that showed that that was the case. It is not to take the view that revocation of extant licences necessarily meant that an error was made in the first place. In all these cases, it seems to me that, on the care that’s taken in the consideration of the initial licence application, the examination of what happens on the ground, and then the consideration of whether or not the behaviour displayed should affect either the continuation of a licence or the granting of a new application, that procedure has to be very robust and very clear.

Chair: Thank you. Last but by no means least, we have John Glen on China.

Q178 John Glen: Thank you, Sir John. Minister, we are concerned to understand the Government’s position on maintaining the arms embargo to China. Obviously, the EU and, formerly, the EC have had that embargo in place for the past 21 years, but last month Baroness Ashton circulated a paper that described the ongoing embargo as "a major impediment" to the improvement of relations between the EU and China. Will you please describe the Government’s position on this, and set out what discussions, if any, have taken place with the British Government regarding the lifting of this embargo?

Alistair Burt: First, the position of the British Government is that they fully support the embargo, which is intended to continue. I think that, where the emphasis might have been different in the EU statement in relation to the impediment was that, if it is an impediment to progress, it is for the Chinese to resolve that, because the embargo is related to human and civil rights considerations, which remain of concern to us, and the importance of which we will continue to uphold. We have absolutely no sense at the moment that we are ready to change this. We have no processes in place to lift this embargo, and my understanding is that we have not been approached to do that. Of course, in the ideal world, the embargo would go because China had changed. If that were the case, everyone in this room would welcome it, but until that happy time occurs, the embargo could and should remain in place.

Q179 John Glen: Nevertheless, there’s a big difference between the position of the British Government and that of, say, France and Spain, which take a different view. How would you account for the difference of view?

Alistair Burt: I am, happily, not answerable for France or Spain. We maintain our own position on this. Frankly, it is one to be defended very robustly. That’s our position.

Chair: Minister, thank you very much for your evidence. Thank you Mr Hall and Mr Vincent for coming as well. Minister, we will be glad to have any of the written follow-up that we’ve requested. We may have one or two additional questions to put to you following your evidence. Thank you very much for coming in front of the Committee today.

Alistair Burt: Thank you very much indeed, Sir John.