House of Commons - Scrutiny of Arms Exports (2012): UK Strategic Export Controls Annual Report 2010, Quarterly Reports for July to December 2010 and January to September 2011, the Government's Review of arms exports to the Middle East and North Africa, and control issues

Scrutiny of Arms Exports (2012): UK Strategic Export Controls Annual Report 2010, Quarterly Reports for July to December 2010 and January to September 2011, the Government's Review of arms exports to the Middle East and North Africa, and control issues - Business, Innovation and Skills Committee Contents

5 Arms export control legislation and procedures

Extra-territoriality

22. Extra-territorial legislation enables UK persons to be prosecuted in the UK for actions overseas which, if carried out in the UK, would constitute a criminal offence. A substantial body of extra-territorial legislation already exists on the statute book. A summary of the legislation, indicating the position taken by successive Governments on this matter, is reproduced as Annex 2. Successive CAEC Reports have taken the view that in the matter as important as arms exports extra-territoriality should be expanded to all types of arms exports and that it would be irrational and inconsistent to apply extra-territoriality to some types but not to others.

23. The Government's current position on extra-territoriality with regard to arms exports, is set out in secondary legislation, most recently in the Trade in Goods (Categories of Controlled Goods) Order 2008.[27] The current system is based on a three-tier categorisation system where the full range of controls apply to Category A goods, but their scope is reduced for Category B and reduced still further for Category C. A summary of this system is set out below.

Box A

Category A goods consist of cluster munitions, and specially designed components thereof; and certain paramilitary goods whose export the Government has already banned because of evidence of their use in torture, including electric shock batons, electric-shock belts, leg irons and sting sticks.
Any person within the UK, or a UK person anywhere in the world, is prohibited from supplying or delivering, or doing any act calculated to promote the supply or delivery of, Category A goods without a licence from the Secretary of State. These strict controls reflect the fact that the supply of many of these goods is inherently undesirable. Licences will not normally be granted for any trade in paramilitary goods listed because of evidence of their use in torture. However, as with physical exports of such goods, there will be rare circumstances in which one might be granted, (e.g. for the export of equipment for museum or exhibition display).

Category B goods consist of Small Arms and Light Weapons (including ammunition); Long Range Missiles (LRMs) capable of a range of 300km or more (Note: this includes Unmanned Air Vehicles (UAVs)), Man Portable Air Defence Systems (MANPADS), specially designed production and field test equipment for MANPADS, and specialised training equipment and simulators for MANPADS, and specially designed components for any of the above.
Any person in the UK, or a UK person anywhere in the world, is prohibited from transferring, acquiring or disposing, or arranging or negotiating a contract for the acquisition or disposal of Category B goods without a licence from the Secretary of State. Financing, insuring, advertising and promotion for Category B goods will not be controlled, but active or targeted promotional activities aimed at securing a particular business deal will be.

Category C goods consist of all goods contained within Schedule 2 of the Export Control Order 2008 that do not fall into either of the two categories above, and certain substances for the purpose of riot control or self-protection and related portable dissemination equipment.
Trading between two countries in Category C goods is only controlled if carried out from within the UK.

Source: Department for Business, Innovation and Skills, Review of Export Control Legislation (2007) Supplementary Guidance Note on Trade ("Trafficking and Brokering") in Controlled Goods (in effect from 6 April 2009), January 2009 and Explanatory Notes to the Trade in Goods (Categories of Controlled Goods) Order 2008

24. The principle that extra-territoriality should be applied to arms exports was first conceded by the previous government when the Trade in Goods (Control) Order 2003 was given legal effect.[28] That Order introduced new controls on trade in military equipment between overseas countries (including 'trafficking' and 'brokering').[29] Under the Order any person within the United Kingdom, or a United Kingdom person anywhere in the world, was prohibited from supplying or delivering, or doing any act calculated to promote the supply or delivery of, restricted goods without a licence from the Secretary of State. Extra-territorial controls (on the activities of United Kingdom persons anywhere in the world) were applied to trade to any destination in:

long-range missiles (over 300 km) and their component parts;
torture equipment the export of which had already been banned by the Government (including, for example, electric shock batons, and leg irons); and
to any embargoed destination.[30]

25. From 1 October 2008 cluster munitions were added to the list of goods to be treated as Category A goods and Category B controls were widened to include small arms and man-portable air defence systems.[31]

26. The then Trade and Industry Minister, Ian Lucas, told our predecessor Committees in a letter dated 11 February 2010 that Anti-Vehicle Landmines would be added to Category B and therefore their trade by UK persons would be subject to extra-territorial controls.[32] Our predecessor Committees had called for this change in their Report of March 2010[33] Additionally, as a first step towards targeted extensions, the letter detailed how NGOs had agreed to:

consider whether there are any particular goods that ought to be moved from Category C to Category B, based on the risks associated with trade in those specific items; and to consider whether there are particular countries of concern such that trading Category C goods to those destinations ought to be subject to extra-territorial control.[34]

Anti-Vehicle Landmines were added to Category B through entry into force of the Export Control (Amendment) (No.2) Order 2010, on 31 August 2010.[35]

27. The CAEC's conclusions and recommendations on extra-territoriality in its last Report (HC686) published on 5 April 2011 were as follows:

We conclude it is disappointing that the Government's discussions with the industry and NGOs have not resulted in extra-territorial controls being extended to include specific items in Category C. We recommend that the Government re-engages with NGOs and industry groups on this important policy issue and lets us know of the progress being made in its response to this report. We further conclude, as did our predecessor Committees, that there is no justification for allowing a UK person to conduct arms exports overseas that would be a criminal offence if carried out from the UK. We note that extra-territorial legislation already applies to a number of areas, including sexual offences against children and young people, war crimes, terrorism, torture, bribery and corruption and taxation. We conclude that there is no reason why enforcing extra-territorial controls in connection with arms export controls should be more difficult to enforce than in these areas. We recommend that the Government extends extra-territoriality to all items on the Military List in Category C.[36]

The Government's unacceptable delay of ten months in responding to the Committees' recommendations on this issue is detailed in paragraph 14 above.

28. The Secretary of State for Business, Innovation and Skills in providing the Government's response to the Committees' recommendation on extra-territoriality stated in his letter of 2 February 2012:

On the specific question of extra-territorial law enforcement, I am always inclined to be wary of going too far down this route. I think extra-territoriality can be justified in the case of the most undesirable types of activity conducted by UK nationals overseas: in other words, normally activity that we would seek to prohibit, not activity that we would seek to license. I am not so far convinced that it would be right to extend the reach of UK law to cover all trade in defence goods, including the least sensitive, by UK nationals. But I am open to hearing your views on this point.[37]

29. The Committees conclude that the distinction made by the Secretary of State for Business, Innovation and Skills in his letter of 2 February 2012 between activities that are prohibited and activities that are subject to licensing is not valid in the context of arms exports and extra-territoriality. The export of all Category A and Category B military goods (as detailed in Box A) by any person within the UK, or a UK person anywhere in the world, without a licence from the Secretary of State is already prohibited and is a criminal offence. The Committees continue to conclude that there is no justification for allowing a UK person to conduct arms exports overseas that would be a criminal offence if carried out by any person within the UK. On enforcement the Committees continue to conclude that the enforcement of extra-territoriality legislation has already been accepted by successive UK Governments in relation to all Category A and Category B military goods. We further conclude that there is no reason why enforcement should prove any more difficult in relation to Category C military goods than in relation to all other areas detailed in Annex 2 to our Report where extra-territoriality legislation already applies. The Committees, therefore, continue to recommend that extra-territoriality is further extended to the remaining Military List goods in Category C.

"Brass Plate" Companies

30. "Brass Plate" companies are companies that do not have an operational presence in the UK but do have a UK-registered address. "They have no presence in the UK other than the brass plate, employ no UK nationals and no part of their activity is actually conducted within the UK."[38] Our predecessor Committees first raised the issue of "Brass Plate" companies in their 2009 Report following their visit to Ukraine, when they were given a document containing a list of UK-registered brokers to whom the Ukrainian State Service for Export Control had granted licences for strategic exports.[39] The end-users on the list included countries for which there had been UK Government restrictions on the export of strategic goods. The CAEC was subsequently informed by the previous Government that four of the 12 UK-registered brokers on the list were "Brass Plate" companies. Our predecessor Committees raised the issue again in their 2010 Report when they recommended that the Government should "explore ways in which it would be possible to take enforcement action against Brass Plate companies, including consulting enforcement agencies in other countries on their approach to this problem."[40]

31. The Conclusion and Recommendation of the current Committees on Brass Plate companies in their Report published on 5 April 2011 were as follows:

We conclude that the Government's current examination of ways to tackle concerns about brass plate UK companies in the UK trading in arms from overseas locations with virtual impunity because of difficulties of enforcement is welcome. We recommend the Government tells us in its response what precise action it will take, including the results of its exploration of the possibility of using powers under the Companies Act to dissolve a company which is operating against the public interest.[41]

The Government's unacceptable delay of ten months in responding to the Committees' conclusion and recommendation on this issue is detailed in paragraph 14 above.

32. The Secretary of State for Business, Innovation and Skills, in providing the Government's response to the Committees' conclusion and recommendation on "Brass Plate" companies, stated in his letter to the Chairman of 2 February 2012:

Looking forward, the main challenge that I see in the area of arms brokers and "brass plates" is one of enforcement. The Government has had some successes in recent years. But it is an ongoing challenge: the fact that a company may be flouting the law does not necessarily mean that we can always catch them, gather evidence and present a case that will convince a court.[42]

33. The Committees conclude that the Government has failed to provide a substantive response to its recommendation in its 2011 Report regarding "Brass Plate" companies in the UK trading in arms from overseas locations with virtual impunity. The Committees repeat their previous recommendation that the Government states in its response to this Report what precise action it will take, including the results of its exploration of the possibility of using the Companies Act, to dissolve a company which is operating against the public interest.

A pre-licence register of arms brokers

34. Article 4 of the EU Common Position 2003/468/CFSP on the control of arms brokering does not require the creation of a pre-licence register, but says that in addition to licences, "Member States may also require brokers to obtain a written authorisation to act as brokers, as well as establish a register of arms brokers."[43]Such a register is considered best practice at EU and international level. At the international level, the Wassenaar statement on arms brokering[44] and the guidelines of the Organisation for Security and Co-operation in Europe (OSCE) also encourage states to develop registers.[45]

35. In the last Parliament, our predecessor Committees repeatedly recommended that the Government establish a pre-licence register of arms brokers.[46] The then Government's repeated response was that it was not convinced of the benefits of such a register, especially when the electronic system for applying for licences (SPIRE) acted as a de facto register. However, the last Government also stated that it was "not opposed in principle to the idea of a pre-licensing registration system under which traders can be vetted before they can be registered."[47] In 2009, the then Government said it would "be happy" to look at whether to introduce a register after it had assessed the effectiveness of other initiatives such as focussing awareness activity on traders and clamping down on those who misuse open licences.[48] The then Minister of State at the FCO, Ivan Lewis, told our predecessor Committees that the last review had been in 2007 and therefore "it may be worth having a look at it at some point in the near future."[49] In response to our predecessor Committees' 2010 recommendation for a pre-licence register, the present Government said:

As things stand, the Government does not believe that the case for a pre-licensing register has been made. It is not clear that the extra layer of bureaucracy involved in a registration system would add to the effectiveness of the UK's trade controls. However, we will keep this under review in the light of any emerging evidence.[50]

We were informed by the BIS Minister, Mark Prisk, during last year's inquiry, that the Government did not have a "completely closed mind on this issue" and that "the question is whether it would make any difference to the kind of rogues we are trying to deal with here [...]"[51]

36. The Committees' recommendation on establishing a pre-licence register of arms brokers in its last Report (HC686) published on 5 April 2011 was as follows:

We recommend that the Government carries out a full review of the case for a pre-licence register of arms brokers and that its review includes a public consultation and is concluded with a Ministerial decision within four months of the start of the consultation.[52]

The Government's unacceptable delay of ten months in responding to the Committees' conclusion and recommendation on this issue is detailed in paragraph 14 above.

37. The Secretary of State for Business, Innovation and Skills, in providing the Government's response to the Committees' recommendation on establishing a pre-licence register of arms brokers in his letter to the Chairman of 2 February 2012 stated:

In terms of our overall approach to these issues, I think that the UK regulatory framework governing arms brokers is now broadly speaking in good shape. Those activities which should be licensable are licensable.[53]

38. The Committees conclude that the Government should consider very carefully whether it should do more to protect access to the UK's arms export licensing system by those arms brokers whom the BIS Minister, Mark Prisk, described to the Committees as "the kind of rogues we are trying to deal with here". We, therefore, repeat our previous recommendation that the Government carries out a full review of the case for a pre-licence register of arms brokers, that its review includes a public consultation and is concluded with a Ministerial decision within four months of the start of the consultation.

EU dual-use controls

39. European Council Regulation (EC) No. 428/2009, the Dual-use Regulation, controls, at European Community level, the export, brokering and transit of dual-use items. The aim of the Regulation is to facilitate legitimate trade and to permit resources to be concentrated on the control of sensitive exports, transfers, brokering and transit of dual-use items, and the combat of fraud. The Regulation was adopted in May 2009 and is directly applicable to all Member States. End-use controls operate in relation to items or technology:

for use in connection with the development, production, handling, operation, maintenance, storage, detection, identification or dissemination of chemical, biological or nuclear weapons or other nuclear explosive devices or the development, production, maintenance or storage of missiles capable of delivering such weapons;
for military end-use in an embargoed destination; and
as parts or components of an illegally exported military item.[54]

40. In July 2011 the EU Commission issued its Green Paper The dual use export control system of the European Union: ensuring security and competiveness in a changing world.[55] In the introduction to the Green Paper, the Commission stated that: "Since 1995, it has been commonly accepted that dual-use export controls constitute an exclusive competence of the European Union and form an integral part of the EU's Common Commercial Policy."[56]

41. In January 2012 the Department for Business, Innovation and Skills published its 20 page response on behalf of the UK Government to the EU Commission's Green Paper.[57] In its response to the EU the Government highlighted the following changes it wanted to the proposals:

The Government suggested that if there was to be harmonisation of the Criteria in Article 12 used by the Member States to assess dual-use licence applications that it would prefer to see it done in a manner consistent with the Common Position.[58]
The Government indicated that it thought that there was a current problem with delays in updating the EU control list which needs to be addressed.[59]

The Government's response on military end-use control is set out in paragraph 47 below.

42. The Government also indicated in its paper its opposition to or concern about the following proposals:

The Government said that "given that harmonisation is likely to result in compromise between existing practices it is important to ensure it does not produce more dis-benefits than benefits." For example, in the UK individual and global licences are generally valid for 2 and 5 years respectively while in other Member States validity periods of 1 and (up to) 3 years respectively are typical. The Government said that it would have difficulty supporting a compromise which reduced the validity period of UK licences.[60]
The Government indicated its opposition to the phasing out of National General Authorisation under the proposal to introduce a new EU export control model based on a network of existing licensing authorities operating under more common rules.[61]
The Government stated that it welcomed improved information exchange, however it would want to ensure that the amount and type of information was proportionate to, and justified by, the objectives outlined in the Green Paper. It said that the proposals should ensure that the volume of such information is not so great as to prevent its effective use (i.e. to avoid "information overload").[62]
The UK Government does not support the phasing out of National General Authorisations as a whole.[63]
The Government said that it was not convinced that any of the proposed alternatives to intra-EU controls, e.g. notification rather than authorisation, post-shipment verification or certified end-users, would provide the same level of assurance as a licensing requirement.[64]

43. The Committees conclude that the Government's decision to make public its response to the EU Commission's Green Paper on the EU's dual-use export control system was welcome. The Committees recommend that the Government in its Response to this Report, and subsequently, informs the CAEC as to which of the UK Government's proposed changes to the EU Dual-use Regulation have been successfully achieved, and also as to the outcome on the EU Commission's proposed changes which the UK Government does not support.

EU end-use control of exported military goods

44. In the Committees' last Report published on 5 April 2011 (HC686) their conclusions and recommendations in relation to military end-use control were as follows:

We conclude it is disappointing that the Government appears not to have continued the previous Government's work and pressed for an expanded Military End-Use Control. We recommend that the Government immediately re-starts work in producing specific policy proposals and to ensure that it has the requisite support for them at EU level in time for the 2012 review of the EU Dual-Use Regulation. We recommend that the Government provides us with an update on how this work is progressing when replying to this report. We further recommend that the Government in the meantime makes the necessary amendments to UK legislation to rectify the present deficiencies in military end use controls.[65]

45. In its response (Cm 8079), published on 7 July 2011, the Government said:

We continue to support an expanded Military End-Use Control and we now have a UK proposal that we can take forward. As part of the preparations for the 2012 review of the EU Dual-Use Regulation the European Commission intend to publish a Green Paper in June of this year. This will be followed by consultations with Member States, exporters and civil society organisations with a view to producing legislative proposals next year. We believe that effective engagement in this process offers the best opportunity for gaining broad support at EU level. In the meantime we have no plans to bring forward the amendments to UK legislation necessary to implement a national military end-use control.[66]

46. The Chairman, in his letter to the Foreign Secretary of 18 July 2011, put the following further request for information to the Government from the Committees:

Will the Government provide the Committees with details of the UK proposal for an extended Military End-use Control and of the EU Commission's Green Paper as part of the preparation for the 2012 review of the EU Dual-use regulation?[67]

The Government's answer, in the Foreign Secretary's reply of 30 September, was:

The UK proposal would be for an amendment to Article 4(2) of Council Regulation (EC) 428/2009 as follows:

An authorisation shall be required for the export of dual-use items not listed in Annex I if the purchasing country or country of destination is subject to an arms embargo decided by a common position or joint action adopted by the Council or a decision of the Organisation for Security and Cooperation in Europe (OSCE) or an arms embargo imposed by a binding resolution of the Security Council of the United Nations and if the exporter has been informed by the authorities referred to in paragraph 1, or has reason to believe, that the items in question are or may be intended, in their entirety or in part, for a military end-use. For the purposes of this paragraph "military end-use" shall mean:

Intended for military, paramilitary, security or police forces in a destination subject to an arms embargo or to an entity involved in procurement, manufacture, maintenance, repair or operation on their behalf.

An authorisation shall not be required if the items in question are medical supplies and equipment, food, clothing and other consumer goods"[68]

47. The Department for Business, Innovation and Skills in giving the UK Government's response in January 2012 to the European Commission's Green Paper on the dual-use export control system of the European Union, said in relation to military end-use control:

Regarding the military end-use control our view is that the current control is too narrow. It currently only applies to transfers to embargoed destinations of unlisted items intended for a "military end-use" where "military end-use" is defined as: (i) incorporation into military-list items; (ii) use of production, test or analytical equipment for the development, production or maintenance of military items; or (iii) use of any unfinished products in a plant for production of military list items. In our view this means that we cannot prevent the export of complete items which are to be used as complete items. For example, we could prevent the export of an unlisted item intended to be used as a component in a military vehicle but we could not prevent the export of a complete civilian vehicle that was to be used by the military or internal security forces of the destination country even where that country is subject to arms embargo. It is also unclear whether the military end-use control permits us to prevent the export of an unlisted item that is to be modified for military purposes, either in the destination country or in an intermediate destination. We have come across a number of cases of this type. We would therefore like to see the Commission address this shortcoming when bringing forward proposals to amend the Regulation. We can provide draft text if necessary.[69]

48. The Committees recommend that the Government in its Response to this Report states the reasons as to why it has no plans to bring forward amendments to UK legislation necessary to implement a national military end-use control when the Government has stated in its response to the European Commission's Green Paper on the EU dual-use export control system that the current military end-use control "is too narrow". The Committees further recommend that the Government states in its Response to this Report whether the European Commission has accepted the British Government's proposals for an expanded Military End-use Control as set out in the Foreign Secretary's letter to the CAEC of 30 September 2011 and in the Government's response to the European Commission Green paper on the dual-use export control system of the European Union, and if not what further steps the Government will now take.

Torture end-use control and end-use control of goods used for capital punishment

49. In 2008 the previous Government stated:

We will be asking the [EU] Commission to introduce a control where the exporter will be required to submit an export licence application where they have reason to believe, or have been informed, that the items could be used for capital punishment, torture or other cruel, inhuman or degrading treatment.[70]

50. The Committees' conclusion and recommendations in its Report (HC686) published on 5 April 2011 were as follows:

We conclude that the slow pace of progress towards an EU torture end-use control is very disappointing. We recommend that in its response to this report, the Government provides detailed information on the parameters of the torture end-use control it intends to propose to the EU. We further recommend that the Government simultaneously prepares draft UK legislation on this issue for public consultation.[71]

In its Response to the Committees' Recommendation the Government provided detailed information on the parameters of the torture end-use control it intended to propose to the EU and said that it would continue to press the EU Commission to bring forward proposals in this area.[72] However, when replying to the Committees' request for draft UK legislation the Government responded: "Given that we consulted on this issue in 2007 we see no reason to do so again now, and we currently do not intend to prepare draft legislation."[73]

51. UKWG expressed alarm that progress on torture end-use control had "effectively stalled", despite first being announced four years ago. They were pleased that the Government had taken unilateral action to place export controls on sodium thiopental, pancuronium bromide and potassium chloride for the use in lethal injections, but were concerned that this only covered exports to the United States and not to other countries where the drugs could be used to carry out executions. It pointed out that if the Government had "delivered on its 2008 commitments in this area" it would have been able to control exports of these items as soon as it had become known that they were being used in executions.[74] The Government introduced a Statutory Instrument that came into force on 16 April 2011 that prohibited the export of pancuronium bromide, potassium chloride concentrate or sodium pentobarbital to the USA in addition to the existing prohibition on the export of sodium thiopental to the USA. The Order was due to expire on 13 April 2012.[75]

52. On 12 April 2011 the BIS Minister, Mark Prisk, wrote to the EU High Representative Baroness Ashton as follows:

I am writing to inform you of the UK's intention to introduce a control on the export of pancuronium bromide, potassium chloride and sodium pentobarbital to the US. This will complement our existing control on sodium thiopental. The UK Government calls on the Commission to propose an amendment to the Export of Torture Goods regulation to apply this control on an EU basis.

As you may know, the UK introduced a control on the export of sodium thiopental to the US in November last year. This followed the revelation that correctional authorities in the US had been sourcing this drug from the UK to overcome a shortage in the US.

The UK Government took the view, consistently with our stated policy of opposition to the death penalty, that we wished to prevent this trade. We also established that this measure would not hamper legitimate trade in sodium thiopental for medical purposes between the UK and the US: it was clear that there was none, nor any prospect of any. We took a deliberate decision to restrict the scope of this control only to exports to the US: sodium thiopental continues to be used as an anaesthetic in medical procedures in a number of developing countries, so we did not wish to disrupt supply of this essential medicine by placing any kind of restriction on exports from the UK.

We have now, at the request of the campaigning group Reprieve, considered the case for extending this export control to cover the other drugs used in the US lethal injection process. Most US states that carry out lethal injection use a three drug cocktail consisting of sodium thiopental, pancuronium bromide and potassium chloride. Furthermore, the state of Oklahoma has carried out one execution using the veterinary anaesthetic sodium pentobarbital, and we understand that more states are considering changing their execution protocols to allow the use of this drug as an alternative to sodium thiopental.

Following a consultation with interested UK parties, we have again determined that a control on the export of these drugs to the US would not hamper legitimate medical trade. I have therefore decided to extend our control to cover these three additional drugs, and will shortly be laying the necessary Order before Parliament.

The UK Government has felt obliged to act at national level because of the urgency of the situation. However, we recognise the desirability of action at EU level to ensure that the playing field is level and that the controls imposed by individual Member States cannot be circumvented by movement of these drugs within the Single Market. Our preferred solution would be for an EU-wide control on the export of these drugs to the US (and indeed to any other country that practices lethal injection) to be incorporated into Regulation 1236/2005 (the "Torture Goods Regulation").

My officials stand ready to discuss this with yours. We would also welcome the opportunity to explore the possibility of a horizontal "end use control" on the export of goods for the purpose of torture or capital punishment.[76]

On 14 September 2011 Baroness Ashton replied:

Thank you for your letter. I would like to apologise for the delay in answering you but there have been a few developments on this issue.

In your letter, you suggested that an EU-wide control on the exports of pharmaceuticals used in lethal injections to the US and other countries applying the death penalty through lethal injection should be incorporated into Regulation (EC) No 1236/2005.

I would like to confirm that the Commission has started the process of reviewing the content of the Annexes of Regulation 1236/2005, which is expected to be finalised by the end of the year. Further examination of the need to review the scope of the Regulation will be undertaken shortly.[77]

53. When we asked the UKWG in the Oral evidence session on 23 January 2012 if they had received any information about the EU Commission's examination of the regulations on torture end-use controls Oliver Sprague (Amnesty UK) said that as he understood the situation, there had been no formal movement on the end-use provision. He continued:

Remember that it is wider than just the death penalty; it is about torture, cruel and degrading treatment, and the death penalty. It is a catch-all clause that says that if you are aware that your products will facilitate those prohibited acts, you need to seek a licence to do that trade. We have often argued that if action is not forthcoming at EU level, and given that it has been a commitment of the UK Government since 2008 to do so, they should introduce it nationally. I think the very fact that national action in the UK on sting sticks and electro-shock devices has had an impact in influencing the EU position on these things is reason to do it.[78]

54. In the Oral evidence session with the Secretaries of State on 7 February 2012, we asked Vince Cable what the UK Government would be doing to get the EU to toughen up the rules on torture end-use control. The Secretary of State replied: "We have got past the point of getting the principle accepted that there have to be tough end-use controls on torture equipment. The issue is now largely a technical one of definition and enforcement [...]"[79] The Head of Policy, Export Control Organisation, Chris Chew, added that the EU Commission would be carrying out a broad review of the EU Torture Goods Regulation in the first half of 2012.[80]

55. The Committees recommend that the Government in its Response to this Report:

a) sets out the specific changes it has made since coming into Office in the UK's export control procedures and legislation either to prohibit the export altogether, or to make subject to export licensing and end-use control, items of torture equipment, including items used to carry out capital punishment, detailing the specific items concerned, the countries to which their export is now prohibited or is subject to export licensing and end-use control, and any expiry time limits set on the relevant procedures and legislation;

b) provides the CAEC with the outcome of the EU Commission's review of the content of the Annexes of Regulation 1236/2005 concerning trade in certain goods which could be used for capital punishment, torture or other cruel, inhuman or degrading treatment or punishment which was expected to be finalised by the end of 2011 and the UK Government's view as to whether this outcome is satisfactory or requires amendment;

c) provides the CAEC with a copy of the UK Government's submission to the EU Commission for the Commission's broad review of the EU Torture Goods Regulation being carried out in the first half of 2012; and

d) states whether it is still the UK Government's policy that it does not intend to prepare draft UK national legislation on torture end-use control and end-use control of goods used for capital punishment, and if so, explains why not.

Re-export controls and undertakings

56. The previous Government's policy on "no re-export" controls and undertakings and its scrutiny by our predecessor Committees is summarised in paragraphs 71-75 of our Report (HC686) published on 5 April 2011.[81] Our recommendations in the Report were:

We recommend that the Government provides us with an assessment of how no re-export undertakings are working, and details of the Government's methodology for assessing their effectiveness. We also recommend that the Government provides us with information as to which other countries have no re-export clauses in their contracts, as opposed to in their undertakings, and the effects of such clauses.[82]

The Government's response was:

The change to no re-export undertakings appears to be working well, in terms of end users being prepared to sign off the new undertakings. The current clause appears to have created no additional burdens on either exporters or end users alike and therefore there has been no resistance to the clause in its current form.

It is not feasible for the Government to track all UK origin goods once they have been exported. We rely on reporting from our overseas posts and other sources regarding cases where UK origin goods have been re-exported in undesirable circumstances. Such reports are very rare. So far it is not possible to judge whether the introduction of the revised End User Undertaking has impacted on this.

We interpret the word "contracts" in this question to mean "export licences". From our discussions with other Governments, we do not sees a simple distinction between the use of licence conditions and the use of end-use undertakings. The primary focus of all European export licensing systems is the assessment, carried out at the point of export, of the risk of diversion, with an obligation on the exporter to declare any knowledge that the have that the goods are destined for re-export. To our knowledge, The United States is the only country that imposes legal penalties for re-export on an extra-territorial basis. To assess the "effectiveness" of this regime is a complex question: for example, it has been suggested that the extra bureaucracy of the US re-export regime may deter some overseas customers from buying controlled US goods.[83]

57. On 26 May 2010, Lord Alton of Liverpool introduced his Private Member's Re-Export Controls Bill in the House of Lords. The purpose of the Bill is to "make provision for the regulation of the re-export of military equipment and goods further to their original exportation from the United Kingdom." The Bill proposed an amendment to the Export Control Act 2002 under which the Secretary of State for Business, Innovation and Skills would be required to make an order to prohibit or regulate the re-export of controlled goods subsequent to their original export from the UK. The Bill completed its passage through the House of Lords on 12 January 2011 and moved to the House of Commons, where it received its First Reading on 27 January 2011. Lord Alton contacted us before the Oral evidence session with the Secretaries of State on 7 February 2012 informing us that the Government had declined to provide time for the progress of the Bill in the House of Commons and had opposed the use of the special Standing Committee procedure for the expedition of Second Readings of Private Members Bills. When we asked Vince Cable whether the Government business managers were blocking consideration of Lord Alton's Re-Export Controls Bill, the Secretary of State replied that he hoped that the Bill was not being blocked, but that he did not know.[84] In his letter of 8 March 2012 the Secretary of State said that the Government did not want goods originating from the UK, once exported, to be re-exported for "undesirable uses", but believed that the Government controls re-exportation through the current export licensing system. He re-iterated that the risk of undesirable re-export is assessed in the licence application (Criterion 7 of the Consolidated Criteria). Where the risk of re-export to an undesirable country is high the licence would not be granted. He stated that: "If a re-export of concern comes to light we can and do factor that in to our assessment of subsequent licence applications for similar goods to that destination." He continued:

Once a good has left the UK, it is in practice under the jurisdiction of the destination country. We would be claiming that UK export controls applied, whereas in reality we would have no powers to enforce them. We are concerned that the effect of Lord Alton's proposals would be to impose statutory obligations (backed by criminal penalties) on persons outside the UK, solely on the basis that they had purchased UK origin goods and technology. In our view such obligations would go against the UK's long-standing opposition to extra-territorial jurisdiction, and would in reality be unenforceable and therefore ineffective.[85]

58. The Committees recommend that the Government in its Response details the controlled goods, for which either the previous Government or the present Government approved licences for export, that it believes were subsequently re-exported for undesirable uses or to undesirable destinations, stating in each case the country to which the goods were originally exported and the eventual undesirable use or undesirable destination.

Licensed production overseas

59. Our predecessor Committees scrutinised the risk of breaches of UK arms export control policies occurring as a result of the export of UK designed goods from licensed production facilities overseas. They last addressed this risk in their Report (HC202) published on 30 March 2010 in which paragraphs 75-77 read as follows:

In previous Reports we have concluded that existing controls over licensed production overseas were inadequate and needed to be extended. We had considered the option that Government had set out in its 2007 Consultation Document that export licences for supplies to licensed production facilities or subsidiaries could be made subject to conditions relating to the relevant commercial contracts.[86] We also recommended that the Government make export licences for supplies to licensed production facilities or subsidiaries subject to a condition in the export contract preventing re-export to a destination subject to UN or EU embargo.[87]

The Government rejected the case for enhancing controls on the export of controlled goods in relation to licensed production.[88] In its Response to our 2009 Report, the Government explained that it considered enhanced controls unnecessary as the export of controlled goods to overseas Licensed Production Facilities already required an export licence, and exporters applying for a licence were asked to declare whether the export was for the overseas production.[89] However, the Government acknowledged that there was a stronger case for enhancing controls on the export of non-controlled goods:

The cases of overseas production where issues have arisen have all related to goods for military end use in embargoed or other destinations of concern, where the goods were not controlled when exported from the UK. The Government, therefore, considers that the most effective way of tightening controls on the export of non-controlled goods would be through an enhanced Military End-Use Control.[90]

60. The Committees recommend that the Government in its Response to this Report states what breaches of UK arms export control policies it believes have occurred under both the previous and the present Government as a result of the export of UK-designed goods from licensed production facilities overseas, specifying in each case the description of the goods concerned, the country in which they were produced and the country to which they were subsequently exported. The Committees further recommend that the Government sets out in its Response what steps it will take to prevent UK arms export policies being breached as a result of the export of UK-designed goods from licensed production facilities overseas.

The Consolidated Criteria

61. The Consolidated Criteria, announced on 26 October 2000 by the then Minister of State in the FCO, Peter Hain, are the consolidation of the UK's national criteria and the 1998 EU Code of Conduct on Arms Exports. The Consolidated Criteria are set out in full in Annex 3, below. On 5 June 1998 the European Union adopted the EU Code of Conduct on Arms Exports. Following a review of the 1998 Code of Conduct, it was replaced on 8 December 2008 with the EU Council Common Position "defining common rules governing controls of exports of military technologies and equipment" (2008/944/CFSP). The EU Common Position is set out in full in Annex 4 below. The UN states that the Commons Position "constitutes a significant updated and upgraded instrument".[91] The Stockholm International Peace Research Institute (SIPRI) states on its website that the "EU Code of Conduct and EU Common Position were aimed at harmonizing EU member states arms export policies in line with agreed minimum standards. They contain common criteria which member states agree to apply when issuing arms export licences as well as mechanisms of information exchange and consultation."[92]

62. Article 1 of the EU Common Position is as follows:

Article 1

1. Each Member State shall assess the export licence applications made to it for items on the EU Common Military List mentioned in Article 12 on a case-by-case basis against the criteria of Article 2.

2. The export licence applications as mentioned in paragraph 1 shall include:

— applications for licences for physical exports, including those for the purpose of licensed production of military equipment in third countries,

— applications for brokering licences,

— applications for 'transit' or 'transhipment' licences,

— applications for licences for any intangible transfers of software and technology by means such as electronic media, fax or telephone.

Member States' legislation shall indicate in which case an export licence is required with respect to these applications.

The wording of the Criteria One to Eight in Article 2 of the EU Common Position mirrors, but is not identical to, the wording of Criteria One to Eight of the UK Government's Consolidated Criteria, which also adds other factors.

63. The Committees' Conclusions and Recommendations in its Report (HC686) published on 5 April 2011 were as follows:

We conclude that the Government's timetable of before the end of 2011 by which the wording of the UK's Consolidated Criteria will be updated to be wholly consistent with the EU Common Position is too protracted. We recommend that the Government sets itself a much shorter timetable in which to conclude this updating and to inform us of the revised timetable in its response to this report. We further conclude that, while the consolidated criteria appear robust their application seems to be less so. We therefore recommend that the Government ensures that the EU Common Position is rigidly and consistently applied.[93]

The Government's Response (Cm 8079) stated:

The Government does not accept that there is any evidence that the application of the Consolidated Criteria is in anyway less robust that the EU Common Position. Nevertheless, it will update the wording of the Consolidated and National Arms Export Licensing criteria before the end of 2011 and this work will be completed as soon as practicable this year.[94]

Notwithstanding what was said in the Government's Response, the updating of the Consolidated Criteria was not completed by the end of 2011.

64. At the Oral evidence session on 7 February 2012 we asked the Foreign Secretary, William Hague, in terms of harmonising EU Member States' arms export policies, what changes, if any, he would like to see to the Consolidated Criteria and the EU Common Position on arms exports. The Foreign Secretary replied:

There is good co-ordination in Europe. There is a monthly meeting in Europe about the enforcement of the consolidated criteria. Of course, there are differences between the consolidated criteria and the EU common position. They principally relate to criteria in both documents concerned with respect for human rights, but the EU Council common position is fully applied in our export licensing process. The decisions we make are fully in accord with the provisions of the EU common position, so, from a policy point of view, I am satisfied with that. It does require regular, rigorous co-ordination to make sure that the effect of the policy is approximately the same across the whole European Union.[95]

65. The Committees recommend that in its Response to this Report the Government explains why its updating of the wording of the Consolidated and National Arms Export Licensing Criteria before the end of 2011, as stated in its previous Response (Cm 8079), was not achieved by that date and that it provides the updated wording in its Response to this Report. The Committees further recommend that in its Response to this Report the Government states whether it considers that the UK Government is fully compliant with each of the Articles in the EU Common Position 2008/944/CFSP of 8 December 2008 "defining common rules governing controls of exports of military technologies and equipment", and, if not, to specify in which respects it is non-compliant. The Committees also recommend that as the EU Common Position is to be reviewed three years after its adoption, on 8 December 2008, the Government sets out in its Response the changes to the EU Common Position to which it will be seeking agreement. Finally, the Committees recommend that where the UK's arms export policies are arguably more stringent than those set out in the EU Common Position, for example in the light of the Foreign Secretary's Oral evidence to the Committees on 7 February 2012 with regard to exports which might be used to facilitate internal repression,[96] the UK Government should adhere to its own policy. The Committees wish to be assured by the Government in its Response that this will be the case.

27 Trade in Goods (Categories of Controlled Goods) Order 2008 (SI 2008/1805) Back

28 The Order was made under the Export Control Act 2002.The Trade in Goods (Control) Order 2003 (SI 2003/2765) Back

29 The Order covered not only companies or people trading between overseas countries on their own behalf, but also those negotiating contracts and arranging trade and related activities for a fee. The Order did not, however, control transportation, financial services, insurance or advertising-except where extra-territorial controls apply. Back

30 See Defence, Foreign Affairs, International Development and Trade and Industry Committees, First Joint Report of Session 2002-03, The Government's proposals for secondary legislation under the Export Control Act, HC 620, Chapter 4 Back

31 Trade in Goods (Categories of Controlled Goods) Order 2008 (SI 2008/1805) Back

32 Committees on Arms Export Controls, First Joint Report of Session 2009-10, Scrutiny of Arms Export Controls (2010): UK Strategic Export Controls Annual Report 2008, Quarterly reports for 2009, licensing policy and review of export control legislation, HC202, Ev 63 Back

33 Committees on Arms Export Controls, First Joint Report of Session 2009-10, Scrutiny of Arms Export Controls (2010): UK Strategic Export Controls Annual Report 2008, Quarterly reports for 2009, licensing policy and review of export control legislation, Ev 63. CAEC also called for anti-vehicle landmines to be added to the list of Category B goods, which prohibits any person in the United Kingdom, or a United Kingdom person anywhere in the world, from transferring, acquiring or disposing, or arranging or negotiating a contract for the acquisition or disposal of Category B goods without a licence from the Secretary of State. Anti-vehicle mines were added to Category B with the entry into force of the Export Control (Amendment) (No. 2) Order 2010 on 31 August 2010. Back

34 Committees on Arms Export Controls, First Joint Report of Session 2009-10, Scrutiny of Arms Export Controls (2010): UK Strategic Export Controls Annual Report 2008, Quarterly reports for 2009, licensing policy and review of export control legislation, HC202, Ev 63 Back

35 Export Control (Amendment) (No.2) Order 2010 (SI 2010/2007) Back

36 Committees on Arms Export Controls, First Joint Report of Session 2010-12, Scrutiny of Arms Export Controls (2011): UK Strategic Export Controls Annual Report 2009, Quarterly reports for 2010, licensing policy and review of export control legislation, HC686, para 57 Back

37 Ev 156 - letter from Vince Cable dated 2 February 2012, para 4 Back

38 Committees on Arms Export Controls, Government Response to the Committee Report, Scrutiny of Arms Export Controls (2008), Cm 7938, p 6 Back