CORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 689-ii

HOUSE OF COMMONS

ORAL EVIDENCE

TAKEN BEFORE THE

COMMITTEES ON ARMS EXPORT CONTROLS

ARMS EXPORT CONTROLS 2013

WEDNESDAY 19 DECEMBER 2012

RT HON DR VINCE CABLE MP, CHRIS CHEW and DAVID FROST

RT HON WILLIAM HAGUE MP, JAMES PAVER and RICHARD TAUWHARE

USE OF THE TRANSCRIPT

1. This is a corrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.

2. The transcript is an approved formal record of these proceedings. It will be printed in due course.

Oral Evidence

Taken before the Committees on Arms Export Controls

on Wednesday 19 December 2012

Members present:

Sir John Stanley (Chair)

Sir Malcolm Bruce

Richard Burden

Katy Clark

Ann Clwyd

Mr Jeffrey M. Donaldson

Mark Hendrick

Mike Gapes

Ann McKechin

Fiona O'Donnell

Bob Stewart

Mr Robin Walker

Examination of Witnesses

Witnesses: Rt Hon Dr Vince Cable MP, Secretary of State for Business, Innovation and Skills, Chris Chew, Head of Policy, Export Control Organisation, and David Frost, Director, Europe, Trade and International Trade, gave evidence.

Q70 Chair: Secretary of State, welcome to the Committees on Arms Export Controls once again. We are very glad to see you, and Mr Frost and Mr Chew.

Secretary of State, I want to start with an important question on enforcement and lessons to be learned. As you are aware, in their annual report the Government published table 1.4 listing the criminal prosecutions that have occurred as a result of individuals being in breach of the arms export control legislation. That table is revealing and useful to the Committees. Since publication of that table in the Government’s last annual report, there have been three other major cases. Mr Michael Ranger has been convicted and has not made an appeal. There is the conviction of Mr Gary Hyde, which I understand is subject to appeal and is therefore sub judice. Then there is the case of Mr Guy Savage, which involves extradition to the United States. Secretary of State, you will remember that I wrote to you about that particular case last year.

Secretary of State, I do not expect that you will be able to comment on individual cases, and I am not seeking that at this session, but I want to ask for your assurance, if you can give it, that at top ministerial level-that is, at Secretary of State level-and right down through official level in the Business Department, you are looking very closely at cases where convictions have taken place for breaches of arms export control legislation and asking yourselves whether these convictions warrant any changes in your procedures or in legislation.

Vince Cable: Mr Chairman, we can certainly give you that assurance, and that is obviously the right question to ask. We must draw wider lessons from individual cases. I think you already know the broad picture. We have well upwards of 16,000 or 17,000 decisions a year, rejections in the mid-100s-150, or something of that order-and a small number of prosecutions, with a high success rate, which are pursued by HMRC. Some of them are large cases, as you will have noticed from the table, and if there are wider policy lessons, yes, we want to act on them.

Chair: Thank you. We now turn to various aspects of the Export Control Organisation.

Q71 Ann McKechin: Good afternoon, Secretary of State. EGAD told us in a recent evidence session that their members are experiencing difficulties due to the lengthy appeals process and delays in classification requests. David Hayes of EGAD told us that the Export Control Organisation was under so much pressure that it is "failing UK industry in an increasing fashion". What is your response to the criticism?

Vince Cable: I will ask Chris Chew, who is the acting head of the Export Control Organisation, to reply in detail. I think the general story is actually an improvement in the administrative processes. They are clearing over 70% now within 20 working days and 95% in under 60 working days. Most of the remainder are issues where there is a political decision of judgment based on conditions on the ground. It is not usually due to administrative inefficiency. I have asked that whenever a case runs over 60 days, Ministers should be briefed regularly till we understand that there is a good reason why the permission is being held back, but the trend is towards improvement in the time of clearances.

Chris Chew: That is right. In 2010-11, performance did fall below the target that we set, but, touch wood, it will finish this year back above target. So performance has improved. We do have a project in place to improve that performance even further, and we are looking at a number of measures to streamline the process and to help exporters understand it better. We are listening to exporters-we recognise that there have been problems, but we are working to fix those problems.

Q72 Ann McKechin: One of the statements that EGAD made to us was that, for example, exports to the international waters west of the Shetland islands are actually covered by your process. It queried why areas that are not known for any security risk should end up having to go through this bureaucratic process. I wonder whether you are reassessing risks and what an appropriate level of classification is given to the final destination of exports.

Chris Chew: We do review the risks and destinations. I am aware of that particular criticism from industry. The technical answer is that those are exports-if they are controlled goods, they need a licence. There is an open licence that exporters could use to transfer items to the continental shelf, which would save them having to apply for each transaction. The fact is, last year, we only received 13 applications for exports to the continental shelf, so that in itself is not a big problem, but the use of open and general licences is something that we are looking at, and we are encouraging exporters to use them where it is possible for them to do so.

Q73 Ann McKechin: EGAD told us that larger, multinational companies had, in its opinion, used production facilities overseas rather than in the UK to bypass our arms control system, resulting in a loss of jobs. Do you agree with that statement?

Chris Chew: We have no evidence of that. We have heard the accusation, or comments to that effect, but we have no hard evidence that that is actually the case. Companies in other countries tell us that our system is better than theirs, so there is an element of the grass always being greener on the other side of the fence. If there are concrete examples, however, we will look at them and see what we can do.

Q74 Ann McKechin: But none has been brought to your attention specifically.

Chris Chew: No specific cases; it all tends to be anecdotal comment.

Vince Cable: I think you can expect us to be thorough, because if things slip through that should not have done, we are rightly criticised by you for the opposite reasons. So there is thoroughness in the process, but it does lead to delays on occasion.

Q75 Ann McKechin: EGAD requested a reduction in the number of standard individual export licences and of open general export licences. Do you see any problems with that request? You mentioned your current review of processes-do you consider that this will result in a reduction in the number of specific licences that need to be granted?

Chris Chew: Yes, that is our aim. There has been an upward trend for standard individual licences over the past four or five years, and we are trying to reverse that trend by encouraging exporters to use open general and open individual licences. We are doing that through a number of actions, such as rewriting the open general licences so that they are easier to understand and, therefore, to use. We are making some changes to our processes and our IT system to make open individual licences easier to apply for and easier to use. We hope that these actions will reduce the number of standard individual licences, which would be of benefit to us because we will have more effort to spend on the cases that are really of concern and of benefit to those in industry because they will have to apply for fewer licences.

Chair: We have some questions on the processing of applications.

Q76 Mr Robin Walker: Secretary of State, earlier you mentioned figures that were close to target for the processing of standard individual export licences, but there has been a dramatic fall in the proportion of appeals processed within 20 days-the target is 60%, but last year it was 26%-

Vince Cable: Sorry, the category being?

Mr Walker: The proportion of appeals processed within 20 days by the ECO. The target was 60% last year, but performance was 26%, which is a drop of almost half year on year. The target for the number of appeals to be looked at within 60 days is 95%, but last year only 71% was achieved, down from 90% the year before. What is the reason for that decline in the proportion of appeals being dealt with?

Chris Chew: Appeals are, by their very nature, the most difficult cases that we have to deal with, because we have refused a licence-and there would be very good grounds for us refusing the licence-and now the exporter comes back to us and says, "I don’t agree with that decision. Look at it again." Quite often, that requires us to look very carefully at all the evidence, to look at the situation in a country, to consider the utility of the goods in activities of concern. These are very difficult decisions. Last year and this year in particular, in light of the Arab spring, we were having to give very, very careful consideration to the appeals, so that was taking us longer than it had previously. Again, it is finding the balance between giving something the right amount of scrutiny and trying to process it quickly, to please the exporters.

Q77 Mr Walker: Do you think you have the resources you require to get that process back on track, given that there are public targets for this?

Chris Chew: I think so, yes. With appeals, the issue is not one of resource, because there are only a very small number of appeals-45 or 50 a year, compared with 16,000 licence applications-so it is not really a resource issue; it is the difficulty and complexity of the cases themselves that cause delays.

Q78 Bob Stewart: If I was a defence exporter and my application to export an item of kit was rejected, are my chances better if I come back again and say to you, "Actually, we disagree with you," because you will look at it more closely, and you might not have looked at it as closely as was necessary the first time? In other words, does that encourage people to come back again?

Chris Chew: I don’t think it does, because in the vast majority of cases we decide that our original decision was correct. There are only a handful of cases that we make a different decision about on appeal, and that is usually because the exporter has provided us with-

Bob Stewart: Because the circumstances have changed?

Chris Chew: Either circumstances have changed, or the exporter has provided some additional information that we did not have before. So I think the answer is probably no.

Q79 Fiona O'Donnell: The number of fragile states and conflict zones is not decreasing, so if it is not a question of resources, how are you able to improve performance?

Chris Chew: It is more about streamlining the process. The Arab spring was a big change for everyone and created a lot of problems and uncertainty. You can never predict the future, and how stable or unstable the world is going to be, but because there is a relatively small number of appeals, we think it is not unreasonable that we can make the necessary streamlining that will help us get the performance back where it should be.

Chair: We have some questions about your website.

Q80 Mr Donaldson: Secretary of State, you have introduced a new website, GOV.UK. EGAD have told us the previous links were removed and it was difficult to find resources that could previously be found very easily on the website. Have you consulted users of the new system about its functionality and usage? If so, what actions are being taken to ensure that users are satisfied with the new system? If not, in the light of EGAD’s comments, what actions will you be taking to improve the effectiveness and efficiency of the new website?

Vince Cable: Mr Chew can say something about the consultation. There are two bigger things happening that affect this process. One of those is that Business Link has been phased out, as you know, and replaced with a new range of Government advisory and mentoring services; the other is that there is an attempt to consolidate Government information for business behind a single website, and obviously there are transitional problems in setting that up. Perhaps Mr Chew could say more about the users.

Chris Chew: That’s right. There is obviously a teething process when you move to any new system, but we are working with exporters to try to improve their awareness and understanding of how this site works, because it works in a very different way to the previous website. We have created about 80 separate pages of information on export control on the new website. When some of that information was moved across, yes, some of the links no longer worked, but we are going through that to rectify that and are working with the industry to get the message out there about how best to use the site. But we encourage industry to tell us about any of these problems, because they are more likely to find the things that do not work than we are.

Q81 Chair: Secretary of State, you will remember that we have been in correspondence with you about the new open general trade control licence that you had created, particularly in the context of-

Vince Cable: Pirates.

Q82 Chair: Somali piracy. You will also remember that a question I put to you was, under what statutory power you created this new open licence, and you replied, "The OGTCL has been issued in the normal way under article 26 of the Export Control Order 2008." The Committee and I, and our advisers, have looked closely at article 26 and remain to be persuaded that the Secretary of State for Business does indeed have a carte blanche legal power to create new open forms of licence. I should be grateful if you could tell me whether you took legal advice as to whether you do indeed have a statutory power to create a new form of open licence at will.

Vince Cable: That comment to you was certainly based on legal advice. If strong, convincing legal advice is coming to the contrary, obviously, we need to revisit it. Obviously, you have counsel who has given you a strong steer there. But certainly, the legal advice I had was that this is all done within our existing powers.

David Frost: Perhaps I can just add that this is not a new form of licence. The open general trade control licence already exists. There are already three other such licences. This is the fourth in the series. Of course, that does not necessarily invalidate the general point, but the power has been used to create such open licences in the past. This is not a new development.

Vince Cable: From my point of view, as political head of the Department, the aim we had was to try to ensure that there was a form of defence against piracy. Often, lightly armed vessels were seizing unarmed merchant ships, and they needed access to equipment. Anybody who receives an open licence has to be subject to, I think, an international protocol governing private security. They themselves can, under the open licence, be subject to audit and are. Obviously, we do not want these things to be misused. But on the specific legal point, we will certainly go back to our legal advisers if there is a dispute on what the statute says.

Q83 Chair: I want to make it quite clear that we are not raising this issue in any way to question the policy merits of taking whatever steps are necessary to deal with Somali piracy, but you will understand that, from our standpoint, it is a potentially serious issue for us and, indeed, for Parliament, if it is believed that the Secretary of State can, at will, create new forms of open licence. I would not, of course, for a moment, suggest that you, Secretary of State, would personally do so, but if it is the case that a power lies there, under which a future Secretary of State could basically create a hugely wide, open-ended licence and, say, replace all the existing standard individual licences with that, and create a licence which gave almost carte blanche to an exporter to sell what they wished to wherever they wished, that would be a serious matter. That is our standpoint and the Committee’s perspective.

Vince Cable: I fully understand that you are not criticising the policy, but we will have to ensure that we correspond with you-to your legal adviser-and exchange legal advice. That is the only thing that I can suggest at this stage.

Q84 Chair: Thank you, Secretary of State. We now come to the review which you have carried out in your Department of the export control organisation.

Q85 Katy Clark: In your written ministerial statement on 7 February, you proposed an independent reviewer, which could be appointed to scrutinise the operation of export control. Can you update us on where you are with that?

Vince Cable: We are not carrying out a general review of the organisation. Perhaps the earlier letter gave you a misleading impression on that.

Q86 Katy Clark: But in the ministerial statement, you proposed that an independent reviewer would be appointed.

Vince Cable: Could you explain where we are with that, David?

David Frost: This was one of the three ideas in what we call the transparency initiative, to bring greater transparency to what we do. One of the ideas that was floated in the written statement of 7 February was that there should indeed be some sort of external audit/reviewer in the process. We consulted on that and we published the responses to that in July. Basically, the impression that we got from the consultation was that there was not a huge amount of enthusiasm for this idea. There was some uncertainty about exactly what role it would fulfil and there was generally a low level of interest. It is one of the ideas that we are still reflecting on, but it is still not absolutely obvious to us what role this would perform that would add to the existing arrangements. That particular one is a very specific point as part of this wider initiative.

Vince Cable: The main commitment that was made in that ministerial statement on transparency is being followed through. We have consulted widely with the industry and they accept the idea that more information has to be disclosed. The IT system is in the process of being installed at the moment and it will be fully operational in the early months of next year.

Q87 Katy Clark: Would you be happy to keep this Committee updated on developments in relation to both the wider issues and the appointment of an independent reviewer, if that is the course that you decide to take?

Vince Cable: Yes. You have a date, don’t you, when we hope to have lift off.

Chris Chew: Yes. On the transparency initiative in general, our aim is to have that in place for the next financial year, from April. We were intending to write, perhaps early in the new year, updating on the overall progress. We will be happy to say more about the aspect of the independent reviewer when we do that.

Q88 Katy Clark: As I am sure you will appreciate, this Committee would like as much transparency as possible over the coming period of time on exactly how you are thinking of pursuing this agenda.

One of the other issues that was announced on 7 February was a new suspension mechanism for pending applications to countries experiencing a sharp deterioration in security or stability. You will be aware that there was some discussion recently during the Israeli-Palestinian conflict, with the bombing of Gaza, of whether that type of situation would merit such a suspension. Was there a discussion of that at the time, and could you outline more fully what kinds of circumstances would be seen to be appropriate for this new mechanism, if the recent events were not suitable?

Vince Cable: The principle of suspension remains as we announced it and is an instrument we can use. I do not think that the issue has ever arisen in relation to the recent problems in occupied Palestine, because I do not think any licences went through while these disturbances were taking place. In principle, it could be utilised.

Chair: Secretary of State, we just have a question that we would like to ask you on your Department’s service improvement project.

Q89 Ann McKechin: I think Mr Chew referred to this a little earlier, but can you clarify what you consider the improvements will be, and what improvements will exporters see once this process has been completed?

Chris Chew: We would hope to see, as we mentioned earlier, a reduction in the number of standard individual export licence applications.

Q90 Ann McKechin: Have you any kind of percentage or target on that?

Chris Chew: We have not set a target for the reduction. We are partly in the hands of exporters as to what licences they want and when they want those licences, but we want to reverse the upward trend that we have seen in the past few years. We also want to ensure that we are consistently above the 70% target and that we are not just managing to achieve it. Clearly we want to get back above that target. A general improvement in the overall feedback that we receive from exporters-

Q91 Ann McKechin: I think that one of the issues that you mentioned was classification, when you will make pre-inquiries. Is that an area that you will look into?

Chris Chew: It is something that we are looking at, yes.

Chair: We now come to the issue of "Brass Plate" companies.

Q92 Fiona O'Donnell: Secretary of State, in response to a recommendation from this Committee last year in relation to "Brass Plate" companies, you said: "The Government continues to explore all opportunities for enforcement action against non-UK persons who transact undesirable arms trading". I wonder if you could update us on what developments have been made relating to "Brass Plate" companies since last year?

Vince Cable: I know that there has been a continuing debate with the Committee, who want us to push further on "Brass Plate" companies than we have. We took the view that a general solution is not necessary; we would use the law enforcement authorities, the company investigations branch of BIS, HMRC and serious crime operations to investigate companies that look suspicious. That takes place.

I think that, before he left the Department, Mark Prisk suggested that if the Committee wanted a confidential briefing on some of these investigations-how they are conducted and what the results are-we will happily do that. However, we have resisted the approach that you have put to us in the past of outlawing "Brass Plate" companies, or having some general action on them, because we think that most of these are completely innocuous. It is only where there are genuine suspicions of nefarious activity that we think it necessary to pursue them.

Q93 Fiona O'Donnell: Have you had any discussions with the Foreign Secretary about this being included in the arms trade treaty?

Vince Cable: I haven’t specifically, but the arms trade treaty, as you know, is progressing very well. I think that we are all pleasantly surprised by how far it has got, with there now being the prospect of a good treaty in the spring. Frankly, I am not sure what the language is on companies of this kind, but we would certainly like it to be as strong as possible in terms of enforcement generally.

Chair: We now turn to arms brokers.

Q94 Mike Gapes: Secretary of State, for several years-both in the previous Parliament and this Parliament-this Committee has pressed the Government to establish a pre-licence register of arms brokers. We have been told that it is not necessary, even though it seems to be good practice in many other countries around the world. We have also been told that your existing SPIRE system fulfils the function, but you said that you had taken the step of publishing a list of companies that use the Open General Trade Control Licence for maritime anti-piracy services. That is a welcome step, but could you go further? Could you give us some idea of further steps you might take whereby we might have some form of register of arms brokers?

Vince Cable: As with the previous question, it has been an ongoing debate with the Committee that you would like us to have gone further than we have gone.

Mike Gapes: We do.

Vince Cable: It is not that there is some fundamental disagreement. We understand entirely what you are trying to achieve: to stamp out British people overseas who are engaged in activities that they should not be engaged in. It is just that we feel that the accumulation of a comprehensive register is probably not achievable because you would not be able to record the kind of people that you would want to catch in it anyway; if they are trying to evade licence obligations, why would they sign up to a register? We are not sure that the additional effort required would justify that.

Where there is abuse of the arms control legislation, with exterritorial activities, breaches of embargoes, engagement in landmines, cluster bombs or whatever, we can pursue them in the normal way. The mere accumulation of a register-while we understand why you want to do it-has always seemed to us to represent disproportionate cost for the benefit.

I think that your question is whether we are taking any stronger steps within the existing framework to accumulate names-what is the answer to that?

Chris Chew: We are not at the moment. Anyone who wants to carry out a brokering activity in the UK legally needs to apply for a licence on SPIRE. So we know who all the legal brokers are because they have applied for a licence on SPIRE.

Q95 Mike Gapes: You know, but it is not public.

Chris Chew: It’s not public. We would have to think quite hard about whether we wanted to make the names public across the board, but that is certainly something that we could think about.

Vince Cable: If that is the request, we will think about that.

Q96 Mike Gapes: I think the Committee may want to look at this when we come to do our report and come back to you. Certainly, we have not been satisfied either with this or the previous Government doing sufficient to have a register so that Members of Parliament and the public would know who the brokers were.

Vince Cable: I know these arguments have been rehearsed with you before, but the practical problem is how to avoid a lot of unnecessary activity around, let us say, a British person working for a French company in France, engaged in perfectly legitimate transactions with the United States-something completely uncontroversial. They, for technical purposes, would be brokers. How do we avoid large-scale, unnecessary duplication of bureaucracy at national level to capture perfectly legitimate activity, when what we are really after are a relatively small number of people who are trying to break the international rules? We judge that there are better ways of doing that than compiling a register.

Q97 Chair: Secretary of State, we come to another area where, so far, we have not persuaded you to go as far as the Committee would wish, which is on the area of extraterritoriality. I do not know whether you have had time to look at the debate we had in Westminster Hall last week. I returned to that particular issue again and pointed up the glaring, acute anomalies in the present position. For example, light weapons are within the scope of extraterritoriality. Broadly speaking, heavy weapons are not. Long-range missiles are within extraterritoriality. Shorter-range missiles are not. Unmanned aerial vehicles are within the scope of extraterritoriality, but manned military aircraft-fixed wing or rotary-are not. The anomalies are absolutely glaring.

I hope you will reflect on the Committee’s position and what we said in the Westminster Hall debate. I do not know whether you wish to add to what you have said to us previously, but so far I have to say that the Committee is not persuaded that these anomalies should continue, and we believe that the category C items in the military list should be added within the scope of extraterritoriality.

Vince Cable: As I think you imply in your question, it is essentially about anomalies and apparent inconsistencies. It is not a disagreement in principle. Of course the Government accept that for very serious matters the law often does have to be applied extraterritorially. It is more difficult, for obvious reasons, because we are dealing with different jurisdictions, but in areas such as torture equipment, arms embargoes, small arms, cluster bombs and now land mines, extraterritorial rules do apply, and we accept that, as with things like terrorism and child pornography, extraterritorial legal application has a role.

The question is where we draw the line. It may be that if there are important categories in the military list that are not being properly supervised they are more appropriate for either the multilateral arms treaty or for European Union jurisdiction. I think we would always be willing to engage in dialogue with you to look at the list constructively, because, as you quite rightly say, there is a somewhat arbitrary line drawn. It is not a fundamental disagreement of principle.

David Frost: That is right. Obviously, extraterritoriality does apply in certain areas, as you and others pointed out during the debate. The question is as much one of proportionality. In a world where supply chains are much more fragmented-goods move from one country to another and are incorporated in other products much more than they used to be-you could easily impose a huge amount of complexity on process on very ordinary, legitimate transactions. That is what we fear from extending extraterritoriality.

Chair: Secretary of State, there is a Division, so I hope you will agree that we have to suspend the Committee. I hope you will give us injury time for a further 15 minutes at the end. The Committee will return in 15 minutes at 3.25 pm.

Sitting suspended for a Division in the House.

On resuming-

Q98 Chair: Secretary of State, we shall now resume after the Division. You wanted to add something to what you said on extraterritoriality.

Vince Cable: Yes. I just want to be as helpful as we can to the Committee on the issue you raised with us about anomalies in military list C, in particular. The problem we have is that this is a very heterogeneous category. It includes everything from tanks and armoured cars down to nuts and bolts for tanks and armoured cars. I can see why you would want the former-the big items-covered by some sort of control arrangement of this kind, whereas not necessarily with every single transaction. After discussing this with officials, we suggest that we perhaps sit down with you or your team and think about some of the more obvious anomalies that we can pick up, and respond to your concerns.

Q99 Chair: Thank you, Secretary of State. We will note what you have said. Thank you for your additional suggestion.

We are now moving on to what is called the "torture goods regulation". We shall start with Malcolm Bruce.

Q100 Sir Malcolm Bruce: Secretary of State, last year you banned a number of ingredients that were found to be exported in the UK and could have been used in lethal injections in the United States. There was an issue of its happening after the event, but it was understood that that was what you did. Since then, the EU has EU-wide export control of the four components. You have also put a control on pancuronium bromide, but you have lifted the controls on potassium chloride, which I assume is one of the components of a lethal cocktail, but not the lethal element. It is clearly a common substitute for salt. I understand your reasoning, nevertheless you have concluded that, as it is widely available worldwide and there is no evidence of any current risk, there should be no restriction on it. Given that it was always a widely available common substance, the question arises why a restriction was put on it at all in the first place.

Vince Cable: The approach I adopted to looking at these substances was that, when we were asked originally, people who were campaigning against the death penalty in the United States put it to us that certain substances were used and that it would be helpful and right if the British Government showed their concern about the death penalty by preventing them from being exported from the UK.

In each case, we looked at the evidence about the availability of these materials, whether they were likely to be used in execution drugs and whether our intervention would make a significant difference. We tried to look at it case by case empirically, while not losing sight of the basic principle. As you rightly say, the European Union has now adopted two of the cases on a European-wide ban. One remains at UK level. We added propofol to the UK list because we discovered that this has been used in Missouri in the United States and that they were very likely to use British suppliers for this product.

In the case of potassium chloride, I am not a chemist or pharmacist. I cannot make direct technical judgments, but the balance of evidence has been that it is sufficiently widespread and there are sufficient options for alternative use that it would have been pointless to have invoked the control.

Q101 Sir Malcolm Bruce: I understand that and, by the way, I supported your decision. Our only criticism was about the time it took but that was a procedural point. It does seem slightly odd that we banned a substance that is pretty widely available in the first place. I suppose it just highlights the kind of difficulties you have on the margins, whether they are arms or arms-type things, where there are unintended consequences. That is really the question. It should surely have been fairly obvious that this was a fairly innocent and universally available substance and therefore it seems slightly odd that it got rolled into that. I can only assume that there is some component in the cocktail.

Vince Cable: Yes.

Chris Chew: Yes. At the time we were approached by Reprieve. They asked us to impose controls. You are right: it is a three-drug cocktail that they use. Potassium chloride is one of those. At the time, we thought it was more important to act quickly and impose the control on all three, rather than spend some time considering which ones we should control or what the scope of it should be. It was that need to act quickly rather than possibly delay the control on the item that we were really concerned about. That was one reason why we made it a temporary control that would expire after 12 months.

Sir Malcolm Bruce: All I can say is that I would absolutely endorse that approach. Better that way than the other.

Chair: Can we turn to the EU’s review of the torture goods regulation?

Q102 Bob Stewart: Secretary of State, the Foreign Secretary sent a letter to our Chairman saying that we were going to constructively engage with the review of EU torture goods regulations. What does "constructively engage" mean? What does he mean by that? What are we doing?

Vince Cable: What it means is that we have been pushing the European Union to look at this issue and reform its procedures. My understanding is that the Commission will embark on this exercise in the coming year, 2013. We don’t know yet what form it will take or what questions they will ask.

Q103Bob Stewart: Are we making suggestions as to what might be in it?

Vince Cable: We haven’t proactively done that so far but it would be consistent with our leadership on this issue.

Chair: Can we turn now to the UK-US Defence Trade Co-operation Treaty?

Q104 Mr Donaldson: EGAD told us that they were frustrated with the implementation of the UK-US Defence Trade Co-operation Treaty and that there was no huge enthusiasm on the part of UK industry to become part of the approved community and work on the treaty. What will the Government do to improve the implementation process and to increase the enthusiasm of the UK industry to become part of the treaty’s community?

Vince Cable: Our general approach to this treaty is that we are pleased it has got so far. We encourage the idea. Our reservations are that it is cast very narrowly. There are many exemptions in terms of the technologies. We would like to continue to improve it.

Chris Chew: We know there are shortcomings. It was a very long negotiation to get the treaty itself and then to get the implementing arrangements in place. But we can see now that it is in force that there are some shortcomings and we are working with the US. The Ministry of Defence leads on this issue, but there is work ongoing to try to address some of those problems and to help industry understand how they can make the best use of the treaty.

Chair: Finally, can we come to the trade fairs issue?

Q105 Fiona O'Donnell: No doubt you will remember that last year the Committee raised concerns about promotional literature that had category A goods at the Defence and Security Equipment International exhibition. In a letter to the Chairman you said: "It is necessary to prove a link between the display of the brochure, and the eventual movement of the goods between two overseas countries…HMRC have concluded that closure of the exhibitor’s stand by the event organiser was proportionate and that no further action was appropriate." However, the UK working group believes it is not necessary to wait until an actual transfer has taken place to prove a direct link, and that such activities are covered by the Act. Will any further actions be taken against these companies, especially as one of them is a repeat offender, and if not, why not?

Vince Cable: Clearly, our starting point is that we do not want these defence sales exhibitions to be used to promote illegal activities. Obviously, that is the starting point. The legal advice we received was that the best way of dealing with the matter was simply to close those things down and stop them. As regards prosecution, you are familiar with the usual legal caveats about having sufficient proof to demonstrate causality to bring a successful prosecution. On advice, we have not pursued that route, but since we are talking about illegal activity, obviously it is an option open to us. David, do you have anything to add to that?

David Frost: No, nothing to add.

Q106 Fiona O'Donnell: Have you issued any kind of warning to the company, should it repeat the offence?

Vince Cable: Certainly, in the exchanges with the defence organisers, they know perfectly well that this must not happen and that our people will move very quickly. It is terrible for their reputation when these things happen, quite apart from anything else, so we will certainly advise them in the very strongest terms to exercise very careful control over who they allow to display.

Q107 Chair: Secretary of State, do you wish to reconsider in any way the response you gave to our criticisms and concerns that the promotion of these illegal goods was found, first, for the second time, and secondly, by visitors to the exhibition? We said that that indicated a serious laxity of supervision, and the Government’s response was that you did not regard the supervision as being lax, which we have to say we found extraordinary.

Vince Cable: If there was a repeat offence-I had not taken that on board; that was an oversight on my part-maybe stronger action would seem to be required. I will certainly go back and have a look at what the legal powers are and whether it would be particularly in cases of recidivism that we use them.

Chair: Secretary of State, thank you very much indeed for coming to give evidence to us today, and thank you, Mr Frost and Mr Chew, for accompanying the Secretary of State. We look forward to continuing our animated correspondence with you and your Department.

Examination of Witnesses

Witnesses: Rt Hon William Hague MP, Secretary of State for Foreign and Commonwealth Affairs, James Paver, Deputy Head of Arms Export Policy Department, and Richard Tauwhare, Head of Arms Export Policy Department, gave evidence.

Q108 Chair: Foreign Secretary, we welcome you to the Committees on Arms Export Controls once again, and we welcome also Mr Richard Tauwhare and Mr James Paver. Foreign Secretary, I am going to start with a question on the arms trade treaty, of which I generously gave you advance notice in my contribution to the Westminster Hall debate last week. In that debate, I stated that the principle of consensus may be helpful in getting negotiations under way, although that does not always prove to be the case. For example, with the fissile material cut-off treaty the principle of consensus has not succeeded in getting negotiation on the text under way at all. But that is the justification for the consensus principle in the context of the arms trade treaty. However, history shows that consensus is the kiss of death if one is trying to reach an agreement on a big, multilateral, multi-nation arms control agreement. If we needed consensus, which means unanimity, we would not today have the non-proliferation treaty, the land mines convention, the convention on cluster munitions and so on.

The question I would like to put to you is this: we earnestly hope that the March negotiations succeed, but if they fail-and you told us that they will be governed by the consensus principle-are the British Government willing to state that in order to achieve an arms trade treaty, although we may not be able to get unanimous subscription to it, it would be a huge advance on the present position where we have no such treaty to get one signed by the great majority of United Nations members? Will the British Government be willing to say at that point that we must take the arms trade treaty back to the United Nations and try to get the largest number of nations to sign up to it on the strongest possible terms?

Mr Hague: Broadly, yes, is the answer to that question. Consensus is not an absolute requirement. It is preferable, for reasons that I might mention in a moment. However, if it proves impossible, our view is that we cannot delay an arms trade treaty indefinitely. We do not want to delay it indefinitely. The resolution that convenes the next conference makes it clear that arms trade treaty supporters will look to the UN General Assembly to take action to adopt a treaty as soon as possible. We will have to evaluate the circumstances of where we are after the conference on 18 to 28 March. I cannot give a categorical assurance about that. We will have to see what the circumstances are, but we do not rule that out. If it cannot be achieved by consensus then we will have to do our best to get as many signatures and supporters in a different way. The consensus principle is preferable since we are trying to get global standards for regulating the arms trade. Of course, there are some major arms exporters we would like to have in it, for whom the consensus principle is important.

The other point I would make is that consensus is not quite the same as unanimity. Consensus means no state opposing agreement, not that they are obliged to ratify the treaty. Working by consensus gives all states reassurance that they can protect what they regard as their vital interests. I think we have come tantalisingly close on that consensus basis. The recent vote at the UN for having the conference in March was 157 in favour, 18 abstentions and none against. We have come sufficiently close to succeeding by consensus that it is worth continuing to try.

Q109 Sir Malcolm Bruce: It is very positive that there were no votes against-not even Zimbabwe this time. That is clearly an improvement. I wonder, in terms of getting both an effective treaty and the maximum agreement, where you think the pinch points are. Initially, the United States was put in the frame by the arms control organisations based there, using the argument that in US domestic politics President Obama did not want to further alienate the powerful gun ownership lobby prior to the election. That was a problem. Obviously, we have had a terrible tragedy this weekend that seems to have shifted opinion in the States. First, do you think that might have-this is a terrible thing to say, in a way-a positive effect on getting agreement from the United States? Secondly, you mentioned other arms export countries that you want on board. To what extend will countries such as Russia and China determine how effective a treaty is, if it is finally agreed by consensus?

Mr Hague: To the last part of your question, a treaty that involves and is signed and ratified by those countries will be dramatically more effective. Russia is a major arms exporter, as is the United States, so we do want them in it. I think it is too early to say-it requires an analysis of US domestic politics that the US politicians might find difficult at the moment-how the terrible outrage last week may have affected this, but we had reached a point in July, with the inclusion of ammunition, which was a contentious point for the United States, through regulating ammunition in the export category in article 6, where the United States, while not willing to go along with the text at that point, was not necessarily or actively opposing that. That is not necessarily a showstopper for them. We certainly hope that it is not.

There are things by which the text that was before us in July could be improved, such as removing some of the loopholes that might be argued to exist in the current drafting, greater clarity on public reporting, improving the language on prohibited transfers and getting clear the procedures for amending the treaty in the future so that it can be kept relevant. There is this question about ammunition and ensuring that the European Union can become a party to the treaty. There are things that are desirable in improving the text, but, at the same time, we have to remember that we were getting very close to an agreement on the basis of consensus on the basis of the July text. I do not know whether my officials would like to add anything on Sir Malcolm’s question about the pinch points and obstacles.

Richard Tauwhare: No.

James Paver: No.

Q110 Sir Malcolm Bruce: I appreciate what you have just said and what you have said about ammunition is quite encouraging, because the Americans seemed to be resisting that initially. The fact that they are at least not resisting it, even if they have not agreed to it, is helpful.

I just wonder whether the relationship with and situation in Mexico has had an effect. Clearly, this spills over their border in the way that the massive proliferation of American guns killing Mexican citizens, and cross-border traffic, seems to reinforce a good, strong domestic case for America to be interested in an arms control treaty in a way perhaps that they might not have been even a couple of years ago.

Mr Hague: I think there is a very good case. We should all seek to persuade the United States-I will certainly be seeking to persuade the United States-that this is something that they should adopt and support, including with improvements, but, as we all know well, debates about small arms control in the United States are entirely different from any debate in this country or any other European country. It is a totally different atmosphere. However, we will be absolutely doing our best in the run up to this conference in March, which we have sponsored and called for, to persuade other countries to regard it as the vital chance-the great opportunity-to finalise and agree an arms trade treaty.

Q111 Ann McKechin: On this issue of loopholes, which you are obviously currently negotiating at the present time, Amnesty has raised some concerns that, for example, Russian arms sales to Syria, which have clearly been in the news this year, would be exempt under article 5.2 of the draft treaty, as they come under existing defence co-operation agreements. I just wonder whether one of the pinch points in these loopholes that you are trying to tackle is this particular point about co-operation agreements.

Mr Hague: That is something that we would like to tackle, but we are unlikely to be able to achieve the absolute ideal in every aspect. Of course, this is an arms trade treaty that we hope will stand the test of time. Some of those current agreements are going to become obsolete. I certainly hope that we can now look forward to the day-we do not know when it is-when the current regime in Syria will not be there and all such arms agreements will have come to an end. We do not know how long that will take. Do you want to add to that point, Richard?

Richard Tauwhare: I do not think so, Foreign Secretary. I think you are absolutely right. The point in article 5.2 on defence co-operation agreements is seen by many supporters of the treaty as a weakness, and it is one area that we will certainly want to do our best to try to address before March.

Q112 Chair: Before we move on to the next subject, Foreign Secretary, may I thank you for your classified letter to the Committee on the arms trade treaty, which was helpful to members of the Committee?

Mr Hague: If it would be helpful, during the process of negotiations up until March, for the Committee to continue to be informed with some confidential information about negotiating priorities, I would be very happy to keep you informed as we go along.

Chair: We are always glad to be kept as fully informed as you think right, Foreign Secretary. Thank you.

Mr Hague: I thought that you might.

Chair: May we now turn to the processing of arms export licence applications within your Department?

Q113 Mr Donaldson: Foreign Secretary, there has been a significant increase in the number of strategic export licence applications being submitted to FCO Ministers. Has that impacted on the time taken for the approval process to be completed? If so, what has been the effect on the applicants?

Mr Hague: I do not think that it has had any significant effect on the time. We are doing well on time. We received 15,000 applications in the last year; 85% were completed within 10 working days and 99.8% within 60 working days, in the Foreign Office. That is even with a sharp increase in ministerial oversight of such applications. I think I gave the Committee the numbers for 2011 in February, when we were up to 153 ministerial submissions, as opposed to 39 the previous year. This year, so far, and we are pretty near the end of the year, there have been 295 ministerial submissions. But we Ministers are relatively quick about our work, and we are particularly assiduous in the Foreign Office team, so that is not contributing to any delay. As you can see, in terms of time, the performance is very strong.

Chair: May we now move on to a number of questions that we want to ask you in relation to the Middle East and North Africa?

Q114 Bob Stewart: Good afternoon, Foreign Secretary. On the export policy review, some non-governmental organisations have been disappointed that they have not been involved, and some members of industry have not been involved. Do you have a particular view on that?

Mr Hague: I think we discussed this a little the previous time I came to the Committee. That was a review within the Government-it was Ministers asking officials for advice on how we could do things differently and better. We have previously explained to the Committee what was recommended and the things it was decided to do in the light of that review, which we have done. In 2012, we have had the energetic introduction of everything that we decided to, including, by the way, the creation in the Foreign Office of a specific department-the Arms Export Policy Department.

Q115 Bob Stewart: So it is actually all internal?

Mr Hague: It was an internal review, and we have now done-

Q116 Bob Stewart: That’s enough said.

Mr Hague: Well, it may not be enough said for everybody.

Bob Stewart: It is for me.

Mr Hague: Thank you. I want you to know that we have done the things that we said we were going to do. We have introduced a suspension mechanism, we have a new country risk categorisation, we have the increased ministerial oversight that I just mentioned, we have new requirements on FCO posts overseas to report on their concerns, and, I hope, we have better presentation of public information on arms exports, including giving more information to this Committee. So we have set about it energetically, and I am pleased with the progress we have made internally over the past year.

Q117 Fiona O'Donnell: May I start with a couple of specific questions and then move on to be more general? The UK Government has recently signed a defence co-operation accord with Bahrain. Given the recent history of human rights abuses in Bahrain, did the UK Government have any misgivings about proceeding with that accord, what does the accord cover, and, in the interest of transparency, why was no mention made of it on the FCO website?

Mr Hague: We signed it on 11 October, and it provides a framework for current and future defence activity with Bahrain, including training and capacity building, partly in order to enhance the stability of the whole region. As the Committee will be aware, we have defence assets of our own stationed in Bahrain, our minesweepers in particular, which are responsible in any crisis for maintaining freedom of navigation in the Gulf, are physically based in Bahrain. We need regularly to update and amend our defence co-operation arrangements. We have a long history of defence engagement with Bahrain since its independence from us in 1971.

This accord complements existing agreements. It does not change our approach to export licensing in any way. Indeed, there have been export licence applications in relation to Bahrain that we have recently refused, or are in the process of refusing. It does not change our approach to export licensing in any way; it is part of a long-standing defence arrangement with a country that is an ally of ours. It has its serious internal difficulties but it is an ally of the United Kingdom.

Q118 Fiona O'Donnell: Did you have any misgivings about human rights issues?

Mr Hague: To the extent that the relationship includes training and capacity building, that might have benefits in the human rights area. After all, it is often argued by those in authority in Bahrain that what they need is their security forces to know what to do, to be trained in how to handle civil disorder. Although I am glad to say that the Bahrain Defence Force has not been deployed on the streets since quite near the beginning of the trouble in Bahrain in 2011. It has not been deployed at all in the past year. This defence co-operation accord does not relate to such difficulties or to export licensing.

Q119 Fiona O'Donnell: Is there any reason why it was not on the website?

Mr Hague: It may be more for the Ministry of Defence to have on its website. I don’t know. There is no problem if you would like to see it on a website, we will put it on a website. It is not secret information.

Q120 Fiona O'Donnell: It was a very badly kept secret if it was.

Mr Hague: Exactly. It can appear wherever you would like it to appear.

Q121 Fiona O'Donnell: On the question of Saudi Arabia, have the Government made a thorough analysis of the use of Saudi military aircraft to bomb Yemeni territory and the consequence of that bombing? Are you able to share any of that analysis with us and further elaborate on the implications of that for the UK policy regarding arms transfers to Saudi Arabia?

Mr Hague: We followed that particular situation-that was in 2009-closely at the time of the conflict between Saudi Arabia and the Huti tribes. We do not believe that British equipment was used inappropriately or in breach of the consolidated criteria. Our defence relationship with Saudi Arabia includes the provision of training to Saudi military personnel. Our military training establishments include training on international humanitarian law, human rights and accountability, so we have no reason to believe that our criteria were breached in the situation.

Q122 Fiona O'Donnell: I shall quickly ask a very general question. Given that Parliament is not sitting over Christmas and this Committee’s proceedings may be screened multiple times, I would like to ask a general question. Could you demonstrate any cases or examples of where, as a consequence of Foreign Office review of export policy, arms transfers to an authoritarian regime have actually ceased?

Mr Hague: As the Committee knows, we had the revocation of 158 licences last year. That was the subject of some controversy. The Committee took a different view in some respects about the lessons of that. Part of a more detailed answer would be that it depends what you mean by an authoritarian regime. That was a revocation of licences to countries in the Middle East and North Africa. There has also been the revocation of a couple in the past year relating to Syria when the provisions of the EU arms embargo changed. I think those are examples.

Q123 Mike Gapes: Foreign Secretary, in the case of an agreement between the UK and another Government to have some kind of defence co-operation, can you confirm that that does not have the same status as when we are talking about restrictions or controls on arms exports that are purchased from British companies or exported from this country? In other words, if the MOD decides to transfer equipment to another state, that would not be subjected to the same criteria as would apply with regard to the arms export regime?

Mr Hague: Mr Gapes, do you mean the gifting of equipment?

Mike Gapes: Yes, the gifting or lending of equipment.

Mr Hague: Those are subject to our normal requirements. We only agree to requests from foreign Governments, first of all, where it would assist in our foreign security policy aims. All proposals from Government sponsors to gift, as it is termed-give, really-controlled goods are assessed against the consolidated criteria, in the same way as commercial applications and to the same degree of rigour.

Q124 Mike Gapes: If you were to write to us and give further information, that would be helpful.

Mr Hague: That is the situation. Are you not happy with that answer?

Q125 Mike Gapes: That is fine. Can I ask you about the review as regards the work load that you referred to for Ministers? You said that the number of items of consideration referred to and overseen by Ministers has gone up to 295 so far this year, compared with 153 last year and 39 in the previous year, before your Middle East and North Africa review. This is presumably dealt with by the human rights section within the FCO, and would then, if necessary, be referable up to Ministers. Is that correct?

Mr Hague: Well, there is an opportunity for many different parts of the FCO to comment on such a review. The work is led by the arms export policy department. That is what it is for. Establishing a particular department has led to a very good focus on this work. Of course, the recommendations that come to Ministers can also come from a post, from the embassy of the country concerned, from our human rights department. So Ministers are given the views-sometimes a variety of views, actually, because we encourage it and we want to know if there is a disagreement-from different parts of the Foreign Office.

Q126 Mike Gapes: In the previous session with Secretary of State Cable, we were touching on the time that is taken for consideration and decision. Is this extra ministerial involvement a factor in delaying some of the decisions?

Mr Hague: Clearly, from the figures I have given, it is not delaying them beyond any properly expected time. Clearly, it does add a little bit of time, but ministerial submissions that come to my office are generally dealt with overnight.

Q127 Mike Gapes: It is not like the Home Secretary or the Immigration Minister having hundreds of things on his desk for weeks and dealing with those matters?

Mr Hague: I am sure they are very quick in other Departments, too. We are certainly expeditious, but sometimes I say I want to think about it for a couple of days, particularly with a difficult decision on an arms export licence. But they do not sit there for weeks. The officials are very efficient, and as I said we have dealt with 99.8% within 60 working days. A year ago, if we look at the table of long outstanding cases, we had seven that had been outstanding over a year, and now we have none outstanding over a year. At that time, we had 36 outstanding for between three and six months. Now we have only 15 in that category; so the actual numbers of those that are taking more than three months, let us say, are very, very small.

Mike Gapes: Can I switch focus to Syria? As you are well aware, because you have been involved in the discussions with your colleagues in the European Union, there is an embargo on Syria. Can you confirm that this applies not just to the regime, but also to support for opposition groups or forces? What would be the process required, if, as the Prime Minister said in an answer to me on Monday-"looking at" was the phrase he used-there was to be a change? What would be required if the UK Government or any other EU Government decided to supply military equipment to elements in the Syrian opposition?

Mr Hague: The first part of your question is whether the EU arms embargo applies to the whole of Syria, and to everybody in it, other than to any equipment needed for UN operations and so on. It applies to the opposition groups as well as to the Government. We have just rolled over that embargo, from 1 December, but we decided, at the instigation of France and the United Kingdom, to do that for three months, rather than for 12 months. We decided to do that because we do not know how the situation in Syria is going to develop, and we think the European Union should give itself sufficient flexibility to be able to respond.

We have not yet taken any decision beyond that. The process, therefore-to answer the other part of your question-is that it is now for EU states to discuss, coming up to the 1 March deadline for the expiry of the current form of the EU arms embargo, whether they want to amend that in any way. For instance, it could be amended so as to apply to the regime, and not to opposition forces, in theory, or it could be amended in many other ways. To amend it in that way would require the agreement of all of the EU member states.

Q128 Mike Gapes: Can I probe you a little on this? I understand that we are already supplying non-lethal equipment to elements in the Syrian opposition. That could be military, but not lethal. How strict is this embargo? Is it possible, for example, if we are giving communications equipment, that it could be used in conjunction with weaponry supplied by Turkey, Qatar or some other countries to elements in the opposition?

Mr Hague: Well, it is not military; it is certainly non-lethal. The assistance, so far, includes things like the deployment of our stabilisation response team to work with the opposition on their future plans and how they are getting help for people’s basic needs in opposition-held areas. We are training Syrian citizen journalists; we are providing, in terms of actual material, water purification kits and generators to help civilians in opposition-held areas; and we are supplying communications equipment to help opposition activists to overcome the communications black-outs-blockages-introduced by the regime and to get their message and reporting out to the outside world. Now, as I have said on the Floor of the House, of course you have to balance the need to do that-people are in desperate need, and it gives them genuine help to send these things-against any risk that they could be used in the way that you described. But I think the balance of the argument is very heavily on the side of delivering such help. We are not going beyond those things at the moment.

Q129 Mike Gapes: What about other EU countries? You said, and the Prime Minister said to me on Monday-he was careful to say this was as far as he was aware-that no EU country was supplying weaponry in breach of the European Union embargo. Do other countries have the same strict view as to what is supplied or not supplied under the embargo?

Mr Hague: I believe so. I have no evidence to the contrary.

Q130 Mike Gapes: Do they have to report? Do the Government have to report somewhere? Do we inform our French, German and Italian partners exactly what we are doing, and do they have to tell us what they are doing?

Mr Hague: We inform them we are doing this. They do not have to say. If a country was going to breach the EU arms embargo, which would be an illegal act, I doubt that it would then take the trouble to tell us that it was doing that, but I would be surprised if an EU country did that. I have absolutely no indication from any-

Q131 Mike Gapes: So press reports that France has been supplying equipment are not true?

Mr Hague: I have absolutely no evidence of that. It has been known for press reports not to be true.

Q132 Mike Gapes: I am sure of that. I have one final question on the 1 March deadline of the three months. If it was decided, because the situation in Syria was moving rapidly and we had come to a tipping point-perhaps over the Christmas recess-how would that three-month deadline be changed? Would that require a meeting of the Foreign Affairs Council, or can it be taken by other means?

Mr Hague: To amend the deadline before 1 March could be done, technically. It could technically be done at any Council of Ministers of the European Union, but it would require unanimity to amend it. All 27 member states would have to agree on it, and there are a variety of views in the European Union about this situation and what to do next. As things stand, it is unlikely to be changed in the coming weeks; we are working towards 1 March, but it is not impossible to change it, if there was a dramatic change in the situation.

Q133 Mike Gapes: Would it be overturned if there was a UN Security Council resolution?

Mr Hague: A UN Security Council resolution takes precedence. If the United Nations adopted an international resolution with an arms embargo-

Q134 Mike Gapes: Or saying there is no arms embargo.

Mr Hague: No, then it is open to any nation or to the European Union to have its own arms embargo. It is not overridden negatively, as it were, by a UN resolution.

Q135 Katy Clark: Did the Prime Minister discuss the Arms Trade Treaty negotiations with the Governments of the Middle East that he visited recently?

Mr Hague: He frequently raises the Arms Trade Treaty with leaders of other countries. I am not really able to set out the records of the meetings he has had with specific leaders in the Middle East. They are confidential, for understandable reasons. I cannot list everything discussed and not discussed at each meeting. The Prime Minister raises the Arms Trade Treaty internationally. I think I can say that.

Q136 Katy Clark: What would you say the attitude of some of these Governments that he visited recently is to the Arms Trade Treaty negotiations? What can you say on the public record?

Mr Hague: It is important to bear in mind that no country voted against holding the conference at the end of March, as I said a few moments ago. On the specific attitudes of the Gulf states, they have not really been among the most troublesome countries on the Arms Trade Treaty. Richard, do you want to expand on that?

Richard Tauwhare: That is right, Foreign Secretary, they have not. If there is a generic concern for countries in the Middle East, it is to ensure that the treaty will not make it more difficult for them to acquire the weapons that they feel they need for legitimate self-defence. We have reassured them that the Arms Trade Treaty would in effect implement criteria that are very similar to those we currently implement. Since we currently are able to export and licence defence equipment for their legitimate self-defence requirements under our criteria, the Arms Trade Treaty would not add anything on top of that. They should be reassured that the Arms Trade Treaty will not make it more difficult.

Q137 Katy Clark: If you cannot give us a verbatim account of what was said in the meetings, can you indicate what level of priority the Prime Minister would have put on this treaty in these recent visits?

Mr Hague: The Prime Minister gives a high level of priority to the Arms Trade Treaty. He is supportive and enthusiastic about the work that we have done. Ministers were involved-particularly Alistair Burt and Alan Duncan-in the work that we have done to get to where we got to in July on the Arms Trade Treaty. He is very supportive of our pushing for the conference that we are having in March. If we need to call in the Prime Minister’s phone calls to other leaders when those negotiations come to a final point, he will be very responsive to that and keen to help. He attaches a very high priority to it and raises it internationally, as I do.

Q138 Richard Burden: Can I take you, Foreign Secretary, back to the internal review that you carried out and the implementation of that? If I have understood you correctly, you were saying, based on your answers to Fiona O’Donnell on Bahrain and the issues around Saudi Arabia and Yemen, that you think that the implementation of that review has enabled Ministers, as you put it, to respond more rapidly and decisively to areas of instability. If that is the case, as there is still this view being expressed by external stakeholders-I think Bob Stewart alluded to it-that they have not been sufficiently involved not just in the review, but in the implementation phase of that review, on which they say they were promised consultation, would there be any problem with running through with them what the review was, what is being done to implement it and seeking their views on it? Would there be a difficulty with that?

Mr Hague: No, I do not think so. I am all in favour of maximum communication. We can do that. We can organise a meeting to do that. We have discussed matters in my human rights advisory group, which covers all subjects. It is a wide-ranging group with many of the key NGOs represented on it. We have discussed just recently, in the last couple of weeks, our approach to the Arms Trade Treaty and to the negotiations in March. I think they are very supportive of the action we are taking to sponsor that conference. I personally have discussions with some of those organisations about this. I think there would be no problem whatever. There is a lot to say, as you can gather, about what we have done to implement this review and the improved procedures that we have. I will happily commit my officials to another meeting to describe it all.

Chair: I want to turn now to cluster munitions.

Q139 Ann McKechin: Secretary of State, cluster munitions have now been prohibited in direct sales, but there is still the issue about indirect financing of cluster munitions. There is concern among the NGO community and a number of UK financial institutions over the need for a voluntary code of conduct. Can you give an indication of whether your Department plans to introduce or broker such a code?

Mr Hague: A number of banks have issued clear statements about this already, I am pleased to say. RBS, Lloyds and HSBC have issued statements saying that they would not knowingly invest in cluster munitions producers. You referred to a voluntary approach in your question. We think that a voluntary approach by the banks on this issue is preferable to intervention by the Government. We welcome what those banks have done, and we will now monitor what approach other financial institutions take. I would encourage them also to spell out their position clearly. I would hope that that would deal with the issues. We would prefer a voluntary approach led by the banks themselves, but I would not rule anything out if we do not get that.

Q140 Ann McKechin: Given your own Department’s specialist knowledge in the area-I am sure people would want to make sure that any code or practice adopted by our own UK-based financial institutions are consistent and follow best practice-surely your Department should be taking a more active interest in ensuring that the codes do reflect good practice; that there is an informed discussion among UK financial institutions; and that those that have not yet publicly adopted a code of conduct are proactively encouraged to do so by the Government indicating that this is an expectation that you have of them.

Mr Hague: We are taking an active interest, as you can gather, and monitoring closely which ones do this and which ones do not. I am happy to say now that if there is not sufficient progress on this, with financial institutions across the board making their approach clear, we will have to ratchet up the reminders, the pressure and the greater active interest from the Government. I am not ruling anything out, but I would like them to do this themselves. That is the simplest, easiest way for it to be done. I do not rule anything out. If, when I come back to the Committee in a year’s time, we have not seen a lot more financial institutions do it, we will look at further options.

James Paver: When we have had a specific request for advice from any one of these institutions, we have provided that.

Ann McKechin: I am sure the Committee will be interested to see what progress has been made next year.

Chair: We move on to the relationship and consistency between the UK national consolidated criteria for arms exports and the EU common position.

Q141 Mike Gapes: Foreign Secretary, the European Union Council has announced the conclusion of the first part of the review of the common position. Is the Government satisfied with this first phase and what do you expect to come from the final conclusions of the review?

Mr Hague: As you say, the initial findings were reported in the Council conclusions adopted 10 days or so ago. The EU member states concluded that the common position is working well, but further work needs to be done on the implementation, so now we have to await the further results of that work. I think it is too early to say whether we are completely satisfied with it, but we are happy with the way in which this work is being conducted. It makes sense to await the outcome of this work, particularly because the adoption of an arms trade treaty in the meantime may affect the end product of the EU review.

Q142 Mike Gapes: The Government seem to be satisfied, but the NGOs and other interested people have no means of knowing whether it is satisfactory because it is not being done in public. Do you think that there is a case, as has been put to us by the NGOs and the UK Working Group, that external stakeholders should have been involved in this process and made contributions to it, and, in addition, that there should be more openness and transparency?

Mr Hague: More openness in EU affairs is usually a good idea. This process is being conducted by the External Action Service, and it is for them to decide whom to consult. To give them credit, they had a meeting with Civil Society in Brussels on 4 December, which included a discussion on the common position. I do not have a list here of who attended but, clearly, there was an opportunity for NGOs to attend. I can say that I will encourage them to do more of that; that is a beginning in openness and wider discussion.

Q143 Mike Gapes: It has been put to us, interestingly, that the UK’s own consolidated criteria are weaker, in some aspects, than the European Union’s common position. Do you agree that that is the case? If so, do you have any proposals to introduce legislation to tighten up our national position to bring it in line with the EU’s common position?

Mr Hague: I haven’t seen anything-my officials may want to comment-but, as far as I can see, our export licensing decisions accord fully with the provisions of the common position. The wording of our consolidated criteria differs in some minor respects, but-

Q144 Mike Gapes: Foreign Secretary, I do not think, woe betide, that it was minor; we were told that issues of national security assessment and defence interest were "considerably weaker", in the words of one of our witnesses.

Mr Hague: Well, I would like to see any substantiated arguments on that, because that would not be our view at the moment. I am always open to arguments, so let’s have the details of that. Richard, do you want to comment further on that?

Richard Tauwhare: Nothing really to add. We are clear that there is nothing in our criteria that would allow a licence to be granted where it would otherwise be refused under the common position. Our criteria are at least as strong as the common position.

Q145 Mike Gapes: Perhaps we will follow this up with correspondence.

Mr Hague: By all means follow it up. There may be a misunderstanding about how we do these things.

Chair: Foreign Secretary, I want to turn now to a particular aspect, which is germane to your Department, arising out of the new licences that are being issued to deal with maritime Somali piracy.

Q146 Bob Stewart: Foreign Secretary, some of the export licences approved to some countries, such as Madagascar and Oman, include assault rifles, body armour, helmets, night-vision devices, pistols, sporting weapon sights and so on. You could make a pretty good army out of that, I reckon, in my experience. How sure are you that these weapons, which have been exported specifically for maritime security, will not be diverted? Russia is another country that is getting this kit, but it is traditionally an exporter of such equipment to other countries. Would you give us your view on that?

Mr Hague: As the Committee will agree, it is obviously important to fight piracy effectively, and we are increasingly doing that as a result of a whole range of measures. Part of that is proper protection and deterrence on the high seas. That has resulted in an increasing number of applications for these sorts of things-weapons, ammunition, body armour, weapon sights and other equipment used by maritime security companies. The two things to say about that are, first of all, that every application is assessed on a case-by-case basis against the criteria, taking into account the risk of internal repression in any of the destination countries and the risk of diversion. Some of the destinations raise concerns against our criteria, so we have to look at those criteria. Secondly, subject to that, we approve licences for companies that have signed up to the international code of conduct for private security.

Q147 Bob Stewart: That includes British companies operating off Somalia, does it?

Mr Hague: Yes.

Q148 Bob Stewart: So a British company that is using ex-special forces personnel on a ship off the Horn of Africa would be subject to this sort of control too?

Mr Hague: Yes, and the conditions we attach to open licences include anti-piracy operations limited to vessels registered to a flag state; equipment only used by named personnel; companies must provide a copy of their standard operating procedures and rules of engagement with each application; there is a limit on the number of weapons that can be held in any one country at a time-so that no one could form an army out of it, to respond to that point-and weapons must be stored securely at each destination country, usually with the country’s national security organisation or in authorised armouries. There are quite a lot of defences.

Bob Stewart: Thank you. You have taken my clothes for my supplementary.

Chair: Foreign Secretary, we are going to turn to drones and the missile technology control regime.

Q149 Sir Malcolm Bruce: Secretary of State, the International Development Committee was in Pakistan a couple of weeks ago, and we heard for ourselves the political impact of drones and how they were being exploited in a very visible way in the run-up to the election. You will know that Imran Khan took 30 American women to the site of some of the drone impacts and used that to make a very powerful attack on American engagement.

I wonder whether you could give us some reaction to the argument that has been put forward by some of the suppliers that they are worried that the missile technology control regime is damaging the market for drones and they are looking for some kind of relaxation. I know what our policy is in relation to drone activity in Pakistan, but on the wider use of drones, to what extent do you feel that the system we have is adequate to control, in particular, those who supply components?

Mr Hague: Under the MTCR, the controls on the export of UAVs are strong, and those capable of travelling beyond a range of 300 km and carrying a payload above 500 kg are subject, as I am sure you know, to a strong presumption of denial for export. We are an advocate of strong controls, and along with our partners in the MTCR we are keen to ensure that they remain appropriately controlled. I think that will be very important, and given that more and more countries are interested in such technology, effective and appropriate controls in this area will remain very important. That is not to say that we do not need to amend them over time as technology changes, but it will remain very important to have strong controls.

Q150 Sir Malcolm Bruce: What about the practice that seems to be developing of leasing or renting out drones? It has been argued that that could be a way of getting around some of the regulations. Do you believe that it is? Given that the UK leases drones in Afghanistan, do those have to comply with the same regulations? It is a little bit like the reply you gave to Mr Gapes, where you said that a gift clearly amounted to the same thing. Can we assume that if they are rented, the same rules would apply?

Mr Hague: That should not be a way of getting round the controls. Again, I will ask for confirmation from my officials, but the same controls apply, as I understand it, in that situation.

Richard Tauwhare: Yes.

Q151 Chair: Just following your reply to Sir Malcolm, Foreign Secretary, were or were you not saying that the British Government will resist any attempts to weaken the missile technology control regime in relation to drones?

Mr Hague: I am saying that there has to be a strong regime, but I consciously say that it may have to be amended from time to time.

Q152 Chair: So you are not giving us an assurance that the British Government will resist any weakening.

Mr Hague: As is clear, our whole position on the arms trade treaty and on arms export controls is to make things tougher over time. I do not know what other people will describe as a weakening or a strengthening of the position. We want to have a tough, strong export control regime at all times into the future.

Q153 Fiona O'Donnell: I just quickly wanted to ask whether the Pakistani Foreign Minister had raised this issue with you recently.

Mr Hague: I discuss a vast range of issues with the Pakistani Foreign Minister on a very regular basis. While I cannot start listing what is discussed at every confidential meeting, it would be amazing if we had not discussed this sort of issue.

Chair: The last area that we ought to cover is some specific countries of concern. We want to begin with Afghanistan.

Q154 Mike Gapes: The Defence Secretary made an important statement today about the revised timetable in terms of troop numbers in Afghanistan. I do not want to ask you about that, but I do want to ask about the implications of that for equipment. I understand that there are some 3,000 armoured vehicles and 11,000 containers of equipment worth some £4 billion in Afghanistan with our forces. Presumably, a large part of that will somehow have to be brought home safely and securely. However, some of it will not be brought back. What steps are we going to take to deal with equipment that we leave behind? Does that come within the ambit of export controls and the gifting issue, which I have already touched on? What guarantee do we have that, if we hand over some equipment to the Afghan forces, those Afghan forces are not going to either hand it on or sell it to, or have it captured from them by the Taliban? Is it being assessed what might end up in the hands of the Haqqani network or the Taliban or some al-Qaeda related groups?

Mr Hague: The Defence Secretary gave some information to the House in November about our plans on this. He told the House: "Our intention is to extract all equipment whose value to the armed forces is greater than the cost of extraction and recuperation." Clearly, you would expect that to include all sophisticated equipment. For that, we hope to be able to use the southern route via Pakistan, but, as you know, we are also negotiating northern routes through Uzbekistan, Kazakhstan and Russia, although we can also bring some equipment out by air.

As things stand, there are no firm plans to leave equipment behind. There is no decision by the Ministry of Defence to leave behind that equipment X in Afghanistan. If we do that, all the relevant issues will have to be looked at. However, if it is left for the Afghan forces, we will regard it in the same way as gifting to other states.

Q155 Mike Gapes: Will export licences have to be issued for goods that are gifted? Will there be a need for parliamentary approval to be sought for any such gifted equipment?

Mr Hague: There will be every opportunity for parliamentary consideration and debate-or, indeed, in these Committees. As for the question on licences, do you want to answer that, Richard?

Richard Tauwhare: The line is that, where gifts are approved, the transfer of the equipment from the UK takes place under Crown immunity so it does not require an export licence. There is a table in the annual report on the equipment that was gifted last year. If the gift is above a certain value, Parliament is informed in advance.

Q156 Mike Gapes: At this moment, we are clearly not in a position to go further than that?

Mr Hague: No.

Q157 Mike Gapes: I think we shall be revisiting this issue.

Mr Hague: I am sure. Clearly, the Ministry of Defence will need to supply information to Parliament about these things.

Q158 Chair: We come now to Argentina.

Q159 Mr Walker: Secretary of State, in April, the UK Government introduced restrictions on the export of some licensable goods and specifically trade with the Argentine military. This Committee asked the Government what they were doing in terms of relations with EU Governments and other allies to encourage them to look at similar restrictions. In response, you suggested that there is not any lobbying going on of other Governments to do that. Is not that an apparent inconsistency in the Government’s position?

Mr Hague: No, I do not think so. Our policy was changed in response to the steady change in Argentine actions, which have been aimed at harming the economic interests of the Falkland Islands. We have a particular interest in that as the United Kingdom. We expect all countries to take the actions of the Argentine Government into account when considering export licence applications, but they have to make their own assessments of that.

Let us take Spain, for example. I just take this for the sake of argument-I do not know whether Spain exports any relevant equipment to Argentina that they should not export to Argentina. It would be a long argument for no particular benefit. I do not think that other EU countries would readily adopt this position, nor are there exports on a huge scale-from what one can see-to Argentina at the moment, so I do not think that that would be a very productive use of our time, as things stand.

Q160 Mr Walker: Does the Department have any figures for the number of UK exports that might have been restricted by this decision?

Mr Hague: They were relatively small. Thirty-seven standard licences and six open licences were revoked, which covered components for military aircraft, components for naval vessels, software for military communications equipment and some equipment employing cryptography. The amounts were very small. In the last year, they were less than £2 million in total.

This was principally at my instigation, but other Ministers readily agreed that, given the changed posture of Argentina on the Falkland Islands, the position that had been adopted in the 1990s not to have any exports that enhanced Argentina’s military capabilities but to permit those that maintained its capabilities was now out of date, and that we should not be contributing to any maintenance of Argentina’s military capabilities. The amounts involved were very small.

Q161 Chair: Foreign Secretary, having become a Defence Minister almost immediately following the Falklands war, I have to say that, given the circumstances when, in that war, British ships were sunk with French missiles, I find it extraordinary that the British Government are apparently not willing at least to try to persuade other arms suppliers to Argentina to adopt the more restrictive policy that is now being followed rightly by the British Government. I find it extraordinary, against the history, that you should not be willing to exempt yourself in that way.

Mr Hague: We have to remember, Mr Chairman, that we are in a very different situation thankfully from that tragic and dramatic time in terms of the capabilities of the Argentine military and in terms of our own defences of the Falkland Islands. Argentina has forsworn military action on the Falkland Islands, therefore the responsiveness of other countries on this might be quite limited. We have taken our action because we do not want to contribute in any way ourselves to maintaining Argentina’s military capabilities, which are considerably less than its capabilities in 1982. That has to be remembered.

Q162 Chair: But there are compelling reasons why the British Government have decided to adopt a significantly more restricted arms export policy towards Argentina. You, from the sources of information available to you-secret sources-have, I am sure, very good reasons for that policy. Why should you not persuade other arms suppliers to adopt the same policy?

Mr Hague: I don’t think that that would become the general policy of other countries. We have to direct our diplomatic efforts to where they are most likely to be productive. Nor do I think we are anywhere near, on any evidence available to us at the moment, a crisis in a military sense in these matters.

Chair: Foreign Secretary, we turn to Israel.

Q163 Katy Clark: Following the recent developments relating to Israel and the Occupied Territories, what actions, if any, are you taking in relation to arms exports to Israel?

Mr Hague: Of course, we are always careful right across the board about licences to Israel. We constantly monitor the situation. We take into account any changes in circumstances. In the recent conflict last month, the British embassy in Tel Aviv monitored the situation closely and the effect of the use of Israeli defence forces weaponry. We called on the Israeli authorities throughout, including in my own conversations with the Israeli Foreign Minister, to abide by international humanitarian law and to avoid civilian casualties. Of course, we also urged all involved to co-operate with the, thankfully successful, Egyptian-led efforts to reach a ceasefire. You have also had a written answer on this from Alistair Burt. So anything we have seen in this situation has not led us to revoke any licences.

Q164 Richard Burden: Were any items of equipment or components that originated in the UK used in the recent conflict in Gaza?

Mr Hague: We have no assessment to date of whether UK weapons or components were used, but we must also remember the circumstances. We have to remember, in any case, the circumstances here, as I have seen and described them. As you know from statements I have given on the Floor of the House, whatever we think about the wider situation in the Middle East and the long-term factors that contribute to the situation in Gaza, the immediate and principal cause of the conflict lay with Hamas and with the increased frequency of rocket attacks on southern Israel. That has to be a factor in looking at this as well.

Q165 Richard Burden: If components or equipment that originate in the UK were used by the IDF or IAF or the Israeli navy in the recent conflict in Gaza and/or its aftermath, would that have been acceptable under licensed equipment?

Mr Hague: I think we would have to look at that. We have no evidence to date of any UK weapons or components in this situation. If we did, we would then assess them against the criteria. That is what has happened in previous conflicts, and that is what would happen in this one.

Q166 Richard Burden: Will there be a check on that? You say that you have no evidence. You will be checking?

Mr Hague: Yes, absolutely, but we have not got any evidence to date.

Q167 Richard Burden: Could I ask one more question? It is in relation to the situation on the West Bank, not only Gaza. You are aware that there are items of construction equipment and sometimes destruction equipment used to build the barrier in the West Bank, sometimes inside the West Bank in Palestinian territory, sometimes to build those houses now. You have made it clear what UK policy is towards those things, for which I am grateful. Has there been any assessment, could there be any assessment, about at what stage the use of equipment like that, if it originated in the UK, could be dual-use equipment and therefore subject to licensing control?

Mr Hague: That is one of those wider questions. That is not really something that is dealt with at the moment under our licences and the arms export control regime.

Q168 Richard Burden: Could it be looked at?

Mr Hague: It is a legitimate issue to raise, but I don’t want to give any commitment today that we will be able to change the rules on that.

Chair: Foreign Secretary, thank you very much for coming before us today. Thank you also Mr Tauwhare and Mr Paver. Foreign Secretary, I am confident that the considerable correspondence between the Committees and yourself will continue. Thank you very much.