8Brexit
Background
140.As we noted in Chapters 3 and 5, the UK export-control regime derives substantially from EU legislation, primarily the Common Position on Arms Exports. In the 2016 Annual Report, the Government says:167
Until we have left the EU, the UK will remain a member of the EU with all of the rights and obligations that membership entails. We will continue to abide by the Council Common Position [on Arms Exports] 2008/944/CFSP defining common rules governing control of exports of military technology and equipment, which is implemented in the UK through the Consolidated EU & National Arms Export Licensing Criteria.
The UK trade-control regime similarly derives from the EU Common Position on Arms Brokering.
Proposed recast of the EU Dual-Use Regulation
141.As we noted in Chapter 3, the European Commission is currently seeking to recast the Dual-Use Regulation to take account of the misuse of new technologies by repressive regimes. The Commission aims through the recast to further harmonise dual-use controls across Member States. It proposes a stand-alone list (separate and apart from the Dual-Use List) of cyber-surveillance technologies that are subject to control where there is evidence that they may be misused against political opponents or in conflict situations by repressive regimes. The stand-alone list would be on an EU-autonomous basis, meaning that it would not rest on commitments given in any international or multilateral export-control regime. In addition, the proposed recast includes a harmonised “catch-all” provision to allow the control of non-listed cyber-surveillance technologies in such circumstances.168
142.Achieving the recast is a lengthy and involved process. It began in 2011 and is still far from being concluded. In November 2017 the matter was considered by the European Parliament’s Committee on International Trade. The Committee supported the idea of a stand-alone list specifically covering cyber-surveillance technologies but at the same time advocated removing the general category of cryptography technology from the Dual-Use List.169 This followed the expression of concerns by privacy campaigners that the encryption controls in the Wassenaar Arrangement “now run counter to the protection of the right to privacy, as well as international and personal security, with little benefit.”170
143.In January 2018 the European Parliament voted by a large majority to amend the recast proposals. Regarding whether cryptography items should be removed from the control list, the Parliament thought there was a strong incentive to do so.171
144.Mr Everitt, of ADS Group, thought that the recast:
is probably not going to get done soon, and certainly not before March [2019] […] A number of member states might have some challenges to what has been proposed, which is essentially a removal of any restriction on cryptographic goods and services, so I am not sure that that will pass muster across EU member states.
His organisation was seeking “a more nuanced approach around cryptography” which recognised the “growing commercial demand” for secure communications technology.172
145.The previous government raised concerns regarding:173
- the proposed introduction of a list of controlled items drawn up by the EU itself, rather than by means of proposals to relevant international export control regimes;
- the proposed extension of Commission powers in order to address human-rights concerns regarding use of dual-use items in third countries;
- the proposal to allow the export of sensitive items under EU GEAs, which could conflict with UK obligations under international or multilateral agreements; and
- whether envisaged cost-savings and reductions in administrative burdens might actually be offset by the extent of costs and administration connected with the new controls.
146.Specifically in relation to the position adopted by the European Parliament on the recast, Mr Stuart told us: “We do not agree with the European Parliament’s thoughts about removing all controls on encryption products.”174
Transitioning from intra-EU export-control arrangements
147.Trade in controlled items between EU Member States takes place under terms which are shaped by the principles of the Single Market. When the UK ceases to be an EU member its trade in such items with EU states will (unless there are relevant transitional arrangements) shift to a new footing, in keeping with the UK’s change in status to that of a “third country”.
148.Mr Stewart, of King’s College London, told us that it did not appear yet to have been settled what the new arrangements would be for licensing trade in controlled items between the UK and the EU:
I think the working assumption is that there will be an open licence […] from the UK to Europe. There is some hope that as part of the recast of the European regulation that they might be able to amend EU001, the general authorisation, to have a similar open licence or general licence for exports back to the UK. There are some logistical challenges that need to be figured out.
One such challenge was that the recast of the Dual-Use Regulation was unlikely to be concluded by March 2019. Another was that the EU did not have the delegated authority to create an open licence in respect of the UK (so this would have to be dealt with by each Member State separately).175
Post-Brexit legal continuity
149.Control Arms UK told us they were concerned about the necessity of amending the Export Control Act 2002, and subordinate legislation, in consequence of Brexit, since these laws refer to EU Regulations and Directives, as well as Common Foreign and Security Policy (CFSP) Decisions (as Common Positions are now known).176 Regarding EU Regulations, Directives and Decisions,177 the European Union (Withdrawal) Act is very clear that these will be translated into UK law. However, the Act is rather more opaque on the subject of Common Positions / CFSP Decisions.178 These, it appears, will not be treated as retained EU law, but rather as “international obligations”. Under Section 8 of the Act, Ministers will have the power to make secondary legislation “to enable continued compliance with the UK’s international obligations by preventing or remedying any breaches that might otherwise arise as a result of withdrawal”.179
150.The Consolidated Criteria, which the Government regards as incorporating the Common Position on Arms Exports (and hence also the Common Position on Arms Brokering), have the status of statutory guidance under the Export Control Act 2002, as we noted in Chapter 5. The Government has given no indication that it believes any other provision is necessary to ensure that the UK continues after Brexit to be in compliance with its international obligations in respect of the Common Position on Arms Exports.
151.However, it is arguably only the duty under the Act to provide guidance, rather than the actual content of that guidance, that is binding in UK law. If this is the case, it would be necessary to enact secondary legislation under the Withdrawal Act for the Common Positions (and hence the Consolidated Criteria) to continue to have binding status in UK law after Brexit. The Government has, though, given no indication that it believes this to be necessary.180
152.There appears to be a further complication regarding the Common Position on Arms Brokering. The UK trade-control regime currently relates to trade involving “third countries”, i.e. non-members of the EU. Whether, and, if so, by what means, this will be recast after Brexit appears to be unclear.
Post-Brexit UK-EU regulatory alignment
153.Apart from the issue of the legal continuity of the Consolidated Criteria, there is the question of how far the Criteria will continue to be aligned with EU export-control policy after Brexit. Giving evidence to the Foreign Affairs Committee in December 2016, Jessica Hand, Head of Arms Export Policy at the FCO, said:181
Colleagues in the Department for International Trade are working in a very focused way at the moment on the implications of Brexit for the [Consolidated] criteria. As I understand it at the moment, the inclination is they stand. Whether in the longer term we may adjust further is an issue for speculation, but I think in the short term, come whatever date is set where we finally make that break, these will stand.
154.Control Arms UK noted it was to be expected that the Common Position on Arms Exports, and the associated EU legislation, would provide the basis for post-Brexit UK policy, at least in the first instance. However, there was:182
no guarantee that UK and EU export criteria will remain in concert into the future with the real possibility of a drift apart over time undoing decades of joint progress. At the operational level, the UK will no longer have the right to participate in the EU Council of Ministers Conventional Arms Working Group (COARM) where information-sharing on, and further development of, arms export control policy and practice take place.
155.Mr Feeley-Sprague, of Amnesty International UK, pointed out that the EU’s regulatory regime was “very much evolving”, with policies “every five or six years” going “through a mandatory period of review, reflection, changes and so on”. The Dual-Use Regulation was currently going through this process and the Anti-Torture Regulation would do so in 2020. Consequently, “we need to find the way that we can use in five or six years’ time, when the EU systems might have evolved in a different way—how the UK system is going to evolve in co-ordination with that.”183
156.We also heard about the importance of post-Brexit UK-EU regulatory coordination for manufacturers whose supply chains cross what will become the new UK-EU border.184
157.Control Arms UK thought it particularly important that the UK should continue after Brexit to co-ordinate closely with the EU on Restrictive Measures (sanctions and arms embargoes). They said that the Government is addressing the lack of sufficient UK domestic powers to enforce sanctions by means of the Sanctions and Anti-Money Laundering Act, which will take effect at the point of Brexit. They highlighted the fact that most EU Restrictive Measures are agreed by the UN Security Council in the first instance, in which case UK and EU policies will almost certainly continue to be aligned after Brexit. However, they pointed out that the EU does occasionally adopt its own unique Restrictive Measures and it was important that the UK continued to align itself with these.185 Ms Kirkham, of Saferworld, noted that “The UK has been a leading actor in getting EU stand-alone sanctions agreed.” She thought that:186
Sanctions work best when everyone is part of the regime and everyone is implementing them in good faith, so it would be really useful if the UK could also say that it will keep in step, align with EU policy on sanctions and continue the dialogue.
158.When we asked Mr Stuart about the prospects for the alignment of UK and EU arms-control regimes after Brexit, he told us: “The aim is for continuity and transfer over. The new system, were changes to be necessary, should enable us to make any such changes more easily.”187
Post-Brexit continuity in UK-EU cooperation
159.Control Arms UK stressed the importance not just of regulatory alignment between the UK and the EU after Brexit but also of continuing UK-EU cooperation in the implementation of export control. In particular, the UK should seek to continue participating in the EU denial-notification and consultation mechanism.188 Ms Kirkham, of Saferworld, explained to us the importance of doing so:189
if one member state denies a licence, they have to tell all the other member states within 30 days […] [T]hey now have an electronic system that basically notifies denials in real time […] [T]hen, if another state wants to take up a licence for an essentially identical transaction, they have to consult with the state that issued the denial. That does not mean there is no undercutting [where exporters “shop around” Member States in search of a favourable licensing decision], but it does mean that there is more convergence, more understanding and greater harmonisation than there would be otherwise.
160.She pointed out that Norway, despite not being an EU Member State, had been able to join the denial-notification mechanism.190 We did, though, also hear from Mr Stewart, of King’s College London, that, while Norway “currently implements the EU export control arrangements”, it “does not sit in the EU’s dual-use working party on export controls. They do not sit in the room and that does create some friction in terms of implementation.”191
161.Ms Kirkham said that her organisation had spoken to officials at DIT and the FCO but had not received any indication that a policy decision had yet been taken on the possibility of UK participation in the denials-notification mechanism after Brexit.192
162.Another area where Control Arms UK thought post-Brexit UK-EU cooperation to be particularly important was that of controls under the Anti-Torture Regulation. In connection with this Regulation, there was “A denial notification, an urgency procedure and consultation mechanism”, along with an Anti-Torture Co-ordination Group. As well as transposing the EU Regulation into UK law, “It will also be important for the UK and the EU27 to keep in step in terms of the future development of controls in this field”. This would need to include “participat[ion] in the denial-notification and consultation mechanism and the Anti-Torture Co-ordination Group” as well as timely exchange of information.193
163.Control Arms UK also told us it would be important for the UK after Brexit to continue co-operation with the EU on export-control intelligence and enforcement:194
[I]f routine customs checks and revenue collection once again become a part of the trade relationship between the UK and EU27 this will place a significant additional burden on customs resources in the UK and also in the EU27. Unless the UK Government provides significant extra capacity, there is a risk that a greater focus on revenue-gathering activities could reduce the capacity of customs and other enforcement agencies to effectively identify, interdict and prosecute cases of illicit trafficking, including of arms and dual-use goods.
164.Both Ms Kirkham and Mr Feeley-Sprague emphasised the importance for British and global security of continuing UK-EU regulatory alignment and exchange of information. This related to preventing the proliferation and diversion of arms; stopping the development of weapons of mass destruction; and curbing the activities of rogue regimes.195
Technical Note on Consultation and Cooperation on External Security
165.On 24 May 2018 the Government published a Technical Note on Consultation and Cooperation on External Security, outlining “options for future UK-EU consultation and cooperation arrangements across foreign policy, common security and defence policy (CSDP), defence capabilities and development and external instruments.”196 However, none of the issues discussed in this chapter was mentioned in the document.
Conclusions and recommendations
166.We note with concern that the Government’s Technical Note on Consultation and Cooperation on External Security did not address the impact of Brexit in relation to arms-export control.
167.The Government should set out in detail in its response to this report:
- its position on the European Commission’s proposal to recast the EU Dual-Use Regulation, setting out the basis on which it is envisaged that UK-EU technical cooperation on export control of dual-use items will take place after Brexit;
- what it is doing regarding the need for post-Brexit licensing arrangements in respect of transfers of controlled items between the UK and the remaining EU Member States;
- its position regarding the continuity of the Consolidated Criteria after Brexit, including clarification of its intentions regarding the possible use of legislation to confirm the binding status of the Criteria;
- whether, and, if so, by what means, the UK trade-control regime will be recast after Brexit;
- its understanding of the consequences of UK and EU arms control policy drifting apart after Brexit, including the impact this would have on the defence and security industry, and how it plans to respond to these;
- its plans to deal with the possible consequences of the UK no longer participating in the EU Council of Ministers Conventional Arms Working Group after Brexit; and
- what the UK’s post-Brexit relationship will be to the EU’s denial-notification and consultation mechanism under the Common Position on Arms Exports.
168.It would also be helpful for the Government to set out for us what information it has on the broader impact that Brexit will have on the defence and security industry.
168 European Parliamentary Research Service, Briefing: EU Legislation in Progress: Review of dual-use export controls, January 2018; European Scrutiny Committee, Twenty-Sixth Report of Session 2016–17, Documents considered by the Committee on 18 January 2017, HC 71–xxiv; HC (2017–19) 287, pp 2–3
169 EURACTIV.com, “Trade MEPs want to scrap all EU export restrictions on encryption”, 23 November 2017
170 Letter from Privacy International and others to Wassenaar Agreement participants, 23 February 2017
171 European Parliament, Amendments adopted by the European Parliament on 17 January 2018 on the proposal for a regulation of the European Parliament and of the Council setting up a Union regime for the control of exports, transfer, brokering, technical assistance and transit of dual-use items (recast) (COM(2016)0616 – C8-0393/2016 – 2016/0295(COD))
173 European Scrutiny Committee, Twenty-Sixth Report of Session 2016–17, Documents considered by the Committee on 18 January 2017, HC 71–xxiv, para 5.6
177 Regulations are legally binding across every Member State. Directives specify outcomes that must be achieved but leave Member States free to achieve them as they see fit through national laws. Decisions are EU laws directed at specified Member States, companies or individuals and legally binding on those at whom they are directed.
178 Common Positions / CFSP Decisions define the EU’s collective approach to a particular geographical or thematic question, setting out general guidelines with which Member States’ national policies must be in conformity.
179 Explanatory Notes to the European Union (Withdrawal) Bill [Bill 5 (2017–19) –EN], para 119
180 The legal and regulatory framework for UK arms exports, Briefing Paper 2729, House of Commons Library, September 2017, p 22
196 Department for Exiting the European Union, Policy paper: Technical note on consultation and cooperation on external security, May 2018
Published: 18 July 2018