10Extra-territoriality
197.The previous Committees persistently drew attention to the problem of UK citizens “engaging in arms export or arms brokering activity overseas which would be a criminal offence if carried out from the UK”230 and advocated addressing it through “extra-territorial” legislation. Laws of this type enable UK citizens to be prosecuted in the UK for actions carried out in overseas jurisdictions which would constitute a criminal offence if carried out in UK jurisdiction.
198.Extra-territorial provisions in respect of brokering were first introduced in 2003, under the Export Control Act 2002, with the creation, as part of trade control, of offences relating to certain kinds of unlicensed brokerage activity by UK citizens located outside the UK. These related initially to trading in Restricted Goods (torture equipment and long-range missiles). In 2004 further controls were introduced in respect of trading in Controlled Goods (Military List items to destinations subject to an internationally agreed arms embargo).231
199.In 2008 the following three-tiered structure was introduced for trade control in respect of non-embargoed destinations:
- Category A: goods whose supply is inherently undesirable (torture Equipment and cluster munitions)
- Category B: goods in which there is legitimate trade, but which are the subject of heightened concern (Small Arms and Light Weapons; Long Range Missiles, including Unmanned Air Vehicles; and man-portable air defence systems)
- Category C: all goods on the Military List which do not fall within Categories A or B, as well as certain goods relating to “riot control” and “self-protection”, and related “portable dissemination equipment” (i.e. incapacitant sprays)
200.Under this structure, trade control only applies to UK citizens operating outside UK jurisdiction in respect of trade in goods covered by Categories A and B. Trade in Category C items is only subject to trade control where it is carried on from within the UK.
201.As a result of the UK’s accession to the ATT (see Chapter 7), the government was obliged in 2014 to extend extra-territoriality to cover brokering by UK persons operating outside the UK in respect of battle tanks, armoured combat vehicles, large-calibre artillery systems, combat aircraft, attack helicopters, and certain missiles and their launchers. This was done by means of adding these items to Category B.
202.The previous Committees consistently argued that extra-territoriality should be extended to cover brokerage of items in Category C, as they did in their 2015 report.232 The then government, however, stated in its response that it remained:233
unconvinced that there is a compelling public interest in applying controls on UK persons outside the UK who are engaged in brokering of Category C goods between non-embargoed destinations that would outweigh the administrative burdens placed upon UK nationals engaged in legitimate business activity.
203.Mr Feeley-Sprague, of Amnesty International, told us that “Whether every single item on the military list, given that it is an incredibly wide list, should be subject to full export controls is a question of capacity”. He did, though, think that “The extension of extraterritorial controls to lethal items on the military list is a good thing to do.” And there was clearly a case for parts and components of such items to be included too.234 This would address the apparent loophole which had arisen with the moving of certain lethal goods (but not their components) from Category C to Category B in 2014: “if you ship a whole tank, you will require a licence and it will go through the case-by-case assessment process, but if you sell a part of a tank or a bit, or you flat-pack it or whatever, you don’t”.235
204.Mr Everitt, of ADS Group, told us that “We do not have an issue with extraterritoriality”. They were “working closely with a number of NGOs” on the extension of extra-territoriality to brokerage of Category C items and “we have found routes” whereby it could be achieved. The obstacle to this coming about was actually “a Government resource issue, rather than an issue relating to the willingness of industry to find a route through”. He explained that whereas Categories A and B were “reasonably tightly defined” and contained “relatively limited” numbers of items, “When you move to category C, you open the envelope much wider, which creates more of a resource burden for Government.” The Government had found it difficult to accept the extension of extra-territoriality in this way “because of the resource burden it would imply for a whole range of reasons”.236
205.The Head of the ECJU, Mr Bell, told us that the same issue arose here as in respect of end-use monitoring, namely the difficulty of conducting post-licensing checks overseas:237
We would need to overcome a number of barriers before we could carry out the kinds of post-licensing checks that are envisaged by some. Extraterritoriality and the legal implications of carrying out those checks are among the things that we would have to address. I think we would have to be clear that the return would be worth the considerable effort that would have to go into making that possible.
Conclusions and recommendations
206.We reiterate the previous Committees’ recommendation to extend the application of extra-territoriality to brokerage of Category C items. We heard from ADS Group that industry is prepared to work with the Government to create a workable enforcement regime that extends extra-territoriality in this way but that the Government has found it difficult to accept this “because of the resource burden it would imply”. We note the Government’s response regarding the difficulty of post-licensing checks overseas and the need for “the return [to] be worth the considerable effort” involved but we consider that the Government must set out a plan and a timetable for implementing this.
207.In addition, we are greatly concerned that the Government’s failure to carry out audits overseas means that the current extra-territorial controls in respect of brokering Category A and Category B items are not being properly enforced. This needs to be addressed as a matter of urgency.
208.We are conscious that UK-connected exports of, and trade in, controlled items outside UK jurisdiction are a problematic area and we intend to look at this further.
231 Quadripartite Committee, First Joint Report of Session 2006–07, Strategic Export Controls: 2007 Review, HC 117, para 53
Published: 18 July 2018