Select Committee on Defence Seventh Report


IV PURPOSES: THE SCHEDULE

Scott Report

36. The Scott Report called for the purposes for which export controls might legitimately be used to be set out in legislation. He set out a number of unanswered questions as to the extent to which export licensing decisions should be taken for foreign policy reasons, drawing on his experience of licensing decisions taken in relation to Iran in particular. He gave as an example the more restrictive export regime applied to Iran after the Fatwa pronounced against Mr Rushdie, and to Iraq after the execution of Mr Bazoft, and asked whether exporters should have to suffer so as to "enable the Government to provide a presentational response to the public outrage that was undoubtedly felt over the Fatwa and the execution". He set out six suggested purposes in his Report .[52]

Successive lists

37. The 1996 Green Paper set out ten suggested purposes. The 1998 White Paper set out a revised list of eight purposes. The Trade and Industry Committee Report set out these three lists in a table. It noted that, in addition to this changing list, there were also the national criteria of July 1997 and the EU Code of Conduct of June 1998, and concluded "We have some sympathy with those who question whether there is not some incoherence among these lists".[53] The Schedule to the draft Bill comprises a list of purposes for which export or transfer controls may be imposed, in effect the fourth edition of the list of purposes. Most are expressed as possible consequences of export or transfer. Controls can be imposed to reduce the risk of these undesirable consequences. We set out in the Table the four lists so far.

List of purposes in the draft Bill

38. The latest list has no obvious defects. Explicit reference to human rights has been restored.[54] The reference to international obligations and commitments, present in the first three lists, has disappeared from the list in paragraph 3 of the Schedule, but is contained instead in paragraph 2.[55] Paragraphs 1 and 2 of the Schedule allow controls for the purpose of giving effect to any Community provision on export of goods or transfer of technology, any obligation under the CFSP or "any other international obligation of the United Kingdom". The paper states that non-binding international commitments "are reflected through all the purposes".[56]

  39. The list is no doubt capable of further refinement. The UKWGA referred to the EU Code's Criterion Three,[57] " the internal situation in the country of final destination, as a function of the existence of tensions or armed conflicts". This may not be fully covered by the reference at B of paragraph 3 of the Schedule to " an adverse effect on peace, security or stability in any region of the world". We recommend that consideration be given to a specific reference within the Schedule to internal conflicts within the country of destination.

PROPOSED PURPOSES OF STRATEGIC EXPORT CONTROLS

Scott Report Green PaperWhite Paper Draft Bill
(i) complying with international treaty obligations (a) to adhere to the UK's international obligations and commitments, including international arms embargoes To adhere to the UK's international obligations and commitments, including international arms embargoes and international control regimes Para 2 of Schedule
  (b) to prevent the proliferation of weapons of mass destruction and of missiles and unmanned air vehicles capable of delivering weapons of mass destruction To prevent the proliferation of weapons of mass destruction and of missiles and unmanned air vehicles capable of delivering such weapons C. Use of the goods or technology anywhere in the world in connection with the development, production or use of weapons of mass destruction
(ii) protection of our armed forces(c) to ensure the security of the UK, its dependencies and its armed forces abroad, and of allied countries To safeguard the UK's security interests and those of allies and EU partners A. An adverse effect on the national security of the United Kingdom (or any United Kingdom dependency), any Member state or any other friendly State.
(iv) avoidance of assistance to human rights abuses in foreign countries (f) to avoid contributing to human rights abuses    D. Use of the goods or technology anywhere in the world to carry out or facilitate the carrying out of(a) acts threatening international peace and security(b) acts contravening the international law of armed conflict(c) internal repression in any country(d) breaches of human rights
  (d) to avoid contributing to internal repression and instability within the country of destination of the licensed goods To avoid contributing to internal repression   
  (e) to take into account the economic and technical capability of the recipient country, and to achieve the least diversion for armaments of human and economic resources To avoid seriously undermining the economy of the recipient country F. A serious adverse effect on —(a) the economy of any country; or(b) the potential for sustainable economic development in any country
(vi) avoidance of assistance to aggression by foreign countries (g) to avoid contributing to the prolongation or aggravation of existing armed conflicts between states To avoid contributing to international aggression B. An adverse effect on peace, security or stability in any region of the world
  (h) to preserve international and regional stability To avoid damaging regional stability  
(v) avoidance of assistance to serious crime in foreign countries (i) to avoid contributing to terrorism and serious crime To avoid contributing to terrorism and crime E. Use of the goods or technology anywhere in the world to carry out or to facilitate the carrying out of acts of terrorism or serious crime anywhere in the world
(iii) prevention of terrorism        
  (j) to avoid re - export or diversion of goods, likely to prejudice purposes (a) to (i)     


40. The UKWGA also referred in evidence to the risk of diversion. [58] This had appeared in the 1996 Green Paper. It is hard to see how export controls could be imposed on goods or technology of any description because of the risks of their being diverted elsewhere. If goods would be dangerous to any destination, then they would presumably be caught under the terms of the existing Schedule. UKWGA also raised the phrasing of the "sustainable development" paragraph. They suggested that some of the detailed language of Criterion Eight of the EU Code should be added to the text of the Schedule, including the need to balance legitimate defence needs against sustainable development.[59] However, this issue seems to arise more from the process of licensing in individual cases than in the definition of purposes for which controls can be imposed"

41. The list of purposes does not address the issue raised by the Scott Report: should export controls on goods or technology already subject to control be used as a general weapon of foreign policy? We have raised in past Reports the question as to how far it is possible or desirable to use the export licensing system as a tool of foreign policy, as a means of conveying disapproval of a regime or of specific acts. The legislation could allow for that, either by adding to the list of undesirable consequences "an adverse effect on the national interests of the United Kingdom", or by providing expressly that controls may be imposed and exercised in pursuance of the foreign policy interests of the United Kingdom. The questions raised in the Scott Report on the propriety of using export controls as a tool of foreign policy, or in pursuit of national commercial advantage, may relate not so much to the goods to be subject to control, as to decisions on whether to grant a licence.

42. There are several other areas where we question whether a purpose might not be added. The fact that there are no powers at present used to control the export of agricultural goods does not mean that they might not be used in future, as a means of avoiding a threat to public health in third countries. Ministers might wish to control the export of goods for reasons of their potential for environmental damage, outside any international regime. They might also wish to control the export of goods on ethical grounds, outside the powers of Customs and Excise to control pornography or degrading material. There are no doubt other possible grounds which can be debated in a Committee on the Bill. There is evident advantage in having such a debate now, rather than having to wait for a subsequent amending Order, which will not be open to amendment. We recommend that Ministers consider the addition of further purposes for which exports may be controlled, including the avoidance of damage to health or the environment. Where they judge it inappropriate to add such powers, they should set out the existing control powers relied upon to fulfil such purposes.

Alteration of purposes: Clause 10

43. The July 1998 White Paper proposed that the purposes should be set out in secondary rather than primary legislation, so as to retain the flexibility to respond to unforeseen circumstances, potentially at short notice. The secondary legislation would be subject to a modified affirmative procedure.

44. The Trade and Industry Committee concluded that it was unlikely that after the various revisions of the lists of primary purposes there were wholly distinct purposes "omitted through ignorance or neglect", and stressed that Parliament should have power to consider and if necessary amend the principal list —"even Charles I might have blushed at asking Parliament for powers and proposing to set out later the purposes of such powers in secondary legislation".[60] It recommended that the list should be in primary legislation, subject to amendment by the modified affirmative procedure. The Government has now accepted this proposal, incorporated in Clauses 10 and 11 (2) (b). We note with interest the view of the House of Lords Delegated Powers and Deregulation Committee that, on the material available to it, it finds insufficient justification for this power to amend the list of purposes by secondary legislation. [61]

Temporary purposes: Clause 3 (2)

45. The draft Bill makes provision at Clause 3(2)for Orders which are not subject to the purposes set out in the Schedule. They are to be subject to the modified affirmative procedure and can only remain in force for at most 12 months. It is envisaged in Cm 5091 that this power could be used to "respond to emergency situations" where the need for such controls "is likely to be short-term and an amendment of the purposes is not therefore warranted. This might be for a purpose completely unconnected with either strategic or cultural export controls."[62] They are "unlikely to be exercised in relation to cultural objects".[63]

46. The House of Lords Committee expressed its concern over Clause 3(2), finding it not "right in principle and therefore appropriate to delegate a power to impose controls for purposes which are not set out in this Bill...The Committee does not at present consider that a restriction on the freedom to trade should be granted in such wide terms".[64] Lord Scott had no objection to it.[65] Ms Baxendale was concerned that it might be used in an undesirable way to bring in controls for general foreign policy reasons.[66] The Secretary of State told us that it was there for "things that we do not foresee".[67]

47. Having set out the primary purposes for which export controls may be imposed and having provided for adding to those purposes by secondary legislation, it is in principle undesirable to bolt on another procedure for imposing controls which are not within any statutory purpose. It is not clear to us why powers are needed to add purposes permanently and temporarily, both subject to the same parliamentary procedure. We recognise the dilemma which a Government potentially faces if it finds that there is political pressure to impose controls for reasons which fall outside the purposes defined, and which are of a temporary and political nature. The requirement to pass primary legislation could be a powerful disincentive to action, even if there were broad support for the proposed controls, and the time delay involved in passing such legislation could well render any action nugatory. However, the 40 day period of grace allowed before such an Order lapses unless parliamentary approval is given (which could extend to several months if the clock-stopping provisions of Clause 11(3) had effect) seems to us too generous. We recommend that the period of time during which Orders made under Clause 3(2) may remain in effect without parliamentary approval should be 28 calendar days.

Purposes: Orders and licensing

48. Clauses 1 and 2 provide for Orders to be made in relation to goods or technology of any description. Clause 3(1) provides that the purposes for which export controls on goods or transfer controls on technology may be imposed are those specified in the Schedule. It can reasonably be assumed that the Orders to be made will be in effect a repetition in amended form of the two principal existing Orders, which set out the Military List[68] and the Dual Use List.[69] The Orders are by and large confined to setting out in schedules the detailed categories of goods to be subject to control .

49. These lists are almost entirely the result of various multilateral agreements on what goods should be controlled. For example, we noted in our February 2001 Report the progress made in establishing a common EU Military List. The Dual-Use List is an EU list, now laid down in EU rather than national Regulations. There have in the recent past been some instances of unilateral extension of controls to new categories of good, most recently in relation to instruments of torture. The result of the new proposed Schedule is that an extension of controls to goods or technologies hitherto not requiring licensing could only be done where the Secretary of State judged that there was a risk that their export or transfer might have any of the undesirable consequences listed in the Schedule. The draft Bill therefore seems to constrain the freedom of Ministers to decide what goods or technologies may be subject to controls; but in practice Ministers are already constrained by the nature of existing multilateral regimes.

50. The imposition of export controls is in practice exercised not only through secondary legislation on the definition of goods and technology requiring a licence, but through the actual process of granting or refusing particular licences for particular destinations in particular circumstances. The draft Bill is silent on the licensing process. There are no statutory criteria for licensing decisions, nor any requirement that licensing decisions should follow any guidelines. Cm 5091 states that "the effect of the provisions in the Bill will be that any licensing decision which ignores completely the purposes set out in the Bill is likely to be an improper use of the powers provided in the Bill...the purposes will set definite parameters for legitimate Government action...".[70] It records the suggestion made by some that the national criteria or the EU Code -now in effect merged—should in some way be incorporated in the legislation. The Government considers that this " would simply introduce rigidity" into the consideration of applications, and "would be as likely to require the Government to grant a licence in a borderline case, as to prevent it from granting such a licence". The paper concludes by repeating the phrase that "the purposes will set definite parameters for legitimate Government action".[71] The Secretary of State confirmed in oral evidence his understanding that licensing decisions would have to be within the purposes set out in the Schedule.[72] The UKWGA seemed happy with the assurance that licences would conform to the purposes as set out.[73] It has however sought and continues to seek the incorporation into statute in some way of the EU criteria, so that the licensing process would have to conform to some statutory norms.[74]

51. The Schedule at present sets out parameters for the making of control Orders under the Bill, but does not provide explicitly for such parameters on decisions on licences. A positive duty could be laid on Ministers in making decisions on licences to have regard to the need to avoid the undesirable consequences listed in the Schedule. Conversely, a Minister would not be able to refuse a licence unless there appeared to him to be a risk of one of the undesirable consequences listed. We recommend that consideration be given to putting on the face of the Bill the assurances given in the explanatory paragraphs accompanying the draft Bill and in evidence to us, that licensing decisions should have due regard to the general purposes for which controls can be imposed, as set out in the Schedule to the Bill.

Government transfers and Crown immunity: Clause 13

52. As drafted, the Bill does not bind the Crown. That means that Government-to-Government transfers can continue to take place outside the licensing regime, and in theory outside the purposes set out in the Schedule. In our first Report of February 2000 we called for Annual Reports to set out details of sales and other permanent or temporary transfers by Government and its agencies, and for "an explicit account of exemptions from the licensing regime".[75] The Government Response stated that details were included in the Annual Reports, and noted that the 1939 Act did not bind the Crown.[76] In our July 2000 Report we noted that a recent Written Answer had revealed that most of the five entries given for such transfers in the 1998 Annual Report had been wrong, and emphasised the importance of full, accurate and open reporting of arms transfers by Government, whether or not judged by the government to be "major".[77] The Government Response stressed that the Annual Report contained information on "the vast majority of government transfers or disposal sales".[78]

53. The Secretary of State told us that the Government did not intend to change the provisions in relation to Crown immunity, but that it would adopt the principles it itself had laid down in relation to Government dealings.[79] The transparent reporting of Government transfers offers some reassurance that Governments will indeed abide by the principles governing non-governmental arms transfers. There might, however, be some advantage in binding future Governments to have regard to the purposes for which export controls are applied when considering their own transfers. We recommend that consideration be given to the desirability of ending the blanket exemption from controls of Government and its agencies as exporters of licensable goods and technology.


52  Scott Report, K 2.16-20 Back

53  HC 65, para 25 Back

54  Cm 5091, para 33 Back

55  See Qq 4-6 Back

56  ibid Back

57  Q 4 Back

58  Q 4 Back

59  Qq7-8 Back

60  HC 65, para 15 Back

61  HL Paper 72, paras 22 and 29  Back

62  Cm 5091, page 10, para 31; page 40, paras 22-23 Back

63  ibid, page 22, para 2 Back

64  HL Paper 72, paras 20 and 29 Back

65  Qq 162-5 Back

66  Qq 166-8 Back

67  Qq 224-5 Back

68  The Export of Goods (Control) Order 1994 Back

69  The Dual-use Items (Export Control) Regulations 2000 Back

70  Para 29 Back

71  Para 32 Back

72  Q 222 Back

73  Qq 1-3 Back

74  Ev, p 5, paras 25-7 Back

75  HC 225, para 76 Back

76  Cm 4799, page 13 Back

77  HC 467, paras 68-9 Back

78  Cm 4872, page 9 Back

79  Qq 227-9 Back


 
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