Select Committee on European Scrutiny Third Report


COM(00) 766

Draft Council Regulation amending Regulation (EC) No. 1334/2000 with regard to intra-Community transfers and exports of dual-use goods and technology.

Legal base: Article 133 EC; qualified majority voting
Document originated: 28 November 2000
Forwarded to the Council: 30 November 2000
Deposited in Parliament: 4 January 2001
Department: Trade and Industry
Basis of consideration: Minister's letter of 19 December and EM of 22 December 2000
Previous Committee Report: None; but see (19625) 8888/98: HC 34-viii (1998-99), paragraph 1 (3 February 1999) and HC 34-xx (1998-99), paragraph 3 (19 May 1999)
Discussed in Council: 22 December 2000
Committee's assessment: Politically important
Committee's decision: Cleared


  14.1  The term 'dual-use goods' covers goods and technologies which are primarily intended for civil applications, but which may be used for military purposes, or which could significantly enhance the military capacities of the countries acquiring them. Before 1995, Member States controlled the exports of these goods under national legislation, taking into account both national policy considerations and international agreements. In 1995, a new system was put in place under a Council Regulation on licensing and administrative co-operation and a Council Decision containing lists of controlled products and an indicative list of countries for which simplified licensing procedures may be applied by Member States. It was agreed that the regime would be reviewed after two years.

  14.2  In May 1998, the Commission concluded, having carried out the review, that the regime was too complex and cumbersome. It proposed[22] a new draft Regulation designed to simplify and strengthen the system, so as to facilitate legitimate trade while respecting the international commitments and responsibility of Member States and the Community. This involved in particular changing the legal structure from a Community Regulation supplemented by a Common Foreign and Security Policy Decision to a single-pillar Regulation under Article 133 (formerly Article 113); creating a Community General Export Authorisation; introducing a military end-use control; bringing under control certain transfers of technology by electronic means; reducing licensing requirements for intra-Community trade; and reinforcing administrative co-operation.

  14.3  We considered the proposal on 3 February 1999, after the Government submitted a very belated Explanatory Memorandum on it at our request, and again on 19 May 1999, when we cleared it. We were subsequently told, in an Explanatory Memorandum of 12 April 2000, that the then Portuguese Presidency had tabled a revised version[23] of the draft Regulation, and we understand that, after further discussion in the Council, the proposal — which we had cleared at our meeting on 19 April 2000 — was adopted on 22 June 2000 as Council Regulation (EC) No. 1334/2000.

The current proposal

  14.4  As noted above, one of the aims of the new Regulation was to reduce the licensing requirement for intra-Community trade, but it nevertheless specified that, in order to enable Member States and the Community to comply with their international commitments, authorisation should be required for such trade in the case of certain items, including all nuclear materials, facilities and equipment, considered to present a risk. However, the Commission says that it has since become apparent that these controls are hampering intra-Community trade in non-sensitive nuclear products, and it also points out that, under the Euratom Treaty, it already has an obligation to inform the International Atomic Energy Authority of intra-Community transfers of nuclear materials. Consequently, although it considered that controls over sensitive materials should be maintained, it took the view that those over non-sensitive products are both superfluous and incompatible with the principle of free movement. In particular, it proposed that controls over intra-Community trade should be removed (i) for natural or depleted uranium or thorium (or any other material containing one or more of them), and (ii) for special fissile materials, other than separated plutonium and uranium enriched in the isotopes 235 or 233 to more than 20%.

The Government's view

  14.5  In his letter of 19 December 2000, the Parliamentary Under-Secretary of State for Consumers and Corporate Affairs at the Department of Trade and Industry (Dr Kim Howells) told us that, although there had previously been discussion on this question in an ad hoc Council working group, no consensus had been reached by Member States prior to the presentation of this proposal, which was not circulated to them until 6 December. He said that this was too late to submit an agreed Explanatory Memorandum to the two Parliamentary Scrutiny Committees before the final adoption of the proposal by the Council on 22 December, and that, since the UK was amongst the "most ardent" supporters of the amendment, any delay to its adoption would have been undesirable. He did, however, promise to submit an Explanatory Memorandum "shortly". This he did on 22 December, though the Memorandum did not in fact add greatly to what had been said in his earlier letter, other than to make the point that the Regulation applying prior to the adoption of Regulation 1334/2000 did not require the authorisation of intra-Community transfers of these items.


  14.6  As with the original proposal leading to the adoption of Regulation 1334/2000, we find it unsatisfactory to be confronted with a situation where a proposal has already been adopted by the Council, and, even though we recognise the tight timetable to which the department was operating in this instance, we consider that more strenuous efforts could, and should, have been made to enable us to look at the proposal properly prior to its adoption.

  14.7  So far as the substance of the proposal is concerned, we find it difficult in such a specialised and technical area as this to form any clear view, other than to conclude that the proposal is of obvious political importance, and thus one which needs to be reported to the House. On that basis, and on the strength of the information provided by the Government, we are clearing it.

22   (19625) 8888/98; see headnotes to this paragraph. Back

23   (21118) - ; see HC 23-xv (1999-2000), paragraph 10 (19 April 2000). Back

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