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Mr. John Smith (Vale of Glamorgan): In the example that the right hon. Gentleman uses, is it not the case that people would fall foul of the legislation only if they knowingly divulged sensitive information?

Mr. Heathcoat-Amory: The hon. Gentleman is right. That assurance has, I understand, been given to the academic world. My point is that it should be in the Bill. It is not good enough for the Government to give verbal assurances to universities and research institutions that are not encoded in legislation. That is my request to the Government.

The Defence Manufacturers Association has a related concern about telephone conversations being licensable. The Bill will require, one supposes, considerable monitoring of employees having such conversations. Monitoring e-mails and telephone calls is a contentious issue in firms, and some trade unions do not like the scrutiny and intrusiveness involved. The Bill and its related literature is silent on that point.

The Bill also extends controls to trafficking and brokering between overseas countries. That raises the separate and important issue of extra-territoriality. Is it realistic to try to control the activities of British citizens, or—as the Bill states—a person acting under the control of a British citizen, when such activities take place entirely abroad? For example, a British citizen might be employed by a foreign company which was ordering, selling or transferring equipment or technology between countries other than the UK—transactions that had nothing to do with this country or anyone in it. However, that person would come within the scope of the Bill.

The situation would be even more bizarre if such a person was a clerk working for a defence company based abroad who merely filled in export licence applications—perhaps for the export of equipment from the UK to another country. However, although the person was working abroad for a company based abroad, the company would still have to apply for a licence from the DTI. That is wholly unrealistic and certainly unenforceable.

Until now, the UK has been rather critical of the United States when it has tried to claim extra-territoriality over American companies based in this country, so it is odd

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that we are trying to claim such rights over British citizens and foreign firms based in other countries and trading in goods that have nothing to do with the UK. We all have good intentions, but the Government's good intentions could lead them into the most appalling muddle of unenforceable laws that might discredit the whole system.

Under the Bill, the Government plan to increase the penalties for export control offences—the term of imprisonment will be increased from seven to 10 years. That is somewhat odd because recently there has been only about one conviction a year for such offences, incurring an average prison sentence of 30 months.

Dr. Vincent Cable (Twickenham): Does the right hon. Gentleman endorse the extra-territorial provisions under legislation relating to land mines and sex offenders? Such provisions are considerably stronger than those proposed in the Bill.

Mr. Heathcoat-Amory: I am merely asking questions. It is not my Bill. We are entitled to ask whether its provisions are realistic and enforceable. In reply to the hon. Gentleman, I think that we should consider carefully whether the land mines legislation is being properly enforced and whether there are lessons to be learned from it; otherwise, Parliament could get into the habit of constantly increasing penalties, while the enforcement of legislation is poor and its applications are confused. Nothing in the Bill supplies an answer to my questions.

What we do know is that such measures have costs. Under the Bill, there will be costs to the Government: extra staff will be needed in Customs and Excise and other departments. There will also be hidden costs to business and industry in complying with the Bill.

Those costs will fall not only on the defence industries. Cultural goods—defined as being more than 50 years old—will be included. If the Government introduce provisions, again by secondary legislation, that require records to be kept of all such goods, the result might be that every antique shop—indeed, every junk shop—might have to keep records of all its goods and, if they found their way abroad, to whom they were sold. Those costs are hidden, but they are real. The Government must provide further information about them, if we are to take a mature view of the measure.

The licensing system for the export of defence equipment is already unsatisfactory—a point made in several interventions. The Government's aim is to deal with individual export licences within 20 working days. However, when I asked the previous Secretary of State whether that target was being met, it turned out that, last year, only 57 per cent. of such applications met the target. The longest time taken was 222 working days. That excludes complex cases in which additional information is required from the applicant firm. That recorded delay is purely one experienced in government and between Departments.

When asked about the issue, the previous Foreign Secretary, the right hon. Member for Livingston, was almost completely dismissive. He said:

I am sure that he has limited sympathy with trade and industry, but that is not good enough for the House. No one doubts that we require a system that strikes the right

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balance between the legitimate need to scrutinise such applications and the fact that the great delays caused by such scrutiny are costing jobs and causing orders to be lost to British industry. The worry is that the Bill could make matters worse.

The Defence Manufacturers Association says that the Government already underestimate the additional burden that will be imposed under the Bill. In opening the debate, the Secretary of State mentioned other member states and appeared confident that there would be one set of rules for all member states. I am sorry to disabuse her of that view, but that issue was tackled specifically by the Quadripartite Committee, which said:

Earlier, the Committee warned that

Indeed, the previous Foreign Secretary admitted to two examples where licences for export had been turned down by this country, but then agreed by other members states in the European Union. Again, we are in danger of putting our own industries at a disadvantage, and we are not creating the comparability of rules that the Secretary of State said was important.

My conclusion—it has to be an interim one—is that the Bill is necessary and that the Import, Export and Customs Powers (Defence) Act 1939 needs to be replaced, but it is difficult to judge the Bill in the absence of secondary legislation. There has been an unnecessary delay in introducing the Bill, which seems as though it will be over-bureaucratic and highly regulatory. Although it will increase the penalties, we have severe doubts about its feasibility and enforceability. It is in that spirit that we shall continue to scrutinise the Bill in its remaining stages in the House.

4.28 pm

Mr. Tom Clarke (Coatbridge and Chryston): When the right hon. Member for Wells (Mr. Heathcoat-Amory) asked probing questions in Committee—the sort of questions that we would expect—he made some relevant points, but, if he does not mind my saying so, he has also indulged in yah-boo politics. First, that is uncharacteristic—it does not fit well with his personality at the Dispatch Box; and, secondly, the British people were not at all impressed by it, as they unfortunately showed in the low turnout at the election. I therefore hope that he will not mind if I pay a bit more attention to his probing questions and seek to emulate that attitude by making a speech along those lines, because this is a good Bill.

The Bill is welcome, and it says a lot for the Government that they have introduced it at this stage in this Parliament. I am delighted that my right hon. Friend the Secretary of State is associated with it and that she has made her own position clear—I thought it very farsighted indeed. I am also delighted that the Under–Secretary of State for Trade and Industry, my hon. Friend the Member for Edinburgh, South (Nigel Griffiths), will make the winding-up speech. I welcome both of them to their

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rightful positions on the Front Bench. I hope that they will not take it amiss if I, too, ask a few questions, some of which have been put to me by some of the aid agencies, non-governmental bodies and others who also welcome the spirit of the Bill and would like to suggest some improvements that can be made to it during its passage through this House and perhaps another place.

As my right hon. Friend the Secretary of State has done, we can take a lead in being tougher on the international arms trade and in seeking relevant controls. We have two opportunities to do that. The first is provided by the Bill and by the chance that we have to tighten it up. The second results from the fact that the United Nations conference on all small arms starts today in New York. We therefore have an opportunity to send an important signal to the conference to show how seriously the British House of Commons takes such matters. I hope that other countries will seek to emulate us.

There has been a massive proliferation in the trade in small arms in the past decade. That has not been helpful for international development, for human rights or for seeking to improve the lives of millions of people in all parts of the world. Some say that 500 million people—one person in every 12 on the planet—have been victims of the arms trade in the past decade. Clearly, that is an issue that we should address.

As supplies increase, we know that prices fall. I am grateful to one aid agency for drawing my attention to the fact that, in north-east Kenya, the barter rate for an AK47 has dropped from 10 cows in 1986 to the present level of two cows. That might seem a trivial point, but it suggests that, if we are to tackle the problem of world poverty, we must control the terrible issue of the arms trade, which has an impact on poverty and on people's lives.

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