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Dr. Tonge: Will the hon. Gentleman give way?

Mr. Howarth: Of course I will give way to the hon. Lady, having provoked her.

Dr. Tonge: Another feature of Liberal policy is our suggestion that we should join the single currency. That would counterbalance the possibility of a loss of exports, because exporting would be so much easier if the exchange rate were different.

Mr. Howarth: I am not sure that that is entirely relevant to my argument, but I note the hon. Lady's point. We would then have a uniform interest rate across Europe. We know how difficult it is to achieve a uniform interest rate across the United Kingdom that matches the requirements of its component parts; it would be even more difficult across Europe, and I suspect that ultimately that would damage manufacturing industry.

I am not sure that the Bill will do anything to help civilians who are caught up in the horror of domestic conflict. I have been to Peshawar in Pakistan, at the base of the Khyber pass. In the market, it is possible to get any weapon of any kind made—and it does not take long: I think it takes about a week to have the most sophisticated weapon made, while others can be knocked up in a matter of hours. The idea that the Bill will eliminate that type of trade is simply wishful thinking on the part of some hon. Members. They need to be absolutely clear about that.

I am clear that the Bill could seriously disadvantage one of the United Kingdom's most responsible and successful industries. The devil will be in the secondary legislation. When we are able to see that, we shall be able to judge whether the Bill will seriously undermine one of Britain's great success stories.

7.10 pm

Ann Clwyd (Cynon Valley): This has been an interesting debate particularly for those of us who were members of the Quadripartite Committee on arms exports because we have been able to hear the views of colleagues who were not members of it. The Committee was an exceptional experiment in combining four Select Committees, composed of hon. Members from all the

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main parties in the House, to discuss an issue on which we had very divergent views. Initially, I was almost afraid to speak because I did not want to upset the apple-cart. However, after several sittings, a consensus seemed to emerge. Considering some of the hon. Members on the Committee, I was very surprised to see it coming together on the issue.

I come from a very particular standpoint on the issue. I am very concerned about human rights and have been very active in that sphere for many years. I have also been critical of the arms export industry, particularly its effect on developing countries and on human rights in some of the countries where our arms have gone. I am not proud that we are the world's second biggest arms manufacturer—it is not a matter of pride, because arms kill. I do not particularly want to be involved with an industry that kills people.

Dr. Julian Lewis: Will the hon. Lady give way?

Ann Clwyd: I shall in a moment. I have listened for many months to the hon. Gentleman's attacks in the Chamber on members of the Campaign for Nuclear Disarmament and on the women of Greenham common, but I remind him that the Greenham common march started in Cardiff and that I was the only politician present. I am exceptionally proud of that fact, and it should be quite clear where I am coming from in this debate.

Dr. Lewis: I thank the hon. Lady, whom I much admire, for her sincerity in giving way and for that little trip down memory lane. I take issue only with her statement that arms kill. Is it not also true that, sometimes, arms prevent killing, deter killing or even stop killing?

Ann Clwyd: I thank the hon. Gentleman very much for that observation, which is patently true. It is also patently clear that arms kill.

I am sorry that the Leader of the House has left the Chamber and is not participating in this debate. He has been so heavily involved in the issue since the then Conservative Government exported arms to Iraq and he responded to the Scott report after having seen it for only about half a day. It was an occasion that anyone who was in the House will never forget.

I do not believe that hon. Members would ever have allowed arms to be exported to Iraq if they had been asked. Anyone who knew about events such as Halabja and the chemical gassing of the Kurds would never have agreed to export arms to Iraq, unless they thought that those considerations were of no importance. When he was Foreign Secretary, the Leader of the House was deeply involved in those issues and attempted to introduce an ethical foreign policy. He also knew that Scott had criticised the fact that the House was not involved in that type of decision making. As the right hon. Member for Tonbridge and Malling (Sir J. Stanley) said, some of Richard Scott's comments on that issue have been quoted out of context.

We could not believe that those who were making the decisions on exports to Iraq were not aware of the type of regime that existed in that country. We were aware of the nature of the regime; so why were those making the export decisions not aware that the Iraqi regime would eventually use those arms against us? Although that may

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be water under the bridge in some respects, Iraq still owes us at least £500 million in export credit guarantees. That is a loss to the British taxpayer.

The confessions of the hon. Member for Twickenham (Dr. Cable) about his days as a civil servant at the Foreign Office and elsewhere were very interesting. He described some of the considerations in decisions that he had to make, and he made it clear that he had doubts about some things. When 30 years have elapsed, perhaps we shall even see whether his signature was on those documents. The point is that, occasionally, some hon. Members are more aware than Ministers or civil servants about the situation in some of the countries that the hon. Gentleman listed.

The Select Committee had an exchange with the former Foreign Secretary on arms to Indonesia. As we all know, in 1997, while attempting to introduce an ethical foreign policy, one of his first major speeches at the Foreign Office was on that very subject. Those of us who had been campaigning since 1987 for human rights in Indonesia were very much hoping that that speech would influence the ultimate decision on whether to continue exporting Hawk aircraft and spare parts to Indonesia.

It was at that time that the former Foreign Secretary and I first fell out. He argued that legal considerations required him to continue those exports. As I said in an earlier intervention, we should not be in such a position. There may be an agreement with a country, but we should be able to review that agreement when circumstances change in that country.

The right hon. Member for Tonbridge and Malling, some other Select Committee members and I visited the United States. People there expressed astonishment that the United Kingdom Government were bound by legal considerations in determining whether to continue sending arms to Indonesia. They said that that would never happen in the United States, and that they could cancel exports to a country if the circumstances in that country changed. They said that their contracts contained a provision enabling them to do that without any obligation at all, including financial obligation.

In the past few years, and even in the past few months, there have been some interesting developments in the United States in relation to arms exports to Indonesia. Although we continue to export to Indonesia, the United States has stopped not only its arms exports but its military training there. I believe that that change is due primarily to the prior scrutiny exercised by members of the United States Congress.

Despite prior scrutiny, the United States is still the world's biggest arms manufacturer. Such scrutiny simply spares United States Ministers and congressional members the embarrassment that was felt all too often by Ministers in the previous Government and in the current one when they discovered that arms were being exported to a country that was committing human rights abuses.

I cannot see any objection to our having a similar system of prior scrutiny. I would have thought that the Government would welcome it. In his last session of giving evidence to our Committee, the then Foreign Secretary seemed to be coming round to our point of view. He saw that our arguments were consistent, and we came up with a compromise that would probably have been acceptable to him.

I ask the Department to think again about this important aspect of arms exports. The Government have done good work in producing the annual report, which I welcome.

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It was a considerable stride forward, as was producing a common European Union code of conduct. However, to fail on prior scrutiny would be a major failure and would not bring the transparency that Labour Members have been calling for since Scott.

Licensed production deals are increasingly supplementing or even replacing direct strategic exports. The number of licensed production facilities worldwide has grown dramatically in recent decades and continues to grow year by year. It is vital to introduce strict controls to ensure that such arms production is not allowed where there is a likelihood of use for human rights violation in the country of manufacture or subsequent transfer to other destinations or end users of concern.

One example of a licensed production deal of concern is the agreement between GKN Defence Ltd. and Asian Armoured Vehicle Technologies in the Philippines to produce Simba vehicles. It was reported in 1994 that the first seven Simba armoured personnel carriers had been delivered to the Philippine armed forces. A total of 150 vehicles had been ordered and fitted with a 12.7 mm Browning machine gun turret. Eight vehicles were to be supplied from the UK, several as kits, and the rest to be assembled at the plant operated by Asian Armoured Vehicle Technologies.

I asked the President of the Board of Trade

The answer was:

That answer illustrates the fact that the inadequacy of UK licensed production agreements leads to the establishment of new centres of production of military/security equipment over which the UK Government have little or no control. We must introduce statutory powers to control licensed production overseas.

I am concerned about end-use monitoring. Those of us who have spent many years asking questions about arms exports have found it very difficult to get answers. I could paper many walls with the questions that I have asked about exports to Indonesia, for example. We are told that we cannot get answers because of "disproportionate cost", meaning that no one plans to answer the questions at all. We have yet to get to the bottom of what "disproportionate cost" means. At a conference in Ireland to discuss East Timor, an Irish senator handed me an Irish £10 note, which I still have, and said, "This is to help the UK Government answer your questions on arms to Indonesia."

Fortunately, things have changed a bit since then. In her international development role some time ago, Lynda Chalker admitted that end-use monitoring was practically impossible. When he was a Foreign Office Minister, Derek Fatchett said that no formal mechanisms existed to monitor the end use of British defence equipment once it had been exported. It is true that it is almost impossible to monitor the end use of arms that we send to some dodgy countries.

Campaigners on Indonesia and East Timor have told me that British-supplied armoured cars, fitted with water cannons, were used by the Indonesians to spray protesters

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with coloured water, enabling them to be identified, arrested and probably tortured. Hawk aircraft were spotted flying over East Timor just before the referendum. When asked about that, Ministers said that embassy staff were monitoring the situation. Given that East Timor is a long way from Jakarta and that people from our embassy did not go there all that often, the reality is probably that people did not know.

I welcome the Government's steps to improve risk assessment at the licensing stage and the strengthened pre-sales checks on exports, but there are no specific measures in the Bill for monitoring goods once they have been exported. With the best will in the world, all Governments make mistakes, and it is quite possible that some of the countries that are not currently considered dodgy may become dodgy in the future. All export licences should have end-use certificates, and minimum requirements should be specified. It would be fairly easy to do that. Monitoring by embassy staff is not a sufficient answer.

Those of us on the International Development Committee know the consequences of selling arms to countries that simply cannot afford them. The world is littered with developing countries that bought arms under previous rulers, sometimes spending 50 per cent. or more of their budget, leaving the poor people there with the bill after the regime had changed. It is important that the schedule of purposes for export controls should contain specific reference to the need to ensure that arms transfers do not have an adverse effect on the economy of any country or the sustainable development of the country to which the goods are exported or the technology transferred.

It is a matter of concern that so many developing countries are in debt, and our Government have led the way in addressing that problem. The Chancellor has done everything in his power to try to get help for those countries that are bogged down by past bills for arms that they did not need. Without those arms, they would have had the scope to spend more on education and health.

The Quadripartite Committee was a particular experience. It showed that Members of Parliament can come together, even on a contentious subject, to test the arguments on representatives of, for example, the Defence Manufacturers Association. By the way, the association's point of view was heard, in spite of what the hon. Member for Aldershot (Mr. Howarth) said.

We are convinced that prior scrutiny will not affect the arms trade, if that is what people are worried about. The right hon. Member for Tonbridge and Malling (Sir J. Stanley) mentioned the amount of money that is spent propping up the defence export industry by the Defence Export Services Organisation, which has a considerable budget, and we need to ask whether that is good value for money or whether it would be better to prop up other industries, such as the pharmaceutical industry. I personally think that that would be much more worth while, and that is the sort of debate that we should have in the House. Samuel Brittan, one of the leader writers for the Financial Times, has made the argument several times that if we were looking for value for money, we would not spend money propping up the defence industry, because we could use that money for other reasons and on better causes.

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