Select Committee on Trade and Industry Minutes of Evidence


Examination of Witnesses (Questions 1 - 19)

THURSDAY 21 MARCH 2002

RT HON JACK STRAW MP, MR WILLIAM EHRMAN AND MR TIM DOWSE

  Chairman: Foreign Secretary, welcome to your first visit to the Quadripartite Committee. Welcome also to members of the public. It is good to see some interest in these matters. The purpose obviously is to take evidence on the Annual Report for 2000 but also on developments since then. Thank you for the written response to the questions that we asked earlier in the year. Towards the end, we will be raising some questions on prior Parliamentary scrutiny. First, let us start with some specific issues arising from the report.

Mr O'Neill

  1. Secretary of State, Criterion One, which involves respect for the UK's international commitments, either regarding UN sanctions or EU common positions: we understand that there is evidence that other EU States have exported equipment to China, which the UK has refused to license under our interpretation of the arms embargo. On the other hand, have there have been any instances where the UK has agreed to license any equipment when it has been notified that another Member has refused a licence?

  (Mr Straw) Mr Chairman, may I say, by way of a preliminary, that I am delighted to be here. I might have said that it is a joy, as ever, but that might be misinterpreted. Secondly, may I introduce the officials with me: William Ehrman, who is Director, International Security, and Tim Dowse, who is Head of the Non-Proliferation Department at the Foreign and Commonwealth Office. To Mr O'Neill, may I say that some of the detail of this I will need to take in the private session, for reasons which will become clear once we go into private session.

Chairman

  2. Secretary of State, I am sorry to interrupt you at this stage. Could you give some general indications?
  (Mr Straw) That is exactly what I am going to do. My aim is to be as forthcoming as I possibly can in public session but by definition some of the reasons for going into private session I can only explain privately, otherwise we are going to be in a circular situation. To deal with what I would like to say in public, the criteria which we have are a consolidation of national criteria and also of EU criteria as well. The EU criteria, although they are criteria which are common to all the European Union countries, are obviously dependent upon national application and therefore it must logically follow that there could be cases, whether in respect of China or anywhere else, where one country in good faith and on similar evidence would come to a different judgment from another country applying the same criteria. I would also say that since some of these issues involve extremely fine questions of judgment, if you took a random group of this Committee and said, "Make a decision" and another random group and said to them, "Make a decision" on exactly the same facts and data, you could end up with two different sets of decisions. That is what we are dealing with here.

Mr O'Neill

  3. Does that come out of the fact that within the 15 Member nations there really is not a consensus as to a common interpretation? Would you like to say what is the obstacle? Is it on the one hand that the UK is taking, let us say, a high moral stand and is too restrictive or are there some people who think that the UK is not restrictive enough and therefore there is this failure to agree?
  (Mr Straw) I do not think it is either. I think that all the European Union countries are committed to the EU Code and they are also committed to their own systems. It happens that, in terms of parliamentary scrutiny, we are much more advanced, I think, than any other European Union country, with the possible exception of Sweden. The Swedish system can be dealt with later. I have suggested, I think, that there are many disadvantages from the point of view of parliamentarians about the Swedish system and many advantages for ministers to be held accountable. That is part of that. I think it just follows from different interpretations of the same rules and of course arms embargoes and export controls run straight into issues of defence and foreign policy, which Member States of the EU guard jealously as within their own national competence and share not as a Community competence but share under what is known as pillar two of the European Union. I also have to say that even if there were a complete harmonisation of Community law, as it were, as long as these were decisions not taken by a single institution but in different States under a Directive, then there would be differences of interpretation. What we try to do is to share information, particularly between ourselves, so that there is, over time, a more consistent application of the criteria.

Donald Anderson

  4. There are also problems, Secretary of State, of profound and differing national interests with the defence industry. To what extent, in your judgment, is the original purpose of the whole project being undermined by widely differing interpretations by Member States?
  (Mr Straw) I do not think it is. I can go into more detail about this when I come to give evidence in private, but I have been struck, in the time that I have been dealing with these applications - and I have to say within the British Government they are dealt with extremely carefully—by the care and seriousness which, from my perspective, I believe is shown by other European Member States. I obviously have no brief from each of those but that is my view. So far as national interests are concerned, yes, as Mr Anderson will be aware, in our criteria as laid out by Peter Hain in his written answer on 26 October, he said, actually quoting Robin Cook from 1997: "The Government are committed to the maintenance of a strong defence industry as part of our industrial base as well as of our defence effort, and recognise that defence exports can contribute to international stability by strengthening collective defence relationships; but believe that arms transfers must be managed responsibly." Then at the end he goes on to mention other factors which are under the operative provision of the EU Code of Conduct, which specifies that Member States, where appropriate, take into account the effect of proposed exports for economic, social, commercial and industrial interests, that these factors will not affect the application of the Code. They list those factors but it also makes clear elsewhere in the criteria that an export licence will not be issued if the arguments for doing so are outweighed by the need to comply with the UK's international obligations and commitments. My concern is that they could be used for internal repression or international questions by risk to regional stability or other considerations. You have the background which is that we have a big defence industry and we have national defence interests but you also have these criteria, some of which are taken into account and some of which override that.

  5. Of course there would be subjective elements and there will be different weights given to different criteria but the whole purpose was the aim of consistency.
  (Mr Straw) I agree with that.

  6. How do we work towards a consistency of approach? Is there beginning to be built up case law in respect of individual cases?
  (Mr Straw) At the moment we do not have case law because this does not come within Community competence; in other words, it could not end up at the European Court of Justice. It is a matter which is embedded in Member States' national interests but if you mean by "case law", is there a sharing of experiences, is there a desire certainly by foreign ministers of the European Union, and I think by others, to ensure that, since we have a single code and EU criteria that should be applied consistently, the answer to that is "yes". I would just say this to you, Mr Anderson, as a fellow member of a similar profession, the legal profession, that you can apply criteria, however detailed, consistently and yet two sets of people may arrive at the margin at different judgments, and sometimes these are very fine.

  7. In the light of experience so far, there must be a spectrum of those who apply the criteria strictly and those much less strictly. Where do we appear in the spectrum?
  (Mr Straw) I think we are pretty good. In a sense, one of the things we need is a greater degree of information about this.
  (Mr Dowse) I think from the experience that we have, and you are absolutely right, we have now had the operation of the EU Code of Conduct for several years, it is true we are building up experience. One way you can judge whether the system is working is by the number of consultations that take place. Under the rules of the Code of Conduct, when any Member State issues an export licence for a transaction essentially identical to one that has previously been denied by another Member State, it will first consult the Member State that issued the denial. Although, as a result of that consultation, we are not obliged then to follow the denial, the process of consultation in itself obliges Member States to look that much more carefully at their export procedures, and it is not something that is done lightly to undercut a denial. The fact is that there have been relatively few cases year by year where these consultations have had to take place. It has happened in a relatively small number of cases. So I think that is one piece of evidence that in fact the guidelines, the criteria, are being applied pretty consistently across the EU.

Chairman

  8. We now move on to a different issue. When we have asked in the past about military equipment exported to Israel, the Government's response has been that there has not been any evidence that this has been used against civilians. Clearly Ben Bradshaw made a statement on 11 March, and we have had a letter today from the Foreign Office clarifying the position. It now seems that indeed UK-manufactured equipment has been used by the Israeli Government against civilians in the Occupied Territories. My question, Secretary of State is: how can we be sure that the example that has now come to light is an isolated example?
  (Mr Straw) In a mathematical sense of proving a negative, it is almost always impossible to prove a negative. Do we take care to check, so far as we are able, on the end use of this equipment? Yes. It is precisely because we do take care that this example has come to light. It came to light because of very rigorous checking by our defence attaché and his staff in the Occupied Territories. I think it is a testament to their work on behalf of the Government and also, if I may say so, on behalf of Parliament, that they have managed to pin down the connection. What they discovered is that these were Puma armoured personnel carriers which had been deployed in the Occupied Territories in September of last year. There were sightings in November and December of last year and a Nachpadon APC observed first in the Occupied Territories on 29 January 2002. These vehicles have chassis which were essentially cannibalised from Centurion tanks which were exported to Israel between 1958 and 1970. They do not look like Centurion tanks at all. It requires a high degree of skill to appreciate that a chassis from a Centurion tank could form the basis of these Puma and Nachpadon APCs. It is as a result of observation by the defence attaché and his staff going into the Occupied Territories, I may say at some degree of personal risk, that they were able to identify this and set out the other circumstances. As you will see, I decided that Parliament should be informed on the day on which I was informed.

  9. Was this the outcome of routine, rigorous, end-use monitoring or was it just a lucky observation?
  (Mr Straw) No, it was not just a lucky observation. Part of the job of defence attache"s is to do this. We may come on to the general principles of end-use monitoring. Obviously how far it is possible physically to control the end use if you have a government which is determined to break undertakings depends on the size and nature of the equipment. If it is easily transferable; it is difficult. In this case actually I suggest that it was pretty difficult to identify but it was identified. If it is equivalent to whole tanks as exported or whole aircraft or artillery pieces as exported, it is relatively straightforward. We are not dealing here with a perfect system but we are dealing here with a system which I think the Committee will accept is considerably better than the system which existed three or four years ago.

  10. I do not think anyone suggests that the system has not got better in recent years. Your Department's letter to the Committee today points out that the Israeli Government had given an assurance on 29 November 2000 that no UK-originated equipment, nor any UK systems, et cetera, are used as part of the Israeli defence force activities in the Occupied Territories. A clear undertaking has been given there that you are now telling us is false.
  (Mr Straw) Certainly not being followed.

  11. Not followed, false, wrong, misleading.
  (Mr Straw) We have to find out. We have to await the response of the Government of Israel before we make judgments about whether the undertaking was given in bad faith. It could have been given in good faith but we are checking. We want proper recognition that the Centurion tanks had been cannibalised in this way. However, whatever judgment we come on to as to that, the simple fact of the matter is that the undertakings which were given by the Government of Israel on 29 November 2000 that, as you say, none of the UK-originated equipment has been used by the IDF in the Occupied Territories, turns out not to be the case and I take that extremely seriously, which is why we are pursuing it with the Government of Israel, as well as why I laid the letter before Parliament in the form of the answer which Ben Bradshaw gave to George Galloway on the day that I first had this drawn to my attention.

  12. There is a number of items of equipment listed in the report: machine guns, et cetera. What actually happens? Do the Israelis, when they are engaged in activities in the Occupied Territories, say, "Well, hang on, we had better put those UK-manufactured machine guns down and pick up someone else's machine guns"? What does the Government really know about the end use of this equipment in a very complex situation such as that in the Middle East? Are concerns about this justified, in your view?
  (Mr Straw) I think, as long as you have a system of licensing, which I strongly support, we should all be concerned about circumstances in which, either inadvertently or advertently, the undertakings which governments give about end use could be broken. I think, on the whole, experience shows they are not and that where material is sold under clear undertakings, governments do not break those undertakings because it is not in their interests to do so. Over time, that would put them beyond the pale of the international community. But within the availability of resources, which is a crucial issue, and what is practical, of course we should strive for means by which we improve the overall regime. I do not argue with that.

  13. Are you re-examining end-use monitoring?
  (Mr Straw) Yes. In the world in which we live you are not going to be able to end up with a situation—perhaps you could do but it would be extremely expensive and I am not sure it would achieve more than we currently achieve or are able to achieve—where you have a system of end-use monitors. Of course we are going to examine very carefully the full details of what happened in this case, certainly. I will also make sure that the Committee is fully informed about that, and it may well be that you will want to return to this at a further session.

Rachel Squire

  14. Can I turn to Criterion Four—preservation of regional peace, security and stability—and particularly ask concerning India and Pakistan? The Report for 2000 appears to indicate that India and Pakistan were the most likely zone for the arms race which could undermine regional peace and security at that time, and the Government recognised that. In your judgement, has the threat to regional security improved or worsened since then?
  (Mr Straw) Since 2000? It has varied from month to month, day to day. I think it was in the middle of 1999 that Kargil took place, so it was very serious at that time. There were then some negotiations between India and Pakistan in the east and it has been going up and down like that. In the last three months, it became serious after the terrorist attack on the State Assembly in Srinagar on 1 October and a lot of diplomatic and other efforts were put in to try and reduce the tensions, including action which was taken by President Musharraf to ban a number of Pakistani-based terrorist organisations which were almost certainly behind that attack. Then, as we know, on 13 December there was the attack on the National Parliament, the Union Parliament, in Delhi and tensions then rose. Overall, again if you are asking me about averages, given the fact of Kargil and what happened in 1999, it is probably on average about the same, although day by day it changes.

  15. It is very much a roller coaster?
  (Mr Straw) I would not say that. It is a serious situation and it is one obviously we take account of in determining whether licences should be issued. I am well versed in trying to make judgments in respect of Criterion Four. It is one of the crucial things I know every member of the Committee has on board but sometimes others may not: by definition, arms are materials designed to be used in an aggressive manner because these are instruments of violence, but this is about whether the export would be used aggressively against another country or to assert by force a territorial claim. Then we have to go through a balancing judgment against the other criteria, including, for example, the criteria in respect of international obligations. That then runs into things like obligations under United Nations Security Council Resolution 1373.

  16. Do you think that the UK Government's position on the situation between India and Pakistan can be reconciled with what is extremely strong marketing by UK defence manufacturing companies to sell arms and equipment to that area?
  (Mr Straw) Yes, I do. Unless we make a decision that we are going to pull out of defence industries, then what we have to do, it seems to me, is to make judgments on a case-by-case basis in the round against these criteria but against the fact that, if the criteria are met in a sense that the export appears to be one that is not caught by the criteria, then it is an export of defence material which ought to be made. I do not believe that the licences whose issue I have been a party to have contributed to a breach of Criterion Four because otherwise I would not have made the judgments there. I agree there have been some licences which I have refused in respect of both Pakistan and India where, amongst other criteria I think have been potentially in breach, Criterion Four has been one of them.

Tony Baldry

  17. Can I ask a slightly different question about India. As I understand the export controls, they seem to infer that licence applications should be considered with regard to whether a defence export might hamper a country's sustainable development. I am a bit confused by India because you and the Prime Minister and others have been promoting the sale of Hawk jets to India, which are going to cost India just under £1 billion, as I understand, but India is our largest recipient of bilateral development aid. £1 billion is equivalent to 10 years' worth of UK development aid to India. Effectively what is happening is that we as taxpayers are subsidising primary health care and basic education in India to the tune of £1 billion every 10 years to enable the Indian Government to purchase Hawk jets from us. I just do not quite see how that is consistent with any concept of supporting sustainable development. I wonder if you can help me on that.
  (Mr Straw) I will do my best to help you, Mr Baldry. First of all, I am not going to comment on the possible sale of Hawk jets because there has been no contract. Yes, it is certainly true that I and other Ministers have made representations to the Indian Government about that particular sale, but that is a separate issue from whether, if we were presented with a particular application for a licence, we would approve it against these criteria. That would depend on the circumstances at the time. Who knows whether or not the contract is entered into or otherwise? So far as India, however, is concerned, India's overall defence spending is as a proportion of their GDP, and when I looked into it—and I have to say I have double checked this—that is surprisingly low, given what is a large number of people involved in their defence services. When you go around Indian cities, you see large garrisons. Notwithstanding that, that is partly because India is a huge country of over one billion people. Their defence spending looks like being somewhere between 2.5 and 3 per cent of their GDP, which is, roughly speaking, the same proportion as for many countries in Europe. On the issue of sustainable development, you will be aware that one of the criteria is that of sustainable development, but it is whether the proposed export would seriously undermine the economy or seriously hamper sustainable development of the recipient country. As with any other criteria, those have to be weighed in the round against aspects of the criteria which were set out two years ago.

  18. That is the point I am putting to you, Secretary. Would you not think that 10 years' worth of bilateral UK development aid waved around is rather a substantial sum?
  (Mr Straw) I am sorry, I am not going to go down that route. As I say, that is based on a hypothesis, first of all, that the contract would be awarded to a British contractor; and, secondly, having been awarded, that the British Government would then license it. Whether we license it, if it is awarded, depends on the circumstances at the time but of course, may I say that we would look at all these matters very carefully and report to the Committee.

  19. I think that affects the integrity of this Committee and how we pursue policy in this area. Sometimes we are approaching these things in a rather artificial way because I think you very fairly acknowledge that you and the Prime Minister, and indeed it is a matter of public record, have lobbied the Government of India on this particular contract. If you are then saying that, because no contract has been awarded, you are not prepared to answer questions on it, fine. Can I just push you on this, that if a contract should be awarded, I and I am sure others would wish to pursue in detail this whole question of sustainable development, otherwise I think it becomes a pretty artificial exercise.
  (Mr Straw) Thank you very much for the notice. Funnily enough, I thought that might be the case. Indeed, I do not think you would be doing your job if it were not.


 
previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2002
Prepared 19 July 2002