Select Committee on Trade and Industry Fourth Report


The Defence, Foreign Affairs, International Development and Trade and Industry Committees have agreed to the following Report:



This report continues the work of our predecessors on the Defence, Foreign Affairs, International Development and Trade and Industry Committees in the last Parliament. They established a system for the joint scrutiny of the Government's Annual Reports on Strategic Export Controls. In this report we focus on the Annual Report for 2000. We also look in some detail at the implications of world events since the end of 2000 for the way in which the export control regime is operated. We draw particular attention to matters of concern relating to India, Israel and Pakistan.

2000 was the first year of the introduction of the consolidated national and EU criteria, against which applications to export strategic goods are judged. We consider the evidence provided by the Annual Report of the extent to which it appears that Ministers have applied the Consolidated Criteria fairly and appropriately. For the most part, we find that they have done so.

We consider whether the evidence suggests that the Consolidated Criteria are interpreted and applied consistently, and whether their terms are sufficiently clear. We give particular attention to the criteria relating to the preservation of regional stability, the prevention of the diversion of weapons (including weapons of mass destruction) to terrorist groups, and the sustainable development criterion. In relation to the last of these, we draw some lessons from the controversy over the licence to export an air traffic control system to Tanzania. We also give some preliminary consideration to the implications of the Government's announcement on 8 July 2002 that it had granted licences for the export of certain components to the USA for incorporation in F-16 aircraft destined for export to Israel.

We examine the format of the Government's Annual Report and the usefulness of the information it contains and that which it fails to include. We make recommendations for increasing its transparency, particularly in relation to the cumulative effect of exports to particular destinations, the monitoring of end-use of exports and data on the identification and value of specific goods covered by licences. We question, in some cases, the basis for excluding information from the report on the grounds of confidentiality. Our concerns also extend to information provided to us which the Government has asked us not to publish.

We consider the administration of the system of licensing by the DTI's Export Control Oganisation. Its performance is still below an acceptable standard. We recommend greater transparency about the input of individual Departments to the licensing approval process, particularly in respect of prior approval by the MoD and consultation with the DfID on sustainable development questions.

We examine the passage of the Export Control Bill through Parliament in this session. We note its implications for the future of the export control regime. We note again that much of the meat of the legislation which will underpin that regime will be contained in delegated legislation to be made under the powers given by the Act, and we remind the Government of its commitment to give sufficient time for our committees to consider that proposed legislation in draft form. We will also be examining the terms of the guidance which is proposed to be issued under the Act.

The control of strategic exports is a sensitive area of Government activity. Transparency in the exercise of that executive function is essential. So too is parliamentary accountability for the Government's discharge of that function. We applaud the Government's progress in establishing a transparent and accountable system of strategic export controls. However, when we examine the arguments put forward by the Government to support their rejection of our predecessors' proposals for prior parliamentary scrutiny of certain licence applications we find many of them to be either ill-founded or exaggerated. We recommend that the Government come forward with proposals for an experimental scheme for prior scrutiny, so that their concerns can be tested against experience.

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Prepared 19 July 2002