Select Committee on Trade and Industry Appendices to the Minutes of Evidence


APPENDIX 4

Submission from the UK Working Group on Arms to the Strategic Export Controls Committees on Prior Parliamentary Scrutiny

BACKGROUND

  Significant progress has been made in opening up the UK export licensing system to parliamentary and public oversight. However, this oversight is entirely retrospective, taking place after licences have been granted. The joint Quadripartite Select Committee (QSC), the Defence, Foreign Affairs, International Development and Trade and Industry Committees, has argued that there is also a role for a Parliamentary committee in scrutinising export licensing decisions before they are granted in order to provide advice to ministers in difficult cases.

  The QSC made its first substantive report on the issue in July 2000. The Government response in December 2000 challenged the QSC proposals for a system of Prior Parliamentary Scrutiny on the grounds that they might:

    —  confuse the relationship between the Government and Parliament;

    —  impinge upon commercial confidentiality; and

    —  hinder British companies' competitiveness by slowing down the licensing procedure.

  The QSC assessed this response and in March 2001 issued a second report on prior scrutiny that modified the originally proposed system of scrutiny to meet the concerns expressed by the Government. However, in July 2001 the Government, in its response to these amended proposals (published after the Second Reading of the Export Control Bill in the House of Commons) regrettably upheld the position that such a system would be unworkable.

    —  The UK Working Group on Arms maintains that prior parliamentary scrutiny of arms export licences is an essential element in ensuring consistent application of the UK criteria for arms exports, the EU Code and the purposes of the Export Control Bill.

THE QUADRIPARTITE SELECT COMMITTEE (QSC)[3]

First QSC Report—July 2001

  The rationale of the QSC for requesting a function for parliament in the prior scrutiny of licence applications was made in its first substantive report on the issue in July 2000[4] stating that:

    "the authority to export arms is of a different degree of sensitivity to other types of Ministerial casework. There can be few decisions of greater potential impact on the conduct of foreign relations, and on the lives of people overseas . . . We are convinced that accountability demands that Parliament is engaged in scrutiny of arms export licences before as well as after their grant . . . Issues of such importance warrant democratic involvement."[5]

  The QSC affirmed that the proposed system would pose no threat to commercial confidentiality or the competitiveness of British industry. The QSC also stated that the system would not delay the granting of licences nor impede the granting of immediate licences for national security reasons. The proposal of the QSC suggested establishing a system that would:

    —  Establish "Stage 1" notification—all licence applications would be notified to the Committee, including OIELs and dual-use goods.

    —  Stage 2 notification—the Committee would identify some licences on which it wished to receive notification that Government was intending to grant a licence. It was expected that this would be a small number of cases.

Government Response—December 2000

  The Government response, in December 2000,[6] challenged the QSC's proposal for a system of prior parliamentary scrutiny on a number of areas. These, which were reiterated by the then Secretary of State for Foreign and Commonwealth Affairs, Robin Cook, during oral evidence in January 2001, focused on the following areas:

    —  competitiveness of British industry;

    —  affecting the efficiency and effectiveness of the export licensing process;

    —  breaching confidentiality between UK exporters and overseas customers; and

    —  involvement of Parliamentary Committees in taking decisions.

  The response noted that Government felt "there is no role for advance scrutiny of individual casework decisions which are quintessentially matters for ministerial decision in accordance with delegated powers conferred by Parliament", however the Foreign Secretary, Robin Cook, also stated that Government was concerned that prior scrutiny in one instance might become common practice in other areas of ministerial casework, such as aid decisions.[7]

  The QSC assessed this response and in March 2001 issued a second report on prior parliamentary scrutiny which suggested modifications to the originally proposed system of scrutiny to meet the concerns expressed by government.[8]

Second QSC Report on Prior Parliamentary Scrutiny—March 2001

  The second QSC report on PPS reflected continued discussions within the QSC on the issue and a refinement of the proposals put forward in July 2000. The main areas raised by the QSC were in response to the Government's response of December 2000. These included:

    —  Principle and function: the QSC reiterated its opinion that individual casework decisions by Ministers cannot be automatically exempt from prior scrutiny and that none of the issues raised by the Government to date had changed the belief of the QSC that such a system was both necessary and workable. The QSC stated its role would be advisory only and that decision-making would continue to rest solely with Ministers.

    —  Stage 1 notifications: to exclude from Stage 1 notification licence applications for exports to NATO countries and other close allies, based on a list of criteria to be agreed between the QSC and Ministers, licence applications not circulated to other departments and licence applications for dual-use goods.

    —  Stage 2 scrutiny and delay: estimations of the approximate number of licences which might be required for Stage 2 scrutiny were made, to address concerns that the involvement of Parliament would considerably slow down the licensing process. In addition, the QSC addressed the issue of delay by noting that Ministers could proceed to grant a licence if there were well-founded grounds for believing that a contract might otherwise be lost.

    —  Stage 2 confidentiality and advice to Ministers: the QSC recognised that a public Stage 2 notification system could work against the best interests of UK exporters and proposed that such notifications should be made in confidence and the confidence would be preserved until the licence was granted and contract signed, except in serious instances, where the Committee would be required to report to the House of Commons, although details would be reported only with the agreement of both the Government and the applicant. The QSC noted that it was up to the Government to decide the level of classification put on information given to the Committee. The provision of information to assist the Committee in its process of reviewing licence applications was raised by Government in December 2000 as problematic. The QSC response suggested that the Committee and Ministers should be able to agree on the level and detail of information needed by the Committee to assist it in its work but that this was a practical detail and should not make a system of PPS unworkable.[9]

The UKWG welcomed the QSC recommendations and supported the practical system proposed

Government response—July 2001

  The delayed Government response (published in July 2001 after the Second Reading of the Export Control Bill), was more earnest in its dismissal of the QSC's suggestions for PPS than its earlier report, stating that the Government stood by its conclusion from the 1998 White Paper on Strategic Export Controls that PPS would not be right and would cause delays and risk breaching the confidentiality of UK exporters and their legitimate overseas customers and that there is no role for advance scrutiny of individual casework decisions.[10]

  The Government response sets out the range of issues that the Government believes would be affected by a system of PPS, including:

    —  Decision taking by Committees under existing legislative powers being viewed as "problematic".

    —  Delays introduced into the licensing process by including PPS, estimated as adding 10 days to Stage 2 notifications and reducing the ability of the Government to meet its processing target of 20 days. Such a delay is viewed by Government as reducing the competitiveness of UK industry overseas.

    —  Special reports on Stage 2 notifications could risk the loss of a contract and/or alert overseas competitors, which might encourage competitors to intervene on the contract. In addition such public reports are seen as potentially damaging bilateral relations with the proposed recipient country.

    —  The ability to take an informed decision would be affected by the need to protect the confidentiality of information, with the Committee unable to have access to sensitive or technical advice on the material covered by the application, the proposed destination or end-user.[11]

    —  While the initial Government response to the QSC proposal of PPS focused on the functioning of such a system, the second response more clearly dismissed out of hand the existence of such a system as unworkable. The Government chose not to respond to the technical solutions raised by the QSC in March 2001, leaving it unclear if these proposals could find acceptance within Government. It may be that on the technical side, the distance between the QSC and Government is less wide than on the principle of PPS itself.

ARGUMENTS AGAINST GOVERNMENT RESPONSE

1.  Relationship between Government and Parliament

  The Government has expressed concerns that granting a parliamentary select committee the right to advise the Government during the export licensing process would raise issues of inconsistency and unlawful sub-delegation and raise the risk of judicial review.

  During the Second Reading of the Export Control Bill (9 July 2001)—prior to the Government official response to the QSC—the Secretary of State for Trade and Industry Patricia Hewitt said:

    "My Hon. Friend makes an important point and I understand entirely the nature of the scrutiny that for which she asks. Lord Scott made it clear in his evidence to the Committee that some serious constitutional issues—impropriety, even were involved in confusing the proper roles of the Executive and the legislature and handling over decisions on individual applications, which should properly be made by Ministers to a parliamentary select committee." [12]

    (i)  During the evidence session on the Bill Lord Scott said he was referring to the QSC Report printed in December 1998 and stated that he has not read the QSC proposals from their reports on Prior Parliamentary Scrutiny (July 2000 and March 2001)—therefore his comments were not based in response to these reports. He stated that: "I can confirm that I have not read that material and I reserve on this occasion, as most, the right to change my mind."[13]

    (ii)   The UKWG has taken legal advice from Matrix Chambers. The advice obtained 11 October 2001 states that:

      —  There is no constitutional impediment which would prevent Parliament from legislating so as to give itself a role in scrutinising arms export licences. (Paper 1, Section 3, paragraph 29)

      —  Sub-delegation of the decision-making function need not be an issue as long as explicit reference is made in the Bill to the fact that such a role would be advisory only. This should appear in the primary legislation to avoid any issue as to the vires of such a provision in the Order on the ground that it authorised sub-delegation where an Act of Parliament had not provided for it. (Paper 1, Section 3, Paragraph 34)

2.  COMMERCIAL CONFIDENTIALITY

  Prior scrutiny measures exist in other countries, for example in Sweden and the USA, without risk to commercial confidentiality. To limit the perceived risk to commercial confidentiality, the QSC have suggested that proposed Stage 2 notifications be made in confidence, which would be preserved until the licence was granted and contract signed. In serious instances, the Committee may be required to report to the House of Commons, but details would be reported only with the agreement of both the Government and the applicant. This would alleviate the Government's concerns that such reports would risk the loss of a contract and/or alert overseas competitors. It is a matter of fact that detailed information on purchasers and types of equipment under consideration often is reported by specialist publications, such as Janes, well before licensing applications have been submitted. Representatives from the defence industry have themselves admitted that commercial sensitivities typically concern pricing data and detailed technical specifications. Beyond requiring information on approximate value where there are concerns about impacts on sustainable development, this type or level of information would be largely irrelevant to the QSC's deliberations.

  The QSC noted that it was up to the Government to decide the level of classification put on information given to the Committee.[14]

3.  COMMERCIAL COMPETITIVENESS

  Related to concerns of harming commercial competitiveness, were concerns that including Parliament in an advisory role in reviewing licences would delay the process beyond the target of 20 days per application by adding an additional 10 days on to processing. However the current situation is that applications for licences that are most likely to be of concern to Parliament already exceed the 20-day target. As the QSC's consideration of licences could occur concurrently with that of Government departments, fears of additional delay appear unfounded. In addition, there is scope for the Government to proceed to grant a licence if there are well-founded grounds for believing that a contract may otherwise be lost.

EXPORT CONTROL BILL—REPORT STAGE

  In the Government's first response to the QSC (December 2000) the Government indicated that the Export Control Bill could be an opportunity to introduce Prior Parliamentary Scrutiny:

    ". . . when the new primary export legislation is introduced as proposed in the 1998 White Paper this will provide Parliament with the opportunity to debate the whole field of export controls and licensing powers including the delegation of powers and the form of parliamentary scrutiny."[15]

  However, the Government chose not to introduce a system under the Export Control Bill. During the consultation stage the Government argued that a system would not need to be established through legislation. In April 2001 the then Secretary of State for Trade and Industry Stephen Byers said:

    "The model contained within the Joint Committees proposals on 14 March could be introduced without primary legislation."[16]

Legal advice

  The Government stated that the introduction of prior parliamentary scrutiny would not require primary legislation. However, as mentioned earlier, the legal advice obtained by the UKWG from Matrix Chambers has indicated that in order to enshrine the nature of the sub-delegation, prior scrutiny "should appear in the primary legislation to avoid any issue as to the vires of such a provision in the Order on the ground that it authorised sub-delegation where an Act of Parliament had not provided for it".

  During the Report Stage of the Export Control Bill, a number of MPs tabled amendments at the House of Commons Report Stage to introduce the concept of prior parliamentary scrutiny in primary legislation setting out clearly the advisory role of the Committee, as recommended in the legal advice.

  The Minister of State Nigel Griffiths re-affirmed the Governments:

    "The Government have made it clear that they see Parliament's role as one of scrutinising decisions after they have been taken and in inputting into policy, not taking part in the decision making process itself."[17]

  In addition to the previously cited arguments, Nigel Griffiths raised the concern over attendance at Committees and "the Clerk scrambling around to secure a quorum for a meeting to quiz top civil servants."[18]

    —  The UKWG believe that the QSC has played an important role in UK arms export scrutiny and that this role should be strengthened with the introduction of a system of prior parliamentary scrutiny.

    December 2001



3   Defence, Foreign Affairs, International Development and Trade and Industry House of Commons Select Committees. Back

4   Reports from the Defence, Foreign Affairs, International Development and Trade and Industry Committees, Strategic Export Controls: Further Report and Parliamentary Prior Scrutiny, 17 July 2000, HC 467. For the February 2000 report, see HC 225, paras 82-85. The trip to Sweden took place in November 1999 and to the US in May 2000. Back

5   Ibid., paragraphs 80-81. Back

6   Reports from the Defence, Foreign Affairs, International Development and Trade and Industry Committees, Strategic Export Controls: Further Report and Parliamentary Prior Scrutiny, Response of the Secretaries of State for Defence, Foreign and Commonwealth Affairs and Trade and Industry, December 2000, Cm 4872. Back

7   HC 212, Qq 26-38. Back

8   Reports from the Defence, Foreign Affairs, International Development and Trade and Industry Committees, Strategic Export Controls: Annual Report for 1999 and Parliamentary Prior Scrutiny, 6 March 2001, HC 212. Back

9   Summary of HC 212, paragraphs 49-72. Back

10   Cm 4872, p 10-11. Back

11   Ibid. Back

12   Hansard 9 July 2001, col 544. Back

13   Reports from the Defence, Foreign Affairs, International Development and Trade and Industry Committees, "Draft Export Control and Non-proliferation Bill" 1 May 2001, Minutes of evidence p 31. Back

14   Summary of HC 212, paragraphs 49-72. Back

15   Reports from the Defence, Foreign Affairs, International Development and Trade and Industry Committees, Strategic Export Controls: Further Report and Parliamentary Prior Scrutiny, 17 July 2000, op . . . cie. Back

16   Reports from the Defence, Foreign Affairs, International Development and Trade and Industry Committees, "Draft Export Control and Non-proliferation Bill" 1 May 2001, Minutes of evidence p 33. Back

17   House of Commons Hansard 8 November 2001, col 243. Back

18   Ibid col 440. Back


 
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