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Session 2001- 02
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Standing Committee Debates
Export Control Bill

Export Control Bill

Standing Committee B

Tuesday 16 October 2001

(Morning)

[Mr. Joe Benton in the Chair]

Export Control

10.30 am

The Parliamentary Under-Secretary of State for Trade and Industry (Nigel Griffiths): On a point of order, Mr. Benton. I should like to make a short statement to the Committee.First, Mr. Benton, I welcome you to the Chair. I also welcome the hon. Member for Salisbury (Mr. Key) to the Committee. The hon. Member for South-West Hertfordshire (Mr. Page) played a constructive part in our deliberations of this important Bill, as have all hon. Members, and I know that the hon. Member for Salisbury, too, will make a valuable contribution to our debates.

This vital Bill has taken on added significance in the light of recent tragic events in America. Indeed, combating terrorism is one of the purposes for which we impose export controls, a fact that is made explicit in the schedule to the Bill. The other core aims of the Bill are as follows. First, it makes provision for greater democratic accountability by setting out in legislation the purposes for which export controls may be imposed, and by providing parliamentary scrutiny of secondary legislation made under the Bill. Secondly, it increases transparency by legally requiring Ministers to publish an annual report on export controls. Thirdly, it introduces powers to create a new licensing regime for arms trafficking and brokering, and to control the provision of technical assistance to weapons of mass destruction or related missile programmes. In summary, it modernises legislation dating back to 1939, and gives us an arms control regime fit for the 21st century and the challenges that we now face.

I also draw the Committee's attention to the fact that I shall be answering a written parliamentary question on the Bill today. In my reply, I discuss the dummy orders that the Department of Trade and Industry published earlier this month. The DTI has received numerous representations from the Quadripartite Committee, industry and non-governmental organisations, all seeking an opportunity to comment on secondary legislation to be made under the Bill.

Over the summer, I have been conscious that it is only right and proper that Parliament should be the first to see the draft dummy orders. We will need to discuss implementation of changes with all interested parties, especially those who will be most affected by those changes—preferably in the spring, at or near the time of Royal Assent. Although debates on primary legislation are an excellent forum for discussion of the Bill and of Government decisions on matters of principle, that is not the logical way to discuss the detail of secondary legislation.

For all those reasons, I am delighted to announce that we intend to hold a full public consultation on drafts of the orders that will be made following enactment of the Bill. That public consultation will give all interested parties an opportunity to comment on the details of the proposed secondary legislation. I know that the Committee will agree that providing an opportunity for the secondary legislation to be scrutinised in detail by public consultation will be of benefit to all, including Members of the House.

I shall ensure that copies of the written question and my reply are made available to the Committee by placing them on the Table as soon as possible.

Mr. Robert Key (Salisbury): Further to that point of order, Mr. Benton. First, may I say what an unexpected pleasure it is to serve once again under your chairmanship. I very much look forward to it, and to my new role as Opposition spokesman. You will not be surprised to hear that I have had to do quite a lot of homework. I also thank the Minister for his courteous welcome. I am sure that we shall find our deliberations constructive. I am delighted to have received copies of the dummy orders, and I thank the Minister for writing to me at the end of last week.

Industry has missed a trick. Companies seem to think that the negative and affirmative procedures under which the secondary legislation will be considered in detail will be a grand opportunity for debate in the House. Of course it will not be, which is why I warmly welcome the consultation period announced by the Minister. Industry will need to engage in that consultation, because although it accepts the provisions, some parts, such as the machine tool industry, regard them as merely a tidying-up operation. However, there are still fundamental issues to be debated and they are covered in some of the important and, indeed, long and complex statutory instruments before us.

I got a surprise when, during my homework, I went through the Quadripartite Committee report of 1 May on the draft Export Control and Non-Proliferation Bill. On 25 April, the Chairman of the Committee queried why the Government had chosen the negative procedure, as opposed to the affirmative one that is used in so much of the present Bill. The then Secretary of State for Trade and Industry said:

    ``My own view is that provided there is the opportunity for Parliament to deal with these matters then there will be an opportunity if the House feels strongly about a matter then certainly in my experience, whether it is negative or affirmative, then the way can be found for the matter to be dealt with. That is the way in practice that these things happen.''

Oh, I wish that were true. Parliamentarians know—I fear that British industry does not—that debates on affirmative and negative procedures are very short and not substantive. The consultation period will therefore be vital for all those involved in export industries to make clear their position on the complex matters involved.

That said, I am grateful to the Minister for his courtesy and I look forward to proceeding constructively on the Bill.

Dr. Jenny Tonge (Richmond Park): I add my welcome to the secondary legislation. I thought that it would be dumped on us and that we would have to read, learn and inwardly digest it in 24 hours. The consultation period is welcome and we thank the Minister for it.

I also welcome the continuation of the Committee's proceedings. It is remarkable that we are continuing and that nothing has changed in the light of present circumstances.

For many years during my parliamentary career I have wanted arms control in particular to be tightened. It is worth reflecting on the fact that the terrorists actions of 11 September were carried out with the aid of Stanley knives, not guns. That raises a point that the hon. Member for Aldershot (Mr. Howarth) is always making. We must bear that in mind during our deliberations. I welcome the resumption of the Committee's proceedings and I hope that all goes well.

Clause 2

Purposes of orders under section 1(1) or 2(1)

Mr. Key: I beg to move amendment No. 48, in page 2, line 21, after second `transfer', insert `other than within a company or group'.

Under the current legislation, only the physical export of defence equipment is regulated. Controls on the transfer of dual-use technology were introduced in September 2000 when the revised European Community dual-use item regulation came into force. It is reasonable that the Government should propose to close the loophole in the Import, Export and Customs Powers (Defence) Act 1939. However, controls on the transfer of technology by intangible means need to be clearly defined to avoid damaging the competitiveness of the UK defence industry.

The Bill takes little or no account of the globalisation of the defence industry or the increasingly multinational character of defence companies. It is important to recognise that defence manufacturers do not oppose the idea of the Bill covering electronic communications; it is an anomaly that they have not been covered. However, they are concerned about how the provisions will work in practice.

The reality of the defence industry has not been fully recognised. For example, fast and efficient access to and exchange of information is essential for multinational companies and for any collaborative programmes. I recall—it seems like yesterday—the scenes on the doorsteps of various chancelleries and Prime Ministers' residencies, when the Government tried to persuade the German and French Governments to move towards a more together defence industry for Europe. All sorts of mergers were proposed and sounded out, but various companies blasted them out of the water and they did not get as far as some people might have wished. If those companies had got together and formed one company, they would still have been caught by the Bill, as existing companies might if, for example, a United Kingdom-based engineer in a UK company wanted to make a telephone call to another engineer on a collaborative project in another country—a friendly ally. Would that call require an export licence or could it be covered in some way?

In my local pub in Salisbury over the weekend I happened to meet a person who worked for QinetiQ, the privatised part of the Defence Evaluation and Research Agency. He recalled that things were easy for him and his colleagues when they were civil servants at DERA; they would not have thought for a moment about whether an export licence was needed to make a telephone call to Lockheed Martin, Airbus or anyone else. Now that they are in the private sector, they have to think all the time about what is on their computers and whether they should be in rooms for meetings. He said, ``We didn't realise that the private sector had to behave like that.''

Everyone now has to tackle that cultural change. My amendment simply attempts to clarify what the Government mean. We want to know whether the Government really intend that someone in a company or group on one project could find himself in trouble if he did not have an export licence every time he sent an e-mail from one part of the group or joint project to another. That cannot be the Government's intention, but that is what the Bill says, as I and industry read it. The Government cannot intend to impose such strict regulations and bureaucratic controls on UK companies that our manufacturing industry will become known throughout the world as an especially difficult partner. I hope that the Minister will allay those fears.

It is far more sensible to allow the free flow of information within companies, and to require export licences for information that will go outside a company, group of companies or a collaborative project sanctioned by Governments. That is the purpose of the amendment. It does not seek to exempt swathes of British industry from reasonable surveillance or permissions, but to ensure that the burden placed on them does not make them hopelessly uncompetitive. That would not be to the advantage of anyone.

 
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Prepared 16 October 2001