Select Committee on European Communities Second Report


5.  EXPORT CONTROL FOR DUAL USE GOODS (8888/98)

Letter from Lord Tordoff, Chairman of the Committee, to Michael Wills Esq MP, Parliamentary Under-Secretary of State, Department of Trade and Industry

  At its meeting on 19 January, Sub-Committee A (Economic and Financial Affairs, Trade and External Relations) considered this document with the help of your predecessor's Explanatory Memorandum of 10 December.

  This Memorandum drew attention (in paragraph 13) to a potential detriment of the move from unanimity to qualified majority voting. We should be glad to know what effect the Government believes the proposal would have on the ability of the United Kingdom to protect its foreign and security interests.

  In relation to Article 8 of the proposal, we are surprised that no reference is made to the EU Code of Conduct on Arms Exports, even though that Code appears to apply to certain categories of dual use goods. Does the Government consider that the regulation should expressly refer to the Code?

  We are holding this document under scrutiny awaiting your reply to these questions, and a copy of the Regulatory Impact Assessment promised by your predecessor.

  When you write, we should also be grateful if you could explain why this document, which is dated 25 May 1998, has only now been submitted for scrutiny. We also note that it refers to a report by the Commission on the application of the present regime. We take it that this will be deposited with an Explanatory Memorandum in the normal way.

19 January 1999

Letter from Kim Howells MP, Parliamentary Under-Secretary of State for Competition and Consumer Affairs, Department of Trade and Industry, to Lord Tordoff, Chairman of the Committee

  I refer to your letter of 19 January concerning the Commission proposals for a new Regulation on the export of dual-use goods (8888/98) submitted with an Explanatory Memorandum on 10 December.

  Paragraph 13 of the Memorandum of 10 December deals with the Commission's proposal to introduce a Community general authorisation (Licence). Any changes to this licence, under the Commission's proposals, would be subject to qualified majority voting (QMV). Therefore, the UK could be outvoted on future proposals to change the coverage of this licence even if the changes would be contrary to its national or foreign policy commitments or obligations. My officials, in consultation with officials in FCO and other Departments, are currently considering ways to safeguard our essential national interests with respect to this and other aspects of the Commission's proposals.

  The Commission's proposals were produced prior to the adoption of the EU Code of Conduct on Arms Exports on 8 June 1998. This explains why there is no reference to the Code in Article 8, which identifies the various criteria Member States should take into account before deciding on whether or not to grant a licence. My officials are in discussions with officials from other Member States and the Commission on its proposals and have already recommended that reference is made to the EU Code in Article 8.

  A supplementary Explanatory Memorandum together with the Regulatory Impact Assessment will be submitted by my officials as soon as they receive responses from industry associations on their request for possible costs the Commission's proposals will have on industry.

  It is regretted that neither the Commission's proposals for a new Regulation (8888/98) nor the Commissions report on the operation of the current Regulation (8889/98) was submitted for scrutiny earlier. This omission resulted from the fact that, although transmitted by the Commission to the Council Secretariat the documents were not sent to national capitals in the usual way under cover of a Council Communication.

  The Official Report by the Commission on the application of the current report will be deposited shortly together with an Explanatory Memorandum in the normal way.

4 February 1999

Letter from Lord Tordoff, Chairman of the Committee, to Kim Howells Esq MP, Parliamentary Under-Secretary of State for Competition and Consumer Affairs, Department of Trade and Industry

  Thank you for your letter of 4 February, replying to mine of 19 January.

  When Sub-Committee A considered your letter, it noted that the question of the proposed change of legal base had also been raised by the House of Commons European Scrutiny Committee. We have since received a copy of your letter of 27 April to the Chairman of the House of Commons Committee responding on that point. We also have your Supplementary Explanatory Memorandum of the same date covering the regulatory impact assessment. We remain concerned about the likely effects of the change of legal base on the United Kingdom's ability to protect its foreign and security interests. But we do not intend to press this point further, and we have now cleared both documents.

  However, we should be grateful for your views on another aspect of the proposal. We understand the academic community has expressed concern that the provisions on the export of intangible capital would catch exchanges of information on research matters. How is it proposed to deal with this problem?

17 June 1999

Letter from Kim Howells MP, Parliamentary Under-Secretary of State for Competition and Consumer Affairs, Department of Trade and Industry, to Lord Tordoff, Chairman of the Committee

  Thank you for your letter of 17 June on export controls for dual-use goods. You raise the question of the proposed extension of the EC Dual-Use Goods Regulation to the transfer of technology by intangible means and the concerns of the academic community about the exchange of information on research matters.

  You may be aware that the current EC Regulation on Dual-Use Goods (No 3381/94) already imposes an export control requirement on the export of various categories of technology for the development, production or use of goods which are themselves subject to control. However, at present this applies only where the technology is exported in tangible form, for example on paper or computer disk. The Commission's proposal for a revised dual-use Regulation would provide that such technology required an export authorisation if exported by electronic means (eg fax, email, or telephone). The same general principles determining whether or not an authorisation is required would apply to electronic transfers, as apply to exports in physical form.

  Tangible transfers of technology in the public domain and basic scientific research are, under the current Regulation, not normally subject to export control (the exception is that transfers of public domain technology or basic scientific research may be caught by the end-use control related to weapons of mass destruction) and under the Commission's proposal for a revised Regulation, these exclusions would apply equally to electronic transfers. Many academic exchanges of information—to the extent that they related to information that would otherwise be subject to export control—would be likely to be excluded from export control as they would either be considered to be in the public domain, which is defined in both the present Regulation and the Commission proposal as "`technology' or `software' which has been made available without restrictions upon its further dissemination (copyright restrictions do not remove `technology' or `software' from being `in the public domain')" or would constitute basic scientific research, which is defined as "experimental or theoretical work undertaken principally to acquire new knowledge of the fundamental principles or phenomena or observable facts, not primarily directed towards a specific practical aim or objective".

  So, to sum up, under the Commission's proposal for a revised Regulation, there would be no difference in the types of technology subject to export control from the present position—it would simply apply to electronic as well as physical transfers in future. And much academic exchange of information should continue to be excluded by virtue of its falling within the exclusions for information in the public domain and basic scientific research.

8 July 1999

Letter from Lord Tordoff, Chairman of the Committee, to Dr Kim Howells MP, Parliamentary Under-Secretary of State for Competition and Consumer Affairs, Department of Trade and Industry

  Thank you for your letter of 8 July, in reply to mine of 17 June. Sub-Committee A considered it on 20 July and asked me to express its appreciation of your prompt and helpful reply to its query.

  It still has concerns over the issue of intangible exports in relation to international collaboration between academic researchers studying, for example, in the fields of chemical or biological warfare. However, it considers that the universities should fight their own battles on this issue; a copy of your letter will be sent to the Committee of Vice Chancellors and Principals and to the research councils.

23 July 1999


 
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