Examination of witness (Questions 240-259)
WEDNESDAY 25 APRIL
a Member of the House, Secretary of State for Trade and Industry
240. Do you see how that can be strengthened?
(Mr Byers) I think there are a number of ways in which
we can improve our operation in this area. I am very keen that,
for example, we use our posts and our embassies and so on in countries
to look very closely that end user conditions are being satisfied
and are being met. It may be something that we have not done as
well in the past as perhaps we should have done. It may not have
been seen as as much of a priority as I think it should be. There
are particular parts of the world where we do require very strict
end user requirements to be signed up to because of our concerns
and I think in those areas in particular we do need to monitor
very effectively that those end user requirements are being met.
I think that is the way to do it.
241. The number of cases in which this kind
of difficulty arises presumably would be quite small. Would it
not, therefore, be extremely helpful to have prior parliamentary
scrutiny in those small number of cases in order to help the Department
set the right kinds of conditions for the licence?
(Mr Byers) I know that is an argument that is put
forward and in terms of the consideration that the Government
is giving to the proposals of prior parliamentary scrutiny I will
make sure that continues to be one of the issues that we will
bear in mind when we arrive at our conclusion.
242. I think you began your remarks on this
end user issue by saying that in the consultation document it
was not as prominent as you would have wished. I have to say to
you that it has been quite prominent in the evidence we have taken
today. I think there was almost a meeting of minds between the
DMA and the NGOs in certain respects on this issue, which was
quite an interesting experience. I think if we take that evidence
this morning and what you have said that, in fact, clearly there
is more thinking to be done on the whole issue of end use, you
would agree with that?
(Mr Byers) I am very clear about this in terms of
just looking at the Bill and the proposals that are coming from
it. I made very clear when we published the Bill that end use
is something that I would hope through this consultation period
we could have a further debate on. I think there is room for improvement.
There is a very helpful piece of work which has been done by Amnesty
International and Oxfam, Destination Unknown. That is something
that has a number of ideas and that is going to inform our thinking
as well. There is a lot we need to do in this area because we
all understand it is an area where there is potential for abuse
and we have got to be very sensitive to that. We have got to have
effective end use monitoring, otherwise the system falls into
disrepute, and that is not going to help anybody.
Chairman: That is very helpful. Two other
issues flow from it, the brokering and licensed production overseas,
which are also the two other areas which go beyond Scott and raise
serious and important issues. I wonder, Roger, if you want to
take the question on licensed production?
243. Yes. Licensed production goes beyond Scott,
although Lord Scott had an interesting comment or two this afternoon.
It also goes beyond the Government's original thinking on this.
I certainly appreciate, as I am sure the Committee and many others
will, that the Government has sought to address this issue given
earlier representations and Committee reports. My first question
in a sense is the Government does seem now to agree that there
is a case for addressing this issue of licensed production overseas
and I was wondering whether there were any particular examples
that the Government had in mind that had persuaded them that this
was an issue that needed to be addressed in one manner or another?
(Mr Byers) I think it is the principle that needs
to be addressed and I do not have any examples that I would want
to particularly draw to the Committee's attention, although I
have got a feeling that the hon. Member may have. I think we can
probably all recollect some areas where things have not gone as
we would have wished. It is an area that needs to be addressed.
There are effectively two options in the consultation paper as
to how we can address this. We are moving to a situation where
we will have a far more effective regime in place, and I would
welcome the views of the Committee as to whether you feel that
is so. Once again, it is one of those areas where I think experience
shows us that we could be in a potentially embarrassing position
for the United Kingdom, as a country that cares about these issues,
not to have an effective regime on licensed production in place.
We need to use this as an opportunity to do precisely that.
Mr Berry: I am very happy with that,
244. Brokering is the other area. The proposal
is to have a register.
(Mr Byers) Yes.
245. We got intonot semantics, they were
more than semanticsquite a serious issue with the DMA this
morning as to how you define a broker, would an agent of a company
be a broker, and the whole area between brokering and being agents
and so forth. Has the Department given some thought as to how
to define brokering and who a broker would be?
(Mr Byers) We have given a great deal of thought to
it and we need to give more thought because it is not an easy
definition to come up with. The report I got from the evidence
session this morning was that examples were mentioned of people
over the telephone talking and saying perhaps "I know somebody
who may be able to help". It is something we are going to
have to have very clear in the secondary legislation. It is not
going to be easy. I think most of us know what we mean by someone
who brokers a deal in that we know it when we see it. The question
is how, in secondary legislation, we can put that down in a way
which is going to be legally watertight. In a sense you are right,
Chairman, there is a danger that it becomes an exercise in semantics
but actually it is crucial in terms of having an effective regime
to regulate the trafficking and brokering of arms. This is part
of the Bill that I am particularly pleased that we managed to
get in, as also licensed production. This is actually one of the
reasons why the Bill has taken longer to bring forward than perhaps
most of us would have wanted but in some important aspects it
goes way beyond the White Paper. The political view that I took
was we are probably only going to get one chance every ten yearsor
based on experience every 61 years to have a Bill on export
control, so let us try and get licensed production there, let
us try and get trafficking and brokering. That is why it has taken
us longer to be here than perhaps any of us would have wanted
to see. That is by way of explanation. I think you are right,
Chairman, I think we do need to be very clear about how we word
this definition of what a broker is in this context.
246. What about the position of extra-territoriality?
(Mr Byers) I think there are two aspects on trafficking
and brokering where I would very much welcome the views of the
Committee and also those of the public more generally. One is
whether there should be any restrictions in terms of the military
list or whether it should be the whole military list that is covered.
At the moment we are not saying that, we are saying it should
be guns, ammunition, the major parts of the military list but
not the whole military list. I would certainly welcome views on
that. The second aspect is in relation to the extra-territorial
point. As you know, there is a reluctance on behalf of Government
to extend provisions in an extra-territorial way but precedents
have been established to allow this to occur. It is possible for
it to happen. The Government's mind is open on this and we would
be very interested in hearing the views that the Committee and
the wider public have got on that particular aspect.
247. We have the American experience where they
have actually had it in law and I think everybody sees it as having
some kind of deterrent value if nothing else.
(Mr Byers) Yes.
248. We have got the precedents of land mines
(Mr Byers) We have, all coming in in recent years.
The precedent is now there and there is a debate going on about
how we should deal with it within this particular Bill.
249. You referred a minute ago to a definition
of brokering. What is the experience of brokering in this field
elsewhere amongst Member States of the European Union? What comparative
evidence have you sought to obtain from elsewhere within the European
(Mr Byers) My understanding is that we are going to
be pretty much ahead of the game if we set up a system in the
way in which we intend to do it, so we are breaking new ground
a bit in terms of how we define who a broker is in this particular
context. We are on our own a bit because we are moving ahead of
250. Can I ask what benefit to brokers one would
see? It seems to me that you have in a sense to establish a benefit
of registration otherwise the incentive to not register and behave
in a hole in a corner manner would be huge. I just wondered whether
you had given any thought to the benefit that derives from being
registered as a broker?
(Mr Byers) I think what surprised me when we began
discussions about trafficking and brokering, brokering in particular,
was I thought there would be a very hostile reaction from the
industry side itself and we have not had that. The industry has
said it welcomes the possibility of having a system which is seen
to be above board and where everybody knows exactly what is going
on and we have a register of people involved in this particular
activity. I think there is a recognition that there is a great
deal of public concern, which the Government must reflect I think,
on this whole area of brokering and trafficking, that something
had to be done. What we are trying to do in the Bill and through
the consultation is working with the NGOs and working with the
defence industry itself to see if there is a way forward that
everybody is happy to sign up to. Broadly speaking, as I say,
I have been pleasantly surprised that we have not had the objections
and the strong reservations that I thought we might get from the
defence sector itself. I think there is a recognition here that
it is in everybody's interests to have a structure within which
this sort of activity can take place.
251. We did get a rather jarring note this morning
from the representative of Rolls Royce who made the point that
if we make it too difficult for British companies then foreign
companies will be chosen. I think this is the kind of self-serving
pleading that has bedevilled the proper treatment of this issue
for a long time but it nevertheless is a concern that if we break
new ground, if we do things that other people do not do, then
we will get the bleating and the complaining from the defence
industries that they are being disadvantaged internationally.
Is the Government sufficiently bold and robust to withstand these
kinds of special pleadings?
(Mr Byers) I would hope so, although I have to say
I think the industry itself recognises that this will not put
them at a disadvantage if we get it right. You could introduce
a system which would really be to their disadvantage but I think
what we are proposing here, that there is going to be a register
which you have to be on, and licences will need to be applied
for, is one where most defence manufacturers are happy that we
have got the balance about right. It meets the genuine concerns
and legitimate concerns that people have got but does it in a
way which does not mean that British business is put in an anti-competitive
position. That is the balance that we are trying to strike now.
252. Would you go a stage further and say that
given there is always going to be a concern about the anti-competitive
disadvantage at which you might place some of our people, that
that would only exist for as long as there was not international
acceptance of the kinds of proposals that we are talking about
today and it is incumbent upon Government if such a line was to
be taken and implemented in legislation to seek to pursue it amongst
NATO allies and the European Union, or amongst the community that
we see as our natural allies in these matters?
(Mr Byers) I agree with that, that is absolutely right.
One of the things that we have been talking to the Swedish Government
in particular about, who have the Presidency of the European Union
at the moment, is how we can get action on this whole area on
a European wide basis. My own experience is if you wait for everybody
to sign up you could be waiting a long time. It takes a Member
State to be bold and robust enough to take the initiative. I think
the fact that the UK Government has indicated that we are going
down this route has actually strengthened our position enormously.
I know in conversations that I have now been having with the Presidency
in terms of getting action on a European wide basis we are in
a far stronger position to achieve that because we have said that
as far as the UK is concerned, we are going to go down this particular
route. It is getting the balance right. The model that we have
been working on is one which will address the concerns that people
have got but in a way which most legitimate defence businesses
will accept is right and proper.
253. Two remaining issues on brokering, one
which was made very forcefully to us this morning by the NGOs,
and that is whether the process should be extended to the logistics
of arms transfers, to the freight forwarders, the shippers, etc?
Where do you stand on including them in the process?
(Mr Byers) I think there are two possible situations
here. One is when shipping is part of the overall contract in
which case, yes, it can be considered as part of the requirement
for registration and licensing. If, however, there is a sort of
freestanding shipping company that is not party to the contract
itself but is the one who then has the responsibility for delivering
the goods, and I have seen the arguments because I have seen representations
from some of the NGOs, and Saferworld in particular have raised
this point directly with the Department, I am not convinced yet
that we should be identifying the logistical aspect if it is a
freestanding element. I will consider the case but, once again,
I would be genuinely interested in getting the views of the Committee
on that, whether it is going a bit too far to specify someone
who is involved in transport within it. I think there may be difficulties
254. I suppose a vivid illustration of it was
the case of the movement of the airlift from Ukraine to Burkina
Faso which the Foreign Affairs Committee pursued. That was a classic
example. That would not be covered under the proposals for brokering,
that type of transfer would not be covered?
(Mr Byers) I have seen that particular example and
my understanding is it would not be covered by the provisions
as they presently are.
255. It was a particularly blatant example of
the kind of thing one would like to actually make illegal?
(Mr Byers) To be honest, it has been drawn out as
an issue since the consultation was begun whereas, to be frank
with the Committee, at the moment I am not convinced that it is
an issue that we should be addressing, although we can in practice
address it if the Committee has views and, indeed, as we have
heard from NGOs, as part of the consultation it is something we
will have to consider.
256. There is one other aspect, if I may, and
that is the whole issue of enforcement and whether, in fact, this
will require in some way further intercept powers. We are talking
now about oral transfers, we are talking about e-mails, we are
talking about transfers through all the modern IT equipment. Has
the DTI received any advice from any of the law enforcement agencies
in relation to the new proposals on, say, brokering as to the
sufficiency of the existing procedural arrangements to detect
breaches of what will become a breach of the law?
(Mr Byers) In the discussions that we had within Government
about bringing forward these proposals one of the aspects that
clearly we do consider is that of effective enforcement. We are
confident that the measures that we want to introduce are ones
that can be effectively enforced.
257. Would they require any extension on sensitive
issues like intercepts?
(Mr Byers) My understanding is that the provisions
that would be needed for effective enforcement are already in
258. So you do not think there is going to be
a civil liberties issue arising by an extension of such requirements?
(Mr Byers) Not that I can see.
259. Let us deal with two other issues, intangible
transfers and technical assistance. On intangible transfers we
had the academics before us a little earlier on still staying
that the Department had gone some way to meet the original concerns
of the 1998 White Paper, that they had swept the whole of academic
research within the provisions of the Bill, it had gone some way
but still not enough. They would be happy if the concession made
about information that was in the public domain was written into
the Bill in one form or another if they could put the safeguards
of the kind that in a way they feel the Department has met them
on but has not met them in legislative terms. Do you want to go
further on that?
(Mr Byers) I know that they gave evidence earlier
on today and certainly as part of the consultation we would want
to look at that and we would want to look at their own representations
that they have made. This is one of those areas where it is not
a matter of great principle at stake, it is a question of making
sure that we have a Bill which ensures the objectives that we