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Strategic Export Controls

The hon. Lady makes a significant point, and I will come to re-exports in a moment. On why we should not include other conventional arms, I offer her the Government's comment. In paragraph 1.7 of their initial response to the public consultation on the review, they said that action was being taken on light weapons"““to ensure that unscrupulous traders cannot pursue deals that concern the UK simply by carrying out the business from another country.””" That is precisely the point that we are both making. An obvious way for unscrupulous traders and business people to avoid UK domestic export controls is simply to carry out the business elsewhere. That argument is as valid for other conventional weapons as it is for small arms and light weapons. That is precisely why there should be full extra territoriality in relation to policy towards brokers. This is the same reason, moreover, why we are concerned about licensed production overseas, why we want to ensure effective end-use monitoring and why we want to tighten up on re-export deals. What is that reason? As I said, it is"““to ensure that unscrupulous traders cannot pursue deals that concern the UK simply by carrying out the business from another country””—" the Government's own words. I welcome and do not wish to diminish the importance of their proposals in relation to small arms. The decision has been welcomed by Amnesty International as a major victory for arms control campaigners. I like to think that our Committee deserves a small bit of credit, as well. However, we need to consider extending those controls to all conventional weapons. On the basis of the evidence that the Committees have received, we have concluded that controls over licensed production overseas are inadequate and need to be extended. We believe that there are advantages in pursuing the third option that the Government proposed in their consultation document, namely that they make export licences for supplies to licensed production facilities or subsidiaries subject to conditions relating to the relevant commercial contracts. For example, permission should be secured before making any onward supplies. Will the Minister tell us when the Government will reach their final conclusions on the options that they identified for controlling licensed production overseas, and will there be an opportunity for comment before the conclusions are finalised? In the past, those of us who argued that this was a major issue have had a response from Government that suggested, ““We understand the point that you are making, but it is all very difficult.”” I see movement here, but I would like to know when we are likely to get some final thoughts from Government and whether there will be an opportunity to pass comment before those thoughts are finalised. One of the concerns about licensed production overseas is the lack of control over ultimate end use. That takes me to end-use monitoring. The Committees have, for a long time, argued that we need appropriate end-use monitoring. In the past, we have recommended that the Government establish a pilot programme of end-use monitoring, focusing on cases in which some degree of risk has been identified. The Government's standard response has been to say that end-use monitoring is no substitute for a rigorous assessment of a proposed export at the time of application. Therefore, it is all about investigating applications on a case-by-case basis. They indicate that that is the key thing and that there is not a lot we can do about end-use monitoring thereafter. Again, I detect some progress. This time last year, I drew attention to the case of Land Rover Defender military vehicles, which were used by Uzbek troops during the Andijan massacre in May 2005. The Committees raised the matter with the Government, who confirmed that Land Rover had sold flatpack civilian Land Rover Defenders to the Turkish company Otokar. Otokar then assembled them and added its own components to produce a military vehicle. We understand that the vehicles were given to Uzbekistan by Turkey and were used against civilians in the Andijan massacre in 2005. The Government informed the Committees at the time that the UK had no power to control the export of civilian specification Land Rovers, which is entirely true. However, in light of the concerns that have been expressed, the Foreign and Commonwealth Office sent us a memo, which is the last memo in our evidence, page 159. It said:"““In respect of Land Rover…in the light of concerns about supplies to Otokar in Turkey, which were later used in Uzbekistan, special arrangements were agreed with Land Rover UK to more closely monitor supplies made by them to Otokar.””" Evidently, the Government accept the importance, in certain circumstances, of end-use controls and, evidently, they have introduced them. It may have been a voluntary arrangement with Land Rover, but the only conceivable reason for persuading Land Rover into a nice arrangement with the Government was that if it exported any more flatpacks to Otokar there would be some dialogue about where what might turn out to be military vehicles would end up. If that is not about end use, or an attempt at end-use control, I do not know what is. Do the Government accept that, in certain circumstances, there is a case for end-use monitoring, not unlike that which we have discovered the Government have been practising, and for which I praise them? I tend to think that the only thing that matters with the arms trade is end use. The only thing that matters when we talk about controlling trade in weapons is who gets the weapons at the end of the day, and what they do with them. End use is all that matters; everything else is an attempt to control that end use. I accept the Government's logic on Otokar and Land Rover. I agree with the Government that we should not ignore end use if it is felt that a UK company is responsible for only the first part of the manufacture of a vehicle in a civilian context. If there are doubts, or if there is evidence to suggest that a UK company might—inadvertently or otherwise—be involved in providing a major component for a military vehicle that might, for example, end up in an embargoed country, the Government should be concerned. I hope that the Minister will confirm that there are circumstances in which end-use monitoring is essential. The hon. Member for Brent, East raised the question of re-exports. The example that springs to mind from the last 12 months arose from media reports that maritime patrol aircraft that had been exported from the UK to India were to be sold by the Indian Government to Burma. There was a lot of media coverage of that and right hon. and hon. Members may recall the case. We suggested to the then Foreign Secretary, my right hon. Friend the Member for Derby, South (Margaret Beckett), that the export licence for sending the aircraft to India should require a restriction on resale. I shall come to the general argument about re-exports later, but we made that point in light of the fact that the Indian Government were said to be planning to re-export to Burma. In her evidence to the Committee, the Secretary of State responded to question 232 by saying:"““With the benefit of hindsight I suppose one could say it might have been desirable””." I think, with the benefit of hindsight, that it was desirable. We all learn from experience, so I suggest, and the Committees agree, that it would be desirable for a standard requirement of licensing whereby export contracts for goods on the military list contain a clause to prevent re-export to any destination that is subject to a UN or EU embargo, and for all export contracts to make provision to allow for end-use inspections. I would be grateful if the Minister could advise right hon. and hon. Members what conclusions the Government have reached on those recommendations. There is not much point having laws if they are not enforced so the question of whether it is worth while breaking the law and paying the fine in the UK environment arises. Penalties for breaching export controls in the UK seem to be rather modest compared with other countries. We received an example in a written submission from the UK Working Group On Arms and, as far as I know, no one has challenged the facts of the case. In the US, for example, the ITT Corporation was convicted and fined $100 million for illegally sending classified night vision technology that is used in military operations to China and Singapore and setting up a front company to escape detection. I repeat: that company was fined $100 million. By contrast, last year, a UK company, Avocado Research Chemicals Ltd, was found—despite its attractive name—to have unlawfully exported two controlled chemicals. I shall not attempt to pronounce the name of the first of those, but it is a possible precursor to VX gas; the other was hafnium, which can be used in the production of nuclear fuel rods. They were exported to a broker in Egypt, which is not a signatory to the chemical weapons convention, yet the company was fined only £600 plus £100 costs. It is not only members of our Committees who think that there might be companies out there that think that it is okay or more economical to break the rules and pay the fine. When EGAD gave evidence a week ago, it was asked about the contrast in the penalties between the US and the UK. EGAD replied that"““from a company's perspective…non-compliance with the UK system can make economic sense but non-compliance with the US system never makes economic sense””." I put it to the Minister that that is an indictment of the UK's enforcement regime. It is not a criticism of those who seek to enforce the law but of the nature of the penalties that are handed out. I would appreciate it if the Minister commented on the issue. Criterion 8—sustainable development—is close to the Minister's heart but I shall make only a brief point on it to allow other Members to contribute. In response to the Committees' recommendation that the criterion 8 methodology—how precisely the Government seek compliance with it—should be published, the Government said that they would consider publishing the final version following a revision of the incomplete or preliminary version that we were given. The NGOs have raised the matter since that. Has the review of the criterion 8 methodology been completed and will the Department for International Development publish it? The Minister gave evidence about the criterion 8 methodology to the Committees and we welcomed its direction. However, to the best of my knowledge, we have not yet received the final version. My final point is on cluster munitions. I do not want to require the right hon. Member for Tonbridge and Malling (Sir John Stanley) to contribute, but he showed an enormous and important interest in the issues of cluster munitions and extra-territoriality when the Committee considered them. The issue was raised during the debate last year, not least by the right hon. Gentleman, and by the Committee subsequently in questions to Ministers in light of the ongoing Oslo process. The report congratulates the Government on their support for a ban on so-called dumb cluster bombs and on their commitment to withdraw the UK stocks with immediate effect. The Government have said that they wish to retain so-called smart cluster munitions, but the Committees have argued that that would be justifiable only if the Government could demonstrate that there was no operational alternative. I do not want to go into the details of which weapons I am talking about, but are the Government sticking to their position that, as of today, no acceptable operational alternative can be found to the smart cluster bombs that they have hitherto insisted on retaining? The issue is important not only because cluster munitions have caused enormous damage to men, women and children all over the planet, but because progress on an international ban on cluster munitions under the Oslo process is urgent. In May, which is very close, a treaty of some kind will be signed in Dublin. I welcome the Government's support for the Oslo process but—I am speaking personally—I am concerned that they seem to be pushing for exemptions that could weaken the treaty. I hope that I am wrong, and I hope that the Minister will tell me that the Government will not seek limitations in the treaty that will weaken it or create loopholes.