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Arms Export Controls

It is a pleasure to be involved in this important debate. We are good at making weapons and weapons systems in the UK, not least because we have a thriving aviation industry with decades of experience in the field. We are also good at producing the IT to go with those weapons and weapons systems. Some of the finest companies in the field are based in the United Kingdom. It is no surprise that there is an enormous temptation and attraction for the UK to export weapons, which is unquestionably why this debate is so important. Arms export controls are thus vital for ensuring that we have a transparent arms trade and that corruption and bribery are stamped out. Every effort should be made to ensure that arms are not supplied to terrorist groups or misused by countries with poor human rights records. When introducing the debate, the hon. Member for Kingswood (Roger Berry) covered those issues in extensive detail, and the arguments do not need to be repeated. The Committee has established a good rapport with the Ministry of Defence and lobby groups in order to work for the best solutions to these problems, and I congratulate it on its body of work so far. I would like to draw the Minister's attention to a number of issues raised in the report on which I hope he will be able to provide an update—again, some of those matters have been raised already, so I do not need to discuss them in great detail. The hon. Member for Kingswood mentioned man-portable air defence systems—MANPADS. Could the issue of the transporters of such category B weapons relate to some sort of register of arms brokers and traders more cohesively? The Minister also needs to address the open general licence issue, and enforcement and punishment issues are also relevant. How can we monitor the resale of goods to prevent weaponry from ending up being used in undesirable conflicts abroad, as has happened in Burma? I hope that the Minister will respond to the points already made, but let me add a few of my own. We are approaching the proposed date for the introduction of the final tranche of secondary legislation under the Export Control Act 2002, which will extend controls on light weapons. Will the Minister update us on the effectiveness and progress of that legislation so far, especially in light of how British-made weaponry often still ends up in the wrong hands? I raised that concern in an intervention, because is easy to see where an aircraft ends up, but it is not so easy to see where light weaponry ends up. If the Minister is so minded, he may admit that that the tracking of light weapons and smaller weapons products is impossible. However, the Government might have come up with creative solutions to that problem. One of the hardest aspects of this whole issue is tracking small-scale weaponry and, indeed, IT systems, which are easy to move under the radar and difficult to find when they fall into the wrong hands. The Committee has suggested previously that""the roles of broker and transporter can be tightly linked, with the dividing line between them difficult to draw"." That is right. As a consequence, there should be an extension of the roles covered extraterritorially in category B to include transporters of those items. That might go some way towards resolving the issue, so I would welcome the Minister's views on that. The Government's previous response to the report did not show a commitment to extending controls to transporters of category B goods. Will the Minister provide an update on that, or indicate whether there has been further consideration of the issue? Have the Government considered extending arms controls over the transporters of category B goods? I recognise that there is an economic implication and that the Government will not want to promote the potential loss of some business at this difficult time, but the cost of not taking action far exceeds the benefit of leaving things as they are due to the destabilising elements of what happens if illegal movements go unchecked. In a similar vein, a register of brokers would also extend arms control extraterritorially. A register of all licensed traders and brokers has long been advocated, and it was discussed at length during the CAEC inquiry sessions. Belgium, France and Sweden, among others, already operate a system of registration that has the clear advantage of better monitoring and transparency. Such a system will not be perfect but, as the hon. Member for Kingswood said, sometimes we have to pass laws notwithstanding the difficulty of enforcement. If the Government are going to be true to their decade-old promise of an ethical international policy, they have to grab this bull by the horns. The Government recognise the advantages of a register: increasing compliance, and raising the awareness of companies and individuals of the controls that they need to satisfy to get a licence, and for what they can get one. That is good. Such a system would also have the advantage that it could be linked to an offence, and that an individual or company could be struck off the register for breaking the rules. Therefore, I would like to ask whether there has been further development of the idea following the Government's response to the report, what the criteria would be for the register, what mechanism there would be for removing offenders and when that would be appropriate, whether the register would be a public document or available only to the Department concerned, and whether a registration fee would be charged and what that would entail. The most controversial of licences to trade in arms—the open general licence—still poses many problems. It is intended to apply to low-risk goods and countries that are not problematical, but there are serious concerns that OGLs can easily be exploited. There are questions about what is done once the licence has been obtained. In theory, an individual or company could then simply act as it wanted and exploit the various loopholes, and be caught only if Her Majesty's Revenue and Customs happened to perform a spot check on the right company at the right time. The Government's view seems to be that spot checks and monitoring would eventually bring up any breaches and that the necessary enforcement action would follow. I do not agree. I think that there needs to be more systemic intervention that will require intelligence and close monitoring of this sensitive sector. Data provided by the Export Control Organisation and quoted by the UK working group on arms indicate that OGL registrants constitute the largest and fastest growing body of users of the UK export control machinery. The number of licence holders has risen in just four years from 779 in January 2003 to a staggering 3,114 in December 2007. Therefore, while the number of spot checks and compliance officers may increase, the rise in licence holders minimises their effect. Indeed, as shown in the report, the number of goods seized by HMRC has fallen from 120 in 2000 to 44 in 2006. While most of those licences involve relatively non-sensitive goods being exported to uncontroversial end users, in certain circumstances they can be used to export lethal military and security equipment to sensitive destinations. I do not believe that the 60 per cent. fall in goods apprehended means that there has been a 60 per cent. fall in breaches of compliance, although the Minister may have a more optimistic view. I suspect that many organisations and individuals have found a way to get through. On top of that, the lack of enforcement and penalties linked to breaches was found to be a concern, even if breaches were minor in character. This is really important: to date, the only significant custodial sentence was through the successful prosecution of John Knight of Endeavour Resources Ltd, who was sentenced to four years for trading arms from Iran to Kuwait without a licence. As the first successful enforcement under the controls, it was widely welcomed and considered to be an extremely important step. However, Saferworld has rightly commented that evidence that emerged from the case raised serious concerns about the effectiveness of the licensing and enforcement regime as a whole, and the willingness of the Department for Business, Enterprise and Regulatory Reform to pursue clear breaches of the 2002 Act. To some extent, the situation is understandable. One of the main difficulties for a successful criminal prosecution is that the burden of proof is extremely high, as the prosecutor is required to disprove all possible defences. Civil penalties, on the other hand, would offer an easier alternative with a slightly reduced burden of proof. Will the Minister outline the progress of the Government's endorsement of that recommendation? It may not be perfect, but it would probably broaden the room for manoeuvre to enforce legislation. As has already been pointed out, the Committee contrasted the US and UK systems. Non-compliance with the UK system can actually make economic sense for UK exporters, whereas the harsh penalties in America never make that the case. That suggests that the Government urgently need to look at the case study of another country, not very different from ours, where the system is designed to work better. We have heard about various re-export breaches. I shall not repeat them, but I look forward to hearing what the Minister has to say about them. The infamous case of the maritime patrol aircraft that were sold by the UK to India, and then resold to Burma, is an example of what can happen if we are not careful about re-export conditions. Serious concerns remain about the lack of a re-export clause. By comparison, that is a standard element of all US contracts. If there were a blanket clause rather than a subjective choice based on the recipient country, one country would not be treated differently from another, which would negate claims of possible insult to other states. Additionally, given the long life of many military goods, it is important to note that the stability, administration and character of states can change dramatically over, say, 20 years, but the goods could still be perfectly usable and available for re-exporting. That mitigates strongly in favour of a blanket clause. Have the Government given any further consideration to implementing a single-action clause, as is used by Germany? Such a catch-all clause could give the Government far more flexibility to deal with fast-changing and complex goods. One thing is certain: something has to change. The Government are obligated to respond to the concerns. The European Union's role also remains crucial. The EU code of conduct was adopted as a common position in December 2008, which means that it is legally binding on member states. The code's eight criteria that any arms sale should satisfy include respect for the UK's international commitments, in particular sanctions decreed by the UN and the EU, and other international obligations, and respect for human rights and fundamental freedoms in the country of final destination. However, the licensing of defence exports still remains at the discretion of member states. Will the Government offer a commitment to the code of conduct, which I am sure all parties in this Chamber want? It seems sensible and consistent with applying common criteria across the EU as a whole. I cite a concern that comes from the overall sense that this sector has enormous vested interest in finding ways through. With the best will in the world, hard-pressed companies will seek buyers and will sometimes be tempted not to ask too many questions about what those buyers want to do with the products. We have made some specific points, but the macro issue is that if there is one sector that is open to corruption, it is this one. If one looks at the mechanics, one understands that perfectly honourable UK companies could end up indirectly providing goods to dishonourable clients. That is why these matters are so important. I congratulate the Committee on the insights that its work has provided. The report is exhaustive, precise and well researched. The Committee's work is vital if we are to prevent weaponry from ending up in the wrong hands. To that extent, the Minister is lucky, because this is an action-oriented debate. As far as I can tell, it is not particularly partisan, but concerned with closing loopholes. That is consistent with ensuring that an ethical foreign policy is not just an aspiration, but a fact. I end with a disappointing and saddening statistic. I am told that for every £2,000 spent on arms, £1 is spent on conflict resolution. I predict that, for many reasons that we understand, we will continue to sell weapons of war, but the greatest single export will be the tools of conflict resolution because human beings, being the creatures that they are, will stop buying arms only when they find an easier and less violent way to solve their natural but tragic conflicts.