Arms Exports and Arms Control

Ann McKechin Excerpts

Thursday 21st November 2013 Westminster Hall

[Ann McKechin (Glasgow North) (Lab)]

I am grateful for the opportunity to contribute to this debate as a member of the Committees.

This year’s report is the most extensive and authoritative parliamentary analysis ever conducted from Westminster on our country’s policy and decisions on arms exports. The report reveals in significant detail what has been sold, its value and the countries to which goods are exported. It has rightly gained significant media attention, and I hope that it helps to inform the necessary parliamentary and public debate on how we develop our policies in future.

I acknowledge the skill and considerable efforts of our Chair, the right hon. Member for Tonbridge and Malling (Sir John Stanley), and our Clerk in obtaining such a wealth of information and in ensuring that it has been made available in the public domain. Parliament owes them its gratitude.

I will focus on several issues addressed by the report. First, on a positive note, our Committees have rightly commended both the current Government and the previous Government for their work on the arms trade treaty. The UK Government should be proud of their leading contribution to achieving the first ever international arms treaty on conventional weapons, but it is important to ensure that work on adopting and enforcing the treaty is just as ambitious and comprehensive.

I hope that over the coming year, in anticipation of the treaty’s coming into force by the end of 2014, the UK Government will show their commitment by making a strong interpretive statement on the treaty’s text and incorporate the treaty’s principles as an integral part of our future decisions on arms exports. We should also be offering practical assistance to other countries, particularly those that receive UK aid, so that they can sign, ratify and properly implement the treaty. The UK should also show that in future we expect that only signatories to the treaty should be provided any access to arms fairs here in the United Kingdom or be permitted to enter co-partnership agreements with UK-based defence companies.

The Chair spoke about the export of chemicals to Syria. I share and endorse his concerns about the manner in which the decision was made last year to grant a licence for the export of chemicals at a time when there must have been an ongoing debate within the EU on an export ban. In fact, such an export ban was subsequently announced a couple of months after the original decision to grant the export licence.

Thankfully, the Committees have been advised by the Secretary of State for Business, Innovation and Skills that no goods were exported under the licence, but the manner in which the decision was made, and the allegations about the nature of the end user’s relationship with the Assad regime, is a legitimate matter of public concern. Our Committees have rightly insisted on much more detailed information and on an opportunity to take evidence in public from those concerned.

Although there is no evidence to suggest that the applicant companies did not act in good faith, it cannot be satisfactory, given the nature of the ongoing Syrian conflict, which commenced before the export licence was granted, to believe that exports capable of dual use should continue as normal between the two countries. Parliament needs to have the ability properly to scrutinise such applications, to hold Ministers and officials to account and to put forward any necessary recommendations on future practice.

I trust that the Minister will assure us that full answers will be provided and open access to witnesses will be secured. If, as we have been advised, the chemicals provided were for completely innocent, civilian use, I fail to see why a company’s reputation would be seriously damaged. The argument made about the Freedom of Information Act was totally ridiculous and insulting to the work of the Committees. This is nothing to do with the Freedom of Information Act; this is about the ability to scrutinise what the Government, funded by taxpayers, do on our behalf.

Our report also touches on the decision in May to alter the European Union embargo on the export of arms to the Syrian opposition. I am not convinced that, given the fragmented, chaotic and fast-changing situation in Syria, any arms exports could safely meet the criteria on end use. There is a real risk of weapons falling into the hands of the Syrian Government or extremist opposition groups.

To date, it would appear that the Government have, with the exception of a gift of non-military equipment in July, not granted any export licences. Given the prospect of talks to address the conflict, it would be helpful if the Minister indicated the Government’s thinking on that issue. Will he also confirm whether, to his knowledge, Croatia has carried on supplying arms to rebel forces, as was widely reported earlier this year, since their accession into the European Union in July? If so, what discussions have been held at European Union level about the consequences of such continued supply in the run up to possible negotiations to resolve this ghastly conflict?

There are continued concerns regarding our policy on arms exports to Egypt. Our Committees have again sought reassurance that such exports will not be permitted when there is a clear risk that proposed exports might provoke or prolong regional or internal conflicts or be used to facilitate internal repression. We noted the Government’s response to our report last month, but why was there a gap of over a month between the initial decision to suspend five licences and the suspension of a further 47 licences, with the second decision only being taken after agreement at European Union level? Given the obvious and ongoing risks of further internal conflict, it is difficult to find good reason for such a delay. Is it now the Government’s intention to review the UK’s policy, which currently considers Egypt to be an appropriate destination for arms exports? Given the delicate state of affairs in Egypt, it is important that the UK should have a clear, transparent policy.

I now turn to the challenge presented by the fast-changing nature of the arms sector and the increased reliance on surveillance systems. As the right hon. Member for Tonbridge and Malling said, when we analyse the nature of the exports to many countries, we see that many relate to cryptography.

The Minister will have read the report in The Guardian on Monday about the sale of mass-surveillance technologies by private firms, including many based here in the United Kingdom. Piracy International has the details of more than 338 companies, including 77 based in the UK, offering a total of 97 different technologies, covering a vast spectrum. There are disturbing stories about the hacking of dissidents not only in their own country, but in the UK, where some are currently taking refuge. Some fairly small, relatively unknown companies are now involved in the sector, and given that the equipment is exceptionally portable and that technical specifications can change rapidly, the detection of illegal exports is bound to be difficult.

The power and reach of such equipment is considerable. A Dubai-based company markets a product called Cerebro, a DIY system similar to the Tempora programme run by GCHQ, that has the ability to tap information from fibre-optic cables carrying internet traffic and to analyse texts, mobile calls, billing data, e-mails and social networks in real time. I welcome the announcement this week by the Department for Business, Innovation and Skills to introduce new rules in this area. Will the Minister provide us with information today on how his Department intends to tackle the issue and what discussions have been held at European Union and international level about combating illegal use? It is unacceptable that this growing market currently lacks either effective oversight or accountability. I hope, given the serious potential for harm, that the United Kingdom will, as promised, take a leading role in providing effective regulation and enforcement.

Finally, given the scale of the challenge of scrutinising this fast-changing sector—I refer to the comments of the right hon. Member for Tonbridge and Malling—I am concerned and severely disappointed at the decision taken by the Department for Business, Innovation and Skills in July to roll back on the requirement that exporters report on the volume or value of transactions under open-general and open-individual licences.

Just a year ago, the Secretary of State for Business, Innovation and Skills publicly committed to providing a significant increase in the amount and quality of the information made available to the public. The opening paragraph of his Department’s 2012 paper, entitled “Transparency in Export Licensing: Government Response”, states:

“Transparency is a key theme of the Coalition Government and plays a vital role in enabling the public to hold the Government to account. It is particularly important in a high profile area such as export control—confidence in the workings of the export licensing system needs to be shared by Parliament and by the public. The system should not just be working properly, it should also be seen to do so.”

I completely agree with that statement, and I am astonished that the Government have preferred to take direct steps at short notice to close down debate and scrutiny based on the flimsy claim that it is too burdensome to industry, for which there is no evidence from the industry.

Given that most records are electronic and that the companies involved are relatively sophisticated, such transparency should not present any great problem. Such an excuse just will not wash, given the level of public debate and the need for greater, not less, transparency. I hope that the Minister will take the opportunity today urgently to reconsider that thoroughly bad decision and will commit to providing adequate information. In that way, our Committees can continue properly to do what the public expect, which is to hold Ministers to account. The public have the right to know.

--- Later in debate ---

[Michael Fallon]

I was referring to the two licences issued in January 2012 and, as my right hon. Friend will know, no shipments were actually made under those licences.

Let me now turn to the licences that my right hon. Friend is concerned about—the five licences granted under the previous Government, between 2004 and 2010, before the current conflict in Syria began, for the export of sodium fluoride for the manufacture of toothpaste. Those licences were no longer extant at the time of the revised sanctions, but I do have to say to my right hon. Friend that we have no evidence of any diversion to any different end use.

[Ann McKechin]

The Minister will be aware that his Department has disclosed the end-user recipient in Syria and that a number of years ago there were press reports, in The Scotsman and other papers, that that company was a front company for the Assad regime; it is well known that a number of companies that have operated for a considerable time in Syria are front companies for the Government.

On the specific issue of the end user, given that there were those press reports and that I anticipate the Government would have intelligence about that company, why were the export licences granted?

--- Later in debate ---

[Michael Fallon]

I am happy to write to my right hon. Friend on that, but it is my understanding that the licences are being used for anti-piracy measures, in which we all have an interest. However, if I am wrong about that, and if I can give him further particulars about the use of machine guns in anti-piracy work, I will of course do so.

Finally, on the countries that have been mentioned, let me turn to Israel. A number of Members have asked about the single licence that accounted for nearly £8 billion of cryptographic equipment. The licence was for “equipment employing cryptography” and

“software for equipment employing cryptography”

with a value of £7.7 billion.

The licence was granted in the first quarter of 2013, and it permits the export of equipment and software for building public mobile phone networks in residential areas and for small businesses. Those items are subject to export control because of their encryption—information security—capability. That capability, it must be said, is a standard feature of the mobile phone network. The goods are for purely commercial end use.

Again, we assessed the application against the consolidated and the national criteria. A licence would not have been issued where there was a clear risk that the proposed exports might be used for internal repression or to provoke or prolong internal conflict, or where they could be used aggressively against another state.

I appreciate that the value of the licence appears extremely high and may not represent a realistic goal on the part of the exporter. The exporter has confirmed to us that the value of the licence was based on an expectation of a large number of orders over the two-year validity period of the licence. Given the nature of the goods and the end use, that was not considered to be a particular concern.

Let me turn now to the arms trade treaty, which is a notable achievement; I am grateful to those Members who referred to it as such. It is not an achievement simply of the past year; it has required long and challenging effort, involving work by two successive Governments over seven years. It was a significant achievement for not simply the United Nations, but the United Kingdom—it was an effort that the United Kingdom led.

The treaty will introduce robust, effective and legally binding controls, which will begin to constrict flows of unregulated or illegal weapons. It will require Governments to block transfers of weapons that pose unacceptable risks and to take strong steps to prevent weapons from being diverted into the illegal market. Authorisations of exports will be reported and arms brokering will be regulated. At the same time, the legitimate trade in arms, vital for national defence and security, will be upheld.

For the United Kingdom, the treaty will be relatively straightforward to ratify because we already have a highly developed export control system. The Government hope to complete the ratification in the next few months. We also hope that the treaty will soon achieve the 50 ratifications that it needs to be brought into force. We and our partners are actively lobbying other Governments to encourage them to sign and ratify it as soon as possible. We are providing funding to support states that need to introduce new legislation or regulations to bring their export controls up to the higher standard required by the treaty.

The performance of the Export Control Organisation in the past year is also— albeit on a more local scale—an important achievement to note. Until recently, the ECO worked to two main targets for processing export licence applications: a primary target to turn around 70% of standard licence applications within 20 working days, and a secondary target of completing 95% of those applications within 60 working days.

Year-to-date performance to the end of October on the primary target is 80.2%, which is a further improvement on the 71% achieved in 2012. However, we listened to industry concerns that, although the old secondary target of completing 95% of licence applications within 60 days was being met, that still left a sizeable number—about 850 a year—taking longer than three months to get a decision. In March I therefore announced a new, more ambitious, secondary target of completing 99% of cases within 60 working days, with the aim of further improving the efficiency of the system. Those additional cases, of course, tend to be more difficult and often require additional scrutiny because of their destination, but the performance since July, when the new target came into effect, stands at a very encouraging 98.4%.

Several Members, including the hon. Member for Glasgow North, mentioned transparency. We remain committed to greater openness and transparency in licensing as that provides the means for Committees, the House and the public to hold us to account. At the same time, in generating more information for disclosure, we should not create unnecessary red tape for businesses.

In the most recent initiative, we have sought to increase transparency by requiring exporters to provide us with information about their export and trade activity under certain open licences. While the final preparations were being made for that, it became clear that we had not struck the right balance between the twin objectives of increasing transparency and avoiding unnecessary bureaucratic burdens.

In particular, the Government became concerned that the proposed reporting of each export would put our exporters at a disadvantage in relation to exporters from other countries, notably the United States. Clear evidence emerged that the proposed rules might lead to some of our companies relocating some operations overseas, with negative consequences for British jobs.

[Ann McKechin]

I refer the Minister to the Government’s feedback of July 2012:

“Exporters generally accept the rationale for this initiative and are generally supportive provided that the administrative burden is kept to a minimum and that what they consider to be truly sensitive information is protected.”

The point is the quality, not the volume, of the information, so that people can know accurately what has been sold. Where is the evidence that exporters in the United Kingdom have said at any point that they will take their business elsewhere?

[Michael Fallon]

I am happy to write to the hon. Lady with more evidence to back up what I have said about the fear that some operations might be relocated overseas. She has challenged me on that, and I am happy to write to her in detail.

The Government announced in Parliament on 18 July that we had decided to dispense with some proposals relating to quarterly reporting. As a result, users of open-general and open-individual licences will be required to make reports on their use of those licences annually, rather than quarterly as originally envisaged. They will still have to provide information on the destination country, the type of end user and the number of times the licence has been used for that country and end user type.

Those revised reporting requirements will apply from 1 January 2014, with the first year’s data being published in 2015. All that information is additional to the existing quarterly and annual reports. We are not reducing the overall level of reporting—quite the opposite. We will be publishing considerably more information about the use of open licences than is currently the case.

I think it was my hon. Friend the Member for Beckenham (Bob Stewart) who raised the matter of the register of arms brokers. My right hon. Friend the Secretary of State for Business, Innovation and Skills has decided that now is an appropriate time to look again at the issue of a pre-licensing register of arms brokers. We will therefore be launching a public consultation to help in gathering the necessary evidence to allow the Government to decide whether to introduce such a register. There will, of course, be an emphasis on the relative costs and benefits, alongside the likely effectiveness of such a register. The public consultation is now planned for early next year.

My hon. Friend the Member for Beckenham and, I think, the hon. Member for Llanelli (Nia Griffith), asked about brass-plate companies. The existing legislation would, in certain circumstances, allow enforcement action to be taken against those and their officers, but sufficient evidence is necessary to justify such action. We continue to pursue with other relevant agencies the possibility of using other legislation to discontinue the UK registration of such companies on public interest grounds. I hope that that is helpful. It is a complex issue, which raises difficult questions about the nature of any evidence that may be disclosed in any proceedings. We shall, of course, update the Committees when firm conclusions have been reached.

I was asked by the hon. Member for Edinburgh South about risk profiling. I reassure him that licence applications are reviewed by officials in a number of Departments and agencies. We take account of all the available relevant information. As I have said, we look at the goods, the end user and the risk of diversion. We will of course not grant a licence if that would breach the consolidated criteria. Risk is integral to everything that we do on export licensing.

I was asked about the paragraph 46 ambiguity, and I am anxious not to add to it. I am assured that if there is any confusion, criterion 2 is the policy, but I am happy to write more formally to my right hon. Friend the Member for Tonbridge and Malling on that issue.