Export Control (Amendment) (EU Exit) Regulations 2020

Lord Grimstone of Boscobel Excerpts

Wednesday 2nd December 2020 Grand Committee

Moved by

[Lord Grimstone of Boscobel]

That the Grand Committee do consider the Export Control (Amendment) (EU Exit) Regulations 2020.

Relevant document: 32nd Report from the Joint Committee on Statutory Instruments (special attention drawn to the instrument)

[The Minister of State, Department for Business, Energy and Industrial Strategy and Department for International Trade (Lord Grimstone of Boscobel) (Con)]

My Lords, I am pleased to be able to open this debate. These regulations, which were laid before the House on 15 October, are necessary to ensure a functioning export control regime at the end of the transition period on 31 December this year. Their aim is to complete the process of transposing the existing system, which is reliant on European Union law, into purely UK law. At the same time, they implement certain EU regulations in Northern Ireland to the extent required by the Northern Ireland protocol. They do not make any change in export control policy.

As noble Lords know, the European Union (Withdrawal) Act 2018 enables a functioning statute book at the end of the transition period by providing Ministers with the tools to deal with deficiencies in domestic law arising because of our exit from the European Union. Noble Lords with good memories will remember that this House has already debated and approved legislation to ensure the continued functioning of retained EU law in the UK in respect of export controls. The Trade etc. in Dual-Use Items and Firearms etc. (Amendment) (EU Exit) Regulations 2019 were debated here on 26 March 2019 and the Trade etc. in Dual-Use Items and Firearms etc. (Amendment) (EU Exit) (No. 2) Regulations 2019 were debated here on 8 May 2019.

These new regulations are necessary because under the Northern Ireland protocol, which forms part of the withdrawal agreement, the EU regulations and directives relating to export control of dual-use items, civilian firearms and goods usable for capital punishment or torture will continue to apply directly to and in Northern Ireland. The provisions of the EU directive on the intra-community transfer of defence-related products will also continue to apply to the movement of military goods between Northern Ireland and the EU. Therefore, these regulations amend provisions of retained EU law to accommodate the Northern Ireland protocol.

Let me explain in more detail how this will work. Beginning at 11 pm on 31 December 2020, the export control rules applying in Great Britain will be derived solely from domestic law, which will include retained EU law. In contrast, the export control rules applying in Northern Ireland will continue to be derived from EU law as required by the protocol on Ireland/Northern Ireland in the European Union withdrawal agreement. My department will continue to be the licensing authority for strategic exports from the whole of the United Kingdom, but items exported from Northern Ireland will do so technically under a licence issued under European Union regulations.

To make this work these regulations, the Export Control (Amendment) (EU Exit) Regulations 2020, amend existing legislation. First, they amend the Export Control Order 2008, which has been the centrepiece of domestic export control legislation since April 2009. Next, they amend two instruments, the Export Control (Amendment) (EU Exit) Regulations 2019 and the Trade etc. in Dual-Use items and Firearms etc. (Amendment) (EU Exit) Regulations 2019, which were made last year in preparation for EU exit. In addition, they amend the Trade in Torture etc. Goods (Amendment) (EU Exit) Regulations 2020. These regulations were debated and approved by both Houses but have not yet been made. It is necessary to amend them to remove a dependency on the now non-existent Customs Tariff (Establishment) (EU Exit) Regulations 2019.

Let me be clear: these regulations do no more than is necessary to ensure the continued functioning of export control law, and therefore the continued effective operation of our export control system, in both Great Britain and Northern Ireland. Without them, our ability to control the export of these goods would be undermined. This legislation will enable the Secretary of State to continue to control exports from all parts of the United Kingdom of dual-use items, firearms and goods that could be used for capital punishment, torture or other cruel, inhumane or degrading treatment or punishment.

The Government believe that the procedures for assessing licence applications and our decision-making processes are robust, and will remain so following the end of the transition period. The eight criteria used to assess export licence applications, as set out in the consolidated criteria, will remain the same. The Foreign, Commonwealth and Development Office and the Ministry of Defence will continue to provide my department with advice and analysis of the relevant foreign, defence and international development policy aspects of each licence application. A licence would not be granted if to do so would be inconsistent with any of the criteria. My department will also continue to provide detailed advice and guidance about export controls and the end of the transition period in order to support legitimate exporters.

I take this opportunity to remind the Committee that these regulations are solely about preparing for the end of transition and ensuring that we have a functioning statute book after the end of the year. These amendments must happen, and Parliament needs to ensure that these controls remain in place. Negotiations about the future relationship between the United Kingdom and the European Union or the wider world are of course a separate matter, and I hope I may say to noble Lords that they play no part in this debate today. I hope that the House will work in the interests of the nation to ensure the passage of this legislation, which is essential to ensuring that we are prepared for the end of transition and continue to control the trade in strategic exports.

This legislation is necessary to ensure that we are prepared for the end of transition and continue to have a fully functioning export control regime on 31 December this year. I commend the Motion to the Committee and I beg to move.

--- Later in debate ---

[Lord Grimstone of Boscobel (Con)]

My Lords, I thank all noble Lords for their contributions. It is always a pleasure to respond to these debates when noble Lords speak with the expertise displayed today. I thank my noble friend Lady McIntosh of Pickering for drawing our attention particularly to the comments made by the Joint Committee on Statutory Instruments. I also thank the noble Lord, Lord Bassam, in this regard. I say without reservation that it was regrettable that a situation arose in which this will have to be corrected in due course.

As we have heard, at its meeting on 25 November, the JCSI scrutinised the instrument in accordance with Standing Orders, and it was, rightly and properly, agreed that the special attention of both Houses should be drawn to this instrument on two grounds. These are that the instrument in one respect is defectively drafted and makes unusual or unexpected use of the enabling powers in another. Of course, for the former point, I apologise unreservedly.

Let me go into more detail about the drafting error, its impact and what the Government intend to do about it. It is a drafting error in new Article 42N(2) of the Export Control Order 2008. The purpose of that new article is to re-enact in relation to transfers from Northern Ireland an existing exception that allows the transfer of software or technology for WMD purposes from the United Kingdom by non-electronic means if: the final destination of the software or technology is the customs territory of the European Union; or processing or working is to be performed on the software or technology in the customs territory of the European Union—in which case the law of the destination member state will be responsible for the control of any subsequent transfer.

The problem is that re-enactment is necessary because the existing exception, which applies in relation to the United Kingdom, is to be removed at the end of the transition period. The error was the insertion of the incorrect conjunction in new Article 42N(2)—an “and” was inserted instead of an “or” between sub-paragraphs (a) and (b). This makes the exception less permissive in relation to transfer from Northern Ireland after the transition period than the existing exception. Nothing is weakened by this error; indeed, the situation is strengthened for this particular category of software that might be used for weapons of mass destruction.

The department thought about this carefully—I have discussed it with officials—and does not consider the error to have sufficient impact to warrant the withdrawal, correction, and re-laying of the draft regulations. That is because it could not have been done in time for the regulations to be effective by the end of this year. I think all noble Lords want to avoid a gap between the existing and future systems. The department has assessed very carefully the consequences of that, and I reassure my noble friend that we believe there is a very low likelihood that a person would wish in early 2021 to transfer software or technology from Northern Ireland to the customs territory of the European Union by non-electronic means despite awareness that that software is, or may be intended, in entirety or in part, for WMD purposes.

I hope that if noble Lords take a step back from the regrettableness of the error, they will realise that the chances of that happening early in 2021 are very low. We undertake—I do so unreservedly—to correct this error in early 2021, when we will be making routine amendments to the Export Control Order 2008. The noble Lord, Lord Bassam, talked about urgency and the importance of there being no gap. I am sure that noble Lords will monitor this situation very carefully to make sure that we live up to our undertaking to correct it early in 2021. Again, I apologise to noble Lords and the House that the error arose. Regrettably, these things sometimes happen, and we took the view that the lesser of the two evils was to continue in this way with this very small error so as to avoid a gap, and to correct that very small error early in 2021.

The second point raised by my noble friend and drawn attention to by the noble Lord, Lord Purvis, was what was described by the JCSI as the

“unusual or unexpected use of enabling powers.”

Part 5 of the draft regulations contains amendments to an instrument that has not been made: the draft Trade in Torture etc. Goods (Amendment) (EU Exit) Regulations. These regulations have been debated in the House; they were ready to be laid but they have not yet been laid, so they have been through the normal scrutiny processes.

Our intention is for the unmade instrument to be made the same day, so that instrument will be made before this instrument is made, which will mean it will come into effect before these regulations come into effect. The making of the instruments in this sequence will allow the draft regulations to correct the deficient commencement regulation in the Trade in Torture etc. Goods (Amendment) (EU Exit) Regulations before it comes into force.

This was not an error; it was done deliberately, but it came about because those regulations were approved by Parliament in April 2019—noble Lords will know how long ago that seems in the history of negotiations with the European Union—before ratification of the agreement on the withdrawal of the United Kingdom from the European Union. I assure noble Lords that there are precedents for a draft instrument requiring affirmative approval to correct a deficient commencement clause in an earlier draft instrument that has been approved by Parliament but not made by making both instruments on the same day and in sequence.

I humbly submit that Part 5 of the draft regulations is appropriate considering the precedent and, more importantly, the additional parliamentary time that would be required if the Trade in Torture etc. Goods (Amendment) (EU Exit) Regulations had to be relaid following, I stress, technical but not substantive amendment and debated again in their entirety by each House of Parliament. I am the first to admit that this is a messy situation. It would have been far better if it had not arisen, but we believe that the path we are taking is the best way to correct it.

The noble Lord, Lord Purvis of Tweed, raised the important question of dual use. I absolutely agree with him on this. He made the comment that the underlying importance of the regulations is to protect excesses of human rights abuse. I am sure that every noble Lord would agree with his sentiments on that matter.

We are right that, at the moment, on 1 January the same laws will apply in Northern Ireland and GB, but there is of course a theoretical risk that divergence will occur. I stress that this is how it will operate: there will have to be close co-operation between the European Union and the United Kingdom on this matter. It would be far preferable if there was no divergence, but because the matters to which these regulations obtain often come about due to wider considerations in the United Nations context, or others, the risk of divergence is low. However, we will do all we can to ensure that divergence does not occur between these two sets of regulations. The protocol is, of course, subject to the continued consent of the people of Northern Ireland, who must approve its continued application every four years.

I will quickly refer to the arguments that the noble Lord, Lord Bhatia, made. I assure him that promoting trade is an important feature of our new free trade agreements.

The noble Lord, Lord Bassam, asked about intercept and cybersurveillance equipment. All cyber, cryptographic and intercept exports are subject to the same thorough risk assessment against the consolidated criteria as other controlled exports.

I appreciate that I have not answered a couple of the detailed points raised by the noble Lords, Lord Bassam and Lord Purvis. I commit to answering those by letter as soon as I possibly can. On that basis, I hope that these matters find favour with the Committee.

Motion agreed.