New Clause 2 - Licensed production overseas
Export Control Bill
11:00 am
Mr Nigel Griffiths (Parliamentary Under-Secretary, Department of Trade and Industry; Edinburgh South, Labour)
In short, the Government consider the amendment unnecessary because the Bill already gives us effective powers. It provides for significant control over the practical means by which licensed production arrangements are established and maintained. Such arrangements typically depend on the company in the UK that licenses the manufacture of its products supplying component parts or production technologies to the overseas producer. Where the product is manufactured under licence and has a potential military end use, an export licence will, in most cases, be required before the equipment and technology necessary for the establishment and further operation of the licensed production facility can be supplied.
The Bill provides a new power to control technology transfers, whatever the means involved. That will close a loophole in the export control regime, whereby a licence would not be required to transfer military technology if the transfer took place by fax or e-mail.
Where, in the case of potential military end use, essential components are needed to ensure that licensed production overseas can be maintained, a licence will be required for updating, for building the facility and for supplying the components. We have made it clear in discussions on licensed production overseas that a licence will not be granted for the supply of controlled goods or technologies that are needed for an overseas manufacturing facility where there is a clear risk that the finished products could be used for internal repression or external aggression or where there is an unacceptable risk of diversion to an end user.
The Bill will strengthen and make more comprehensive the UK's capacity to control the supply lines on which licensed production arrangements depend. The important issue is that we are introducing measures to effectively and practically control licensed production overseas. We are likely to be able to hamstring it effectively by refusing licences if there have been substantiated reports of previous diversion or illegal use. I therefore urge the Committee to reject the new clause.