[Janet Anderson in the Chair] — Strategic Export Controls

– in Westminster Hall at 12:00 am on 22nd February 2007.

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[Relevant documents: First Joint Report from the Defence, Foreign Affairs, International Development and Trade and Industry Committees, Session 2005-06, HC 873 and the Government's response thereto, Cm 6954; The Minutes of Evidence taken before the Defence, Foreign Affairs, International Development and Trade and Industry Committees on 7(th) December 2006, HC 117-I.]

Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Michael Foster.]

Photo of Roger Berry Roger Berry Labour, Kingswood 2:43 pm, 22nd February 2007

It is a pleasure to introduce the latest report from the Quadripartite Committee on strategic export controls and the Government response. May I begin by saying a few words of thanks? First and foremost, I thank the members of the Quadripartite Committee. As hon. Members know, many years ago the House decided to scrutinise the Government's policy on arms export controls by having a joint Committee comprising the Select Committees on Defence, on Trade and Industry, on International Development and on Foreign Affairs.

Occasionally, Select Committees have difficulty arriving at a consensus, although many Committees do so successfully. However, we can claim that four Select Committees simultaneously have again arrived at a consensus in this report. Therefore, I hope that the Government will take our recommendations and views four times more seriously than perhaps those of some other Select Committees—apart from those represented here today, of course. In all seriousness, that consensus could not have been arrived at without enormous efforts by my colleagues, and I should like to express my gratitude to them for their efforts in producing, yet again, a unanimous report.

I also place on record our thanks to those who staffed the four Select Committees. In particular, we thank Glenn McKee for his excellent work as Clerk to the Quadripartite Committee. We are grateful for his excellent drafting. He demonstrated wisdom beyond belief. The caveat has to be made that the responsibility for the report is clearly ours, but we are grateful to him. Things would not have been anywhere near so easy for the Committee without his work on our behalf.

I thank all those who gave oral and written evidence. I also thank officials of Departments who had responsibility for preparing answers to a significant number of questions. We are grateful to them for that. I thank those who appeared before the Committee as witnesses: the Export Group for Aerospace and Defence, representing defence manufacturers in the UK; the UK Working Group on Arms, representing non-governmental organisations, specifically Amnesty International UK, Oxfam GB and Saferworld, all of which made a great contribution to our deliberations; and Mark Thomas, broadcaster and journalist, who gave us helpful evidence, following his investigations.

For the first time, Her Majesty's Revenue and Customs and the Revenue and Customs Prosecution Office gave evidence to our Committee, on the enforcement of export controls. We have for some time felt that, as a Committee, we ought to devote more time to the issue of the enforcement and monitoring of the export control regime, and we are grateful to Her Majesty's Revenue and Customs for giving evidence to the Committee in preparation for the report.

I thank the two Ministers who gave oral evidence to the Committee: my hon. Friends the Minister for the Middle East and the Minister for Science and Innovation, who as we speak is at the south pole. I exaggerate slightly: he is in Antarctica, in, I assume, his capacity as Minister responsible for science. He jokingly said to me that that was the furthest he thought he could go to get away from having to reply to the debate this afternoon. I assume that he was joking and I hope that he is safely ensconced in a warm part of Antarctica. I am pleased to see present my hon. Friend the trade and industry Minister, who will reply on behalf of the Government this afternoon.

I should say at the outset that the Committee as a whole has always acknowledged the progress that the Government have made in the area of arms export controls. I shall not list all the innovative changes made in recent years, but progress has been made. That is recognised by the Committee and, indeed, by all those who gave evidence to us. With regard to recent events, I particularly welcome the Government's decision not to outsource the work of the Export Control Organisation. The Committee could never quite understand why the Government were contemplating outsourcing such an important area of activity and so, with many others, we celebrated the Government's announcement that they would not go ahead with that proposal.

We value the quarterly reports that we now receive. There is not just an annual report; we can now access quarterly reports. There is now greater transparency and therefore accountability in relation to information on arms export licensing than there has been in the past, which is another development on which we congratulate the Government.

We welcome the leadership that the Government have shown on the international arms trade treaty. Recently, I was at an Amnesty International event with the Minister for the Middle East at which Amnesty and other organisations were congratulating the Government on that treaty. They said, rightly and as I am sure we will do shortly, that there were things that they would like in the treaty that they were worried might not be in it, but that they recognised seriously the role that the UK Government have played in pursuing an important measure to get the arms trade under control internationally. It would be enormously helpful if the US Administration were not opposed to that exercise. I know that the UK Government are doing all they can to help on that.

In our report, we have paid tribute to the Government's efforts in a number of areas. However, given the opportunity offered by the debate, you, Mrs. Anderson, would expect me and other hon. Members present to focus on areas on which we have concerns. We have raised concerns about a number of areas of Government policy, in terms of both policy formulation and policy implementation, and I want to focus on a few of those in the time available.

Most of our concerns fall in one of two categories. The Export Control Act 2002 was a major step forward in formulating the legal basis for arms export controls, but there are still significant loopholes that need to be addressed. Secondly, it is not just the legislation that matters, but its enforcement. We can pass legislation in this House, day in and day out, but its enforcement in the real world is what matters. It is fair to summarise the report by saying that our concerns fall under those two categories: loopholes in legislation and enforcement.

One concern that we have raised time and again—indeed, we raised it before the Export Control Bill was published in 2001—was that the proposals to tackle arms brokering and trafficking would not be comprehensive. Sadly, that is where we are today. We welcome the introduction, for the first time, of extraterritorial controls on arms trafficking and brokering in the Export Control Act, but their coverage is limited.

The Committee has repeatedly called for the tightening of controls on brokering and trafficking. Currently, UK citizens abroad who operate outside the UK are regulated only if they trade in missiles with a range of more than 300 km or in torture equipment, or if they trade to an embargoed destination. Therefore, the controls do not cover trade in missiles with a range of less than 300 km.

The Committee has long argued that it is essential to increase the scope of extraterritorial controls to deal with problems in the arms trade. The weapons that are most likely to be used by terrorists and in armed conflicts around the world are rocket-propelled grenades, MANPADS—Man-Portable Air Defence Systems—and automatic light weapons. Millions of men, women and children live daily in fear of armed conflict that is usually based on the use of small arms and light weapons. Some 500,000 people are killed every year as a result. That is one person every minute. By the end of this debate, another 360 people will have been killed as a result of small arms proliferation.

Small arms are, arguably, today's weapons of mass destruction, given the death and injury that are caused by their use, but there is currently no control on British citizens who broker or who may broker small arms deals from outside the UK. At the time of the 2002 Act, and before, the Committee argued, as did many others, that the Government missed an opportunity when they failed to regulate all UK citizens and companies involved in arms trafficking and brokering abroad, whatever the nature of the arms. The Act is being reviewed this year and we welcome that. Will the Minister assure us that the full extension of extraterritoriality to arms brokering and trafficking will be actively considered?

Photo of Peter Luff Peter Luff Chair, Trade & Industry Committee, Chair, Trade & Industry Committee

I do not know whether this is an appropriate point in the hon. Gentleman's speech to ask about the regulation of brokers operating within the United Kingdom. Does he share my concern about the Government's dismissal of the Committee's call for a register? I find it odd that they are rejecting it on the grounds that someone might break its terms and embarrass them. Surely the point of having a register, such as that for GPs, is to ensure that standards are upheld. I cannot understand the Government's reasons for rejecting the recommendation.

Photo of Roger Berry Roger Berry Labour, Kingswood

I welcome the hon. Gentleman's intervention, as I do not understand the Government's position either. People have to register births, deaths and marriages and a variety of other things, such as having a TV licence or running a lottery. Trading in arms is, arguably, a serious activity. Evading controls on arms dealing is probably more serious than not paying one's TV licence, although I recommend that people should pay their TV licence. The hon. Gentleman makes a fundamental point. One effective way of sending out the message that lawful brokering is okay—that is not in question—but unlawful brokering is not, is to have a register of brokers as well as full extraterritorial controls. I welcome the hon. Gentleman's support on that.

I remind my good friend the Minister that our party fought the 2001 general election, in the run-up to introducing the path-breaking 2002 Act, with this commitment:

"We will legislate to modernise the regulation of arms exports, with a licensing system to control the activities of arms brokers and traffickers wherever they are located."

It did not say "some arms brokers" or "those who are trying to flog long-range missiles, but not those who are trying to flog small arms." As tactfully as I can, I remind the Minister and the Government of that commitment.

In rather more considered terminology, the Committee concluded, at paragraph 195, that

"no logical case can be made for including some controlled goods within the Government's extra-territorial control on brokering and trafficking whilst excluding others."

That is saying the same thing as I said a moment ago, but is not quite as punchy as I tried to make it.

The Committee genuinely cannot understand why extraterritorial controls do not exist across the piece. The Government's response thus far has been that the matter will be considered in this year's review, but I hope that the Minister will accept today the logic of our argument that it is nonsense to exclude from control brokering in the weapons that are of most use to terrorists and that cause the most damage in areas of conflict around the world.

I move to the issue of dual-use goods—goods that might have a civilian or a military purpose. In its report, the Committee refers, as many others have done, to the so-called Land Rover/Otokar case. I shall be brief on this, because many hon. Members present will be familiar with it. The Committee considered the use of Land Rover Defender military vehicles by Uzbek troops during the Andijan massacre in May 2005. According to the Government, and we entirely accept their understanding of the situation, Land Rover did not sell the military vehicles themselves, but sold flat-pack civilian Land Rover Defenders to a Turkish company, Otokar. The company assembled them and the Turkish Government then handed them over to Uzbekistan, where they were used during the Andijan massacre of 2005.

The Government rightly told the Committee that

"the UK has no power to control the export of civilian specification Land Rovers."

That is correct; there is no doubt about that. However, anyone vaguely familiar with the arms trade, even if only from reading the odd newspaper article about it, would have known perfectly well that there was a real risk regarding the use of Land Rover flat-packs that were exported from the UK to Turkey, given that Turkey was clear, at that time, about supporting military transfers to the Uzbek Government. Anyone with the vaguest knowledge of the arms trade would have had bells ringing in their brains. They would have thought, "Hang on a minute, is it not possible that an export from the UK that has a dual-use"—it could be a civilian vehicle, but could be modified into a military vehicle—"going to Turkey could end up being used by a Government with a questionable human rights record?"

The Government's response to date has been that they understand that concern, but that when the goods left the UK they did not require a licence—that is true—so there was not a lot that could be done. If Land Rover or any other company had sought a licence for the export of a military vehicle to Uzbekistan at that time, it would almost certainly not have been granted. A European Union embargo was subsequently introduced because the situation was so serious.

We must try to take the dual-use product situation more seriously. Our report states:

"We recommend that the Government commission research to establish the extent to which dual-use goods not subject to control are exported from the UK and are then incorporated into equipment which had it been exported from the UK would have been subject to export control. We recommend that the results of the research and the Government's analysis of the results are published. We further recommend that the work is completed in time to inform the review of the legislation in 2007."

A simple confirmation from the Minister that that is what the Government intend to do would be helpful, because there is a serious problem.

Arms controls can be circumvented in various ways, whether by accident or intentionally—I make no judgment about the Land Rover case. One obvious way of circumventing arms export controls is by having the kind of arrangement that existed in the Land Rover/Otokar case.

That leads me on to the closely-related question of incorporation and offshore production. We would argue that it is currently another area where the Government simply do not have the kind of controls that they need. UK companies, like other companies engaged in arms manufacture and export, are increasingly involved in arms production in other countries. That can take many forms: it can be done through a subsidiary, a joint venture or licensed production. If the final assembly takes place outside the UK, our present controls are limited to controls on the transfer of technology.

Our report makes the modest recommendation:

"that the Government bring forward proposals for consideration during the 2007 review...to regulate:

a) British companies proposing to license the production of weapons overseas; and b) exports from overseas subsidiary companies in which a majority shareholding is held by a UK parent".

The Government's response to our report indicated that they were not entirely convinced of the need to do that, but they have given a commitment to consider the matter further. We very much hope that they can be persuaded on this issue.

The arguments that I have made thus far are ones that the Committee has been putting forward for a number of years. This year, we examined two issues for the first time, taking an interest in the internet and in arms fairs, for which I give particular thanks to Mark Thomas. On the question of the internet, I had the pleasure of going to Oxford at his invitation to meet students of Lord Williams's upper school. They demonstrated how easy it was to set oneself up as an arms broker. I recommend that Members of Parliament might wish to consider setting themselves up as arms brokers and seeing what they can buy over the internet. The Quadripartite Committee might even wish to do this, because it might be a way of testing the system.

Those youngsters showed me that it was simple to form an arms broking company and start importing things from other parts of the world. The example that springs to mind is instruments of torture. They acknowledged that the UK has legislation that prevents the manufacture and export of certain instruments of torture, so they wondered whether they could get such stuff from somewhere else, and surprise, surprise it is straightforward to do so. They obtained thumb cuffs, wall cuffs and sting sticks.

A sting stick is a cylindrical metal piece of equipment that is about 4 ft long and has metallic spikes sticking out of it. It is used to thrash people and is a very nasty instrument, so much so that the Palace authorities would not give us permission to bring one into our Committee for Members to see what young people could obtain on the internet. We had to show the Minister in question the sting stick outside. I suspect that doing so was still a bit dodgy because sting sticks are dangerous weapons, but parliamentary privilege perhaps applied.

The important point is that those young people demonstrated how easy it was for anyone to set themselves up as an arms broker and import illegal items into the UK. I am concerned about illegal guns in the UK. It appears that it is easy to obtain guns in the UK in numbers that would surprise. The point that the Committee was making by referring to the internet in the report was that we could see little or no proactive policing of the internet in respect of companies that were promoting business in breach of arms export controls.

The report stated:

"that the Government's response to the challenge of the Internet as an arms emporium is too passive and fails to take account of the role it now plays in promoting and facilitating commerce and exports across the world."

The Government's response said that they would consider the issue further and would write to the Committee in due course on the issue. To date, we have not received that letter. We look forward to receiving it as soon as possible.

The question of arms fairs arose from the fact that although the brokering of torture equipment is illegal, we received evidence that at the 2005 Defence Systems and Equipment International arms fair in Docklands, TAR Ideal Concepts Ltd, an Israeli company, was openly advertising the supply of electro shock batons and leg irons in its brochure. When that was exposed, it was asked to leave. That was exposed not by our enforcement arrangements, but by Mark Thomas. Why do we so often have to rely on investigative journalists to expose breaches in some of our arms export control legislation?

I understand the difficulties of enforcement and I am sure that effort is put into it, but I believe that the advertising literature at the arms fair in Docklands is approved by a Department, so why could such a situation occur? Why could Global Armour, a South African company, offer electro shock weapons in its brochures at the same event? It cannot be that difficult to police arms fairs. I hope that in future they will be policed more effectively. Enforcement is an issue even when the policy is clear. We have a clear policy on trade in torture equipment and so forth.

Sometimes the policy is not clear and it is impossible to know exactly what is happening. I shall cite one such example that we raised in the report: exports to Israel. The Committee is confused, but I have never understood it and I shall explain why. In evidence to the Committee, the Government confirmed that the policy on exports to Israel has not changed since 2002. We are told the policy is that:

"no weapons, equipment or components which could be deployed aggressively in the Occupied Territories would be licensed... and the Government did not take into account assurances given by the Israeli Government concerning the end-use of exports."

I shall not go into the details about why the Government do not accept those assurances any more, but that is the policy. Our report invited them to explain the policy. The Government's reply simply restated the policy and said that they examine everything on a "case-by-case basis". Indeed, the Government are brilliant at responding to any seriously good question that is intended to get to the essence of their policy on arms exports, by saying, "We rigorously examine each application on a case-by-case basis." Of course they are supposed to do that, and I am not suggesting that they should not, but can we please know what the policy is?

Do the Israeli Government have one pile of weapons over here, which they say they can use in the occupied territories without any problem? Do they say, "These weapons are ours, because we got them from Germany"? Do they have another pile somewhere else and say, "These are the Brits' weapons. They're funny, the Brits. Apparently, we can use these weapons in some circumstances, but not others. We certainly can't use them in the occupied territories. So don't mix these two piles of weapons up"? Is that what actually happens? A simple yes or no from my very good friend the Minister at the end of the debate would suffice. We would just like to know what is going on.

Photo of Richard Burden Richard Burden Labour, Birmingham, Northfield

I share my hon. Friend's frustration on this matter. Will he invite the Minister to go a little further in his reply than some of the parliamentary answers that we have had on the issue? Last year, there was a massive upswing in the death toll in Gaza and there was the invasion of Lebanon, and many thousands of people were killed or injured. When we asked whether UK-supplied arms or components were used in those conflicts, the same answer came back: there were no reports.

However, we did get confirmation that Israel was using F-16 fighters in Gaza and Lebanon, and we know that those fighters use head-up display units supplied from the UK. We asked whether such units were being used in those F-16 fighters, and the answer was:

"We have no reports that UK supplied equipment has been deployed during the recent air strikes in Gaza. We continue to monitor developments...closely."—[Hansard, 19 July 2006; Vol. 448, c. 496W.]

When the Minister sums up, will he tell us where UK-supplied components and arms were during those conflicts? Secondly—

Photo of Janet Anderson Janet Anderson Labour, Rossendale and Darwen

Order. I urge the hon. Gentleman to keep his interventions fairly brief.

Photo of Richard Burden Richard Burden Labour, Birmingham, Northfield

I am finishing my intervention now, Mrs. Anderson. My second question to the Minister is this: what information did the investigations produce and has it affected any export applications since?

Photo of Roger Berry Roger Berry Labour, Kingswood

That was an excellent intervention, which I entirely endorse, and I look forward to the Minister's response. These are serious matters, and my hon. Friend's point neatly brings me to the next question.

Photo of Peter Luff Peter Luff Chair, Trade & Industry Committee, Chair, Trade & Industry Committee

I am grateful to the hon. Gentleman for giving way again. When the Minister replies, I hope that he will recognise that many of us think that Israel has a robust right to defend herself and should be enabled to do so against the real threats posed, for example, by Iran. At the same time, she should be encouraged to respond more tactfully sometimes to the aggression that she experiences from others. That would reduce the need for Labour Members to ask questions such as those that we have heard.

Photo of Roger Berry Roger Berry Labour, Kingswood

I welcome that intervention.

The issue mentioned by my hon. Friend Richard Burden raises the question of the extent to which the Government are prepared to monitor end use. What matters above all else in the arms trade is end use, or what military equipment ends up doing. Whom is it used against? In defence of whom is it deployed? End use is everything; it is the only thing that matters.

The Committee has therefore consistently argued—it has been unanimous on this across the parties—that an effective arms export control policy must take end- use monitoring seriously. This year, we again recommended that the Government establish

"a pilot programme of end-use monitoring focusing on cases where it has identified some degree of risk...when considering an application".

The United States has the Blue Lantern scheme, and other countries try to monitor end use.

We cannot understand why the Government have rejected our recommendation again this year, on the grounds—yes, hon. Members will have guessed it—that

"there is no substitute for a rigorous assessment"— assessment on a case-by-case basis—

"of any proposed export at the time of application."

Of course the assessment carried out at the time of the application for an export licence is critical, and the Government are right to emphasise that it is fundamental to get that right, but that does not deal with the monitoring of end use. The Government can grant export licences rigorously and on a case-by-case basis only where they believe that the end use will carry no risk, but they cannot guarantee that there will be no diversion—that none of the arms licensed to an appropriate end user will not be diverted.

There have been examples of diversion, and the reason why the Government no longer take Israeli Government assurances on arms exports into account is that UK equipment has been observed being used in the occupied territories. All that the Committee is saying is that we should take end-use monitoring more seriously because of the problem of diversion. It is not an alternative to rigorous case-by-case assessment of licence applications at the point of application, but additional to that assessment in sensitive areas.

I have just two final points, because I am aware that many hon. Members wish to speak. On a happier note, the Government can thus far take enormous credit for the international arms trade treaty. I remember when the campaign to establish the treaty was launched in the House in 2003. Amnesty International and other non-governmental organisations organised the launch; I hosted it and a Minister spoke at it. There is now a consensus that, however good the Government are at controlling arms exports from the UK, and however good the European Union is at doing so through EU arrangements, the ultimate objective must be an international regime to control the arms trade. The treaty is therefore necessary and important.

The report identifies several features that we would like incorporated into the treaty, although given the time that I have left, I shall not go through them in much detail. One is that the treaty should cover trade in all conventional arms, including dual-use goods, and that there should be an effective and transparent monitoring and enforcement mechanism. Again, the monitoring and enforcement of the policy is central.

I should add that I am grateful to the Foreign and Commonwealth Office for providing members of the Committee with an informal oral briefing on 7 February, and I congratulate FCO officials on the progress that they are making on the arms trade treaty. I am pleased to say that one of the things for which they are pushing is, interestingly, the effective monitoring and enforcement of the treaty. That is great news and we celebrate it. We have been saying that the issue should be given greater priority in the UK, and we are pleased to hear that the Government believe that it should also be given greater priority internationally. In all seriousness, however, I applaud the Foreign Office for its work on the issue. It is to be commended because it is essential to preventing lives from being lost as a result of inappropriate arms trading.

My final point relates to this year's review of the arms Export Control Act 2002. It is five years since the Act was introduced and three or four years since it came into operation, and there is to be a review this year. The Committee has argued that that gives us an excellent opportunity to take stock and look at the loopholes or deficiencies—however one wishes to describe them—in the current procedures, and I have referred to some of them. In particular, we face the challenge of increasing globalisation in the defence industry, so this is an excellent opportunity to look at whether further changes need to be made.

The Government have kindly welcomed the input of the Committee, which has been seeking views since the autumn from those with an interest in the matter. We shall have a couple of works outings over the next couple of months, including one to the Export Control Organisation in March and one to the Foreign and Commonwealth Office in April. We shall be able to explore some of the issues on our works outings, and what we see on the ground might influence our views about the review of the legislation.

The Government have given the Committee the draft terms of reference for the review. It appears to be wide-ranging and I welcome that, but I hope that in some areas—perhaps the more controversial ones, in which the Government are not convinced by the Committee's views—they may consider some independent research. There are issues on which year after year, unanimously, on a cross-party basis, we have identified problems. If the Government still do not accept our arguments, there are some areas, such as those that I have mentioned this afternoon, on which independent research would be helpful.

In conclusion, the Government have made progress in recent years and the Committee has acknowledged that. I have outlined some of the concerns that remain and my colleagues and other hon. Members present will no doubt refer to others. However, the concerns that I have mentioned are serious, not marginal. I may on occasion have lapsed into humour; I sometimes try to do so when I am becoming slightly hysterical about the absurdity of circumstances—but these are serious matters. The points that I am raising are not about just tweaking bits of the Act. In areas such as arms brokering and trafficking, the loopholes, in the Committee's view, must be addressed. I hope that the review of the 2002 Act this year will enable those and other serious loopholes to be plugged as soon as possible.

Photo of John Stanley John Stanley Conservative, Tonbridge and Malling 3:21 pm, 22nd February 2007

It is a pleasure to follow Roger Berry who, once again, has given thoroughly effective leadership to the Quadripartite Committee in carrying out its important and complex annual scrutiny of the Government's policy on arms exports. I shall cover three subjects, two of which the hon. Gentleman has already dealt with, but I hope that I can give one or two additional perspectives on them, as well as introducing a new dimension.

I should like to start with the international arms trade treaty. As has been said, there is perhaps a slightly worrying degree of mutual admiration between the Quadripartite Committee and the Government on that subject. I now risk adding to that by welcoming the entirely spontaneous and voluntary decision of the Foreign and Commonwealth Office to offer to the Committee its draft submission to the UN Secretary-General in response to his request for Government views on what the content of the international arms trade treaty should be. That was an excellent initiative by the FCO and the members of the Committee have been very glad about that opportunity.

Perhaps I can take this moment to put on the public record two issues that relate to the treaty, which are I think very important. First, the Quadripartite Committee concluded at paragraph 186 of the report that

"the International Arms Trade Treaty must... (b) cover the trade in all conventional arms, including dual-use goods and technologies".

I am glad to see from the FCO's submission that it is the British Government's intention to try to extend the treaty to cover dual-use items. I fully appreciate that it is an extremely complex, commercially sensitive and difficult area, but we managed to cover dual use in the EU context, and I therefore hope that it will be possible to cover it in the worldwide international arms trade treaty. I do not suggest to the Minister that it should necessarily be a make-or-break issue. There may be points, when we have had the negotiation, at which we must settle for half or two thirds of the loaf on the basis that that is better than none, but I welcome the Government's efforts to get dual use included, and I very much hope that they will succeed.

The second issue that I want to raise is one to which I drew attention in an earlier debate in this Chamber on the report of the Select Committee on Foreign Affairs on east Asia. We covered issues of proliferation, particularly with respect to North Korea. We always use the expression "arms trade treaty", but often we lose sight—I do so myself—of the crucial issue of trying to interdict movements of weapons that are internationally criminal or that violate international treaties, when those weapons are actually in transit.

When those weapons are in transit by air it is relatively easy, in theory at any rate, to seal them off when the aircraft comes on to a runway or landing strip. That can be sealed if the host country is willing. When they are in transit on land, again, it is relatively easy to interdict them, but there is a huge loophole in international law when weapons, or components of weapons, are being transited by sea. That fact was brought out in the FCO's response to our east Asia report:

"There is currently no legal base for intercepting shipments on the high seas containing ballistic missiles or components, materials or technology for them, which makes direct action against such shipments extremely difficult."

What applies to ballistic missiles and their components, and similar technology, applies to the whole gamut of conventional arms also.

I should therefore like to flag up to the Minister and the Government the fact that there is a huge legal loophole and that, in this world of global terrorism and global illicit trafficking of weapons and components, we must address the issue of trying to interdict those shipments when the ships carrying them are outside territorial waters, where they are subject to no legal control whatsoever at the moment.

The Chairman of the Committee, the hon. Member for Kingswood, raised the issue of trafficking and brokering with great force and in a very compelling way. The issue that was transparently clear to the Quadripartite Committee and pretty well every other party outside the Government is that the present Government policy is nonsense. It does not stack up. Extraterritoriality—the ability to prosecute, in the United Kingdom, UK residents who commit trafficking and brokering offences that would be criminal if they were carried out in the UK—applies to so-called instruments of torture.

I recognise that officials have made a valiant effort in the relevant statutory instrument to define instruments of torture. We have descriptions of leg irons, shackles and types of handcuffs, and so on. However, in reality, no comprehensive definition of instruments of torture is possible. Almost anything can be used as an instrument of torture. As we know from the accounts of survivors, the victims of Nazi torture were subjected to having their flesh being burnt with lighted cigarettes. Appallingly, today, the torture instrument of choice in Iraq appears to be the electric drill.

At the other end of the scale, the Government are applying extraterritoriality to long-range missiles with a range in excess of 300 km. What is the sense of a cut-off range set at 300 km? Again, that policy makes no sense, and that was brought home vividly when I asked a question of the then Secretary of State for Trade and Industry, Ms Hewitt. The exchange took place before the Committee on 3 April 2003 and was reported in paragraph 112 of the evidence in the first joint report of 2002-03. I asked the Secretary of State:

"How can you defend missiles above 300 k and not shorter?"

She turned to the official alongside her, Mr. Glyn Williams, and replied to the Committee:

"I wonder whether Mr Williams would like to comment on that because I am not aware of the detailed thinking on that one."

That was the end of her reply. The reality is that there is no logic, sense or justification for setting a range cut-off date for extraterritoriality in relation to missiles.

The hon. Member for Kingswood has referred to trafficking and brokering. I do not believe that that involves torture equipment to any significant degree, because there is no money in that and the people involved are interested only in money. It does not occur with long-range missiles because, by and large, that is Government-to-Government business. It occurs, as the hon. Gentleman said, with automatic weapons, rocket-propelled grenades, man-portable missiles and so on. The Government have conceded the principle—I commend and congratulate them on that—but they seem unwilling to concede the practice.

It is sad and regrettable that the Government in their reply simply parked the issue in the 2007 review and said that

"at this stage" they

"would not wish to prejudge the outcome of the review."

The issue has been around, as far as the Committee is concerned, for seven years. The Committee's excellent Clerk—I warmly echo the tribute to him by the hon. Member for Kingswood—kindly produced a complete list of the Quadripartite Committee's recommendations on trafficking and brokering. They began exactly seven years ago in February 2000. I have totted up the list of recommendations that the Clerk gave me, and we have made no less than 34 on this matter.

Every recommendation must have prompted a review with a submission to Ministers on how the Government should respond, so there must have been at least 34 reviews. The matter has been reviewed to death, and it is unnecessary to review it further. The Minister need not say so in the public domain—that would be embarrassing—but he may say it privately in the Tea Room that in his heart of hearts he knows that the Government's answer is just a cop-out from making a decision. All the issues are on the table and the facts are known, so I appeal again to the Government to scrap the review. Ministers do not need more information. The case for accepting the Committee's recommendations is clear-cut and overwhelming, and I hope that the Government will consider accelerating their decision, perhaps in response to this debate.

Another issue arises from a recommendation that the hon. Member for Kingswood quoted, but I have a particular angle to which he did not refer and which I hope will be helpful to the House. I want to put it on the record that I am referring to the recommendation in paragraph 158:

"We recommend that the Government explain the policy—that no weapons, equipment or components which could be deployed aggressively in the Occupied Territories will be licensed for export from the UK to Israel—in its reply to this Report. It would assist us if the Government gave examples of the equipment to which, in the light of the policy, it has refused to grant export licences."

Our report was finalised on 19 July last year, and I am certain that had it been finalised one month later, after the invasion of Lebanon, when we used the phrase,

"which could be deployed aggressively in the Occupied Territories", we would have added, "and in Lebanon."

I want to deal as factually, dispassionately and objectively as possible with the Israeli armed forces' use of cluster bombs in Lebanon. The facts as I know them from independent sources are as follows. The use of cluster bombs was on a truly massive scale and probably unprecedented in recent times. The United Nations produced a fact sheet in November 2006, and estimated that the number of bomblets dropped on Lebanon by the Israeli armed forces was some 4 million. The estimate excludes those that were dropped by the Israeli air force. This month, the UN produced a map showing that the total area in southern Lebanon over which the cluster bombs were sown covered a total of 2,400 sq km. The skilled statisticians in the Library tell me that that is equivalent to one and a half times the area of Greater London. It is worth reflecting on how we might react in this country if 4 million bomblets, with a known percentage failing to detonate, had been dropped in an area of the UK one and a half times that of Greater London.

Another fact that I want to put on the table comes from the UN Secretary-General's report of September 2006 on the implementation of the UN Security Council's ceasefire resolution 1701. That report states that an estimated 90 per cent. of all the cluster bombs dropped in Lebanon were dropped in the 72-hour period between the date of adoption of resolution 1701 on 11 August and the ceasefire which came into effect three days later on 14 August. In other words, in that 72-hour period, with the ceasefire about to come into effect, the Israeli armed forces chose to conduct a truly massive bombardment of a large area of southern Lebanon with cluster bombs that have—I repeat—a known rate of failure of detonation.

Those cluster bombs have, as we know, resulted predictably—I would say with absolute certainty—in a significant number of civilian deaths and maimings. I have noted with interest during the past few weeks that even the US State Department has reported to Congress that the Israelis' use of cluster bombs in the Lebanon conflict may have been in breach of agreements between the US and Israeli Governments on the use of cluster bombs. That background brings me to the UK dimension.

There is a UK dimension, because there is a commercial interface between the UK and Israel on cluster bombs. I have four questions for the Minister. I suspect that he will not be able to answer them in his response to this debate, but I hope that he will answer them in writing. I know that all Committee Members will be pleased to hear his answers.

The first question that I put to the Minister arises out of the paragraph 158 recommendation to which I have spoken in full. It is therefore on the record in full. In that recommendation, the Committee specifically asked the Government to provide examples of equipment for which they have refused to grant export licences to Israel. Their response to our request was 100 per cent. silence. I have been around long enough to become suspicious whenever Governments are silent, and I wonder whether they have anything to hide.

Why were no examples given of refusals? We know that cluster bomb components are made in the UK, and, from the answer given by the Minister of State, Ministry of Defence, on 7 November 2006, that the Ministry's stockpile contains a significant number of cluster bombs that are apparently redundant for MOD use and described as being "out of service". I would be grateful if the Minister present told us whether there have been any requests to the Government for the exporting to Israel of components or, possibly, complete cluster bombs from the one known UK manufacturer, BAE Systems, and from the one holder of complete cluster bombs, the Ministry of Defence.

The second question that I put to the Minister arises out of another written answer given by the Minister of State, Ministry of Defence, this time on 31 January 2005:

"I am not aware of any UK company manufacturing cluster munitions for export since 1998."—[Hansard, 31 January 2005; Vol. 430, c. 729W]

That answer is two years old. Does it still hold good or has there been any change in the period between its publication and today? Is any UK company manufacturing cluster munitions, which applies to components and to complete cluster bombs, for export?

The third question that I put to the Minister arises out of another answer given by the Minister of State, Ministry of Defence, this time on 17 November 2003. It revealed that the Ministry has a truly massive contract with Israel Military Industries to purchase ground-launch cluster bomb shells, which come to this country having been manufactured almost entirely—apart from the fuse—in Israel. The fuse and the final packaging are produced in this country.

The answer revealed also that the contract involves the import from Israel Military Industries of 30,000 cluster bomb shells. Given the use made of cluster bombs by the Israelis in Lebanon last year, do the Government still consider it appropriate to provide such financial support through contracts to the Israeli cluster bomb manufacturing industry?

My final question to the Minister arises out of the answer that the Minister for the Middle East gave in his written ministerial statement on cluster munitions on 4 December 2006. He said that

"we announced our plan to withdraw from service by the middle of the next decade our so-called 'dumb' cluster munitions and called on other countries to do the same."—[Hansard, 4 December 2006; Vol. 454, c. 1WS.]

The policy question that I put to the Minister present is this: is it really going to take so long—to 2015—to withdraw dumb cluster bombs from the inventory of the British armed forces?

Those bombs, by virtue of being dumb, have no self-destruct mechanism. There is a known and apparently unavoidable rate at which bomblets do not detonate. Therefore, unless one is 100 per cent. certain that a dumb cluster bomb will land solely among one's military enemy, one will inescapably put civilians at risk. Should not the Government, in light of what happened in Lebanon, give serious consideration to trying to accelerate to a substantially nearer date the phasing out of dumb cluster munitions by the British armed forces?

In conclusion, the Quadripartite Committee appears to be a somewhat unwieldy body, but it has proved, by the rather empirical basis on which it was set up, to be the right mechanism for discharging this Parliament's important responsibility for scrutinising the Government of the day in the area we are considering. Though we in the Committee are not remotely complacent, and though we will consider at all times how we can improve our performance, I sincerely believe that the mechanism in place is one of the best mechanisms, possibly even the best, for the parliamentary scrutiny of arms exports by any country in the democratic world.

Photo of Judy Mallaber Judy Mallaber Labour, Amber Valley 3:47 pm, 22nd February 2007

I am pleased to speak in the debate, and I too pay tribute to our Chairman, my hon. Friend Roger Berry. He manages to chair what could be considered an unwieldy Quadripartite Committee effectively, and he opened the debate with a clear analysis of the main points in our report and the issues that we want to raise. I am also grateful to our Clerk for the support that he provides.

I am pleased to follow Sir John Stanley. Although I have come here with lots of bits of paper, which I shall refer to, I shall be neither as clear my hon. Friend nor as forensic in my analysis and questioning as the right hon. Gentleman. He gave an excellent speech, and I particularly endorse his questions about cluster bombs.

As a relatively new member of the Committee, I shall provide some impressions as to why my experience on it during this period has been so fascinating, interesting and important. Before I entered the Chamber, I spoke to a senior—and, to me, respected—female Member of Parliament, who, when I described what I was going to speak about, was not as clear as I might have expected in knowing of the Committee's existence and of its work. She was impressed by the extent of what we are doing and by how fascinating it is, but that is perhaps a lesson for members of the Quadripartite Committee and for Ministers that we should talk more about what we do.

Two things have really crystallised some of the issues we raised during the past year. The first was the group of school pupils that I met from Oxford, and the other was to see the situation from the other end as one of the international monitors of the first democratic elections for 40 years in the Democratic Republic of the Congo. I went twice last year, and it really brought home to me some of the issues of arms trading: smuggling; the connection between brokers, business and militias; state control, or lack of it; the use of natural resources; and the complicated connections between those areas that make this such a difficult subject to get a handle on or gain control over.

I emphasise again the critical issue of brokers. We must ensure that we do something about that and bring the whole range of weapons within the process. There has been an arms embargo in the Democratic Republic of the Congo for many years, but that makes one realise just how important brokering is, and how important it is to include the whole range of weapons. The weapons we are talking about include small arms, Kalashnikovs and grenades—those at the smaller end of the market. If we are not dealing with that, we ought to be.

I may refer later to "Blood Diamond", the film that has been out recently. It has had mixed reviews—some say that it is honourable, others say that it is too glib—but it highlights a lot of the issues for people who would not necessarily know about them. Leonardo DiCaprio plays, I think, an Australian who is a broker trading diamonds for guns. He turns out to be a good guy at the end, but perhaps the film will bring home to a wider public some of the issues and complications. We are not covering the way in which weapons get into countries through small-time brokers by ensuring that they are registered, or by getting some sort of grip on that process. This huge trade causes massive trauma, dislocation, death and horror to countries such as the DRC and others. The film that I have referred to is set in Sierra Leone, which has the most horrendous history of arms use in conflict and of arms coming into the country. It is essential that we extend what we are talking about to include brokering and the range of weapons covered.

On 14 February, I was heartened to read that the Secretary of State for International Development had said in an interview in the Financial Times that there would be a forthcoming review of the Export Control Act 2002, which would examine whether UK controls on international arms brokers who act as go-betweens in weapons deals should be extended. I welcome that review, but like my colleagues, I say that the only thing that we need to do is examine the reports and recommendations of the Quadripartite Committee. They comprise a quite sufficient review, and I hope that Ministers will take on board our recommendations, which are fairly clear.

If the Minister wants to consider something else, he can look at the December 2004 report by the all-party parliamentary group on the great lakes region, which looked at arms flows in the eastern Democratic Republic of the Congo. It highlights many of those issues, so if the Minister wants a bit more evidence than that provided by the Quadripartite Committee, he can consider it as well. I hope that Ministers will endorse our recommendations. It is critical that they do that, and it is extremely important to ensure that those issues are included in the international arms trade treaty.

I mentioned that I was very struck by meeting the school pupils from Oxford—I cannot remember the name of the school. Anyone who saw the Mark Thomas television programme would have seen a 16 or 17-year-old pupil calmly phoning up, after getting a contact through the internet, to say, "I am the finance director of this company", then going on through a bargaining process to buy weapons. It was a chilling experience to see how easy it was for someone, who must have sounded very young on the phone, to order such awful weapons. I was slightly alarmed to see that my hon. Friend the Minister for Science and Innovation was displayed holding an horrific Chinese sting stick weapon in front of the television cameras on College green, because I thought that we may be getting him into trouble.

The programme also showed pupils in Ireland, where different controls operate on either side of the border. As I recall, it also alleged that the Republic was looking at what more it could do on arms control issues, which brings in the international dimension that we need to take on board. For me, it brought home the fact that such potential gaps in our controls exist, and I am concerned that it has taken an investigative journalist to begin probing them. I hope that the Committee's recommendations will be taken on board by the Government, although we recognise the huge difficulties in clamping down on this horrendous trade.

I have referred to the all-party parliamentary group report on arms flows in the eastern Democratic Republic of the Congo. I went there last year for the extremely important elections. There is now the potential for peace in one of the most conflict-stricken regions of the world—a huge country in the centre of Africa, which had six neighbouring countries traipsing over it. It was Africa's world war, and four million people died in the civil war there. During the period in which the report was written, while the all-party group conducted research on the way in which arms flow in and out of that country, there was theoretically an arms embargo.

In the report, we see the way in which the worst of all those involved in conflict from the neighbouring countries traded natural resources for guns in order to get weapons into the country, which then fuelled the conflict. The report highlights a number of the ways in which brokers operate in that situation. At that point, there was a transitional Government moving towards elections, and it was highlighted that in order to have a peace process, it was essential that the international community did what it could to ensure that no more arms got into the hands of the rebels in the DRC. One of the most important things was that human rights should be at the core of all Governments' export controls. We have recommended that that should be incorporated into the terms of reference of, and the whole philosophy behind, the international arms trade treaty. My right hon. Friend the Leader of the House of Commons, who was then Foreign Secretary, welcomed the report of the all-party group and said:

"It is clear that the flow of arms in the volatile Great Lakes region adds to insecurity and hampers international efforts to bring about a durable peace."

The group of experts also welcomed and used the report.

When I was in the DRC for the second round of elections, I was going up on the eastern side of the Congo, from Kindu in the province of Maniema. We visited a group of women who came to welcome us with wonderful Swahili songs. Some years ago, they had been moved further and further away from where they were by conflict involving one of the rebel groups, the Mai-Mai, who had burnt them out of their homes. To get the women out of their homes, that group had used the sort of weapons that come in through the processes that I have mentioned. It had raped, pillaged, threatened and caused conflict, death and trauma.

One of the problems we had in getting the children of those women educated, as part of our international goal of getting children into education, is that they are now so far away from anywhere, with hardly any transport links, that they cannot even go to school until they are of an age where they can walk the necessary distance. That is the case partly because rebel groups had obtained arms that they used to threaten and disperse people as part of that conflict. Those things are interconnected. The report states:

"arms networks are controlled by businessmen whose interests coincide with those of combatants."

Arms and ammunition are smuggled in and out, but that process is financed by businessmen. There is a connection between business, natural resources, armed militia, official militia, armies and conflict and death. It is incredibly difficult to break those links.

The way in which armed groups in neighbouring countries to the DRC were flowing in and out prevented the state from exercising control in the eastern part of the country. The report said:

"Instead, control is wielded by mafia-type organisations, private armies, businessmen and state elites from both within and outside the region."

The Congolese war economy revolves primarily around two things: the transnational trade in arms and the trade in natural resources. Deals are struck between influential businessmen, politicians and high-ranking military officers on one side, and multinationals on the other. Minerals and diamonds go out and arms come in, through deals with businessmen and the brokerage that we are discussing. It is a complex trade, and part of the problem is that the conflict is over control of the natural resources, which are used to pay for the weapons to continue the conflict. We have to try to break that connection, but if we say that we are not going to deal with brokerage—the Leonardo DiCaprio character in "Blood Diamond"—or say that it is important, we will not be able to do so. If we do not look at how the trade operates, we will not tackle the problem.

In the case of the DRC, weapons enter the conflict zone primarily from Bulgaria, Serbia, Bosnia and Herzegovina, and Montenegro through Rwanda, Tanzania and Uganda, often via official networks. As part of any international arms trade treaty, we will also need to give assistance to some of those interim countries to get a grip on that trade. That will be a complex task, but it is important to consider the mechanisms for that as part of the international arms trade treaty. The all-party group's report was done by a Belgian-based international think tank called the International Peace Information Service or IPIS. Although there is an arms embargo, there is evidence that the trade is continuing through eastern Europe and those other countries into the DRC. The issues that we need to take up to ensure that UK individuals and companies are not trading should also feed into the international treaty in relation to the other countries that are involved.

As we know, the issues are complex and quite hard for us to get to grips with, but it is important that we deal with them. However, I was heartened that the officials we met to discuss the international arms trade treaty took that on board. For instance, we wanted to ensure a big human rights dimension within the philosophy of the international arms trade treaty. The minimum standards to prevent arms sales might include not exacerbating existing conflicts or aiding the commission of human rights abuses, but I also suggested including the relationship between financial exploitation and the exploitation of human resources and how that is used to finance trade. It should be important that we know how the trade is financed and where the money comes from. One of the officials to whom we spoke said that the proposed inclusion of brokering in the treaty—a heartening comment—would expose the financial transactions behind many elicit transfers of arms. It important that we make those connections.

I would like those issues to be within the international arms trade treaty, as well as the connected issue of good governance. The Government are trying to give considerable assistance to the new Government and Parliament in the DRC on good governance. The issue is critical, because states must have the ability to control their own borders and natural resources. They must also have the willingness and the desire to do that in the first place, which is a problem, but good governance is important. I hope that that will also be fed into the principles of the international arms trade treaty.

In "Blood Diamond", the broker ended up becoming the good guy, going from Sierra Leone to giving evidence to something that became the Kimberley process. Under that process, everybody in this country must ensure that the diamonds that they go out to buy—even through apparently respectable sources—have not come from a conflict zone, where they might have been used to purchase weapons. I hope that everybody in this country will ensure that they know where any diamonds that they are about to buy have come from and how they have been financed. It should be a criteria in the international arms trade treaty that people know where the money comes from to do the deals in weapons, because those connections lead to such horrendous, appalling conflict and trauma.

The DRC is undergoing the first International Criminal Court trial of one of the warlords, Thomas Lubanga, who is being indicted for recruiting child soldiers, which is a horrendous problem in all those countries. Again, he could have got the weapons only through some fairly unsavoury trade. We need to ensure that the mechanisms that finance and service that trade are fed into the work that we do, and that we consider the issue of brokerage in both the international arms trade treaty and the work that we do in controlling our own citizens. I do not know whether our citizens have been involved in that evil trade. It is perfectly possible, but at the moment we do not necessarily have the will-power, knowledge or commitment to try to take that on board, difficult as it is.

I am pleased to have been a member of the Quadripartite Committee. The process is absolutely fascinating, and I hope that we shall be able to do much more good work. I urge Ministers to take on board the useful recommendations in our report. I thank my fellow members of the Committee, our Chairman and our Clerk for the work that has been done. I look forward to carrying on that work in the future.

Photo of Malcolm Bruce Malcolm Bruce Chair, International Development Committee, Chair, International Development Committee 4:06 pm, 22nd February 2007

I want to make a few comments, but first I want to pick up what Judy Mallaber has said. She will be aware that the Select Committee on International Development published a report on conflict resolution and went to the DRC, as well as Sierra Leone and Uganda. In our report, we highlighted the concern that international companies, some of which were identified as British, were trading in minerals that were, knowingly or unknowingly, being used to sustain warlords and civil wars. One of the ironies of the DRC is that, if it were not rich in resources, it would not have had such a devastating conflict or be such a failed state, and the people would not be so poor. The DRC is a classic case where wealth has caused poverty and hardship, as well as death and destruction.

The hon. Lady should also be aware that my Committee was concerned that the United Nations should investigate and draw up a list of companies that it at least suspected of having engaged in trade in conflict resources in that region and ask the relevant host Governments to investigate those allegations, but our Government failed to do so.

One witness came before our Committee—to be fair to him, he came to us perhaps rather naively—and gave answers to our questions that revealed that, at the very least, he was not too interested in finding out where materials had come from or who he was transacting with, even in relation to his operating licence, which turned out to be under the control of the rebels rather than the official Government. His argument was that they were operating from the same office, so he just paid the fee. The consequence of that was that he was able to say, "Oh, well, my case was resolved." When the United Nations was asked what "resolved" meant, the answer was, "Well, we couldn't take it any further", not that the case had been investigated or that there was no case to answer. Frankly, nothing had been done.

We also asked that witness what the Department of Trade and Industry had said to him when it investigated him. He said, "Who are the DTI? I've never had any conversations with the DTI. They've made no investigations, either informally or formally, and had no engagement or conversations with us as a company." My Committee intends to take evidence from the DTI to ask why, when such allegations are put into the public domain, it does not follow them up.

Sir John Stanley, in his inimitable style, explained in huge detail his concern about the obvious misuse and misappropriation of weapons and the dilatoriness with which we appear to take action to bring them out of the system. Of course, people can argue that it is perhaps somewhat strange to talk about a qualitative analysis of weapons of destruction—arms are designed to destroy and kill—but we have international codes and practices and we have the Geneva convention. Also, we accept that certain weapons are more offensive than others, and there are international agreements not to deploy them. Given that, the issue should be rigorously pursued. The right hon. Gentleman is right to be so assiduous in demonstrating how often that has been called for and how lacking the response has been.

It so happens that today marks the public announcement of the £1 billion profit made by BAE Systems, the biggest British arms manufacturer. Many people, and possibly many pension funds, will rejoice at that as it will yield dividends to shareholders, and I am sure that much of it is testimony to British technology and capacity. However, problems are associated with such profits. One is the suspension of the investigation of the Saudi situation, which has left a cloud over how the company does business—and that is not the only investigation relating to it.

I make a positive point in saying that if the United Kingdom is to be engaged in the international arms trade—obviously, there are people who wish that we were not at all—and if it is trying to adopt and promote high standards, it needs to ensure that its major contractors are free from taint. I have to tell the Minister right now that that simply cannot be said. That is why we think it really important that the Minister and the Government accept the Committee's recommendations in a constructive spirit—in other words, try to get a system together that will make the trade more transparent, more controllable, more respected and perhaps more respectable in the end. That is what we are trying to do.

I chair the International Development Committee, and obviously there are development issues of particular concern to me and the members of my Committee. One is the extent to which we should be selling expensive arms to countries that cannot afford them. The Saudi investigation has been abandoned, but the investigation of the sale of the air traffic control system to Tanzania is ongoing. More than anything else, the argument about that was that a very expensive system was being sold to a very poor country and that there was no evidence that that was sustainable or was making, or could make, any contribution towards poverty reduction. I do not want to prejudge the result of the inquiry, although others have made their views about the circumstances pretty clearly known. Indeed, at the time, many people clearly stated that the sale was inappropriate.

In 2005, I think, the United Kingdom sold £1 billion of arms to Africa. For those of us who support our international development obligations, that raises real questions whether that is consistent with our objective to eliminate poverty in Africa and tackle its very real problems. The poor people whom I and many others visit when we go to Africa simply want the opportunity to get out of poverty. Are they well served by Governments who buy arms from us on that scale? That is an important question. We need a clearer steer on what is happening.

Reference has been made to the role of arms brokers, which our Committee and organisations such as The Corner House and the consortium on arms think critical. That is the grey area where everything gets hidden—what is being exported, from where, to whom, to which third party and whether the lubricant of bribery is being used, whether simply for procurement purposes or for subverting licensing and regulations. The Committee's recommendation that the Government should consider taking tighter control of the role of brokers and extending jurisdiction over British nationals abroad in that sphere should be seriously considered. It is easy to hide information in third countries.

The issue of dual use is particularly pertinent to me, as I represent a constituency heavily engaged in oil and gas exploration, development and production. We will all surely be mindful of the fact that the arms to Iraq scandal centred on supposed oilfield equipment—actually components for making a supergun—being exported to Iraq. In case of misunderstanding, let me be clear: I do not believe that the companies, big and small, engaged in the oil and gas industry in my constituency are willingly or intentionally or in any possible way engaged in anything that converts oilfield equipment to arms. However, the problem, particularly for small companies that may be asked to provide components for what they would regard as perfectly legitimate oil or gas-related activities, is that it may not always be realised that such components could be adapted, subverted or in some way diverted for military use.

We had a good discussion in the Committee about the risks associated with that and the proactive nature of the Export Control Organisation in giving people access to information on the issue. However, it remains my view that more could be done proactively to ensure that companies appreciate such risks, particularly if they get orders from unusual areas, and that they know that they can get advice to check the situation out. I think that 99.9 per cent. of companies would rather not accept even a profitable order if they thought that it would be misused in that way. They need to know that they have help available.

We all take the view that the exercise at the Department to consider the privatisation or part-privatisation of the Export Control Organisation was an untimely distraction that put a lot of pressure on the organisation and certainly depressed morale. One can say only that it ended happily, in that the Government realised—quite quickly, to be fair—that the proposal was neither defensible nor even sensible. We were pleased when the Minister in question admitted that it was not going to proceed. He expressed his personal satisfaction. I hope that such a thing is not proposed again.

I am not making an ideological point about the role of the private sector, but it seems to me that an organisation with a job as crucial as controlling what arms are exported from this country and where they go, and ensuring that they are not misused, is fundamentally a public policy agency that could only be compromised by being put in the private sector or even by being part-privatised. The Government have accepted that argument.

The hon. Member for Amber Valley rightly said that the issue is complicated and difficult for the Quadripartite Committee. That is why we need such a Committee. I commend its Chairman, Roger Berry, and its other members who apply a little more assiduity than me to the complexity and the details of weapons systems and the means of regulating, licensing and so forth.

With the excellent support of its staff, the Quadripartite Committee does a really good job of putting pressure and focus on such issues. Nevertheless, it is exactly because the issues are both technically complicated and administratively so difficult that the risk of things going wrong is so high. We need to find simpler, more transparent systems that are more easily understood so that the alarm bells ring earlier.

It does not help when people get into a compromised situation in respect of jobs and UK arms exports. If we can manufacture weapons within an agreed system of international trade that develops technology, and provides jobs and export opportunities to the United Kingdom—and we do—I shall not complain in principle about that.

I was concerned, however, when some of my colleagues and I were giving evidence to the Organisation for Economic Co-operation and Development peer review about bribery and corruption, especially in the arms trade, by something said by the then Chairman of the Defence Committee, Mr. George. A freedom of information note that I received from the civil service states:

"Mr. George said that the arms industry was one of the most susceptible to bribes. It was worth millions of pounds and thousands of jobs and he (remember: the Chair of the Defence Select Committee) would be amazed if many of the big contracts achieved by UK companies were not as a result of bribes. Apparently they have to do it because everyone else does and the contracts are worth millions...jobs etc."

I believe that the right hon. Gentleman had not quite appreciated the environment into which he had put himself. I should point out that I was at the meeting as well. When the report was published, he called me and asked if he had really said those things, and I had to tell him that he had.

Unfortunately, that is the problem that we get into. Many jobs and a great deal of money are involved, but that is exactly why we need clear, open and transparent regulation, and a rigorously enforced licensing system that people understand and that is likely to lead to prosecutions on a grander scale than we have had to date. The fact that there have been no prosecutions could be interpreted as a wonderful vindication of the absolute integrity of our system and British executives, but I do not believe that the public at home or abroad would accept that at present.

I can put no finer a point on it than this: it is in the interest of us all to get this right. As long as a cloud hangs over the British arms industry, our ability to provide moral leadership in international arms trade and treaties is diminished. I hope therefore that the Minister will take seriously that what the Committee is trying to do in different ways and by different approaches—it comes from different perspectives—is to help the Government come up with a rigorous system that works. However, that requires that our recommendations are properly dealt with, either by implementing them or by explaining clearly why they cannot be implemented or why things should be done differently. We would regard that as a perfectly constructive exchange.

Photo of Susan Kramer Susan Kramer Shadow Secretary of State for Trade & Industry, Trade & Industry, Shadow Secretary of State, Liberal Democrat Spokesperson (Trade and Industry) 4:22 pm, 22nd February 2007

I congratulate the Committee on its report, which, again, is of the high quality that its reports have consistently been, and on obtaining this debate. On behalf of my party, I am delighted fully to support the recommendations. Indeed, we wish that the Committee had been more vigorous at times, but we are definitely on that side of the picture rather than the other.

We also appreciate the evidence given to the Committee by many groups, particularly the UK Working Group on Arms, which has been good at keeping us all reasonably informed on the issues. It is an important balance to a sector that has powerful communications mechanisms. I pay tribute to the work that Saferworld, Amnesty International UK, Oxfam GB and the British American Security Information Council do to ensure that information comes out.

This is an important time to debate the report. We appreciate that the Government will begin a review of the Export Control Act 2002 in May. That is exceedingly timely, but it will be extremely important that the scope of the review is as broad as it needs to be, and that it covers all aspects of this complex set of issues and this complex trade. Also, the focus of the report will be critical. The Chairman of the Quadripartite Committee, Roger Berry, defined two core areas of concern: loopholes and weaknesses, and enforcement. They are exactly at the heart of the issues that the review must address.

Let me first spend a few moments on enforcement, which has been less discussed in this debate, although it has been mentioned from time to time. I have been fascinated by answers to written questions that I have submitted to Ministers. I suppose that it is serendipitous that I happen to be speaking on behalf of my party today. In a question to the Chancellor of the Exchequer, I asked

"what offence was committed in respect of each prosecution for breaches of strategic export controls since 2000 where proceedings are complete; and what punishment was imposed in each case."—[Hansard, 13 September 2006; Vol. 449, c. 2332W.]

That was an attempt to find out who has been successfully prosecuted. The answer was that there have been only six cases. In 2001-02, a party—the names are not given in the response to the question—was prosecuted for knowingly breaching the prohibition on the export of aluminium and other WMD-related items to Pakistan. The punishment was 12 months' imprisonment, suspended for two years.

There was another success in 2003-04. The offence was exporting aluminium to Pakistan without a licence, and the fine was £1,000. In 2004-05, for an offence of knowingly breaching the prohibition on the export of aircraft parts to Iran without a licence, the punishment was rather stronger: 18 months' imprisonment, suspended for two years; a ban from being a company director for 10 years; and asset forfeiture of just under £70,000. There was yet another success in 2005-06. The offence was exporting body armour to Kuwait, Iraq, Saudi Arabia without a licence. The fine was £10,000, plus £500 costs.

In 2006-07, believe it or not, there were two offences for which prosecution was successful and for which there was punishment. The first offence was exporting three consignments of body armour and helmets to Kuwait and Iraq during 2004 without a licence. The fine was £10,000, plus £1,600 costs. The second offence was exporting 10 consignments of military helmets and flak jackets to Kuwait for export to Iraq without a licence. The fine was £8,000, plus £500 costs.

I do not know how other people react to that list, but it strikes me that we must have the most extraordinary arms industry in this country—its integrity must be beyond that of any other industry.

Photo of Malcolm Bruce Malcolm Bruce Chair, International Development Committee, Chair, International Development Committee

I am listening closely to what my hon. Friend is saying, and I concur. It is worth adding that the UK Working Group on Arms, in a submission to the Committee in November, said that it had documents showing that arms brokers in the UK were involved in negotiations for arms deals to supply £2.25 million of arms to Sudan, and other British-based companies were involved in providing arms from Albania to Rwanda for the Democratic Republic of the Congo. The point is that those cases were not even investigated, never mind prosecuted.

Photo of Susan Kramer Susan Kramer Shadow Secretary of State for Trade & Industry, Trade & Industry, Shadow Secretary of State, Liberal Democrat Spokesperson (Trade and Industry)

I thank my right hon. Friend for those comments. There may well be other ongoing prosecutions. Indeed, we know about BAE Systems in Tanzania. I suppose that one could consider that to fall into this category, but there have been few prosecutions and punishments, at least to date. I find that exceedingly worrying.

My colleagues and I decided that we might try to investigate the issue a little further. As the problem clearly seems to be whether cases are actually reported to the Government for prosecution, we asked how the Government deal with unreported cases. What do they do to ensure that they are monitoring and investigating what is happening? Again, we received an answer on 13 September:

"HMRC does not make systematic assessments of unreported breaches of arms export controls. However, HMRC does undertake risk-testing exercises that support our assessment that there is not widespread abuse of export controls and that UK exporters are broadly compliant."—[Hansard, 13 September 2006; Vol. 449, c. 2332W]

Given the risks that are involved with this trade, I believe that many of us would find that a rather worrying response. A risk assessment surely is not sufficient when we consider the consequences of the illegal arms trade.

Trying to investigate still further, we went to the Department of Trade and Industry:

"To ask the Secretary of State for Trade and Industry how many staff are tasked with monitoring compliance of UK (a) companies and (b) citizens in relation to UK arms export regulations."—[Hansard, 27 June 2006; Vol. 448, c. 246W]

I suspect that many people in this Chamber will be interested to learn that:

"The Department of Trade and Industry's Export Control Organisation has seven full-time Compliance Visiting Officers who check compliance".

The chances of being caught for travelling without a ticket on the London underground are considerably higher than for illegally exporting arms from the UK.

Those are the issues around enforcement. Many other important issues have been well discussed in this debate, but those examples begin to illustrate why we are concerned that enforcement is low on the agenda. It is not receiving the vigour that it needs, yet it is one of the two pillars of an effective arms export control system.

We are also concerned about Government cuts. As we know, I assume as part of the Gershon review, the staff at the Export Control Organisation are under review and are likely to be reduced, despite the fact that in 2004 the Government received a report from their consultants that the present numbers would always operate close to the limit of their capacity. The consequence of the loss of that small number will be a significant risk of failing to provide the necessary minimum level of service. The operation is already near the bone. I have listed the work that it can do, its enforcement powers are limited, and it now faces further cuts. We find that exceedingly worrying.

We have talked about end use, and I shall talk about it from a different angle. We have talked about the review of end use as a necessary part of the enforcement mechanism, but the system seems to involve informal reporting on end use from defence attachés in our embassies. I understand—perhaps the Minister can clarify—that the removal of defence attachés, at least from some key embassies, is being considered. If that is true, what are we doing to our informal system, when we do not have a rigorous formal system in place? Will the Minister address enforcement seriously today and when he enters the review process, which is welcome, in May?

The Quadripartite Committee is doing a superb job of providing parliamentary scrutiny, but as someone who is not a member of the Committee, I have a sense that if it were in another country—perhaps the US, or somewhere such as Sweden or Belgium—it might receive a far steadier and more detailed flow of information to use in the scrutiny process. I know that the Government's heart is in the right place; they have often said how important it is to have detailed annual reports. Can they update us on where they have been going with that process? I understand that in 1996, there were technical difficulties in providing information and I am not sure how far we have advanced.

I move on to an issue that has been well-covered in the debate: extraterritorial jurisdiction of brokering and trafficking, which is the loophole and the weakness in the 2002 Act. As a party, we are extremely concerned about the scope for the re-export of inappropriate arms—third-party arms transactions that would be illegal were they carried out directly from the UK—and the trend among UK companies to move arms production from the UK offshore to places with lighter licensing regimes. Others have given excellent examples of all three. The Chairman of the Quadripartite Committee talked about Land Rover and the 110 military vehicles that turned up in the Andijan massacre and were used by Uzbek troops in attacks on protestors and civilians. Others have referred in passing to BAE Systems and its subsidiary, BAE Land Systems South Africa, which openly sells military vehicles into conflict areas. Such sales would be heavily questioned if the vehicles were directly exported from the UK. We have been given a series of examples.

The Chairman of the Quadripartite Committee reminded the Minister of a strong element of the Labour Party's 2001 manifesto, which was to pursue arms brokers and traffickers wherever they were located. Will the Minister update us on his thinking on that and, too, on the fact that we do not have the capacity to pursue those companies wherever they go, which has become a running sore in the 2002 Act?

I want to see re-export clauses in licences for production agreements. I shall not be pedantic about the exact mechanisms, but the will has to be there to ensure that, throughout the chain, the appropriate standards and criteria are observed. If we do not do that, as my right hon. Friend Malcolm Bruce said, the taint that will remain around our domestic industry will be unacceptable. If that taint remains and grows, rather than disappearing and being removed in a way that gives confidence that criteria are being observed, it will become increasingly difficult for companies to operate. Public opposition to them will grow unless the taint is challenged and removed.

In arms control, consistency is important. I do not want to rub it in about BAE Systems and al-Yamamah, but there is a sense that friends get treated differently simply because they are friends. In his intervention, Richard Burden, who is no longer here, talked about UK components—head-up display units—in US F-16s that have been sold to Israel. In that case the licence was given with the knowledge that the aircraft would end up being sold to the Israeli Government. That bending of the rules in order to keep up a friendship, in this case with the United States Government, makes people believe that there might be a double standard. Nothing could put more at risk the sense of integrity around arms exports than a sense that there is some sort of double standard and that we will allow a friendly third party to do something that we would not do ourselves. It is important that that consistency should be established throughout the process.

Judy Mallaber mentioned the role of finance, which is crucial. It can be seen in the alleged corrupt selling of BAE's air traffic systems to Tanzania, as questions have been raised about the financing that enabled that transaction to take place. Many major arms control transactions involve a degree of financing, and the review must take that on. Surely the standards that are being applied to the companies ought to flow through and be applied to the financial institutions that are the enablers of many of the transactions. I ask the Minister to include that in the review.

The passionate speech made by Sir John Stanley described more clearly than I ever could the unacceptability of extraterritorial rules that apply to long-range missiles and weapons of torture but not to small arms, light weapons and ammunition—those instruments used in conflicts in the developing world. The hon. Member for Amber Valley and my right hon. Friend the Member for Gordon, both of whom have such experience in international development issues, are well aware of and have described the conflict that tears apart the poorest countries in the world, which makes misery and takes away hope and development opportunity from the poorest people on the globe. The conflicts in the Democratic Republic of the Congo, Sierra Leone—although that is in a more hopeful phase—Uganda and Sudan have depended on the availability of small arms to fuel conflicts and to allow conflict to continue. If small arms are not controlled and we cannot get a grip on such trade, I see no way in which we can bring peace and opportunity to some of the people who need it most.

I spent some time on the Department for International Development portfolio, rather than the DTI portfolio that I am on now, and in virtually every area of suffering, conflict and small arms are an essential element of the ongoing agony that people live with. We must ensure that sustainable development is recognised as fully as possible in the criteria in the Export Control Act. I know that it is in there—everyone welcomed the mention of sustainable development as a criterion—but many of us feel that it is not applied to the same standard or given the same importance as other criteria. In the review, that could be changed. For example, it could be included in the table of relevant consequences contained in the schedule to the Act. Various other amendments could ensure that sustainable development had a much higher profile when considering arms export licences.

The right hon. Member for Tonbridge and Malling spoke of cluster munitions. I do not need to take up time by adding to what he said. I was going to speak extensively, but he spoke well and completely. The review of the Act gives the Government a real opportunity to make a substantial change to their historic policy. I know that, in their hearts, many Ministers would allow that.

There is a growing recognition that cluster munitions are basically land mines delivered from the air, that their failure rate will always be high and that there is no recognised military application for them. They are essentially a weapon that targets and destroys civilians, but the military use for which they were originally designed has long been redundant. The review of the Act will give the Government an opportunity to take a stand and a lead. The Minister will know that a number of countries met in Norway recently to formulate a new version of the prohibition on land mines. To see that moving forward would be fantastic.

Getting our house in order is crucial because we have to act also on the international stage. This is not a debate about international arms treaties, so I shall mention the subject only in passing, but for the Minister and the Government to have an effective and powerful platform, we must be seen to be totally effective on our home ground. We need the Government to help promote the European Union code of conduct on arms exports, upgrading it into an enforceable common position. It now exists in draft form and it has been widely welcomed, but it is not high on the agenda of the German presidency and it does not seem to be on the agenda of the Portuguese presidency. It needs a champion to get out there and take it forward. Having an effective and enforceable common position at EU level could make a fundamental difference—one that the United Kingdom cannot make alone.

Again on the international arms trade treaty, my party was delighted that, in October 2006, the United Nations voted overwhelmingly in favour of a resolution mandating the start of negotiations, and it congratulated the British Government on playing a leading role in ensuring that the mandate was successfully passed. However, that is only the beginning. In the process of negotiation so much can be lost, and a Government who have ensured that their home ground is as strong, as viable and as invulnerable to challenge as it can be will surely take the leadership, having a more powerful position in the international arms trade treaty. I hope that we hear from the Minister on that matter, and that it will be kept in mind in the review that lies ahead.

Photo of Tobias Ellwood Tobias Ellwood Opposition Whip (Commons) 4:43 pm, 22nd February 2007

It is a delight, Mrs. Anderson, to participate in this debate. On behalf of Her Majesty's Opposition, I welcome the report and I congratulate Roger Berry on juggling four Departments so well and keeping them in check.

The debate has given us a fantastic opportunity to scrutinise the work of the Committee and its report. Before turning to the details, however, I will share with the House my reactions to the contributions that have been made. It has been an interesting debate so far.

My right hon. Friend Sir John Stanley spoke eloquently on a number of issues, but he touched heavily on cluster bombs. I fully concur with many of his comments. He may be aware that about 6 per cent. of cluster bombs fail to ignite. I hope that the Minister will consider whether anything can be done. We are not going to reach the stage where all cluster bombs are removed from the battlefield. As a former member of Her Majesty's armed forces, I have come across many areas where we have taken casualties in that respect. The problem will be there for a long time to come, even if we ban them ourselves.

The treaty might consider making the collecting of mines that have not exploded the responsibility of the organisations or military bodies that dispersed them. That might be a step forward in helping to remove the problem. It could result in a new generation of cluster bombs that would be easier to collect in the aftermath of war. It would at least be a stepping stone towards the elimination of those ghastly bits of military hardware.

Judy Mallaber called for a wider audience for this subject. Perhaps the result of the review that the Minister is about is to initiate could be debated on the Floor of the House rather than in Committee. More right hon. and hon. Members would thus be able to participate and learn about the important measures that are taking place. We have a long way to go and the greater the number of hon. Members who are involved in the debate, the better.

Malcolm Bruce touched on the air traffic control system to Tanzania. I fully agree with what he said. It seems bizarre that we should have sold a bit of kit worth £28 million when something a quarter of the price would have worked. We must also bear in mind that the state of the air force in Tanzania equates to 10 Bell Huey helicopters, nine MIG aircraft and one Cessna light aircraft. That does not justify a £28 million air traffic control system. Legal it may have been, but whether it was morally correct is questionable.

Susan Kramer completed the debate by showing that there is cross-party support for working together on an international arms trade treaty. We should take the opportunity of that cross-party support to review what regulations, if any, need to be changed on the home front.

I welcome the revision of the European Union code of arms exports, as it will strengthen the code. Arms control will be effective only if other countries are as rigorous in their controls as we are. I agree with the conclusion of the Quadripartite Committee that the code should ensure

"greater consistency, responsibility and transparency in the exports of arms" both across the EU and beyond.

I have a number of questions. If the Minister is not able to respond today, I ask him to write or to put his replies in the Library, so that others can benefit from them. In line with Cabinet Office guidance, the Government plan to review the regulations under the Export Control Act 2002 in May this year. What progress has been made on the terms of reference for that review, and when do the Government plan to publish a consultation paper? When will the Government's review into that Act be complete? Again, I ask that we are given the results on the Floor of the House.

What recent discussions has the Minister had with his European counterparts to revise the EU code on arms exports, and how does he plan to reach a consensus with those EU member states that have blocked the revised version of the code? What plans does he have to conduct a review of the effectiveness of the principles governing arms transfers agreed by the conference for security and co-operation in Europe?

The 2002 Act is the backbone of our discussions on the report and the international arms trade treaty is a vision for the future. The Opposition are pleased that, last October, the United Nations voted to begin work on drawing up an international arms trade treaty. Although the UK already has a rigorous arms export control regime, which I support, and although our country's defence exporters are responsible people, the treaty is a step forward. It will ensure that suppliers of arms are made accountable and will not contribute to brutal and destabilising wars around the world.

We are pleased that major weapons manufacturing countries, such as Britain, France and Germany, voted to begin work on the treaty, as did the emerging arms exporting countries of Bulgaria and Ukraine. However, I have some concerns about the treaty. I am sure that the Minister is aware that a few arms exporters either voted against the treaty or abstained. America, for instance, said that it wanted to rely upon existing agreements, and Russia and China, which are also major arms manufacturers, abstained. We need to assure arms exporters, such as Russia and China, and emerging manufacturers that a treaty would not aim to damage the arms industries.

There are an estimated 639 million small arms and light weapons in circulation. If we were to spread those evenly among everybody, there would be one for every 10 people on the planet. That places the challenge facing us in perspective. The report concludes that a treaty must be founded on existing humanitarian and human rights laws and cover trade in all conventional arms. Does the Minister believe that the effectiveness and rigor of the existing UK arms export control regime is a suitable model for the UN treaty? If not, how would he change the Export Control Act 2002?

The report claims that a transparent mechanism for monitoring and enforcement is required—as reiterated by hon. Members. The Minister must also ensure that a treaty is enforced by other signatories because a treaty will only be as good as the signatures on it. What about the states that refuse to sign a treaty? What discussions has the Minister had with the US, Russia, China and other counterparts on the international arms trade treaty? What plans does his Department have to ensure that the plans for an international arms trade treaty do not collapse? What representations have the Government had from arms manufacturers on the proposed treaty?

Moving on to the detail of the report, first, on sanctions and embargoes, I agree with the Committee's comments that the Government need to clarify the status of the arms embargo on China. On page 80 of the report, concerns are expressed about how that has been implemented. I would be grateful if the Minister could say whether, despite our strong trade links with China, there are still concerns about the arms embargo. How will those concerns manifest themselves when we try to ensure that China makes progress and joins an arms trade treaty?

Photo of John Stanley John Stanley Conservative, Tonbridge and Malling

Would my hon. Friend agree that following the destruction of an out-of-date weather satellite and the successful testing of an anti-satellite system by China, there is now an even stronger determination, particularly in the US, to ensure that the arms embargo is sustained?

Photo of Tobias Ellwood Tobias Ellwood Opposition Whip (Commons)

My right hon. Friend makes an astute point. The ground-based missile fired on January 17 that took out a satellite moved us into a new generation of arms warfare. I was surprised that there was little response in the media, from the Government, or from the Unites States on the fact that that moved us into a new chapter. I concur with my right hon. Friend's comments and am interested to hear what the Minister says about China moving into an area that we have not seen before.

I understand why the Government and other EU countries are unclear about the arms embargo on China. For example, Britain's trade deficit with China was, for the first time, more than £1 billion last February; it has been even higher in the months since then. The report on east Asia from the Select Committee on Foreign Affairs published last year concluded that

"the United Kingdom maintains its championship of free trade between the European Union and China, by working with other advocates of free trade within the EU to support trade with China."

However, the Government must not forget that the arms embargo was imposed because of the human rights abuses carried out by the Chinese Government in 1989 and that people still remember the horrific scenes that took place in Tiananmen square. The report we are discussing suggests that there is an erosion of the existing arms embargo on China and that EU countries now interpret the embargo in different ways, so it is losing its impact.

Photo of Roger Berry Roger Berry Labour, Kingswood

That is because, apart from the UK, EU countries did not define what the embargo meant; the UK was the only country to define what the embargo covered. In that sense, the embargo is not 100 per cent.—I am not even sure it is 10 per cent. Most countries in the EU are not specific about what it covers, so it is a weak embargo. That is a problem.

Photo of Tobias Ellwood Tobias Ellwood Opposition Whip (Commons)

I am grateful for the Chairman's comments. On page 80 of the report, it is made clear that there are different interpretations of the terms of the embargo and, as the hon. Gentleman said, only Britain went further and provided a solid definition. Perhaps, other EU countries should take a leaf out of our book in that respect.

It is essential that, before trading in weapons with China, we have clear evidence that the Chinese Government are willing to respect human rights. Can the Minister confirm whether it is still the Government's intention to maintain an arms embargo on China and whether he supports the European arms embargo? What recent discussions has the Minister had with his American and European counterparts about maintaining an arms embargo on China, and what plans does he have to work with the European Union and the international community to maintain an effective arms embargo? Are we witnessing a process of demise until the embargo is not worth the paper on which it is written?

My final questions relate to pages 57 and 58 of the report, which are about the staffing of Custom's locations around the UK. There is a worrying citation on page 58 that suggests that of the 50,000 containers checked in Felixstowe, only one was actually opened up. Can the Minister say whether he feels that we have sufficient staffing across the country to ensure that exports are thoroughly scrutinised?

On overseas arms production, on page 95, the report states:

"There is an increasing trend for UK companies to be involved in arms production in other countries. This involvement can take several forms, for example: co-production and joint ventures".

Such involvement could also include building products in other countries. The further away from Britain that production takes place, the more diluted any treaty becomes—as has been said many times. Can the Minister confirm what is being done to ensure that any export treaty, licence or agreement remains sacrosanct no matter how far from UK shores the military hardware is taken?

On page 97 of the report, the international traffic in arms regulations waiver—an agreement with the United States—is discussed. We have spoken a lot about technology getting into the wrong hands, but, on the flip side, it is important to be able to share technology with our friends. We consider the US our best friend. We stand next to the US in the diplomatic corridors, stand shoulder to shoulder with them on the battlefield, and work next to US citizens on the factory floor. It seems strange that there are people in Congress who wish to challenge existing export treaties and established licences and agreements simply because they feel that we are no longer trusted. I hope that the Minister will take those concerns seriously because they have a knock-on impact on our ability to maintain, own and repair the hardware that we need to keep our military up to the standard that we expect. The focus of that issue is the F-35—the joint-strike fighter aircraft—over which there is a huge question mark simply because of our relationship on the hill with the United States. There are those in the US who question whether or not we are trusted to hold on to the necessary technological skills and know-how and not hand them on to other sources.

I welcome the report and congratulate again the hon. Member for Kingswood on his work. However, I add the caveat that there is much work to do. We have an economic and moral duty to provide robust, enforceable, yet fair export controls. Britain is in a pivotal position: it is part of the G8 and has a lead position in the EU and the Commonwealth. We must ensure that we provide the necessary laws and incentives to produce an arms export and control treaty that works. That is the objective of all parties and although we are making progress, there is still much work to do.

Photo of Jim Fitzpatrick Jim Fitzpatrick Parliamentary Under-Secretary (Employment Relations & Postal Services) 4:59 pm, 22nd February 2007

I thank the Quadripartite Committee for its report and congratulate it on producing it. I add my appreciation to that expressed by all right hon. and hon. Members for the support that the Committee had in arriving at its conclusions. I also welcome the constructive presentations of views given by colleagues here today. I acknowledge the concerns and questions raised, as well as the positive comments on the Government's efforts.

I should explain at the beginning that I am responding to the debate on behalf of my hon. Friend the Minister for Science and Innovation, who is overseas on Government business. My hon. Friend Roger Berry did me a great service when he promoted me to Minister of State—I am actually an Under-Secretary—but I am grateful to him. He might have a word with our right hon. Friends at No. 10 or, perhaps even better, No. 11 and bring his judgment to the attention of the Chancellor of the Exchequer.

I am pleased to have the opportunity to respond to the Committee's specific points, to comment further on the Government's wider export control work and to look forward to the challenges that lie ahead in this vital field. If I may, I will make my prepared contribution first and then respond to the points raised by right hon. and hon. Members.

The Government have worked hard to maintain a high level of export control efficiency and effectiveness. That is reflected in the continuing excellent performance against published targets by the export licence processing teams. In fact, 2006 was the Government's most successful year ever for export licensing performance. Good work is ongoing with regard to information provision in the annual and quarterly reports; enhancing the IT systems that underpin our work; awareness raising, both domestic and international; and a range of other matters.

The scrutiny applied by the Committee is a very important aid to the export licensing process and to the Government's wider deliberations on the scope and administration of export controls. I look forward to the Committee playing a full role as the Government's review of export controls is taken forward in the spring and early summer of this year.

A key aspect of an effective control regime is accountability and transparency—a point made forcefully by many right hon. and hon. Members. UK export controls are among the most transparent in the world. The Government publish detailed information at quarterly and annual intervals, setting out licence applications granted and refused by destination, as well as a range of performance-related data. The reports are scrutinised by the Committee, which seeks evidence both on individual decisions and on more general export control issues.

The Export Control Organisation and the Foreign and Commonwealth Office have worked together to make significant strides in recent years in reporting, including by introducing the quarterly reports and improving both the data in and the presentation of the annual report. The Government continue to keep an open mind about what information we provide and how we provide it, and have carefully considered the range of recommendations made by the Committee in that regard.

The Government are happy to provide in the reports information on resources allocated to administering and enforcing export controls, as recommended, but the Committee will of course appreciate that, on certain matters, the Government are limited as to what we can place in the public domain by the need to maintain confidentiality for commercial or security reasons. There is also the underlying question of resources.

Although the Government can consider changing the way in which we report our export control activities, to do more in that respect would risk diverting resources away from the core export control function. Developing a searchable database, as the Committee recommended, might deal with the issue by providing the ability to manipulate data. The Government are considering that proposal and will let the Committee know the outcome in due course.

I come now to the 2007 review of export controls. In addition to running the export licensing machine well, we need from time to time to step back and ask whether it is the sort of machine that we want in the context of the fast moving environment in which it operates. That is why this year's review is so important. As the Committee will know, the Department of Trade and Industry will this year start a review of the controls introduced in 2004 under the Export Control Act 2002. That review is timed to commence three years after the new export control legislation was implemented, in accordance with Cabinet Office better regulation guidelines.

The ECO will carry out the review, the centrepiece of which will be a full public consultation. That will provide an important opportunity to take stock of existing export controls, evaluate the impact and effectiveness of what we did in 2004 and assess options for changing or enhancing export controls. The ECO is already engaging with other Departments and external stakeholders, including industry and non-governmental organisations, to identify what those change options are and their respective merits. We will continue to do so throughout the coming months in the lead-up to the issue of the public consultation document in May. I believe that that was the subject of one of the questions asked by Mr. Ellwood. That document will flag up the realistic change options and ask for evidence-based views on their likely impact and effectiveness. The deadline for receipt of contributions will be August 2007, so that in the autumn of this year we can fully evaluate those responses.

The Committee's review of the operation of the legislation is timed so as to be taken fully into account by the Government's review. We are working closely with the Committee—as I think my hon. Friend the Member for Kingswood, as its Chairman, will acknowledge—to ensure that it can make a well informed contribution, and we will consider very seriously what it has to say. We aim to complete the review process by December 2007 and we will publish a response when we have analysed the outcome of the consultation.

I hope that the Committee will appreciate that I cannot pre-empt that major review by expressing views about what I or any other Minister might think should change in export controls. That will be determined on the basis of the evidence put before us, and we are, I can assure the Committee, genuinely open-minded. However, I should like to take this opportunity to talk about the key themes and some of the difficulties inherent in finding the right answers.

One of the key difficulties that we will face—it has already emerged during the initial workshops that we have had with the industry and NGO representatives—is finding a way to prevent undesirable exports and related activities that is effective and proportionate and does not place unnecessary burdens on legitimate business. The Minister for Science and Innovation flagged that up when he talked to the Committee in March last year, and it remains an area in which there are no easy answers.

The days are gone when the UK defence industry was largely autonomous. Defence manufacturing is now a complex globalised process, with international collaboration firmly to the fore. Technology crosses borders, often electronically, at all stages of the process, and components and equipment will often leave the UK to be turned into the final product elsewhere. That mirrors what is happening in many industries and it happens for perfectly legitimate business reasons, but it inevitably presents additional challenges for export controls.

Our export controls are graduated on a risk basis: the higher the risk and the greater the potential damage from an unwarranted export proceeding, the greater the stringency of control. Thus in some cases—for example, those in which components are going to the Governments of NATO countries and other trusted allies—we can provide more flexible licensing options. For high-risk transactions, however, we need to apply close scrutiny before a decision is given. For those activities that are inherently undesirable, we want to control not only what happens in the UK, but what UK citizens are doing overseas. That relates to the so-called extraterritorial controls.

For example, we quite rightly apply extraterritorial controls in the field of torture equipment and for supplies to embargoed destinations. In doing so, the UK is sending a clear message that it does not want such things to be exported from its territory, and nor does it want its citizens, wherever they may be located, to be involved in arranging for others to supply them or to provide other services in support of those supplies. However, making extraterritorial controls work in practice is always going to be difficult.

Such controls are likely to lead to conflicts of jurisdiction where other countries take a different view from us on individual cases, causing problems with enforcement. It is difficult to ensure that UK citizens overseas are aware of them, and there is clear potential to confuse those who find themselves operating under two separate, perhaps differing, sets of legislation.

Photo of Roger Berry Roger Berry Labour, Kingswood

The Government have dealt with that issue in other legislation. For example, in the Anti-terrorism, Crime and Security Act 2001, the Government legislated on bribery and corruption with full extraterritoriality, knowing full well that, in many jurisdictions, such activity is not criminalised.

Photo of Jim Fitzpatrick Jim Fitzpatrick Parliamentary Under-Secretary (Employment Relations & Postal Services)

My hon. Friend makes a very important point. Clearly, lessons can be learned from other legislation. I will say more about extraterritoriality in a second.

To return to what I was saying, we need to focus our efforts carefully. We need to avoid casting the net of export controls so wide that it catches a wide range of legitimate and innocuous activities, at significant cost to both business and the Government. If I may, I will now deal with a number of the points raised in the course of the discussion.

Photo of Roger Berry Roger Berry Labour, Kingswood

I am grateful to the Minister for giving way again; I hope not to intervene too often. Is not the deterrent effect a crucial part of the argument? The chance that innocent people will be caught is an unlikely concern, given the importance of the message that people who are breaking the law will be dealt with if they can be caught and if it can be proved that they are breaking the law. Is not the deterrent argument infinitely more important than the argument about the odd innocent person not knowing that they might conceivably break the law?

Photo of Jim Fitzpatrick Jim Fitzpatrick Parliamentary Under-Secretary (Employment Relations & Postal Services)

I do not disagree with my hon. Friend's assessment. He has made the point very effectively that we operate the system in respect of other aspects of conduct and that consistency should be welcomed.

Both my hon. Friend and Peter Luff asked about creating a register of arms brokers. The EU Council common position on the control of arms brokering that was adopted on 23 June 2003 does not call for the registration of arms brokers. Article 4 says that member states "may" establish a register of arms brokers. It also states:

"Registration or authorisation to act as a broker would in any case not replace the requirement to obtain the necessary licence or written authorisation for each transaction."

The Government will consider carefully the comments that have been made on this issue and any evidence that is put forward as part of the forthcoming review.

Several Committee members questioned the Government's policing of the internet to detect export control breaches.

Photo of John Stanley John Stanley Conservative, Tonbridge and Malling

Before the Minister moves on from the registration of brokers in the UK, I ask that the Government reflect on the sense of their justification for refusing the Committee's recommendation. In their response, they say:

"The Government has long considered that such a register could be used by brokers to suggest that they have official approval".

The Minister nods. Will he consider the Government's child sex offenders register? Would anyone seriously suggest that, by setting up such a register, the Government approve child sex offences?

Photo of Jim Fitzpatrick Jim Fitzpatrick Parliamentary Under-Secretary (Employment Relations & Postal Services)

I hope that the right hon. Gentleman will forgive me for nodding at him. I was nodding not in assent, but because I assumed that he was quoting accurately from the Government's response. I hear what he is saying about the interpretation of what a register would convey, but, as I have just said, the Government will consider carefully the comments that have been made on this issue and the evidence that is put forward in the forthcoming review.

The right hon. Gentleman said in his speech that a review is not needed because all the evidence is already out there. The Cabinet Office recommendation is that there should be a three-yearly review of new regulations as part of our better regulation policy. The opportunity is there, and the Committee will want to press for changes in several areas, as has been clearly articulated today. Some right hon. and hon. colleagues may think that the review represents another delay and is unnecessary, but it will provide an opportunity, and it is the way in which the Government intend to proceed. I hope that colleagues will take advantage of the opportunity that it will provide.

I return to the policing of the internet to detect export control breaches. I am pleased to report that the Government recently started a pilot programme of internet monitoring, within a limited subject, to gauge the extent to which the internet is used to promote or facilitate the export or transfer of goods that are subject to UK export controls. The Government hope to report back to the Committee later this year on the outcome of those investigations.

In response to the Committee's recommendations on changes to the Export Control Organisation's IT, the Government are due to launch the SPIRE—shared primary information resource environment—IT system in the third quarter of 2007. The system will allow the electronic submission, circulation, processing and issuing of export licences. That will make the whole process even more joined up between Departments and create a more efficient and effective licensing process. Importantly, part of any new system will be dedicated to providing a reporting tool to simplify the production of statistical data for the annual and quarterly reports. I hope that that addresses colleagues' concerns about the Government's response being joined up.

In an intervention on my hon. Friend the Member for Kingswood, my hon. Friend Richard Burden asked about arms exports to Israel. It is, of course, entirely understandable that hon. Members should take a close interest in defence exports to Israel. However, like all other countries, it has a right to arm itself for self-defence, as the hon. Member for Mid-Worcestershire, the Chairman of the Select Committee on Trade and Industry said.

I reiterate that all applications from any destination, including Israel, are rigorously assessed against the consolidated EU and national export licensing criteria on a case-by-case basis. With applications from Israel, the likelihood of an export being used in the occupied territories is a key factor in risk assessment against the consolidated criteria. If a licence is considered to be inconsistent with the criteria, the licence will be refused, as many for Israel have been.

Our overseas posts also have standing instructions to report any misuse of UK-supplied equipment. If such information comes to light—whether through the media, NGOs or intelligence reports—it will be taken into account when assessing future licence applications. This issue may also be raised with the relevant authorities in the country in question. I cannot respond to some of the specific points that were raised, but I can say that we recently refused licences for the export of head-up displays to Israel because of concerns that they might be used in the occupied territories.

My hon. Friend the Member for Kingswood also asked about brochures and publicity in a recent arms fair in my constituency. Where prohibited items have been advertised at trade fairs, the Government have taken action with the organisers to remove all such material. Clearly, we have to be vigilant to ensure that that remains the case.

Sir John Stanley asked four specific questions, and generously said that he did not expect me to respond today and that I could respond in writing. I accept his generous offer, but I will say that we thought that we had given the Committee details of refused licences. I shall certainly respond to the Committee in writing with more information. His second, third and fourth questions are primarily matters for the Ministry of Defence, but I shall ensure that the Department is aware of his questions and that it responds in due course.

The right hon. Gentleman and others asked about extraterritoriality for trafficking and brokering. The British Government controls UK involvement in the movement of any military goods from one overseas country to another if any part of the trading activity takes place in the UK. Fully extraterritorial trade controls would apply to any UK person anywhere in the world and to any act calculated to promote the supply or delivery from one third country to another of restricted goods only—long-range missiles with a range of 300 km or more and their components and torture goods—and to military equipment to embargoed destinations. Whether those controls should be extended to other types of military equipment, particularly small arms and light weapons, or adapted in other ways are key questions for the forthcoming review. The Government will seriously consider all the evidence that is put before them.

Malcolm Bruce asked about Department of Trade and Industry follow-ups on some reports. He knows that HM Revenue and Customs is the primary enforcement body for export controls. The DTI refers to HMRC any evidence presented to it that suggests the breach of a control. Some of the transactions that he spoke of may have taken place before the introduction of the tighter 2004 legislation. However, I have taken a note of the matters that he raised. If he wants to supply any further information, I will be happy to pass it through the system and have the matter considered further.

The right hon. Gentleman also asked about export licensing and sustainable development. As the Chairman of the Select Committee on International Development, he will know that DFID is the lead Department for advice on sustainable development considerations, as defined in criterion 8 of the consolidated criteria. The criteria require the Government to consider the compatibility of exports with the economic and technical capacity of the end-user country before issuing or refusing a licence. That ensures that sustainable development must be considered in relation to export licence applications.

The ECO will refer licence applications to DFID for assessment against criterion 8, if the destination is on the list of countries for which sustainable development is most likely to be an issue and—with standard individual export licences and standard individual trade control licences—the value of the licence is above a certain threshold that is determined on a country-by-country basis. The destination list is made up of countries that are eligible for concessional loans from the World Bank's International Development Association and is taken to represent the world's poorest. The list is kept under constant review to take account of changing circumstances.

The proportion of licences sent to DFID for advice during any particular period depends on the mix of country destinations for which applications were made. During 2005, 1.6 per cent. of SIEL applications and 35 per cent. of open individual export licence applications were referred to DFID for advice.

Photo of Malcolm Bruce Malcolm Bruce Chair, International Development Committee, Chair, International Development Committee

I am grateful to the Minister for what he has helpfully just said. Does he accept that there is a certain irony in the fact that it appears that British arms exports to Africa exceed our aid and development budget? Does he think that that suggests that we have the right balance between sustainable development and the arms trade?

Photo of Jim Fitzpatrick Jim Fitzpatrick Parliamentary Under-Secretary (Employment Relations & Postal Services)

The right hon. Gentleman makes a powerful point. I am sure that that situation would be of interest, and probably of concern, to the vast majority of colleagues in all parties. I have tried to articulate the fact that we have protections in place to try to ensure that exports to countries that are assessed as being in most need are suitably examined before export licences are afforded.

Photo of Roger Berry Roger Berry Labour, Kingswood

This is a request for information to be given at some future time. The methodology for applying criterion 8 would be of great interest to the Committee. I have raised in the House the fact that France has—some would say surprisingly—a record of rejecting rather more licence applications on the grounds of development criteria than the UK. I believe that the relevant figures are about 30, as opposed to one or two. I have asked the Government for their assessment of the reason for the disparity, given that this information is shared among member states of the EU. Some future assessment of that would be helpful.

Photo of Jim Fitzpatrick Jim Fitzpatrick Parliamentary Under-Secretary (Employment Relations & Postal Services)

I am happy to take on board my hon. Friend's request for further information. I note the points that he makes about comparisons with France, and I shall respond to him in due course.

Hon. Members have also raised the important issue of how we enforce export controls. I should like to give further information on that. Effective enforcement starts with the ECO's compliance team, which has a rolling programme to visit all companies that hold open licences to check that they are complying with the terms and conditions of those licences. We are currently looking at a number of compliance issues and will report back to the Committee in due course. We will increase the resources put into that function later this year—that matter was raised by Susan Kramer in particular—by redistributing some of the resources that will be saved through the introduction of the SPIRE electronic licensing system.

HMRC has been working over the past 12 months to raise the profile of strategic export controls and to integrate them more effectively into the wider work of the Department. Although HMRC officers are multifunctional—covering a wide range of fiscal controls, as well as many regimes that prohibit or restrict the import and export of goods—strategic export controls are given a high priority in the Department's overall enforcement work. To that end, the Customs confidential page on the HMRC website has been expanded and now includes information on military equipment, weapons of mass destruction, sanctions and arms embargoes, as well as on firearms and explosives.

HMRC has also established an industry working group with the Export Group for Aerospace and Defence specifically to focus on export control enforcement issues. Following meetings in July 2006 and January 2007, HMRC has agreed to consider a number of points about unlicensed exports, including those specifically relating to the possible misuse of the DTI's open general export licences. In parallel, the level of Customs checks on dual-use consignments has been increased.

Both to promote its own best practice abroad and to learn from the experience of others, HMRC has had recent contacts with German export control officers from the German customs investigation office, which have led to the initial assessment that its enforcement framework is broadly comparable to the UK's.

The Revenue and Customs Prosecutions Office has also recently met with Eurojust colleagues and other EU prosecutors. Importantly, HMRC and the RCPO will work closely with the DTI to ensure that they make a full contribution to the 2007 review of export controls. Separately, the RCPO will engage with the Sentencing Guidelines Council to see how best it can influence the discussions on appropriate sentencing guidelines.

The hon. Member for Richmond Park also asked why the EU common position on the control of the export of military technology and equipment has not yet been adopted. The common position defining common rules governing the control of the export of military technology and equipment will update and replace the EU code of conduct and will be legally binding. However, it requires consensus among member states for its adoption and, unfortunately, as she has outlined, member states were still unable to reach consensus at the General Affairs and External Relations Council meeting on 12 December. The Government are keen to see its adoption as soon as possible and will continue to work with partners to try to overcome the objections. Sadly, I cannot guarantee that agreement will come quickly, but I took note when she said that her information is that the Portuguese presidency is interested in raising it—

Photo of Jim Fitzpatrick Jim Fitzpatrick Parliamentary Under-Secretary (Employment Relations & Postal Services)

I take on board that clarification.

The hon. Member for Bournemouth, East raised the prospect of a debate of the whole House on the review's conclusions. I am happy to communicate that suggestion to my colleagues, including the Leader of the House. Obviously, it would be a matter for the usual channels to consider whether or not such a debate would be appropriate. He also raised the question of arms treaties. He suggested that I ask the Foreign and Commonwealth Office to respond in writing, and I shall do so. I shall also come back to him on the question of searches at the point of export. As I mentioned, customs checks at ports are a matter for HMRC, as the appropriate body. I understand that the Committee will be seeing representatives of HMRC on 1 March, so perhaps it will take up the issue then.

In conclusion, I hope that the Committee will see from the Government's written responses to its recommendations that all the points that it makes are being carefully considered. The Committee's scrutiny makes an important contribution to the Government's ongoing plans for improvements to export controls. That is particularly the case with the forthcoming review of export controls. The Government are grateful to the Committee for its contribution and look forward during the course of the review to a vigorous debate with the Committee, Members and other stakeholders.

Question put and agreed to.

Adjourned accordingly at twenty-seven minutes past Five o'clock.