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Re-Export Controls Bill [HL]

Volume 722: debated on Friday 3 December 2010

Second Reading

Moved By

My Lords, at the outset of my remarks, I pay tribute to Hannah Wright and Tom Donnelly of Saferworld, who have worked tirelessly to prepare background and briefing material for the Re-Export Controls Bill. Two weeks ago, they accompanied me to a meeting with the Minister—the noble Baroness, Lady Wilcox—and her officials, to whom I am grateful for their courtesy and willingness to engage in the issues raised by the Bill. We were accompanied by the right reverend Prelate the Bishop of Bath and Wells, who is a supporter of the Bill who had hoped to speak today but is a casualty of the Arctic weather conditions in Somerset.

Perhaps I should also put on the record the names of some other noble Lords who are supporters of the Bill. The list, which reveals approval from all parts of your Lordships’ House, includes: my noble friend Lord Hylton; the noble Lord, Lord Judd; the noble Baronesses, Lady Kinnock and Lady Falkner; the noble Lord, Lord Chidgey; my noble friend the Earl of Sandwich; the noble Lord, Lord Steel; the right reverend Prelate the Bishop of Bath and Wells; the noble Baroness, Lady Morris of Bolton; the noble Lord, Lord Razzall; my noble friend Lady Cox; the noble Lord, Lord Selkirk; the noble Baroness, Lady Tonge; the noble Lords, Lord Morgan, Lord Lyell and Lord Bates; and, my noble friend Lord Hannay of Chiswick.

I know that the noble Baroness, Lady Wilcox, will plead that the Bill is not necessary. She will doubtless argue that the Bill would create administrative burdens, that current end-user arrangements are satisfactory and that it would not add to what the United Kingdom is doing at present. I hope in my remarks to do two things: first, to set the scene and to show why this country needs to do all that it can, within its powers, to try to end the flow of arms into areas of conflict; and, secondly, to describe the purpose of the Bill.

Civil servants invariably prepare briefs that argue against change and for the status quo, but I hope to convince your Lordships that this Bill would not only close a legislative lacuna but enhance our authority in the international arena as more comprehensive measures on arms control are considered. All the arguments for no change that will inevitably be advanced today can be countered by one decisive point: that re-export controls are used in many other jurisdictions, including—as the Minister confirmed yesterday in Answers to Written Questions that I tabled—other European Union countries, such as France and Germany, and in the United States, China and Russia. As supporters of the Bill have recognised, if such provision was deemed necessary by legislators in all of those other jurisdictions, what evidence has led the United Kingdom to a different conclusion? Also, if those provisions have not crippled their Civil Services with extra administrative burdens, why should similar provisions have that effect here?

Private Members’ Bills are promoted in the hope of securing legislative change, but they have another important function, too. They create debate, challenge attitudes and influence policy-making. The Bill needs to be set in the context of the flow of arms into areas of conflict and against the backdrop of militias, genocidaires, child soldiers, warlords and whole regions, especially in Africa, that are awash with weapons. You do not need a weapons inspectorate to know what the weapons of mass destruction are in Africa; they are the small arms that you see everywhere.

In September, I was in Southern Sudan, southern Ethiopia and the Turkana region of Kenya. In an Ethiopian village called Omorate I talked to Joseph Amukoo, who is now aged 14. He was shot on Christmas Day last year in Salan village where he was sleeping alongside three men. Joseph’s father is dead and his mother and brother had encouraged him to work with the men, to earn some money to support the family, in building a house. He comes from the Merille tribe. As they slept, they were set upon by Turkana warriors, who burst in just after midnight. Joseph’s companions were killed and Joseph, badly wounded with a bullet through his chest, was left for dead. The following day, he was airlifted to Kenya’s Kakuma hospital. Surgeons immediately operated and removed a bullet just centimetres from the boy’s heart.

Still clearly traumatised by that terrifying experience, Joseph told me, “At midnight I saw their shadows and as they entered I pretended to be asleep. After they shot me in the chest, thinking I was dead, they ran away. I was left alone. In the morning the police vehicle came and after the bodies were removed the police collected ammunition and began inquiries”. I asked Joseph what happened next. He said, “They never found the men who shot me. This is normal”. What was their motive? “They killed for revenge. Their family had also been killed, one month earlier in the village of Kokuro, so they came for revenge, simply revenge”. Joseph described the killers as, “powerful warriors. They killed to show that they are powerful men”.

Joseph’s story could be replicated countless times: a decade ago, in Southern Sudan, 2 million people died during the civil war there; 200,000 people have died in Darfur; the so-called Lord’s Resistance Army in northern Uganda was responsible for the deaths of more than 1 million people; another 1 million people died in the Rwandan genocide; and 6 million have died in the continuing conflict in the Democratic Republic of Congo. These deaths happen because weapons manufactured outside Africa are exported to the continent by unscrupulous quartermasters who care little about the suffering or misery caused by their trade.

I was struck by some words from Hillary Clinton on 16 November, when the US Secretary of State made the point that this is not a historic problem but a contemporary one, even as we meet today. She said:

“We remain deeply concerned about Darfur. Violence is intensifying, human rights violations continue, arms flow despite the embargo, journalists and activists are arrested—some merely for speaking to members of this Security Council—UN peacekeepers are kidnapped. This is all unacceptable”.

Those remarks followed reports in October that more than 50,000 weapons had been shipped into north and south Kordofan, elsewhere in Sudan, to supporters of President Omar al-Bashir. Bashir has, of course, been indicted as a war criminal for genocide by the International Criminal Court, yet the flow of arms into areas immediately in advance of January’s forthcoming referendum is continuing to destabilise the situation there.

These small arms—man-portable weapons such as assault rifles, mortars, and grenades—are light and cheap tools that take a fraction of a second to fire, but their effects can be felt for a lifetime within families, communities and nations. Small arms have been a staple of all recent armed conflicts. They are available in abundance; no one knows how many of these weapons are currently deployed with armies, criminals and private security forces around the world, but estimates are in the hundreds of millions. In virtually all the armed conflicts currently dealt with by the United Nations, small arms and light weapons are the primary or sole tools of violence. Analysts estimate that around 2 million small arms and light weapons are still circulating in central America, 7 million in west Africa, an estimated 10 million in Afghanistan and millions in the Great Lakes region of Africa, where in the past 12 years an estimated 7 million people have been killed in the ongoing wars and humanitarian crises.

With few exceptions, none of the countries where these weapons were used in recent armed conflicts actually manufactures them. In many cases, neither the manufacturer nor the exporter, nor even the buyer, really knows the purposes for which the weapons will be ultimately used because, unlike the trade in other categories of weapons, nearly 40 per cent of the trade in small arms is carried out through illicit means. The weaponising of communities, the growing use of children as soldiers, illicit mining and the use of rape as a weapon of war in places such as Congo, across the Great Lakes and the Horn of Africa are just a few examples of what is happening, but among other things these crises are sustained by the continued proliferation of small arms and light weapons.

In modern conflicts, more than 80 per cent of all casualties have been civilian casualties, 90 per cent of which are caused by small arms. Stories such as Joseph Amukoo’s, which I have mentioned, and accounts of those who have witnessed or lived through these crises are shocking enough to melt a stone heart. As the former UN Secretary-General Kofi Annan said in his report on small arms,

“At least 500,000 people die every year as a result of the use of small arms and light weapons. Of the estimated 4 million war-related deaths during the 1990’s, 90 per cent of those killed were civilians, and 80 per cent of those were women and children, mostly victims of the misuse of small arms and light weapons”.

The 2008 report, Global Burden of Armed Violence, commissioned by the Geneva Declaration on Armed Violence and Development, says that between 1990 and 2007 $300 billion was lost by 23 African countries as a result of violent conflict. That sum is roughly equivalent to the international aid that Africa received in the same period. If that money had not been lost due to armed conflict, it could have been used to solve the problems of HIV and AIDS in Africa or to address the many needs in education, clean water and sanitation and prevent tuberculosis and malaria. On average, armed conflict shrinks an African economy by 15 per cent, but that is probably a conservative estimate.

A crucial point in the report is that around 95 per cent of the weapons used in those conflicts came from outside Africa. Although those were not all from re-exporting countries, or indeed from the UK, that figure highlights the fact that getting a handle on the irresponsible, illicit transfer of arms more broadly is essential. The same report says that more than 740,000 people die around the world each year as a result of armed violence. According to the World Health Organisation, as many as 10 times more people are injured. That includes an average of 52,000 violent deaths per year in armed conflicts and 200,000 a year who have died in conflict zones from non-violent causes such as malnutrition, dysentery or other easily preventable diseases that resulted from the effects of war on populations.

Words cannot do justice to the detrimental effects that small arms and light weapons have on fragile and unstable societies. They have ruptured social cohesion; they divide families and people; they corrupt institutions and destabilise and eventually destroy societies and Governments. In doing so, small arms undermine the very social and economic fabric of our societies as well as damage the democratic functioning and constitutional arrangements of those places.

I am of course not suggesting that all such arms originate in this country; equally, though, Britain’s trade in arms is truly global in scope and impact. Analysts claim that Britain and the other four permanent members of the UNSC, along with Germany and Italy, accounted for around 85 per cent of the arms sold between 2002 and 2009. This is roughly a $45 billion to $60 billion business. As a huge and major producer of arms, we have a special responsibility to do everything that we possibly can to regulate and control the flow of arms.

Over a decade ago, Madeleine Albright, the former US Secretary of State, said:

“All of us whose nations sell such weapons, or through whose nations the traffic flows, bear some responsibility for turning a blind eye to the destruction they cause. And all of us have it in our power to do something in response”.

The Bill is an opportunity to do something in response and is our opportunity to build on what has been done so far, to fill the current gaps and to match our well thought-out intentions with practical mechanisms that match our words. We are all acutely aware—let no one doubt—that through circuitous routes, and after changing hands many times, sometimes in collusion with traders in other contraband goods, small arms have been used in places far removed from their original places of regular supply.

What would the Bill do? In many respects, I happily concede that the UK arms transfer control regime is among the most sophisticated in the world and that, as a country, we have led the international community in its progress towards establishing a global set of norms on the responsible transfer of military equipment. The Export Control Act 2002 and the subsequent Export Control Order 2008 were both significant steps in controlling the way in which our defence exports are controlled. Detailed risk assessments are undertaken for every licensing application to ensure compliance with the EU common position and the consolidated criteria. The Department for Business, Innovation and Skills publishes quarterly and annual reports on strategic export controls. I also welcome the publication of a new searchable database on UK arms licensing decisions.

The UK is clearly among the leaders on transparency in arms transfers. The committee on export controls does an excellent job of scrutinising the Government’s decisions, but the one area in which the UK falls behind the other major arms exporters is the controls that we place on the re-export of our defence equipment. When countries decide to upgrade their defence systems and make major new purchases, they are faced with the question of what to do with their old equipment. Not surprisingly, one obvious option is to re-export those arms on to another buyer. The buyer is unlikely to be any of the world's great military powers, or those who seek to maintain a technological advantage by buying the newest, cutting-edge equipment or technology. Frequently, the prospective customers will be looking for relatively cheap equipment. Virtually by definition, they are in the market for second-hand goods.

The US, France, China and Russia—all of the other permanent members of the Security Council—require any state that purchases their defence exports to seek permission from them before re-exporting those goods; that is what the Bill seeks to do for the UK as well. Including such a clause in export licences is a simple but effective way of reducing the risk of arms exports ending up in the wrong hands. The purpose of the Bill is to amend the Export Control Act 2002 to introduce such a requirement, which would bring the UK into line with all other major arms exporters on this issue. The Bill would insert a clause into UK export licences stating that the buyer of UK arms will not re-export them to any third party without seeking prior permission from the UK Government.

The Government already place limited controls on the re-export of UK arms. The end-use declarations that buyers of our defence exports are required to sign include a clause that requires the buyer not to re-export to any state that is under embargo. This is clearly welcome, but altogether far too limited. There are many states that are not under embargo that the UK would have serious concerns about the re-export of arms to. Under the UK’s consolidated criteria, licences may be refused for many reasons: because the arms may provoke or prolong armed conflict; because they may be used for torture or other human rights abuses; or because they may threaten regional peace and stability, undermine development or threaten our national security. There is a long list of countries to which the UK has refused to license defence exports. In the last period for which licensing decisions have been published—April to June 2010—the UK refused licences for exports to, for example, Bangladesh, Chad, Indonesia, Israel, Nepal and Pakistan, none of which is under embargo. Indeed, licences were refused for exports to 41 different countries, of which only five are subject to either EU or UN embargo.

Surely if we accept the principle, as the Government do, that the Government have good reason to forbid the re-export of arms to destinations of concern, we should apply that in all cases and not just some. In fact, a “no re-export” clause is all the more important where no embargo is in place. Where there is an embargo, states are already obliged under international law not to re-export. If states are willing to export despite an embargo being in place, it would seem highly unlikely that UK re-export provisions would constrain them. However, where no embargo is in place, the “no re-export” clause could make a real difference.

I am aware that the coalition Government have made a commitment to promote UK defence exports as a key priority, so I want to make it absolutely clear that the Bill is not designed to restrict the UK’s ability to export. The Bill is concerned purely with the re-export of UK arms from which the UK receives no remuneration and no economic advantage. Therefore, I know of no reason why the Bill should pose a threat to British business. In fact, in the long run, having more robust measures to ensure that our exports do not end up in the wrong hands would help strengthen UK exporters’ reputation as responsible sources of military equipment. Nor would the Bill introduce any extra red tape for UK firms, as foreign buyers would come directly to the Government for permission to re-export. When the Government received such a request, they would need to assess the risk that re-export would pose. Although that would involve additional licensing activity, I understand from non-governmental organisations that have had discussions with officials in other European Union states—I have recently raised this issue with the noble Baroness—that the number of requests received is relatively few and the additional administrative burden therefore low, although those Governments have greatly appreciated having control over those that they have received.

As I mentioned earlier, the UK has a thorough risk assessment process for such export licensing decisions. Among other things, the process includes an assessment of whether the buyer is likely to re-export the goods to a third party. Although that may suffice for detecting any immediate risk of re-export, in actual fact the buyer may not decide to re-export until years or even decades later, by which time circumstances may have changed in ways that could not have been anticipated at the time that the risk assessment was carried out—that is, before the items were originally exported. I gave the noble Baroness the example of four BN-2 Islander maritime surveillance aircraft that were exported from the UK to India in the 1970s. It was not until 2006 that the Indian Government decided to re-export the aircraft to Burma, an act which could not possibly have been predicted 30 years earlier. When the UK Government requested that India not proceed with the re-export, India felt able to ignore the UK request precisely because there was no contractual restriction on re-export. According to Sandeep Dikshit, writing in the highly regarded Indian broadsheet newspaper the Hindu on 4 February 2006, a senior Indian naval official was reported as saying:

“We should tell them where to get off”.

This demonstrates two points. First, the possibility of future re-export cannot always be foreseen when a pre-licensing risk assessment is carried out. Secondly, if buyers have not signed a contract agreeing to seek UK permission before re-exporting, they have no reason to consider doing so.

The other issue, of course, is enforcement. I understand that the Government's primary reservation about introducing re-export controls has been that they are difficult to enforce. Indeed, if a state decided that it was determined to re-export UK arms against the UK's wishes, there would be little that we could do to put a stop to it. However, re-export controls are not about forcing the bad guys to submit to British will but about working with legitimate, reasonable importers. I assume that importers of military equipment from the UK want to be seen not as irresponsible trading partners but as people who keep to the terms of their agreements. If they do not, one would hope that we would not export arms to them in the first place. Having said that re-export controls are not about enforcement, I should say that, if recipients decided to re-export against the wishes of, or without alerting, the UK Government, we would have many partners with whom we could share that information and who could subsequently factor that illegitimate behaviour into future licence decision-making processes.

To sum up, there is a developing international norm supporting re-export controls as an important component of arms transfer control. Bringing the United Kingdom into line with that norm would strengthen the United Kingdom’s legitimacy in persuading states with weak transfer controls to improve their regimes. It would be unfortunate—indeed, verging on the inexplicable—if the United Kingdom, which has so often led the way on arms transfer controls, were to stand against this wholly favourable tide. The Bill enjoys widespread support in your Lordships’ House and in another place, right across the political divide. I ask the House to give the Bill a Second Reading. I beg to move.

My Lords, it is a pleasure and an honour to follow the noble Lord. I call him the marathon man because he had an enormous responsibility yesterday, when he also led the debate. He has made a masterly speech today. I thank and congratulate him on behalf of all of us who are going to speak in the debate. He has given us a top-class presentation. It was detailed and competent, and I hope he will forgive me for calling it passionate. In line with the motto of the great city that he lived in and with which I have some connection, I say nil satis nisi optimum—only the best will do. That is what the noble Lord is driving at.

I warned my noble friend Lady Wilcox that in as august a list of speakers as there is today, I am very much the mouse that roared. We have an instruction that it will help if speeches are short, so I hope I will help the debate and those who follow me since my remarks will only support, in the strongest possible terms, what the noble Lord, Lord Alton, is trying to do.

I read the Bill with great care. The licensing and transparency aspects certainly seem particularly important. Could the noble Lord and your Lordships just glance at new Clause 1A(3)(b) and (4)? These provisions seem to encapsulate everything, including all the difficulties that the noble Lord set out in his speech. It was implementation of these two particularly small points in new Clause 1A that caused me to take considerable interest in what the noble Lord pointed out today. In the back-up notes that he has so kindly given us, and as he has pointed out, the European Union code—which is, I think, known as the common position—was United Kingdom-led. What the noble Lord proposes in the Bill will encourage the United Kingdom Government to continue in that leading position.

However, proper and full implementation of these codes of conduct and a way of controlling re-export and re-re-export of arms could be appallingly difficult. The noble Lord has pointed out in his briefing that there was some concern over the United States, which tries to comply and is very helpful in the lead on this aspect. It exported some goods to Israel, which found their way on to China. Quite how one can make the provisions in the Bill bite worldwide is a difficult matter. In most cases, one will find that nations tend to comply with the rules, regulations and demands. However, it certainly worries me considerably that honest efforts could be made but—to put it tactfully—bullying by other nations or combinations of nations could follow. That is something that I hope the Bill will look at.

The most important point is to enlist the diplomatic world in what the noble Lord seeks to do. It is fine for us in your Lordships’ House or elsewhere in the United Kingdom to say, “This should be done”. Unless we have friends in the diplomatic world who can bring this policy and the wishes of the noble Lord to fruition, we will not get very far. However, what the noble Lord has presented to us this morning is worthy of enormous support. From the Back Benches, I am delighted to support the excellent Bill of—I was going to say “my noble friend”, thanks to the Liverpool aspect—the noble Lord, Lord Alton, on which I congratulate him.

My Lords, I also pay tribute to the work of the noble Lord, Lord Alton, on the Bill, which has the potential to bring the UK’s export controls into line with those of all the other major arms exporters in the world. Clearly, that should be a priority for all of us.

Some years ago in Kisangani, Amnesty found ammunition cartridges from North Korea, Chinese and Russian heavy machine guns, Russian revolvers, Chinese anti-aircraft weapons and Russian, Bulgarian and Slovak automatic launchers—this when the Democratic Republic of Congo was subject to an EU and United Nations embargo. The prevention of illicit and destabilising arms transfers requires urgent and active engagement. Action on landmines and cluster munitions has proved that if the political will is there, we can ensure that we have international systems capable of making peace and security efforts work effectively. We need rigorously enforced measures and efforts to close loopholes such as those we are discussing today.

Many of us here today have worked, and will continue to work, for an end to irresponsible arms trading, for the establishment of systems that are likely and able to end illicit international transfers, and to ensure maximum respect for the highest international standards. There is clearly a need for global co-operation by manufacturers, brokers and buyers, working with Governments. Another key element will be new or amended national legislation. Already, more than 90 countries have domestic laws in place governing the illicit manufacture and possession of, and trade in, weapons. Also, the UN has reported that an estimated half of the total of more than 4 million weapons collected and disposed of during the past 10 years have been taken over the past two years. There is reason for us to be encouraged but more needs to be done, certainly—as far as the UK is concerned—on post-export transfers.

Let us agree that there is no time for protracted diplomatic processes and that the UK must continue to offer clear leadership, in both the European Union and the United Nations. The very first member of the United Nations Security Council to support the arms trade treaty was the United Kingdom. We need reassurance today that the same commitment and enthusiasm exists, especially as a draft text on that treaty is being prepared. This week the UK Working Group on Arms expressed concerns that at the July Prep Comm in New York there was a clear perception that the UK was not providing the leadership that, in the past, has been so constructive. It has claimed that the United States, France and Australia took the baton. I ask the Minister: will the UK continue to argue for a comprehensive text? Will the UK engage with states likely to present opposition? Will the Government accept that licensing should carry an export contract that specifically prevents the re-export of arms, as the noble Lord, Lord Alton, said, to a country subject to arms embargo?

The Government should go further and ensure that the UK is in line with others who refuse to re-export without prior authorisation. This occurs in Belgium, for instance, while in Germany a clause on non-export without the agreement of the German Government is imposed in an end-user certificate. In principle, a country that breaches a no re-export clause or fails to ensure that the clause was respected would be denied future exports. Similarly, France requires certification that goods will not be re-exported without the consent of the French Government. While acknowledging that a no-export clause in an end-use certification is not a guarantee, it without doubt puts additional contractual obligations on the intended recipient. A state supplying these measures also has the potential to apply sanctions to prevent the diversion of goods.

Many countries that lack a modern defence industry such as ours can still act as sources of surplus or second-hand goods, such as small arms and light weapons, as the noble Lord, Lord Alton, said. Does the Minister agree that if the UK implemented a no re-export clause, it would surely increase the likelihood that the UK will achieve EU harmonisation on this issue?

NGOs also strongly support the need for controls, including re-export controls. They challenge the Government’s claims that checks before export are able to deal with the dangers posed by the situation. European Union officials from member states that use re-export clauses will argue strongly that the UK should also be in favour of them. Even if the arms trade treaty provides for an appropriate standard of control, it will take until 2012 for it to be put in place. Even then it will need to be ratified and come into force. Of course, some states may choose to remain outside the agreement. They will, in all probability, be the very same states that will need to have those post-export controls. In the mean time, why does the UK not tighten up its own export controls in this way? We could then strengthen the argument that the UK will need to make as part of a stronger European Union and UN lobby.

Every step of the way of improving arms trade controls has met with a repetition of the same old arguments: “It will cost too much”; “It cannot be enforced”; “Existing controls are enough”; “It is happening anyway”; and so on. Disappointingly, as I have said, on post-export controls the UK trails behind other major arms-exporting states. I trust that today we shall see a willingness to adapt the current UK position. That is surely justified because controls on arms trading contribute to cutting that umbilical link between conflict and systemic insecurity and poverty.

My Lords, I congratulate the noble Lord, Lord Alton, on bringing forward this Bill and on making such a compelling case for why its time has now come.

We know that the arms export business is one of the least transparent and most globalised businesses around. It is replete with brokers, middlemen, cover companies and offshore financial dealings. The line between it and the security services or military in many countries is extremely blurred. Above all, its business is death, injury and torture. Of the many millions who have died in armed conflict, many have died from the use of arms and related products that were not intended to be used in that manner or against those people.

We in the UK have much to be proud of. We have developed one of the most rigorous regimes for the export of arms and related weapons and goods since Sir Richard Scott's report on the arms to Iraq inquiry of 1996. We have built on the Export Control Act 2002 and we have had the legally binding EU Code of Conduct for Arms Exports since 2008. Yet, and despite a rigorous regime, we have story after story of how the controls have proved ineffective in preventing misuse of the exports or, even worse, we appear to have colluded in side-stepping our own controls, as this week’s leaks have shown in the case of cluster munitions.

Another example of misuse was seen in the Committees on Arms Export Controls report of March this year, which found that British arms exports to Israel were almost certainly used in Operation Cast Lead—the attack on Gaza. Its report states:

“This is in direct contravention to the UK government’s policy that UK arms exports to Israel should not be used in the occupied territories”.

CAEC went on to say that export licences to Sri Lanka were revoked after the arms delivered were used by the Sri Lankan military against the Tamil Tigers. These may have been used in some of the many thousands of deaths that occurred among the civilian population. I cite this just to illustrate that things can slip through even a relatively good export control regime.

But let me turn to the examples of where re-export controls would have had an effect. In 2009, we had the investigation ordered by the then Foreign Secretary when it became apparent that UK arms dealers had been buying Soviet weapons, including AK-47s, in Ukraine and then selling them to countries which are on the banned list. These arms were re-exported to Equatorial Guinea. That country regularly suppresses its population and has one of the worst human rights records in west Africa.

We know that the previous Government were reluctant, despite significant evidence, to introduce re-export controls. It is a modest step in the right direction if this Government go down this road. We know that they wish to increase arms sales as part of their strategy to increase the UK’s overall trade balance. While I broadly agree that we cannot prevent the arms trade unilaterally, as other countries would simply step in, I believe that we can improve the existing regime by unilaterally tightening our own rules. This Bill is not about tightening controls on where and when we export; it is about making sure that our arms exports do not end up in places where we do not want them to, where they may inflame conflict or even be used against our own troops abroad.

One of the arguments that has been made against introducing re-export controls is that it would be inappropriate for the United Kingdom to impose these restrictions on other countries, which the United Kingdom would not accept if they were imposed on us. However, this should not be seen as an imposition of our will on other countries; a licensing agreement is a contract which is entered into voluntarily. Furthermore, the UK already restricts what buyers are able to do with our exports once they have bought them by including a “no re-export to embargoed states” clause in end-user agreements. Therefore, the Government have already implicitly acknowledged that it is legitimate to use such controls.

It has also been argued that introducing re-export controls would create extra bureaucracy for government at a time when there is a move towards reducing bureaucracy. In order to reduce the amount of bureaucracy created for the Government in processing requests for permission to re-export, they could draw up a list of so-called safe countries. For example, a rule could be instituted whereby permission to re-export to other EU countries, plus selected other “safe” destinations, is granted without carrying out a risk assessment. This list would, of course, need to be kept under review and updated according to any relevant changes in circumstances . However, we do so in any event, in the case of embargoed countries, through the consolidated list. I hope that the Minister will be able to deal with this point when she sums up.

There is real concern internationally about what happens to old equipment once a state no longer needs it. There is also international and EU concern that when Governments upgrade their defence systems they may sell their old equipment to countries where it might be used to fuel conflict and undermine peace and stability. Germany is so concerned about this that, since 2003, it has instituted a policy of requiring states which import new small and light weapons from Germany to destroy or put beyond use an equivalent amount of their old equipment. This is not only to prevent re-export per se, as the Germans are asking for old stock to be destroyed regardless of whether it was originally supplied by Germany or any other country, or even domestically manufactured. However, it illustrates the seriousness with which other states regard the threat posed by arms which are no longer wanted being sold on to countries of concern.

In the brief time allocated to me, I conclude by noting that the noble Lord, Lord Alton, talked about the emerging international norm of moving towards re-export controls. It would be unworthy of this Government to resist this small step towards entrenching that norm. I sincerely hope that they will move positively in this direction.

My Lords, I support this modest Bill introduced by the noble Lord, Lord Alton. When he first sent me a copy of it, my immediate reaction was to ask myself why we would not want to know when arms are re-exported somewhere else. From a security and intelligence point of view, I should have thought it would make absolute sense to say that permission needs to be sought to do this so that we know what is going on. That seems to me entirely consistent with the national security policy embodied in the security and defence review. Of course, we need to know about this matter. We need to have as much information as possible about where these arms are ending up in case they fuel conflict. When they introduced the Export Control Bill in 2002, I am amazed that the previous Government did not include such a provision in that worthy piece of legislation. Therefore, this Bill constitutes a necessary tidying-up.

I argue that supporting this measure would go with the grain of the coalition Government’s declared “foreign policy with a conscience” that we debated yesterday. I want to use some quotes in support of that proposition. Most obviously, the national security strategy states that the number two priority is tackling the root causes of instability. Indeed, my right honourable friend the Prime Minister said in another place on 19 October, when presenting the strategic defence review,

“we must get better at treating the causes of instability, not just dealing with the consequences. When we fail to prevent conflict and have to resort to military intervention, the costs are always far higher”.—[Official Report, Commons, 19/10/10; col. 798.]

That is entirely consistent with what has been put forward here. The strategic defence and security review repeats that exact sentiment. The re-exporting of small arms to fragile states is certainly one of those causes of instability that we should track down.

Moreover, my right honourable friend Andrew Mitchell, the Secretary of State at the Department for International Development, said in an excellent speech to the Royal College of Defence Studies on 16 September:

“Britain has a proud tradition of standing up for a more equal world where people live in dignity and where they are protected from those who would harm them. As the Foreign Secretary said some time ago: ‘it is not in our character to have a foreign policy without a conscience: to be idle or uninterested while others starve or murder each other’”.

Those are profound statements.

This leads me on to another point and one of the reasons why all Governments often get in a tangle over defence exports, because responsibility for defence exports lies within the Department for Business, Innovation and Skills. There is a significant departmental team numbering approximately 180—larger than all the other departments put together in terms of export sales. They promote British exports, and we are all in favour of that. I am concerned that that effort should be joined up with other departments which have an interest in this matter—the Foreign Office, the Ministry of Defence and the Department for International Development. A lot of good work has been done by this coalition Government in trying to increase the level of co-ordination. I am very proud of that.

When one looks at the way in which money in the strategic defence review has been diverted from defence into a pool shared between DfID and the Ministry of Defence to deal with conflict prevention, and the sums increased from £210 million to £300 million, that is a clear statement that resources are being put behind the effort to tackle the causes of instability. I return to my first point. Why would we not want to know where weapons go which may be used to fuel a conflict and cause instability, when it is our national security policy to prevent that? Why would we not want to deal with it?

In conclusion, I shall refer to an excellent and helpful report, House of Commons Paper 178. It was a joint report by the Business and Enterprise, Defence, Foreign Affairs and International Development Committees, Scrutiny of Arms Export Controls (2009). It was a very good and well researched document. A chairman of one of those Select Committees, Peter Luff, is now an excellent Minister at the Ministry of Defence. The report came to some interesting conclusions regarding re-exports. It states on page 4, paragraph 9:

“We conclude that, despite the Government’s view”—

the then Government’s view—

“that non re-export clauses would be an unnecessary burden as they would be difficult to enforce, the requirement to have a non re-export clause in contracts for the supply of controlled goods would send a clear message to both parties to the contract that re-export to certain countries is unacceptable. We recommend that the Government gives further consideration to blocking this demonstrable loophole in its arms export controls regime”.

That was in 2009. The report continues in paragraph 10:

“We conclude that we do not agree with the Government’s decision not to enhance controls on the exports of UK controlled goods produced under licence overseas and we recommend that the Government should explain in its Response why it came to this decision and whether it will reconsider its policy”.

I looked further through the report in vain for such a response. There was none then, and I guess that it is because the case is unanswerable.

My noble friend Lord Lyell, in his excellent contribution, described himself as the mouse that roared—and we all enjoyed that. The time has come for the Government to demonstrate that they are not the lion that squeaked.

The noble Lord has been quoting from what is known as a quadripartite report. I was the founder chairman of that committee some years ago. The other important point about such a report, which is curious from a House of Commons point of view, is that it has to be unanimous, because it is the combination of four Select Committees.

My Lords, after those contributions—I do not know about the mouse—I am trying to think of the right metaphor. Certainly, as someone who is new to this subject, my first observation is that while everyone can support the objectives, how to achieve them in a highly competitive global marketplace is a complex challenge. However, I congratulate the noble Lord, Lord Alton, on the Bill and on the tour de force and tour d’horizon of his contribution. We can see from this debate that there is unanimous support for what the noble Lord, Lord Bates, described as a modest proposal.

We have to recognise that we have a highly developed defence and armaments industry which makes a significant contribution to our manufacturing industry and to the economy as a whole. It was the noble Lord, Lord Alton, who demonstrated what could be achieved if we could turn all those swords into ploughshares. We recognise that that will not happen in the current environment. His speech reminded us of how much of the world’s economy goes into armaments.

I would defend the record of the previous Government because they played a significant role in developing international and national policy on this issue, arising from our manifesto commitment in 1997, which stated:

“Labour will not permit the sale of arms to regimes that might use them for internal repression or internal aggression. We will increase the transparency and accountability of decisions on export licences for arms. And we will support an EU code of conduct governing arms sales”.

That was a positive and constructive commitment and we honoured it. It culminated in the Export Control Act 2002. In 2007, we conducted a review of that Act to examine the effectiveness of the controls introduced under the Act, particularly with respect to brokering, trafficking and licensed production, and determine whether further changes needed to be made to the legislation without imposing a disproportionate burden on business. The review led to a series of changes to the UK’s legal and regulatory framework for arms exports. The extra-territorial provisions of export control legislation were extended by the introduction of a new three-tier system of trade controls.

Following requests from the Committee on Arms Export Controls in 2009, the previous Government commissioned an independent survey of compliance levels in the dual-use sector. The survey concluded that levels of non-compliance were low. However, it is interesting to note that NGO and industry stakeholders questioned aspects of the survey, including its main conclusion.

When researching for this debate, I looked at the scale of the problem, examined in a report, Biting the Bullet. It says:

“In most countries, substantial quantities of SALW”—

small arms and light weapons—

“and ammunition are legally held by the armed forces, police, other various government agencies or contractors, manufacturers, wholesalers, shops, clubs and private security companies. Each year, large amounts of SALW and ammunition in authorised holdings are diverted to unauthorised users and uses, contributing to all of the problems associated with uncontrolled SALW proliferation and misuse”.

We have heard a number of examples today of the terrible effects of such diversions. The report continues:

“Moreover, of the estimated 600 million SALW in global circulation approximately two-thirds are held by civilians. Firearms and ammunition held by individual citizens are mostly stored at home, often with minimal security and large numbers of firearms are stolen from homes each year. Most countries’ systems for licensing and controlling firearms possessions by individual civilians have major weaknesses that can be exploited by irresponsible or criminal gun-shops or individual licence-holders”.

Therefore, there is a huge problem around the world.

The noble Lord, Lord Alton, has already talked about the size of the market but it is a point that bears repetition. I quote from a paper on recent trends in the arms trade:

“One of the most marked aspects of major arms transfers over time is the stable composition of the list of the five biggest suppliers, with only slight changes in the ordering. For the period 1980-1984, when global arms transfers were at the highest, the Soviet Union, the United States, France, the United Kingdom and Germany accounted for 84 per cent of all exports. The five largest suppliers of major conventional weapons for the period 2004-2008 were the USA, Russia, Germany, France and the UK. Those suppliers accounted for 78 per cent of world exports for this period, compared with 81 per cent for the period 1999-2003”.

Therefore, as we can see, this is a huge global industry in which we play a significant part, and I think that at this point it is legitimate to question whether, although the controls have been improved, we have made sufficient progress.

As a number of speakers have said, we have been at the forefront of conventional arms transfer controls internationally. However, in one area—re-export controls—it is fair to say that we are now seen as lagging behind. As has already been noted, the UK Government have so far been reluctant to apply re-export controls as a matter of routine. However, as a number of contributors to the debate have said, this is not about tightening controls on where and when the UK is willing to export; it is about making sure that UK arms exports do not end up in places where the UK Government do not want them to be—where they may inflame a conflict or even be used against UK troops abroad.

The UK Government have acknowledged the principle of controlling re-exports by introducing a clause on end-use declarations, stating that the buyer will not re-export to any destination which is under embargo. As has been noted by a number of speakers today, that is a significant step in the right direction. However, there are states which are not under embargo but to which the UK would have serious concerns about its arms being re-exported. We feel that the Bill is a timely initiative that would extend the application of re-export controls and provide legislative protection. That is why we feel it is worthy of consideration. I certainly agree with the noble Lord, Lord Alton, that the Bill is an attempt not to limit exports but to ensure that in the re-export market exports do not end up in destinations that would damage the interests of this country. There is of course a balance to be struck. I noticed that the Government have issued a further set of guidance to exporters, and another speaker has referred to the searchable database and other aspects that are of use to exporters.

I suppose that the question being posed here is: have we gone far enough? My noble friend Lady Kinnock pointed out that, in going down this road, we would align ourselves with other countries—not insignificantly, the US, Russia, Belgium, France and Germany. Although we are supporters of the potential arms trade treaty, it is, as has been pointed out, still in gestation and will not totally solve the problem. There was also a candid recognition that, whatever legislation is passed, there will be limitations to its enforcement. However, such legislation does position the United Kingdom in the right place in this industry, and the noble Lord, Lord Bates, made the important comment that the Bill is a modest measure entirely consistent with national security policy.

I was interested to hear the noble Lord, Lord Bates, quote Peter Luff. Mr Luff also said that the new coalition Government have signalled that promoting arms exports will be a high priority. He said in June:

“There will be a very, very, very”—

he obviously likes emphasis—

“heavy ministerial commitment to the process. There’s a sense that in the past we were rather embarrassed about exporting defence products. There’s no such embarrassment in this Government”.

I do not think that anyone in this House was seeking to embarrass the Government; they were simply trying to ensure that we have a consistent policy—one that is in our own interests and in the interests of our national security.

Does the noble Lord accept that there is nothing inconsistent in the views of Mr Peter Luff in the report quoted by the noble Lord, Lord Bates, and this Government’s desire to balance and improve their record on exports? I think we have to be realistic and accept that increasing trade is a strategic objective that we sign up to, yet we might wish to improve the controls.

I thank the noble Baroness. I was pointing out the two sides of his statement. On the one hand, we have the quotation from the noble Lord, Lord Bates, and, on the other hand, this one. I recognise, as did the previous Government, that the defence and armaments industry is a key part of our manufacturing base. Will this Bill make a reasonable contribution to our national security and ensure that the re-exported arms and weapons do not end up in the hands of those who would use them in a way that would harm the interests of this country? Will it introduce a regime which does not bring in further red tape and which can be managed in a way that certainly does not damage exports?

We are prepared to support the Bill and I look forward to the Minister’s response.

I thank the noble Lord, Lord Alton of Liverpool, for bringing this matter to the attention of the House today. The current situation is as follows. Goods controlled for strategic reasons require a licence for export from the UK. We do not currently operate re-export controls which would require overseas entities to seek permission from us to re-export items that have already been exported from the United Kingdom, no matter how long ago.

The Government are not convinced that introducing controls of this kind is either necessary or feasible. Such a system could be onerous to operate and would be extremely difficult to enforce outside the UK’s legal jurisdiction. Once a good has left the UK, it is, in practice, under the jurisdiction of the destination country. We would, in effect, be claiming that UK export controls applied, whereas in reality we would have no powers to enforce them.

The noble Lord’s Bill is presumably driven by a concern to prevent UK goods, once exported from being re-exported for undesirable uses. We already tackle this issue through our existing export licensing system, which the noble Lord has rightly praised as being among the most thorough in the world. Furthermore, we already take account of the risk of diversion—in other words, the re-exporting of goods to undesirable end-users—in our risk assessment of the licence application. No licence would be issued unless it was consistent with the consolidated criteria. Where licences have already been issued and information subsequently comes to light of an undesirable re-export, we have a power to revoke the licence in our secondary legislation. The impact of doing so would obviously be limited if the goods had already been re-exported, but we would always factor that information into subsequent licensing decisions. Even if we had full re-export controls in place, it would be unlikely that we would know that a re-export had occurred because we could not force a foreign entity to provide that information. In all likelihood we would only find out after the fact, by which point it would be too late to try to take any meaningful action. If an undesirable export had taken place, that would form part of our assessment of future export licence applications, but we do that now so there appears to be no additional practical benefit from the noble Lord’s proposals.

The majority of re-exports would not be of concern to us. The reality is that arms are a small proportion of the UK’s defence exports, a significant proportion of which are of low-level components being exported as part of a global supply chain. The equipment that these components go into is most often destined for our allies and partners, who have similar and equally robust export controls of their own. There are significantly more destinations of no concern than destinations of high concern. In response to the noble Lord, Lord Young, regarding other countries of concern, we agree that it is undesirable for UK-origin goods to be re-exported to destinations or end-users of concern. That is why the risk of undesirable re-export is embedded in our assessment of licence applications. If the risk of re-export is sufficiently high an export licence would not be granted. It is an issue of proportionality, and as I said, there are significantly more destinations of no concern than of high concern, which is why we judge that the current scope of the re-export clause is appropriate, as it covers the most sensitive destinations.

The noble Lord, Lord Alton, and the noble Baroness, Lady Falkner, spoke of other states. It is true that other states have reintroduced re-export controls, as acknowledged in a briefing produced by Safer World which said that states were reluctant to go on record regarding specific instances where re-export controls have been applied as that tends to involve confidential discussions with the original recipient. Aside from the United States, which is open and in some cases forceful in pursuing a re-export control policy, the evidence on the effectiveness of the arrangements in other states is unclear. The United Kingdom has one of the most robust strategic export licensing systems in the world, as I have already said, and I do not believe that the introduction of re-export controls would make it more so.

The noble Lord, Lord Alton, referred to administrative burdens. There could be significant practical problems and resource implications for government and possibly for industry in dealing with re-export control provisions. The export group for aerospace and defence—EGAD—said in a memo, which I shared with the noble Lord, that there could be low administrative burdens for the UK industry. As I said, we would need to conduct a full consultation to establish the scale of the administrative burdens that would be created for both government and industry. I should add, in response to the noble Baroness, Lady Falkner, that even if we apply re-export controls only to a limited set of countries there would still be a burden that we would need to assess.

The noble Lord, Lord Bates, rightly raised the issue of the re-export clause recommended by the parliamentary committee on arms exports. It is important to recognise that the end-user undertaking is a commitment made in good faith on the part of the recipient of the goods exported under the standard or open individual export licence. It has no force in law and cannot be used to prevent the re-export of goods. We require this commitment from the end-user in recognition of the serious threat posed by the proliferation of WMD and multilateral commitments that we have entered into. In recognition of the concerns on this issue and in response to calls from the Committee on Arms Export Controls, we amended the end-user undertaking for standard licences in July this year to make it clear that an export licence does not authorise re-export and that risk of unauthorised re-export is a factor in our licensing decisions. We deliberately limited it to embargo destinations which we consider to be the most sensitive transfers because, as I have already said, the majority of the exports are not problematic. That amendment was welcomed by the Committee on Arms Export Controls, which reflected that this new measure should be allowed time and that successor committees may wish to monitor its effectiveness to review whether a wider re-export clause remains desirable. I agree with that view and await the outcome of the new committee’s assessment with interest.

In response to the noble Baroness, Lady Kinnock, I say that since not all countries operate effective export control systems the Government are fully committed to agreeing a strong and comprehensive arms trade treaty at the United Nations. Such a treaty would be expected to raise global export control standards. As a result, transfers of concern would be less likely to happen because state signatories would have regard to the same principles when deciding whether to permit the export. As noble Lords will know, preparations are continuing towards the diplomatic conference in 2012. I would like to see the outcome of that process before committing to take action on this issue.

The noble Lord, Lord Young, asked about illicit trade in small arms by criminal gangs. He said that the majority of arms are held in private hands which may fall into criminal hands through theft. While I understand the problems that that causes, I cannot see how re-export controls would prevent that criminal activity. In summary, we prefer to base our approach on thorough pre-licensing assessment, which takes into account the risk of diversion or re-export to undesirable end-users at the application stage. We believe that our current system is robust. Re-export controls would not make it more so.

Will my noble friend explain further why there is a jurisdictional problem in relation to this proposal, which apparently does not exist in relation to the existing arrangements under which re-export to an embargoed country is forbidden? The same point arises in relation to enforcement. Again, enforcement must depend on information from overseas which would be applicable in this case. Apparently the Government object to this case but not to the export to embargoed countries.

My Lords, I thank the noble and learned Lord, Lord Mackay, for his intervention. It is important to recognise that the end-user undertaking is a commitment made in good faith on the part of the recipients of the goods exported under a standard or open individual export licence. This has no force in law and cannot be used to prevent the re-export of goods.

My Lords, I am indebted to everyone who has taken part in our short debate this morning. The intervention of the noble and learned Lord, Lord Mackay of Clashfern, illustrates how much common ground there could be among us and shows that many of the problems that the Minister has raised are not insuperable. If there is not a problem with end-user exports and if other countries do not have a problem in placing re-export provisions into their domestic law, it is difficult to see why there should be such problems for us in the United Kingdom.

I am particularly pleased by the support given to the Bill from the opposition Front Bench by the noble Lord, Lord Young of Norwood Green, who talked about the importance of aligning ourselves to others. The noble Baroness, Lady Falkner of Margravine, speaking for the Liberal Democrats, made a similar point. She said that, although the integrity of our country has to come first, that is not incompatible with achieving trade objectives.

We were rightly reminded by the Minister and others of what has already been achieved. However, as the noble Baroness, Lady Kinnock, said so eloquently, we need to cut the umbilical cord that links conflict and poverty. She also said that we need to give clear leadership as this issue comes to be debated at the United Nations in 2012. Those objectives are not incompatible. Putting this modest measure on to the statute book would show that we wish to be in line with all the other nations on the Security Council and with many of our European Union allies.

I am grateful to the noble Lord, Lord Lyell, who rightly pointed out the importance of aligning ourselves with other nations in achieving these objectives. To have any degree of enforceability and any assurance that such controls will become normative throughout the world, we will have to use all our diplomatic skills to draw others alongside us.

The noble Lord, Lord Bates, asked a key question in his interesting, helpful and welcome speech. Why would we not want to know where arms or equipment manufactured in our country end up? Why would we not want to know their destination and use? As he said, it is crucial to our own defence and security to know the answer. He quoted the Development Secretary, Andrew Mitchell, who has also said that our objective is to ensure,

“100 pence of value for every pound”,

of development aid. He is absolutely right, and I know that many noble Lords share that view. However, where there is untold conflict in a country, that jeopardises development. Unless we get conflict right, much of the resource that we put in to try to tackle health and education issues ends up being wasted.

There has been considerable agreement among us today, but the Minister raised three specific objections. She said that buyers are put off by the bureaucracy involved in the USA’s ITAR—international traffic in arms—controls, on which she mentioned that she had shared with me the Export Group for Aerospace and Defence letter that was sent to her. However, that is rather like Don Quixote being invited to tilt at imaginary windmills, because my Bill does not propose the American system or a system linked to ITAR. Plenty of other states apply re-export controls in a far less intrusive way and we should look to them as models. In Sweden, for example, a threshold is applied so that, when Swedish companies export relatively insignificant components for integration and onward export, re-export controls do not apply. Although buyers might be put off by the US ITAR controls, I know of no evidence that they are put off by less intrusive bureaucratic systems. Indeed, if they are put off, that would suggest that the United Kingdom is currently winning from competitors that apply re-export controls the business of buyers who have ambitions to re-export. Perhaps the Minister could write to tell me whether she is aware of any such cases. If there are such cases, I think that that reinforces the need for us to act.

The Minister also talked about inconsistency. EGAD’s argument is that introducing re-export controls would be inconsistent with ongoing European Union intra-Community transfers initiatives, which, it says, require European Union members to remove transfer restrictions wherever possible. That overstates the case. The ICT initiatives explicitly provide that states can apply re-export conditions. In any event, it is not clear why national re-export controls cannot be organised in a way that is consistent with the requirements of the ICT measures. Many of the states that negotiated those initiatives already applied re-export controls, so presumably they had to take that issue into account during the process. Again, I would be most grateful to the noble Baroness, Lady Wilcox, if she could address that issue when she responds in writing after the debate.

Finally, the perfectly legitimate question of enforcement was raised during the debate—indeed, I raised it myself. One of the arguments against introducing re-export controls is that the United Kingdom cannot prosecute foreign Governments for exporting UK arms against our wishes, as there is no court with the legal jurisdiction to enforce that. No one is suggesting that the UK should prosecute a foreign Government. Nor should the UK look to prosecute or punish the original UK suppliers, which could not and should not be expected to enforce the contract. To see this as a struggle between opposing forces or as a matter of legal enforcement is to miss the point. The countries that regularly buy UK arms exports are responsible trading partners—or at least one hopes so—and one assumes that the licensing procedures ensure that those to whom we export will honour their obligations. In the unlikely event that they decided to re-export without our permission, that information could then be shared with other arms-exporting states and be factored into future licensing procedures. That would reinforce what this country already does and would place us in line with other nations that have introduced these provisions.

I am extremely grateful to all noble Lords who have contributed to the debate and I thank them for their support. I now ask the House to give the Bill a Second Reading.

Bill read a second time and committed to a Committee of the Whole House.