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Mr. Jeremy Corbyn (Islington, North): I am sorry to interrupt the hon. and learned Gentleman's flow. I agree with his point about parliamentary scrutiny. Does he accept that such scrutiny should also extend to information held by the UN weapons inspectorate in Iraq which, it is understood, has considerable knowledge of the individual companies that have, often in breach of the

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Mr. Campbell: I certainly agree with that. The hon. Gentleman and I were both in the House when the Scott report was published and discussed. He will recall that my attitude to these matters is similar to his. Transparency is the best protection against such abuse.

To be effective in these matters, Governments cannot act alone. That is why our motion commends the proposal for a European code of conduct on the arms trade, and in particular the Government on their efforts to secure such an agreement during their presidency of the European Union.

The stated objective of the code is to

"strengthen the exchange of information relevant to the export of conventional arms with the aim of setting high common standards for arms exports from all EU member states."

The code also proposes measures for the exchange of information and consultation. It provides that member states have to notify one another when they refuse export licences, but gives no details of the information that has to be notified, or indeed the time frame in which it should take place. To be effective, notification must surely include the type of equipment refused a licence and the prospective destination and end user, and the information should be circulated in a prescribed period.

There is a more fundamental and serious omission--there is no provision in the code for countries to notify other countries of licences that are granted. The code requires a country to intimate if it is refused a licence, but there is no obligation to intimate if it has granted a licence. That provision should lie at the heart of a code with such laudable objectives.

The code also proposes export guidelines, but these are ambiguous and leave too much room for subjective interpretation. If there is any ambiguity about whether a prospective military export breaks the guidelines, there should be a presumption that the export will be denied. In the case of ambiguity, the only possible conclusion to reach is that that export should not be entitled to take place.

There are eight guidelines in the code. I shall address three in particular. The signatories bind themselves to take into account human rights and not to export equipment that might be used for internal repression. However, there is a qualification to that obligation. Indeed, it constitutes a loophole. It allows the export of repressive equipment

"if the end-use is judged to be legitimate, such as protection of members of the security forces from violence".

The code also talks about development. There should be an express presumption that arms exports will be denied to countries that spend more on the military than on health and education combined. There should be a presumption to deny exports that undermine the objectives of bilateral and multilateral aid.

There are additional measures that the code should embrace if it is to be effective. The code states that it is the duty of member states to "promote transparency" and the need to "harmonise export licensing procedures" is mentioned. Again, those are laudable objectives to which no one could object, but unhappily there are no measures to ensure that they are realised.

Parliamentary scrutiny, to which I have referred in a domestic context, should be embedded in a code that applies to member states of the European Union. All member states should be obliged to produce an annual report to their Parliaments of the arms export licences that have been granted or denied.

There should be a common system of end-use controls. End use is often the means by which transactions, which on the face of it are legitimate, are rendered illegitimate. These agreements should have the status of legally binding contracts and there should be a follow-up system to check that the end user is the one that was first proposed.

Brokering should be controlled. Member states should establish a central database of arms brokers. It should not be possible for people to create £100 companies with two £1 shares paid up and set themselves up in the United Kingdom, or anywhere else in the European Union, as arms brokers. If people want to practise that trade, they should be obliged to register so that we may know precisely who, in this dark and rather subterranean world, is active. It was perfectly plain that, throughout his inquiry, Lord Justice Scott was often thwarted because of inadequate details of some of the companies that were operating in this area.

Mr. Gordon Prentice (Pendle): The hon. and learned Gentleman called for transparency in these matters. Would that extend to commissions? As he will know, in some arms exports, some 25 per cent. of the value of the export is siphoned off to commissions. That must cause him concern.

Mr. Campbell: I hope that it would cause all hon. Members concern. There are newer Members to whom the hon. Gentleman's point may have been more expressly directed than those present this afternoon. He is absolutely right. Transparency in these matters is essential.

The Council of Ministers of the European Union should review annually the code's implementation and make recommendations for its development or alteration. The results of any such review should be reported to national Parliaments and to the European Parliament for debate.

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European Union states are among the leading arms exporters in the world. In 1996, they had 40 per cent. of the world market in arms exports. That entitles us to say that they have a special responsibility to promote restraint and transparency in the transfer of conventional arms and technologies for military use. The aim of setting high common standards for arms exports from all EU member states is one to which I hope all hon. Members find it easy to subscribe.

In our recent history we have seen the consequence of the indiscriminate export of defence and defence-related equipment. Nothing would cause the public more concern, apprehension and even anxiety than the knowledge that there might be a repeat of the circumstances that obtained during the Gulf war--that British forces might find themselves on the wrong end of equipment or of materials, the ability to manufacture which had been provided in a profligate and wholly unrestrained way by the previous Government.

I commend the code as a common EU action that is entirely worth while and much more likely to be effective on a collective rather than an individual basis. The Government deserve the support of the House in their efforts to ensure that such a code is effective and meets the laudable and praiseworthy objectives set out in its preamble.

5.10 pm

The Minister of State, Foreign and Commonwealth Office (Mr. Tony Lloyd): I am not sure whether I have been damned with faint praise or praised with faint damns, but I strongly welcome the motion tabled by the Liberal Democrats. I thank the hon. and learned Member for North-East Fife (Mr. Campbell) for his courtesy in making me aware of one part of his speech to which I otherwise would not have been able to respond.

Clearly, the Government do not oppose the motion. We welcome the Liberal Democrats' support for our work on the EU code of conduct for arms exports. The proposals which we and the French have tabled will set genuinely high common standards for exports from all EU member states. In so doing, they represent a break from anything that has existed in this area in the past.

Let me set the EU code of conduct on arms sales in a wider context. It is an important measure but it is only one part of the story which the Government have to tell on the regulation of strategic exports. When the Government came to power we were determined to add an ethical dimension to British foreign policy. That, inevitably, has implications across the range of international relations, from greater readiness to raise human rights in bilateral dialogue to support for ethical trading standards.

When talking about ethical trading standards, it is inevitable that they should apply specifically to arms exports. The hon. and learned Gentleman was right when he said that we do not recoil from the idea that we have a strong defence industry. The industry's recent export performance, which has increased under the Government's tight export regime, is one of Britain's success stories. The International Institute for Strategic Studies estimates the United Kingdom's share of global arms exports in 1997 to be 22 per cent. of the global total, about half as much again as that of France and second only to that of the United States.

That is a tribute to the competitiveness of British industry. But it gives us--a point made by the hon. and learned Gentleman--a particular duty to manage arms

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The hon. and learned Gentleman referred to the Scott report which partly inspired the Government's policy. There can be no doubt that that report revealed a scandal at the heart of the previous Government. I hope that, with time, that will become the common framework within which Britain judges the matter.

We are also aware that that was not the only scandal at the time. There were other areas in which arms exports were at best lax and at worst simply unacceptable. We were, and are, determined to ensure that the situation described by the Scott report does not happen again.

In February 1997, on the first anniversary of theScott report's publication, the then Labour Opposition committed themselves to a range of measures designed to achieve that. In our election manifesto we said that we would not permit the sale of arms to regimes which might use them for internal repression or international aggression.

On taking office, one of the Government's first foreign policy priorities was to put that commitment into practice. We initiated a review of the criteria used in considering licence applications for the export of conventional arms and dual-use goods. In July last year, my right hon. Friend the Foreign Secretary announced the outcome of that, which was that the new criteria would give full weight to the UK's economic, commercial and financial interests. The Government are keenly aware of those.

The defence industry is a strategic part of the UK's economic base. It supports more than 400,000 jobs. Its ability to export is crucial to the viability of the defence industry and to the preservation of those benefits. Defence exports help the national balance of payments and reduce the unit cost of equipment for UK forces. They can also contribute to security and stability by helping to strengthen bilateral and collective defence relationships.

But the criteria--this is the important point about balance--also deliver in full on earlier commitments by stating that licences will be refused where there is a clearly identifiable risk that proposed exports might be used for internal repression, aggressively against another country, or to assert by force a territorial claim. Those are important changes in previous criteria and an important step forward in ensuring that Britain can claim to be staking out a position that balances national interest in terms of jobs and defence with national interest in terms of the promotion of human rights.

On the same day that my right hon. Friend the Foreign Secretary announced the new criteria for arms exports, he also announced another important step forward--a ban on the export or trans-shipment from the UK of weapons of torture, including such choice items as electric-shock batons and shields, stun guns, gang chains, leg irons, shackles and electric-shock belts. There is clear evidence that such equipment has been used to inflict torture or cruel, inhuman or degrading treatment on our fellow citizens in the world. Thus, another of our pre-election commitments was fulfilled by my right hon. Friend.

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