The Response of EEV Limited to the Proposals
Contained in the Department of Trade and Industry's White Paper
on "Strategic Export Controls", Published Wednesday
1 July 1998
EEV Limited, a wholly owned subsidiary of GEC
Plc, is a major manufacturer of both defence and commercial professional
components and systems, many of which are subject to export control
in one form or another under the current regulations. Our export
business is significant and important to the profitability of
We believe that EEV has an exemplary record
in respect of the considerable resources that it has over the
years invested in its export licensing administrative system to
We remain keen to be involved in the changes
that will affect the UK Export Licensing system.
In our response to the DTI Consultative document
on "Strategic Export Controls" dated 30 October 1996,
we stated that "clear definitions should be drawn between
Foreign Policy considerations and strategic concerns. This would
probably make the granting of export licences less arbitrary and
more consistent". This White Paper lays the framework for
achieving this purpose and EEV Ltd welcomes many of the proposed
There are a number of comments and responses
that we would like to make on the content of the White Paper and
these are as follows.
The first option would be the most effective
but processing would take too long. Both of the remaining two
options are somewhat unsatisfactory in that there could be the
confusing situation of an amendment coming into force and then
shortly afterwards being revoked.
We do not agree with the Government's preference
for the third option in that unsuitable legislation could come
into force merely because Parliament did not manage to complete
the approval process within the allowed time. A fail-safe mechanism
for weeding out the controversial ones such as to ensure that
they are not missed would help but the filtering procedure would
be difficult and somewhat subjective. We believe that this option
would move us back into the vagueness of the past.
We believe that a more positive approach is
needed whereby delays are minimal and there is no risk of poor
legislation due to time-out situations and we see Option 2 as
a way of achieving this.
We agree with the Government proposal on this.
Parliament should not be involved in the scrutiny of individual
applications. This would certainly slow things down and they are
slow enough already. Also, publication of individual applications
could result in commercially sensitive information getting into
the wrong hands.
The annual reporting is acceptable as long as
the Freedom of Information Act does not seek to impose obligations
to release commercially confidential information which should
be excluded from the Act as is the case in USA. The exclusion
of pricing information in the Export Licence Application and Export
Licence itself (relying on quantity alone) would facilitate this.
Pricing seems to be irrelevant and sometimes it is difficult to
balance licence value with delivered value, particularly when
exchange rates are involved.
It is a good idea that the purposes of Strategic
Export Controls be set down in legislation. More transparency
in this area will give industry better guidelines for compliance.
We agree that it is practical to provide this information by secondary
legislation to enable flexibility to respond quickly to changing
circumstances. We agree that the proposed affirmative resolution
procedure for Parliamentary Scrutiny of the purposes of Strategic
Export Controls is the most effective way for this to be introduced.
2.2.3 THE PURPOSES
The purposes of export controls need to be unambiguously
defined. The FCO's exisiting "Criteria used in considering
conventional arms export licence applications" has been suggested
by DMA as a good starting point.
3.1.3 THE CHEMICAL
1996 (CWA) AND BIOLOGICAL
We understand that there is some confusion relating
to whether or not France is a member of NATO. If it is concluded
that France is not, we may be adversely affected by the Government's
proposals in this matter.
That there should be such control is reasonable.
However it is difficult to assess how it could be effected. We
can make employees aware of the controls and re-enforce the importance
of being compliant with the regulations. If such a control is
made law, exporters should have clear advice and guidance from
the authorities on the best ways to prevent an offence.
With regard to enforcement of Controls of transfer
of technology by intangible means, we believe that it is feasible
to keep records for inspection by HM Customs (HNC) but there would
need to be more, manpower resource made available to HMC.
If no licence required (NLR) decisions are to
be made legally binding more clarity and feed-back is required
in the NLR letter and it should be mandatory that there will be
an NLR letter which could be used legally if required. There should
also be an appeals procedure as to the classification or licenceability
of a company's products.
There should be limits agreed as to what information
companies would be obliged to give. The release of commercially
sensitive information including costings and pricing should be
at the company's discretion.
4.4.1 TIME LIMITS
We agree with the Government's conclusion that
licencing by default should not be adopted. However, changes are
needed to ensure a turnaround of licences in 10-20 days. Also,
there should be a specified reasonable time limit for decisions
on more complex cases and measurable time limits for each stage
of the export licence approval process to enable the highlighting
We have found that DTI are keen to suggest that
we apply for an Open Individual Export Licence in certain cases
but that these have taken 6-12 months to be granted which somewhat
nullifies the benefit of their offer.
There are problems with the electronic version
of the Form A Export Licence Application and EEV Ltd, who were
involved in a pilot study have fully reported our findings to
Industry and DTI would benefit from the application
of increased resource at DTI to review and refine the classifications
of Goods in Export of Goods Control Orders with a view to better
definition and exclusion of old technology items no longer sensitive.
Also, certain classifications may be excludable for certain non
We commented on this extensively in our response
to the DTI Consultative document on "Strategic Export Controls"
dated 30 October 1996.
Such a change is likely to bring even more low
sensitivity product under control, worsen the DTI resourcing problems
and lengthen turnaround times.
Standardisation of end user statements would
reduce time and cost of the procedure. Also, a means of enabling
end user statements where the intermediary's customer is not yet
known or confidential should be established as this is a perfectly
reasonable way of doing business, especially in the components
DTI or HMC procedures for regularly inspecting/auditing
actual end-use against end-user statements would be of benefit.
There could be reciprocal arrangements with overseas authorities
equivalent to UK DTI.
DMA have raised the question as to why "most"
is used in relation to nuclear weapons. This needs definition
to avoid ambiguity.
The greatest areas of impact to EEV Limited
due to this White Paper are in 3.1.3 if French business is impacted
due to confusions as to whether or not France are in NATO and
the additional controls on transfer of technology by intangible
means. We do not see these issues incurring significant cost however
and such costs we believe would be offset by the benefits gained
by industry from the changes.
Improvements in turnaround times for the approval
of individual export licence applications/open individual export
licence applications would enhance our competitiveness against
foreign companies and a reduction of the number of our products
inappropriately classified as export licenceable would streamline
the work we have to do in this area.
We also believe that it is in all our interests
that there should be policing by DTI/HMC of the end-use statement
Finally, the range of legislative documents
that have to be studied (and amendments scrutinised) make the
job of understanding the regulations far from easy. The latest
versions of EG(C)O, the DUEC and the EC Council regulations all
have to be considered and it would appear to us that if the DTI
produced a consolidated "manual" summarising (and amending)
all of the regulations into one, then we would all benefit.
29 September 1998