Select Committee on Trade and Industry Minutes of Evidence

Annex E


  1.  The idea behind this is not, of course, that companies should themselves become independent arbiters of foreign policy and decide whether licences should be granted for export of their products! The concept is rather that companies, as with individuals in respect of income tax returns, should increasingly apply a corpus of known regulations so as to reduce to an absolute minimum the number of cases which have to be decided on an individual basis by DTI and other government departments. The other half of the idea is that DTI resources would be freed up for ensuing compliance through random audit of companies's records and systems, the former to ensure historical compliance, the latter to ensure that firms have the capacity both to absorb and comply with future legislative changes.

  2.  There is nothing particularly radical about either of these points: both are well established in DTI philosophy and practice. Moves towards both goals are consistent with export control in a post cold-war world where controls are increasingly operated for a wide variety of reasons and against a wider range of destinations than merely the old-Soviet bloc, and where ensuring compliance is, for that reason, more complex.

  3.  To reduce the number of individual licence applications requires the maximum use of both OGELs and OIELs, not just for dual purpose, but also for military products. In practice it is OIELs which must have the greatest untapped potential. Exporters should be encouraged to seek these for as large a percentage of their current and future exports as possible, by reference to both current and prospective customers. Such OIELs should be wide enough, for example, to cover sales via agents/distributors and sales of follow-on spares.

  4.  Enforcement via inspection at consignee's premises is consistent with the parallel development in customs practice (itself the result of the 1992 EU Single Market) away from inspection at ports towards inspection at exporters' premises. The emphasis on exporters' control systems (currently mainly an issue for those firms with military OIELs) would also be logical once a greater percentage of exports were to be covered by these. This also recognises that, in the case of most reputable exporters, there is a far greater chance of technical infringements as a result of failure to understand the regulations or failure to apply these, than through deliberate evasion of controls.

  5.  If companies are to have greater responsibility for operating the system, the rules themselves must be better presented and easier to understand. There is still considerable work required to make the system user-friendly, rather than the present unhappy combination of technical description tied up in "legalese". Again, taking tax legislation as the model, something akin to the proposed re-write of tax law is needed.

  6.  Within DTI, the status and standing of the Export Control Organisation needs to be enhanced. Staff also need first hand experience of industry if they are to be capable of understanding the industrial perspective on all this.

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Prepared 10 December 1998