Memorandum submitted by The Joint Electronics
and Telecommunications Security Export Control Committee (JETSECC)
of the Federation of the Electronics Industry.|
1. At the outset, we would like to stress
that, as seen from the perspective of the Information and Communications
Technology Industry, any regime of Export Controls (and the associated
list of controlled goods) must be both practical and enforceable.
Controls should be targeted against the unscrupulous exporter,
without imposing an additional administrative burden on the majority
of responsible and compliant companies. In practical terms, the
costs of compliance for Industry are directly related to the scope
and complexity of the Export Control regime; hence we shall continue
to press for maximum simplification and certainty.
2. Our comments related to the following
sections of the White Paper:
(a) The end-use control (para 3.1.4).
(b) Transfer of Technology by intangible
means (paras 3.3.2-3.3.3).
(c) Trafficking and Brokering (paras 3.3.2-3.3.3).
(d) Power to require information from companies
(e) Time limits for processing licence applications
(f) Giving reasons for refusing export licences
(g) Appeals (paras 4.6.2-4.6.5).
(h) Coverage of controls in Export of Goods
Control Orders (paras 5.1.1-5.1.2).
(i) End-use monitoring (para 5.2.1).
(j) Compliance Costs and Other Costs (Annex
A: paras 5-6).
3. Where we have not commented, it may be
assumed that we endorse the views and proposals set forth in the
White Paper: we do, for example, warmly support the proposal that
DTI should continue to be the licensing authority (para 5.3.3)
and that no charge should be levied for export licences (para
4. The End-Use Control
We wish to reiterate our concern regarding the
phrase "has grounds for suspecting" in this context.
No other EU state has thought fit to include this tendentious
and ambiguous phrase in its legislation and, in view of the proposal
to extend export control to the transfer of technology by intangible
means (see para 5 below), the prospect of companies being judged
culpable, because they failed to "suspect" some ill-intent
on the part of their customers, becomes even more obnoxious from
Industry's point of view.
5. Transfer of Technology by Intangible Means
We consider the cost implications of this proposed
extension of the ambit of Export Controls in para 13 below. More
generally, it is in our view very important that any new control
of this kind should be negotiated internationally and be implemented
in concert with other EU Governments and, indeed, with other Wassenaar
partners, so as to maintain a level playing-field with our overseas
competitors. In addition, any consideration of the practicality
and overall impact of such controls must take into account their
potentially damaging effects in such fields as the dissemination
of commercial software incorporating cryptographyan area
of vital importance to the continuing development of global electronic
commerce. With regard to the Government's intention of extending
export control legislation to cover the conveyance technological
information by non-documentary means, we would counsel a considerable
measure of caution in view of the potential impact, not only an
academic freedom (duly mentioned in the White Paper) but also
on the training which companies are expected by their customers
to provide as an integral element of an export of a high-technology
product. We do note with some relief the Government's intention
of limiting this particular new control to WMD-related technology,
and sincerely hope that the phrase "for the time being"
does not betoken any eventual desire to extend it more widely.
Precisely the same considerations apply to the possibility (discussed
in para 3.2.3 of the White Paper) of controls on the dissemination
of technological information vie the World Wide Web.
6. Trafficking and Brokering
Provided that the extended controls are limited
to those referred to in para 3.3.2, we would not object to this
7. Power to require information from companies
where this is needed to meet the UK's international obligations
We would stress the importance of ensuring that,
in exercising its obligations under the UN Conventional Arms Register
and the Wassenaar Arrangement, the Government does not inadvertently
disadvantage UK industry by revealing commercially sensitive information
to our overseas competitors.
8. Time limits for processing licence applications
We are bound to express considerable disappointment
at the decision to reject Sir Richard Scott's arguments in favour
of licensing by defaultas is, in effect, already the case
in the US and in France: whilst is may be true that this might
result in some licences being granted in error, no mention is
made of the corresponding risk that inordinate delays in the processing
of licence applications can and do result in significant export
orders being lost. We do however note with pleasure the Government's
intention of comprehensively reviewing the ECO licence processing
system, and would ask that, as a matter of urgency and in addition
to the measures referred to, consideration be given the adoption
of e-mail licensing procedures, to the automated tracking of licence
applications, and statutory time limitsmeasures which have
been in force in the US for many years.
9. Giving reasons for refusal of export licences
We appreciate that the safeguarding of sensitive
sources of intelligence must inevitably be an overriding consideration,
but would point out that the facts revealed by intelligence can
often be stated without in any way compromising the source. We
would ask that this be borne in mind when companies are given
the rationale for the rejection of a licence application.
Whilst regretting that the appeals procedure
now envisaged will not be completely independent, we do welcome
the fact that it will be somewhat more structured than the present
arrangements, and trust that it will incorporate the possibility
of appealing against excessive delays as well as against refusal
of licences. We also note with satisfaction that the possibility
of seeking judicial review of export licensing decisions, including
the outcome of appeals, remains open to companies which are seriously
aggrieved by what they consider to have been a wrong decision.
11. Coverage of controls in Export of Goods
We welcome the Government's intention of seeking
to refine the terms "specially designed" andin
particular "specially designed for military use":
we would urge that their intention be translated into action in
the very near future. In view of what has been said in para 4
above, however, we are unhappy about the possible introduction
of a military end-use (catch-all) clause. With regard to both
these items, we would consider it vital that Industry be brought
into consultation before any decisions are taken.
12. End-use Monitoring
In considering the options for achieving more
effective monitoring of end-use, the Government needs to bear
in mind the importance of avoiding measures that would be seen
by our overseas customers as unacceptably intrusive.
13. Compliance Costs for Business and Other
It is entirely correct to state that the extension
of controls to transfers of technology by intangible means would
impose an increased burden on exporters. However, the suggestion
that this would not be "a significant burden", since
it would be spread over a large number of companies, is mistaken.
First, the impact of export controlsincluding the putative
control of intangiblesis largely concentrated on those
companies which live by exporting technology-intensive products,
either for military use or for dual use. Second, the task of monitoring
what information is sent by fax or e-mail by large numbers of
staffparticularly in those companies having a substantial
element of people engaged in R & Dis lkely to prove
burdensome as to be effectively impossible. And, by the same token,
we believe that the resource costs envisaged for Government Departments
required to cope with an increased flow of licence applications,
following the introduction or control of tangibles, have been
14. As remarked earlier, there are many
points in the White Paper with which we cordially agree: the fact
that, in the interests of brevity, we have not specifically referred
to each and every one of these should not be interpreted in any
negative sense. We hope that the comments offered by JETSECC on
behalf of the FEI, as set out in paras 4-13 above, will be seen
as constructive; needless to say, we should be happy to discuss
any or all of them with Government representatives if that were
considered helpful from the Government's point of view.