RT HON BARONESS TAYLOR OF BOLTON, MR STEPHEN FRENCH, MR TONY PAWSON, MS GLORIA CRAIG AND MR PAUL LINCOLN

21 NOVEMBER 2007

  Q120  Mr Havard: Can I be clear on the JSF, that as far as this Treaty is concerned (and if it is not ratified by the US Congress it really will not make a difference) it may be an enabler that might make it easier but it will not be a showstopper if it is not agreed. Is that right?

  Baroness Taylor of Bolton: I think that is correct. It may facilitate the speeding up of certain aspects.

  Q121  Chairman: Paul Lincoln, you said that it was for technology that was exported from the US to the UK. Does the Treaty cover also technology exported from the UK to the US, or is it a one-way Treaty?

  Mr Lincoln: This is not a one-way Treaty but what this does do, in essence, is create for the US system something which becomes very akin to our open general export licensing system. So we are trying to reduce the bureaucracy, particularly on the US side of the Atlantic, in order to facilitate those transfers.

  Q122  Mr Jones: Can I come on to intellectual items covered? I understand that those that are currently on the US munitions list, apart from certain highly sensitive technologies—would everything on the list actually be covered by this Treaty? If, in future, the US Government take things off the list for any reason, will the UK Government be consulted beforehand?

  Baroness Taylor of Bolton: Basically, the content of the US munitions list is, and will remain, a matter for the US Government. We cannot influence that except in terms of international influence on all treaties about controls. So we do not have any influence on that. I am sure that people in the American defence industry do, from time to time, and the more they co-operate the more they would be wanting to maximise their impact, but in answer to the straightforward question, no, we do not influence that list.

  Mr Lincoln: I would supplement that, in that we do have regular discussions with the US on a range of export licensing issues, as to what the substantive lists are, and we do that through international fora. There is also a consultation mechanism under this Treaty under which we will, at least annually, review the operation. That will include what will be on the exclusions list if we thought there was a problem with the operation of it.

  Q123  Willie Rennie: There is a list of excluded EU goods from the Treaty. Can you explain what these goods are?

  Baroness Taylor of Bolton: Basically, they are dual-use goods.

  Mr Lincoln: They fall under one of the annexes of the EU dual-use regulations and they are goods which could be potentially used for civil purposes, not just military purposes, and for which we are not able as a government to enter into negotiations because they form the European competence.

  Q124  Willie Rennie: In terms of the relationship between the US and the UK in future, will this Treaty lead to the UK procuring more defence equipment from the US? Do you think that will happen?

  Baroness Taylor of Bolton: Not necessarily because we do acquire a great deal. The biggest difference, from my understanding, is that some of the agreements to allow us access to some of that technology will go through more quickly. At the moment, in terms of the export licences that have to be applied for in the US for information to come to Britain (I think there are about 8,500), over 99% of those are actually approved and granted but there is very often a very significant time delay, and it is to cut down on that time delay that I think will be one of the benefits of this Treaty in particular.

  Q125  Willie Rennie: The thing that I am most concerned about is that if this Treaty is going to make it easier to have collaboration between researchers in this country and the US, you will get technology in the kind of widget description that Kevan was talking about earlier on, where you effectively get a whole lot of technology that is mixed up together and, therefore, the US will have a stranglehold because they have tougher regulations about how they can export, as we have experienced before, but because they have those tougher rules it will make it more difficult for us to collaborate with other countries outside those two countries.

  Baroness Taylor of Bolton: I really do not think that is what is envisaged.

  Mr Lincoln: I do not think that is the case. I believe that industry would say that that would not be the case either, in that the way in which they currently deal with US companies and US technology is they do already, as a matter of course, comply with those conditions which they get under licence from the US.

  Q126  Willie Rennie: If you are going to get more mixed up technology, the logic is it is going to be more difficult for us to collaborate elsewhere, surely.

  Baroness Taylor of Bolton: Not necessarily because, as I say, there is a great deal that happens already; it may just alter the pace of some of that happening, and that has to be to everybody's advantage.

  Mr Lincoln: There are also controls in place in most companies, not because those come through intellectual property rights or commercial reasons. Those controls are very tight in terms of making sure that where you do contaminate (I think was the word used) you are quite sure about how that contamination has happened, and where the respective rights lie within that.

  Willie Rennie: I just wonder if we are creating a big barrier around the two countries that will restrict activity between us and other countries. That is my concern.

  Q127  Mr Jenkin: This is a related question of the potential for the United States to control UK exports. This all rests on Article 9 which is quite clear: "Her Majesty's Government shall, with certain exceptions, that shall be mutually agreed and identified, etc, require supporting documentations including United States Government approval of the proposed retransfer or re-export". That is a new obligation on the United Kingdom in international law, is it not?

  Baroness Taylor of Bolton: On any technology that we have and want to export there has got to be some control. We have it over our own and we do not have the right now to transfer technology that we acquire from anywhere else.

  Q128  Mr Jenkin: At the moment that is expressed in executive agreements or commercial agreements; it has not actually been expressed in a treaty before.

  Mr Lincoln: There is an existing treaty, which is called the General Security Agreement of 1958, which also does set out our dealings with the US on security matters and the implementation agreement, which does say that when you have got material which has been provided in confidence from the US you should ask their permission beforehand before you provide that to a third party. So, on a security basis, those are provisions which already stand.

  Q129  Mr Jenkin: So those that complain that this is handing over control of United Kingdom defence exports to the United States are missing the point entirely; these obligations already exist, in fact, and we would not have the American technology over here in the first place unless we had already agreed to arrangements that are exactly the same as in this Treaty.

  Mr Lincoln: We have some of those arrangements in place already and, as I say, companies say that they comply with all those agreements with the US already.

  Q130  Mr Jenkin: Just very broadly, what is the objective in terms of interoperability? How will this improve interoperability between the United States and the United Kingdom Armed Forces? What is the upside? I am sure there is plenty of it.

  Baroness Taylor of Bolton: The upside is that if we have got those technologies and things moving more quickly and we have got people working on them then they can work with Americans who are working to the same standards on the same issues, and they can have confidence in each other that they are able and allowed to do that.

  Q131  Mr Jenkin: But this is the main reason for doing this, is it not?

  Mr Lincoln: If we are offered interoperability then we would expect that, in due course, Armed Forces working together on the frontline would be able to share information, technology and repair equipment together, etc, on that front line, in a more effective and cost-effective manner.

  Q132  Mr Holloway: Just on interoperability, we are told that previously there have been problems on the ground caused on this, and the Treaty is going to solve that. What sort of problems have there been previously?

  Mr French: There are some occasions when the ability to address problems on the ground has been delayed as the information that needs to be transferred at the operational level has been subject to licence, and thus the time of being able to do that, and there is some reticence in some areas to do that as a matter of course. We feel that this Treaty should take away that issue.

  Q133  Mr Holloway: In what sort of areas? ECM, or more basic stuff?

  Baroness Taylor of Bolton: I think it could be any—widget B, as much as anything else.

  Q134  Mr Holloway: Just in terms of the last few years in Iraq and Afghanistan, what sorts of equipment has this involved?

  Baroness Taylor of Bolton: I cannot be specific because I do not know, but the examples that were given me were repairs on equipment that had technology that was not ours; we did not have a licence for it and there were people there who could have repaired it but could not repair it with British people present because the British people were not empowered to work on that because they were not covered by the licence. If the basic licence covered everybody then—

  Mr Holloway: That is understood, I was just wondering, so we can visualise the sort of equipment we are talking about.

  Q135  Mr Jenkin: Apache helicopters?

  Baroness Taylor of Bolton: Quite possibly.

  Chairman: In the middle of the earlier session I made a point, which I shall make again, that it is the process of a Select Committee that in cross-questioning people about anything we tend to probe at what might be perceived as the areas where we do not know enough or where things might be going wrong, or weaknesses. We are not, thereby, intending to suggest that this entire Treaty is a bad thing, because I do not think, for a moment, we will come to any such conclusion. The fact that we are questioning these things does not mean that we think that the arrangements that have been entered into are bad ones. I just needed to set that tone.

  Q136  Willie Rennie: The US spends a greater percentage of its GDP on research compared with the UK. Is there not a danger, if these barriers come down, that the US will effectively suck in what are the best researchers over to that side of the Atlantic and we will end up having sometimes a fragile research community in the UK damaged by this?

  Baroness Taylor of Bolton: I think everybody is very conscious of the need for a good research base here. However, I do not think that by having this Treaty we will alter US perceptions about what they should be doing. They have spent a lot of money, they continue to spend a lot of money and I would suspect they will spend a lot of money regardless of whether this Treaty goes ahead.

  Q137  Willie Rennie: That is my worry, in some ways; effectively, it will act as a kind of suction on the UK research base.

  Baroness Taylor of Bolton: I see no reason why it should make any difference. I think they are intent on spending it and will spend.

  Mr Lincoln: I do not see that we see that, necessarily, in the same light. We would think there is an opportunity here, also, for US technology, research and development to do further collaboration within the UK. If you consider that the US are the largest foreign investor in the UK in any case, and in defence as well, and they exploit our technology on both sides of the Atlantic as well, we would expect that there would be some expertise and knowledge which comes here too.

  Q138  Willie Rennie: Do you think universities and the rest of the research sector in the UK know about this Treaty and are ready to respond to the implications?

  Baroness Taylor of Bolton: As was mentioned earlier, there are parts of universities which are already covered by List X, so in a sense they are part of "the system", but they will be aware both of the discussions and of the potential.

  Mr Lincoln: That said, of course, we will be looking at how we do communicate more widely once we have come to a final agreement with the US on the implementing arrangements as to making sure that those people who may or may not benefit from the terms of the Treaty will be aware. I would expect industry prime contractors who use those universities or subcontractors, etc, to be explaining to them the benefits also throughout the supply chain.

  Q139  Chairman: So, instead of a List X company, there would be List X elements within the university. Is that correct?

  Baroness Taylor of Bolton: I think that is the position at the present time—that universities are not given List X status; it is certain facilities within certain universities that get that status.

  Mr French: That is true for companies. There are not List X companies, there are List X facilities of companies.

  Chairman: I am with you.