Trade etc. in Dual-Use Items and Firearms etc. (Amendment) (EU Exit) Regulations 2019

Motion to Approve

Moved by

That the draft Regulations laid before the House on 4 March be approved.

My Lords, I am pleased to open this debate on the Trade etc. in Dual-Use Items and Firearms etc. (Amendment) (EU Exit) Regulations 2019. These regulations do a very serious job. Without them, existing European Union law will not be effective in UK domestic law on the day we exit the EU, a vital part of our long-term planning since Royal Assent of the European Union (Withdrawal) Act.

The regulations include amendments that will allow the UK to maintain those EU laws that control exports of items with both military and civil uses. They will control the export of civilian firearms of the type used by hunters and sports shooters. If we do not retain and amend this legislation, we will no longer control the export of such potentially dangerous items. This will put the United Kingdom in breach of international agreements which require we impose these controls and which prevent military equipment falling into the hands of those who intend this country harm. They also prevent or disrupt the proliferation of nuclear and chemical weapons and play a key part in promoting global security by controlling the strategic goods that leave our shores.

The exit-related legislation provides the necessary legislative building blocks to ensure readiness on exit day. The EU withdrawal Act enables a functioning statute book on exit day by providing Ministers with the tools to deal with deficiencies in domestic law arising as a result of our exit from the EU, so it is right and proper that we use it for matters such as export controls.

By making this regulation and the associated Export Control (Amendment) (EU Exit) Regulations 2019, the department will have completed much of the legislative part of controlling the export of strategic goods in preparation for a no-deal Brexit. If this regulation is no longer required on exit day, we would expect to revoke or end it. Alternatively, commencement could be deferred to the end of an implementation period.

Broadly, all the provisions applying to exports from the EU customs territory today will instead apply to exports from the UK. However, leaving the EU will mean that the rules will have to change, and we cannot guarantee that all the export licensing requirements that UK exporters are familiar with will remain the same. For this reason, the Government have made every effort to provide certainty for businesses and the public wherever possible. We have published a new general export licence, which provides for the export of dual-use items to all European Union member states and the Channel Islands. In August, we published a technical notice on export controls, which explained our plans for post-EU exit export control licensing. We have also included EU exit advice, both in the export control training programme and at the annual export control symposium, as well as giving extensive advice to key sector trade associations.

The House should be aware that the Joint Committee on Statutory Instruments has reported the draft regulations on the grounds that they require elucidation in one respect and were defectively drafted in three respects. On the first point, we provided the committee with an explanation of why the transfer of technology by electronic means to the Isle of Man is considered to be an export whereas the physical movement of goods is not. This is a consequence of our customs arrangements with the Isle of Man and is consistent with our controls on military goods and technology. On the other three points raised by the Joint Committee, we have acknowledged that these are drafting errors that we will correct in the near future by laying a further SI, which corrects the drafting. We are very grateful for the diligent work of the committee, and I am happy to confirm that none of those errors affects the proper functioning of the regulations.

My Lords, I am very grateful that the Government have responded promptly to the committee’s report in indicating that they will correct the drafting errors, which were very basic. If it is the Government’s position that they are preparing for exit day by addressing such an important issue as arms exports and controls, for there to be three glaringly obvious mistakes is very worrying. That said, I am grateful that the Government have indicated that they will bring forward another SI to correct the mistakes in this one. It is symptomatic of where we are in the Brexit process, but it is depressing given the seriousness of this issue.

With regard to the substance of the SI, will the Minister say a little more about the Isle of Man? I understand the distinction for traditional customs purposes between those who offer, in effect, services and those who export goods. It is fairly clear in customs practice. I also appreciate the distinct relationship between the Isle of Man and the United Kingdom, but that distinction is academic when it comes to dual-use items, software and cyber warfare. It does not reflect the reality of modern arms exports or defence capabilities. I serve on the International Relations Committee. Our last report went into considerable detail about cyber-warfare capability. As the reality is that a mixed-used technology can be used for offensive and defensive purposes, we need an up-to-date system of regulation. Simply stating that we are using the traditional definition of the export of goods and the export of services is not sufficient. I hope the Government may be in a position to indicate that any successor to this SI will reflect the new reality. The committee is looking at nuclear non-proliferation, and much of the evidence is about the sensitivities within cyber-warfare capability and about exporting or importing goods that would traditionally be used for nuclear or fissile technologies. Any enemy of our state could use a platform in the Isle of Man to provide cyber capabilities and would not be covered by these regulations, but somebody exporting traditional weaponry would be covered. That is a weakness.

That leads me to my final point. It is a depressing reality of leaving the European Union that the Government are indicating that we will remove ourselves from a network of 27 other nations, in which we have effectively led debates about the regulation of dual-use weaponry for our defence. The European Union will have a list of technologies and we may well have a stand-alone list. We will leave a network with a unified system of processes for the determination of the capability of those systems, and we will have a stand-alone process. We will leave an integrated licensing system, and we will have to devise our own. Those three areas show the potential weakness of the United Kingdom compared to being part of a unified bloc. The reality is that we will have to be part of that bloc, aligned with it or distinctly separate from it. Since the Government have indicated that they wish to have a treaty on security and defence, it is fairly obvious to me that as soon as we leave the European Union we will be negotiating to realign ourselves with the three systems we will be leaving. It is a rather depressing scenario for our defence, but it is perhaps symptomatic of the process that is under way in leaving the European Union. If the Minister is able to clarify those points, I will be most grateful.

My Lords, I am again grateful to the Minister for her comprehensive introduction to this SI. I follow the noble Lord, Lord Purvis, on a number of points and look forward to the responses to them.

I was puzzled by why the version of the SI that we have is not the corrected version, but I think time has probably defeated us on that. I look forward to seeing the final version when it comes out. Having to rerun this debate so quickly might be a little otiose, but it is always a pleasure to have these debates.

My question is slightly broader, and it may be better answered in a letter. The SI concerns the need to amend domestic and directly applicable EU legislation so that it continues to function in relation to the way in which these types of weapons are exported. I could not pick up from what the Minister said—this is why I suggest she might write to us—where this fits into the broader system we set up in early 2000 to try to make sure that exports of weapons as weapons are properly controlled. At that stage it involved three departments of state, but it presumably now involves four. Who has control of that? Are those systems fully operational, and is there any issue there? In a sense, I am confident that there is not, but there is growing concern about the way in which weapons have been used in certain areas. Rather than being used in genuine defence situations, they appear to have been used in internal conflicts and in other scenarios, which was never intended. Therefore, the problem might be that the dual-use material here might also fall into that category, and I wonder whether the Minister can confirm that the broad structure that is there to protect exporters but also to protect our own systems will apply. If so, exactly how will that work in practice?

Secondly, on the same theme, the Explanatory Memorandum makes relatively light work of the new pro forma licences that will be available in the UK to deal with these goods. I do not need a detailed response tonight but I would be interested to know a little more about how these will work in practice. “Pro forma” can be shorthand for not requesting a very detailed exposition from the exporter. I hope that that is not the case. I assume that pro forma means that the licences will be pre-printed and relatively easy to fill in, but I would be grateful to have confirmation of that. What is the system? Where do they go? What are we looking for here? Are these materials are being created under a very deep cut through the system? Will the system track back over rules of origin? Will we be clear where they originated from and where their final destination is likely to be? Presumably all those things will be in a system at some point. Will they be clearly written up and submitted properly, and, if so, to whom, and will they cover all the points that I have made?

My Lords, I shall try to address the questions directly. Turning to the concern raised by the noble Lord, Lord Purvis of Tweed, I can confirm that controls will apply to cyber capability materials when they are exported to the Isle of Man.

Part of my point was about exports from, rather than to, the Isle of Man. Currently I am unaware of the Isle of Man taking a very aggressive stance against the rest of the United Kingdom on cyber capability. However, I was anxious about any part of the United Kingdom or the Isle of Man being used for exports to other states. Therefore, it is not only a question of exports from the United Kingdom to the Isle of Man; it is a question of the Isle of Man being the basis for exports from the United Kingdom.

There are two points that I would like to raise on cyber capability, and to some extent they will also address the process that the noble Lord, Lord Stevenson of Balmacara, asked about. There will be an open pro forma licence for materials going to what we consider to be low-risk territories—that is, the EU. Where there will be a change is if the products go into the EU and are then exported from the EU to another part of the world. Cyber and cryptographic goods are an area that we are taking increasingly seriously. The noble Lord, Lord Purvis, mentioned some of the open general export licences, but only those absolutely consistent with our consolidated criteria are included. All high-risk capabilities are deliberately excluded. As your Lordships will know, the controls on cryptography come from the Wassenaar agreement. There are various agreements that we comply with. The EU Parliament has suggested removing regulation from dual use, but we believe that we have international obligations to implement the controls and we do not agree with that. To be absolutely clear about cyber surveillance, which I believe is a key concern in the work that the noble Lord is doing, cyber surveillance equipment is not included in the open licence.

Regarding the more general impact of our exit on future co-operation with the EU, we absolutely recognise the importance of maintaining close co-operation and hope it will be a key part of the negotiation on our future partnership with the EU.

The noble Lord, Lord Stevenson of Balmacara, raised a subject that is probably for another day. I can just give some reassurance that the Export Control Joint Unit has been created with the Ministry of Defence, the Foreign Office and DIT. DIT is essentially the regulator; the other two departments provide their input, advice and challenge. The unit is established and populated. It is a very important subject but, as I said, one for another day.

Motion agreed.