HC Deb 13 April 1984 vol 58 cc697-705 1.59 pm
Mr. Paddy Ashdown (Yeovil)

I am grateful for the opportunity to raise the question of the COCOM regulations and the Export Administration Act of the United States. I am grateful to the Minister for attending at this late hour before the Easter Recess to answer the debate.

On the last occasion on which the House debated new technology, I managed to speak for the utterly disgraceful length of 37 minutes. Today I have about 15 minutes to cover an even larger amount of ground. I hope that hon. Members will therefore forgive me if I do not take any interventions. However, I do not think I am in much danger from that.

I shall not repeat the details that I gave to the House in the debate on 17 February as they are contained in Hansard of that date. Suffice it to say that I agree, as I imagine do most other hon. Members, on the need to control and protect our important high technology from falling into the wrong hands. My case is that the mechanisms for doing this—COCOM and the United States Export Administration Act—have fallen largely into disrepute, and are damaging this nation's best interests.

I remind the House that COCOM is supposed to be advisory, but, in my judgment and in that of many, it has become almost completely under the influence of the United States. Furthermore, it has its origins in the late 1940s, it meets in secret in Paris, and it has never come before the House for discussion, or for ratification. The current COCOM list of controlled goods is out of date, and includes items which, far from being important from a security point of view, are in common everyday use. For instance, it is technically illegal, I understand, for me to leave Britain with the watch that I am wearing without obtaining an export approval for the chips that are contained in it. Similarly, certain heart pacemakers require export licences, as do many electronic toys, according to the COCOM regulations. COCOM is now considering a new list. The American proposals about what the list should contain cover some 400,000 items, it is said—basically a total inventory of the current United States electronics warehouse. For us to accede to this proposal would be virtual technological suicide.

Meanwhile, there are clear attempts by the Americans to enforce the current COCOM regulations down to the level where they would include even such basic computer "toys" as the ZX80. Indeed, the ZX80 was forced to be withdrawn from the other side of the duty-free barrier at Heathrow airport recently, apparently as a result of American pressure.

The Secretary of State has said that he is opposed to such a nitpicking approach. On his return from America recently, he said—and I quote from the Department of Trade and Industry press release of 6 March: One of the points I pressed upon the US Administration was that control of Acorn computers which are freely available in almost any high street in Britain would be counter-productive. That may be the Secretary of State's view, but it is clear that the Americans do not wish to pay any attention. In an interview given by Richard Perle, one of Mr. Caspar Weinberger's deputies, to United Kingdom journalists on 23 March on this issue, Mr. Perle made it clear that the United States would insist on controls over the export of just such computers. Pressed on this, he explained that the United States used such toy computers to control its nuclear weapons. He said—and I quote from the transcript: We are now using Apple 2 computers to target nuclear weapons—Apple 2 computers with standard software. I shall not comment on the frightening thought that United States nuclear weapons are being targeted by these virtual toys using eight-year-old technology and one of the most inefficient programme languages known to man. Suffice it to say that it is clear that the United States wishes to use COCOM to impose restrictions upon high technology trade which would be very damaging for our own high technology industry.

What is more, there is now clear evidence that the United States Government are prepared to use the COCOM provisions to block Britian's high technology trade while their salesmen move in and clean up. During the debate on 17 February I mentioned the case of Plasma Technology which was unable to get a licence for the export of certain high technology goods from the Department of Trade, I understand, because of COCOM regulations. Meanwhile, American firms, Plasma told me at the time, seemed free to bid for the same contracts. In that debate I warned: I fear … that a major … high technology firm will be blocked from exporting … to China … and that the Americans will relax the rules unilaterally, and move in and clean up."—[Official Report, 17 February 1984; Vol. 54, c. 496–504.] That is exactly what has happened. On 20 March a director of Plasma wrote to me saying that he had lost the order, worth £1 million, because he could not get an export licence and that Plasmatherm, a different and American-owned firm selling the same equipment, had won the contract. Similarly we have heard recently that the United States Government wish to block our magnificent system X telephone exchange under COCOM regulations. In his interview on 23 March Mr. Perle explained that this was because system X had a stored programme facility. Meanwhile, the American giant ITT has sold to the Chinese, through its subsidiary, Bell Telephone Manufacturing Company of Antwerp, four complete microchip manufacturing lines designed to make telecom chips. I understand that these include the highly advanced Tegal 803 system for Planar etching. These are two of many examples.

While the United Kingdom has been blocked from selling computers to the East, the United States has sold no fewer than 30,000 DEC PD 11 computers through an established agency in Yugoslavia, by its own admission. While our own exports have been curtailed under COCOM, United States high technology trade with Hungary has gone from £12 million per year to £26 million per year between 1980 and 1982. While such firms as Plasma Technology and Hadland Photographic have been inhibited from gaining Chinese contracts, United States high technology trade with China has moved from £71 million in 1981 to £500 million this year.

It is clear that COCOM is being used as an instrument in the high technology trade war and not as an instrument to protect the security of our high technology secrets. It is time that the House of Commons had a chance to review the operation of the COCOM structure.

However, it is not just COCOM which is now impinging upon our high technology industry both inside and outside Britain. For some time the United States Government have been seeking to apply extra-territorially their own legislation—the Export Administration Act—to firms and individuals in this country. Again, the Secretary of State has recognised the problem. In an interview given in The Sunday Times on his return from the United States he said about the issue of extraterritoriality: The point I put to them was that they are welcome to have that principle, put it in a nice leather covered book, and let it get covered with dust. So long as they do not seek to assert it, well what does it mean? That may be the view of the Secretary of State, but it is clear that it is not the Americans'. In December, IBM sent a letter to many of its customers requiring that they should apply to the United States Administration for permission before moving certain of their computers even within Britain. Questioned about what sanctions would apply if this United States Government instruction was not adhered to, a Department of Defence official in Washington threatened A complete embargo against any country which refused to comply with United States regulations. Since nine out of 10 computers in Britian are of American manufacture, since both industry and Government are dependent on these computers, and since those computers are essential to the operation of the Inland Revenue, the Ministry of Defence, and even GCHQ, such an embargo would not only cause havoc in our industry but also threaten our national security.

Furthermore, it is now clear that the United States would wish to extend these countrols from machines even to people. Mr. Perle has made it clear that he would include individuals with computer knowledge in their heads as, in certain circumstances, being in the category of those requiring export licences before leaving the country. There is disturbing evidence coming to light that the United States is now beginning to block access to scientific conferences in the United States as an expression of this new policy.

Before the Secretary of State went to the United States, he promised to take up this matter. We waited with bated breath for his return, hoping that he would have protected our interests. His comment on arrival back in Britian was merely that what happened in Britain was subject to British law only—but that companies should look after their own commercial interests. A more Janus-faced comment could scarcely be imagined. It was not up to the Department to protect companies—they would have to protect themselves.

Things might have rested there, but two further events have given cause for even greater concern. In mid-March President Reagan passed part of the responsibility for the administration and enforcement of the Export Administration Act from the Department of Commerce to the Pentagon. At about the same time, British companies, especially leasing companies, began to come under pressure from the United States Administration to provide lists of customers within the United Kingdom and abroad. Indeed, one United States-based company, the Digital Equipment Corporation, has been forced to provide such lists. At a meeting with British leasing companies at Epsom on 29 February, a commercial officer of the United States embassy is reliably reported to have said that if British companies did not comply the United States Government had sufficient information about them to slap the irons on most of you". When pressed about the source of that information, he said that the United States Government had had two officials within the Ministry of Defence with access to such information, which they were supplying to the United States Government.

This is such a serious charge that I felt that it could not be right to make it on the Floor of the House without first writing to the Secretary of State for Defence for clarification. I wrote on 27 March but have not received a reply, although he knew that this debate was to take place today and I asked for a reply before the debate. A similar letter was sent to the Secretary of State for Trade and Industry on 26 March, but a reply has yet to arrive.

I felt that the information about the meeting on 29 February was so serious that I should also visit the United States embassy to ask for clarification. The official whore I saw there denied any such operation but confirmed that two United States customs officials were working in the embassy assisting United Kingdom customs on high technology matters. A parliamentary reply to me yesterday, however, revealed that there were not two but four such officials. At that time I was prepared to accept the embassy official's denial. Indeed, on balance I still find it inconceivable that people should be working within the Government in the fashion originally claimed.

On 4 April, however, Mr. William Casey, director of the CIA, speaking to Californian business men in Palo Alto, revealed that the CIA was busy in Western Europe investigating high technology matters and that it had intimate details of 300 Western European firms which it claimed were involved, and the CIA in Washington has recently confirmed that United Kingdom firms are among them. The most recent issue of the computer trade magazine, Computer News, reports that United Kingdom firms that it has interviewed believe that United States treasury and customs officials, among others, are being used as a cover for CIA operations.

In his interview on 23 March, Mr. Perle seemed to corroborate that when he said: The budget for the customs service to enforce existing COCOM and United States export control has gone from 1 million dollars a year to 31 million dollars a year because the Defence Department contributed 30 million dollars. With even more candour he went on to reveal that British intelligence was involved, when he said: The British Government has become increasingly concerned … it has launched an expanded intelligence effort of its own". I repeat that I am in favour of protecting our important technology to ensure that it does not pass into the wrong hands, but it is clear that the COCOM regulations are now in chaos. They are now being taken to ridiculous lengths, perhaps even to the point at which their use is not so much to protect technology as to provide an instrument for the prosecution of United States high technology trade supremacy and an expression of the present United States Administration's paranoia.

Matters are made even worse by the fact that the Government seem powerless to stop the crude attempts by the United States to enforce the writ of United States law on companies and citizens of this country. In addition., there is the possibility—perhaps the probability, although personally I am tempted to reject this—that the CIA may conceivably be operating with the knowledge and assistance of the British Government to enforce United States laws against the interests of British firms and citizens.

In short, our high technology trade is now threatened in a way that may place us in permanent technological subservience to the United States and is likely to threaten our very sovereignty. What do the Government intend to do about it?

2.15 pm
The Minister for Trade (Mr. Paul Channon)

The hon. Member for Yeovil (Mr. Ashdown) is to be congratulated on initiating a debate on an important subject which has been debated only rarely. I hope that he will forgive me for saying that I cannot accept quite a lot of what he says, although I share some of his worries about the operation of extra-territoriality.

There is common ground between the hon. Gentleman, myself and the Government on the need to control the export to the Soviet Union and its allies of strategic high technology equipment and know-how. Surely it must be agreed throughout the House that such controls are essential if we are to play our proper part in protecting our security, in which our vital technological lead plays an essential part.

There can be no doubt that the need for control is as clear today as it has ever been. It has been evident for some time that the Soviet Union and its allies are putting considerable efforts into the acquisition of advanced western technology, often of direct benefit to the development of the Soviet military equipment programme. If the West allows this technology to be transferred, it loses a strategic advantage which it has developed at considerable expense. A good deal of further effort and expenditure of money and intellectual resources, often at considerable direct cost to the taxpayer, is required before we can re-establish our lead. I do not think that there is any disagreement about that among the member Governments of the Alliance.

Any measures designed to control the flow of western technology to the East must be organised on an agreed uniform basis. None of us could operate an effective embargo, which it is agreed is essential, if each member country went its own way and did not co-ordinate its action with others. Action by one member state to impose controls against the wishes of the other allies would do more harm to the cohesion of the Alliance than to those against whom the controls are aimed. I do not think that there can be much doubt about that, but if there is we have only to consider the disruption that took place in the Alliance in 1982 when there was disagreement about the supply of equipment from western European countries to the Soviet Union for installation in the west Siberian gas pipeline. Therefore, it is essential that such disputes do not occur.

It is valuable that the hon. Gentleman should put on record his concern about some of the activities of the American Government. I do not think that they are all well founded but it is important that such concerns should be publicly ventilated. It would be only in the interests of the Soviet Union and its partners if any member of the Alliance, whether it is the United States, the United Kingdom or any other member, were to break ranks from the uniform basis of control.

The form in which the common approach to the embargo is worked out is known as COCOM which is a co-ordinating committee. The member states meet at COCOM to co-ordinate their policies towards the embargo. It is not a treaty-based international organisation. It is merely a forum for meetings that are attended by the various member states. It was set up in 1949 and its function is to control and co-ordinate the strategic export control policies of the members, which are the members of NATO, less Iceland and Spain, and Japan. It works on the basis of unanimity. That is an essential safeguard that ensures that no policies can be adopted and that no policies can be changed without the unanimous consent of all the members.

The hon. Member for Yeovil drew attention to his view that some of the list of goods subject to the embargo are out of date. The lists are revised periodically to bring them up to date and such a review is in progress now. I very much hope that it will reach a conclusion later this year. It is right that measures should be taken from time to time to bring the lists up to date.

The British Government's view is that the list of embargoed goods should be as short and as precisely targeted as is consistent with the needs of our collective security. It would be wrong if the list were to be cluttered up with products that might have been of strategic sensitivity years ago when they were at the forefront of technological progress, but have been overturned more recently by modern developments. What is the point of denying the Soviet Union equipment to which it already has access? Lists that are too lengthy greatly complicate the task of enforcing export control by blurring the ability of the authorities concerned to focus on what is essential.

Export controls on items that are not generally strategically sensitive undermine public confidence in and the support of the industrial community for the embargo as a whole. It is right that the list should be brought up to date, but we must not jeopardise the genuine, widespread public support within the United Kingdom for the aims of the embargo, provided that the lists are up to date, and it is administered sensibly.

It is common ground that one of the ways in which the list is badly out of date is in what it has to say about computers. The present COCOM arrangements for computers were agreed as long ago as 1974 and that means that substantial revision is required to ensure that only computers, software and computer-controlled equipment of strategic significance is covered. We agree with the United States on the need to cover genuinely strategically sensitive computers. However, we do not share some of their strategic assessments, particularly as regards low-power computers and in respect of a wide range of goods that are now controlled by microprocessors. Discussions on this topic are continuing and we shall give special attention to it.

The Government have made a careful strategic assessment of our attitude towards controls on computers. The British computer industry has been kept fully in touch with developments by my Department. Some of the present computer items in COCOM are out of date, but there are provisions that enable us to issue licences at national discretion for certain computers. The hon. Member referred to his digital watch, but claims that people who export such things are committing offences are incorrect. Programmable pocket calculators require an export licence but provided that the Customs and Excise is satisfied that the calculators are being exported as personal effects, it has discretion to waive the requirements of a formal export licence.

The hon. Gentleman made one accusation with which I should deal in case there is any misunderstanding either in or outside the House. I can confirm that no Ministry of Defence officials are co-operating with the United States embassy on export controls. I think that is the answer to his question. It is true that representatives of the American customs in the embassy are co-operating with the investigation division of our Cusoms and Excise, and that is perfectly normal.

Mr. Ashdown

Is the Minister confident that any information supplied or obtained by British firms does not get used for any other purposes than those relating to customs? I wish to know in particular whether that route is one by which the alleged 300 firms that are on the CIA's books have obtained their information.

Mr. Channon

I can give the hon. Gentleman that assurance. Therefore, I can deal with the point about which he has written to my right hon. Friend the Secretary of State for Defence. I am sure that he will receive a letter on that point shortly.

An essential element of this is enforcement. We have decided to put more into enforcement because there is no point in having controls if we do not enforce them. These measures are already beginning to bear fruit. There are a number of cases pending in the courts where British subjects are facing charges of illegal exports of embargoed equipment to Eastern Europe. We are pressing ahead with trying to enforce the rules, which have been commonly agreed.

I share the hon. Gentleman's anxiety about extraterritorial jurisdiction by the United States. The exercise of purported jurisdiction by the United States beyond its frontiers is a matter of very great concern to the Government, in this context and others. For example, I have already mentioned American measures against the supply of western equipment for the Siberian pipeline.

We have made it clear time and again to our friends in the United States that our harmonious relationship is threatened by the American Export Administration Act. Although the Act lapsed in October, Congress is considering successor legislation and, in the meantime, controls remain in force under emergency legislation. We believe that measures to give effect to the strategic embargo must be a matter for agreement and co-operation between members of the Alliance.

The United States is prepared to negotiate with its partners in COCOM a multilateral system of export controls, but it insists on substituting its own judgment for the judgments of its principal allies. It is not acceptable in political terms for American export restrictions to be extended to the British subsidiaries of American corporations or to the re-export from the United Kingdom of goods or technology of American origin.

It is also not acceptable for the authorities of another country to extend legislation to companies in the United Kingdom in ways that displace British policy and may harm employment and profitability in British companies. The Government believe that such measures are contrary to the generally accepted principles of international law. We have urged the American authorities to ensure that the new Act will not include claims to have power to impose or maintain restrictions that have extra-territorial effect.

Mr. Ashdown

I am grateful for that assurance, but will the Minister go further and confirm that, in advance of the agreement, his Department will protect any British firm that comes under commercial pressure from the United States to obey American law?

Mr. Channon

I shall deal with that in a moment. We have to recognise that, despite all our efforts, and those of our allies to persuade the Americans that their extraterritorial pretensions are bad law and bad policy, they will exist for a bit longer.

Therefore, we have been urging the American authorities to adopt measures that, without prejudice to their position on the principles of international law, may nevertheless result in the practical application of those measures in a way that will minimise the political and jurisdictional difficulties. So far, we have had some success.

My answer to the hon. Gentleman's intervention is that in the last resort we have at our disposal the powers in the Protection of Trading Interests Act 1980, which the Government introduced specifically to combat the extraterritorial application of foreign law. We used those powers in the Siberian pipeline case and the aviation antitrust case, and the Government are ready to use them again if we are left with no alternative. Obviously, we would not wish to use them, but we are prepared to do so if there is no alternative.

The hon. Member mentioned Mr. Perle, an official at the American Defence Department. It is important to remember that, unlike the British Government, the American Administration is not monolithic. We have a tradition of collective responsibility, but the United States has a tradition of senior officials speaking in terms that do not necessarily reflect an established consensus. The extension of the role of the Defence Department is limited and is an internal matter for the American Government. There has been no change in American legislation.

I will deal with what the hon. Gentleman said about Plasma Technology if I have time, but I wish first to answer the claim that American export laws extend to business dealings with companies in the United Kingdom. That is not a new claim, but it has no validity in British law. My right hon. Friend the Secretary of State emphasised that on his recent visit to the United States and I shall repeat it when I visit Washington soon after Easter. In Britain, British laws must be observed.

We should like the Americans to renounce their claims once and for all, but the really important point is whether the American claims result in any practical damage to United Kingdom interests. We are continually in touch with the American Administration on this matter and they can be in no doubt about the strength of feeling in this country on the issue, nor about the potentially harmful effects on the interests on American multinational companies. The Americans have a stong interest in avoiding problems of this kind.

If, however, firms find themselves in difficulty as a result of attempts to enforce American export control laws in the United Kingdom, I hope that they will inform my Department at once. We shall pursue the matter vigorously and defend British interests wherever we can. The British Government feel most strongly about that.

In 1982, about £1 billion-worth of British goods were exported to the destinations covered by the COCOM embargo. Only 4.5 per cent., worth £45 million, were goods controlled by COCOM. Of that 4.5 per cent., £38 million worth were licensed under our national discretion procedures, and only £7 million worth of goods had to be put through the COCOM procedures. Although, therefore, some of the hon. Gentleman's fears are exaggerated, he has raised a serious and important matter that we shall continue to study.

It being half-past Two o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, that this House do now adjourn.—[Mr. Neubert]