§ Order for Second Reading read.6.40 pm
§ The Minister for Trade (Mr. Tim Sainsbury)
I beg to move, That the Bill be now read a Second time.
The Bill is short and technical; my speech will be short but I hope not too technical.
The Bill repeals section 9(3) of the Import, Export and Customs Powers (Defence) Act 1939. That subsection provides that the Act will expire when an Order in Council is made declaring that the emergency that was the occasion of the Act's passing is at an end. By repealing the subsection, the effect of clause 1 is to make the 1939 Act permanent. I do not think, in the circumstances, that I need dwell on the purpose of clause 2.
The 1939 Act is the last major piece of the emergency legislation introduced at the beginning of the second world war which remains in use, although, perhaps not surprisingly, it is not the only one remaining on the statute book. While preparing this Bill, we have initiated a review of other emergency legislation with analogous provisions to section 9(3), notably the Compensation (Defence) Act 1939 and the Landlord and Tenant (Requisitioned Land) Act 1939 and the Landlord and Tenant (Requisitioned Land) Act 1942. Whilst the review is not yet complete, we have reached the preliminary conclusion that the powers provided by these Acts are no longer necessary.
The Import Export and Customs Powers (Defence) Act 1939 gives powers to the Secretary of State for Trade and Industry to make orders prohibiting or regulating the import or export of goods to or from the United Kingdom, and enabling licences to import and export goods to be granted. It also provides for the forfeiture of goods imported or exported contrary to an order.
The power to control imports and exports has been, and remains, essential to implement a wide range of important Government policies. The powers to control exports have for many years been used to restrict trade for strategic reasons—for example, with the Warsaw pact countries and the People's Republic of China. The continuing need for such powers, even in a more peaceful world, is only too obvious. Other examples of the use of the powers are to implement international treaty obligations, such as the nuclear non-proliferation treaty, and to give effect to our other non-proliferation policies aimed at preventing countries from developing a chemical, biological, missile or nuclear capability; to prevent certain exports which could be prejudicial to national security, such as encryption equipment; and to prevent the export of goods likely to be used for terrorist purposes or for internal repression.
The powers of the Act are used to prevent exports of antiques and other items which are considered to be an important part of the national heritage. We also use the powers of the Act to implement the voluntary restraint agreement on steel exports.
The powers to control imports are equally important in relation to safeguarding public security, such as firearms, and to support foreign policy objectives, although they are used mainly to enforce internationally agreed trade protection measures, including restrictions on imports of textile and clothing products within the framework of the multi-fibre arrangement. The Act is also used to regulate the import of bananas, although, contrary to some 1060 popular opinions, that is not to help the Government to avoid banana skins but to help protect our traditional suppliers in the Commonwealth Caribbean.
The powers in the Act to control exports are implemented by the Export of Goods (Control) Order 1989, which specifies the goods the export of which requires a licence from the Secretary of State for Trade and Industry. It is for exporters to determine in the first place whether a particular product needs an export licence. In the event that advice is required, my Department stands ready to assist. Licence applications are submitted to the export control organisation within the DTI. To minimise the burden of export controls on exporters, a number of open general and open individual export licences have been introduced covering many industrial dual-use goods. Those remove the need to seek prior authorisation from the DTI before making a shipment.
Imports are controlled under the Import of Goods (Control) Order 1954, also made under the 1939 Act, which prohibits the import of all goods. Since there is no reason to restrict the entry of most goods, an open general import licence has been introduced which permits goods to be imported without the need to apply for an individual licence, with the exception of those goods specified in a detailed schedule. Goods in that schedule can be imported only under the authority of an individual import licence, for which importers apply to my Department's import licensing branch.
The powers have been used regularly by every Government since the war. Nearly 200 orders or amendments to orders have been made since the end of the war, averaging more than four each year. That is a clear indication of the continuing need on the part of successive Governments for powers which enable new items to be brought under control when that is judged necessary in response to a perceived threat or technological change.
Equally, controls which have become unnecessary can be removed. For example, the major relaxation in controls, introduced in the light of developments in eastern Europe, which was announced in July by COCOM partners, has been implemented under the powers of the 1939 Act. I hope that the present negotiations on a "core list" will lead to further relaxations in export controls early next year.
The powers are therefore tried and tested. Experience has shown that they work efficiently and effectively without placing unnecessary burdens on business. The 1939 Act enables us to react quickly and flexibly in response to each situation as it arises. The importance of the power has been highlighted by the present Gulf crisis.
I emphasise that the Bill is essentially a technical measure. It does not affect the exercise of powers under the Act, or the import and export licensing systems which have been established and which are familiar to importers and exporters. However, I am sure that the House will agree that it is no longer satisfactory to control imports and exports under powers derived from an Act whichshall continue in force until such date as His Majesty may by Order in Council declare to be the date that the emergency that was the occasion of the passing of this Act came to an endWe should now make the Act permament.
The Bill does not in practice change anything. The powers conferred by the Act have been operating 1061 satisfactorily for many years, and it is important that they continue to do so in the future. The Bill simply has the effect of putting them on a permanent legislative footing.
§ Ms. Joyce Quin (Gateshead, East)
I listened carefully to the Minister's explanation. The Opposition do not object to the Bill, as it makes sense in the light of events. In view of the reunification of Germany and the fact that the allied powers now have no role in Berlin, it is patently absurd to suggest that any part of the emergency circumstances of the second world war exist today. In any event, the Government have made clear statements to that effect, in answer to parliamentary questions and in documents, for example, in the Government's observations to the fourth report of the Foreign Affairs Committee, in which they referred to the treaty on the final settlement. It says that the treaty settlesbetween the parties…definitively matters arising out of the Second World War.If the 1939 Act were unamended, we should be in the strange position where it would presumably be possible for exporters and companies to challenge the legal validity of any measures taken under the 1939 Act.
When I first looked at the Act and the proposed Bill, my first impressions were of alarm and surprise. My alarm stemmed from the fact that the 1939 Act is couched in the language of war. That was not surprising because it was clearing the way for the conditions of war and the trading embargos and restrictions that were going to operate during that period. I was alarmed at the wording of the Act, which still pertains today, and I was surprised that the Act should be the legal base for so much of the export and import control adopted by Governments of different political complexions since 1939. Therefore, our willingness to accept the Bill does not mean that we accept that the 1939 Act should be the basis of such controls for ever and ever. It might well be sensible for a future Government to introduce a modern Bill, not couched in the language of 1939, to allow, for whatever reason, necessary restrictions on exports and imports.
I am glad that the Minister gave us some details of the way in which the 1939 Act continues to operate and some reasons for existing export and import restrictions. Will the Minister confirm that, while he referred to political reasons, there may be other reasons, such as health reasons, for the control of exports and imports allowed by the Act?
How effective is our import and export legislation? Let us look at the so-called Iraqi supergun incident. I do not apologise for raising that matter now, because the Opposition have repeatedly asked the Department of Trade and Industry to make a statement in the light of the dropping of charges in the Iraqi supergun affair. Following that affair, we are concerned about the effectiveness of our export and import controls.
When the previous Secretary of State for Trade and Industry was first asked about the so-called Iraqi supergun, he said that it was not possible to reveal the full details because of the possibility of criminal proceedings being instigated. Now that charges have been dropped, we feel that we have a right to certain answers and are still perturbed that there seems to have been a failing within the Department of Trade and Industry to appreciate the 1062 warnings given to it by the hon. Member for Bromsgrove (Sir H. Miller) and others about the export of that equipment to Iraq. Why was nothing done to act on the information, which has been available since July 1988, on the specifications and contracts surrounding the order, the detailed information on changes made to the order and the knowledge that existed about the involvement of the Space Research Corporation of Dr. Gerald Bull?
Will the Department state what has happened to the equipment already sent to Iraq? Are the reports that some of the equipment is involved in test firing accurate? What is the military assessment of its potential uses?
An alarming report in The Independent stated:Somewhere in Iraq, the 90ft long barrels of three British-built guns may be trained on allied forces 750 kilometres away in Saudi Arabia.That is a matter of grave concern to all hon. Members.
Why did the Government fail to uphold the arms embargo against Iraq? We want full information about other possible breaches of the embargo. Companies need to know where they stand on export and import restrictions. One company involved was apparently told, in a telephone conversation with the Department of Trade and Industry, that it did not need a licence, but the then Prime Minister, the right hon. Member for Finchley (Mrs. Thatcher), subsequently said at Question Time that the company should have applied for an export licence. That effectively changed the nature of the application system and put a different onus on the companies involved. If companies are to be held responsible for every possible end use of equipment or products, they need a great deal more assistance and effective response from the Department of Trade and Industry than was evident in that case, as my hon. Friend the Member for Sheffield, Central (Mr. Caborn) said.
Considerable concern was expressed on both sides of the House when statements were made by Ministers in March and April this year on the Iraqi supergun affair. Many of the questions asked then are still unanswered. Surely it is time for the Government to come completely clean on that issue. It is simply not good enough for the Department to say that any statement made on the judgment made to drop charges should be made by Customs and Excise—a full statement to the House of Commons by the Department of Trade and Industry is necessary.
The Opposition do not object to the Bill which, as the Minister said, is a technical measure and a necessary amendment to the 1939 Act if that Act is to accord with reality. But we urge the Government to improve their export-import procedures. In the long term—if the Government have a long-term future, which I doubt—will other legal vehicles be brought forward to achieve the control of exports and imports which are more appropriate than the obviously dated 1939 Act?
§ Mr. Sainsbury
With the leave of the House, I shall reply. The hon. Member for Gateshead, East (Ms. Quin) has expressed her support for the Bill, for which I am grateful. I note what she said about the long term—she used the expression "for ever and ever." I certainly would not suggest that the 1939 Act should remain the basis of legislation for ever and ever, but it is a matter for later consideration whether it would be appropriate to change it. In practice, very few people have occasion to look at the 1063 original Act and would look at the orders, with which the hon. Lady is familiar and which are set out in more modern language, not in terms of dealing with the enemy.
With regard to the Iraqi supergun, as I hoped I made clear in my introductory remarks, it is for those seeking to export items to satisfy themselves whether a licence is required. The mechanism for controlling the export of military equipment and components from this country is the licensing regime administered by my Department, under the Export of Goods (Control) Order 1989, made under the 1939 Act. It is for exporters to take reasonable steps to find out what they are making and disclose all relevant facts when asking about the need for a licence. A licence would have been needed to export components for a long-range gun to any destination, and would not have been granted for export to Iraq. In 1988 exchanges took place between Government Departments and industry in which advice was sought about the need for licences in relation to certain tubes. No basis was found for advising the companies that the tubes were subject to licence, and industry was accordingly informed that no export licences were required.
In the light of the Iraqi supergun case, the relevant Departments have reviewed their procedures. The hon. Lady asked about the effectiveness of those procedures. Some improvements have already been made and others will soon be made. The aim of the improvements is to remove any scope that may exist for misunderstanding between inquirers and Departments and ensure that all information available to the Government, which might be relevant to particular export proposals, is taken into account when deciding whether a licence is necessary and, if so, whether it should be granted. I hope that the hon. Lady will be reassured by what I have said.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Committee of the whole House.—[Mr. Nicholas Baker.]
§ Bill immediately considered in Committee; reported, without amendment; read the Third time, and passed.