Sustainable Development (Hansard, 19 September 2002)

§ Ms Hewitt

I have been asked to reply.

The Government's policy on Criterion Eight of the Consolidated EU and National Arms Export Licensing Criteria remains as stated in the criteria announced by my right hon. Friend the Member for Neath on 26 October 2000, Official Report, column 199W. However, as stated by my noble Friend, Lord Sainsbury of Turville on 4 March 2002, Official Report, column 73, the Government have recognised the need to consider how criterion eight…can most effectively be applied in assessing relevant export licence applications. The Government agree that there is a need for clearer procedures within Whitehall for reaching decisions where sustainable development is an issue.

The Government have agreed a two-stage process for assessing the impact of relevant proposed exports on sustainable development as defined in Criterion 8. First a non-exhaustive list of countries identifies those where sustainable development is most likely to be an issue. Second, in cases involving exports to those countries, the Government will look in more detail at the possible impact of relevant proposed exports on the economy or 310W the sustainable development of the recipient country. All Departments involved in the export licensing process have agreed guidance for officials to assist with this process. This guidance is not on the interpretation of policy, which remains as set out in the Criteria, but in the procedures developed to assist in compiling the data necessary for the Government to make decisions.

The list of countries will reflect those destinations where the prevailing macro-economic and development conditions mean that an export is most likely to trigger concern about economic impact or sustainable development as defined in Criterion 8. Those countries eligible for concessional loans from the World Bank's International Development Association (IDA) have been chosen for these purposes as representing the world's poorest. Because the economic and development situation in these countries differs, this part of the process will identify, on a country by country basis, which ELAs the Department of Trade and Industry will pass to the Department for International Development, as well as to the Foreign and Commonwealth Office, and the Ministry of Defence, for more detailed assessment and advice. The Government will keep the list of countries under constant review to take account of changing circumstances. The list will be published on the DTI website. Additionally, at the request of any Government Department involved in the licensing process, any ELA may be examined for its impact on the economy or sustainable development of the recipient country as defined in Criterion 8 should that Government Department consider this appropriate in the light of the individual circumstances of that application.

To assist in carrying out the assessment required under Criterion 8 where an ELA has been identified as requiring this further detailed assessment, the Government have devised a series of indicators. In the interests of transparency, consistency and predictability, I will outline the nature of these indicators.

The indicators take account of both the conditions prevailing in the importing country and the potential impact of the export. They are designed to help assess whether the proposed export would seriously undermine the economy of the recipient country and whether it would seriously hamper its sustainable development as defined in Criterion 8. The indicators are: relative levels of military and social expenditure and level of military spending as a percentage of GNP; aid dependency compared with the regional average; state of public finances; balance of payments; external debt sustainability; economic and social development, i.e. GNP/capita and Human Development Index; the status of any IMF or World Bank-sponsored economic reform programme. The assessment will take into account the impact of the proposed export on the above indicators.

Criterion 8 refers to the compatibility of the arms exports with the technical and economic capacity of the recipient country, taking into account the desirability that states should achieve their legitimate needs of security and defence with the least diversion for armaments of human and economic resources".

The Department for International Development will raise any concerns about "least diversion" by reference to the other agreed indicators.

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The cumulative impact of all arms imports to the destination country, not just exports from the UK, would be captured by the Criteria as a whole and by the above indicators.

Sources of information will include the IMF Government Financial Statistics Yearbook, IMF Country Reports and Surveys, IMF/World Bank Annual Progress Reports on the Poverty Reduction Growth Facility and, where appropriate, completion point documents from the Highly Indebted Poor Countries Initiative. Information in the IMF's periodic publication, Recent Economic Developments and the World Bank's World Development Indicators as well as OECD statistics, data and country summaries may also be drawn on.

Export licensing decisions rest with the Secretary of State for Trade and Industry, taking account of both advice from other Departments, and whether to issue or refuse a licence would be consistent with the Consolidated Criteria as a whole. The Department for International Development as the lead Department for advice on sustainable development issues, will invariably provide advice, although other Departments may also provide advice.

The F680 process, through which the Government provide advice to industry on proposals for marketing or promoting products overseas, does not constitute an export licence. Neither is the existence or otherwise of an F680 approval a factor which is taken into account in the licensing decision. However, the Government have also decided to make procedural changes to the F680 process. Rather than as previously, commenting through FCO, the Department for International Development will be invited formally to comment directly on F680 applications.