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BASIC / Saferworld Briefing Paper

The European Union Code of Conduct:
First Steps in Arms Trade Restraint

Introduction

On 11 June 1998, the Foreign Ministers of the 15 European Union Member States adopted an EU Code of Conduct on arms exports. The Code, ¹ which aims to set "high common standards for the management of and restraint in arms exports from the EU", is a politically binding agreement under which the Member States agree to abide by certain criteria when granting arms export licenses. The Code represents significant progress towards the development of common EU controls over the arms trade, and has already been effective in denying licenses. It has also attracted the support of a number of countries outside the European Union. Nevertheless, the Code does contain weaknesses, which must be addressed before it can truly be considered as an international standard on arms transfers.

Background to the EU Code

The European Union Code of Conduct is built upon a number of pre-existing national and international measures. These include the eight common criteria agreed among EU members after 1991 Gulf War, the OSCE 'Principles governing conventional arms transfers' of 1993 and the UK government's guidelines on arms exports which were introduced in July 1997.²

The EU Code of Conduct initiative also has its roots in a six-year long campaign on the part of EU NGOs who saw that the eight common criteria and other instruments were having little impact upon the sale of EU arms to the developing world. Parallel progress toward a US Code of Conduct in the United States Congress, evidenced by the voice vote victory of the "McKinney-Rohrabacher Code" in June 1997, added extra impetus to the efforts of those who had long campaigned for a European Code.³

In February 1998, the British and French governments introduced a draft text of the EU Code of Conduct, initiating a four month negotiation on its scope and content. Meanwhile, a European coalition of NGOs, with Members of the European Parliament and national parliaments, exerted pressure on EU governments to develop and strengthen the provisions of the Code.

As a result, the Code proposals were considerably more substantive by the time the agreement was approved by the EU Council of Ministers on 11 June. However the NGO and parliamentary coalition still felt there were a number of weaknesses which would need to be addressed if the Code was to fulfil the laudable objectives of "high common standards". The groups released a comprehensive critique of the EU Code which it was hoped would spur efforts to revise the Code during the annual review process.⁴

Eight Criteria Guiding Arms Exports

• International Commitments: An export would be refused if it runs counter to the international agreements of the EU Member States, including UN arms embargoes.

• Human Rights: Member States will not export weapons "if there is a clear risk that the proposed export might be used for internal repression."

• Regions of Tension: Weapons should not be exported to areas of tension where they might exacerbate or prolong the conflict.

• Peace and Stability: Arms exports would be denied if there is good reason to believe that they might, in the near future, be used for aggression by the importing state.

• National Security: Member States must consider the risk a sale might pose to the national security of EU members, friends and allies.

• Behavior in the International Community: In issuing a license, a country's attitude to terrorism, international law and non-proliferation will be taken into account.

• Diversion and Re-export: Member States will take into account the risk of diversion and re-export in granting export licenses to recipient countries.

• Economic Capacity: The exporting country will take into account that the importing state achieve its defence and security needs with the least diversion of human and economic resources.

Strengths and weaknesses of the EU Code of Conduct

The EU Code is divided into three sections: a preamble, eight criteria for judging exports, and 12 operative provisions. The Code works through consultation and information exchange. When a Member State denies an export license on the basis of one or more of the criteria, the denial notification is circulated through diplomatic channels to the other Member States, along with an explanation of the refusal. If another government wishes to go ahead and fulfill that order (undercut), they must then enter into consultations with the government that originally denied the export.

The Code also includes provision for annual review of its operation and requires Member States to submit yearly reports on their arms exports and their implementation of the Code. It is hoped that this annual review process will lead to a strengthening of the Code over the coming years. Finally, the text of the Code calls on the Member States to encourage other arms exporting countries to subscribe to the EU Code of Conduct.

The Human Rights Criteria
The human rights criteria of the EU Code of Conduct were subject to the most debate and controversy and in the end, they were the most extensive and detailed of all of the criteria. The definition of human rights abuses in the EU Code is a strict one. The human rights criteria defines internal repression as "torture and other cruel, inhuman and degrading treatment or punishment, summary or arbitrary executions, disappearances, arbitrary detentions and other major violations of human rights and fundamental freedoms as set out in relevant international human rights instruments." Crucially, the Code states that Member States "will not issue a license" if there is a "clear risk" that the equipment "might be used for internal repression". One criticism voiced by NGOs related to the use of the word "internal" in the phrase "internal repression". Concerns were raised that this might exclude situations where human rights violations were being committed by armed forces outside their own borders, as in the persecution of the Kurds by Turkish forces operating outside Turkey. Furthermore, Member States decided to grant licenses on a case-by-case basis, rather than exercising restraint in arms exports to recipients that are guilty of serious human rights violations in general. As a result, an opportunity was missed to ensure maximum restraint in the supply of military equipment to abusive regimes.

Consultation and Information Exchange
The Code is based upon the flow of information on export license denials between governments and on the effectiveness of the bilateral consultations in preventing undercutting. However, a requirement to consult all Member States in advance of a decision to undercut would undoubtedly have encouraged greater convergence of the Member States' arms exports policies leading to higher common standards of behavior. Although the required unanimity was not achieved, there was support amongst the majority of the Member States for multilateral consultations on undercutting, and it is to be hoped that progress towards this goal will be possible in the future.

Annual reports and annual review
The Code requires that member states compile annual reports on defence exports and circulate them, in confidence, to all EU Member States. A consolidated report on the implementation of the Code will then be submitted to the EU Council of Ministers. Whilst the Code does not state that the Consolidated report will be made public significant support amongst the Member States for greater transparency will hopefully lead to the publication of this report. The Code does not rule out the individual Member States making their annual reports public and the decision by the UK and German governments to publish comprehensive reports on their arms sales should help sustain the climate in favor of increased transparency in arms sales. The annual review of the Code moreover will create a focal point for NGO and parliamentary pressure in favor of increased transparency across the EU as well as increasing opportunities to assess the Code's success and strengthen its provisions. The first such review is due to begin in mid-1999.

Missing provisions
A number of European Union states have weak or non-existent controls on the activities of arms brokering agents.⁵ However, pressure from the EU NGO sector ensured that this issue was placed high on the agenda of the German government which currently holds the Presidency of the EU. Germany does control the activities of arms brokers working on German soil, but are constantly frustrated by individuals stepping outside of the country to conclude their arms deals. Brokering controls recently adopted in the United States would serve as a useful model. All US nationals, regardless of where they are operating, must register with the State Department , and all arms deals brokered by US nationals or foreign nationals operating the United States are subject to US law regarding the export of military goods and services. Each arms deal must receive prior approval from the State Department. It is hoped that the German initiative to conclude an EU agreement on controlling arms brokers will lead to the adoption of similar controls across Europe.

Another significant loophole in the EU Code relates to the potential for EU Member States to circumvent the regulations of the EU Code by setting up licensed co-production agreements allowing the production of military equipment in countries which would fall foul of the Code's criteria. Again, EU NGOs are pressing for their governments to make all such agreements subject to the provisions of the Code of Conduct so that they do not license the production of military equipment in countries where it might be used for internal repression, and so on.

Finally, the Code of Conduct is currently only politically binding. Despite support for making the Code legally binding, in particular from the German government, this is unfortunately another area where unanimous support could not be achieved.

A Year of Activity

Alignment with the EU Code
Since the Code's agreement, a number of countries have aligned themselves with its provisions. The European associated countries - European nations that are not members of the EU but are party to certain agreements with the organisation - endorsed the Code of Conduct on 3 August 1998.⁶ Four of these countries, the Czech Republic, Norway, Poland and Slovakia, are reported by the Stockholm Peace Research Institute (SIPRI) to be among the world's top thirty arms suppliers.7 Canada also aligned itself to the EU Code at the end of 1998. Meanwhile, the Foreign Ministers of the Southern Africa Development Community (SADC) have also given their support to the codes of conduct approach by endorsing the Southern Africa Action Programme on light weapons. This calls on SADC countries to adopt a Code based on the EU model.

Denial notifications
Because denial notifications are confidential, it is difficult to assess how many weapons export licenses have been denied since the Code was agreed in June 1998. Reports indicate, however, that there have been well in excess of 100 denial notifications issued by the Member States and that in at least one case, a denial issued by one Member State has led to another Member State refusing a similar export licence.⁸

Release of the UK Annual Report
On 25 March 1999, the British Government released the first annual report since the Code's agreement.⁹ The report detailed exports licenses granted by the Labour government between May 1997, when it took power, and the end of that year. It indicates that the British Government has made significant advances in establishing a more ethical framework for arms exports. Although the NGO coalition was supportive of the increased transparency, it was concerned that military equipment was still being shipped to countries like Burundi, Turkey and Sri Lanka, which all fall foul of the EU Code criteria.

The EU Joint Action on Small Arms
The European Union has also played particular attention to the proliferation and misuse of small arms. In December 1998, the EU adopted what it called a "Joint Action" on small arms.¹⁰ The Joint Action is wide-ranging, and outlines the European Union's aim to build consensus on certain commitments. These include, inter alia, transfer of small arms and light weapons for legitimate security purposes only; controls on illicit weapons trafficking; and the control or destruction of surplus weapons. Crucially, the EU will "provide financial and technical assistance to programmes and projects" which endorse the Joint Action's aims.¹¹

International Reaction to the EU Code

The US administration has reacted favourably to the adoption of a European Code of Conduct, and indicated a willingness to work more closely with the European Union on arms transfers. In June 1998, Secretary of State Madeleine Albright said, "I welcome the European Union's recent decision to adopt a code of conduct for arms transfers, and will work to ensure better coordination of our respective policies. I also want to strengthen the Wassenaar arrangement, which has not yet reached its potential. We want that arrangement to be recognized as the institution where responsible nations take practical steps to prevent and address the dangers arising from irresponsible arms exports."¹² Other international organisations, including the United Nations Secretary-General and Organisation for Security and Co-operation in Europe (OSCE) have also indicated their support for the EU Code.

Recommendations
The European Union Code, although a significant achievement, falls short in many areas. It is vital that weaknesses in the EU Code are swiftly addressed and that the mechanism is used constructively and openly to stop arms from fuelling human rights abuses or situations of conflict. Active support for the EU Code would be best expressed through the adoption of similar Codes of Conduct on arms transfers, especially in the United States. This would encourage the EU to strengthen its own Code and would help develop high common standards at the international level, especially in the OSCE and the Wassenaar Arrangement. It would also further progress towards an International Code of Conduct, a proposal which is promoted by a group of Nobel Peace Laureates led by Dr. Oscar Arias, the former President of Costa Rica.

• The European Union Members States should work to strengthen the EU Code to include stricter criteria, multilateral consultations on undercutting; controls on arms brokering agents and on licensed production agreements and an explicit commitment to transparency and accountability.

• EU Member States should work to internationalise the EU Code. Non-EU Member States should align their policies with the EU Code, and encourage the adoption of a strict Code within the Wassenaar Arrangement or other multilateral body.

• The United States Congress should enact the US Code of Conduct as developed by Reps. McKinney and Rohrabacher, and Sen. John Kerry.¹³

• All governments should support the International Code of Conduct championed by the commission of Nobel Peace Prize Laureates.

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Endnotes

¹ EU Code of Conduct on Arms Exports, text formally approved by the European Union General Affairs Council, 8 June 1999.

² UK guidelines outlined in speech by FCO Minister of State Tony Lloyd, "Controlling the Arms Trade: A New Agenda for the 21st Century" Saferworld/BASIC Seminar, Chatham House, London, 9 June 1997.

³ Arms Transfers Code of Conduct, amendment to Foreign Relations Authorization Act, Fiscal Years 1998 and 1999, offered by Cynthia McKinney (D-GA), House of Representatives, 10 June 1997, Congressional Record, pp. H3618-H3626.

⁴ "Final Analysis - EU Code of Conduct on the Arms Trade", co-authored by Amnesty, BASIC, Christian Aid, Oxfam, Saferworld, World Development Movement.

⁵ Brian Wood and Elizabeth Clegg, "Controlling the gun-runners: Proposals for EU action to regulate arms brokering and shipping agents", BASIC, Saferworld and the Norwegian Initiative on Small Arms Transfers, February 1999.

⁶ These countries are Bulgaria, Cyprus, the Czech Republic, Estonia, Hungary, Iceland, Latvia, Lithuania, Norway, Poland, Romania, Slovakia and Slovenia.

⁷ Reported in "Additional States to Follow EU Code of Conduct", Arms Control Today, August-September 1998.

⁸ Confidential conversations with EU government officials, Saferworld and Human Rights Watch.

⁹ Annual Report on Arms Exports, Produced by the Foreign and Commonwealth Office, the Ministry of Defence and the Department of Trade and Industry.

¹⁰ Joint Action of 17 December 1998 adopted by the Council on the basis of Article J.3 of the Treaty on European Union on the European Union's contribution to combating the destabilising accumulation and spread of small arms and light weapons (1999/34/CFSP), Official Journal of the European Communities, 15 January 1999.

¹¹Ibid., Title II, Article 6.1.

¹² Speech by Secretary of State Madeleine K. Albright at the Stimson Center, Washington, DC, 10 June 1998.

¹³ Code of Conduct on Arms Transfers Act of 1998, (H.R. 4545) in the House, and Code of Conduct on Arms Transfers Act of 1997, (S.1067) in the Senate, 105th Congress.

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