British American Security Information Council

Recent years have witnessed a number of developments in the field of conventional arms export controls across a range of fora and institutional contexts. These have included:

In the United States, the International Arms Sales Code of Conduct Act of 1999 obliged the US President to "take the necessary steps to begin negotiations within international fora … to establish an international regime to promote global transparency with respect to arms transfers." In December 2000 the EU and the United States issued a "Declaration by the European Union and the United States on the Responsibilities of States and on Transparency Regarding Arms Exports."

While these institutional arrangements have given some cause for optimism with regard to improving controls over arms exports, it would seem that, in the last two years, progress at the US-EU level has stalled. This is of particular concern, as the United States and EU member states, which have in recent years been responsible for over 70 per cent of weapons sales around the world, have also been the lead nations in terms of developing national and international normative standards in arms export controls.[i]

This recent hiatus would appear to be due in part to the fact that since 9/11 the nature of the international security environment has changed markedly, with implications for the relative weight applied to export control criteria and perceived foreign-policy imperatives in arms export licensing decisions. At the same time, governments and their export licensing authorities are having to confront rapid consolidation of the defence industry, both within and across borders: traditional anti-proliferation concerns have been challenged by arguments for streamlining export licensing processes for transfers to economic, as well as strategic, allies.

Within this context, BASIC and Saferworld organised a roundtable discussion in order to facilitate greater dialogue and sharing of information between EU and US officials and independent experts. The roundtable discussion sought to identify areas of transatlantic common ground, to isolate the areas where there is disagreement, and then to advance proposals to reconcile these differing viewpoints. It was attended by representatives from the US government and EU member states, the transatlantic defence industry, the European Commission and selected individuals in Europe and the United States with experience in the area of arms export controls. A full list of participants will provided in the full report to be published shortly.

Participants reviewed the current state of arms export controls in the EU and the US, considered the possible implications of any decision taken to streamline licensing laws for sales to near allies, and analysed the impact of 9/11 on arms export decision-making. The day concluded with a discussion of how the EU-US dialogue and cooperation in this area might be re-energised in the future.

To help inform the discussion, background papers were prepared in advance by BASIC, Saferworld and other independent experts. These papers will be reproduced in the full report to be published shortly.

The EU Code, which has proved to be among the most dynamic and effective of the multilateral export control regimes, is now the well-established basis for developing arms export controls across the EU. One of the key aspects of the EU Code is that it sets out a list of criteria that governments must always take into account when considering whether to allow the export of controlled goods. While for the moment and foreseeable future this area falls under the competence of member states, the possibility that arms exports will at some stage in the future be brought within the competence of the EU Commission cannot be discounted. More immediately, next year will see the admission of 10 new members to the EU, a process which represents both a challenge to and an opportunity for the existing EU arms export control regime.

In the US, there have been a number of recent proposals to streamline the licensing process, especially for exports to allies, for example by moving munitions from the US Military List to the Commerce List. In particular, announced in November 2002 was the National Security Presidential Directive 19: Review of Defense Trade Export Policy and National Security (NSPD-19). NSPD-19 was described by one participant as "a comprehensive assessment of the effectiveness of US defense trade policies, to identify changes necessary to ensure that those policies continue to support U.S. national security and foreign policy goals." According to US officials, this review, although wide-ranging, continues to address export controls within the parameters of the Arms Export Control Act and the Foreign Assistance Act. However, changes are believed to be necessary to deal with issues such as working with allies and the globalisation of the defence industry. In particular, the licensing authorities are struggling to deal with multinational corporations, and incorporation issues are likely to become increasingly important in the future, for example with regard to the Joint Strike Fighter program.

It was acknowledged that the United States has the most comprehensive arms export control regime, including for example extra-territorial control of arms brokers and extensive prohibitions on unauthorised export. Nevertheless, the universal application of criteria under the EU Code may make for more restrictive licensing decision-making within EU member states. It should be noted, however, that a recent decision in the United Kingdom to apply different standards to exports of goods for incorporation and onward sale threatens the universality of the EU system.

With regard to the prospects for wider international agreements on export controls as mandated by the International Arms Sales Code of Conduct Act, it was clear that although the United States has held some "discussions", there have as yet been no "negotiations." The US Administration appears reluctant at this stage to sign up to existing instruments or to attempt to draft any new ones, to "create paperwork to no effect."[ii] Rather, the preference expressed was to begin with "gentle", bilateral discussions to encourage a wider range of states to accept those norms which have already been largely agreed by what might be termed the Western, like-minded arms export control community. It was suggested that this would be a more productive way forward than trying to "sell" non-universal documents (e.g. the Wassenaar Arrangement or the EU Code) to a universal audience (including, for example, China and India).

The US Administration is at present considering a number of different approaches to simplifying the transfer of controlled goods to allies, either through streamlining licensing procedures or by exempting certain equipment or recipients from the process entirely.

While there was considerable concern expressed over whether exempting classes of equipment was appropriate, the principle of administering the export control regime to ensure that most effort is spent on evaluating the more sensitive transfers appeared to be widely accepted. How this is best achieved, however, was the subject of considerable debate.

It was noted that the licensing system is having difficulty keeping up with technological advances and the impact of industry restructuring and consolidation. In the United States in recent years, although the number of licence applications has remained relatively constant, many individual evaluations have become vastly more complex, especially those involving licensed production and/or technical assistance. These latter types of licence application are far more labour intensive and their proportion in relation to total applications is on the increase.

With such complicated cases the potential regulatory burden on the company may also be high, which has prompted calls from industry for greater use of "global licences", i.e. a single licence, allowing for multiple deliveries, to be issued for each contract. It was observed, however, that any lowering of licensing requirements must be matched by greater oversight and more rigorous enforcement.

Controlling flows of information (intangible transfers) was regarded as extremely difficult yet of critical importance. These flows may involve the movement of the technology itself, or of people with technical knowledge and skills. Industry compliance and EU member states bringing their controls up to US standards were identified as key to building effective controls. Examples of where the US applies tighter regulation than many EU member states are:

With regard to ITAR waivers, which involve the waiving of certain export restrictions for sales to countries with export control standards which closely match those of the US (i.e. which have largely achieved the measures called for above), the concept of "slow and deep" progress was put forward. For the moment, waiver negotiations are most advanced with non-EU Australia, followed by the UK. Negotiations with the UK were complicated by the role of the EU as "a silent partner in the room"; preferential arrangements among EU member states mean that to a certain extent an agreement with one is an agreement with all. Proceeding slowly and setting high common standards at this early stage would have the advantage of establishing a restrictive framework which other states, if they wished to be considered under this process, would have to match.

The events of 9/11 seem to have elevated the importance of foreign policy (and national security) considerations in US arms export control policy, at the expense of the application of other criteria (e.g. the risk that transfers might contribute to human rights abuses). This new focus has paradoxically both strengthened and weakened export controls.

Before 9/11 there was considerable pressure to liberalise export controls on the grounds that they were a barrier to trade and were disadvantaging US companies. Post-9/11, there is a greater awareness that controls have broader implications, that it is not merely a question of commercial interests, but also of national and homeland security. This has resulted in a reappraisal of the purposes that selective liberalisation might serve, and has encouraged Congress to be more restrictive in some ways, e.g. airline security, the Container Security Initiative. Funding has been increased for end-use monitoring of exports, especially for the Department of Defence Golden Sentry programme, however the impact of these additional funds is not yet known-the latest information available on such checks is for 2000.

On the other hand, 9/11 has reorganised, rather than removed, the pressures for export control liberalisation. NSPD 19 is focused on streamlining procedures with regard to supplying allies. The US Government is using arms exports and military assistance as a direct tool of foreign policy, as a lever to enlist support for the "war on terrorism" and to provide support to those states which have signed up. Relatively little weight appears to be placed on the human rights or democratisation records of those recipients of US support, or indeed on the prospects for their long-term stability. The concern was raised that the US may be using the 'war on terrorism' to justify exports which satisfy other foreign policy objectives.

This last point raised the key issue of licensing arms exports as a short term expedient, and whether the US Administration was ignoring the potential "blow-back" or "boomerang" effect of weapons sales. The point was made that US officials are acutely aware of what might happen if you send arms to a country to which you might later send troops. Another participant was even more sanguine on this issue, declaring that fears about blow-back were overplayed and that no US service person had ever been shot at overseas with a weapon of US origin larger than an M-16.

This view, however, would appear to be based upon a relatively narrow interpretation of blow-back, ignoring the less direct impact of supplying weapons to states or regions of instability. Indeed it is possible to argue that the current situation in the Persian Gulf can in part be traced back to decisions to arm the Shah's Iran in the 1970s. Certainly the states of the Cold War Western Alliance are complicit in assisting Saddam Hussein in his efforts to obtain weapons of mass destruction. Exactly who supplied what is to some extent irrelevant-during much of the 1980s a generally permissive environment allowed Iraq great latitude in its procurement strategies.

The EU, on the other hand, has maintained the EU Code and its criteria as the basis for arms export licensing decisions. However, the criteria allow considerable latitude for interpretation, and it is unclear how much 9/11 and its aftermath have actually influenced decision-making (in part because of the relative lack of transparency in this area in many EU member states). It was suggested that the criteria are themselves creatures of their time, and that they are kept under constant review. As circumstances change, so must the criteria or their interpretation. In December 2001, the UK authorised the export of an extremely wide range of military equipment into Central Asia under an open licence (which places no restrictions on total quantities), a decision hard to imagine being made before 9/11. UK Government Ministers have also made comments that they may have to rethink policy to some countries with poor human rights records which are facing a "terrorist threat".

Despite these signals, it appears there has been some divergence on this issue between the EU and US, which could conceivably contribute to transatlantic tensions. Yet it was widely agreed that it is crucial that the EU and the US co-operate on arms export controls, and that all would benefit from a regime that reduced unnecessary internal barriers while building high common standards of external control. EU states were encouraged to adopt US standards on extra-territorial controls, which would also have the advantage of helping to establish the principle as an international arms export control norm. Attention focused as well on the possibilities for greater co-operation over end-use issues.

Questions were asked about the extent of information sharing among states regarding instances of diversion or misuse of arms exports. It was suggested that EU member states and the United States should go further, and consider sharing resources for pre-licensing evaluations and post-export delivery verification and monitoring. The value of post-export monitoring was questioned at one point, on the grounds that being informed of misuse or diversion "after the event" was being informed too late, although it was also pointed out that such revelations would be available to inform subsequent decisions.

In closing, the point was made that arms transfers must not be looked at through an economic lens, and that we must always keep in mind what export controls are for: to enhance common security.

A number of existing instruments were examined as possible means through which to develop EU-US and indeed wider co-operation on arms export controls. The EU Code, the US International Arms Sales Code of Conduct Act, the Wassenaar Arrangement and a draft international Arms Trade Treaty (ATT) were all considered.

It was unanimously agreed that substantive progress requires a break from the traditional North-South divide; there is an urgent need to encourage participation of those who see themselves as on the receiving end of export controls. There was also some feeling that talk of legally-binding, as opposed to politically-binding, instruments could at this stage be counter-productive. It was agreed that it is important for governments and civil society to work together to bring about change.

The US Congress was seen as having little appetite to pursue any kind of international code or agreement at this time-there was little or support for an International Code of Conduct-and so it was suggested that the United States might not be the best country to take a lead on this. On the question of EU-US dialogue, it appeared that although there was a willingness to discuss export controls, it was not seen as a priority.

Included in the operative provisions of the EU Code is an exhortation for member states to use their best endeavours to encourage other arms exporting states to subscribe to the principles of the Code, and some EU member states have expressed a preference for the EU Code to form the basis of a wider international agreement. Although the prospects for this currently appear limited, the possibility of the US signing up to the Code, and especially to the denial notification and consultation mechanisms, deserves further consideration.

One participant proposed the Framework Agreement/Letter of Intent (LoI) process (currently comprising France, Germany, Italy, Spain, Sweden and the UK) as a possible forum for establishing agreement on export controls.[iii] This may well prove useful in terms of developing procedures for closer industry co-operation, however its utility in terms of export control are likely to be limited, as these provisions are embedded within the context of the EU Code.

It was noted that the Wassenaar Arrangement has proved a useful forum for socialising "outsiders" to the arms export control agenda. Yet this has also proved to be its greatest weakness: the caution or in some cases antipathy of those outsiders has acted as a brake on the institution. The United States would like Wassenaar to be as strong as other export control regimes, but how this is to be achieved is unclear. The slow progress made under the Wassenaar process is an example of the difficulty consensus-based fora have in adjusting to change: one participant suggested a way forward might be to move to systems of majority-voting.

The ATT was perceived by some to be too idealistic to generate much support among states. Others, noting that the provisions of the ATT are grounded in states' existing responsibilities under international law, were less sceptical. There was some feeling that efforts should be made to "sell" it to states which fall outside existing conventional arms export control instruments, and that this could be one way of starting to penetrate the above-mentioned North-South divide.

[i] In fact, the new annual report from the US State Department, released after the roundtable, states, "The US accounted for 64 per cent ($33 billion of total world arms exports in 1999. This was a record level, not only for the past decade but for all time, and amounted to a 52 per cent increase over the 1989 level." And in regard to EU countries it noted: "Western Europe was the second largest arms exporting region in 1999, accounting for 23 per cent of the world total." (World Military Expenditures and Arms Transfers 1999-2000, US Department of State.)

[ii] This comment was made on one occasion with particular regard to the EU Code, however the Code does have practical implications for the way its signatories implement policy. The denial notification and consultation mechanisms oblige signatories to take into account the licensing denials of their co-signatories when assessing export licence applications.

[iii] The Framework Agreement signed at Farnborough on 27 July 2000, and since ratified by all parties except Italy, is designed to facilitate the restructuring and operation of the European defence industry.

Transatlantic Security

Export Controls