It is my pleasure to bring the Control of Exports Bill 2007 before the House today for consideration and debate. The lessons of our recent economic history have taught us the advantages of operating in a truly global economy where opportunities are available for all countries to access open markets on an equal footing. As a strong supporter of trade liberalisation, Ireland continues to work with our EU partners and other like-minded countries within the World Trade Organisation to eliminate trade barriers and to promote the free movement of goods and services. However, our adherence to the principle of free trade is tempered by our equally strong commitment to arms control and global disarmament. The global community has a shared need for a stable, secure, inclusive and co-operative international environment. To this end, Ireland and other like-minded countries have undertaken to regulate trade in military goods and products that have both civil and military applications.
Ireland's existing legislation in the area of export controls dates from 1983. While a mere 23 years have elapsed since then, it is true to say that the past is indeed another country. In 1983, Europe and the world languished in the depths of the Cold War. After the fall of the Iron Curtain and the democratisation of central and eastern Europe, we had every reason to anticipate a period of sustained global peace and stability. Sadly, the tragic events of 11 September 2001 and subsequent events brought with them the realisation that new threats to international peace and security had emerged.
It has become apparent to us all that the enemy is no longer confined to massed armies without. Increasingly, we must guard against wanton acts of terrorism within, impacting on people as they go about their daily lives. Thanks to the wonder of modern communications, we cannot deny knowledge of atrocities perpetrated against innocent civilians in Darfur, for example, and other conflict zones. Closer to home, the horrors of the recent Balkan conflict, including the massacre at Srebrenica, have dispelled any assumptions we may have had that Europe has advanced to a state that makes it somehow immune from the inhumanities inflicted on the inhabitants of other continents. Our own recent history has also persuaded us that the ballot box, rather than the armalite, is the instrument best applied when seeking a lasting solution to conflict.
Another challenge to be faced has been the blurring of the distinction between military and civilian goods. Denied the possibility to import weapons directly, states and non-state parties have sought to develop their own weapons programmes by acquiring items not designed or developed exclusively for military purposes but which, nonetheless, can have military applications. Twenty years ago, we had a very clear understanding of what we wanted to control — guns, bullets, tanks or bombers. Again, however, we have been shaken out of our complacency. The attack on the Twin Towers was not perpetrated with a missile launched from a B1 bomber but with a civilian passenger jet. The London Underground explosives in July 2005 were encased not in weapons-grade steel but in nylon backpacks. We now know that we live in an era when anything and everything can be used as a force for evil. In the right hands, a hurley or a cricket bat can be wielded with sublime grace. In the wrong hands, up a dark alley, either can become a lethal weapon.
In light of these developments and concerned as to whether the existing 1983 legislation was adequate for the needs of a 21st century export control system, my Department in 2003 commissioned Forfás to undertake a review of Ireland's licensing system for military and dual-use goods. The overall objective of this exercise was to prepare a recommendation for the Government as to how best Ireland could modernise and strengthen its export licensing controls so as to ensure full compliance with our international obligations.
Forfás contracted Fitzpatrick Associates, Economic Consultants, in conjunction with the Stockholm International Peace Research Institute, a highly respected authority on issues such as conflict and security, to prepare a report with four specific objectives. The first of these objectives was to consult with Departments, end users, international organisations, specialised institutes — both national and international — involved in the licensing of military and dual-use goods and interested parties to determine the most appropriate export licensing system to be put in place in Ireland. The second objective was to prepare background material for a public consultation process in order to allow members of the public to make submissions or contributions on the optimal method of licensing military and dual-use goods. The third objective was to study international best practice with regard to export licensing control systems in other countries. The final objective was to submit a report outlining the results of both sets of consultations and the review of international best practice with regard to export licensing systems for military and dual-use goods.
The work of the consultants was guided by an inter-departmental group comprising officials from my own Department and the Departments of Foreign Affairs, Defence, Justice Equality and Law Reform, and the Revenue Commissioners. The group provided assistance and support to the consultants. However, I must emphasise that they had complete editorial independence and the report's conclusions and recommendations were those of the consultants. As part of this review process, roughly 40 public consultations were held with individual organisations in Ireland. These included exporters, representative bodies, State agencies and others. In addition, some 14 organisations responded to an invitation to members of the public to make submissions.
With regard to industry, the key lessons learned were that only a small number of companies had any involvement with the licensing system. Those companies that used the system were generally happy with it, while having some suggestions as to how it could be improved. Specific topics identified in this regard included more advance information on developments in the system, greater clarity as to what was controlled and with regard to end uses and the need for an electronic application system. Companies in general also emphasised the need to minimise bureaucratic requirements and pointed out the need to balance new restrictions against the possibility of making Ireland an unattractive location for certain highly mobile ICT activities.
As with industry, interest on the non-governmental side was limited to a small number of NGOs. In general, they were critical of what they perceived to be a lack of transparency regarding the decision-making process and outcomes in terms of detailed information on actual exports. They also criticised gaps in the system on such issues as brokering, licensed production overseas and service exports, as well as the absence of end-use monitoring and checking.
As part of the benchmarking exercise, a review of literature and information on export licensing systems in a range of countries was studied. A more detailed examination was conducted on the licensing systems in place in the United Kingdom, Austria, Sweden and the United States. It emerged that many of the problems considered by us to be challenging were also a cause for concern in other countries. These included controlling exports of intangible technology, putting into practice the EU's catch-all clause which controls non-listed items if they could be used in a WMD programme, enforcement of licence controls on non-compliant companies and promoting greater co-operation between licensing and customs authorities.
The final report of the Forfás review was published in May 2004. A key finding was that there was no one-size-fits-all solution for implementing export controls. Rather, it was vital to factor in unique national circumstances such as the legal systems and size and scope of the production activities affected when designing an effective system. The report identified a number of strengths and weaknesses of the Irish system. On the plus side, we have a relatively accessible, straightforward system staffed by knowledgeable personnel and the turnaround times for licensing applications stand up well to international comparison. Against that, however, the review recommended action to address a number of weaknesses, in particular the need for new legislation to address the needs of a modern, complex export control system.
Before moving on to consider in detail the legislative proposal now before the House, I would like to focus briefly on some of the other, non-legislative recommendations of the Forfás review and to brief the House on progress in these areas. In line with the Forfás recommendation, responsibility for the export licensing function has remained with the Department of Enterprise, Trade and Employment. However, much has been done to improve co-ordination with other Departments and State agencies, in particular the Department of Foreign Affairs, which is consulted on all licence applications with foreign policy considerations, and the customs authorities of the Revenue Commissioners.
The interdepartmental group established to oversee production of the report has remained in existence with a brief to promote and monitor implementation of all the review's recommendations. As this process nears completion, it is my intention to transform this group into a standing interdepartmental committee which will take forward responsibility for co-ordinating the work of the Departments and agencies in the area of export licensing.
A priority of the interdepartmental group has been the establishment of a technical advisory panel to act as a specialist resource for my Department on technical questions related to the licensing process. Acting on the recommendation of the Forfás review, a project to develop an on-line export licensing system has been under way for the past year. I am pleased to announce I expect this system, OELAS, to go live by St. Patrick's Day. We have worked hard to improve the flow of information to exporting companies and in this regard I was pleased to host our first ever export control seminar last June in Farmleigh at which I launched our users' guide and customers' charter to export licensing in Ireland.
Returning to the Control of Exports Bill, in January 2005 the Government approved in principle the drafting of new legislation in line with the recommendations of the Forfás review. As the House will be aware, all Government proposals for primary legislation are now subject to regulatory impact analysis, or RIA, to determine whether the new regulation will have the desired impact. RIA helps to identify any possible side effects or hidden costs associated with regulation and to quantify the likely costs of compliance for individuals or companies. It also helps to clarify the costs of enforcement for the State.
Prior to the general roll-out of RIA across all Departments and offices in June 2005, my Department participated in the pilot phase by offering the proposed Control of Exports Bill as a suitable test case. A RIA was undertaken which looked at three options for regulating export control. The first option was to maintain the status quo, namely, to continue to rely on the 1983 Act. The second option was to introduce new legislation which would update penalties, broaden the definition of exportation to include intangible transfers and introduce audit and inspection powers. The third option was to introduce new legislation along the lines of the second option but with added controls on arms brokering and technical assistance.
We quickly concluded the third option was the only one which would ensure Ireland's export control system was in line with best international practice and would enable us to meet our international obligations. The absence of any evidence to suggest Irish-based firms were engaging in brokering or technical assistance activities led us to determine that the economic impact of these new controls would be negligible.
Two key steps of a RIA are a public consultation process and an examination of enforcement and compliance issues. We were fortunate that these steps had been examined in some detail as part of the Forfás review. Working on the basis of the Forfás review recommendations and the findings of the RIA, the general scheme of the Control of Exports Bill was prepared in my Department and was approved by the Government on 19 July last. Since then, this Bill has been a priority item of legislation for publication by my Department. I am very pleased we were able to finalise the text of the Bill at the earliest opportunity and to publish it on 9 February.
I wish to explain the provisions of each section of the Bill. Section 1 sets out the definitions of certain terms. Where possible, we have aligned definitions with those in use in EU legislation. Section 2 sets out the general procedures for the making of regulations and orders and enables regulations and orders to be made for the purpose of giving effect to EU legislation. Section 3 enables the Minister to make orders or regulations to control brokering activities in accordance with the EU Common Position 2003/468/CFSP of 23 June 2003. It provides for controls to be imposed on brokering activities undertaken in the State and outside the State if undertaken by an Irish citizen or company. Section 4 enables the making of orders or regulations to prohibit or control the export of specified goods and technology. Generally, such orders will take the form of a list of goods to be controlled.
Section 6 makes general provisions with regard to the issue or refusal of licences. It will also enable regulations to be made governing licence application procedures. Section 7 deals with the appointment of officers authorised to enforce the Act and grants them necessary powers such as the right to enter premises, including vehicles, to inspect goods and technology and to require the production of documents and records. This section also allows for joint inspections with members of the Garda Síochána and Customs and Excise officers. Section 8 creates summary and indictable offences and significantly increases the financial penalties from a maximum of £12,700 under the 1983 Act to up to €10 million and-or five years' imprisonment for breaches of the Act.
Section 9 introduces a provision for an annual report on the operation of the Act to be prepared and to be laid before the Houses of the Oireachtas. This is in line with a key recommendation of the Forfás review and responds to calls for greater transparency in the area of export controls. Section 10 is a standard provision for expenses. Section 11 provides for the repeal of the Control of Exports Act 1983 but confirms the validity of the Control of Exports Order 2005, SI No. 884 of 2005, which contains the current list of controlled military goods. Section 12 provides for the citation of the Bill when enacted as the Control of Exports Act 2007 and for its entry into force, in all or in part, to be made by ministerial order. I commend the Bill to the House.
