sou · GTB39 · 2006-01-01 00:00:00 — The results have been used as a starting point for the review of the regulations. The factors of change are summarised below. Since the end of the Cold War, has gradually expanded its participation in European and transatlantic cooperation structures. Exports as well as manufacturing and development of defence equipment have become important areas of co- operation. There is now no contradiction between non-partici- pation in military alliances and participation in these structures. has abandoned its previous aspiration to be self- sufficient in terms of defence equipment. Given developments in the threat picture, Swedish independence as regards equip- ment is neither necessary nor economically feasible. Instead, must share the costs of development and manu- facturing with other countries. is participating in a number of intergovernmental pro- jects concerning the development, manufacturing or acquisi- tion of defence equipment. At corporate level there are nume- rous cooperative with other countries, which vary in depth and nature. There is significant foreign ownership of the defence industry in . Meanwhile defence companies operations are becoming increasingly international and export- oriented as demand from the Swedish defence declines. and the five other largest arms-producing countries in the EU make up the six nations cooperation (FA/LoI), the aim of which is to facilitate the restructuring and operation of defence industry. The rules that have been agreed on are intended to simplify and guarantee deliveries between participants in individual cooperation projects. There are special rules for resolving questions relating to the export of jointly developed equipment to third countries. The future defence of states and their involvement in international missions create a need for continued defence equipment acquisitions, even if in smaller quantities than pre- viously. The EU has established a common . The agency began its work in 2004 and has a broad mandate including research, acquisition, marketing issues and capabili- ties development. The EU is developing increasingly close cooperation on export controls. has adopted the EU Code of Conduct on and is working for its further development. The Code contains eight groups of criteria to be observed in national-level examination of export licence applications, along with an undertaking to exchange notification of licence denials, etc. As the worlds leading producer of defence equipment, the has an influence on Swedish companies that use American technology or attempt to win part of the US market. This dependence puts pressure on to meet US demands regarding both security of supply and re-exportation of tech- nology to third countries. The concept of export is becoming broader. The question of conceivable export markets is sometimes already discussed when entering into cooperation agreements. In addition, it is becoming more common for companies to sell functions rather than isolated products. These functions can include multi-year commitments on updates of software and hardware, as well as maintenance measures. Counterpurchases are becoming more common in large transactions, as are export subsidies. The dividing line between military and civil spheres has become less clear-cut. Military technology is being spun off to civil sectors of society and conversely civil applications are being used by the defence industry. In addition, industrial coopera- tion, research programmes and security cooperation are being established for products with both military and civil areas of application, with a view to generating synergies and lowering costs. Non-proliferation, which has long been an objective of inter- national cooperation on export controls, has come to focus on dubious regimes and non-state actors such as international criminal syndicates and terrorists. The threat from the latter category in particular has led to tighter regulations and has been a driver for enhanced cooperation on export controls. Switch to the concept defence equipment The inquiry proposes that the concept of krigsmateriel (literally war materiel but now often translated as military equipment) should be replaced by försvarsmateriel (defence equipment) in Swedish legislation. Defence equipment is a more modern concept, which is used alongside military equipment in export contexts and is an established term in the security and defence policy areas. In Swedish public administration, the determinant krigs- (war) has generally given way to försvars- (defence). Krigsmakten (the Swedish military), for example, has become Försvarsmakten (the Swedish defence, officially known in English as the Swedish Armed Forces). The modern equivalent of the Inspectorate of is the National Inspectorate of . The most recent defence policy bills talk about exports of defence equipment. Defence equipment is also a more correct concept than military equipment technically speaking, since the products concerned are now used, and usable, in applications that have nothing to do with warfare or are not traditionally military, for example, in the civilian sector of national defence and in international humanitarian missions. In the longer term, this development is expected to be reinforced by changes in the threat picture, combined with states being more rarely willing to pay for the development and acquisition of equipment that can only be used in one type of activity. It is not anticipated that the proposal will lead to any increase or decrease in the number of products for which a licence is required. Switch to the EU common list The inquiry proposes that the Swedish military equipment list should be replaced by the EU list, a revised version of which was adopted in (2003/C 314/01) and is intended for use in association with the EU Code of Conduct when considering applications for export licences. The reason for having a common list is that the differences between the national lists act as an obstacle to harmonised application of the Code. In the view of the inquiry, in the long run a switch to the EU list would both simplify the classification of products by the ISP and make it easier to exchange information with the other Member States. list uses a slightly different system of classifi- cation and does not differentiate between military equipment for use in combat and other military equipment. It is not anticipated, however, that this will lead to any increase or decrease in the number of products for which a licence is required. Under the proposal, part C of the Swedish military equipment list, which enumerates chemical substances, will continue to be used so that the obligation to declare such substances will continue in future to be clearly indicated in the Ordinance. The inquiry has evaluated the organisation of Swedish export controls, above all the division of responsibilities and work between the Government, the Riksdag (Parliament), the ISP and the . This evaluation has involved a study of the regulatory framework, interviews with individuals working in different parts of the organisation and comparisons with how other countries organise their export controls. The assessment comes to the conclusion that the Swedish organisation is well suited to its purpose and works well in all essential respects. observations underlying the inquirys assessment are listed below. Neither the Government nor individual ministers can formally be held responsible by the Riksdag for individual decisions taken by the ISP. However, the Government can be called to account if the Inspectorate fails to follow the line approved by the Riksdag when examining applications and if the Govern- ment fails to take measures in such a situation. and above its role as legislator, the Riksdag has expressed its support for the Guidelines. The submission of an annual report on exports gives the Riksdag an opportunity to monitor the implementation of policy. Parliamentary interpellations are another vehicle at the Riksdags disposal. The influence exerci- sed by the representatives of the parties in the Riksdag via the gives the decisions of the ISP added legitimacy. The purpose of the 1996 delegation reform was to relieve the Government of business of an administrative nature. It can be said that this purpose has been achieved. The Government has made the final decision in 15 cases since 1996, as against some three thousand every year before the reform. The way in which applications are examined is not considered to have undergone any substantial change as a result of dele- gation, which was an important precondition for the reform. As far as the inquiry can judge, the decisions taken by the ISP have followed the line indicated in the Guidelines and in policy documents. The ISP should continue to occupy an independent position vis-à-vis the Government, in accordance with the Swedish model of public administration. The Governments policy instruments – instructions and appropriation directions, but also the right to issue additional regulations concerning the referral of applications to the Government – together allow necessary control over the Inspectorate. has been able to exercise its ad- visory role and has influenced the ISPs decisions. has also been able to exercise its function as an observing body. It should be noted that in international terms, is unique in having a council composed of representatives of the parties in parliament with a mandate like that of the . The organisation and the regulatory framework enable effective control and governance of the defence industrys export- oriented operations. The role of the ISP is to serve as control agency and licence application examiner and in this connection to provide service to companies in practical matters associated with the licensing process. The evaluation made by the inquiry of the organisation of Swedish export controls has not found any reasons for proposing any change in the general situation. Nonetheless, there is scope for im- provement and continued organisational development. The most important proposals are summarised below. Extension of the ISPs institutional memory The inquiry proposes that the ISP, as a stage in extending its institutional memory, should document the deliberations behind decisions on applications that have been subject to consultation with the . Documentation is valuable in enabling the Inspectorate and the Government to follow developments in the application of the Guidelines over time. Notification of denials in accordance with the EU Code of Conduct The inquiry proposes that undertaking in the EU context to notify other Member States when an export application, or cancels a previously issued licence, should be written into the ISPs instructions. This would consolidate existing practice and clarify in what situations other Member States must be informed of a denial. New requirements for decision-making background information An equipment-specific approach places new demands on the back- ground information on which to base decisions on applications. The inquiry proposes that the ISP should deepen its cooperation with the Government Offices, government agencies and intelli- gence services so as to obtain information about alternative areas of use and the intentions of the recipient. The visits abroad – for the purpose of studying the prospective recipients export controls and to verify that the equipment remains in the possession of the end-user – should be developed. for an integrated approach for export control assistance (outreach) There is scope for increased coordination and planning of Swedish export control assistance. By way of proposal, the support may focus on new EU countries that are recipients of Swedish equip- ment. The support should concentrate on the application of regu- lations, including cooperation between government agencies and industry. The possibility of involving expertise from the Swedish defence industry should be made use of. The proposal aims to increase the long-term dimension of assistance measures. Maintenance of the division of roles in international export control cooperation The delegation of licence application examination to the ISP has consequences for how is represented in international export control cooperation. Often both government and ISP officials are required to take part in meetings and maintain their own networks. For the sake of coordinated Swedish action at international level it is important that the division of roles set in ordinances and appropriation directions is maintained. There should be early, structured coordination ahead of meetings at international level, giving consideration to the experience and views of all officials concerned. Strategy for consultation will make the more effective The effectiveness of the depends on the ability of its members to evaluate and take a position on the back- ground information that is made available before and during meetings. The inquiry proposes that the ISP, in dialogue with the members of and advisers to the Council, should elaborate a strategy for further developing the process of consultation. Such a strategy could cover both practical issues, such as the volume and presentation of material, and a plan for deepening members knowledge of export control issues. Modernisation and further development of the Guidelines Decisions in every single case concerning exports or international cooperation are preceded in by an examination. Since the 1950s, Guidelines have guided the positions taken on the appropri- ateness of recipient or cooperation states. The Guidelines have evolved by means of textual revision and practical developments. The current Guidelines for military equipment exports and other collaboration with foreign countries were elaborated in the late 1980s and came into effect in 1993. In its review of the current Guidelines, the inquiry has found that these should be further developed and modernised so as to retain their usefulness as a guidance document when taking political positions. The inquirys proposals are based in part on the observations below. In , exports and international cooperation involving defence equipment are subject to regulation and licence requirements. All decisions on export and cooperation applica- tions are preceded by an examination. The companies or individuals that follow the regulations and whose applications are assessed positively receive a licence from the ISP. About a thousand export licences are issued each year. Security and defence policy motives for permitting exports and cooperation persist and have grown stronger as a result of augmented participation in European and trans- cooperation and the abandonment of the aspiration to be self-sufficient in terms of defence equipment. Continued development of the hi-tech skills possessed by the defence industry, which benefit other industries as well, are an additional reason to allow cooperation and exports. The foreign policy reasons for denying licences for exports and cooperation persist and have also undergone further develop- ment. This is a result, not least, of international cooperation on export controls. When Code of Conduct for was adopted in 1998, this gave a number of additional principles and criteria to take into account when considering whether to grant a licence. There have also been developments in the rules of international public law that have been significant for the defence equipment area. The development of practical routines has been determined by the adaptation of the Guidelines by the Government and the ISP to contemporary foreign, security and defence policies and to the specific circumstances in each case. The inquiry notes, among other things, that in practice developments have entailed that weight is given not only to the identity of the intended recipient state but also to the areas of use for the equipment. The structure and language of the current Guidelines do not meet present requirements. The overlapping principles, abso- lute and conditional obstacles to exports, positive and negative presumptions concerning different countries and different types of equipment, add up to a combination that is extremely demanding for anyone wanting to understand which rules apply. Licences for exports and international cooperation involving defence equipment1 will be granted when there are foreign and security policy, defence policy or industrial policy reasons for doing so and provided there is no conflict with the principles and objectives of foreign policy or international obligations. This applies in particular when an application concerns an EU , , , the or other states with which to strengthen its cooperation in the defence equipment area. must fulfil its international obligations and undertakings in the area of export controls and must work internationally to pro- mote effective export controls. When a licence application is exa- mined, attention must be paid to any risk of the equipment being used for internal repression or of it being harmful to peace, secu- rity, stability or sustainable development. When a licence application is examined, attention must be paid to the existence of any intergovernmental agreement that includes 1 The term defence equipment refers to equipment listed in the Ordinance. Applications concerning the provision of technical assistance involving defence equipment abroad will be examined following the same regulations as for exports of defence equipment. security of supply guarantees for the equipment in question or a clear connection with a previously approved supply of a system or subsystem. If this is the case a licence should be granted, provided that this does not conflict with international obligations. Cooperation agreements must give the possibility of consulting with the state or states concerned in the cooperation regarding exports to third countries of jointly produced equipment. In connection with such consultations, a balanced assessment will be made of the national interest of cooperation, demands for responsible export controls and the significance of the Swedish contribution to the coming into being of the equipment. On the basis of the principles just stated, the following criteria must be applied when granting licences. A licence may only be granted if the intended recipient or co- operation partner is: a state; a central government agency; an approved company; an intergovernmental organisation that intends to use the equipment concerned in a peace-support operation; a legal person or individual who is acquiring the equipment concerned for a museum or similar non-military purpose. A licence should not be granted if there is a clear risk that the equipment concerned may be used by a different end-user than the one indicated or re-exported without consent. Before equipment leaves the country an end-user certificate or an own production declaration should be presented. A licence must not be granted if the intended export or co- operation conflicts with an embargo decided on by the , the EU or the . may a licence be granted if the equipment concerned is prohibited under international public law. International obligations relating to weapons of mass destruction and undertakings under multilateral export control regimes must be fulfilled. A licence should not be granted if in the course of the past three years an EU has denied the intended recipient an essentially identical transaction with reference to the EU Code of Conduct on . Should there nevertheless be reasons to grant an export, must first consult with the concerned and then explain the reasons why a licence application may be approved. Account must be taken of respect for human rights in the intended recipient or cooperation state. A licence must not be granted if there is a clear risk of the equipment concerned being used for in- ternal repression. Special caution must be exercised when the appli- cation concerns a state where serious violations of human rights have been established. Account must be taken of consequences for peace, security and stability. A licence should not be granted if there is a clear risk of the intended recipient or cooperation state using the equipment concerned for purposes other than legitimate security and defence purposes. Special attention must be given in the assessment to any risk that the intended export may impair the security of any EU or other friendly state. Account must be taken of the behaviour of the intended recipient or cooperation state with regard to the international community. A licence must not be granted for a state that supports terrorism or international organised crime. Account must also be taken of whether the state in question respects international humanitarian law in armed conflicts, is committed to non-proliferation and other forms of international arms control and disarmament and reports to the . Account must be taken of consequences for the economic and technical development of the intended recipient or cooperation country. A licence should not be granted if there is an obvious risk that the export or cooperation would seriously hamper sustainable development. The right of states to self-defence and potential participation in international peace-support operations must be taken into account at the same time. Comments on more important proposals for change In the proposal, licences are not made conditional on any need on the part of the Swedish Armed Forces. It is a necessary condition for the continued ability of the defence industry in to re- structure and develop its expertise that the companies are also able to export products that the Swedish defence is compelled to reject on grounds of priority or does not intend to acquire. The inquiry also finds that because of defence equipment cooperation within the EU, it is neither meaningful nor even desirable to make licences conditional on specifically Swedish needs. The criteria in the EU Code of Conduct have been integrated into the Swedish criteria. As the inquiry, after thorough delibera- tion, has chosen to integrate rather than replace criteria, the pro- posal contains new wordings in some areas. It is above all the operative provisions of the criteria in the Code that have been introduced into the Guidelines. Criteria found in the Code but not in the current Guidelines have been integrated, including the criteria concerning sustainable development and terrorism. Industrial policy is given as a further reason for being able to grant a licence. This does not mean that employment or regional policy aspects are to be taken into account. There may, however, be reason to grant licences for the sake of promoting technological development in the defence industry, particularly in view of the defence industrys role in generating new technology. Numerous civilian products and technologies have been successfully spun off from the military industry. The different presumptions for military equipment for combat and other military equipment have been replaced in the inquirys proposal by the type of equipment-specific approach prescribed in the EU Code of Conduct. This approach entails that when an application is examined, not only is consideration given to the identity of the recipient country but a position is also taken on how the equipment concerned will be used by the end-user. The provision that , in the event of the Government declaring the country neutral with respect to a conflict, must not export to the warring parties has been removed. This provision has never been used and in view of commitment to European cooperation it is becoming less and less likely that it will be put to use in the foreseeable future. Even if the provision has been re- moved from the Guidelines, it retains its validity.