Fourth annual report according to operative Provision 8 of the European Union Code of Conduct on Arms Exports

(2002/C 319/01)

INTRODUCTION

The European Code of Conduct on Arms Exports was adopted on 8 June 1998, setting high minimum standards for the management of, and restraint in, conventional arms transfers by all Member States of the European Union. The Code sets up eight criteria for the export of conventional arms and a denial notification procedure obliging Member States to consult on possible undercuts.

Operative Provision 8 of the Code provides for an annual review of its implementation and identification of any necessary improvements. This document constitutes the fourth annual report and covers developments during the fourth year of operation of the Code.

Decisions by Member States on practices relating to the Code of Conduct and its application by Member States are recorded in subsequent annual reports. With each report the body of such decisions grows. In the interest of transparency it was therefore decided to publish a Compendium of Agreed Practices listing all decisions in a systematic way. Together with the Code itself the Compendium gives a comprehensive view of the Code and the way it is applied by Member States. The Compendium is annexed to this report and will be updated with each subsequent report.

I. REVIEW OF THE FOURTH YEAR OF IMPLEMENTATION OF THE CODE

During the fourth year of operation the European Union Code of Conduct on Arms Exports consolidated its position as the most comprehensive international arms export control regime, providing for a high degree of internal and external transparency, dialogue, respect for denial notifications and dynamism.

Priority objectives identified in earlier reports were achieved. However, many issues are not settled once and for all but are subject to a continuous dialogue on responsibility in arms transfers and ways to promote it.

When adopting the third annual report it was felt that although the fundamental elements of a common approach to the control of conventional arms exports by Member States of the European Union were in place much remained to be done. Also work needed to begin in certain areas which had not been addressed in the past.

This feeling was echoed in the explanatory statement of the Committee on Foreign affairs, Human Rights and CFSP of the European Parliament, concerning the Council third annual report of the Code of Conduct (EP Doc. A5-0286/2002), which acknowledged that the annual report revealed the extent to which the Code of Conduct had its own built-in dynamics and noted that progress was being made in areas regarded by the Parliament as important, but concluded with the words "a lot done, a lot more to do".

In specific terms, the substantive increase in the number of notified denials and consultations has produced a sizeable body of information which testifies to the growing confidence in this instrument. The Code's unique notification and consultation procedures and the continued exchange of views between Member States on aspects of national export policies including policies on exports to specific countries or regions contribute decisively to transparency, dialogue and convergence between Member States in the field of conventional arms exports.

Dialogue takes place not only between Member States, but also through troika meetings in the framework of the political dialogue of the EU with candidate countries and non-member states and by way of EU Member States' participation in other international and multilateral forums.

The dialogue with third countries which have aligned themselves with the Code's principles, particularly the Associated Countries of Central and Eastern Europe, as well as Cyprus, Malta and Turkey, was stepped up during the fourth year as a result of new initiatives aimed at improving the application of the Code in these countries both at the legislative level and in actual implementation by the operators concerned. Ad hoc expert meetings between all Member States and Associated Countries are now held on a regular basis.

On 9 May 2002 the Republic of Croatia aligned itself with the Code by announcing its acceptance of the principles contained in the Code.

A meeting of the Presidency and the Commission with the United States of America, attended by a number of EU Member States, was held in June 2002 on the subject of export control assistance, including in the field of arms exports.

Member States have been conscious of the increased need to prevent arms from falling into the hands of terrorists and have supported the inclusion of a terrorist clause in the "Initial Elements" of the Wassenaar Arrangement, of which all EU Member States are members. The clause was adopted at the Wassenaar plenary meeting in December 2001. EU Member States have contributed to the subsequent work on the issue in the Arrangement.

The next two sections of the report cover work on specific issues addressed by Member States during the fourth year of operation of the Code. The decisions reported in these sections are also reflected in the annexed Compendium of Agreed Practices (see Annex I).

II. STATE OF PLAY AS REGARDS THE IMPLEMENTATION OF PRIORITY MEASURES IDENTIFIED IN THE THIRD ANNUAL REPORT

Harmonisation of national reports

Reporting procedures in Member States are different and do not necessarily produce comparable statistical data. Substantial efforts were therefore made to provide an agreed and uniform basis for national reporting providing greater transparency and comparability between data from individual Member States. Since national reporting procedures may take considerable time to change it is important to establish a uniform set of reporting requirements that can be implemented by all Member States. Some work remains to achieve this, but considerable progress was made increasing both the scope of reporting and the comparability of the data.

Member States agreed that the public report will provide, if available, data broken down by recipient country on the number and value of licences granted and the value of actual exports. It will also provide the total number of denials issued by each Member State and the total number of denials by all Member States for each recipient country and indicate the criteria invoked for denials and the number of times these criteria were invoked (see Annex II).

Controlling exports of non-military security and police equipment

Throughout the year, COARM kept this item under review. The Commission announced its intention to present a proposal for a Community regulation covering such items and presented its preliminary ideas for the structure and content of such a proposal, which would ban, altogether, equipment used solely for torture and introduce strict controls on equipment that may be used for internal repression. COARM will continue to follow this issue.

Arms Brokering

In the framework of COARM, Member States have collected and discussed relevant data concerning the control of brokering in their respective national legislation. Several Member States already have controls on brokering and others are in the process of introducing such controls. Member States have discussed ways of strengthening the political commitment to control arms brokering both among Member States and in a wider context. A draft Common position on the control of arms brokering was presented by the Spanish Presidency and is now under examination.

End-user certificates

Member States agreed on a common core of elements that should be found in a certificate of final destination when it is required by a Member State, concerning the export of goods included in the "common list of military equipment". They also identified an additional set of elements, which might also be required in accordance with their national legislation.

The following are the minimal details to be set out in an end-user certificate:

- exporter's details, at least name, address and business name,

- end-user's details, at least name, address and business name. In the case of an export to a firm which resells the goods on the local market, the firm will be regarded as the end-user,

- final destination country,

- a description of the goods being exported (type, characteristics), or reference to the contract concluded with the authorities of the final destination country,

- quantity and/or value of the exported goods,

- signature, name and position of the end-user,

- the date of the end-user certificate,

- end-use and/or non re-export clause.

Moreover, in accordance with their national legislation, Member States can require, inter alia:

- a clause prohibiting re-export of the goods covered in the end-user certificate. Such a clause could, among other things:

- contain a pure and simple ban on re-export,

- provide that re-export will be subject to agreement in writing of the authorities of the original exporting country,

- allow for re-export without the prior authorisation of the authorities of the exporting country, to certain countries identified in the end-user certificate,

- indication of the end-use of the goods,

- an undertaking, where appropriate, that the goods being exported will not be used for purposes other than the declared use,

- an undertaking, where appropriate, that the goods will not be used in the development, production or use of chemical, biological or nuclear weapons or for missiles capable of delivering such weapons,

- full details, where appropriate, of the intermediary,

- if the end-user certificate comes from the government of the destination country of the goods, the certificate will be authenticated by the authorities of the exporting country in order to check the authenticity of the signature and the capacity of the signatory to make commitments on behalf of their government (2002).

Production of military goods under licence

Member States have agreed that, when considering licence applications for the exports of controlled technology or goods for the purposes of production overseas of equipment on the common list of military equipment, account will be taken of the potential use of the finished product in the country of production and of the risk that the finished product might be diverted or exported to an undesirable end-user.

Promoting the principles and criteria of the Code among non-member countries and international organisations

The Code of Conduct was a primary subject of all political dialogue consultations carried out with non-member States. Consultations are ongoing with the United States on ways to follow-up on the December 2000 Declaration by the European Union and the United States on the responsibility of States and on transparency regarding arms exports.

Involvement of Associated countries in denial notifications

Member States agreed to share information on denials on an aggregate basis with Associated Countries and encourage these countries to similarly inform Member States about their denials. The information will be shared through the Presidency and contain the following details: country of destination; short description of equipment and military list rating of items; classification of end-user as government agency or private entity, and reasons for refusal (criteria of the EU Code of Conduct).

III. FURTHER QUESTIONS ADDRESSED BY THE COARM WORKING PARTY IN CONNECTION WITH THE IMPLEMENTATION OF THE CODE OF CONDUCT

Member States have continued their efforts to upgrade practices relating to the Code of Conduct in the following areas:

EU common list of military equipment

COARM agreed that Presidencies should periodically convene special meetings (at technical expert level) with a view to deciding on the possible update of the EU Common list in order to take account of modifications of the Wassenaar Arrangement (WA) list and coordinating Member States' positions and agreeing on possible common proposals for modifications of the WA list.

Transit

In those cases where Member States require a licence for transit or transhipment of any of the goods on the European Union common list, the criteria of the European Union Code of Conduct on arms exports should be duly taken into consideration by Member States when deciding on applications for such licences.

IV. PRIORITY GUIDELINES FOR THE NEAR FUTURE

The first three annual reports established the practice of identifying a number of guidelines on topics requiring consideration or action in the near future, enabling Member States and their partners within and outside the European Union to monitor and measure progress in the implementation of the Code.

Following this example Member States have identified the following guidelines:

1. continue efforts to increase harmonisation of national reports with the aim of increasing their transparency and producing clearer summary tables;

2. pressing for definitive adoption of a system for controlling exports of non-military security and police equipment;

3. continue deliberations in the area of arms brokering on the basis of the guidelines already approved, with a view to adopting a Common Position on the subject. Promote regulation of arms brokering in other relevant forums;

4. continue work on standardising the information to appear in the certificates of final destination;

5. continue work on issues related to manufacture under licence in non-member countries;

6. establish how best the authorities of each Member State should control electronic transfers of the software and technology associated with equipment on the common list;

7. continue efforts to promote the principles and criteria of the Code among third countries and international organisations;

8. work towards even greater involvement of the candidate countries in the implementation of the Code of Conduct and provide practical assistance to this effect, including by sharing information on denials;

9. consider practical measures to improve the implementation of the denial and consultation mechanism in national decision-making taking into account Member States' experiences and the handling of the growing volume of denials circulated among Member States.

ANNEX I

COMPENDIUM OF MEMBER STATES AGREED PRACTICES WITHIN THE FRAMEWORK OF THE CODE OF CONDUCT

I. INTRODUCTION

Since the adoption of the Code of Conduct in 1998, the Member States of the European Union have agreed on a number of practices relating to the Code and its operative provisions with a view to clarifying, detailing and sometimes broadening the scope of the Code's principles and operative provisions.

Agreed practices have been reported in the annual reports on the operation of the Code of Conduct by Member States. This compendium gathers them in a systematic way and will be updated and published on a yearly basis as an annex to the annual report. Together with the Code itself the compendium provides a transparent and comprehensive view of the Code of Conduct and its application by Member States.

The compendium contains two parts. The first concerns general practices related to the operation of the Code and the second, practices linked to specific operative provisions of the Code. The year of publication in the annual reports is indicated in brackets. The Compendium does not cover issues under discussion or identified as priorities for future discussions.

II. GENERAL PRACTICES RELATED TO THE OPERATION OF THE CODE OF CONDUCT

1. Export of equipment for humanitarian purposes

The issue of the desirability of allowing exports of controlled equipment for humanitarian purposes in circumstances that might otherwise lead to a denial on the basis of the Code of Conduct has been addressed by the COARM Working Party. In post-conflict areas, certain types of controlled equipment can make important contributions to the safety of the civilian population and to economic reconstruction. Member States have come to the conclusion that such exports are not inconsistent with the EU Code of Conduct. These exports, like all others, must be dealt with on a case-by-case basis, taking full account of the criteria set out in the Code. Member States will require adequate safeguards against misuse of such exports and, where appropriate, provisions for repatriation of the equipment (2001).

2. Control of arms brokering activities

In the context of the implementation of the Code of Conduct, the issue of arms brokering was raised and was discussed on several occasions by COARM. In accordance with the intention expressed in the second annual report, Member States have continued and deepened their discussions on the procedures for monitoring arms brokering activities. To that end, they have reached agreement on a set of guidelines for controlling brokering that could be a basis for national legislation.

Residents and entities within the EU must be prevented from engaging in arms transfer activities circumventing national, European Union, United Nations or OSCE embargoes or export criteria of the EU Code of Conduct on arms exports; it is also desirable to establish the necessary tools for information exchange on both licit and illicit brokering activities, thereby enhancing cooperation within the EU with a view to preventing and combating arms trafficking. Member States have thus agreed that arms brokers resident or established within the territory of the EU and/or brokering activities that take place within the territory of Member States should be controlled. Such controls should cover the activities of persons and entities that act as agents, traders or brokers in negotiating or arranging transactions that involve the transfer of arms and military equipment from one foreign country to another. These measures will also establish a clear framework for legitimate brokering activities.

In order to prevent loopholes stemming from different national approaches and to facilitate the work of Member States wishing to develop or further elaborate national regulations, some suggestions for controls on arms brokers were evaluated and the following conclusions were drawn.

For transactions involving the activities of buying and selling (where the arms or military equipment enter into the legal possession of the arms-brokering agent) or mediating (without direct acquisition of property), a licence or written authorisation should be obtained from the competent authorities in the Member State where the brokering activities take place or where the brokers are resident or legally established. Such licence applications should be assessed on a case-by-case basis against the criteria of the EU Code of Conduct on arms exports.

Additionally, Member States should seriously consider registering brokers or requiring them to obtain a written authorisation from the competent authorities of the Member State where they are resident or established. In the assessment of an application for authorisation to act as a broker, records of involvement in illicit activities should be taken into account. Such a system of registration or authorisation should not be construed as implying any form of official approval of brokering activities, a fact that is made clear also by the maintenance of a system of individual or global licences authorising transactions.

Legal controls in this important area should be supported by effective penalties. Member States could exchange information on legislation, registered brokers and brokers who have a history of proven involvement in illicit activities and could continue discussions in the COARM Working Party to further define, inter alia, possible criteria for the assessment of applications to register as a broker or obtain authorisation to act as a broker (2001).

In the framework of COARM, Member States have collected and discussed relevant data concerning the control of brokering in their respective national legislation. Several Member States already have controls on brokering and others are in the process of introducing such controls. Member States have discussed ways of strengthening the political commitment to control arms brokering both among Member States and in a wider context. A draft Common Position on the control of arms brokering was presented by the Spanish Presidency and is now under examination (2002).

3. Intangible transfers of technology

COARM endorsed the importance of considering effective legal controls on electronic transfers of the software and technology associated with items on the common list, which is already done in certain Member States. It agreed to pursue its deliberations on this issue, taking into consideration the work done in the dual-use area (2001).

4. Transit

In those cases where Member States require a licence for transit or transhipment of any of the goods on the European Union common list, the criteria of the European Union Code of Conduct on arms exports should be duly taken into consideration by Member States when deciding on applications for such licences (2002).

5. Production of military goods under licence

Concerned by the consequences of uncontrolled flows and destabilising accumulations of arms and other military equipment, and the proliferation of the technology and means to produce such equipment, the EU has adopted measures to consolidate and strengthen controls on arms exports, to promote international cooperation in this area and as a contribution to the prevention of conflicts. In this respect the EU recognises the special responsibility of arms exporting States. Recalling the EU Code of Conduct on arms exports of 8 June 1998, Member States have agreed that, when considering licence application for the exports of controlled technology or goods for the purposes of production overseas of equipment on the Common list of military equipment, account will be taken of the potential use of the finished product in the country of production and of the risk that the finished product might be diverted or exported to an undesirable end-user (2002).

III. PRACTICES RELATED TO THE OPERATIVE PROVISIONS OF THE CODE OF CONDUCT

Operative Provision 3

EU Member States will circulate, through diplomatic channels, details of licences refused in accordance with the Code of Conduct for military equipment together with an explanation of why the licence has been refused. The details to be notified are set out in the form of a draft proforma at Annex A. Before any Member State grants a licence which has been denied by another Member State or States for an essentially identical transaction within the last three years, it will first consult the Member State or States which issued the denial(s). If following consultations, the Member State nevertheless decides to grant a licence, it will notify the Member State or States issuing the denial(s), giving a detailed explanation of its reasoning. The decision to transfer or deny the transfer of any item of military equipment will remain at the national discretion of each Member State. A "denial of a licence" is understood to take place when the Member State has refused to authorise the actual sale or physical export of the item of military equipment concerned, where a sale would otherwise have come about, or the conclusion of the relevant contract. For these purposes, a notifiable denial may, in accordance with national procedures, include denial of permission to start negotiations or a negative response to a formal initial enquiry about a specific order.

1. Denial notifications and consultations

A serial number indicating the country of origin and the number of the denial will be introduced for denial notifications (accompanied by the Community acronym of the Member State concerned and indication of the year).

Denials still subject to appeal under national procedures will be notified under the Code of Conduct with an indication to that effect.

Decisions to revoke extant licences will be dealt with in the same way as refusals of licence applications.

Denial notifications that have been circulated in the international export control regimes will also be circulated as Code of Conduct denial notifications if relevant to the scope of the Code.

A period of two to four weeks, from the date the request for consultations has been received is established for the consultation procedure envisaged in operative paragraph 3 of the Code, unless a different time period is agreed upon between the parties concerned.

When an arms embargo is lifted, denials solely based on the embargo will expire unless they are renewed by the denying country within a period of one month on the basis of other criteria of the Code.

Denial notifications should include the following particulars:

- country of destination;

- full description of the goods concerned (with their matching common list number);

- buyer (specifying whether the buyer is a government agency, police, army, navy, air force, or paramilitary force, or whether it concerns a private natural or legal person and, if denial is based on criterion 7, the name of the natural or legal person);

- description of the end-use;

- reasons for denial (these should include not only the number(s) of the criteria, but also the elements on which the assessment is based);

- date of the denial (or information on the date when it takes effect unless it is already in force).

A denial of a licence for a transaction deemed essentially identical to a transaction already subject to a denial notified by another Member State should also be notified.

The consulting State should always provide feedback on its final decision to the notifying State, irrespective of whether that decision is to grant or deny a licence.

On denials issued more than three years previously, even though the obligation to consult ends after three years, as laid down in the Code of Conduct, such a denial does not expire but could be the subject of exchanges of information (2000).

2. Dialogue on undercuts

Licensing cases in which denial consultations lead to a positive decision could be of particular use in enhancing the dialogue on the interpretation of the criteria of the Code and thus in promoting convergence in the field of conventional arms exports.

Such cases might be based on developments concerning the destination in question and/or highlight different interpretations of the criteria. Member States deciding an undercut therefore agree to share, to the extent compatible with national considerations and on a confidential basis, information on the undercut decision not only (as specified in the operative provisions) with the State responsible for the relevant denial, but, in the context of COARM deliberations, with all Member States (2001).

3. The concept of "Essentially identical transactions"

Discussions within COARM has led to the following common approach.

Daily operation of the Code's denial mechanism will result in an accumulation of experience that will provide the basis for a clear understanding of what is meant by an "essentially identical transaction".

This process will be facilitated by the adoption of a comprehensive approach to assessing transactions, and by initially using a broad interpretation of the concept of "essentially identical". The resulting consultation will provide the experience needed to gradually evolve a more precise definition of the term.

In order to accelerate the process further, the consulting Member State will, to the extent compatible with national considerations and on a confidential basis, endeavour to share with other EU Member States, in the context of COARM deliberations, information on the occasions in which consultations result in the conclusion that two transactions are not essentially identical. According to the logic of the consultation mechanism, these cases are not considered as undercuts (2000).

Operative provision 4

EU Member States will keep such denials and consultations confidential and not to use them for commercial advantage.

1. Confidentiality in consultations

Member States have looked at the arrangements for the consultation procedures and, in particular, problems relating to the necessary confidentiality of such contacts, which should not, however, thwart the objective of transparency underlying the Code of Conduct (2000).

Operative provision 5

EU Member States will work for the early adoption of a common list of military equipment covered by the Code, based on similar national and international lists. Until then, the Code will operate on the basis of national control lists incorporating, where appropriate, elements from relevant international lists.

1. The common list

The common list of military equipment was adopted by the Council on 13 June 2000 and published in the Official Journal of 8 July 2000. The Council decided to publicise the list in accordance with the principle of wide-ranging transparency underlying the Code.

Member States will now use the common list's references in denial notifications (with retroactive effect for earlier denial notifications), thereby clarifying and simplifying their information exchanges on these matters.

Denials on items subject to national controls by Member States, but not included in the above-mentioned list, will continue to be notified to all Member States. Member States that do not control these items will inform others.

The common list of military equipment has the status of a political commitment in the framework of the Common Foreign and Security Policy. In this sense, all Member States have made a political commitment to ensure that their national legislation enables them to control the export of all the goods on the list. The common list of military equipment will act as reference point for Member States' national military equipment lists, but will not directly replace them.

Since the list has an evolutionary character, Member States will continue updating it on a regular basis within the COARM Working Party.

Member States have made it known that they would endorse efforts for any items from the common list of military equipment which are not contained in the Wassenaar list, to be put forward for consideration within the Wassenaar Arrangement. (2000)

COARM agreed that Presidencies should periodically convene special meetings (at technical expert level) with a view to deciding on the possible update of the EU common list in order to take account of modifications of the WA list and coordinating Member States' positions and agreeing on possible common proposals for modifications of the WA list (2002).

2. Controlling exports of non-military and police equipment

COARM undertook to draw up a common list of non-military security and police equipment, the export of which should be monitored in accordance with criterion two of the code "Respect for human rights in the country of final destination". The Commission has now announced a proposal for a Community mechanism for controlling exports of non-military equipment that may be used for internal repression (2001).

The Commission announced its intention to present a proposal for a Community Regulation covering such items and presented its preliminary ideas for the structure and content of such a proposal, which would ban altogether equipment used solely for torture and introduce strict control with equipment that may be used for internal repression (2002).

Operative provision 7

In order to maximise the efficiency of this Code, EU Member States will work within the framework of the CFSP to reinforce their cooperation and to promote their convergence in the field of conventional arms exports.

1. Appeal procedures

The COARM Working Party discussed possible appeal procedures relating to exports of military equipment (2001).

2. End-user certificates

Member States agreed on a common core of elements that should be found in a certificate of final destination when it is required by a Member State, concerning the export of goods included in the common list of military equipment. They also identified an additional set of elements, which might also be required in accordance with their national legislation.

The following are the minimal details to be set out in an end-user certificate:

- exporter's details, at least name, address and business name,

- end-user's details, at least name, address and business name. In the case of an export to a firm which resells the goods on the local market, the firm will be regarded as the end-user,

- final destination country,

- a description of the goods being exported (type, characteristics), or reference to the contract concluded with the authorities of the final destination country,

- quantity and/or value of the exported goods,

- signature, name and position of the end-user,

- the date of the end-user certificate,

- end-use and/or non re-export clause.

Moreover, in accordance with their national legislation, Member States can require, inter alia:

- a clause prohibiting re-export of the goods covered in the end-user certificate. Such a clause could, among other things:

- contain a pure and simple ban on re-export;

- provide that re-export will be subject to agreement in writing of the authorities of the original exporting country;

- allow for re-export without the prior authorisation of the authorities of the exporting country, to certain countries identified in the end-user certificate,

- indication of the end-use of the goods,

- an undertaking, where appropriate, that the goods being exported will not be used for purposes other than the declared use,

- an undertaking, where appropriate, that the goods will not be used in the development, production or use of chemical, biological or nuclear weapons or for missiles capable of delivering such weapons,

- full details, where appropriate, of the intermediary,

- if the end-user certificate comes from the government of the destination country of the goods, the certificate will be authenticated by the authorities of the exporting country in order to check the authenticity of the signature and the capacity of the signatory to make commitments on behalf of their government (2002).

3. Member States' Coordination

Coordination within the European Union was exemplary at the United Nations Conference on the Illicit Trade in Small Arms and Light Weapons held in New York from 9 to 20 July 2001, where the European Union was the only group of States to submit an overall plan of action.

The EU also established a high profile at the Conference's preparatory committee meetings where it showed no hesitation in clearly articulating its ambitions in this area with one voice (that of the Presidency) (2001).

Operative provision 8

Each EU Member State will circulate to other EU Partners, in confidence, an annual report on its defence exports and on its implementation of the Code. These reports will be discussed at an annual meeting held within the framework of the CFSP. The meeting will also review the operation of the Code, identify any improvements which need to be made and submit to the Council a consolidated report, based on contributions from Member States.

1. Harmonisation of national reports

Member States agreed that the public report will provide data, broken down by recipient country, on the number and value of licences granted and the value of actual exports (if available). It will also provide the total number of denials issued by each Member State and the total number of denials by all Member States for each recipient country and indicate the criteria invoked for denials and the number of times these criteria were invoked (2002).

Operative provision 9

EU Member States will, as appropriate, assess jointly through the CFSP framework the situation of potential or actual recipients of arms exports from EU Member States, in the light of the principles and criteria of the Code of Conduct.

1. Consultations within COARM

Any individual case of arms exports can be raised for discussion by delegations in the COARM Working Group, if it is considered to be useful for national licensing deliberations (1999).

Member States continue to exchange information on national interpretations of embargoes imposed by the United Nations, the European Union and the Organisation for Security and Cooperation in Europe.

Member States also concert on national policies to control arms exports to certain embargo-free countries or regions that are being closely monitored (existence of an internal or external conflict, human rights situation, etc.) (2000).

2. The Development of exchanges of information on national control policies for the export of arms to certain countries or regions regarded as requiring special vigilance

A substantial body of denials, notified in the framework of the mechanism of the Code, is the concrete basis for such exchanges. The exchanges have also been supplemented by exchanges of views and information amongst all Member States undertaken on a regular and systematic basis within COARM, focusing on specific countries and regions (2001).

Operative provision 11

EU Member States will use their best endeavours to encourage other arms exporting States to subscribe to the principles of this Code of Conduct.

1. Third Countries

Non-EU countries which have declared their adherence to the principles and criteria of the Code, and which have become involved in the restructuring of the European defence industry, shall be allowed to gain access to the evolving interpretation of the Code's principles and criteria. This shall not entail access to information made available in the course of the procedures referred to in the operative provisions of the Code.

The European Union and the Member States continue to encourage other arms-exporting countries to subscribe to the principles of the Code (2001).

The Code of Conduct was a primary subject of all political dialogue consultations with non-member States carried out. Consultations are ongoing with the United States of America on ways to follow-up on the December 2000 Declaration by the European Union and the United States of America on the responsibility of States and on transparency regarding arms exports (2002).

2. Involvement of Associated Countries in denial notifications

Member States agreed to share information on denials on an aggregate basis with Associated Countries and encourage these countries to similarly inform Member States about their denials. The information will be shared through the Presidency and contain the following details: country of destination, short description of equipment and military list rating of items, classification of end-user as government agency or private entity, and reasons for refusal (criteria of the EU Code of Conduct) (2002).

ANNEX II

INFORMATION ON CONVENTIONAL ARMS EXPORTS AND IMPLEMENTATION OF THE CODE OF CONDUCT BY THE MEMBER STATES OVER THE PERIOD 1 JANUARY TO 31 DECEMBER 2001

Statistics are compiled differently by each Member State: no uniform standard is used. Consequently, owing to current procedures in the area of arms export controls or data protection legislation, not all countries have been able to submit the same information.

The attached tables contain the following information:

TABLE A

- country by country breakdowns for each Member State(1) (a) = number of licences issued (if available), (b) = value of licences issued in Euro (if available), (c) = value of arms exports in Euro (if available) (Totals per region are shown in bold),

- total exports per Member States and total EU exports to each destination(2) (a) = number of licences issued (if available), (b) = value of licences issued in Euro (if available), (c) = value of arms exports in Euro (if available), (d) = number of licence refusals, (e) = criteria numbers on which refusals are based (the approximate number of times each criterion is invoked is indicated in brackets); discrepancies in the grand total per region and the grand total per Member State are explained in footnotes 4 and 8, which might also be applicable for several Member States.

TABLE B

Total number of consultations initiated and total number of consultations received by each Member State.

TABLE C

Internet addresses for national reports on arms exports.

TABLE A

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TABLE B

Total number of consultations initiated and total number of consultations received by each Member State

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TABLE C

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(1) To make the table more readable, nil values and/or the mention "not available" are omitted.

(2) To make the table more readable, nil values and/or the mention "not available" are omitted.