EN Official Journal of the European Union C 316/1

SIXTH ANNUAL REPORT ACCORDING TO OPERATIVE PROVISION 8 OF THE EUROPEAN UNION CODE OF CONDUCT ON ARMS EXPORTS

(2004/C 316/01)

INTRODUCTION

The European Code of Conduct on Arms Exports was adopted on 8 June 1998. The Code sets up eight criteria for the export of conventional arms and a denial notification procedure requiring Member States to consult on possible undercuts. Since its adoption the Code has contributed significantly to the harmonisation of national arms export control policies.

In the sixth year of operation of the European Code of Conduct considerable progress has again been achieved with respect to the implementation of the Code. A number of important new developments have contributed to further strengthening and expanding the application of the Code. These developments reconfirm the Code's status as the most comprehensive international arms export control regime. The single most important development in this respect is the accession of the ten new Member States to the European Union on 1 May 2004. It should also be noted that in addition to the newly acceded Member States, soon after the adoption of the Code in 1998 Bulgaria, Romania, Iceland and Norway declared that they shared its objectives and aligned themselves to the criteria and principles contained in the Code, which would guide them in their national export policies. Subsequently Canada and Croatia also aligned themselves with the Code.

In the interest of transparency, attention is drawn to the User's Guide, an essential tool summarising agreed guidance for the implementation of the operative provisions of the Code, which has been published, and will regularly be updated. The User's Guide is intended primarily for use by export licensing officials and is available in the EU Code of Conduct on Arms Exports chapter of the ‘Security Related Exports Controls’ webpage in the Common Foreign and Security Policy section of the Council internet site (http://ue.eu.int). It gives an extensive view of the Code and the way it is applied by Member States.

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

1. Enlargement of the Union

As a result of the accession of the 10 new Member States to the European Union on 1 May 2004 the criteria and procedures of the Code of Conduct, notably the notification and consultation mechanism, became fully applicable to them. Consequently the high number of notified denials and consultations in the past years six years is expected to increase further and the dialogue between Member States on the interpretation of the Code will undoubtedly intensify. This will contribute to the further convergence of the policies and procedures on arms exports applicable in the 25 Member States. Those newly acceded Member States which were able to do so have submitted figures for their arms sales in 2003, as can be seen from the tables included in the present report.

2. Review of the Code of Conduct

An important development which has taken place with respect to the Code of Conduct in 2004 has been its review, the first since the Code became operative in 1998. The review discussion has taken place not only between Member States, but also through meetings with interested third parties, notably international NGOs. Under the Irish and the Netherlands Presidency a number of constructive meetings on the review have taken place in which both Member States and NGOs have participated. These review discussions are expected to result in a significantly updated and upgraded Code. Several new elements are likely to be included in the Code, therewith deepening and widening its scope of application.

3. User's Guide

As of 1 January 2004 the User's Guide, the first version of which was adopted in 2003 and is available on the ‘Security Related Export Controls’ webpage in the Common Foreign and Security Policy section of the Council internet site (http://ue.eu.int), became fully applicable. It contains procedures to improve the denial notification and consultation system and to clarify responsibilities of Member States in this respect. A soon to be published revised version of the Guide will contain chapters on licensing practices, best practices for interpretation of certain criteria and requirements for submission of information for the EU annual report.

4. Best practices for interpretation of criteria

Best practices for the interpretation of criterion 8 of the Code of Conduct, for inclusion in the User's Guide, are currently being discussed by Member States.

5. Temporary measures upon lifting an arms embargo

Member States are discussing a set of temporary procedures which could be applied vis-à-vis countries with respect to which the EU has decided to lift an existing arms embargo. This so-called ‘toolbox’ would complement the Code of Conduct.

6. Outreach

Member States have reached agreement on a mechanism to improve the coordination of outreach activities undertaken by them in order to promote the principles and criteria of the Code among third countries. The Presidency and a number of Member States have organised joint outreach seminars with neighbouring and candidate countries.

Troika meetings have been held with the United States, Canada, the Russian Federation and Ukraine in the framework of the political dialogue of the Common Foreign and Security Policy of the European Union. Fruitful discussions have taken place with these countries on arms export controls in general and the Code of Conduct in particular.

7. Dialogue with the European Parliament

On 1 September 2004, at the invitation of the European Parliament Sub-committee on Security and Defence, the Netherlands Presidency had an exchange of views on Fifth Annual Report on the European Code of Conduct on Arms Exports and related arms exports issues with members of the Sub-committee. The COARM Working Party has agreed to invite the rapporteur for the aforementioned report of the Committee on Foreign Affairs of the European Parliament for an informal discussion.

II. STATE OF PLAY CONCERNING THE IMPLEMENTATION OF PRIORITY MEASURES IDENTIFIED IN THE FIFTH ANNUAL REPORT

1. Harmonisation of national reports

Although differences in national reporting still remain, a number of steps have been taken to further the harmonisation of reporting procedures, and to achieve fully comparable statistical data. Member States have agreed to include references to the Military List numbers in their contribution to the EU annual report (if available). Furthermore consensus has been reached on providing national data on the value of licences issued. Due to the fact that some States are presently unable to provide additional data on actual exports, it has been agreed that these figures will be made available by those States who are able to do so.

2. Arms brokering

In June 2003, following final approval by the COARM Working Party, the Council adopted a Common Position on the control of arms brokering. The joint commitment is a formal confirmation of some of the agreed practices listed in the appendix to the Fourth Annual Report. It also contains some criteria and definitions which Member States are to include in their national brokering legislation.

The Working Party has agreed that the Common Position should be implemented via the mechanism laid down in the Code of Conduct. This is expected to be expressly stated in the relevant operative paragraph of the revised Code of Conduct. However, since all Member States do not yet have legislation on brokering in place the notification and consultation system will operate on a mandatory basis only for those Member States that have the required laws.

3. Electronic transfer of software and technology

In the framework of the review of the Code of Conduct, agreement is expected to be reached to include a new provision in the relevant operative paragraph of the Code stating that export licence applications shall include applications for any intangible transfers of software and technology by means such as electronic media, fax or telephone.

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

The Code of Conduct, its aims and procedures are constantly presented and promoted in the framework of political dialogue with non-member states and international organisations.

In this respect, in 2003 the COARM Working Party agreed in principle to share information on denials on an aggregate basis, without indicating which Member States issued the denials, with selected non-member countries whose export control legislation and policy meet the high standards set by Member States for themselves. Each decision in this respect will be taken on a case-by-case basis, after consultation by the Presidency or the Council Secretariat with the Member State in question as to which details can be provided in accordance with national law. The first country with which such an agreement has been reached is Norway. The aforementioned exchange of denials between the EU and Norway will take place as of 18 November 2004.

5. Practical and technical assistance to candidate countries

As stated in Chapter I of this report, Member States have reached agreement on a mechanism to improve the co-ordination of outreach initiatives undertaken by them in order to promote the principles and criteria of the Code among candidate countries and other third countries. This mechanism will consist amongst others of a database containing information on national activities with such countries. This will help Member States to better prioritise and plan their efforts in this field and promote joint activities.

6. Full implementation of the User's Guide

As stated in Chapter I of this report, the User's Guide, the first version of which was adopted in 2003, became fully applicable as from 1 January 2004. It contains procedures to improve the denial notification and consultation system and to clarify responsibilities of Member States in this respect. As of the aforementioned date national notifications and bilateral consultations have taken place via the EU's electronic coreu system almost on a daily basis, thus significantly increasing the transparency of the arms exports policies of Member States vis-à-vis specific countries of final destination and specific end-users.

Member States have updated their national denial notifications list and have committed themselves to continue to do so on a regular basis. These lists as well as the results of bilateral consultations are included in a central electronic EU database of denials. The database, which is managed by the EU Council Secretariat, may thus develop into a dynamic system reflecting Member States' arms exports control policies.

Chapters describing agreed practices on licensing procedures, guidance on criteria (i.e. criterion 8) and requirements for submission of information to EU annual report will be included in the revised version of the User's Guide to be published shortly.

7. Development of the dialogue with the European Parliament

As stated in Chapter I of this report, on 1 September the Netherlands Presidency, at the invitation of the European Parliament Sub-committee on Security and Defence had an exchange of views on Fifth Annual Report on the European Code of Conduct of Arms Exports and related arms exports issues with members of the Sub-committee. Members of Parliament were particularly interested in the following issues: transformation of the Code of Conduct into a common position, illegal transfers of small arms and light weapons, transparency, brokering, outreach and clarification and harmonised interpretation of the criteria of the Code.

8. Development of relations with third countries

Fruitful COARM Troika meetings were held by the Irish and the Netherlands Presidencies respectively with the United States, Canada, the Russian Federation and Ukraine in the framework of the political dialogue of the Common Foreign and Security Policy of the European Union. At these meetings the Presidency informed their interlocutors about new developments with respect to the EU Code of Conduct, in particular the review process. Furthermore matters of mutual interest were discussed such as arms exports compliance and control issues and membership applications of six new EU Member States for the Wassenaar Arrangement.

9. Review of the Code of Conduct

COARM has conducted in depth discussions in order to bring forward the review of the Code which it decided to undertake in December 2003. As a result of the review, the first one since the adoption of the Code in 1998, it is expected that the Code will be significantly reinforced by including several new elements in the text, most notably: brokering, transit/transhipment, licensed production overseas, intangible transfer of software and technology, end-user certification and national reporting. Discussions on the possible inclusion of other elements are ongoing. No agreement has yet been reached to transform the Code into a legally binding instrument.

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

1. Incorporation of goods for re-export

Member States agreed that, as with all licence applications, they will fully apply the Code of Conduct to licence applications for goods where it is understood that the goods are to be incorporated into products for re-export. However, in assessing such applications, Member States will also have regard, inter alia, to:

(i) the export control polices and effectiveness of the export control system of the incorporating country;

(ii) the importance of their defence and security relationship with that country;

(iii) the materiality and significance of the goods in relation to the goods into which they are to be incorporated, and in relation to any end-use of the finished products which might give rise to concern;

(iv) the ease with which the goods, or significant parts of them, could be removed from the goods into which they are to be incorporated;

(v) the standing entity to which the goods are to be exported.

2. Priority guidelines for the near future

Six years of application of the Code of Conduct have shown that the fundamental elements of a common approach to the control of conventional arms exports by the Member States may be considered to be in place. However, there is still work to be done in certain areas that have not been addressed in the past, or where further work is necessary to consolidate and build on the results achieved.

Member States have identified the following priority guidelines for the near future:

1. Continuation of the process of harmonisation of national reports in order to produce clearer, more transparent summary tables;

2. Follow up of the implementation of the Common Position on arms brokering, taking into account the different situations of the national legislation;

3. Full implementation of the simplified rules contained in the User's Guide, including the central denials data base;

4. Exploration of the feasibility of formulating joint guidelines with respect to end use controls and post shipment verification in countries of final destination of arms exports originating from EU Member States;

5. Development of best practices for the interpretation of criteria, as is being done in respect of criterion 8;

6. Continuation of the policy of promoting the principles and criteria of the Code of Conduct among third countries, specifically those that have aligned themselves with the Code of Conduct.

7. Provision of practical and technical assistance, when requested, for the Acceding Countries, in order to ensure the harmonisation of policies on arms export control and the full implementation of the Code of Conduct principles and criteria;

8. Further development of dialogue with the European Parliament.