Second annual report according to operative provision 8 of the European Union Code of Conduct on Arms Exports
Date: 2000-12-29
Institutions: Council of the European Union
Subjects: European Union, code of conduct, export, marketing standard, military equipment

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Official Journal of the European Communities

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(Acts adopted pursuant to Title V of the Treaty on European Union)

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

(2000/C 379/01)

The European Union Code of Conduct on Arms Exports,
adopted on 8 June 1998, set up a mechanism for information
exchange and consultation among the Member States based
on the common criteria adopted by the Luxembourg and
Lisbon European Councils held in 1991 and 1992 respectively.
The European Union thus embarked on a process of conver-
gence of national arms export control policies accompanying
the restructuring of European defence industries.

The European Code of Conduct provides for an annual review
procedure. The first report was published in the Official Journal
of the European Communities on 3 November 1999 (1) following
a Council decision to publicise it in line with Member States’
wishes.

This document constitutes the second annual report: it reviews
the second year of implementation of the Code of Conduct.
The second year was marked by consolidation of the first
year’s achievements and also by further progress, particularly
in the priority areas defined in the first report. Finally, since
the implementation of the Code of Conduct is part of a long-
term process of convergence and harmonisation of arms
export control policies, this report sets out guidelines which
the Member States have adopted for the future.

I. REVIEW OF THE SECOND YEAR OF THE CODE’S
IMPLEMENTATION: CONSOLIDATION OF ACHIEVEMENTS

The first report stated that considerable progress had been
made over a short period of time and that the results of the
Code’s implementation during the first year of its existence
were already positive.
In the second year the Code was
substantially strengthened and the first year’s achievements
consolidated. It was marked by a considerable increase in the
number of notified denials and consultations, as will be seen

from the table annexed to this report. This evolution is
evidence of Member States’ resolve to put into practice a new
form of transparency in arms export control and to act in
greater concert in this area.

Implementation of the Code of Conduct went hand in hand
with greater concertation by Member States regarding not only
the practical arrangements for implementing the Code and
upgrading those arrangements, but also arms export control
policies. The CFSP Working Party on Conventional Arms
Exports (COARM) afforded a privileged framework for that
concertation. During the second year of the Code’s implemen-
tation, the working party concentrated on addressing the
priority areas identified in the first report. The results achieved
here are described below. The steady increase in the number
of notifications and consultations, reflecting the Code of
Conduct’s rising impact, gives added substance to Member
States’ information exchanges in the said working party.

Operative provision 11 of the Code of Conduct provides that
Member States will use their best endeavours to encourage
other arms-exporting States to back the Code’s principles. The
first report already signalled support for these principles by
the associated countries of central and eastern Europe, Cyprus,
the EFTA countries’ members of the European Economic Area
and Canada. Turkey and Malta have since declared that they
subscribe to the Code’s principles and have undertaken to
adjust their arms export policies accordingly but also, where
necessary, their relevant rules. Member States welcome the fact
that the Code’s principles are being increasingly recognised;
they are determined to continue encouraging that develop-
ment.

(1) OJ C 315, 3.11.1999, p. 1.

In tandem with implementing the Code of Conduct, Member
States have each embarked on a national drive to increase
transparency. Thus, most arms-exporting Member States now
publish national reports on arms exports. A list of those

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reports and — for those that are available online — their
Internet addresses are annexed to this document. Member
States welcome this development as a boost to the Code of
Conduct.

Lastly, the 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.

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

The first annual report identified four key areas for consider-
ation and action by the Member States in the short term, with
a view to strengthening the Code and ensuring greater
transparency. Progress made in these areas during the second
year of the Code’s implementation is detailed hereafter:

Common list of military equipment

The first report emphasised that top priority needed to be
given to finalisation of the common list of military equipment
provided for in operative provision 5 of the Code because that
list was to be a cornerstone of the Code of Conduct.

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

The adoption of the common list of military equipment
represents a major positive development contributing signifi-
cantly towards making the Code of Conduct more effective. It
marks a further step towards convergence between the Member
States in the area of controls on conventional arms exports.
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 infor-
mation exchanges on these matters.

in the framework of

The common list of military equipment has the status of a
political commitment
the common
foreign and security policy (CFSP). 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.

‘Essentially identical transactions’

The second priority identified in the first report was the
development of a common understanding of what constitutes
an essentially identical transaction. That concept is, in fact,
central to the Code of Conduct’s operative section; therefore,
there is obviously a need for an understanding agreed by all
Member States of the scope of essentially identical transactions.

Member States have continued discussion of this matter within
the COARM working party. Progress has been made, but a
common understanding has yet to be agreed. The concept is
complex and the guidelines to be adopted here will have a
major bearing on the Code’s future operation.

Member States propose to continue exchanging information
and harmonising matters in this area. The common list of
military equipment will henceforward be the agreed basis for
seeking a common understanding of what constitutes an
essentially identical transaction.

More elaborate denial notifications

The first report also pointed to the need for denial notifications
to give a fuller description of the reasons for denial in order to
facilitate understanding of the general thinking behind each
other’s denials, and help Member States decide whether
consultation would be warranted.

Here, Member States have agreed that 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,

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— 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).

Member States have also agreed that 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.

to continue and deepen their discussions on the procedures
for monitoring arms brokers’ activities in order to incorporate
this special topic — the importance of which has been
recognised — into the process of convergence of the Member
States’ control policies.

Finally, with a view to the 2001 United Nations Conference
on the illicit trade in small arms and light weapons in all its
aspects, the Member States have started to define common
guidelines and to strengthen their coordination as regards the
control of transfers of small arms and light weapons by
drawing on the experience gained during implementation of
the Code of Conduct.

Embargoes on arms exports

Lastly, the first report emphasised that it was important for
Member States to continue exchanging 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 have also further concerted 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.).

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 and
harmonise the arrangements for implementing the Code of
Conduct mechanism.

Besides the questions referred to above, they have, inter alia,
looked at the arrangements for the consultation procedures
and, in particular, problems relating to the necessary confiden-
tiality of such contacts, which should not, however, thwart the
objective of transparency underlying the Code of Conduct.

Member States have further looked at military equipment used
in humanitarian operations — in particular humanitarian
mine-clearance operations — for which consideration was
given to the possibility of making exceptions by means of a
legal instrument.

IV. PRIORITY GUIDELINES FOR THE NEAR FUTURE

The implementation of the Code of Conduct forms part of the
long-term process for strengthening cooperation and for
promoting convergence between the Member States of the
European Union in the area of conventional arms exports.

As stated in the first report, such a process is unique to date.
The implementation of the Code of Conduct constitutes an
important milestone for the future of Europe as regards arms
export controls by promoting greater transparency between
States and vis-à-vis civil society, and the gradual development
of harmonised policies.

The results achieved in the area of exchanges of information
between Member States after two years of implementation of
the Code are already considerable. The application of the Code
should nevertheless be deepened and consolidated so as to
make full use of its potential.

With a view to improving and deepening the implementation
of the Code of Conduct, several
issues have already been
mentioned in this report as continuing to require joint
consideration.

Moreover, and in addition to the above questions, the Member
States have identified a number of guidelines on issues on
which decisions should be taken or to which attention should
be given in the near future.

1.

Finalisation of a common list of non-military security and
police equipment

As part of the implementation of the Code of Conduct, the
Member States have also had to reflect on the question of arms
brokerage control. This aspect was raised on several occasions
and formed the subject of a meeting of experts specifically
convened to address this problem. The Member States intend

The Member States consider that exports of certain non-
military equipment which may be used for internal
repression should be monitored by national authorities
on the basis — as regards civil goods — of Community
rules, in order to prevent equipment originating in the

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European Union from being used for acts which violate
human rights.

4. Harmonisation of national annual reports on the application

of the Code of Conduct

For this purpose, the COARM working party has under-
taken to draw up a common list of non-military security
and police equipment, the export of which should be
monitored in accordance with the second criterion of the
code ‘Respect for human rights in the country of final
destination’. The list drawn up by the working party
will be submitted to the Commission which will be
responsible for taking the initiative of proposing a draft
Community mechanism for controlling exports of non-
military equipment which may be used for internal
repression. This instrument will be separate from the
operative provisions of the Code of Conduct. However, it
will be linked to it as control will be implemented on the
basis of the second criterion of the Code.

The Council takes note of the Commission’s intention of
submitting as soon as possible a proposal based on the
list, enabling Community control arrangements to be set
up.

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

However, the development of a dialogue between the
Member States on national arms exporting policies lies at
the heart of the objective of the Code of Conduct. The
Member States are determined to make headway with
this dialogue. The body of denials — which is now
substantial — notified in the framework of the mechan-
ism of the Code constitutes the concrete basis for such
exchanges.

3. Harmonisation of the procedures implemented in the framework

of the operational provisions of the Code

The Member States will continue the harmonisation work
already initiated. They will endeavour in particular to
clarify and strengthen the bilateral consultations mechan-
ism, to define the method for revoking certain notifi-
cations at the request of the notifying State (except the
lifting of an embargo which is already covered by agreed
procedures) and finally to reflect on the concept of a
minimum threshold for export notifications.

is drawn up on the basis of

The annual report on the application of the Code of
Conduct
the Member
States’ reports. However, the fact that some of the data
transmitted are hard to compare, especially statistics,
makes the task of summarising the information more
complex and may hamper joint efforts to achieve trans-
parency. In order to improve transparency and to increase
the informative value of the annual report, the Member
States will, as far as possible, endeavour to define a
harmonised framework for national reports, particularly
as regards statistics.

5.

Coordination of
multilateral bodies dealing with arms export control issues

the Member States’ national positions in

In order to implement operative provision 7 of the Code
of Conduct, the Member States will help the Presidency
strengthen coordination of their national positions and
that of
the European Union in international bodies
dealing with arms export control issues.

6.

Promotion of the principles of the Code of Conduct in third
countries

Operative provision 11 of the Code provides that the
Member States will use their best endeavours to encourage
other arms-exporting States to subscribe to the principles
of the Code of Conduct. The Member States will actively
pursue their efforts along those lines and strengthen the
dialogue with the countries that have said that they will
back the principles of the Code, including initiatives to
assist countries that experience difficulties in applying
them. Moreover, they have taken note with interest of the
adoption by the United States Congress of the law on the
‘promotion of an international code of conduct for arms
exports’ and have welcomed the fact that the United
States has thus embarked upon a path where the European
Union has played a pioneering role. The Member States
consider it highly desirable that the United States and
the European Union should work together towards
promoting common principles of arms export controls
in third countries.

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ANNEX I

Information on conventional arms exports and implementation of the Code of Conduct in the Member States over
the period 1 January to 31 December 1999 (NB: figures in brackets refer to the period 1 January to 30 June 2000).

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

Country

Total value of arms exports
(in euro)

Total number of licences issued

Number of notified
denials

Number of bilateral
consultations
initiated

Number
of consultation
requests received

Austria

395 453 327 (1)

Belgium

622 021 411 (1)

1 294

950

Denmark

Finland

Not available under the cur- 228 in total(including 186 on common
rent system (2)
list + 17 for foreign police forces + 43
for, inter alia, hunting weapons)
174 (licences granted,
prior notifications)

40 155 692 (3)

i.e. excluding

France

3 780 000 000 (1)

5 093 for exports of war material

Germany

3 026 167 800 (1)

9 373

Greece

43 158 770

Ireland

60 394 090

23

41 (4)

Italy

1 340 812 490 (1)

Final: 495
For temporary export: 116
Extensions: 65

Luxembourg 39 093 (1)

20

Netherlands

366 336 768 (1)

Not available

Portugal

10 640 103,89 (1)
(for 57 effective operations)

898

Spain

141 383,860 (3)

2 305

Sweden

3 654 000 000 SEK (3)
7 153 000 000 SEK (1)

United King- 980 520 000 GBP (3)
dom

527 (export licences for sale)

Total number of licences: 9 416
(Standard individual export
8 967
Open individual export licences: 449)

licences:

11
(7)

29
(13)

2
(1)

1
(2)

62
(46)

61
(9)

0
(0)

0
(0)

11
(12)

0
(0)

12
(6)

2 (from 1.1.1999
to 30.6.2000)

4
(2)

0
(0)

26

4
(0)

6
(7)

0
(0)

0
(0)

15
(7)

4
(0)

0
(0)

0
(0)

0
(2)

0
(0)

0
(0)

0
(0)

0
(0)

0
(0)

4

(15 from 8.6.1999 (5 from 8.6.1999

and 7.6.2000)

and 7.6.2000)

1

2
(2)

0
(0)

0
(1)

5
(0)

14
(4)

0
(0)

0
(0)

1
(3)

0
(0)

4
(0)

0
(0)

0
(0)

(1) Total value of licences issued.
(2) A system for compiling these data has been operational since 1 July 2000.
(3) Actual value of exports.
(4) Irish law requires a licence to take out of the country guns and ammunition for any purpose whatsoever, including sports and hunting, repair and transfer of

personal effects. A total of 419 licences were issued in 1999, including 378 for private purposes and 41 for the export of military equipment.

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ANNEX II

National reports on arms exports are available in paper form or on the Internet at the following locations:

Belgium:

Denmark:

Finland:

France:

Germany:

Ireland:

Italy:

diplobel.fgov.be

Ministry of Foreign Affairs, No 2, Asiatisk Plads 2, DK-1448 Copenhagen K, Denmark
or www.um.dk (the report will be available at the end of 2000)

www.vn.fi/plm/index.html

www.defense.gouv.fr/actualites/dossier/d49/index.html

www.bmwi.de, select politikfelder, select Aussenwirtschaft & europa, select exportkon-
trolle

www.irlgov.ie/iveagh

Government report to Parliament on 1999 arms exports — published by Camera dei
deputati and by Senato della repubblica (Doc. LXVII n.4)

Netherlands:

www.minez.nl/ezenglish/export.htm

United Kingdom:

www.fco.gov.uk/news/newstext.asp?3991

Sweden:

www.utrikes.regeringen.se/inenglish/pressinfo/information/publications.htm