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Brexit and export controls: Entering uncharted waters

UK and EU flags flying from a building in London. Photo: Dave Kellam
UK and EU flags flying from a building in London. Photo: Dave Kellam

The UK’s decision to leave the EU has generated a huge amount of comment and debate regarding its potential impact on trade and the free movement of people. Less attention has been paid to its potential effect on foreign and security policy, both at the UK and EU level. This backgrounder examines Brexit's impact on export controls, a key area of foreign and security policy where the EU has developed an ever-expanding role over the past 20 years.

Export controls are the policies states employ to regulate the international movement of military items and dual-use goods, i.e. goods and technologies that can be used for military and civilian purpose.

While the issue played no role in the pre-referendum Brexit debate and likely resides somewhere near the bottom of the list of priorities for UK and EU negotiators, exports controls are arguably an area of foreign and security policy where EU cooperation reached its deepest level. Brexit's impact here will be a key indicator and driver of Brexit's impact on other areas of foreign and security policy.


The EU and export controls

There are four EU instruments that play a role in structuring the UK’s export controls: the EU Common Position on arms exports, which sets standards for controlling transfers of military goods; the ICT Directive, which establishes simplified procedures for the export of military goods to other EU member states; the EU Dual-use Regulation, which regulates the trade in dual-use goods; and EU arms embargoes, which either replicate UN arms embargoes, expand upon them, or are entirely autonomous (as in the case of EU sanctions on Russia and Syria).

As in many areas, the question facing the UK in the months and years ahead will be whether it will remain bound by these instrumentswhich will continue to be updated in Brussels without UK inputor whether it will decouple itself, partially or completely. The decisions the UK makes, and the way the remaining EU member states respond, will have broader implications both for the UK and the EU as a whole.


EU Common Position

For the EU Common Position, the process of extracting UK policy from the EU framework is relatively straightforward.

While it remains in the EU, the UK is legally required to maintain controls that implement the obligations outlined under the EU Common Position. These obligations include subjecting all items on the EU Military List to export controls and implementing the eight ‘common criteria’, relating to issues such as human rights and conflict prevention, when assessing arms exports. However, the UK is free to decide how it implements these obligations and the EU has no legal powers to sanction non-compliance. Hence, UK legislation in this area is draftedand derives its legal powerat the national level.

Post-Brexit, this UK legislation will remain intact. The only difference will be that the UK will be free to alter it in ways that are not in line with the EU Common Position. It is unclear of the UK will choose to do this, although an ongoing investigation into the UK’s arms exports to Saudi Arabia has the potential to spark change.

A December 2015 legal opinion commissioned by Saferworld and Amnesty International argued that UK arms exports to Saudi Arabia for use in the conflict in Yemen constituted a breach of the UK’s ‘obligations under domestic, European and international law.’ In March 2016 Campaign Against Arms Trade (CAAT) began formal legal action aimed at challenging the UK’s arms exports to Saudi Arabia.

Destrpyed house in Yemen, 2015
House in Sana'a, Yemen destroyed by a Saudi-led air strike, June 2015. Photo: Ibrahem Qasim, CC BY-SA 4.0.

The UK government maintains that its exports to Saudi Arabia are in line with the UK’s ‘Consolidated Criteria’ for assessing arms exports, which include the EU's common criteria. However. if the legal pressure gains traction and it is felt that exports to Saudi Arabia have to be curtailed to bring them in to line with UK regulations, there may be discussion about watering down the Consolidated Criteria. According to SIPRI data, Saudi Arabia accounted for 46 per cent of the UK’s exports of major conventional weapons during 20112015 and there are strong vested interests in preventing any damage to this trade.

Brexit would remove one potential obstacle to the UK government weakening the Consolidated Criteria for arms exports, but many others would remain. Such a move would be strongly opposed by UK parliamentarians and NGOs. Moreover, post-Brexit the UK would still need to ensure that its Consolidated Criteria are in line with the international Arms Trade Treaty, which contains some but not all of the elements covered by the EU common criteria.


The ICT Directive

The picture is broadly similar for the ICT Directive. The UK used existing national laws and regulations to implement the EU’s ICT Directive so there is no reason why the freedoms UK companies have gained to export military equipment to EU member states will be taken away post-Brexit.

However, there is a possibility that Brexit will mean that companies in other EU member states will face increased controls when supplying goods to the UK. This will likely be one of several challenges that Brexit will pose to faltering attempts to increase consolidation and reduce duplication in the European defence sector.


Tightly entangled: The Dual-use Regulation and EU arms embargoes

The picture becomes less clear when it comes to dual-use export controls and EU arms embargoes. Dual-use export controls are an aspect of EU trade policy which, under the Lisbon Treaty, falls under the ‘exclusive competence’ of the EU.

The relevant UK regulations were drafted at the UK level and can presumably remain largely intact. However, according to the UK government, the main legal basis for having these controls is the EU’s Dual-use Regulation. In addition, aspects of the UK’s controls, including the control list and the scope of certain licences, are updated automatically when the EU’s are updated.

EU arms embargoes do not fall under the EU’s ‘exclusive competence’. However, the UK has adopted legislation that makes EU Decisions and Regulations regarding their implementation and updating automatically applicable at the national level.

For dual-use export controls and EU arms embargoes, UK lawyers and civil servants will have to determine the parts that derive their legality from the national or EU level. They will also have to determine the extent to which the UK will continue to implement EU standards despite losing any say in how they are drafted. All of this will potentially require drafting and enacting new legislation, at least some of which will require parliamentary approval.  

Export controls are just one of potentially thousands of areas where equivalent processes will need to be undertaken. Taken together, this represents a Herculean task for a UK bureaucracy that has already been severely hollowed out by post-2008 budget cuts and which will be simultaneously engaged in the process of negotiating its withdrawal from the EU and establishing new rules on migration and trade.


UK’s reduced influence over export controls in the EU

Aside from the diversion of limited government resources, the other cost for the UK of Brexit in the field of export controls will be the loss of both influence and insight with regards to the policies of other EU member states.

The UK played a key role in the adoption of the EU Code of Conduct on arms exports in 1998, the precursor to the EU Common Position. More recently, the UK was instrumental in driving EU support for the Arms Trade Treaty, as well as defining the scope of EU sanctions on Iran and Russia. Post-Brexit, the UK will have no avenues to influence EU policies in the field of export controls.

The UK will also lose access to the mechanisms of consultation and information exchange that are established under the EU Common Position and Dual-use Regulation. Norway and other non-EU member states have secured partial access to some of these processesand the UK may do the samebut without participation in the more substantive discussions and exchanges of views.


Wider implications for the EU

The impact on the EU as whole is harder to determine but potentially more wide-ranging. Much depends on whether Brexit leads to a deepening of cooperation among the remaining 27 EU member states or heralds a wider decline in the size or ambition of the EU.

If it’s the former, we may see the EU go on to develop more harmonized and potentially more restrictive policies in the field of export controls. In recent years, the UK has been accused of blocking efforts by the Commission and other EU member states to deepen EU cooperation in these areas. If it’s the latter, then we will likely see a reduction in the extent to which the EU facilitates the formation and promotion of standards in the field of export controls and a growing reliance on other policy forums, such as the Wassenaar Arrangement.

Either way, it is likely that Brexit will lead to a reduction in the EU’s ability to promote its standards in the field of export controls internationally. Post-Brexit, the number of EU member states with a permanent seat on the UN Security Council will fall from two to one (only France will remain) and its access to the Commonwealth will evaporate. Both venues have been important for channelling the EU’s support for the Arms Trade Treaty and promoting other aspects of the EU’s standards in the field of export controls.

If Brexit means the UK starts to water down its export controls in order to facilitate transfers to Saudi Arabia, or otherwise boost its arms exports, the implications may be more severe. Such a move could trigger a 'race to the bottom' among EU member states, many of which are seeking to boost their own arms exports in order to help domestic producers offset the impact of post-2008 national defence cuts.

Altering the EU Common Position would require the support of all remaining EU member states, something that would be hard to achieve. However, EU member states could increasingly ignore its existing standards, something they are relatively free to do given the absence of any real enforcement mechanisms.

The EU’s export control framework includes elements that favour both liberalization and restraint. On balance, the forces promoting restraint have been more powerful over the past 20 years. The challenge post-Brexit will be ensuring that this remains the case.


Dr Mark Bromley is a Senior Researcher with the SIPRI Dual-Use and Arms Trade Control Programme.