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The EU Code of Conduct on Arms Exports:
The Current State of
By Holger Anders, researcher at GRIP
24 October 2006
The Council of the EU published the eighth annual report on the implementation of the EU Code on Arms Exports by member states in September 2006. The report provides a review of the implementation of the EU Code in the eighth year of its operation, looks at the state of play concerning priority measures that member states identified in the past, and lists the agreed priorities for future work by EU member states. In addition, the report provides statistical data on licensed arms exports for the year 2005 as well as on denied arms export licenses.
This paper reviews the current state of play regarding the EU Code. The first section looks at the recent EU Council consolidated report and at current issues on the arms export control agenda of EU member states. The second section looks at the draft EU Council common position to change the legal standing of the EU Code. The third section looks at issues that EU member states are encouraged to pay further attention to. For interested readers, the annex to the paper provides a historical overview of the developments of the EU system of arms export controls.
It is argued that EU member states have come a long way in their efforts to develop a shared arms export system on high common standards. However, there remain important weaknesses, including in the area of controls on intermediary activities, transits, and end-use of exported equipment. There is also scope for strengthening information-sharing mechanisms among EU member states to prevent undesirable arms exports. Despite progress, there is no room for complacency.
Section 1: the eighth report and the current EU agenda on arms export controls
The eighth consolidated EU Council report on the 1998 EU Code of Conduct on Arms Exports affirms that, as in previous years, EU member states made significant progress in relation to the Code’s implementation. More states than in previous years are now reporting not only on licenses, but also on the financial value of actual exports. EU member states that have not adapted their national data collection systems to allow for the collection of this data are
Denmark, Lithuania, and the . The eighth consolidated report also provides a separate table on licensed exports to embargo destinations. Other new elements in the report include a table showing the number of consultations between EU member states in relation to individual export destinations, and a table on out-reach activities by the EU Council working group COARM. United Kingdom
Amongst the issues on the agenda of EU member states is the further development of best practices to assist export licensing officials in the implementation of certain of the Code’s export criteria. The best practices identify factors that complement those in the EU Code criteria and that officials can take into account when considering whether an export application is permissible under the EU Code of Conduct. So far, best practices have been developed for criterion 2 (“human rights”), criterion 7 (“risk of diversion”), and criterion 8 (“sustainable development”). Efforts are currently under way in COARM to develop best practices for the criterion 3 (“internal situation in the final destination country”) and criterion 4 (“regional peace, security, and stability”).
Member states have also continued their dialogue on best practices in the area of end-use controls. The current agreement among member states relates to the minimum of information that will be required in an end-user certificate (EUC). The required elements include, since early 2006 and where appropriate, an end-use statement in which the recipient undertakes not to use the exported equipment for purposes other than the declared use and not to use the goods in development of weapons of mass destruction or of missiles capable of delivering such weapons. Optional elements that member states may include in a EUC are a ban or restrictions on the re-transfer of military equipment. Member states have also initiated a survey of national requirements and policies on end-use controls and post-shipment verification with a view to identify common elements and approaches in this area.
Another element on the EU agenda is the harmonization of the annual national reports on arms exports that are submitted to the EU Council. Member states initiated a survey to gain a better understanding of the national data collection and processing methods to identify common approaches to maximizing the information provided in the consolidated reports. An experts’ meeting of licensing and customs officials is planned to further assist member states in the areas of the collection and processing of arms export data. In relation to arms brokering controls, EU member states established databases for the exchange of information about national legislation on brokering and, where applicable, on registered brokers. COARM and the EU Council working group on global disarmament, CODUN, also continued the contact group allowing them to jointly discuss the EU strategy for the promotion of an international Arms Trade Treaty at the United Nations.
Section 2: the draft EU Council common position on arms export controls
One of the enduring issues on the agenda of EU member states is the debate on the legal status of the EU Code. At present, the Code remains a political declaration by member states though this may change in the future. EU member states reached an agreement on a draft common position on the EU Code in 2005. A common position is an EU foreign policy instrument that is embedded in the 1992 Treaty on European Union. The treaty stipulates that “Member States shall ensure that their national policies conform to the common positions”. Regrettably, the adoption of the draft common position on the EU Code seems to have become a chip in political bargaining among member states in the debate on the lifting or retaining of the EU arms embargo on
. The adoption of the draft common position therefore remains a goal that is still to be attained. China
If adopted, the common position would not so much change the substance of the EU Code than provide a more comprehensive framework for shared arms export controls among member states. Under the common position, member states would be obliged to have legislation in place that indicates in which cases a license is required for different export activities. The common position would define export activities to include physical exports, including for the purposes of licensed production of military equipment abroad; brokering activities; transits or transhipments; and intangible transfers of software and technology.
The common position would also introduce certain good practices into the Code that have been agreed on in COARM. For example, the common position would include the affirmation of the principle that reliable prior knowledge of the end-use of military equipment in the country of final destination is a condition for export licenses. End-use and user verification may also require authenticated end-user documentation or other official authorisation of the authorities in the country of final destination. With regards to exports of military technology or production equipment, member states would need to consider the risk that the produced goods may be misused, diverted, or exported to an undesirable end-user.
The common position would not oblige member states to integrate the export criteria or the operative provisions of the EU Code into national legislation. The formulation of the export criteria would also remain largely unchanged. One exception would be the stipulation under criterion 2 (“human rights”) that export licenses will be denied if the military equipment might be used in serious violations of international humanitarian law. Another exception would be the elaboration of risk factors when assessing the risk of diversions or undesirable re-exports (criterion 7). The factors to be considered in export licensing under the common position would include the record of the recipient country in terms of respecting any re-export provision or prior consent requirements for re-exports which the exporting state may have imposed.
Section 3: remaining weaknesses and scope for further action
It is encouraging that EU member states continue to understand the EU Code of Conduct as a framework and platform for the improvement in the implementation of common export standards. The initiatives taken in COARM, such as the surveys of national data collection and processing and of national policies on end-use controls are welcome. It is desirable that member states are transparent about the findings of the surveys to allow for policy input from other stakeholders. Policy discussions should also deliberate the collection and publication of data that identifies the type of end-user to which an arms export has been licensed. Greater transparency on the types of end-users (such as military forces, police forces, other state security forces, peace-keeping forces, non-state recipients) would considerably advance the scope for scrutinising the national implementation of the EU Code.
The narrative text of the eighth EU consolidated report does not provide any explanations of the end-use or end-user of equipment exported to embargoed destinations. This hinders a transparent dialogue on the policies of member states in this sensitive policy area. EU member states should consider therefore to providing a justification for export licenses to embargoed destinations. A possible reason could be the export of military equipment to a UN peace-keeping force stationed in an embargoed country for example. EU member states that do not publish national annual reports on arms exports as the basis for a debate with parliament, industry, and other stakeholders should be encouraged to do so.
There is no systematic standard at the EU level saying when to require end-user certificates and other end-use documentation. Likewise, there is no policy on the use of post-shipment controls. The current approach by many EU member states is to require certain end-use and post-shipment controls “when required”. It is desirable that these states clarify the conditions which, if met, should require end-use and post-shipment verification. EU member states should also consider strengthening their policies on the targeted physical verification of military equipment at points of import, transit, and export. One element that could trigger targeted physical verification could be transports of military equipment to embargoed destinations or countries near to such a destination.
To be effective, end-use controls and verification must be complemented with sanctions on those found to have violated end-use or re–transfer obligations. Such sanctions seem rarely applied by member states. In addition, there is no comprehensive exchange of information among member states about known cases of diversions or violations of end-use controls. So far, diversion concerns are only flagged to other EU member states in the case of an export license denial on the grounds of criterion 7 (“diversion risks”). There is no systematic and centralised collection of information member states have at the national level regarding specific actors or destinations which have been implicated in diversions of military equipment.
Several EU member states also still need to implement the 2003 EU common position on the control of arms brokering at the national level. The brokering controls adopted at the EU level and most of the controls embedded in national law do not cover the activities of freight forwarders, shipping agents, and other actors involved in organising and implementing arms transfers. The poor control of these actors and their activities undermines the effectiveness of existing brokering controls. Member states that do not require a license for transits or trans-shipments through their territory should consider introducing a licensing or other prior authorisation requirement. Importantly, member states should seek more actively to overcome their current deadlock in relation to the adoption of the EU common position on the EU Code of Conduct.
Annex: Developments in the last decade
The EU Code of Conduct on Arms Exports seeks to set high common standards to promote restraint in and transparency on conventional arms transfers by EU member states. This annex aims to provide an overview of the developments towards these goals since the early 1990s. It is intended for the reader who is interested in an overview of the current system for arms export controls at the EU level.
Developments in the early 1990s
In 1991, EU member states adopted a path-breaking Declaration on Non-Proliferation and Arms Exports. In this declaration, EU member states expressed their concern about the dangers arising from the proliferation of weapons of mass destruction (WMD) and agreed to counter these dangers by supporting the strengthening of regimes of non-proliferation of WMD. EU member states also expressed concern at the excessive stockpiling of conventional weapons in certain regions that risked the reoccurrence of instability in these regions. States ‘noted with satisfaction’ the identification by the organs of European political cooperation of a number of arms export criteria used by member states at national levels. They expressed their hope that these criteria may lead to a common approach and a harmonisation of national policies in the matter.
The identified criteria commonly used by member states included: respect for the international commitments by member states; the respect for human rights and the internal situation in the country of final destination; the preservation of regional peace, security, and stability; the national security of a member state as well as that of friendly and allied countries; the behaviour of the buyer country with regard to the international community, as regards in particular its attitude to terrorisms, the nature of its alliances, and respect for international law; and the existence of a risk that the equipment will be diverted within the buyer country or re-exported under undesirable conditions. The following year, EU member states added to these one further criterion that had been identified as commonly used by them, that is, the compatibility of the arms exports with the technical and economic capacity of the recipient country.
The NGO campaign launched in 1995 for a European code on arms exports sought to bring forward the debate on arms export controls by proposing the codification and strengthening of these criteria as well as of relevant information exchanges among governments. NGOs argued that high common standards promoting responsible and transparent export policies and practices were essential to avoid situations in which an export that was denied by one EU member state would be subsequently be authorised by another member state. This would undermine the effectiveness of any common approach by member states to arms exports. Transparency was also required to facilitate the scrutiny by parliaments and the public of governmental export policies and practices to ensure that governments adhered to their declared aims of a responsible export policy.
The EU Code of Conduct on Arms Exports
The adoption by the Council of the European Union in June 1998 of the EU Code of Conduct on Arms Exports was facilitated by the election in 1997 of centre-left governments in
Franceand the . Both governments indicated early on their interest in promoting a code of good conduct among EU member states with the aim of introducing an ‘ethical’ approach to arms exports. The eventually adopted EU Code retakes the criteria that had been identified in 1991/92 and elaborates on these to provide greater clarity about their scope. The Code also contains operative provisions to support its functioning. Among these is a commitment by states to notify the other member states of denials of arms exports and to seek consultations in the case that it is considering to grant an export license that was previously denied by another member state. States also committed to annually report to the EU Council on their implementation of the Code. UK
While NGOs generally welcomed the adoption of the EU Code as an important first step to restrictive and transparent arms export policies in EU member states, there was (and remain) criticisms around several weaknesses in the Code. Existing weaknesses notwithstanding, the adoption of the EU Code has marked the beginning of a continuing process to further refine and develop common arms export standards among EU member states. One of the first complementary outcomes of this process has been the adoption in June 2000 of the Common Military List of the European Union which defined the range and types of military equipment that are covered by the EU Code. Since its adoption, this list has been regularly revised and updated to ensure its continuing relevance in the light of technological developments.
Reporting by the EU Council and dialogue with stakeholders
In September 1999, the EU Council published a consolidated report on the basis of the national reports that EU member states had committed themselves to submit to the Council under the EU Code. The publication of the consolidated report and its forwarding to the European Parliament came as a surprise to many because several states had been strongly opposed to greater parliamentary and public transparency during the 1997/98 Code negotiations. This opposition became weaker with a greater level of comfortableness among member states in relation to the type of information that was being published. The publication of this first consolidated report was precedent setting and was followed by the annual publication of the subsequent consolidated reports.
The first consolidated report announced that the experiences in implementing the Code had been positive and were leading to an increased and valuable dialogue on the implementation and national interpretation of the Code. The report listed the issues member states had debated and agreements they had reached to enhance the practical implementation of the Code in relation to, amongst other, details of the consultation process and clarifications of definitions set out in the Code. The report further listed issues member states planned to discuss as priorities for coordinated action in the future. One page of the report provides statistical information on the total value of arms exports by each member state, the total number of licenses issued, as well as the number of denials notified to, and as a result of, bilateral consultations held with other member states.
The subsequent consolidated annual reports published by the EU Council follow the structure and contents of this first report. There has been an incremental increase in transparency on arms exports. The consolidated report published in November 2005 contains more than 350 pages of statistical information. This still includes the total export values by each member states, the number of issued licensed and denials, as well as the number of bilateral consultations. However, the report also lists this data for each of the categories of military equipment in the EU Common Military List, as well as for each equipment category for each region of the world. In addition, tables show exports (value, type of equipment, and number of licenses) by EU member states to each individual export destination.
· Reports by the European Parliament
Individual members of the European Parliament (EP) actively participated in the mid 1990s in the calls for the adoption of a European Code of Conduct to promote restrictive and ‘ethical’ approach to arms export policies by EU member states. In response to the consolidated report by the EU Council, the EP published an own-initiative report in July 2000. As with the Council reports, these reports by EP are now an annual occurrence. They contain a draft for a resolution and an explanatory statement that critically assess the progress made by member states in implementing their commitments under the EU Code and recommend further action. This has included for example recommendations to make progress in the areas of transparency, of end-use monitoring of arms exported by EU member states, and of controls on arms brokering.
The EP has no decision-making power on standards on arms export controls that are adopted in the EU Council. Nevertheless, the EU Council and the EP have entered into a sustained dialogue on arms export controls in the EU. This dialogue, next to the annual reporting by the two institutions, includes presentations by the EU Council of its reports at sessions of the EP. At a minimum, these regular exchanges of ideas between the EU Council and the EP have helped establish continued interest in the EU in the implementation of the EU Code. They also serve as an encouragement to the Council and member states to continue their work towards the development and implementation of high common standards on national export controls.
· Exchanges of views with NGOs
The EU Council and EU member states have also demonstrated an increased interest in listening to the views and opinions of NGOs on the EU Code and its implementation. In most years since the adoption of the EU Code, NGOs have organised meetings with member states. At these meetings, developments are discussed within the framework of the Code and NGOs present their criticisms of the remaining weaknesses in the Code and the Council reports. It seems fair to say that these exchanges of views and ideas help sustain the interest in the EU Code’s implementation and the continuing debate on means and possible measures to pursue the evolutionary work within the Code context.
NGOs also provided an input into the discussions among member states on the best practices for the implementation of specific Code criteria through in-depth reports that highlighted problems and suggested ways to overcome them. This input has been welcomed by the EU Council that has also expressed its hope that NGOs will contribute to the development of further best practices for other Code criteria that are planned for the future.
User’s guide to the EU Code
In November 2003, the EU Council published the first User’s Guide to the EU Code of Conduct on Arms Exports. The guide singles out the sections from the Council reports on the implementation on the EU Code relating to the evolving practices member states have agreed on to facilitate their implementation of the EU Code. The User’s Guide does not replace the EU Code but seeks to complement the Code. It is primarily addressed to export licensing officials to offer guidance to their efforts to implement the Code in their national decision-making processes. The guide has been updated on several occasions to integrate new elements and elaborations that member states have adopted in the framework of the EU Code. Similar to the Council reports on the EU Code, the User’s guide has gained in comprehensiveness in recent years.
The first user’s guide included sections on understandings on definitions and the information exchanges in cases of denials, mechanisms for the revocation of denial notifications, and procedures for conducting denial notifications and consultations. An update of the guide, published in December 2004, introduced chapters on denial notifications and consultations; licensing practices; transparency in relation to national reports submitted to the EU Council; non-EU member states that have stated their adherence to the export criteria of the EU Code of Conduct; and on the EU Common List of Military Equipment. A further update of October 2005 introduced an additional chapter providing guidance on the implementation of the Code criterion regarding the technical and economic capacities of the recipient country (‘sustainable development’).
The development of best practices for the implementation of the criterion on sustainable development represented an important step for further facilitating the emergence of common understandings and approaches in the national implementation of the Code. The best practices do not represent a set of instructions to national licensing officials. Rather they aim to assist these officials in their decision-making by identifying and clarifying factors that may be taken into account during the decision-making process. The best practices on the criterion on sustainable development were further elaborated on in a January 2006 update of the user’s guide. An update in June 2006 also introduced best practices for the implementation of the Code criteria on the human rights situation in the recipient country as well as the risk of diversion of exported military equipment.
Controls on arms brokering
One of the criticisms of the EU Code in the late 1990s and early 2000s was the absence of any provisions for the control of arms brokering activities. By 2001, discussions between member states had progressed to the extent that they adopted “a set of guidelines for controlling brokering that could be a basis for national legislation”. As explained in the guidelines, the aim of such controls should be to prevent residents and entities within the EU from engaging in arms transfer activities circumventing national, EU, UN, or OSCE embargoes or the export criteria of the EU Code of Conduct. The guidelines recommended amongst other to set up a clear legal framework for legitimate brokering activities by establishing a licensing requirement on a case-by-case basis for the mediating of arms transfers and the buying and selling of military equipment by a broker.
In June 2003, EU member states built on these guidelines by adopting the Common Position on the control of arms brokering activities. The Common Position (CP) specifies that the controlled activities should cover the brokering of transfers between two countries outside the EU. States further committed themselves to assess license requests against the EU Code criteria, to establish legal sanctions on those found to have violated national brokering controls, and to exchange information on national regulations, licensed brokering activities, and license denials. The CP also recommends several non-binding measures, including states considering controlling the activities of residents and entities which are operating from abroad. Another recommended measure is the establishment of a registration requirement for those wishing to engage in brokering activities.
 Ibid, p.14.
 Destinations currently under an arms embargo by the United Nations and/or the European Union are
Bosnia and Herzegovina, China, Democratic Republic of the Congo, Cote d'Ivoire, Iraq, Liberia, Sierra Leone, Somalia, Sudan, Uzbekistan, and . Zimbabwe
 See Council of the European Union. 2006. User’s Guide to the EU Code of Conduct on Arms Exports.
: Council of the EU, 20 June. Brussels
 Ibid, p.18f.
 See Council of the European Union. 2006. User’s Guide to the EU Code of Conduct on Arms Exports.
: Council of the EU, 20 June. Brussels
 See Draft Council common position defining common rules governing the control of exports of military technology and equipment, 28 June 2005.
 European Union. 1992. Treaty on European Union. Title V, art. J.2.2.
 Draft Council common position defining common rules governing the control of exports of military technology and equipment, 28 June 2005, art.1.2.
 Ibidem, art.5
 Ibidem, art. 2, criterion 2.c.
 Ibidem, art.2, criterion 7.d
 EU Code of Conduct, preamble.
 Council of the European Union. 1991. Declaration on Non-Proliferation and Arms Exports, adopted by the Luxembourg European Council of 28 and 29 June 1991 (Annex VII to the Conclusions).
 See Council of the European Union. 1992. Conclusions of the Presidency, adopted by the European Council in
of 26 to 27 June 1992. Lisbon
 See EU Code of Conduct on arms exports.
 See Council Declaration of 13 June 2000, issued on the occasion of the adoption of the common list of military equipment covered by the European Union code of conduct on arms export. EU document 2000/C 191/01 (Official Journal of the European Union of 8 July 2000).
 See for example the European Parliament resolutions on a European controls on arms exports of 1995 (Official Journal C 043, 20/02/1995) and 1998 (Official Journal C 34/163, 02/02/1998; and Official Journal C 167, 01/06/1998).
 See European Parliament. 2000. Report by the Committee on Foreign Affairs, Human Rights, Common Security and Defence Policy on the Council's 1999 Annual Report on the Implementation of the EU Code of Conduct on Arms Exports.
: European parliament, 18 July 2000. Brussels
 See for example Control Arms. 2004. Guns or Growth? Assessing the impact of arms sales on sustainable development.
: Control Arms, June. Available at http://www.oxfam.org.uk/what_we_do/issues/conflict_disasters/guns_or_growth.htm; and Saferworld. 2006. NGO submission on the elaboration of article 2, criterion 7 of the draft EU Common Position Defining Common Rules Governing the Control of Exports of Military Technology and Equipment. Submission by European NGO network. London : Saferworld, April. Available at http://www.saferworld.org.uk/images/pubdocs/joint%20NGO%20arms%20submission.pdf%20-%20May%2006 London
 So far, the first user’s guide of November 2003 has been updated in 2004, 2005, and in 2006.
 See Third annual report according to Operative Provision 8 of the European Union
Code of Conduct on Arms Exports, p.
6f. Available at http://register.consilium.europa.eu/pdf/en/01/st13/13657en1.pdf
 See EU Council Common Position 2003/468/CFSP of 23 June 2003 on the control of arms brokering.
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