Cross-border defence procurement and trade in United Kingdom

International trade rules

What export controls limit international trade in defence and security articles? Who administers them?

The European Union has adopted the Council Common Position 2008/944/CFSP defining common rules governing control of exports of military technology and equipment (the Common Position) and an accompanying list of military equipment covered by such a Common Position (the Common Military List) in the European Union. The Common Position and Common Military List have been implemented by EU member states into their own national legislation.

The fundamental UK legislation implementing export controls is the Export Control Act 2002. The Act provides authority for the UK government to extend the export controls set forth in the Act through secondary legislation. The main piece of secondary legislation under the Act is Export Control Order 2008, which controls the trade and exports of listed military and dual-use items (ie, goods, software and technology that can be used for both civilian and military applications).

The military and dual-use items captured by the Order are known as ‘controlled goods’ as trading in them is permitted as long as, where appropriate, a licence has been obtained. Licences are administered by the UK Export Control Joint Unit within the Department for International Trade. Her Majesty’s Revenue and Customs is responsible for enforcing the legislation.

What domestic preferences are applied to defence and security procurements? Can a foreign contractor bid on a procurement directly?

If the DSPCR applies, there is no scope for domestic preferences. However, where article 346 TFEU is relied upon to disapply the DSPCR, contracts are commonly awarded to national suppliers.

Within the MoD, there are specific approval levels for anyone wanting to rely on article 346 to award a contract without competition.

Are certain treaty partners treated more favourably?

Only those that are member states of the European Union or signatories of the GPA are able to benefit from the full protection of the DSPCR.

Are there any boycotts, embargoes or other trade sanctions between this jurisdiction and others?

The European Union implements embargoes and (financial) sanctions imposed by the United Nations and may also implement EU autonomous embargoes and sanctions. All of these embargoes and sanctions are implemented through EU regulations, which have direct legal effect in each member state. The United Kingdom makes statutory instruments (such as Orders) to provide for the enforcement of, and penalties for, breaches of EU and UK embargoes and sanctions, and for the provision and use of information relating to the operation of those sanctions.

Embargoes and sanctions, depending on their type and ultimate aim, are targeted at individuals, entities, sectors or countries. The current arms-related and financial sanctions can be found on the UK government website (www.gov.uk/guidance/current-arms-embargoes-and-other-restrictions). Overall responsibility for the United Kingdom’s sanctions and embargoes policy lies with the Foreign and Commonwealth Office. Financial sanctions are implemented by the Office of Financial Sanctions Implementation, which is part of the Treasury.

Are defence trade offsets part of this country’s defence and security procurement regime? How are they administered?

The MoD does not use offsets in its defence and security procurement.