Identifier
Created
Classification
Origin
07BRUSSELS1316
2007-04-19 10:06:00
UNCLASSIFIED
Embassy Brussels
Cable title:  

Belgian Regions Mastering Export Control

Tags:  ETTC PARM PGOV BE 
pdf how-to read a cable
VZCZCXYZ0006
RR RUEHWEB

DE RUEHBS #1316/01 1091006
ZNR UUUUU ZZH (CCY TEXT ADAB5720 MSI0280)
R 191006Z APR 07
FM AMEMBASSY BRUSSELS
TO RUEHC/SECSTATE WASHDC 5144
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUCPDOC/USDOC WASHDC
UNCLAS BRUSSELS 001316 

SIPDIS

SIPDIS

STATE FOR EUR/UBI AND PM
USDOC FOR 4212/OECA/JLEVINE

C O R R E C T E D C O P Y (TEXT)

E.O. 12958: N/A
TAGS: ETTC PARM PGOV BE
SUBJECT: Belgian Regions Mastering Export Control
Responsibilities


UNCLAS BRUSSELS 001316

SIPDIS

SIPDIS

STATE FOR EUR/UBI AND PM
USDOC FOR 4212/OECA/JLEVINE

C O R R E C T E D C O P Y (TEXT)

E.O. 12958: N/A
TAGS: ETTC PARM PGOV BE
SUBJECT: Belgian Regions Mastering Export Control
Responsibilities



1. (SBU) Summary. In 2003, the Belgian federal
government handed over the responsibility and final
authority of licensing arms exports to the regional
governments of Wallonia, Flanders, and Brussels
Capital. Wallonia and Flanders, which together
account for 95 percent of Belgium's exports, have
implemented procedures that are quite extensive and
more restrictive than the European average. Despite
early concerns about regional capabilities,
regionalization of licensing appears to have led to
increased attention and scrutiny following a
training and transition period. A loophole in
Belgian regulation that the regions inherited from
federal level oversight, however, may allow brokers
to circumvent arms embargoes or encourage venue
shopping by arms and dual use technology exporters.
End Summary.

--------------
Transfer of Responsibility to Regions
--------------

2. (U) In 2003 Belgium transferred the
responsibility of licensing arms exports to the
three regional governments. This reflected
Belgium's ongoing devolution of power to the
regions, part of a political compromise to remain a
federal state comprised of two strong linguistic
groups (French and Dutch speaking) inhabiting three
regions (Wallonia, Flanders, and Brussels Capital
Region). The federal government retained
responsibility for arms trade relating to police and
armed forces, as well as sales of equipment
purchased from the U.S. government and equipment
requiring end-use certification. Each region has
final authority to grant export licenses for
commercial sales of military and dual use equipment
by companies located in their region. Of course,
the regions are bound by Belgium's international
obligations, including multilateral export control
regimes governing arms and dual-use technologies.
Because the federal government retains primacy in
international relations, close cooperation between
the regional governments and federal agencies
(primarily the Foreign Ministry) is necessary to
provide guidance and intelligence to the regions
about how certain arms exports may affect Belgian
national security interests. The federal government

is responsible for all export control enforcement,
through Belgian Customs and Federal Prosecutors,
because customs and law enforcement remain federal
purviews.


3. (U) Due to its EU membership and other binding
political and economic treaty commitments, Belgium
must take into account many restrictions in terms of
arms exports. Belgium is a member of the Benelux
Union Treaty and Benelux Agreements, which state
that licensing systems for import, export, and
transit of arms must be equal among the three member
states (Belgium, Netherlands and Luxembourg),and
grants union-wide validity to licenses issued by any
of the members. Trading of arms or dual use goods
within the Benelux Union requires no license.
Belgium is also a member of the Belgian-Luxembourg
Economic Union. This union requires shared
regulations and even shared documentation for filing
export license requests. Belgium's trade
commitments under European Union treaties are even
more comprehensive. Belgium adheres to an EU Code
of Conduct specifying which items are restricted or
require a license. This EU Code includes a common
list of restricted goods, details EU regulation of
dual use products, and includes "catch all" denials
of exports to proliferation-risk countries of items
not specifically on international control lists.

--------------
Flanders regional procedures
--------------

4. (U) On March 26, 2007, the Flemish parliament
hosted a presentation by the Flemish Peace Institute
(FPI) on the Flemish arms export regime. In
attendance were representatives from the diplomatic
community, EU institutions, some private sector
manufacturers, and academics. The FPI presented its
findings in regard to the 2003 regionalization of
arms export and review function in Flanders.



5. (U) According to regional data, 181 licenses were
granted in Flanders in 2006, valued at nearly 200
million Euros. The high point of Flemish regional
arms exports came in 2004, when total value reached
about 480 million Euros. The largest export
destination for such Flemish exports is the EU (45
percent),followed by the U.S. (36.6 percent).
Compared to the other regions in Belgium, licensed
exports from Flanders are generally in the high tech
fields such as display screens and software. By
value, Walloon arms exports account for 70 percent
of total Belgian exports, Flemish exports for 25
percent, and Brussels exports about 5 percent. The
nature of arms exports, with large one-time deals,
leads to a pattern of great variance in value across
years.

6. (U) While the Belgian federal government and all
regional governments adhere to regional trade rules
as well as international codes of conduct, Flanders
has voluntarily added four extra classifications to
the EU common military list. These extra groups
further restrict the export of certain rifles, law
enforcement materials, and other catch-all goods
that have a military end-use function, such as
airport security supplies, software, and vehicle
parts. The most significant addition, however, is
the Flemish restriction on display and visualization
screens. While these items are not seen as
armaments, they are restricted because of their
inherent application in military settings. One
company, BARCO, headquartered in Kortrijk, Belgium,
is almost exclusively responsible for exports of
screens from Flanders. FPI participants discussed
how the inclusion of screens on the military list
could act as an anticompetitive obstacle to their
sale and distribution, but also exempts them from EU
common market regulation.

--------------
Ensuring Credible End Users
--------------

7. (U) When issuing export licenses, Flanders
employs two methods to ensure that the end user of a
Belgian product (or product created with Belgian
content) is appropriate. First, a country that is
included on the Flemish "Befriended Nations" list is
allowed to re-export goods that were exported under
a Flemish license, without any additional consent of
the Flemish government. These countries, such as EU
member states, the United States, Canada, and many
western nations, are thus delegated the
responsibility of confirming a qualified end user.
This enables military products containing Flemish
content to reach countries that could not have
secured a license. An example is that U.S. defense
companies are allowed by the USG to export military
goods to Israel and Saudi Arabia; however, these
nations would most likely not be granted export
licenses by the Flemish. Befriended nations exports
account for 76.8 percent of exports.


8. (U) Another form of restriction addresses arms
shipments that pass through the Belgian region.
Transit licenses are required by both Flanders and
Wallonia when sensitive goods on the restricted list
pass through their territory. Whether or not a
license is granted or even required largely has to
do with the sensitivity of what is being
transferred, how long it will be on the region's
soil, and the specific exporter and recipient of the
shipment. Transport licenses are less sensitive, as
evidenced by the fact that regions may deny an
export license to a certain country listed as an end
user, but will allow a shipment through Belgium for
goods destined for the same country.

--------------
Walloon Licensing Procedures
--------------

9. (U) Wallonia has traditionally been the major
arms exporting region in Belgium, accounting for 70-
75 percent of the nation's exports. It is home to
well known firms such as FN Herstal and Mecar that
have supplied the USG, among others. Both companies
are manufacturers of arms, ammunition, and weapons

systems for military and police forces. In 2006,
Wallonia issued 767 arms export licenses with a
value of 760.4 million euros. The main customers,
by value, were the United States and Saudi Arabia.
(Detailed statistics are not currently available for
Wallonia past 2005.)

--------------
Layers of Responsibility
--------------

10. (U) Since the 2003 regionalization of
responsibility to license arms exports, the regional
governments adopted their own review mechanisms, in
part mirroring the previous federal system. In 2004
a reconfigured system was implemented. Multiple
regional groups were created to ensure proper
oversight and adequate expertise used in the
evaluation process. The main group includes a
director, a chemical engineer experienced in dual
use technology, and several other agents experienced
in arms export licensing. The new structures
emphasize the integration of information sharing and
gathering mechanisms, with the goal of increasing
the transparency and traceability of exports, and
enhancing regional appraisal expertise. Regional
committees were assembled specifically to analyze
issues like human rights records of end-use
countries, as well as international law and
political considerations. A larger advisory council
was also formed in each region, to meet several
times during the year to evaluate the most sensitive
export licenses. Each region also now has a
procedure to forward particularly sensitive
applications to the regional minister responsible
for export control for his or her personal review
and decision. In 2004 the Walloon government, under
pressure from human rights groups, reversed an
earlier decision and denied export licenses for
technology transfers to Tanzania for the
construction of an ammunition factory, citing
overall unrest in the Great Lakes region. Walloon
officials have since been tougher on cases involving
states with internal turmoil and potential use of
Belgian-made arms for human rights abuses.


11. (U) Walloon, Flemish and Brussels officials take
into consideration the same criteria in deciding
whether or not to grant an export license. They
adhere to the European Code of Conduct, obey EU and
UN arms embargos and international treaties
regarding arms, and evaluate the trustworthiness of
the recipient nation. The regions maintain a list
of nations for which they do not require end-user
certification, trusting them to ensure the end user
is reputable; these are generally other EU nations
and NATO member states. For all other countries,
the end-user certificate must be detailed as well as
verified by the Belgian ambassador to whichever
country is listed as the end user, or by another
Belgian ambassador who is assigned jurisdiction for
these purposes over that country.

--------------
The Bottom Line: Denied Licenses
--------------

12. (U) In 2006, Flemish authorities denied five
licenses, or 2.69 percent of all export requests
filed. Four of them were denied for unspecified
reasons or political reasons, and one (with Austria)
was declined temporarily because of a paperwork
error that was later resolved. Licenses were denied
for China, Venezuela, and Thailand for political
reasons, and in the case of China, because of the EU
arms embargo. Although these licenses were denied,
the FPI questioned several other licenses granted to
what they deemed suspicious countries and end users,
among them Pakistan, India, Colombia, Nigeria,
Angola, Israel, Russia, and Turkey. The FPI
questioned them as end users, citing internal
tensions, civil war, human rights records, and
regional conflicts. Most of the goods shipped to
these countries were catch-all category goods, such
as visualization screens and armored transport
vehicles, rather than actual weapons.


13. (U) In Wallonia in 2005, 14 licenses or just
over 2 percent of all export applications were

denied. The denied licenses all had end users in
the Middle East, Africa, or the Indian sub-
continent. Approved licenses for Middle Eastern
customers totaled 101.5 million Euros in value that
year. Flemish and Walloon government review
procedures appear more restrictive than the European
average of less than 1 percent of export licenses
denied.

--------------
Brokering Loophole Concern
--------------

14. (U) One issue of concern is brokering by a
Flemish arms dealer between two third parties.
Currently Flanders requires only that Flemish arm
brokers be registered and granted a license to
broker arms sales, a requirement Belgian federal
government previously enforced. Flanders does not
require that specific deals brokered between third
parties by Flemish nationals or companies be issued
a license. Reportedly, this practice runs contrary
to EU Common Position 2003/468 CFSP, which states
that specific brokering transactions should be
investigated and licensed to prevent broker
circumvention of international agreements and
embargoes regarding military goods. Because
Wallonia, like Flanders, inherited much of its
regulatory framework from pre-existing federal
export regulation, Wallonia too appears to require
brokers to register but not to request licenses for
individual brokered sales between third countries.

--------------
Comments
--------------

15. (SBU) The regionalization of Belgian arms and
dual use export licensing authority has advantages
and disadvantages. Regional governments are closer
to the exporting companies, and therefore may be
better suited for communicating with the exporter,
researching the transaction, and adjudicating the
license application. Early fears of weak regional
expertise to adjudicate applications have been
quelled, and the procedure of Flanders and
Wallonia, based on present dta, appear demanding,
thorough, and more restrictive than the EU average.
The proximity between reviewer and applicant,
however, could potentially lead to increased
collusion between business and government in order
exclude goods from EU common market regulations,
boost regional export sales, or foster local
economic interests (such as employment).
Regionalization of adjudication in Belgium also
permits companies to "shop" for the most favorable
venue in which to process its export requests. That
is, if a company has facilities in more than one
region, it can choose from which region to request a
license. This raises the potential for anti-
competitive behaviors by regional governments
seeking to attract transactions, production
facilities and headquarters of arms manufacturers
and sensitive technologies away from other regions.
The end result could be an inappropriately close
relationship between arms dealers and licensing
officials leading to sales that might be unwise or
even illegal. At present, we have observed no such
cases; the greater concern is the broker loophole
cited para 14. Post will continue to monitor
regional export controls for further data on their
operation and effectiveness.

FOX