BAE SYSTEMS, Britain’s biggest defence group, is pushing the British government to split with Europe and negotiate a special exemption to spare the UK from American sanctions over arms sales to China.

BAE executives and defence officials fear Congress will stop the transfer of vital defence know-how if Europe lifts its embargo on arms exports to China. Washington sources say four top legislators — senators John McCain, Joe Biden, Richard Lugar and Joe Lieberman — are ready to ban all technology transfers.

Mike Turner, BAE’s chief executive, said the company wanted a “carve-out” deal that would exempt Britain. BAE would not export any important UK technology if the embargo was scrapped.

“We have been very clear and upfront that if the embargo comes off, you will not see BAE exporting sensitive UK technology,” said Turner. “We have far too much at stake in the United States.” BAE is America’s sixth-largest defence contractor, with a US turnover of nearly £3 billion.

President George Bush raised America’s concerns over the embargo during his recent visit to Europe. The ban was put in place after the 1989 Tiananmen Square massacre.

“I think there is a carve-out for the UK,” said Turner. “We will have to convince them — ourselves, the secretary of state and the prime minister. We can be trusted on this.”

But Turner advocated Britain taking a hard line with the Pentagon on technology from the Joint Strike Fighter (JSF), the world’s largest defence project. If it was not forthcoming, Britain should consider withdrawing. The British government has already invested £2 billion to become lead partner.

“If we don’t get there (the transfer of the required intellectual property) I think Geoff Hoon (the defence secretary) will have to think about our involvement in this programme,” said Turner.

Key decisions on securing a British assembly line would have to be taken in the next 12 months, he said. Current plans for the JSF envisage only one assembly line — in America.

Turner also said BAE would not countenance MoD proposals to set up “sub co” — a single company to look after the Royal Navy’s nuclear submarine fleet. The plan would merge businesses owned by BAE, DML, Babcock and Rolls-Royce.

Turner said the company would only consider the creation of a much larger combined business to look after both surface ships and submarines.

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax