Creating a single market for EU defence industry: Commission opens consultation - Main contents

Creating a more open "European Defence Equipment Market" (EDEM) between Member States is the theme of a public consultation launched by the European Commission today.

So far, the circulation of defence-related products in the internal market is restricted by varying national administrative procedures in the Member-States. A Commission initiative to reduce these obstacles to intra-community trade in defence products contributes to making European defence industries economically more efficient and technologically more competitive. It enables Member States to meet military needs under proper security conditions and at lower cost. Today's public consultation seeks the views from stakeholders, experts and all other interested how to lift intra EU borders for the circulation of such products.

Commission Vice-President Günter Verheugen i responsible for enterprise and industry policy said: "Opening the internal market for defence products would boost our economy and increase the competitiveness the European defence-producing companies. "

The EU defence industry turnover (aeronautics, space, electronics, shipbuilding, engines, trucks, etc.) can be estimated at about € 70 bn, with employment of about 770 000. This represents roughly half of the US defence industry, both in turnover and employment. Most of the companies concerned are involved in both military and civil activities. An analysis of the 28 European companies belonging to the World Defence Industry Top 100 shows that only 13 of them make more than 50% of their turnover in the defence sector.

Several ways to facilitate cross-frontier operation the national export authorisation systems are discussed:

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  Continue intergovernmental cooperation as it exists among six Member States since 1998 but extend it to all other 19 Member States;
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  Reinforce the European Security and Defence Policy (in particular the Council Working Party on Armaments Policy, POLARM, and the European Defence Agency) or
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  Proposing a Community instrument for lifting obstacles to trade within the EU thanks to the coordination of export rules concerning armaments.

In times of crisis such a European instrument increases the security of supply with necessary military equipment from other Member States by facilitating its free movement between EU Member States. At the same time it will provide the necessary guarantees for the protection of national security in view of re-exportation to third countries, for example by organizing at EU level its traceability and certification of defence-producing companies.

The aim of the consultation is to obtain more detailed information on how to shape the European instrument, for example:

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  Under what conditions could an EU instrument add value to the current systems of checks on transfers from the point of view of the security of commercial transactions, the protection and safeguarding of the public interest and the simplification of procedures for businesses?
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  Is defining a common export policy setting limits to the exportation of armaments in particular to crisis areas a pre-requisite for abolishing intra-Community controls?
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  Could the common list of military goods covered by the EU Code of Conduct (see below) serve as a reference for the application of such an instrument on the movement of defence-related products?

The full online consultation is available in three languages (DE/EN/FR)

http://europa.eu.int/comm/enterprise/regulation/inst_sp/defense_en.htm#cons

After this initial consultation the Commission will be in a position to take a decision on the main lines of a possible proposal in the context of a general communication on the defence industry before the end of 2006.

Background:

In 1998, with regard to the common foreign and security policy, the Council adopted a European Union Code of Conduct on arms exports in order to strengthen cooperation between the Member States and to promote convergence with regard to exports of conventional weapons.

The European Defence Agency made up of the Defence Ministers adopted a regime for a Code of Conduct applicable from July 2006 on defence procurement which aims, among other things, to get subscribing Member States to undertake to support efforts to simplify intra-EU transfers of defence goods and technologies. The Code will only apply to Member States who choose to subscribe to it, and these remain free to cancel their participation at any time.