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Cutting red tape in EU defence industry - guide

05 December 2007
by eub2 -- last modified 05 December 2007

The European Commission wants to tackle obstacles to cross frontier trade in defence related products within the EU, thereby facilitating cross-border procurement of Member States’ armed forces and industrial cooperation in Europe. So far, the circulation of defence related products within the internal market is constrained by a web of heterogeneous and disproportionate national licensing procedures. By streamlining those procedures, today’s proposal will contribute to make European defence industries more competitive and improve conditions for Small and Medium Sized Enterprises' (SMEs) participation in armament development and production. In addition, it should enable Member States to meet military needs at lower cost and enhance security of supply for public procurement and industrial cooperation. To preserve the overall prevailing level of security interests’ protection, the facilitation of intra-EU transfers has been complemented by mutual confidence-building measures, notably guarantees for the protection of national security in case of re-exportation to third countries.


Why has the Commission taken an initiative in the Community framework?

Constant case-law by the European Court of Justice (ECJ) has made clear that Treaty (internal-market/first-pillar) rules apply to defence-related products.

Though art.296 allows Member States to take restrictive measures pertaining to defence related products to protect their “essential security interests”, the ECJ has constantly stated that no general reserve existed under art.296. Recourse to article 296 has to be demonstrated on a case-by-case basis and it is up to the Member States to provide evidence that such recourse is necessary to protect their essential security interests.

Article 296 has thus no effect on the Community’s legislative power to lay down measures concerning the approximation of the national provisions which have as their object the establishment and functioning of the internal market (Article 95(1)). Of course, article 296 remains unaffected and the adoption of internal measures does not deprive MS from the possibility to invoke art. 296 on a case-by-case basis.

Member States indeed currently implement export controls in a very heterogeneous and disproportionate way, which is detrimental to the internal market of defence related products. The Commission therefore proposes a minimum harmonisation of such export controls schemes as far as intraEU transfers are concerned.

What is the articulation with the work in the context of the Common foreign and security policy (CFSP)?

The Council adopted in 1998 a European Union Code of Conduct (CoC) on arms exports to strengthen cooperation between the Member States and promote convergence with regard to exports of conventional weapons. The proposal is complementary to the Code: it embeds the Common Military List annexed to the Code as its scope in order not to duplicate ammunition lists of reference but refrains from harmonisation of export policies which clearly remains within the remits of the CoC.

What is the link with current ongoing EDA and intergovernmental endeavours?

In 2004, the Council created the European Defence Agency (EDA). Although deprived of any mandate for simplifying transfers between Member States, the EDA has since constantly voiced the need to streamline current transfers’ procedures in order to ease industrial cooperation and to foster security of supply for governments procuring cross-border[3].

The proposal also fully integrates the international cooperation of Member States in the area of export control. It leaves a large margin of manoeuvre to Member States for deeper cooperation, for instance as regards the choice of products for the different types of licences and the terms and conditions of such licences.

How precisely does the proposal simplify existing licensing systems?

A major contribution to simplification is the introduction in all Member States, where they do not exist, of general and global licences. The general licence will allow all domestic companies, which comply with the conditions, to transfer the covered defence related products without individual prior authorisation. Global licences will allow companies and administrations to cover a large number of a company’s products to a large number of recipients in one single administrative act.

How does the proposal take into account the need to protect national security interests against the risks associated with the transfer of defence related products?

The consultation process has revealed that the risks are generally not created by the transfer as such, but by the subsequent exportation to third countries. The proposal therefore requires additional guarantees designed to increase confidence between Member States in their mutual ability to properly deal with export to third countries following the initial intra-community transfer:

  • According to common criteria, Member States will have to certify recipient companies’ capacities to properly handle the risks associated with the commerce in defence-related products. In problematic cases, a Member States may use a safeguard clause to exclude certain companies from receiving defence related products under its general licence.
  • In addition, companies will have to report on the use of the licences, which thus enables regular public reporting and ex-post control.
  • The proposal has a clear ‘internal market’ basis and does not affect Member States’ export policies. The decision to authorise or deny an export remains at the discretion of each Member State

Source: European Commission