The long-term needs for a competitive European defence equipment industry to support a European Security and Defence Policy (ESDP) are outlined in a Communication adopted by the European Commission today. The Commission underlines that cost efficiency of defence spending, the maintenance of a competitive defence and technological industrial base, better access for EU manufactured goods to third country market, ethics and fairness in the arms trade, security of supply, and also the need to respect Member States prerogatives in this sensitive area are all important considerations when defining an EU defence equipment policy. Action by the Union Institutions is proposed to help establish a European defence equipment market. A key contribution is to seek improve the EU regulatory framework governing the treatment of armaments in Europe. In the area of research linked to global security, the Commission will invite Member States, industry and the scientific community to help identify common needs and pool know-how and investments to jointly develop technologies that could be critical for Europe's security in the long term.

Enterprise Commissioner Erkki Liikanen said : «Tax payers should get the most out of the investment they make in security. There is ample evidence that this is not the case at present and that a European defence equipment market would bring significant economic efficiencies. It is crucial for both civil and defence sectors of the economy that we create an environment in which European companies can give better value for money.» He added: «By placing the issues clearly in the context of industrial competitiveness, the European Commission is signalling the importance it attaches to developing policies which will give European companies in the defence industries, whether prime contractors or part of the tens of thousands of SMEs in subcontracting roles, the opportunity to remain at the leading edge of advanced technologies and to compete on a the basis of fair competition.»

External Relations Commissioner Chris Patten said: «Member States are committed to the development of a strong and credible European Security and Defence Policy. It is difficult to envisage this happening without the support of a strong and competitive defence industry, transparent market conditions and a healthy climate for investments in Research and Development. I hope the Communication adopted today will help contribute to this end.»

To meet ESDP needs cost-effectively, the Commission proposes, inter alia, to:

provide the necessary financial resources to ensure that the European defence equipment Standardisation Handbook is ready by 2004 and then propose appropriate complementary measures for updating and using it,

launch a study in 2003 to assess the impact of existing rules and different proposals, and, depending on its findings, start elaborating at the end of 2004 an appropriate legal instrument to facilitate intra-Community transfer of defence equipment,

continue reflection on the application of competition rules in the defence sector taking due account of the specificities of this field and the provisions of article 296 ECT,

initiate a reflection on how to optimise defence procurement at national and EU levels. Given the important Court judgements in recent years, especially in helping to define the scope of Article 296, the Commission will issue an Interpretative Communication by the end of 2003 on the implications of these judgements. In parallel, it will work on a Green Paper, which might be issued in 2004 as a basis for discussion with stakeholders,

raise, in the relevant Council working bodies, the issue of the Commission's involvement in export control regimes,

Invite Member States, industry and the scientific community to help identify common needs in the area of research linked to global security. The Commission intends to launch a preparatory action to coordinate such research at the EU level, focusing on a limited number of concrete technologies linked to the Petersberg tasks and,

pursue work on a possible EU Defence Equipment Framework, overseen by an agency (or agencies), in order to pull together, develop and widen national initiatives - especially in collaborative programmes, Research and Development, and off-the-shelf procurement - making use, where appropriate, of Community mechanisms and instruments.

In the Communication, the Commission encourages the Member States to consider a European defence equipment policy as one of the logical next steps in the development of ESDP.

Background

In 1996 and 1997 the European Commission produced two Communications on defence-related industries to encourage restructuring and the setting up of an efficient European defence equipment market. Concrete proposals and actions followed with respect to some of these issues. However, as regards the most essential reforms, Member states considered action on the European level premature.

Following a period of considerable change, both in the industrial armaments sector and in EU, including developments in ESDP, the European Parliament, in a Resolution of 10 April 2002, invited the Commission to address the issue of armaments in a new Communication. The European Convention's current achievements also demonstrate that time is now ripe for further action at EU level to shape an EU armament policy.