Single Market for EU Defence Equipment Industry
(Source: European Commission; issued July 11,
2005)
The European defence industry is marked by market
fragmentation at national level. This is an important sector which is a
catalyst for growth and innovation in other industries ranging from
high-tech (e.g. aerospace, IT) to more traditional industries (e.g.
steel, shipbuilding).
The absence of a functioning single market constitutes a major obstacle
to the consolidation, competitiveness and sustainability of this
sector. For these reasons the Commission has made proposals for
measures which would encourage industrial restructuring, promote an EU
defence equipment market and enhance the competitiveness of the
industry.
These proposals were discussed at a Defence Conference organised by the
European Commission in cooperation with the European Defence Agency in
Brussels today.
Vice-President Günter Verheugen responsible for enterprise and industry
policy said: "The dismantling of barriers between industries and
markets inside the Union holds the promise of benefits for all
operators be they large or small. A dynamic defence sector can boost
economic growth and make an important contribution to the Lisbon goals
for jobs and growth."
"We have to make better use of the 160 billion euros that Europe spends
on defence each year," said Nick Witney, Chief Executive of the
European Defence Agency.
The EU defence industry's annual turnover can be estimated at about
euro 70 billion and employment amounts to roughly 770.000. It involves
sectors such as aeronautics, space, electronics and naval shipbuilding.
Weaknesses
On the supply side, European defence industries have suffered from the
absence of an internal market as Member States have maintained national
control over defence equipment markets and industry. On the demand
side, the State is not simply the only customer for the defence
industry, but has a considerable role in the financing of research and
strategic orientation. Budgetary restrictions and largely uncoordinated
programmes and procurement policies have led to a duplication of
programmes at national levels, thus inhibiting the sector from
increasing its critical mass on a global market.
Proposals
In this context, the Commission has already launched 4 specific
measures, which were debated during the Defence Workshop:
- Mapping the European defence technological and industrial base:
The objective is to increase the knowledge base on defence economic
data and thus support the elaboration of appropriate policy options.
- Standardisation: The Commission together with CEN (European
Committee for Standardisation) is supporting the preparation of a
defence standardisation Handbook for use in defence procurement
contracts.
- Intra-EU transfers: simplified licensing schemes are being
examined for facilitating transfers of defence products, components and
intermediate goods throughout the EU, which is today treated like
exports to thirdcountries.
- Harmonised procurement rules: A central issue to address while
creating a European Defence Equipment Market is the opening up of
defence procurement through an agreed common set of rules.
Complementing these measures, the European Defence Agency (EDA),
created in 2004, has started a number of activities to improve Europe's
defence performance. The EDA is headed by the High Representative for
CFSP Javier Solana. Vice-President Verheugen represents the Commission
on the EDA Steering Board.
