Brussels, 29/06/2005 (Agence Europe) - During a public hearing organised on Thursday 23 June at the European Parliament, speakers stressed that the governments of EU Member States too often tend to promote their own national suppliers for defence procurement contracts, which goes against the grain of true internal market principles. The results of the hearing will allow the EP to examine, in November, an own-initiative report analysing the European Commission's Green Paper (published in September 2004) on defence procurement.
A “big black hole”, that is what the EU defence material procurement market looks like today, said Joachim Wuermeling (EPP-ED, Germany), rapporteur for the parliamentary committee on the internal market, on the Commission's Green Paper on Defence Procurement. According to a Commission representative, the Member States devote around one fifth of their defence budget to equipment spending, i.e. around EUR 32 billion annually. Nonetheless, State subsidies and distortion noted in the public and private industrial sectors prevent the development of defence procurement, the Commission explained.
According to some experts, EU member nations often derogate from EU rules on public procurement by invoking Article 296 of the EC Treaty which authorises any Member State to take the measures it considers necessary to protect its essential security interests in the field of defence equipment production. Burkhard Schmitt, from the Institute on Security Studies, stressed that most defence contracts are awarded according to national legislation, “resulting in a lack of transparency and competition”.
Most MEPs and specialists, like the Commission, consider that, far from ensuring equitable competition conditions, the European defence market undeniably needs to be reformed. Opening up public defence markets in Europe would certainly be to the advantage of SMEs, stressed Jeremy Miles of Britain, representing small enterprises in the defence equipment sector.
The Commission's Green Paper suggests two ways to remedy the fragmentation of the European defence market and Member States' systematic application of Article 296. The Commission suggests either presenting a communication in order to clarify the legal opinion, or a directive to finalise specific provisions for defence procurement. Most MEPs and specialists present recommended a parallel approach combining directive and communication. Some also urged for the establishment of a code of conduct in the defence procurement field.
EU Member States have already entrusted the European Defence Agency with presenting, by the end of the year, a voluntary code of conduct aimed at opening up the European armaments market to cross-border competition (AN of 26 May 2005). In response to the Commission's Green Paper on defence procurement, France said the adoption of a communication would not provide any new elements and that the adoption of a directive would only be useful if it were preceded by greater harmonisation of Member States' procurement policies - hence the stance taken by France (and others) in favour of a code of conduct implemented within the framework of the European Defence Agency. The United Kingdom and Germany are in favour of adopting an interpretative communication on Article 296 of the treaty, but are opposed to a directive being adopted. Spain supports implementation of the Green Paper in an interpretative communication and explains that the usefulness of a directive in this field should be analysed with great care. Member States in favour of a directive include Portugal, Poland (but only after publication of an interpretative communication), Italy, and Hungary.