Brussels, 03/04/2006 (Agence Europe) - On Monday 3 April 2006, the European Commission opened consultation on the free movement of defence-related goods within the Community of EU Member States. The new debate opens another chapter in the work undertaken at different levels to prevent fragmentation of the defence market and open it up to competition. The European Defence Agency has already drawn up a code of conduct that will be applied on a voluntary base as of 1 July this year, and the Commission had announced last December that there would be an interpretative communication and a proposal for a directive coordinating defence market procurement procedures when derogation under Article 296 of the EC Treaty is not applicable (EUROPE 9083).
The new discussion paper covers all defence-related equipment from the angle of free movement of goods in the internal market. In its introduction, the Commission notes that the movement of such goods is subject to different national administrative procedures, which is not only costly but also off-putting for European defence industries, and for SMES in particular, which produce sub-systems and components. A large LoI (Letter of Intent grouping Germany, France, the UK, Sweden, Italy and Spain) member nation (Ed.: the country in question is France although the text does not cite it by name) did make an attempt to establish an area of free trade for defence related equipment, technology, information and personnel (“Defence Schengen”) but the attempt failed due to inadequate support. Yet another failure was the German proposal for a Council common position aimed above all at abolishing export licenses for intra-Community transfers. Does the Commission feel it necessary to reflect upon a Community instrument? According to the Court of Justice (the text cites the conclusions of the advocate general in the Sirdar affair C-273/97), the Community's legislative authority to determine measures relating to the approximation of legislative, regulatory and administrative provisions of Member States, aimed at the establishment and functioning of the internal market (Article 95§1), is not affected by Articles 30 or 296 of the Treaty. The instrument in question, whether a directive or a regulation, should affirm the principle of free movement of defence-related products within the Community. The authorisation of each intra-Community transfer would be replaced by a single procedure and common simplified criteria concerning the transfers that are a serious risk for national security (the discussion paper mainly speaks of establishing lists restricting the possibility of re-exportation to third countries). The new rules of procedure would also organise the traceability of transfers within the Community (this would be assured by attributing a movement reference number completed by a company certification procedure) and each Member State would keep the possibility of exemption from these rules under certain conditions.
The full text is in French, German and English at the following website address: http: //europa.eu.int/comm/enterprise/regulation/inst_sp/defense_en.htm#cons. Parties interested have until 30 June to send their comments to the Commission.