Brussels, 30/06/2006 (Agence Europe) - The Code of Conduct on defence procurement is to take effect on 1 July. The Code, to be applied by 22 EU Member States (except for Denmark, Spain and Hungary), aims to liberalise the defence procurement market of the European Union, estimated at around €30 billion annually. This is an “historic” stage in creating a real European defence market, Nick Witney, Director of the European Defence Agency (EDA), explained to the press on 30 June.
Member States will keep their partners informed of calls for tenders in the defence procurement sector via the new electronic bulletin, accessible from the EDA website. All contracts under one million euros will be concerned if they come under Article 296 of the Treaty, except for NBC (nuclear, biological and chemical) equipment. Member States may also decide not to apply the code in the event of urgent operational need or for national security requirements. However, if they decide not to apply it, they must “provide us with an explanation”, Mr Witney said. The site will be accessible to all, including in principle to third country companies, but, in practice, the code aims to promote cooperation between EU Member States. Intended to give greater transparency and competition in this highly protected sector, the code is nonetheless not binding. So how can Member States be prevented from promoting their own national companies? EDA will carry out six-monthly controls and present its first report to EU defence ministers during October and, if cases of such behaviour are found, ministers will “discuss” the matter.
Although Mr Witney does not like giving figures, he did make an estimation: - at the outset, if one adds together all the calls for tender on the site, there could be “over €100 million worth of contracts”. It remains to be seen whether this figure will become stable or/and increase. However, Mr Witney believes that there is no doubt the code will be a success. First of all because “only two governments have decided not to subscribe to it”: Spain and Hungary (Denmark benefits from an opt-out in defence matters). He did go on to add that such decisions, especially on the part of Spain, may not be eternal. Also because the opening of such a market will be to the benefit of all, including small and medium-sized enterprise (SME) as, in parallel to the Code of Conduct, there will be a Code of Best Practice in the Supply Chain (CoBPSC) (to open the market up to subcontractors and subcontractants) from 1 July. There will naturally be “some hesitation” on the part of some but, Mr Witney is convinced, “there is no alternative” as only by pooling resources will the EU be able to have a competitive industrial and technological base in the international area.