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Overview: Defence Package of the European Union
The fragmentation of the European defence market and divergent national
policies create red tape, hamper innovation and competitiveness and,
ultimately, weaken the European Security and Defence Policy (ESDP). The
European Commission presented in December 2007 a package of initiatives
to improve this situation. This "defence package" contains three
elements:
- A Directive on defence procurement to enhance openness and
intra-European competition in Member States' defence markets; and
- A Directive on intra-EU transfers of defence products
designed to alleviate obstacles to intra-community trade.
The objective of the proposed new legislation is to contribute to
creating a genuine European market in this sector without sacrificing
Member State control over their essential defence and security
interests. The creation of a European defence market will improve the
efficiency of defence spending in Europe and strengthen our ability to
get the best available equipment for our soldiers and civilian personnel
serving in operations in Europe and abroad.
1. Draft Directive on defence procurement
EC procurement rules apply also in defence and security. However, Member
States can exempt contracts in these fields if this is necessary for the
protection of their essential security interests. The legal basis for
this exemption is Article 296 of the Treaty (for defence) and Article 14
of the current procurement Directive (for security). According to the
Court of justice, the use of these exemptions must be limited to
exceptional cases. In practice, however, many Member States have used
them extensively to exempt almost all defence and sensitive security
procurement from Internal Market rules.
As a consequence, most defence and sensitive security equipment is
procured on the basis of uncoordinated national rules, which differ
greatly in terms of publication, tendering procedures, selection and
award criteria. This regulatory patchwork is a major obstacle on the way
towards a common European defence equipment market and opens the door to
non-compliance with the Treaty principles. Lack of transparency and
discrimination of suppliers from other Member States leads to lack of
openness of defence markets, with negative effects for all stakeholders.
Proposed measures: The new Directive will apply to the procurement of
arms, munitions and war material, as well as related works and services.
At the same time, Member States can also use it for certain particularly
sensitive non-military procurements in areas such as protection against
terrorism, where contracts often have similar features to defence
contracts.
The new Directive will contain a number of innovations tailored to the
specificities of such procurement cases. Awarding authorities may in
particular use the negotiated procedure with prior publication as a
standard procedure, which gives them flexibility to negotiate all
details of the contract. They may also require from candidates specific
clauses for security of information (in order to ensure the
confidentiality of sensitive information) and for security of supply (in
order to ensure on-time delivery).
Member States will still have the possibility to use Article 296 to
exempt defence and security procurement contracts which are so sensitive
that even the new rules do not satisfy their security needs. In most
cases, however, Member States should be able to use the new Directive
without any risk for their security.
The draft Directive and the EP:
The European Parliament has supported the initiative through the
following reports: 1) Report on the annual implementation of the ESS in
the context of ESDP (Rapporteur Karl von Wogau, adopted in Plenary in
2006), 2) "Wuermeling" Report, adopted in Plenary in 2005.
The Directive will not be a "Buy European Act": The objective is not to
introduce a "Buy European" policy, but to foster transparency and
openness of defence markets between Member States. Intra-European
competition has proven to be the best means to improve the
competitiveness of Europe's defence industry. The Directive will set
rules on how to procure defence equipment, but not determine which
equipment should be procured. This is the decision of the customer, i.e.
Member States. The proposal therefore does not contain a "Buy European"
clause.
2. Draft Directive on intra-EU transfers of defence products
This draft directive aims to significantly simplifying national
licensing procedures and therefore facilitating crossfrontier commercial
exchanges within the EU. This will contribute to making defence
industries more competitive and facilitate SMEs participation into prime
contractors' supply chains. The new legislation should enable Member
States to meet military needs at lower cost and enhance security of
supply
for public procurement and industrial cooperation.
(AB, 19 May 2008)
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