Barriers Removed from EU Defense Equipment Market
December 16, 2008 // Published as a news service by IHS
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On Dec. 16, the European Parliament (EP) voted to support the proposal by the European Commission (EC) for a new directive to overcome fragmentation of the European defense market.
Once implemented, the new directive on transfers of defense-related products within the European Union (EU) will alleviate obstacles to trade across the European Community and eliminate most transit formalities, while preserving EU member states' control over their defense and security interests.
Until now, national systems to control transfers of defense equipment have not distinguished between exports to third countries and transfers to other member states.
According to the EC, applying heterogeneous and disproportionate national licensing systems hampers the security of supply between member states, costs business over €400 million a year and curtails market opportunities in other member states for competitive subcontractors from small and medium-sized enterprises (SMEs).
In order to change this situation, which is incompatible with the aims of the internal market as well as European security and defense policy, the directive on intra-EU transfers of defense products will significantly simplify national licensing procedures, thereby facilitating cross-border exchanges within the EU.
This will help make defense industries more competitive and facilitate SME participation in prime contractors' supply chains. The new legislation should enable member states to meet military needs at lower cost, enhance security of supply for cross-border defense procurement and encourage industrial cooperation.
"Today's approval brings us a decisive step forward towards setting up a true European defense equipment market," said EC vice president Günter Verheugen, responsible for enterprise and industry policy.
"Member states will soon cease to consider other member states as third countries when authorizing the circulation of defense-related products within the EU. I am also very grateful that, thanks to a collective engagement of all parties concerned, the directive has been adopted in less than a year.''
The EP vote was based on an agreement reached with the European Council.
For more information, see Commission proposes cutting red tape in EU defense industry (Memo/07/546) and EC's web page on Intra-Community Transfers of Defense-Related Products.
Source: European Commission.