Bolkestein touts opening of EU’s weapons market

By Peter Chapman

Date: 02/09/04

EUROPE'S protected market for defence equipment, ranging from jets and aircraft carriers to helmets, could be opened up, even to America's military industry giants, under a blueprint to be unveiled later this month by Internal Market Commissioner Frits Bolkestein.

A green paper will suggest that pure defence products be brought within the Union's public procurement rules - meaning countries would have to advertise across the EU and choose the supplier offering the best value for money

Bolkestein's spokesman Jonathan Todd told European Voice: "Member states are currently entitled to exclude military products [from procurement rules] under Article 296 of the treaty

"The green paper looks at where you draw the line between military and "dual-use" products. More interestingly, it also asks whether member states would, nevertheless, want open and competitive procurement for all military products." If governments agreed, he added, "there could be a directive on defence procurement"

Dual-use products are those which can be used for both military or civilian purposes.

The European Court of Justice and the Commission have already issued rulings calling for open tendering in some dual-use technology and other areas where there is no justification for secrecy or protection on strategic grounds - for example office supplies

European subsidiaries of US manufacturers such as Boeing or Lockheed Martin - or firms in partnerships with EU companies - might also take part in tenders in the future, Todd added. Executives at these companies said that they would closely examine the proposals, expected later this month

Alexander Reinhardt, spokesman on defence and security systems for the European Aeronautic Defence and Space Company (EADS), said his company would welcome a freeing-up of procurement with open arms

He said EADS, with units across Europe, is often thwarted by national protectionism when it tries to sell military hardware to countries with other national suppliers. "This would clearly be something we would be in favour of. We face a lot of burdens and barriers between national markets," he said, adding that many countries "have rules that money may not cross the border"

Jean-Yves Haine, research fellow at the Paris-based EU Institute for Security Studies, said finance ministries were keen for more value for money - adding that they could help press for more open tendering in the EU

"I think it will happen because they [finance ministers] are asking for more bang for their euro. The bottom line is that we spend €160 billion on defence and the end result is appalling. Economies of scale are the obvious way forward - including public procurement."

The UK and France are the EU's biggest defence spenders and the British are most keen to buy from non-native suppliers

But Haine said even Paris is warming to the idea of buying abroad if the price and quality are right. "Some say that a single market for defence would save €6bn per year."

However, German MEP Karl von Wogau, head of the European Parliament's defence sub-committee, said there was no likelihood that the green paper would presage a free-for-all on pure defence products

He said countries would still want to keep information under wraps and be free to choose where they spend their military hardware budgets

Instead, he said, member states were likely to accept less ambitious moves to open up to more products that are bought by the military but are essentially the same as civilian goods, such as uniforms, boots and conventional electronics equipment

Article discusses a Green Paper to be launched by the European Commission in September 2004 on the application of EU public procurement rules to pure defence products.

European Commission: DG Internal Market: Public procurement http://ec.europa.eu/comm/internal_market/publicprocurement/index_en.htm

European Commission: DG Enterprise: Defence http://ec.europa.eu/comm/enterprise/defence/

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