Accord to boost defence firm cooperation

Date: 20/07/2000

By Simon Taylor

SIX EU member states are set to sign a ground-breaking agreement next week setting out rules to govern moves towards closer defence industry cooperation.

The UK, France, Germany, Italy, Spain and Sweden will announce details of an accord laying down the framework for agreeing common rules on the most sensitive aspects of defence industry cooperation, including export restrictions and security of information, at the Farnborough airshow.

The deal is the biggest step forward so far in efforts to create a common set of rules for Union defence companies, giving them a stronger legal basis to reap the benefits of the increasing number of mergers and joint projects between European firms. "This shows that a Europe of armaments is being built at the same speed as the EU's new defence and security policy," said a French defence ministry official.

The European defence industry has been transformed by a series of major mergers over recent years, turning what was once a sector dominated by large national companies into one where firms operate at pan-European level. The biggest recent deal saw major firms from Germany, Spain and France joining forces to form the Union's largest defence operator, EADS.

Under the agreement, known as the Letter of Intent initiative, the six governments will launch negotiations on six key areas essential for effective industry cooperation. These will include security of supply, export restrictions, security of information, research and technology and the harmonisation of military requirements.

The initiative is designed to make it easier for armaments companies in different countries to work together by laying down clear rules to govern exchanges of key technological information with partner firms.

One of the most significant changes to be introduced by the agreement is to the regulations on export controls. The accord would allow states involved in joint production ventures to draw up common lists of countries to which the defence items could be exported. This represents a major advance on existing arrangements, under which responsibility for granting an export licence lies with the country where the equipment is finally assembled.

But the move has been criticised by security and defence policy analysts, who warn that it could increase pressure on countries with strict export restrictions to ease their criteria for granting licences. "The new arrangements may have the potential to override more restrictive national export policies such as the Swedish regulations or the new German export guidelines of January 2000," said Sibylle Bauer, a researcher at the International Security Information Service in Brussels.

The agreement due to be announced in Farnborough follows two years of negotiations between the six leading arms-producing nations in the EU. The initiative has been the most successful example of defence industry cooperation, after attempts to reach an accord with all 15 Union member states failed. Similar discussions within the framework of the Western European Union, of which ten EU countries are full members, also failed to produce significant results.

French defence industry officials say they hope other Union governments will join the initiative soon. The Netherlands is reported to be interested in taking part, but officials would not say when it might sign up to the agreement.

Six EU Member States are set to sign a ground-breaking agreement setting out rules to govern moves towards closer defence industry cooperation.