Commission set to launch defence market blueprint

Date: 27/02/03

By Peter Chapman

THE European Commission will next month unveil a blueprint aimed at spurring an EU-wide market for defence products.

The aim is to help European firms emulate the US's military hardware giants.

Erkki Liikanen, the commissioner for enterprise and the information society, said he and his counterparts will sign-offon a policy paper on 11 March to target the barriers to the EU's defence business that are also thwarting potentially lucrative spillovers into the civilian world.

He said the paper, prompted by the Greek presidency, would flag the need for more EU standardisation of military hardware and greater openness in public procurement of defence equipment.

But he admitted this was just the start of a long haul towards convincing national governments to loosen their grips on parochial defence markets.

"The key point is if you have a fragmented market, with fragmented stakeholders, it means high costs and a lack of efficiency.

"It is the same as for everything else in the internal market," the Finnish industry chief told European Voice.

"I am sure that a strong internal market and common standards would mean there would be more value for money from investment.

"Companies have already been consolidating themselves, but European legislation can change.

"We will assess these issues now and hope that we will be able to have more discussion," Liikanen added.

Some member states - such as France and the UK - have signed bilateral deals to try and step up cooperation in the way they buy military hardware, from guns to aircraft carriers.

That means that French companies would be more likely to win British military contracts - and vice-versa.

Also, many products and parts - ranging from nuts and bolts to radar - would be interchangeable with one another.

But Liikanen said the paper would sell the benefits of an EU-wide approach - an issue already raised in the Convention on Europe's future.

"There are already these arrangements and "memorandums of understanding" between member states.

"The question is should this take place at community level - where it would be open?"

On research and development (R&D), he said the paper would raise the scope for concerted investment in "dual use" areas also likely to spawn civilian applications.

He said the internet - born from US military research - was a case in point.

"The question is should we look at how R&D on the military side can have spillovers on the civilian side," said the Finnish commissioner, adding: "Much more reflection is needed if European countries would like to do more."

The European Commission will unveil a blueprint in March 2003 aimed at spurring an EU-wide market for defence products. The aim is to help European firms emulate the US's military hardware giants.