Until recently, fragmentation of the European defence market and divergent national approaches caused many problems for the European defence industry, which still operates in a highly regulated environment at a national level.
But, according to the European Commission report on the transposition of Directive 2009/43/EC, published today, important first steps towards an internal market for the transfer of defence goods have been taken.
Such transfers are needed for the supply of components or for assembling final products. The Directive simplified these transfers, in particular by introducing an EU wide coherent licencing system for the transport of defence-related products through one or more Member States.
Before the adoption of the Directive, individual licensing was the most common administrative tool, which was required prior to every transfer with the associated procedures and costs, and more than 21 000 licences were issued by Member States in 2010. Heterogeneous national licensing regimes hampered the security of supply between Member States at a cost of over €400 million in 2007/8. For example, national systems to control the transfer of defence equipment to another Member State did not distinguish between exports to third countries and transfers between Member States. Moreover, small and medium sized enterprises (SMEs) did not have the means to enter into the supply chain in other Member States.
Timely transposition of the Directive, due since June 2011, proved challenging for Member States, and only 20 of them officially communicated full transposition in their national law (see below). However, the report underlines the advantages of the Common Military List at EU level replacing previous different lists established at national level, and of the system to certify defence companies resulting in increased mutual trust and common recognition of defence companies’ reliability. The Commission also opened today a new Register of Certified Defence Recipients (CERTIDER), encompassing a centralized list of companies certified by Member States.
The EU defence sector in figures
The EU defence sector employs around 400.000 people with a turnover of € 90 bn in 2010. Intra-EU transfers of defence products amounted to € 9bn, for which Member States issued 21,533 licenses. The European defence equipment market is:
- technology and research-intensive (electronics, IT, transport, biotechnology and nanotechnology – with many important spin-offs in civil sectors, e.g. satellite navigation).
- The defence industry is mostly concentrated in six Member States (France, Germany, Italy, Spain, Sweden and the UK) although companies producing ancillary equipment and systems are found all over Europe.
Fragmented markets create red tape, hamper innovation and lead to duplication of defence programmes and research – undermining the EU's global competitiveness and the effectiveness of the Common Security and Defence Policy.
New rules benefit industry, and in particular SMEs
Directive 2009/43/EC allows the defence system integrators having the possibility to open their supply chains in more predictable conditions, increase economies of scale and optimise the defence manufacturing chain. The new rules can also create opportunities for SMEs in the sector to enter into the supply chain in other Member States.
The Directive also contributes to the reduction of the administrative burden for economic operators and for Member States' administrations. The efficiency of export controls in the EU would increase as Member States' control authorities could focus resources on the most sensitive transfers and therefore maintain high security levels.
Finally, the Directive increases assurance against the risk of illicit transfers, allowing traceability and reporting on re-exports, as well as enhancing mutual trust with like-minded third countries.
New register of Certified Defence Recipients
The Commission opened today the Register of Certified Defence Recipients (CERTIDER). The objective of the certification of recipient companies is to establish their reliability for receiving defence-related products under a general transfer licence published in another Member State. It is a confidence-building measure and a tool to reinforce the ex-post controls. It will reduce the risk of illicit transfers and enhance the traceability of the defence-related products transferred under a general transfer licence. CERTIDER will contain a centralized list of companies certified by Member States.
Commission requests eight Member States to transpose EU defence product rules
The European Commission has decided to request Romania, Italy, Belgium, Denmark, Finland, Luxemburg, Poland, and the United Kingdom to transpose EU rules on defence products into national law. The transposition deadline was 30 June 2011 (IP/12/532 and IP/12/651).