Defence industries

Reference documents

Defence Package - Towards an EU Defence Equipment Policy

Following the Commission's adoption of the "Defence Package" in December 2007, two directives were adopted in 2009 with a view to facilitate the development of a European defence equipment market: Directive 2009/43/EC on intra-EU transfers of Defence products simplifying terms and conditions of transfers of defence-related products within the Community and the Defence and Security Procurement Directive on the coordination of procedures for the award of certain works contracts, supply contracts and service contracts awarded by contracting authorities or entities in the fields of defence and security.The package also consists of the Communication "Strategy for a Stronger and More Competitive European defence Industry".

EU transfers of Defence-related products

Until recently, fragmentation of the European defence market and divergent national approaches caused many problems for the European defence industry. 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. Heterogeneous national licensing regimes hampered the security of supply between Member States and cost over €400 million a year.

The new Directive 2009/43/EC on intra-EU transfers of defence products [1 MB] will alleviate these obstacles. It will be a further step towards a genuine European market for defence equipment without sacrificing Member States' control over their essential defence and security interests. Amendment to the Directive 2009/43/EC pdf - 919 KB [919 KB] on intra-EC transfers of defence product.

Article 9 of Directive 2009/43/EC lays down the general principles for the certification of defence undertakings in the EU. Certification is granted at national level and is meant to testify to the special ability of defence undertakings to receive defence-related products and, where appropriate, to respect all the conditions attached to those products such as end-use conditions.

As certificates have to be mutually recognised, this Commission recommendation provides national competent authorities with common certification guidelines.

The Directive will induce Member States to replace as far as possible their existing individual licences with general licences for those intra-Community transfers where the risk of re-exportation to third countries is under control, such as purchases by armed forces of other EU Member States and transfers to certified companies of components in the context of industrial cooperation.

Global licences, grouping multiple transfers to several recipients by one supplier, will cover most of the remaining intra-community transfers, with individual licensing thus becoming the exception. Member States will remain free to determine the products eligible for the different types of licence and to fix the terms and conditions of such licences.

Transposition into national legislation of the Directive was due to have been completed by 30 June 2011. The implementing measures will have to be applied from 30 June 2012.

Further reading:

More information can be obtained by contacting:

European Commission
Directorate-General Enterprise and Industry, Unit C/4 B-1049 Brussels (Belgium) Fax: +32 2 299 3098 - E-mail: entr-internal-market-simplif@ec.europa.eu

Defence and Security Procurement

The Defence and Security Procurement Directive sets Community procurement rules which are adapted to the specificities of the defence/security sectors. It allows, for example, the use of the negotiated procedure with publication as the standard procedure and provides special provisions for security of supply and security of information. The existence of this Directive will make it easier for Member States to limit the use of the exemption provided for in Article 346 of the Treaty on the Functioning of the European Union to exceptional cases, in line with Court of Justice rulings. Taking into account the increasingly blurred dividing line between security and defence, the new rules will also apply to sensitive contracts in the field of non-military security. Transposition into national legislation of this Directive was due to have been completed by 21 August 2011.

Communication "A Strategy for a stronger and more Competitive European Defence Industry"

The Communication "A strategy for a stronger and more Competitive European Defence Industry" sets out a number of actions that the Commission, Member States and the European Defence Agency (EDA) can take to enhance competitiveness.

Studies

Study on the industrial implications in Europe of the blurring of dividing lines between security and defence pdf - 3 MB [3 MB] . This study was commissioned from a consortium led by the Istituto Affari Internazionali, to examine the industrial challenges generated by the perceived eroding of distinctions between the defence and security sectors.

FWC Sector Competitiveness Studies - Study on the Impact of Emerging Defence Markets and Competitors on the Competitiveness of the European Defence Sector - Final Report, 12th February 2010. pdf - 2 MB [2 MB] This study was commissioned from ECORYS by DG Enterprise and Industry to obtain a detailed understanding of the developments in the key emerging defence markets and their current, and potential, impact on the competitiveness of the European defence sector.

Development of a European Defence Technological Industrial Base pdf - 2 MB [2 MB] , Annex report pdf - 627 KB [627 KB] . This study was commissioned from TNO by DG Enterprise and Industry to obtain a detailed understanding of the existing structure of the European defence industry, how it has evolved and to identify the main drivers for change affecting the industry. The annexes to the study are attached separately.

The Nature and Impacts of Barriers to Trade with the United states for European Defence Industries pdf - 5 MB [5 MB] . This study was commissioned from DECISION by DG Industry and Entrepreneurship to obtain a detailed understanding of the current transatlantic defence trade and the different strategies used by Member States and industry to facilitate this trade.

Study on the "Competitiveness of European SMEs in the defence sector"
In November 2008 the Commission launched a study on the "competitiveness of European SMEs in the defence sector". Please find here after the Executive Summary pdf - 70 KB [70 KB] and the final report pdf - 3 MB [3 MB] delivered in October 2009.

The report consists of an overview on the industrial landscape, an assessment of factors affecting the competitiveness of defence-related SMEs and recommendations how to improve the situation of SMEs.

The contractor focussed the study on the following 6 Member States: France, UK, Italy, the Netherlands, Poland and Romania. Concerning reliable data the contractor reported how difficult it was to get respective data on the defence sector, especially on SMEs in this area. Some national defence industrial associations even do not know the number of SMEs in their country. Just two figures which have been delivered amongst others by the contractor: The avarage annual turnover of defence-related SMEs is € 9 million. Less than 10 % of their defence business comes directly from their national defence authorities. Factors affecting the competitiveness of defence-related SMEs are:

information problems (i.e.lack of information on contract opportunities and future capability requirement
Problems accessing finance
National procurement authorities´growing reliance on Primes and Tier 1 companies
Regulatroy failure (offset policies, export regulations)

The contractor also provided a list of existing SME policies and of recommendations.

At EU level: implementation of the two new directives, EDA and ASD greater role in coordinating activities of national and industry trade associations

At national level: better information flow between defence authorities and SMEs through trade association and between trade associations and companies

Topics for further consideration: export promotion, support of defence clusters and recognising quality assurance procedures.