Britannia Radio

Step by step our  independence is removed.  If this goes through we 
will find our whole defence strategy being further under EU control.  
Since none of our partners contributes to EU defence in any 
meaningful way this must be resisted. We used to have a veto on 
defence matters.  Has this already gone ?

The FT thinks of the EU before it thinks of Britain and the two 
correspondents who wrote this don't inspire any confidence that they 
either know what they are talking about or care about Britasin either.

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Finanacial Times    14.1.09
Tougher rules for EU defence deals
By Sylvia Pfeifer, Defence Industries Correspondent, and Nikki Tait  
in Brussels

European defence contractors are likely to gain more access to  
contracts elsewhere in the European Union, under legislation which is  
designed to free up cross-border procurement and set to be endorsed  
on Wednesday by the European Parliament.FIN

The proposed directive is aimed at preventing member countries from 
buying military equipment principally from domestic contractors.

Regulators have become increasingly concerned at member states' use 
of an exemption which allows them to opt out of normal EU competition 
rules on grounds of national security.

This, they say, has been used to cover both military procurement and 
"sensitive non-military security equipment", used by the police.

Between 2000 and 2004, for example, the EU's 15 older states 
published only 13 per cent of all opportunities to tender for defence 
equipment contracts across the EU. Germany published only 2 per cent 
of opportunities.

The new legislation should help limit these derogations and allow 
small and medium-sized companies in one EU member state to sub-
contract to companies in another. Prime contractors are also expected 
to benefit; the new rules will allow them to apply for general export 
licences to transfer one or several items to multiple member states.

Currently, the 27 national licensing procedures make transfers of 
equipment between countries difficult and laborious, with Brussels 
estimating it costs business and governments more than ?400m (528m, 
£363m) a year.
But some senior industry executives remain concerned about the 
directive's potential impact on research and development spending.

Currently, it is normal practice for a member government to award a 
contractor both an R&D contract and what is usually a more lucrative 
manufacturing contract. However, under the directive, a government 
would have to put the manufacturing out to tender.

According to executives in the UK, among the higher spenders on 
defence within the EU, this could undermine business models and 
affect a state's commitment to invest in developing sovereign defence 
capabilities.

One senior industry executive said: "Industry believes there should 
have been something that recognised the defence market is 
structurally different from other markets in terms of research and 
development. When governments invest in R&D they do so to meet a need 
of their own armed forces."

But proponents of the directive argue it is a matter of degree and 
will not affect all parts of the industry. Developing key 
capabilities, such as fighter aircraft, could still be covered by the 
domestic preference rule.

Charlie McCreevy, EU internal market commissioner, conceded to MEPs 
on Tuesday that the text was a "compromise", but claimed it would 
"make a difference and contribute to a real European defence 
market".  [He's Irish and Ireland opts out of EU defebce arrangements 
- cs]

Once the directive is adopted, governments will have 18 months to 
convert it into national law, and an-other 18 months to apply it.