19 European Defence Agency
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(28077)
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(b)
(28078)
15184/06
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Annual Report for 2006 by the Head of the Agency to the Council
Council Guidelines for the Agency's work in 2007
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| Legal base | — |
| Deposited in Parliament | 28 November 2006
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| Department | Defence |
| Basis of consideration | EMs of 27 November 2006
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| Previous Committee Report | None
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| Discussed in Council | 13 November 2006 General Affairs and External Relations Council
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| Committee's assessment | Politically important
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| Committee's decision | Cleared; further information requested
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Background
19.1 The Thessaloniki European Council in June 2003 tasked the
Council with taking action to create an intergovernmental agency
to develop defence capabilities for crisis management, to promote
and enhance European cooperation on armaments, to strengthen the
European Defence Industrial and Technological Base and to create
a competitive defence equipment market. It should also promote
research aimed at "leadership in strategic technologies for
future defence and security capabilities, thereby strengthening
Europe's industrial potential in this domain".[51]
19.2 In June 2004 we considered the Council Joint Action establishing
the EDA. It set out:
- how the Agency would perform its four key tasks — capabilities,
armaments, defence industrial issues, and research;
- staffing and organisational structure, including its relationship
with existing European Security and Defence Policy (ESDP) bodies;
- budgetary and financial rules;
- arrangements for the establishment of ad hoc projects and
budgets; and
- the EDA's relations with the European Commission, third states
and organisations and entities; like the Institute for Security
Studies and the EU Satellite Centre — the other two bodies
set up to support the Common Foreign and Security Policy —
the Agency would have its own legal personality, independent of
the Council Secretariat.
19.3 In his accompanying Explanatory Memorandum, the then Secretary
of State for Defence said that the Agency would play a key role
in rationalising and harmonising capability requirements under
the EU capabilities development process, linking this directly
to industrial and research efforts and thereby improving the military
effectiveness of both ESDP and NATO. A Steering Board of national
Defence Ministers would have the political authority, policy expertise
and financial means to ensure that Agency recommendations were
implemented by national governments. The Steering Board would
act under the authority of the Council, which would issue guidelines
and decisions by unanimity. The fact that the Agency Steering
Board would make most subsequent decisions by qualified majority
voting would help prevent its policy recommendations being held
hostage to national hobby-horses; however, the UK had negotiated
a reinforced "emergency brake" mechanism, which would
allow any Member State to block a recommendation detrimental to
key national interests. Projects would be identified and financed
on an opt-in or opt-out basis, preserving the right to participate
or not according to the UK national interest in each particular
case.
19.4 He added that the Government attached great importance to
the Agency working effectively with NATO, under the overall framework
of co-operation and consultation between the EU and NATO, and
also fully supported the establishment of such relations between
the Agency and third states so as to enable them to take part
in ad hoc projects and in substantial consultations. We recommended
it for debate in the European Standing Committee.
19.5 During the debate, which took place on 22 June 2004, the
then Secretary of State for Defence stated that the EDA's principal
purpose would be to improve the military capabilities of Member
States and would "not turn into a supranational body that
dictates procurement decisions" or "force the UK to
compromise the kit for our armed forces or to accept a 'fortress
Europe' defence industrial policy". He said that it incorporated
two key British proposals: the Secretary General/High Representative
should head it, because "he has the political clout to cajole
and prod Member States into making good on their commitments";
and it should be directly under the authority of Defence Ministers,
who sit on the Steering Board. While QMV was appropriate for the
Steering Board, which directs internal operations, unanimity was
required for decisions relating to its role, including its work
programme and budget, because they "affect the external activities
and the military capabilities of member states".[52]
19.6 Later in 2004, we also considered the European Commission
Green Paper on Defence Procurement, which was one of the outcomes
of its May 2003 Communication, "European Defence —
Industrial and market issues — towards an EU defence policy",
the aim of which was to improve the EU regulatory framework so
as to promote a robust, internationally competitive Defence and
Technological Industrial Base. After examining the nature of the
European defence equipment market and various earlier attempts
at introducing greater openness and competition, the Commission
floated two alternatives for the future:
- an interpretative Communication, clarifying the existing legal
framework, including the types of contract that fall within the
scope of Article 296 EC (which allows Member States to deviate
from EU procurement rules under specified national security conditions,
and which appears to be interpreted and applied differently by
individual Member States); and
- adapting the EU's acquisition rules to take into account the
specific characteristics that differentiate defence equipment
acquisition from other forms of public procurement and bringing
forward a new Directive to co-ordinate defence procurement procedures
where Article 296 EC is not applicable.
19.7 In October 2004, the then Minister for Defence Procurement
outlined the Government's preferred, third approach — a
voluntary Code of Conduct, supervised by the EDA and relying on
peer pressure against Code-breakers. Our predecessors felt that
this would be consistent with the Government's overall approach,
be quicker to agree and implement, be less of an imposition on
industry and leave the Commission with no greater involvement
than hitherto: either of the alternatives would be the opposite.
They felt that the Code approach would arguably have a better
chance in practice of succeeding than would a law-based regime,
because those who are determined to interpret Article 296 EC (and
any further rules or Directives) so as to exclude non-national
suppliers would always find ways of doing so; also, the EDA, with
a Board of 25 EU defence members, was likely to be more effective
in clarifying the existing legal framework and identifying the
types of contract that fall within the scope of Article 296 EC
than the Commission would be. The Green Paper was debated on 8
February in European Standing Committee B.[53]
19.8 At their informal meeting at Hampton Court in October 2005,
EU Heads of State and Government noted the EU's rapid expansion
in crisis management and its increasingly important role in the
world. Following these discussions, the Presidency asked the Secretary
General/High Representative, Javier Solana, to take work forward
in four specific areas and to provide initial "orientations"
for the December meeting of the European Council. His subsequent
"four short papers" covered the following areas:
— "improving
our defence capabilities by increasing levels of research spending,
finding opportunities for research collaboration, tackling capability
gaps and collaborating as partners on training;
— "ensuring
our crisis management structures can meet the new demands on them
including for responding to natural disasters;
— "increasing
CFSP funding, with a better way to finance civilian operations
rapidly; and
— "ensuring
the EU is ready to assume greater responsibility in Kosovo and
improving the co-ordination of EU action in the Balkans, especially
on organised crime". [54]
19.9 The Government agreed with the House of Lords
Select Committee on the European Union (in responding to its special
report on the EDA) that it would deposit the Agency reports to
the Council referred to in Article 4 of the Joint Action establishing
the EDA — its May report on activities during the previous
and current year and its November report on current year activity
and "draft elements" of the work programme and budgets
for the following year — and the Council's annual guidelines
to the Agency that set the framework for its work programme.
The Head of the Agency's Report
19.10 In his 27 November 2006 EM, the Secretary of
State for Defence (Mr Des Browne) says that the report highlights
the Agency's first substantial results in relation to the European
Defence and Equipment Market, the Long Term Vision for ESDP Capability
and Capacity Needs, and the preparation of the first European
Defence Research and Technology Joint Investment Programme, and
brings out some positive and negative elements before looking
to the work ahead. Noting that no new policy implications arise
from this report, the Secretary of State says that the UK "will
continue to engage positively with EDA to ensure that it is an
effective tool in helping to improve military capability in Europe".
He then considers its main components as follows:
European Defence Equipment Market
"On the European Defence Equipment Market
work, the regime surrounding the Code of Conduct on Defence Procurement
is now operational. The UK has subscribed to the Code, which came
into force on 1 July 2006, and fully supports ongoing efforts
in its implementation. We will continue to encourage those participating
Member States who have not yet subscribed to the Code to do so.[55]
"The UK believes that the Long Term Vision
is a valuable piece of work that sets out a coherent view of the
challenges we will face and the capabilities we will need. No-one
knows whether the vision will turn out to be accurate. But we
need a long term aiming point to guide the future development
of our defence capabilities. We believe that the Long Term Vision
provides a reasonable foundation upon which the EDA's medium to
long term agenda can be based. Furthermore, we strongly support
the ongoing work to establish the ESDP Capability Development
Plan.
Defence Research and Technology
"The Defence R&T Joint Investment Programme
on Force Protection was established by Ministers at the Steering
Board meeting on 13 November, as the report anticipated. While
the UK is not contributing to this programme due to the high degree
of duplication with our ongoing national programme on this subject,
we note the establishment of the Joint Investment Programme and
will follow its progress with interest. We anticipate working
with the Agency to establish appropriate subject matters for further
collaborative programmes, and will consider contributing to future
programmes where they represent value for money.
"The UK is also keen to establish Strategic
Targets, including on Defence R&T, as it is clear that current
levels of defence investment are inadequate across Europe. We
will be working with the Agency and other participating Member
States to determine a list of such targets, and expect these to
be produced at the Steering Board in May 2007.
"The Agency continues to conduct good work
in a variety of areas, and we fully support these efforts.
"While I am pleased that the EDA has achieved
an Administrative Agreement with Norway, I continue to be disappointed
that an Administrative Agreement with Turkey has not yet been
concluded. The UK will continue to press for this to happen as
soon as possible.
"The transfer of the portfolio of projects
from the Western European Armaments Organisation Research Cell
is an important achievement, ensuring duplication of effort is
minimised and providing optimum value for money.
"The UK has encouraged Member States to
use the EDA as a facilitator to help find solutions to the current
shortfalls in Air to Air (AAR) refuelling and strategic airlift
within Europe. On AAR, the UK is already at an advanced stage
with a national solution to our requirement, but the EDA is correct
in its statement that there has been little progress by other
Member States in addressing their AAR requirements. However, we
would disagree with the Agency's view that there has been no real
progress in the advancement of strategic airlift availability. The
UK has encouraged Member States to assess their requirements for
strategic airlift and to work together to acquire capability that
would be able to satisfy national requirements as well as their
commitments to international institutions; such as the EU, NATO
and UN. Member States have indicated they will meet their requirements
through a combination of national procurement, such as our own
procurement of a fifth C-17; leasing arrangements, such as the
multi-national Strategic Airlift Interim Solution (SALIS) agreement;
or by gaining access to multilateral Strategic Airlift capability,
such as the NATO Strategic Airlift Capability (NSAC), a consortium
that consists of a number of nations, including Sweden. Both NSAC
and SALIS will improve European Strategic Airlift capability and
capacity, and the success of these initiatives should be noted.
"The EDA is still in the early stages of
its development, and there remains work to be done in developing
confidence amongst participating Member States that they are receiving
the best value for money. As the Agency continues to develop,
we fully anticipate that confidence will rise and that it will
be possible to fulfil the Agency's full potential. However, we
continue to feel that modest growth of the Agency is the most
appropriate, giving the Agency the opportunity to develop a strong
foundation. We believe that modest growth will enable the Agency
to function by facilitating collaborative projects between interested
Member States.
"We strongly support the ongoing work on
the ESDP Capability Development Plan. This is at a very early
stage, but we look forward to working closely with the Agency
and the EU Military Staff on this in the coming year. We also
look forward to working with the Agency on the definition of a
European R&T Strategy and on what a strong EDTIB should contain".
The Council's guidelines for the Agency's work
in 2007
19.11 In a separate 27 November 2006 Explanatory
Memorandum, the Secretary of State says that there are no new
policy implications that arise from these guidelines, and examines
them under the following headings:
Capability Development Plan[56]
"Following on from the Long Term Vision
the Capability Development Plan will aim to identify the European
Defence Capability and Capacity Needs in the medium to long term.
The UK believes that this is a valuable piece of work in identifying
and aligning National and European long term plans that should
allow greater cooperation between participating Member States.
European Defence R&T Strategy & European
DTIB Strategy
"The council agreed that the Agency should
use the Defence Research & Technology Strategy to identify
the key European technologies and research capabilities that should
be developed or preserved to maximise the Defence Technological
Industrial Base (DTIB). We support this work where there is a
genuine technology to preserve but believe that the industrial
base should adapt to its customers' (Member States) capability
requirements.
"The UK supports the need to collaborate
where the business case to do so represents best value for money.
We remain cautious about entering into collaborative projects
for the sake of collaboration but fully support any initiatives
that facilitate effective collaboration in the future. We expect
to be working closely with the Agency on the formulation of further
Joint Investment Programmes, and will consider participating in
future programmes where they represent value for money for the
UK to participate.
"The UK strongly supports the need for the agency
to act in coordination with and mutually reinforce the work being
undertaken in OCCAR, NATO and the LOI framework. The UK would
wish to see minimal overlap between projects and initiatives being
undertaken with these organisations and the EDA and to ensure
that where any overlap exists information is shared to minimise
duplication of work.
Review of the Joint Action
"Council Joint Action 2004/551/CFSP establishing
the EDA contained a provision that it should be reviewed three
years after entry into force. We will engage constructively with
this review, aiming to ensure the Agency has the appropriate mechanisms
to meet its remit whilst recognising the rights and responsibilities
of participating Member States".
19.12 The Secretary of State adds that the 2007
budget for the Agency was agreed by the GAERC on 13 November 2006,
and that the EDA's 2008-2010 Financial Framework is expected to
be agreed by the end of 2007.
19.13 Finally, he says that the Report was noted,
and the guidelines adopted, by the GAERC on 13 November, and notes
that the Head of the Agency will next Report to the Council in
May on the Agency's activities in the current and previous year.
Conclusions
19.14 We are grateful to the Secretary of State
and his predecessors not only for these Reports but for the practice
they initiated of writing before and after each EDA biannual Ministerial
Steering Board, and more recently also to colleagues on the Defence
Select Committee, to inform us of the issues under discussion
and the outcome.
19.15 We are thus aware of the context against
which these formal documents are prepared, and therefore of the
different views over the pace at which the Agency should develop.
Our own instinct is in line with the Minister's: that modest growth
is the most appropriate basis at this stage in an Agency that
came into being only 18 months ago and in a field that would still
seem to be very crowded. Although the Secretary of State suggests
that a three-year financial framework should be agreed by the
end of 2007, to cover 2008-10, he also notes that a review of
the Agency is due to be presented by mid-2008. It seems to us,
therefore, that it would be more appropriate for such a proposed
framework to emerge from that review — which would then
be able to draw on next year's experience on top of experience
so far — rather than be produced beforehand. We should be
grateful for the Secretary of State's views on this thought.
19.16 As well as reporting them to the House because
of the widespread interest in the activities in which the European
Defence Agency is engaged, we also commend these documents to
other EU agencies, and the Commission, for their clarity and brevity.
19.17 Since the Minister sent us this Explanatory
Memorandum we understand that the Commission has produced its
Interpretative Communication, which seeks to clarify the borderline
between Article 296 and the internal market. We look forward to
scrutinising it in due course and in the meantime clear these
documents.
51 Presidency Conclusions - Thessaloniki, 19 and 20
June 2003, paragraph 65 (SN 200/03). Back
52
OR 22 June 2004, cols 3-5. Back
53
OR 8 February 2005. Back
54
The so-called "Solana orientations" are available at
http://ue.eu.int/ueDocs/cms_Data/docs/pressdata/EN/reports/87644.pdf. Back
55
According to the EDA website, 22 Member States have subscribed
to the Code of Conduct. See http://www.eda.europa.eu/index.htm.
Back
56
For full details, see the EDA 2007 Work Programme at http://www.eda.europa.eu/reference/ewp/ewp-2006-11-13.htm. Back
57
OCCAR (Organisation Conjointe de Coopération en matière
d'Armement) is a European organisation, founded in 1996 by France,
Germany, Italy and the UK, which facilitates and manages collaborative
European Armament Programmes. See http://www.occar-ea.org/ for
further information. Back
58
Letter of Intent Framework Agreement of 27 July 2000 between
France, Germany, Italy, Sweden, Spain and United Kingdom was subsequently
signed up to by Belgium. The primary purpose is to remove barriers
to industrial co-operation between the defence industries of the
signatory nations. The agreement also facilitates co-operation
between partners to identify common staff targets in the area
of defence and to identify and co-ordinate defence research and
technology projects. Back
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