The
Committee consisted of the following
Members:
†
Ainsworth,
Mr. Bob
(Minister for the Armed
Forces)
†
Borrow,
Mr. David S.
(South Ribble)
(Lab)
†
Caborn,
Mr. Richard
(Sheffield, Central)
(Lab)
†
Cunningham,
Tony
(Workington)
(Lab)
†
Howarth,
Mr. Gerald
(Aldershot)
(Con)
†
Hurd,
Mr. Nick
(Ruislip-Northwood)
(Con)
†
Jones,
Mr. Kevan
(North Durham)
(Lab)
†
Liddell-Grainger,
Mr. Ian
(Bridgwater)
(Con)
Mudie,
Mr. George
(Leeds, East)
(Lab)
Rennie,
Willie
(Dunfermline and West Fife)
(LD)
†
Russell,
Bob
(Colchester)
(LD)
†
Spellar,
Mr. John
(Warley)
(Lab)
†
Taylor,
Mr. Ian
(Esher and Walton)
(Con)
Hannah Weston, Eliot Wilson,
Committee Clerks
† attended
the Committee
The following also
attended, pursuant to Standing Order No.
119(5):
Hodgson,
Mrs. Sharon
(Gateshead, East and Washington, West)
(Lab)
Cash,
Mr. William
(Stone)
(Con)
Jenkin,
Mr. Bernard
(North Essex)
(Con)
European
Committee
Monday 10
March
2008
[Frank
Cook
in the
Chair]
European Defence Equipment Market and European Defence Agency
4.30
pm
The
Chairman:
We are running on the revised procedure as
determined in the main Chamber, so a member of the European Scrutiny
Committee is to be given an opportunity to address us about the
decision to refer the relevant documents to this Committee before we
hear the ministerial
statement.
Mr.
David S. Borrow (South Ribble) (Lab): This is the first
time that I have had the honour to address such a Committee under the
new procedures. I shall keep what I have to say short as I explain to
the Committee why the European Scrutiny Committee has referred three
documents to it.
The
European Defence Agency was established as a European Union body in
2004 to support the Council and member states in
their efforts to improve the European Union’s defence
capabilities in crisis management and to sustain European defence and
security policy. The European Defence Agency has four functions: to
improve defence capabilities; to promote defence research and
development; to promote armaments co-operation and to create a
competitive European defence equipment market. The November 2007 report
by the head of the European Defence Agency is on current year activity
and the following years’ budgets. The Council’s
guidelines to the agency set the framework for its 2008 work programme.
Together, they raise wider issues that the European Scrutiny Committee
thought worthy of
debate.
It is plain
that the Government have worked hard to ensure that the agency learned
to walk by keeping it focused on areas in which it would add value and
ensuring that its budget was suitably restrained. It is equally clear
that there are still pressures from some member states for it to run
faster with bigger budgets and ambitions. Given that the French will
hold the presidency in the second half of this year and that the
traditional French approach is towards wanting the European Defence
Agency to expand and develop its influence, the European Scrutiny
Committee felt that it was important to debate such matters. There are
clear signs that the French presidency will develop the European
Defence Agency.
In
particular, France seems keen once again that the European Union should
have its own independent military planning capability, which was one of
the major bones of contention during the negotiation of the 1998 St.
Malo declaration, the final outcome of which was that the European
security and defence policy required a capability for relevant
strategic planning, but without unnecessary duplication. As the
European Defence Agency enters the next stage of its development, the
European Scrutiny Committee felt that including the report and the
guidelines for 2008
in this debate would enable the House to consider the wider framework,
and how the EDA might best
contribute.
The last
of the three documents is the Commission’s strategy for a more
competitive European defence industry. The European Scrutiny Committee
noted that the communication suffered from defects in its analysis of
the market and its context, notably in relation to research and
development. The Committee also drew attention to the absence of any
mention of NATO in the communication, even in the
context of standardisation and quality assurance. It agreed with the
Government that the communication looked at matters through a single
market lens. Indeed, it was perhaps so focused on single market issues
within the European Union that the increasingly global nature of
defence acquisition was ignored. The Government also identified that
many of the issues raised in the communication would be better
addressed by the European Defence Agency than by proposals from the
Commission.
The
European Scrutiny Committee is holding under scrutiny two such
proposals, one for a directive on defence procurement and one on
intra-EU transfers of defence equipment. It thought that the general
issues raised by the communication should be debated at this stage and
against the wider background of the respective roles of the Commission
and the EDA in relation to the present and prospective
ESDP.
I have set out
the views of the European Scrutiny Committee and, as
a member of the Defence Committee as well as the ESC, I shall hope to
take a further part in the
debate.
The
Chairman:
I call the Minister to make his opening
statement.
4.35
pm
The
Minister for the Armed Forces (Mr. Bob
Ainsworth):
It is a pleasure to appear before the
Committee under your chairmanship, Mr.
Cook.
As hon. Members
are aware, we have consistently supported the European security and
defence policy to enable the EU to play a comprehensive role in
military and civilian aspects of international crisis management and to
develop as a strategic player in its own right. I view the EU’s
ability to respond to international crises as complementary to that of
NATO. That in no way detracts from NATO being the first line of defence
for the United Kingdom. To ensure that the EU and NATO can fulfil their
respective roles, they need access to modern, deployable, sustainable
and interoperable military
capability.
To enable
all EU member states to play their part in operations, we must build a
more consistent level of capability throughout Europe. The European
Defence Agency is key to exposing issues of capability shortfall and in
assisting member states to do more. Clearly, if the EU is to have the
ability to develop the modern capabilities that are needed now and will
be needed in the future, it must be supported by a defence industry
that is optimised to meet our needs
cost-effectively.
I
believe that the Commission has a role in helping to develop a
competitive and efficient European defence industry, but I do not
support the notion that that should be done with the goal of achieving
European
autonomy. I believe that the demand and supply sides stand to gain from
a rationalised technological and industrial base for European defence
and a more open European defence equipment market, through which the UK
can benefit from greater genuine choice in the defence
marketplace.
I
hope that the Committee agrees that the Government have adopted an open
and consultative approach to the work programme of the European Defence
Agency and to the Commission communications. As set out in the
explanatory memorandum submitted to the Committee, the Government
should continue to engage proactively with the Commission on its work
to address the European defence technological and industrial base, and
the work of the EDA, to develop a work programme that enhances the
military capabilities of our European
partners.
The
Chairman:
We have until 5.30 pm for questions to the
Minister. I remind hon. Members that questions should be brief. It is
open to a Member, subject to my discretion, to ask a series of related
questions one after another. In doing so, I hope that hon. Members will
bear in mind the interests of others who may wish to pursue a sustained
line of
questioning.
In the
past, we have been compelled to tolerate the rather restrictive
practice used in the main Chamber of going from one side to the other
and, in doing so, have lost the theme of questioning. In this sitting,
I propose that themes should be followed. When a Member asks a
question, I will ask them to exhaust the questions on that theme and
will then open it to the rest of the Committee before moving on to a
new theme. I hope that that works effectively. It ought to and I see no
reason why it should
not.
Mr.
Gerald Howarth (Aldershot) (Con): I understand that these
are new
procedures.
Mr.
Howarth:
Modified procedures. I will endeavour to follow
them. The Clerk was very helpful in advising me earlier
today.
Before I ask
any questions, may I put on the record my appreciation for the work
undertaken by the European Scrutiny Committee? The hon. Member for
South Ribble introduced the proceedings by referring to why that
Committee thought it appropriate that we should review these matters.
In turn, I would like to put on record that I think that the European
Scrutiny Committee has done a huge service to the House, and to those
of us with an interest in defence matters, by teasing out some of the
issues.
I would like
to ask the Minister a number of questions—they may not be
exhaustive and perhaps I could follow on later on a similar theme.
First, on a procurement theme, the Minister will recall that in 2006
the European Defence Agency agreed on a code of conduct that was
designed to try to break down barriers and the propensity of member
states to buy defence equipment from their own industrial base. How
great a difference has that code of conduct made in the past two years?
I note particularly that as soon as the code was introduced,
the Spanish announced that they were going to absolve themselves from
the responsibility of following it. Can I also ask the
Minister—
The
Chairman:
Order. Perhaps I did not make myself clear, so I
will try again. There is an opportunity to ask questions on a related
theme, but one at a time so that everybody can follow the
theme.
Mr.
Ainsworth:
I say to the hon. Member for Aldershot that
there are problems in the area of procurement rules for the defence
sector. There are genuine issues regarding national security that are
interpreted in different ways by different member states. We try not to
go beyond those things that we consider to be absolutely essential to
our national security. However, it is clear that other member states
take a different line, and we would have a more efficient and open
European defence market were they not to do so. Therefore, we will
continue to encourage them to move in what we consider to be the
appropriate direction.
Mr.
Howarth:
I am grateful to the Minister, although that was
rather a vague answer that did not really tell us how effective or
otherwise the code of conduct has been. He said that it was interpreted
in different ways by different member states, and that leads to a
question about article 296, which exempts military equipment from the
competition rules and allows member states to exempt
themselves from putting out to open competition EU contracts for
military equipment. There is clear evidence that, if the directive is
implemented, there is a strong possibility that the European Court of
Justice will arrogate the power to determine whether, in its view, a
state is entitled to continue to seek that exemption. As far as we in
the UK are concerned, that would inevitably lead to a very serious
situation in which we were no longer subject to the interpretation of
what is our own national interest. Will the Minister respond to that
point?
Mr.
Ainsworth:
As ever, in this area the hon. Gentleman wants
two separate things. He wants increased openness from others, and now
he is worried about the potential for our own requirements not to be
met. We are convinced that we have the framework within the treaty, and
in what the Committee is scrutinising, to maintain our position on our
ability to derogate under article 296 appropriately. We will continue
to do that. The European Court of Justice could rule on that, but we
are convinced that it is an area for member state decisions, and that
we will be able to maintain that position.
Mr.
Howarth:
I am sorry, but that is a seriously
unsatisfactory answer. We cannot rely on the Minister’s
assurance that the exemption will not become subject to the European
Court of Justice’s interference. The history of our involvement
in the EU has found us progressively under the jurisdiction of the
European Court of Justice. I do not think that the Minister’s
response will satisfy those of us who are concerned that the United
Kingdom will lose the exemption. On what basis is he offering the
Committee the assurance that the ECJ will not arrogate unto itself the
power to challenge a decision by the United Kingdom
Government on what constitutes the national
interest?
Mr.
Ainsworth:
In our national security interest we
are able to derogate under article 296—that is
the purpose of the derogation. Yes, of course, the European Court of
Justice can rule on that area. However, as the provision is there for
precisely that purpose, if it is used correctly, the ECJ should not be
able to do what the hon. Gentleman
fears.
The
Chairman:
Do any other members of the Committee have a
question on that particular
aspect?
Mr.
Borrow:
Will the Minister clarify not necessarily the
technicalities of any treaty, but whether, in the negotiations that are
about to take place during the French presidency, the UK Government
will consider it to be in their interest to open up public procurement
of defence products in other countries? Given that the UK probably has
the most open defence market regarding procurement for our services, it
is a contention that other countries have far more closed defence
markets. Is it in our interest to seek, through the European Union, to
open up other markets, or are we satisfied to leave the situation as it
is?
Mr.
Ainsworth:
My hon. Friend is right that we have probably
the most open defence market in the EU. The European Commission is
already able to refer cases under article 296 to the
ECJ. However, the Commission’s challenge regards the
inappropriate use of that article. The aim is not to prevent its
correct use, but to take action against those member states that, as my
hon. Friend points out, have a far more closed market, and that are
believed to be using article 296 inappropriately to protect their own
industry, when that has nothing to do with their strategic national
defence.
Mr.
Ian Liddell-Grainger (Bridgwater) (Con): The Minister is
aware that we have a fairly problematic history of procurement from
Europe. In the first Gulf war, we could not get ammunition because the
Belgians refused to sell it to us. Since then, the situation in the
United Kingdom has worsened. We are shutting our ammunition factories;
the last one in my constituency goes in two months’
time.
The history of
procurement involving BAE Systems in Europe is that
it tries one country, but if that country is not prepared to be
supplied, or cannot be supplied, BAE goes to countries that are not in
the European Community. Will the Minister assure the Committee that we
will still be able procure where we want to; that we will not be bound or held, for example to the French, who have a centrally
controlled system, as the hon. Member for South Ribble was saying; and
that we will be able, dare I say, to make a unilateral declaration of independence and bring in emergency war stocks, and not be held to only one
country?
Mr.
Ainsworth:
The hon. Gentleman points out a genuine problem
with the documents. When I referred in my opening
statement to the Commission’s propensity to look to European
autonomy, that was precisely the point that I was trying to make. It is
in our interest to open up the market and to be able to acquire
ammunition and other defence supplies from the world market. The
European Commission needs to accept that there is a
world market and that most of the European players are also players
within that world market. Therefore, we cannot consider supply solely
from within the EU. We must have an outward-looking focus in that
regard and look at improving the market, rather than closing it
down.
Mr.
Liddell-Grainger:
The Minister knows that the biggest
ammunition factory in the world is based in Tennessee and is controlled
by BAE Systems, which is a British company. I am sure that we will be
buying much more from that area in the future. The French system is
tightly controlled. The French have made it clear that they want to be
able to sell us ammunition on a fair and open basis, but it must be in
our interests to support our indigenous company, which happens to
control the biggest ammunition factory in the world. Is it not in
our interests to make it clear, and to enshrine in
writing, that that is what we will do—I am talking about not
only this Government, but successive Governments—so that there
is no misunderstanding that we, as a nation, will not be held hostage
by organisations or countries that are less than happy with what we are
doing?
Mr.
Ainsworth:
I do not disagree with the hon. Gentleman. I
think that it is in our interests to develop European capability, but
we should not do so within some kind of closed framework that protects
the European market completely from the world market,
which already exists and meets our needs. That is precisely the
Government’s position. We want to assist in any way that we can
to develop the capability and capacity of our European partners, but
not to close our mind and doors to companies—in many cases our
own—that have capability well beyond the boundaries of the
EU.
The
Chairman:
Maintaining this theme, I call Ian
Stewart.
Mr.
Ian Taylor (Esher and Walton) (Con): I am sure that I
would prefer to be Ian Stewart, but sadly I am
not.
I
agree with what has just been said because we clearly have an
international market. It is also clear that the main defence companies
in Europe are cross-frontier companies. EADS not only crosses several
frontiers, but has just won an enormous contract for refuelling tankers
in the United States. BAE Systems, as my hon. Friend the Member for
Bridgwater said, has extensive interests in the Unites States, and
Thales is a worldwide defence company that has interests not only in
America, but extensively in this
country.
Has the
Commission indicated that it wants to use its powers
to open up defence markets to more transparency within the member
countries than has perhaps been the case, particularly in France? Does
it understand that it is not in the EU’s interests to develop an
indigenous defence market on an almost protectionist basis, simply
because the commercial interests are
global?
Mr.
Ainsworth:
I am in danger of repeating myself, but I am
not so sure that the Commission would fully accept the hon.
Gentleman’s point. In some of the documents that are before us,
the Commission tends to have approached the issue from the point of
view of
the single market and an
autonomous European defence sector, so we will make points in
subsequent negotiations on those documents to protect precisely the
capability that the hon. Gentleman talks about and to gain acceptance
that the worldwide market exists. We have already laid out, in the
defence industrial strategy, the items that we consider to be essential
to our own national security and that we will maintain capability
within Britain. However, we are accepted as having an open attitude,
compared with some of our European partners, and we will continue to
pursue that and try to persuade them to be likewise. From the
defence documents that the Commission has put forward, it is not clear
that it fully appreciates that position, so that is an issue to be
tackled.
Mr.
Taylor:
Before I lost track in the introduction to my
question, I had intended to declare a vague interest in the defence
sector, as I am a director of a company that has some defence
interests, although they are not directly relevant to this
discussion.
The
Chairman:
Thank you for that
clarification.
Bob
Russell (Colchester) (LD): In the extensive documentation
for this sitting, we are advised by the Secretary of State for Defence
that no new policy implications arise from the report, and that the
UK
“will continue to
engage positively with the EDA to ensure that it is an effective tool
in helping to improve military capability in
Europe.”
Does the
Minister share my concern that theory and practice
are not necessarily the same? European countries are signed up to NATO,
as we are, but when it comes to putting troops on the front
line—as in Afghanistan—they are somewhat reluctant to do
so. If they are not prepared to do that, what guarantees are there that
if there is a conflict that they disapprove of, they will not withhold
some of the munitions or equipment that we might need, such as
helicopters?
Mr.
Ainsworth:
It is the EDA’s job not to involve
itself in operations, but to try to develop military capability. It can
do that only with the agreement of all member states, all of which will
have their own interests to protect. However, there are areas in which
we can co-operate and we see the EDA as an important tool in that. That
will not take away all the politics of any particular engagement, and
that is why all nations will want to lay out some basic requirement
that they will keep to themselves. We do that—in terms of
industrial capability, we have done it through the defence industrial
strategy—but we do not look to use basic national security rules
to protect our industries in areas where it is not appropriate so to
do.
The
Chairman:
Maintaining the theme, I call Richard
Caborn.
Mr.
Richard Caborn (Sheffield, Central) (Lab): Many years ago,
when I was Chair of the Trade and Industry Committee, I brought it and
the Defence Committee together to look at some of these issues. One
could look at the Airbus model: we brought four members states together
to produce it, and British Aerospace played a significant role, but
that did not debar it from continuing development across the pond in
the USA. It was a great
advantage to both British industry and European industry. Is the model
we are looking at now in terms of the European Defence Agency the kind
in which we can protect the ability to purchase, but equally so marry
in industrialists from the industrial base? The greatest advantage for
UK Ltd would come out of
that.
Mr.
Ainsworth:
Rather than use the word
“protect”, I would use the word “develop”,
and that is precisely what the agency is there to do. For instance, we
and the French account for some 80 per cent. of defence
research and development across the European Union. Making sure that we
work together and look at each others’ capability will be hugely
beneficial to us both. However, to cut us off, from both the markets
and the supplies that are necessary in this area outside of the
European Union, would be a retrograde step and not something that we
would want to
do.
Mr.
Kevan Jones (North Durham) (Lab): Does my right hon.
Friend agree that the British policy on open markets in defence has led
to an expansion of the UK defence industry in terms of not just market
share, but jobs? I am thinking about the investments
of Finmeccanica in this country, and of Thales, EADS and, obviously,
BAE Systems. They have been able to have a larger footprint in not just
Europe, but internationally. Reference has been made to the tanker
contract that has just been won in the United States, and Finmeccanica
has won the presidential helicopter contract. What is the way forward?
Surely that is not necessarily regulation to try to force the defence
market to follow a certain method, but opening up the market—not
only in this country, which has happened successfully, but across
Europe.
Mr.
Ainsworth:
I agree with the hon. Gentleman.
Opening the markets but protecting only that
considered vital to our national defence is the appropriate way
forward. All the companies named by the hon. Gentleman are
international companies operating well beyond the boundaries of the
European Union, so his point is well made—this is a world
market. The Commission needs to understand that; we need to understand
that; everyone needs to understand that, if we are to get the best out
of the
situation.
Several
hon. Members
rose—
The
Chairman:
Order. I have noticed a tendency over the last
several questions to introduce argument, rather than purely posing
questions. The debate comes later, after the questions are finished. I
call Bernard Jenkin. I am sorry that it has taken us so long to get
round to you.
Mr.
Bernard Jenkin (North Essex) (Con): I put it to the
Minister that the whole conversation underlines the fact that he is
trying to have his cake and eat it. He is insisting that article 296
exempts all this from any possible incursion from the European Court of
Justice, but he is also saying how desirable it would be if it was all
properly co-ordinated from the centre and we created a European defence
industrial strategy, which is the title of the EDA’s press
release on these papers.
Mr.
Jenkin:
Can the Minister tell the Committee which European
institution will adjudicate on how article 296 is applied, if at
all?
Mr.
Ainsworth:
I am not trying to have my cake and eat it.
Article 296 is there to be used, and to be used appropriately. If it is
used inappropriately, judgments will potentially be
brought against the people or the nation doing so. As I acknowledged to
the hon. Member for Aldershot, in such circumstances, the ECJ would
make that
adjudication.
Mr.
Jenkin:
I am grateful for that response. Is the
Minister aware of what the European Scrutiny
Committee made clear? It
noted:
“even though the
Court of Justice has stated that the use of the exemption should be
limited to exceptional, clearly defined and individually justified
cases.”
Does that not
demonstrate that the European Court of Justice is
already trying to limit the scope of article 296? So, on matters such
as markets for parts that might be used in civilian as well as military
applications, or intellectual property rights that might apply to
civilian as well as military capabilities, article 296 will not be
allowed to apply. It is to those grey areas that my hon. Friend the
Member for Aldershot was trying to alert the
Committee.
Mr.
Ainsworth:
It would be impossible for me to persuade the
hon. Gentleman that any European institution was capable of doing
anything for a good reason in an appropriate way. It is just possible,
however, that the ECJ’s attempts to limit the use of article 296
are in line with our interests and our current position. We do not
derogate and use 296 inappropriately, as it is felt that many others
do. That might be the issue from which the ECJ is trying to protect us,
although I am sure that the hon. Gentleman would not accept that
because it has “European” in its
title.
Several
hon. Members
rose
—
The
Chairman:
Order. How do I say this? We are trying to
establish a slightly modified procedure, so that hon. Members, when
making an inquiry, exhaust the basis of their interrogation or inquiry
and then sit down and pass on to someone else. However, on this
occasion, let us follow the same theme, on the same aspect, with Kevan
Jones.
Mr.
Jones
:
I understand the rules, Mr. Cook,
but I also understand that the hon. Member for North Essex raised the
issue of treaty relationships in Europe, particularly around the
defence co-operation treaty on technology transfer with the United
States. Does the Minister agree that for the purpose of the treaty
under discussion, companies such as Thales and
Finnmeccanica are
European—
The
Chairman:
Order. The procedure to be followed is that
there is a statement from the European Scrutiny Committee and then the
main statement from the Minister. The question time
is meant to elicit clarification
and understanding on the ministerial statement. It is not to engage in
debate with comments that have come from another hon. Member as part of
a question. That should be part of the debate that has yet to come.
Therefore, I prefer to leave aside any reference to questions asked by
other hon. Members.
Mr.
Jones:
I am asking the Minister whether he thinks that for
the purpose of the defence technology transfer treaty with the United
States, other European companies, such as those that
I have already mentioned, with large footprints in the UK should be
considered as UK
companies?
The
Chairman:
I understand that, but the justification for the
question was based on the fact that another hon. Member in the
Committee had made a point that the hon. Gentleman had not raised. I
will permit the question on this occasion, but not
again.
Mr.
Ainsworth:
My hon. Friend the Member for North Durham
raises some important issues concerning the US-UK treaty. We need to
satisfy the United States that in any transfer of technology and
capability, we can protect appropriately that which it has been
prepared to transfer and under the terms in which it has transferred
it. If the United States transfers any technology or capability for the
specific use of the UK, we must be able to honour the restrictions that
it applies in that regard. At the same time, it would be good to be
able to increase the transferability of capability across the European
Union. We must deconflict those two situations and ensure that we can
benefit from a more simplified market while, at the same time, being
able to satisfy our partners in the United States that it can transfer
and work with us safely and securely.
Mr.
Howarth:
Following on the article 296 debate, which is
essentially what we are having here, the Minister has tried to reassure
us that he is satisfied that we can maintain national sovereignty in
that regard. May I draw to his attention what the Government have said
in respect of the risk of article 296 being applied to
extra-territorial contracts—that is
third-party contracts outside the EU to which the hon. Member for North
Durham has alluded? The Secretary of State said that
although
“the draft would
not extend the Community's external competence in relation to trade in
military goods (already theoretically covered by the Common Commercial
Policy), the Commission might become more willing to challenge Member
States’ use of Article 296 of the EC Treaty to justify bilateral
treaties in this area. Given the impact that this could have on our
ongoing efforts to ease the conduct of defence trade with non-EU
nations, the Government will pay special attention to this aspect
during the Council Working Groups.”
The European Scrutiny
Committee asked that question, which I will put to the Minister now so
that he can answer it, not just for me but for the Scrutiny Committee.
We know about the exclusion of certain contracts awarded in third
countries, but question whether the proposed directive should have any
application when a contract is awarded in a country outside the EU. We
are asking for an explanation about the degree to which
extra-territorial jurisdiction is intended by this provision. That is
critical because the United States is our key partner. I put it to
the Minister that if there is a whiff in the United States that the
European Court of Justice or the European Commission are going to
involve themselves in regulating contracts between the UK and the US,
that business will be
dead.
Mr.
Ainsworth:
As acknowledged in the paragraph that the hon.
Gentleman read out, I am not denying that there are potential
difficulties to which we will need to play close attention. I am only
trying to reassure him that I believe that we will be able to do that
and that we will not be alone in having those concerns. Ultimately,
those difficulties will be sorted out to our satisfaction. We will be
able to protect our relationship with the United States and other
external partners within the framework that is finally agreed. I am not
saying that there are not tensions in the document: the Secretary of
State’s statement exposed those and the hon. Gentleman has just
read them
out.
Mr.
Howarth:
Has the Minister had any intimation from the
United States that the fact that this debate is now out in the open in
Europe has had any effect on the decision of Congress so far not to
debate the US-UK treaty? He again tries to reassure us. I am perhaps
not yet persuaded, but let me put it this
way—
The
Chairman:
Order. Once again, we are descending into the
debate which has yet to come. In doing that, we are curtailing the
amount of time made available and allotted for questioning. The more
time Members take doing that, the less time there will be for others to
ask questions. Questions must be brief and to the
point.
Mr.
Howarth:
I am sorry, Mr. Cook. These are
extremely complex and interconnected matters, which I think that the
Minister fully understands. This is our opportunity to debate these
matters, so forgive me. Let me ask the Minister a quick question. Will
qualified majority voting apply in the negotiations that will be
undertaken to define whether the directive on intra-European trade in
defence products will be extended into our trade with the United States
specifically?
Mr.
Ainsworth:
Qualified majority voting applies in that area.
I have no evidence that there is any concern in the United States that
we will not be able to reach a satisfactory situation on these
proposals, which protect the position of the United States and its
ability to do business with us and other European members on a
satisfactory
basis.
Mr.
William Cash (Stone) (Con): I should like to ask the
Minister one or two questions that follow from one other. They will be
questions.
First—
The
Chairman:
One at a
time.
Mr.
Cash:
Indeed. Does the Minister agree that the European
Scrutiny Committee found it inexplicable that the Commission
communication contained no reference to NATO and why was
that?
Mr.
Ainsworth:
The Committee made that observation and was
right to do so. All the capability that is now being used by the
European Defence Agency builds upon knowledge that is possessed by NATO
and has been developed in NATO. So no, I am unable to say why the
Commission did not manage to mention NATO in the communication. I
should have thought that that was an error and a mistake not to do
so.
Mr.
Cash:
The Minister will not deny, I am sure, that the high
representative, Javier Solana, campaigned for seven years in Spain
against NATO. Is that
correct?
Mr.
Ainsworth:
I do not
know.
Mr.
Cash:
I can confirm that that is the case. Does not the
Minister accept that under the arrangements for the EDA, the EU high
representative is head of the agency and chairman of the steering
group—
Mr.
Ainsworth:
This is the
EDA?
Mr.
Cash:
I am talking about the European Defence Agency. In
other words, I am asking the Minister to confirm that the same Javier
Solana is the EU high representative and is also the head of the agency
and chairman of the steering board, the decision-making body composed
of the Defence Ministers of the 26 participating member states and the
European Commission. That is correct is it
not?
Mr.
Cash:
I also want to ask something that goes back to a
question that was answered earlier from the hon. Member for Colchester.
Does the Minister accept that the question of whether there is, or
could be, an interrelationship between the activities of the high
representative in the European Union’s foreign and security
policy and in its defence policy is something of great concern, because
he holds both
roles—
The
Chairman:
Order. We are doing it again, and in a slightly
more devious
manner.
The
Chairman:
The hon. Gentleman will listen to me. The
questions are being put in the form of
cross-questioning—
The
Chairman:
The hon. Gentleman will listen to me until I am
finished. The questions are being put in the manner of
cross-questioning, as though we were in a court. We are dealing with a
ministerial statement, on which the hon. Gentleman, who is not
a member of the Committee but who is allowed to speak at the
discretion of the Chair, can seek clarification. The questions that he
has been asking are in the form of a debate, and I have already ruled
that that debate must come later, otherwise it will penalise the other
hon. Members who want to ask questions. I ask the hon.
Gentleman to modify his approach, or I shall withdraw the discretion
that I am exercising.
Mr.
Cash:
I am grateful for that, Mr. Cook. May I
ask a further question? Is the Minister concerned that, because the
high representative has a dual role, in respect of the EDA and as the
vice-president for external affairs and high representative in relation
to European foreign and security policy, there is potential for
difficulties to arise in the context of his having to carry out all
those duties together, when he has so much power over operational roles
and contractual arrangements of the kind to which my hon. Friend the
Member for Aldershot has just been
referring?
Mr.
Ainsworth:
I am not at all sure whether there is such
potential, and to be honest with the hon. Gentleman I have struggled to
understand the thrust of his questioning. He seems to be of the view
that Javier Solana is an anti-NATO figure who campaigned against NATO
for seven years. He was, some time ago when I used to hear him named
fairly often, the Secretary-General of NATO, so I cannot quite see how
he is an anti-NATO figure. I do not know whether there is a conflict
between the different roles and jobs that he has currently. I shall
happily look into that, and come back to
it.
Mr.
Cash:
I am very grateful. I have one last question, if I
may. Did the Minister note the point that the European Scrutiny
Committee made about what the Government said: that the Minister, the
Government and the Secretary of State all thought that the budget for
2008 for the EDA was excessive and that the growth projections had to
be restricted? What has he been able to do about
that?
Mr.
Ainsworth:
We have tried to focus on the EDA’s
work. The EDA’s budget is not huge in the grand scheme of
things. Our contribution to it, I think, is 17 per cent., which is less
than £3 million. We have tried to ensure that it focuses on work
where it can add value and we have had a degree of success in
that.
Mr.
Jenkin:
I welcome the Minister’s disappointment
that NATO is not mentioned in the documents produced by the EDA, but
what does he propose to do about that, given that the Government
presumably never intended the EDA to duplicate NATO’s role on
weapons standardisation? Are we not now in a position where two
organisations will be involved in weapons standardisation in
Europe—the EDA and NATO? Is that duplication not precisely what
the Government said they would avoid?
Mr.
Ainsworth:
We need to get it right when we say that the
documents produced by the EDA do not mention NATO. The documents are a
communiquÃ(c) from the Commission, not the EDA. Yes, there is an
EDA statement about its work load in the past year, but there is also a
Commission document laying out the EDA’s work load in the year
to come. Those are the documents that do not refer to NATO, and they
are
not all authored by the EDA—indeed, only one
document in the bundle is authored by the EDA. The hon. Gentleman is
therefore totally wrong to say that the documents that do not mention
NATO originate from the EDA; there are two Commission documents and
there is one EDA document on its work load in the past
year.
The
Chairman:
Mr. Howarth, what is your next aspect
of inquiry?
Mr.
Howarth:
May I pursue a further aspect of article 296,
which touches on what the Minister said in his opening remarks? He
mentioned the key capabilities that we have in the UK, but there is a
real question about what assurance he can give us on that issue and,
indeed, about the value that we can put on such an assurance. What
assurance can he give us that the proposed directive will not limit the
UK’s declared position in the defence industrial strategy to
identify the key capabilities that we need to maintain here? For
example, will we be threatened by the directive where we have only one
company making a particular piece of military equipment, whose
production we think it is vital to retain in the UK? Could our position
be challenged under the wider interpretation of article 296, as my hon.
Friend the Member for North Essex suggested? May I
add that industry is also very concerned that the proposal will limit
the ability of British defence companies and their partners on the
continent to engage in partnering arrangements? The Ministry of Defence
has a partnering arrangement with MBDA on missiles and with
AugustaWestland on helicopters, but there are also cross-European
partnering arrangements. Will those be subject to competitive
challenges or will they be allowed to
continue?
Mr.
Ainsworth:
First, may I correct something that I
said to the hon. Member for North Essex? The three documents
are not two Commission documents and one EDA document, but a Council
document on the EDA’s forward-looking programme, a Commission
document and an EDA document.
On the extent of article 296,
that article has never given a blanket exemption and has always been
limited by a list of military equipment. The
justification that needs to be used is that an item meets the essential
interests of national security. We believe that that is precisely the
criterion to which we operate and that we do not misuse the position
under article 296. We believe that we use it to defend our ability to
produce items that are in the essential interests of our national
security. We need to do some analysis of the directive and its
potential impact on the defence industrial strategy. There is no
indication so far that the directive would hamper or impact on the
defence industrial strategy or partnering strategies. However, we need
to satisfy ourselves fully that that is
so.
Mr.
Howarth:
The Minister mentioned the list. Again, I refer
to the European Scrutiny Committee, which drew attention to the wide
delegation of powers to the Commission. It is empowered to amend not
only the list of defence related products in the annexe, but
non-essential parts of the directive. The Commission is apparently the
judge of what is essential for these purposes.
The Minister
says that of course the United Kingdom has applied article 296
appropriately. I put it to him that it is about to be taken out of his
hands. He will no longer be able to determine what is appropriate and
could be subject to challenge from the European Court of Justice. That
is the concern that he has and that the European Scrutiny Committee
has. What is the answer, particularly on the list question? Again, does
that use qualified majority
voting?
Mr.
Ainsworth:
We have the concern that Commission competence
should not be extended to inappropriate areas. The difference between
the thrust of the hon. Gentleman’s questions and our position is
that we are confident that we will be able to protect the position that
has been outlined to the
Committee.
Mr.
Howarth:
May I explore another
aspect?
The
Chairman:
Order. Other hon. Members wish to come
in.
Mr.
Liddell-Grainger:
R and D research in Europe shows that
the figure for spending on collective R and D is about 14 per cent.,
whereas that for spending by individual countries doing R and D is 86
per
cent.
Mr.
Ainsworth:
In the defence
sector?
Mr.
Liddell-Grainger:
No, internationally. The obvious problem
is that nation states are determined to maintain their own defence
capabilities. Time and again, war stocks procurement and operations
procurement have been beset by problems—for instance, the 500 lb
bomb for Harriers. We have not been able to get round those problems
because of that national and international procurement problem. I find
it slightly worrying that the Minister has full confidence in our
ability to do so when history tells us that that has not always been
the case. I am talking about not this Government, but successive
Governments. Therefore, will he give further assurances, other than his
confidence, that we will not end up in a very sticky position in 10 or
20 years’
time?
Mr.
Ainsworth:
Developing a genuine defence market involves
difficulties that do not apply in other areas. There are quite
reasonable issues of national security, but it is not in our interests
for there not to be a genuine market or to end up with only one
supplier. Therefore, we must develop openness in the European
market, but in such a way that it is accepted that there is a
world market that can be used for the purposes of
competition.
I cannot
give the hon. Gentleman assurances that we will achieve some nirvana
that we all hope for, but we must try to move the issue in the right
direction. That is the Government’s position.
We should seek more genuine openness, transferability of capability and
rising capability within the European market. However, we should not do
that by closing the door to the outside world market. That will not be
possible in any case because, as the hon. Gentleman knows, those
companies operate on a worldwide
basis.
Several
hon. Members
rose
—
The
Chairman:
Order. The hour allotted for question
time will be over in one minute, but it appears that
several hon. Members still wish to ask questions. Under the provisions
of Standing Order No. 119(7), I am extending Question Time to allow the
remaining questions to be asked, if they are brief and to the point. We
shall move on to the debate after no more than half an hour. Any
additional time given for questions will be deducted from the total
time available for the debate, so we will still finish no later than 7
pm.
Do
you wish to continue on the same theme, Mr.
Howarth?
Mr.
Howarth:
Indeed. I want to pick up on research
and development, to which my hon. Friend the Member
for Bridgwater referred. The Government have rebutted the European
Commission’s claim of duplication and waste in defence research
across Europe. In those circumstances, what does the Minister think
will be gained from pooling our often-secret research with European
partners who contribute nothing or very little? Will that not imperil
our relationship with the United
States?
Mr.
Ainsworth:
The Commission will have to evidence its
allegation. If it can, it will be well worth considering, but we doubt
that it can. There is a fair concentration of almost all the spending
on research and development in just four nations—more than 90
per cent., I think. We will have to take up those issues with the
Commission, but we do not think that it can evidence its
statement.
Mr.
Taylor:
Research and development will inevitably be
cross-border. For example, Astrium is part of a European
group—the European Aeronautic Defence and Space
Company—but it is based principally in this country. Is not
safeguarding our own research and development intellectual property and
secrecy part of the system already in collaborating across frontiers?
Is the Minister satisfied that the Commission is not trying to
interfere with that, but is trying to reinforce
it?
Mr.
Ainsworth:
We consider the EDA the vehicle by
which to encourage members to collaborate on research
and development—indeed, that constitutes a large part of its
work—but it can do that only by agreement and by understanding
what is done and what the capabilities and needs are, and therefore by
encouraging people to work together where it is in their interests to
do so. We consider the EDA the vehicle by which to do that, not the
Commission.
In further
response to the previous question, which was asked by the hon. Member
for Aldershot, there is no question of any obligation being placed on
us to share classified research with
others.
Mr.
Howarth:
So what sort of intellectual property and defence
research, if not classified, is likely to be
exchanged?
Mr.
Ainsworth:
That which is agreeable to the parties, which
is what the EDA is trying to scope.
Mr.
Howarth:
The Minister will know that the Secretary of
State, in a letter to the Scrutiny Committee on 26 November, reported
that he had supported the EDA’s 2008 work
programme
“on the basis
that the long term strategies and objectives will add value to European
capabilities”
and that
his officials will be working to ensure that the agency has made its
work programme coherent by 2009. Why does he support an organisation
the work of which he does not believe to be
coherent?
Mr.
Ainsworth:
It is early days for the EDA. It was
established in 2004 and has done some useful work. We are engaged with
a very large part of it and have every confidence that it is the
vehicle by which to bring partners together in an acceptable way, which
is why we are working with it and why we are confident that we can
steer it in the right
direction.
Mr.
Howarth:
I am sorry, but why do we need the EDA to do
that? That work is ongoing and there is already collaboration. I
alluded to that earlier—for example, MBDA, which is a
cross-frontier United Kingdom and French company. What will the EDA add
to the United Kingdom? Perhaps it will add something to other
countries, but we already have such
arrangements.
Reference
has been made to Airbus. That was a civilian project anyway, but it
fell completely outside the scope of any European agency. The contracts
are free and negotiated, and they have served us well. Why do we need
the
EDA?
Mr.
Ainsworth:
Not only private sector entities need to be
able to collaborate. Governments need to be able to do so as well, and
the EDA is the forum in which members of the European Union can come
together to do so. If the hon. Gentleman does not think that
Governments, as well as their private sector suppliers, need to
collaborate in research and development, I am surprised
indeed.
Mr.
Jones:
Does the Minister agree that unless the EDA says to
individual countries, “You will do this and you will do
that,” what is happening at the moment will carry on happening?
An example given in annexe 2 is investment in combat and strike
fighters, specifically the Eurofighter, Gripen, Rafale and joint strike
fighter. The document says that research and development investment in
the first three amounts to some €10.5 billion, which has led to
less technology and ageing aircraft compared with the JSF. Unless the
EDA has some direct say in what countries do, will it not be whistling
in the wind against the national interests of each individual
country?
Mr.
Ainsworth:
The EDA has to work with the grain of
countries’ national interests. I understand what my hon. Friend
is saying, and what frustration the matter could
cause, but the other side of the coin is that almost all our research
and development is bent towards our own national needs and basic
requirements. If we allow a European institution effectively to remove
that and spend it in other areas where other countries are doing less
than us, that will detract from our own research and development
capabilities and our fundamental national
interests, so we must be bought into the process. The EDA will not be
allowed by any EU country to extend its ability to impact on that. That
will work as much in our interests as in those of other countries, in
certain
circumstances.
Mr.
Jones:
I agree with the Minister, but will not the
EDA’s scope and effectiveness be limited? The only
time that it will ever get co-operation is when
individual member states’ national interests agree. It is a pipe
dream to hold it out, as is done in some quarters, as the answer to the
problem of how to compete with the United States and not waste money on
research and
development.
Mr.
Ainsworth:
The EDA is a small organisation with a
£20 million budget. We contribute 17 per cent. of
that—less than £3 million. The EDA is there to bring
people together to find things on which they are prepared to
co-operate, and it can do no more than that, but that in itself is
worth doing and worth supporting. We are involved in much of the
EDA’s work, which deals with identifying capability and shifting
people towards a focus on capability and away from areas of work that
have been less productive in some member
states.
The
Chairman:
Order. Is this question on the same
theme?
Mr.
Howarth:
Yes, it is. If the EDA is supposed to engage in a
debate on identifying capabilities, why is it involved in
trying to determine a framework for operating unmanned aerial vehicles
in controlled air space? The Secretary of State wrote to the European
Scrutiny
Committee:
“I
am clear that I need not only a robust justification as to why the
Agency should proceed with work in this area, but also a case that
allows me to judge whether it is a better use of defence funds to
invest in this work rather than investing in other projects, nationally
or
internationally.”
Will
the Minister explain why, therefore, in a subsequent note, the
Government say that they share the agency’s objective in the
area of UAVs and
believe
“that the EDA
could play a useful role in both legislation and
standards”?
That
is a complete contradiction. What is the Government’s
position?
Mr.
Ainsworth:
The airspace over western Europe is
extremely crowded and there is increasing use of unmanned aerial
vehicles. How far we should allow unmanned aerial vehicles to operate
inside commercial airspace is an important matter. It needs to be
thought through and developed, and the EDA is capable of doing
that.
Mr.
Howarth:
Why did the Secretary of State tell the European
Scrutiny Committee that he needed not only a robust justification as to
why the EDA should do that work, but to judge whether it was the best
use of defence funds, rather than investing the money in other national
and international projects? It seems that the
Government are all over the shop. I put it to the
Minister that that is a matter for the national air traffic control
service, not the EDA, which has no competence in this
area.
Mr.
Ainsworth:
I shall have to
check.
Mr.
Borrow:
I return to the point made by my hon. Friend the
Member for North Durham. Is it not the case that until the EDA and the
European Commission recognise the transatlantic nature of the European
defence industry, any money invested in the agency will not realise its
best potential? Until that is sorted out, the less that is spent the
better.
Mr.
Ainsworth:
We need to persuade the Commission to have an
open mind about the market and supplies from outside the EU. I have
already said that. I think that that is what my hon. Friend is getting
at. It would be wholly useful if we persuaded the Commission to accept
such a
position.
Mr.
Howarth:
The Minister has said that he sees a role for the
EDA, but the Secretary of State has said that he does not want to see
an increase of €6 million in the budget—he is prepared to
agree to only €1 million. How far are the Government prepared to
go in sticking to their position in limiting the EDA’s
budget?
Mr.
Ainsworth:
As I have said, we have tried to focus the
EDA’s work, and I think we have had a degree of success in that.
As I have also said, the position on unmanned aerial vehicles and other
areas is that that is an appropriate field for the
EDA.
Mr.
Taylor:
Will the Minister confirm the size of the budget?
I understand that it is €20 million. The current
framework programme for EU research and development
in the civil sector is €53 billion. We are taking an awfully
long time to debate a very small
budget.
To
what extent can the Minister influence EDA discussions in areas in
which there undoubtedly needs to be European competence, because we
should not leave ourselves vulnerable to the purchasing of US
technology?
Mr.
Ainsworth:
As the hon. Gentleman says, the budget is
small. As yet, there is no agreement on an increase in spending of
€6 million. I do not have the exact figure, but the budget is
about €20 million, our contribution being €2.8 million.
In the grand scheme of things, for defence capability and procurement
that is a very small amount.
Mr.
Taylor:
May I pursue that point? I happen to think that
the defence industrial strategy has an interesting way of taking things
forward that fascinates me—how to take ideas through to applied
products. In defence and security, that is crucial. If the small budget
of the EDA is designed to do that, so much the better. Does the
Minister agree that it in no way threatens the United
States—other than providing the beginnings of ideas,
which I would welcome, that could be competitive to the United
States?
Mr.
Ainsworth:
I do not believe that the United States or NATO
feels threatened by the EDA. The United States and NATO have a keen
interest in developing European capability and that is, hugely, the
work of the EDA. I would have thought that NATO and the United States
were more than happy to see the EDA succeed in that
regard.
Mr.
Taylor:
Again, I would like Minister to clarify something.
Of course, the membership of the EU, and therefore of the EDA, does not
overlap entirely with that of NATO and some neutral countries are
involved. Will he reassure us, therefore, that there will be no attempt
to hold back developed products from the EDA, when
NATO is engaged in out-of-area missions—for example, to deploy
such
products?
Mr.
Ainsworth:
I am trying to understand the thrust of the
hon. Gentleman’s question, but I am afraid that it has defeated
me.
Mr.
Taylor:
Given that the intellectual property will have
been developed by the EDA, some of whose members are neutral, I wish to
have the Minister’s assurance that any products sponsored by the
EDA will not then be withheld when deployed by countries that are
members of NATO in out-of-area
operations.
Mr.
Ainsworth:
I am pretty sure that that is not the case. The
overwhelming majority of members of the EDA are members of NATO, and
they would try to ensure that they deconflicted such issues. However, I
shall write to the hon. Gentleman to try to satisfy him on that
point.
The
Chairman:
Mr. Howarth, would you like to move
on to your next
aspect?
Mr.
Howarth:
I shall not say that I am exhausted, because
there are many other questions I would like to raise, but I am
conscious of time and I do not wish to detain one or two colleagues on
the Government
Benches.
The
Chairman:
If there are no further
pressing questions that hon. Members want to ask, we can proceed to the
debate on the
motion.
Motion
made, and Question
proposed,
That
the Committee takes note of European Union documents No. 14937/07,
Report by the Head of the European Defence Agency on its activity in
2007, No. 15413/07, the Council’s guidelines for the European
Defence Agency’s work in 2008, and No. 16682/07 and Addenda 1-2,
Commission Communication on a Strategy for a Stronger and More
Competitive European Defence Industry; and endorses the
Government’s approach to the development of the European Defence
Agency and its view that the analysis and proposed solutions in the
Commission’s Communication need further refinement before they
could be supported.—[Mr. Bob
Ainsworth.]
5.48
pm
Mr.
Howarth:
We have had an interesting exchange, but the
Minister has invited us to rely heavily on assurances, which, I am
afraid to say, as a result of 30
years’ experience with the European Community
in its various guises, do not reassure
me.
Conservative
Members have always taken a cautious view on the objectives of the
European Commission and the EU generally in respect of defence. Our
uncompromising view is that NATO has provided for the past 60 years,
and continues to provide, the people of these islands and people on the
continent with their protection. It thus beggars belief that the
Commission documents before us make no reference whatever to
NATO.
The
United Kingdom has been a very good European partner over the past 40
years and has led co-operation on a number of military projects, not
least the Tornado and the Typhoon, which are advanced combat aircraft
in which the French refused to participate, preferring their own
solution, the Rafale. My hon. Friend the Member for Bridgwater reminded
us that, during the first Gulf war, the Belgians refused even to sell
us
ammunition.
Our
market has been wide open to overseas investors. We have led the way in
this area, which is why major US, French, German and Italian companies
have been able to acquire British companies. It is interesting to note
that, as far as I am aware, neither BAE Systems nor QinetiQ, both of
whose headquarters are in my constituency, has been able to make
similar investments in France. I remain completely unpersuaded that the
proposed directive will induce a change of heart. Furthermore, I am not
persuaded that the invocation of article 296 will result in any
material change, if the Government of France decide that invoking that
article is what they want to do.
The interpretative
communication on the application of article 296 gives me considerable
cause for concern. As we have discussed at some
length, that article specifically exempts defence equipment from the
rules on common procurement, thereby enabling member states not to put
such contracts out to competitive tender should they not wish to do so.
These new proposals are clearly designed to encourage—indeed,
potentially to enforce—the procurement of European military
equipment by member states. I say “enforce” because it is
crystal clear that the European Commission intends to use “all
the legal instruments” at its disposal, which includes the
European Court of
Justice.
My
fear is that that will open the door to allowing the ECJ to determine
what constitutes the national interest—defence—in the
making of decisions on buying military equipment. Thus, we shall have
transferred such national sovereign power to the EU Commission, which
is unacceptable to my party. It is what my hon. Friend the Member for
Woodspring (Dr. Fox), in the curtailed debate in the House on the
defence and security aspects of the Lisbon treaty, described
as
“the creeping
competence of the Commission and the EU structures...which
gradually erode our ability to be masters of our own
destiny.”
It is sad that
neither the Minister for the Armed Forces nor the Secretary of State
for Defence were able to participate in that debate on the Lisbon
treaty, which touched directly on the issues that we are discussing
today. [
Interruption.
] I know that the Minister
for the Armed Forces was in the Chamber then, but it is astonishing
that he made no contribution to the debate.
Britain does not have the same
interests as other EU countries, as recent operations
illustrate only too graphically. I think that it was the hon. Member
for Colchester who pointed out the fact that we are engaged in two
medium-scale war fighting operations to a far greater extent than any
of our EU partners. In those operations, we invariably fight alongside
the United States and interoperability with the United States must be
our key determining
factor.
If the
Minister is going to respond, he needs to tell us a little about how
the European standards are compatible with NATO standards. I am making
an assumption that they are indeed compatible, but the last thing that
we want is European standards that do not mirror exactly the NATO
standards.
If we are
interested in operating so extensively and alongside the United States,
when our European partners do not take the same view, it is inevitable
that our procurement requirements will be different from theirs. That
is why it is critical that we should maintain our ability, unchallenged
by the ECJ, to decide what is in the national interest of the United
Kingdom when it comes to defence
procurement.
We do not
believe that the Commission has a role in defence, nor do we want to
see power exercised by an individual who, as my hon. Friend the Member
for Stone pointed out, is head of the EDA, vice-president of the
European Commission and the EU’s Foreign Minister. That, of
course, is our friend Javier
Solana.
There is
concern about the EDA in military quarters. I have in front of me the
January 2008 EDA
Bulletin, in which
there is an article by General Sir Kevin O’Donoghue, Chief of
Defence Materiel, Defence Equipment and Support, who will be well known
to the Minister. General O’Donoghue makes an interesting
point:
“We look
for innovative solutions to the development of capability, remembering
that we in the UK are currently supporting two major operations. It is
inevitable that our top priority will be current operations and the
equipment needed to support them. Although our front line forces tell
me that their equipment and its support is excellent, we need to think
carefully about priorities when every pound sterling or Euro spent on
international institutions is a pound or Euro I cannot spend on
equipping and supporting deployed front line
forces.”
That is General
O’Donoghue making his position absolutely clear. His argument
makes it clear that he cannot see a particular purpose that is served
by the EDA. As my hon. Friend the Member for Woodspring said during the
debate in the
House:
“The
EDA offers the UK no tactical, strategic or technological advantage
that NATO, bilateral or multilateral agreements, or the UK defence
industrial base do not already provide.”—[Official
Report, 20 February 2008; Vol. 472, c. 417.]
We believe that we need not
more institutions or agencies, but an acceptance by member states that
they must make a far greater contribution towards
enhancing their own capabilities. We all agree with that, and I know
that the Prime Minister agrees with it, as does the Secretary of State.
However, it is significant that, despite public reprimands, those
member states that have failed to increase their military capabilities
continue not to do so. In matters of research and development, there is
no way that we in the UK should put the product of our
research—funded in many cases by the British taxpayer—at
the disposal of countries that not only make no, or very little,
contribution to defence research, but that do not buy the products that
result from it.
Another concern raised by
industry is about the extent to which it will be able
to carry on doing research and benefit from the production that flows
inevitably from that, or whether there will be a requirement on those
companies that have carried out the research to be subject to
competition, particularly from overseas. A host of issues need
addressing, but the European Commission is interested only in building
up an agency and staffing it with ever more people. As my
right hon. Friend the Member for North-East Hampshire
(Mr. Arbuthnot) said in the House during the debate on the
Lisbon
treaty:
“What I
do not understand...is why the European Union is so intent on
building up a defence role for itself when it is so reluctant to pay
for it, to build its capabilities or to deploy troops to Afghanistan,
which many EU members voted for.”—[Official
Report, 20 February 2008; Vol. 472, c. 409.]
The communication from the
Commission says that member states
must
“shoulder their
responsibilities to collectively provide the European security and
defence policy with the industrial and technological tools it
needs.”
The truth is
that this package of measures is the latest step in building the
apparatus to create a European army to implement a European foreign
policy. I suspect that the Government agree, which is why they believe
that the proposals require, in the words of the motion before us,
“refinement”. The Government accept, and have accepted in
all the evidence that they have given to the European Scrutiny
Committee, that the reservations held by the right hon. Member for East
Kilbride, Strathaven and Lesmahagow (Mr. Ingram) in 2005,
when he appeared before a similar Committee, still exist in Government
quarters. They are similar to those that were expressed about the
Lisbon treaty and faded away as the Government came under pressure. I
believe that that is what will happen
here.
All the
assurances that we have been given and all the concerns that the
Government have expressed to the European Scrutiny
Committee will eventually evaporate, as they want to be seen to be good
Europeans, which means going along with whatever emerges out of
Brussels. I believe that, as a nation, we have been good Europeans in
terms of defence, which is indicated by the products that we have
produced together with some of our European partners—without the
benefit of the
EDA.
We
believe that a clear message must be sent that defence is a sovereign
issue for nation states. The European Commission should not be
permitted, by a process of creeping competence, to arrogate that
responsibility to supranational EU institutions. This is a matter for
the UK Government and a matter for the UK Parliament, and it must
remain so.
I warn the
Minister: all the signs are there that the ECJ will interfere in these
matters, our sovereign status will be attacked as a result and the
Government will be able to do very little about it—we are giving
them the warnings now so that they can take action now. To reinforce
how strongly we feel about this, I shall invite my hon. Friends to vote
against the
motion.
6
pm
Bob
Russell:
Other than the penultimate phase of the
speech, I have considerable sympathy with and understanding of the
points made by the hon. Member for Aldershot. Whatever criticisms I may
make of the
Government, I would never accuse them of wanting a European army or a
European defence policy. I do not believe that that is the case. I
would not under any circumstances support a European defence policy or
a European army, or anything of that
sort.
As Members on
both sides of the Committee will be aware, I am very supportive of the
concept and ethos of closer collaboration with our European
allies. However, when it comes to defence matters, I somehow take a
different perspective, perhaps because I represent a garrison
town.
European
Union countries have not pulled their weight in Afghanistan, which I
recently visited, or in Iraq. Therefore, I have serious reservations.
In my constituency—hon. Members can probably tell similar
stories—there used to be two engineering companies that provided
equipment for Her Majesty’s armed forces and for armed forces
around the world. Neither exists today. Paxman Diesels, which used to
provide engines for the Royal Navy and other navies around the world,
was acquired by MAN of Germany and closed by MAN of
Germany.
Over the last
decade, I have seen one-way traffic. Our European allies—I use
that term guardedly—in NATO have not played their full part.
That is the message I brought back from
Afghanistan.
The
Government say that no new policy implications arise from the
documents. That is fine. They say that the UK
will
“continue to engage
positively with the European Defence Agency to ensure that it is an
effective tool in helping to improve military capability in
Europe.”
It is all very
well having a military capability, but what if the vast majority of EU
countries do not exercise that
capability?
In
Afghanistan, which is a conflict that should involve all the democratic
countries of the world, Europe has been represented by the United
Kingdom, Estonia, Latvia, the Czech Republic and Holland. Of the 38
NATO countries—the vast majority of them EU members—there
is no sign of the big EU countries on the front line, yet we are being
asked to collaborate with the European countries in the EDA. I do not
see them putting their forces where they want their
equipment to
be.
I have a simple
message: if the EU countries in the EDA want to play a team game, they
must put players on the pitch. So far, things have been too one way,
and that message comes from somebody who is generally very supportive
on EU
matters.
6.4
pm
Mr.
Jenkin:
I commend the comments of the hon.
Member for Colchester, which were extremely measured
and well informed by his experience of front-line operations; he has
visited troops, particularly from Colchester, many times. I remonstrate
with him on one point, however. He says that he is not in favour of a
European army and he is not in favour a European defence policy. Why
then did he vote for the Lisbon treaty, which sets out the provisions
for
“the common security
and defence
policy”?
However, whether
that policy leads to a common defence is perhaps where the argument
lies.
We are
confronted with an extraordinarily voluminous set of documents. The
European Union has a habit of making such matters seem extremely
complex, but that complexity dulls the senses and enables what it would
call progress to be made out of reach of the understanding of ordinary
citizens, something that at one stage the Lisbon treaty was meant to
resolve, but clearly will not. The European Union is becoming ever more
complex and ever more
obscure.
I
must confess some disappointment about the exchanges that took place
during questions. Valiantly as you attempted to chair them,
Mr. Cook, and to bring some order of topics to the
questions, the issues are so complex and so obscure that it is
difficult to ask straight and pointed questions without becoming
embroiled in great detail, as colleagues from both sides of the
Committee found themselves. The complexity of the issues should not
obscure for us the underlying direction that events are taking in the
European Union and are intended to take, even if some are capable of
denying that while supporting the events, or some are genuinely
ignorant of where they are intended to
lead.
The
documents need to be seen in context. I quote from the document
provided by the Council, which contains Commission document COM (2007)
764 final. It
states:
“For
the Commission, improving the functioning of the internal market for
defence products is a priority. This Communication is therefore
accompanied by a proposal for a directive on intra-EU transfers of
defence products and for a direct directive on defence
procurement.”
After
all that the Government have been saying throughout the debates on the
Lisbon treaty about defence remaining intergovernmental, I believe that
a number of colleagues in the House and outside it will remain
absolutely astonished that the European Commission is bringing forward
draft directives on defence products, which is what we are considering
today. That underlines how the EDA—and our work today
demonstrates it—sees its role, albeit, let us agree, with a
limited budget and operating, however grandly with its rhetoric and its
sweep of the global horizon, with limited effect.
I shall give
way. I am sorry. I thought that the Minister wanted to intervene. He
was twitching. I have to be careful with the right hon. Gentleman, for
whom I have great respect. He commands loyalty and affection from those
in the armed forces for his role. I must have been getting a little
under his skin at that point. He seemed as though he had an attack of
lice. However, he seems all right now and looks very
cheerful.
I was about
to set the work of the European Defence Agency in its proper context.
The Minister agreed that ultimately article 296 will be adjudicated by
the ECJ and the draft directives demonstrate that the European
Commission is already seeking to push the boundaries of the internal
market into defence-related matters. It is extremely hard to
argue—although not impossible—that the ECJ could finish
up adjudicating on fundamental aspects of military policy, but it is
the grey areas, the border areas, the penumbra between the internal
market and defence policy where an increasing body of European
Community law will be established, rather than the intergovernmental
arrangements that the Government insist will be adhered
to.
Mr.
Howarth:
Has my hon. Friend also noted the
Minister’s acknowledgement that qualified majority voting will
apply in the debate that he and his colleagues will have with our
European partners over the question of the extent to which we can
protect our bilateral trade with, for example, the United States, where
we have sold more than £6 billion-worth of equipment over the
past five years and it has sold half that to
us?
Mr.
Jenkin:
My hon. Friend leads me directly to the next
point, which describes the context for these documents. They are
brought to us after a long period when many European defence companies
and many countries—I shall not name any in particular, because I
do not wish to cause unnecessary offence, but people
might know who we are talking about—have definitely taken a
protectionist view of their defence markets. That is not why we in the
United Kingdom avail ourselves of article 296, and I commend the
Minister for explaining how the UK regards use of article 296 as right
and proper. It is used to protect genuine national interests, genuinely
sensitive issues of intellectual property and so on; it is not used
simply to protect industry. However, if we are to be realistic about
how we develop a European defence industry, which is what the papers
seem to be about, we should be realistic about how other member states
are likely to
behave.
We have been
here before. I remember the Horizon frigate programme. That was an
Anglo-French venture. The idea was that the British and the French
should jointly develop a frigate and we would agree to stick British
and French bits on it as recognition of the joint venture. In the end,
what happened was that the British would say, “Okay, you do the
gun and we’ll do the avionics that relate to the communications,
the radar and so on,” and the French would say,
“Absolutely right, but of course with the French frigate
we’ll have to do the gun and the avionics because we’re
French.” It quickly became apparent that the French wanted to
have it both ways. There is a long history of protection in the French
defence industry—genuine protection—probably to the
detriment of their defence capability, but it is a country where even
centre-right politicians, who should naturally be in favour of free
markets, extol the virtues of protection. We all know
that.
Therefore,
I rather suspect that one motive behind the European Defence
Agency—particularly as it is not dealing with the real need, as
was mentioned, to create a genuine transatlantic pool of defence
capability and a defence industry—is a desire to create
standards and operational requirements for certain bits of kit in the
European Union that will be unable to be satisfied by equipment that is
not manufactured to a close specification, and therefore it is likely
to be of European rather than French origin. I think that that could be
detrimental to the UK. We are in an advantageous position as a leading
member of NATO in Europe, but also because of our close relationship
with the US. We can pick and choose. A former head of the Defence
Procurement Agency once described to me the nature of that choice. We
could buy the European kit—we would be involved in the research
and development, create extra jobs and finish up with a bit of kit
where we could look inside the box, know exactly how it works and be
able to modify it for our own purposes. Yet it would probably be
considerably
more expensive and not work quite as well as the American kit, because
they spend vastly more on their research and development than we do in
Europe. However, if we buy the American kit, which will be cheaper and
do exactly what it says on the outside of the box, we will not be able
to look inside the box and we will probably not have so many jobs or
intellectual property under our
ownership.
That is the
choice that every procurement Minister and Defence Secretary has to
grapple with on every piece of equipment. Other countries are involved,
such as Israel and South Africa, but that is basically the balance of
the judgment. I would not want to create a limit on the ability of a
British Minister to make that judgment. However, we are now dealing
with a new institution, and from little acorns, great oaks
grow.
Craving
your indulgence, Mr. Cook, it is worth reminding Members
what the Lisbon treaty intends the European Defence Agency to do. It is
important to see these documents in that context. Article 28D of the
Lisbon treaty, which becomes article 45 of the consolidated treaty,
states that the task of EDA shall be
to:
“(a) contribute to
identifying the Member States’ military capability objectives
and evaluating observance of the capability commitments given by the
Member States;
(b) promote
harmonisation of operational needs and adoption of effective,
compatible procurement
methods”.
That
is interfering—potentially considerably—in the defence
policies of the member
states.
Mr.
Howarth:
My hon. Friend is making an important point. In
order to determine the capabilities needed, we start from a foreign
policy baseline. That is what the Government did in the strategic
defence review. They started with the foreign policy baseline: what is
our foreign policy? That will determine what capabilities we need,
which means we go and procure those capabilities. Is this move by the
EDA and the Commission not an indication that they are looking for a
European foreign policy and that they want to build a European defence
capability that meets that European foreign
policy?
Mr.
Jenkin:
My hon. Friend may lead me further down the track
than you want me to go, Mr. Cook, but I wish to elaborate a
little further on the context of the Lisbon
treaty.
The
Lisbon treaty establishes the EDA more formally as a European
institution and makes it clear that the Council, acting by qualified
majority, adopts the decision defining the agency’s statute.
That is, we do not have a veto on how the agency is constituted. The
statute already exists and, underlining the point made by my hon.
Friend, according to the statute, the
agency
“should contribute
to the implementation of the Common Foreign and Security
Policy”,
not just
developing
“defence
capabilities in the field of crisis management, promoting and enhancing
European...cooperation”.
As
has been pointed out, those decisions, like the establishment of the
statute, are not going to be taken by unanimity. Once
we have established the treaty obligations, which may not be
enforceable by the European Court but will certainly represent
international treaty law, the European Defence Agency will be making
decisions by qualified majority voting over which we
will have no veto—although it is said that we could refer a
decision back to the Council for unanimity if necessary. That is unlike
NATO, which remains a classically intergovernmental
organisation—if the French rejoin the military structure of
NATO, they will have a complete veto over anything that NATO chooses to
do or not to do. That is a more dynamic intergovernmentalism, which is
clearly designed to force decisions to a consensus, even if no
qualified majority voting is taken. I put it to the Minister that there
will be pressure on the United Kingdom to reach that consensus for fear
of souring the atmosphere by flinging around a veto that is not quite
properly constituted in the rules in order to protect our interests.
Decisions will trickle through that over time and will limit the scope
of the United Kingdom’s defence policy.
One other aspect of the
agency’s statute, to which I will refer directly, is a decision
adopted by the Council on 12 July 2004. The document is numbered
L245/17 and paragraph 17
states:
“The
Agency, while being open to participation by all Member States, should
also provide for the possibility of specific groups of Member States
establishing ad hoc projects or
programmes”.
That
directly mirrors permanent structure co-operation that exists under the
Lisbon treaty where groups of member states can form a sub-group of
member states for particular purposes for particular
military operations. The permanent structure co-operation can only be
established according to the protocol of the Lisbon treaty. It includes
article 1(a), which states that a member state shall
“proceed more intensively to
develop its capacities through the development of its national
contributions and participation, where appropriate, in multinational
forces”.
Article 2(b)
states that member states shall
“bring their defence apparatus in
to line with each other as far as possible particularly by harmonising
the identification of their military
needs”.
It
is clear not only that we are participating in the European Defence
Agency, but that we intend to participate in the permanent structure of
co-operation. Incidentally, although the permanent structure of
co-operation votes by unanimity, it is constituted by qualified
majority voting and a member state that fails to fulfil the criteria
set out in the protocol can be removed by qualified majority voting.
Therefore, the same dynamic pressure that is put on member states to
reach consensus—instead of sticking their neck out and
objecting—exists in the permanent structure of co-operation as
exists in the European Defence
Agency.
The
development of the European defence industrial strategy needs to be
considered in that context and alongside the Commission encroaching
upon defence and bringing in the jurisdiction of the European Court of
Justice in order to force uniformity of defence policies, defence
acquisition policies, defence research and development policies, and
defence armament development policies along the European lines. As I
said earlier, one of the primary motives is to create a rival to the
United States rather than a partner. If there were any doubt about the
latter point, the Minister should ask why, despite Government
assurances about NATO being the cornerstone of our defence policy and
the fact that the treaty refers to the primacy of NATO, it has been
utterly ignored in these documents. The
reason is that the real game plan is not to build on or
complement NATO—as the Government keep
saying—but for NATO to become a second-rank player and also-ran
in the defence policy of the European Union. If the French are allowed
to join the military structure of NATO, they will be even more able to
paralyse matters than they were before the invasion of Iraq in
2003.
The
Chairman:
For the record and in response to the criticism
of the hon. Member for North Essex about my criticism of procedures
earlier today, I remind the Committee that we are required to apply
amendments to the Standing Orders that have been approved by the
House. At the same time, we had to maintain the
requirement to keep a clear division between question time and the time
allotted to it and the debate that follows. The House must have taken
its decision without taking into account the voluminous material that
we have had to consider today, as the hon. Member for North Essex
rightly said, and the intricacies of it, as the hon. Member for
Aldershot pointed out. However, we seem to be getting somewhere near to
resolution.
6.25
pm
Mr.
Jones:
I was going to say something, but having listened
to the contribution of the hon. Member for North Essex, I have lost the
will to live, so I shall leave it there.
The
Chairman:
If that is the extent of your contribution, I
call the Minister.
Mr.
Jones:
Has he got the will to
live?
6.26
pm
Mr.
Ainsworth:
I am still alive.
The UK Government are committed
to developing and strengthening an open, flexible, militarily robust
and NATO-friendly European security and defence policy. It is accepted
in the hated Lisbon treaty that NATO has primacy over our defence
needs, but there is no proposal for a European army.
The EDA, supported by the Commission, has a pivotal role to play as a
facilitator. It will help to improve member states’ defence
capabilities, and help the Community to achieve its European security
and defence policy. The hon. Member for Colchester studies these
matters, so he will know that capability is relevant. If he really
wants to get over the problem of burden sharing, which is a real issue,
he ought to support the EDA, which is a small organisation and is
trying to develop European capability. In those circumstances, burden
sharing would become a lot more realistic than it is
today.
Bob
Russell:
Does the Minister accept that the theory and
reality are separate? I acknowledge totally his comments about the
theory and how we want things to develop, but the reality is that the
vast majority of European countries are not putting their troops on the
ground. I have to look at the issue as it is and not as it ought to
be.
Mr.
Ainsworth:
I do not know how the hon. Gentleman responds
to real-world issues and problems. We tend to respond to them by
engaging—not by walking away. That is all I shall say on that.
This engagement is appropriate. The EDA is a small organisation that
seeks to help to develop interoperability and capability among European
nations. The Commission’s communication usefully highlights the
areas that need to be addressed, and the EDA should be the organisation
that leads in moving those forward. However, it should be responsible
not to the Commission, but to the Council and individual Defence
Ministers.
Finally,
there is no question of our putting our research at the disposal of
others who do nothing, as the hon. Member for Aldershot suggested. The
projects are individual, and we will decide how to get involved, where
we ought to help and where we need to defend our national interests.
The EDA gives us a forum by which to do
that.
Question
put:—
The
Committee divided: Ayes 6, Noes
4.
Division
No.
1
]
Liddell-Grainger,
Mr.
Ian
Question
accordingly agreed to.
Resolved,
That the
Committee takes note of European Union documents No. 14937/07, Report
by the Head of the European Defence Agency on its activity in 2007, No.
15413/07, the Council’s guidelines for the European Defence
Agency’s work in 2008, and No. 16682/07 and Addenda 1-2,
Commission Communication on a Strategy for a Stronger and More
Competitive European Defence Industry; and endorses the
Government’s approach to the development of the European Defence
Agency and its view that the analysis and proposed solutions in the
Commission’s Communication need further refinement before they
could be
supported.
Committee
rose at half-past Six
o’clock.
