Select Committee on Defence Written Evidence

Memorandum from Finmeccanica UK

  1.  The US-UK Defence Trade Treaty has its roots in the initiative after the 2003 Iraq war to ensure that US and UK armed forces could share capabilities through equipment and technical transfer so as to make them more effective when operating together in combat. The Finmeccanica UK Group of companies is an important part of the domestic defence manufacturing community that provides the UK's armed forces with their combat capability. This is reflected by all Finmeccanica sites' List X accreditation. It would not be in the spirit of the Treaty, and would be irrational, to exclude from the Implementation Arrangements companies in the UK's domestic defence capability landscape simply because of third-country ownership. This is exemplified by Finmeccanica's sales in the UK of £1.7 billion exclusively in support of the UK's armed forces and those of allies. Finmeccanica could not accept, given its place in major UK equipment programmes such as Typhoon, Tornado, Merlin and Apache, that we might be treated as some special case, amounting to being labelled as a second class citizen.

  2.  Finmeccanica has also underwritten with the UK MOD Special Security Arrangements to support national security interests by guaranteeing continuity and security of supply.

  3.  From a business perspective, Finmeccanica has made significant inward investment decisions based on the principle that, because of our position in key UK domestic programmes, we would be afforded the same treatment as other companies in this community, regardless of ownership. It was on this basis that Finmeccanica has invested £1.5 billion in high technology facilities in the UK and maintains a high-skill workforce of some 9,000 or 12,000 if our interest in MBDA is included. The creation of a two-tier industrial landscape would undermine the rationale for this very significant investment and high level of activity.

  4.  For the above reasons, it is not only within the spirit of the original intent, but essential for practical, political and industrial terms that Finmeccanica's aspirations in the UK be included in the scope of the Treaty arrangements.

30 November 2007

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