11 Transfers of defence-related products
within the Community
| (29271)
16534/07
+ ADDs 1-2
COM(07) 765
| Draft Directive on simplifying terms and conditions of transfers of defence-related products within the Community
|
| Legal base | Article 95 EC; co-decision; QMV
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| Department | Business, Enterprise and Regulatory Reform
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| Basis of consideration | Minister's letters of 8 and 12 December 2008
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| Previous Committee Report | HC 16-xi (2007-08), chapter 3 (6 February 2008) and
HC 16-xv (2007-08), chapter 1 (12 March 2008)
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| To be discussed in Council | No date set
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| Committee's assessment | Legally and politically important
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| Committee's decision | Cleared
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Background
11.1 The draft Directive is one of two Directives proposed in
a Commission Communication of December 2007 entitled "A Strategy
for a stronger and more competitive European defence industry".
The Communication was debated in European Committee on 10 March
and a Directive on defence procurement which would adapt the public
procurement regime set out in Directive 2004/18/EC to the award
of contracts in the defence and security sectors was debated in
European Committee on 24 November.
11.2 The present draft Directive aims to simplify
the terms and conditions for the transfer of defence-related products
within the EU by providing for general and global licences and
minimising the use of individual licences. The Directive would
require Member States to establish systems of general licences
for transfers of defence equipment and supplies to the governments
of any Member States or to other recipients in other Member States
who are certified in accordance with common criteria set out in
the Directive.
11.3 In our assessment of the draft Directive we
shared the concern expressed by the Government that adoption of
the proposal might restrict the scope for determining national
policy on licence conditions and would lead to the risk that the
UK would find itself no longer able to rely on Article 296EC to
justify the making of bilateral agreements with third countries
(including NATO Members) in relation to the licensing of exports
of military equipment and supplies. In his letter of 29 February
2008 the then Minister of State for Energy at the Department for
Business, Enterprise and Regulatory Reform (Malcolm Wicks) informed
us that where there were essential security interests at stake,
Member States would still be able to invoke Article 296EC and
that where a Member State might properly do so now, the Directive
would not affect the position. The Minister further explained
that the danger was not so much that the Directive would change
the position on external competence but rather that it would make
the Commission more likely to challenge inappropriate use of Article
296EC.
11.4 We asked whether the subject-matter of the proposal
might not better be dealt with by the European Defence Agency
than by a proposal under the EC Treaty, but the Minister explained
that the Government believed the subject was of sufficient complexity
and technical detail to raise significant doubts as to whether
the EDA had the capability or experience to undertake such a task
and that this view was widely shared by the majority of Member
States. We also asked whether any limitation on Member States'
freedom to engage in intergovernmental cooperation was intended
by Article 4(4) (which provided that Member States might pursue
and extend existing intergovernmental cooperation "in order
to achieve the objectives" of the Directive). The Minister
replied that Article 4(4) was not specific enough in spelling
out the entitlement of Member States to pursue and further develop
intergovernmental cooperation to facilitate the restructuring
and operation of the European defence industry and that it should
not prevent some Member States from making specific agreements
that would facilitate transfers of defence-related products between
them that go beyond the Directive. The Minister added that the
Government intended to seek to strengthen the text in order to
preserve this form of cooperation among Member States.
11.5 In reply to our question as to the meaning of
the requirement in Article 4(8) to "determine the recipients
of transfer licences in a non-discriminatory way" the Minister
replied that the Government was then unable to confirm the meaning
of this provision, but that it seemed likely that it referred
to discrimination on grounds of nationality. The Minister added
that if no acceptable explanation was forthcoming, the Government
would press for the deletion of this wording. On the question
if any assessment had been made of the consequences of reproducing
the Common Military List of the European Union, which has been
adopted intergovernmentally under the EU Treaty, as an Annex to
a measure adopted under the EC Treaty, the Minister stated that
there was some concern over using this in the Directive, and that
the Government was still considering the issue. Finally, we drew
attention to the wide delegation of powers to the Commission,
which would be empowered, not only to amend the list of defence-related
products in the Annex, but also to amend "non-essential"
parts of the Directive, with the Commission — apparently
— the judge of what was essential for these purposes. The
then Minister shared our concern about the potential for an increase
in the powers of the Commission, and explained that the Government
intended to obtain either an amendment or a deletion of the relevant
provisions.
The Minister's letter of 8 December
11.6 In his letter of 8 December the Economic and
Business Minister at the Department for Business, Enterprise and
Regulatory Reform (Ian Pearson) provides further information on
the course of the negotiations, and addresses further each of
the concerns we raised in our previous report.
11.7 On the question of retaining freedom to make
bilateral agreements with third countries, the Minister states
that the Government is satisfied that it has achieved this objective
and that it has done so by securing an amendment to Article 7,
which would allow individual licensing "where it is necessary
for compliance with international obligations and commitments
of Member States". The reference to "international non-proliferation
regimes" (and which would have limited the scope for agreements
with third countries) has been deleted.
11.8 The Minister also explains that a new Article
1(3) has been added to make clear that the Directive applies subject
to Articles 30 and 296EC. The Minister explains that where essential
security interests are at stake, Member States will remain able
to invoke Article 296EC, but that the danger is that the Commission
will become more likely to challenge inappropriate use of Article
296EC. The Minister comments that the amendment "therefore
does not have any legal significance but might be of some symbolic
value to Member States".
11.9 In relation to Article 4(4)(which provided that
Member States might pursue and extend existing intergovernmental
cooperation "in order to ensure the objectives of this Directive"),
the Minister informs us that the text has been amended as follows:
"This Directive does not affect the possibility
for Member States to pursue and further develop intergovernmental
cooperations, whilst respecting the provisions of this Directive."
11.10 The Minister comments that the Government is
now satisfied that the amended text provides enough flexibility
and reassurance to Member States on intergovernmental cooperation.
The Minister notes in particular that the apparent limitation
to existing cooperation has now been deleted.
11.11 In response to our concern over the meaning
of the reference to discrimination in Article 4(8) the Minister
informs us that this reference has now been deleted.
11.12 On the use of the intergovernmental Common
Military List as an annex to an instrument adopted under the EC
Treaty, the Minister informs us that during the meetings of the
Council working group the UK highlighted the issue we raised about
the potential for "cross-pillar contamination". However,
the Minister also reports that these concerns did not receive
any support from other Member States and that the suggestion simply
to refer to the EU instrument containing the Common Military List
"was ruled out on the basis of legal advice from the Commission
Legal Services". The Minister adds that Article 13(1) (which
contained the reference to the Common Military List) has now been
amended to impose an obligation on the Commission to update the
list set out in the Annex "so that it strictly corresponds
to the Common Military List of the European Union", and that
the UK is satisfied that this is a satisfactory way of solving
the issue of defining the scope of defence-related products for
the purposes of the Directive.
11.13 On the related issue of the scope of powers
delegated to the Commission to amend "non-essential elements"
of the Directive, the Minister states that the amendment to Article
13(1) (described above) has limited the scope of the Commission's
powers and adds that the reference to amending "non-essential"
parts of the Directive has been deleted.
The Minister's letter of 12 December
11.14 In his letter of 12 December the Minister provides
further information on the negotiation of the proposal. The Minister
explains that as a result of intensive negotiations driven by
the French Presidency a first reading deal has been agreed with
the European Parliament, with a vote likely in the Council later
this month. The Minister also explains that the Government feels
able to vote in favour of the text in view of the amendments which
have been made. The Minister further reports that the reference
in Article 13(2) to amending "non-essential elements"
has now been re-instated. The Minister informs us that the Government
supported the deletion of the reference in Article 13(2), but
that it considers its re-instatement within Article 13 to be "broadly
acceptable". The Minister notes that it can be argued that
the delegated power of amendment under Article 13(2) relates only
to the Annex referred to in Article 13(1) and is not a broader
power to amend other parts of the Directive.
Conclusion
11.15 We thank the Minister for his two recent
letters. These show that the concerns we raised have been substantially
addressed.
11.16 We think that there could be some doubt
over the scope of the power delegated to the Commission under
Article 13(2) and that ideally this could have been more closely
confined to amendments to the list mentioned in Article 13(1),
but we do not consider this point to be sufficiently important
to withhold clearance of the document.
11.17 We therefore clear the document from scrutiny.
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