Documents considered by the Committee on 4 September 2013 - European Scrutiny Committee Contents


23 European Defence

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COM(13) 542

Commission Communication: Towards A More Competitive and Efficient Defence and Security Sector

Legal base
Document originated24 July 2013
Deposited in Parliament29 July 2013
DepartmentDefence
Basis of considerationEM of 22 August 2013 and Minister's letter of 2 August 2013
Previous Committee ReportNone
Discussion in CouncilDecember 2013 European Council
Committee's assessmentPolitically important
Committee's decisionNot cleared; further information requested; Opinion sought from the Defence Committee under Standing Order No. 143(11)

Background

23.1 The Commission begins this Communication with two quotations.

"The world needs a Europe that is capable of deploying military missions to help stabilise the situation in crisis areas…. We need to reinforce our Common Foreign and Security Policy and a common approach to defence matters because together we have the power, and the scale to shape the world into a fairer, rules based and human rights' abiding place."[81]

"The Council reiterates its call to retain and further develop military capabilities for sustaining and enhancing the CSDP. They underpin the EU's ability to act as a security provider, in the context of a wider comprehensive approach [and] the need for a strong and less fragmented European defence industry to sustain and enhance Europe's military capabilities and the EU's autonomous action".[82]

The Commission Communication

23.2 Against this background, the Commission Communication, accompanied by its staff working paper,[83] argues that, in a world faced with numerous complex, inter-related and unforeseeable security challenges, which do not respect national boundaries; where the US is shifting its focus to Asia; and where the traditional dividing line between internal and external security has broken down, Europe has to assume greater responsibility for its security at home and abroad. The Commission says that:

"To punch its weight, the EU needs to develop a credible CSDP. This evolution must be fully compatible with NATO and its principles."

23.3 The Commission notes the cuts in defence budgets and decline in defence R and D: but also the nearly 1.4 million jobs in Europe that depend directly or indirectly on the defence industry. Thus, the Commission says:

"The European Defence Technological and Industrial Base (EDTIB) constitutes a key element for Europe's capacity to ensure the security of its citizens and to protect its values and interests. Europe must be able to assume its responsibilities for its own security and for international peace and stability in general. This necessitates a certain degree of strategic autonomy: to be a credible and reliable partner, Europe must be able to decide and to act without depending on the capabilities of third parties. Security of supply, access to critical technologies and operational sovereignty are therefore crucial."

23.4 Against this background, the Commission proposes a number of high-level actions to improve the competitiveness of the EDTIB. It stems from the work of the Commission's Defence Task Force, which was established in November 2011, and with which the Commission says both the European Defence Agency (EDA) and the European External Action Service (EEAS) "have been fully associated". It is intended to be the Commission's contribution to the defence industry element of the December 2013 European Council discussion on defence.

23.5 The Commission says that it intends "to take action in the following strands":

  • "Further deepen the internal market for defence and security. This means first of all to ensure the full application of the two existing Directives.[84] Based on this acquis, the Commission will also tackle market distortions and contribute to improving security of supply between Member States;
  • "Strengthen the competitiveness of the EDTIB. To this end, the Commission will develop a defence industrial policy based on two key strands:

—  "Support for competitiveness — including developing 'hybrid standards' to benefit security and defence markets and examining the ways to develop a European certification system for military airworthiness.

—  "Support for SMEs — including development of a European Strategic Cluster Partnership to provide links with other clusters and support defence-related SMEs in global competition.

  • "Exploit civilian military synergies to the maximum extent possible in order to ensure the most efficient use of European tax payers' resources. In particular by:

—  "concentrating its efforts on possible cross-fertilisation between civil and military research and the dual-use potential of space;

—  "helping armed forces reduce their energy consumption and thereby contribute to the Union's 20/20/20 targets.

  • "In addition, the Commission suggests actions which aim at exploring new avenues, driving the strategic debate in Europe forward and preparing the ground for more and deeper European cooperation. In particular by:

—  "Assessing the possibility of EU-owned dual-use capabilities, which may in certain security areas complement national capabilities and become effective and cost-efficient force multipliers;

—  "Considering launching a preparatory action for CSDP-related research focusing on those areas where EU defence capabilities are most needed."

23.6 The Commission invites Heads of State and Government to discuss this Communication at the European Council in December 2013, together with the report prepared by the High Representative of the Union for Foreign Affairs and Security Policy, on the basis of the following considerations (the Commission's emphasis):

—  "Decisions on investments and capabilities for security and defence should be based on a common understanding of threats and interests. Europe therefore needs to develop, in due course, a strategic approach covering all aspects of military and non-military security. In this context, a wider political debate on the implementation of relevant provisions of the Lisbon Treaty should be held;

—  "The Common Security and Defence Policy is a necessity. To become effective, it should be underpinned by a fully-fledged Common European Capabilities and Armaments Policy as mentioned in Article 42 of the TEU;[85]

—  "To ensure coherence of efforts, CSDP must be closely coordinated with other relevant EU policies. This is particular important in order to generate and exploit synergies between the development and use of defence and civil security capabilities;

—  "For CSDP to be credible, Europe needs a strong defence industrial and technological base. To achieve this objective, it is crucial to develop a European Defence Industrial Strategy based on a common understanding of the degree of autonomy Europe wants to maintain in critical technology areas;

—  "To maintain a competitive industry capable of producing at affordable prices the capabilities we need, it is essential to strengthen the internal market for defence and security and to create conditions which enable European companies to operate freely in all Member States;

—  "Facing severe budget constraints, it is particularly important to allocate and spend financial resources efficiently. This implies inter alia to cut back operational costs, pool demand and harmonise military requirements;

—  "To show real added value of the EU framework, what is needed is to identify a joint project in the area of key defence capabilities, where EU policies could fully be mobilized."

23.7 Subject to the Council discussion, the Commission intends to create a detailed roadmap with concrete actions and timelines, and to establish specific consultative mechanisms with Member States, in conjunction with the EDA and EEAS, in order to prepare and implement this roadmap.

The Government's view

23.8 In his Explanatory Memorandum of 22 August 2013, the Minister for International Security Strategy at the Ministry of Defence (Dr Andrew Murrison) says that the Communication does not alter Government policy, and that there are "many proposals which the Government supports and encourages as they are consistent with the Government's growth agenda." These include, he says:

"the Commission taking 'specific measures to ensure that the [Defence and Security Procurement] Directive is correctly applied and fulfils its objective', which should encourage greater opening of defence markets; the use of EU structural funds to encourage less efficient industry to leave the defence market; the proposals relating to the support of defence SMEs such as; 'the Commission will adapt existing tools [including Commission research funding and financial grants] designed to support SMEs to the needs of defence-related SMEs"; and the aspiration to increase the synergies between the EU civil research programme and defence research."

23.9 However, the Minister says, some of the proposed actions in the Communication "cause concern", which he divides into the following four broad categories:

a.  "Those that could impinge on Member States' sovereignty, for instance 'the Commission intends to support a pre-commercial procurement scheme to procure prototypes…' and 'the Commission will consider the possibility to support a Preparatory Action for CSDP Research, focusing on those area where EU defence capabilities would be more needed'. While the exact scope of these proposals remains unclear, the Government has made it clear to the Commission that we would oppose any measures by the EU to develop and, of more concern, to own high-end military or dual-use capabilities such as Remotely Piloted Air Systems (RPAS), high-resolution satellite imagery or military satellite communication equipment;

b.  "Those related to the external market and exports, such as 'The Commission will establish a dialogue with stakeholders on how to support European industries in third markets…It will also explore how EU institutions could promote European Suppliers in situation where only one company from Europe is competing…'. The Government would not wish to see the Commission involved in external market matters which would constrain our ability to promote and pursue defence export opportunities. We would also question the idea of the EU supporting a 'European supplier' in an export situation — this would be virtually impossible to enact without implementing some regulation around a 'European Economic Operator' and could have a negative impact on UK companies supporting non-European Allies in export opportunities;

c.  "Those which suggest the potential for duplication of effort, including those measures where we would consider that Member States, NATO or EDA currently have the lead and therefore see that the Commission may create a role for itself in competition with, or duplicating, the role of these other, better-placed organisations. Examples would include: the Commission exploring with the EDA options to establish 'a mechanism to draft specific European standards for military applications on request from Member States', which could duplicate the NATO standardisation work; the Commission establishing 'a European certification system for military airworthiness', which could duplicate work being undertaken with the EDA; or 'the Commission has put forward a proposal for an EU space surveillance and tracking (SST) support programme in 2013. Building on this proposal, the Commission will assess how to ensure, in the long term, a high level of efficiency of the SST service', where we would rather see them draw on the existing Member State infrastructure in place;

d.  "Those which imply unnecessary regulatory interference in the defence market. While the Commission has ruled out legislation in the near term, there remains a risk that it could interfere in the defence market through promoting regional specialisation, or by the issue of new guidance on defence procurement. Similarly, its proposal to issue a green paper on controls of defence assets (mergers and/or foreign investment) risks new Commission controls."

23.10 The Minister also takes issue with the proposed action whereby "the Commission will work with the EEAS on a joint assessment of dual-use capability needs for EU security and defence policies. On the basis of this assessment, it will come up with a proposal for which capability needs, if any, could best be fulfilled by assets directly purchased, owned and operated by the Union", saying that this:

"presents a 'red line' for the UK. Not only does this impinge on the Member States' sovereignty, it also suffers from duplication of efforts already in place. Pooling & Sharing and NATO Smart Defence have both been established to enable Member States to co-operate, identify capability gaps, prioritise and work together filling these gaps and delivering a 'European Solution'. The Government does not believe that there is, or should be, a role for the EU in this area."

23.11 The Minister goes on to say that the Government has engaged proactively with the Commission's Task Force and has also "worked closely, on a bilateral basis, with our Letter of Intent (LOI)[86] partners and through the EDA, to shape Commission thinking"; and that "the European Defence industry has also lobbied strongly."

23.12 Looking ahead, the Minister says:

"The UK continues to work closely with industry, including through the ADS association in particular, in addition to engaging with Member States, to establish their views on these issues;

"This is not a proposal for legislation, therefore no impact assessment has been made. This is the first Communication on this subject and we will continue to engage with the Commission, Allies and the EDA to ensure UK interests are protected while the proposed actions and resulting road maps are developed;

"The Commission intends to discuss these proposals at the Council Meeting in December 2013; and

"In the lead up to this discussion the Government intends to work with Member States and the Commission to ensure that our areas of concern are properly addressed, and that UK interests are fully taken into account when taking forward any of these actions."

The Minister's letter of 2 August 2013

23.13 This letter, from the Minister for Europe (Mr David Lidington), is in response to one sent to him by the Committee shortly before the summer recess, asking him to provide information about the proposals that the 27-28 May Foreign Affairs Council asked to be prepared for the December European Council on: increasing the effectiveness, visibility and impact of the CSDP; enhancing the development of defence capabilities; and strengthening Europe's defence industry — matters, we said, that should be subject to scrutiny prior to the December European Council.[87]

Conclusion

23.14 The Minister's letter is relevant not only to this Commission Communication but also to the 2012 Annual Report on CFSP (which we consider elsewhere in this Report) and to the High Representative's review of the EEAS (ditto).

23.15 In the first instance, we wish to hear more from the Government:

—  first, in September, regarding Baroness Ashton's formal proposals for the December European Council discussion on defence (pace the Minister, we can see no reason why this document should be classified: on the contrary, it should be open to the widest discussion); and

—  secondly, about the discussion of these issues at the 6-7 September "informal" Foreign Affairs Council; the full FACs in October and November; and European Council President Van Rompuy's recommendations, which the Minister for Europe says are due in November.

23.16 Looking further ahead, it would seem likely that this Commission Communication (and the EEAS review) will warrant debating before the December European Council. Although some of the specific proposals might be welcome, other proposals and calls for "a strategic approach covering all aspects of military and non-military security" and for "a wider political debate on the implementation of relevant provisions of the Lisbon Treaty" are potentially more controversial. Before taking a definitive view we would welcome the Opinion of the Defence Committee on the significance of the Communication, in accordance with Standing Order No. 143 (11).

  1. In the meantime, the document remains under scrutiny.



81   European Commission President Jose Barroso's "State of the Union 2012 Address", 12 September 2012 , available at http://europa.eu/rapid/press-release_SPEECH-12-596_en.htm. Back

82   19 November 2012 Foreign Affairs Council Conclusions on Military Capability Development. See http://www.consilium.europa.eu//uedocs/cms_data/docs/pressdata/EN/foraff/133560.pdf. Back

83   SWD(13) 279. Back

84   On defence and sensitive security procurement (2009/81/EC) and on intra-EU defence transfers (2009/43/EC). Back

85   Article 42 TEU is reproduced at the first Annex to this chapter of our Report. Back

86   France, Germany, Italy, Spain and Sweden. Back

87   Which is reproduced at Annex 2 to this chapter of our Report. Back


 
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Prepared 23 September 2013