Select Committee on European Union Fortieth Report


Letter from Rt Hon John Reid MP, Secretary of State for Defence, Ministry of Defence to the Chairman

  The next European Defence Agency (EDA) Steering Board meeting is due to take place on 15 May. I would therefore like to inform you of the main items I expect to be discussed at this meeting. I also enclose for your information the draft agenda and draft papers that have been circulated by the EDA (not printed). The final papers for this meeting will be issued by the Agency during the week beginning 8 May, thus I am not able to provide these to you at present.

  There is one item for agreement by the Steering Board as an administrative point, without discussion at the meeting. This is for the approval of the Code of Best Practice in the Supply Chain, which is a supplementary element of the Code of Conduct for Defence Procurement. Following positive discussions with UK Industry on the draft EDA proposal I intend to allow this to pass at the Steering Board.

  There are two particular issues of note for the defence R&T agenda item. First, the Agency has recommended that the Steering Board approves the EDA's blue print for a new vehicle for Joint investment in Defence R&T. We received the Agency's proposal rather late in the day and will need to work through some of the details before we are in a position to formally endorse this approach. I would want to be satisfied that MoD experts were content with the arrangement for this new funding mechanism before giving my approval. Instead, noting that the EDA's proposals on the Force Protection programme of work will not be available until June, I will propose that participating Member States continue to work with the EDA on both the funding mechanism and the work programme in parallel. When both have been finalised, participating Member States will be able to decide whether there is merit in participating in the Force Protection work using the new joint investment vehicle.

  The second issue concerns the data on defence R&T spending and the suggested targets for participating Member States to achieve collectively. I am firmly of the belief that Europe needs to spend more on defence R&T. The EDA recommendation is to set a collective target for defence R&T to reach 3% of total participating Member States defence spending by 2010. This would be a substantial increase on the current figure of less than 1.5%. l will therefore want to use this opportunity to discuss with fellow Ministers whether it is right to set such a challenging target.

  The EDA have also suggested setting a collective target for 20% of defence R&T money to be spent collaboratively within Europe, by 2010. I will want to discuss with fellow Ministers whether there is merit in setting such a target in this area. The UK policy will continue to be to collaborate with European and non European nations on the basis of common military requirements and access to the best scientific knowledge. I will make the point that the only way to increase defence R&T collaboration in Europe will be to firstly ensure that participating Member States have harmonised military requirements. I will also explain our reservations about setting a target that takes no account of our extensive cooperation with states outside the EU.

  On the capabilities agenda item I will reiterate that MoD will continue to engage in the various EDA work strands where appropriate. However, I will resist the proposal that the Commission should be involved in the funding of civilian airlift for ESDP operations. The Commission has no competence in ESDP and I do not believe it should not be asked jointly to fund this activity.

  The armoured fighting vehicle agenda item will be used to discuss the progress the EDA has made in this area, particularly their 5 proposed feasibility studies. MoD experts are currently considering these proposals in light of the work already taking place with respect to the UK Future Rapid Effects System programme. Before the UK commits to those studies in which we have indicated an interest we will want to ensure that the output from the studies would not duplicate work already under way in the UK, was aligned with UK needs and represented value for money.

  The EDA has also proposed that the R&T Directors Steering Board and the National Armaments Directors Steering Board be amalgamated to help make EDA activity more manageable. I will support the moves to reduce the number of Steering Boards but would wish to be assured that there will continue to be proper oversight and management whichever Steering Boards are amalgamated.

  Finally, I agreed last May to submit to Parliament the EDA's report to the Council detailing its activities during the previous and current year (article 4.2a of the Joint Action establishing the Agency). It appears that the EDA will not issue this report until some time during the week on 5 May. I will endeavour to pass this on to you before your meetings during that week so that you may have sight of it before it is noted at the Council on 15 May. However, this may not be possible, due to the short timescales involved. In this event I will enclose the report with the letter I intend to send to you reporting on the outcome of the 15 May Steering Board.

4 May 2006

Letter from the Chairman to Rt Hon Des Browne MP, Secretary of State for Defence, Foreign and Commonwealth Office

  I am writing in response to the letter from your predecessor, John Reid, dated 4 May 2006. Sub-Committee C considered the letter at its meeting on 11 May.

  We would like to make a number of points concerning the issues raised in the letter.

  Code of Best Practice in the Supply Chain—We welcome the draft Code and note that it is voluntary and complementary to any national procedures, with such procedures taking precedence. We consider that the ability of buyers to limit the number of suppliers invited to tender on the basis of optimum economy constitutes a very general opt-out which could be used by buyers to undermine the principles of the Code. Accordingly we ask to be kept informed as to the EDA's assessment of compliance with the Code by subscribing Member States.

  Joint investment in defence R&T—We consider that it is necessary to agree a financing mechanism before any work on the Force Protection Programme can be carried out. We therefore urge you to press for agreement on a blue-print at the 15 May meeting.

  Collective targets for defence R&T—We agree that Europe needs to spend more on defence R&T and believe that a target should be set in order to encourage increased spending. However, we also agree that 3% of total defence spending is a challenging target and accept that a more realistic target might need to be set at this stage. We also agree with your comments on the target of 20% of defence R&T to be spent collaboratively at the European level by 2010. It is important to take account of cooperation with states outside the European Union. However, whilst we agree that no such target should be set, we will continue to press for further collaboration on R&T between the participating Member States.

  Capabilities—Further to our previous point, it is necessary to ensure that collaboration on defence R&T, where the Member States are closely involved, is not impeded by questions of competence. The Commission has a clear role to play in civilian crisis management and collaborative research on dual-use technology would be beneficial. The letter states that you will resist the proposal that the Commission should be involved in the funding of civilian airlift for ESDP operations, arguing that the Commission has no competence in ESDP. We do not agree with this interpretation of the EDA's proposal. The EDA's proposal states that "there might also be interest in a parallel arrangement for assumed access to conventional civil air transport, for both ESDP and disaster relief purposes, jointly funded by the Commission and pMS." This does not state that the Commission would be co-funding ESDP research, rather that civil air lift is necessary for both ESDP (pMS responsibility) and disaster relief (where the Commission has competence), therefore it would be a suitable case for joint funding. We agree with the EDA's proposal.

  Feasibility studies on Armoured Fighting Vehicles (AFVs)—We agree with the approach taken by the UK Government to these studies and support the reservation given in the letter concerning the potential for duplication of work already being carried out within the UK.

  Reduction of Steering Board compositions and meetings—We agree with the proposed reductions and ask to be kept informed on the management of the Steering Boards following their amalgamation.

12 May 2006

Letter from Rt Hon Des Browne MP to the Chairman

  You will be aware that the Ministerial Steering Board for the European Defence Agency (EDA) met in Brussels on 15 May. Prior to this meeting John Reid wrote to you with the agenda, draft papers and an outline of the likely points of discussion. I was grateful for the responses I received from Michael Connarty (letter dated 8 May) and Lord Grenfell (letter dated 12 May). I am now writing to inform you of the outcome of this meeting.

  I enclose the final versions of the papers that were considered at the 15 May Steering Board (not printed). The main changes were that the items on armoured fighting vehicles and the proposals to reduce the number of Steering Boards were removed from the agenda for the 15 May meeting and so were not considered by Ministers. Similarly the proposal on assured access arrangements for civil airlift on the basis of joint funding by Commission and participating Member States was removed from the "Hampton Court Capabilities paper", and not therefore considered by Ministers.

  I also enclose a commentary that outlines the discussions that took place on 15 May (not printed) and picks up on a number of points raised by Lord Grenfell and Michael Connarty.

31 May 2006

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