Europe set to liberate military contracts

8 June 2005
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09 June 2005 | Liam O'Brien

A defence group wants Europe to open national military deals to foreign competitors under a new code of conduct.

The scheme, from the European Defence Agency (EDA), is designed to counter widespread use by European Union members of Article 296 of the Treaty of Rome to protect domestic defence companies from international competition.

It plans to unveil the voluntary code by the end of the year.

The rules, which will stipulate what can be exempted under the treaty, are to be used first for land-based defence equipment.

Article 296 was intended to permit EU states to protect some tenders from non-domestic competition if the contracts were for sensitive defence equipment.

But critics say the definition of "sensitive" is open to abuse.

Alan Sharman, director general of the UK-based Defence Manufacturers' Association, said: "The UK has the most open market in Europe, but others in the EU are protectionist and use 296 to stifle competition. The Greeks bring army fork-lift trucks under the article."

The EDA said the code is expected to take effect by mid-2006 and will be one of the organisation's first initiatives.

The agency was established in 2004 to improve defence procurement in the EU.

Signatories will have to open defence contracts to union-wide tender for all other deals.

An EDA spokeswoman said: "The code is designed to liberalise defence buying across the EU and is voluntary and non-binding."

SMjun2005

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