# EUR-Lex - 51997IP0076(01) - EN

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# 51997IP0076(01)

**Resolution on the Commission communication on the challenges facing the European defence-related industry, a contribution for action at European level (COM(96)0010 C4- 0093/96) **

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Official Journal C 167 , 02/06/1997 P. 0137 *

A4-0076/97

Resolution on the Commission communication on the challenges facing the European defence-related industry, a contribution for action at European level (COM(96)0010 - C4-0093/96)

The European Parliament,

- having regard to the Commission communication, COM(96)0010 - C4-0093/96,

- having regard to its resolutions of:

. 11 April 1984 on shared European interest, risks and requirements in the security field ((OJ C 127, 14.5.1984, p. 70.)),

. 13 July 1990 on disarmament, the conversion of defence industries and arms exports ((OJ C 231, 17.9.1990, p. 209.)),

. 17 September 1992 on the Community's role in the supervision of arms exports and the armaments industry ((OJ C 284, 2.11.1992, p. 138.)),

. 19 January 1995 on the need for European controls on the export or transfer of arms ((OJ C 43, 20.2.1995, p. 89.)),

. 18 May 1995 on progress in implementing the common foreign and security policy (November 1993 - December 1994) ((OJ C 151, 19.6.1995, p. 223.)),

. 18 January 1996 on Saudi Arabia, in particular paragraph 6 thereof ((OJ C 32 , 5.2.1996, p. 98.)),

. 13 March 1996 embodying (i) Parliament's opinion on the convening of the Intergovernmental Conference, and (ii) an evaluation of the work of the Reflection Group and definition of the political priorities of the European Parliament with a view to the Intergovernmental Conference ((OJ C 96, 1.4.1996, p. 77.)),

. 18 July 1996 on progress in implementing the common foreign and security policy (January-December 1995) ((OJ C 261, 9.9.1996, p. 154.)),

- having regard to the Declaration (No 30) on Western European Union annexed to the Treaty on European Union which provides for 'enhanced cooperation in the field of armaments with the aim of creating a European armaments agency', as well as to Article 223 of the EC Treaty,

- having regard to the work already undertaken by the Western European Armaments Groups (WEAG) and to the pioneering role played by the Franco- German armaments cooperation structure,

- having regard to the report of the Committee on Foreign Affairs, Security and Defence Policy and the opinions of the Committee on Economic and Monetary Affairs and Industrial Policy, the Committee on Research, Technological Development and Energy, the Committee on External Economic Relations and the Committee on Institutional Affairs (A4-0076/97),

A. whereas, since the end of the Cold War, the reduction in military expenditure in most of the major industrialized nations (known as the 'peace dividend') - which is to be welcomed - has resulted in a cutback in orders for military equipment and exacerbated the economic and social crisis in the defence-related industries sector,

B. deeply convinced that the development and strengthening of the European defence-related industries is not incompatible with fresh initiatives in connection with disarmament,

C. whereas the consequence of this situation has been that competition between world defence equipment manufacturers has become increasingly fierce, with manufacturers trying to outbid each other, both within and outside the Union,

D. whereas this situation could lead to the disappearance of industries which are vital for the economic, political and military security of the Member States of the European Union,

E. whereas, when like is compared with like, European defence companies have shown themselves to be fully competitive with US companies,

F. noting, however, that the competitivity of the European defence industry as a whole is being undermined by its highly fragmented nature, with each Member State having its own procurement requirements and procedures resulting in wasteful and expensive duplication,

G. noting that US companies, on the other hand, have benefited from operating in a much more favourable environment - a large single market, unified procurement, a 'Buy American' policy and large-scale government support for R& D etc.; noting also that US companies have been able to consolidate and merge in order to be better able to respond to the challenges of a more competitive market; further noting that American manufacturers have benefited from the dominant position of the United States within the Atlantic Alliance,

H. whereas the concept of a European defence identity was accepted and recognized by all parties in the Atlantic Alliance at the meeting held in Berlin in June 1996,

I. whereas a European defence identity has three essential components:

- a political component: the EU

- a military component: the joint responsibility of NATO and the WEU

- an industrial, scientific and technological component,

J. stressing that neither the European defence identity nor the common foreign and security policy of the EU can be credible without a strong European armaments industry and an effective procurement policy,

K. stressing also that, without a strong efficient and viable European armaments industry and an effective procurement policy, EU Member States would in the long term find it difficult to fulfil their obligations under NATO and other global security arrangements,

L. whereas the development of a restrictive European armaments policy will enable European states, as a result of the ensuing standardization and more open procurement, to enjoy economies of scale, which will greatly benefit the budgets of the states concerned,

M. whereas the development of an internal armaments market between countries of the European Union, combined with gradual consolidation of the industrial basis of the defence sector, would make the armaments industry less dependent on exports,

N. whereas American companies, because of the reduction in orders from the Pentagon, are competing fiercely with European undertakings on external markets, for example in Europe, the Middle East and Asia, with the support of their government,

O. whereas, furthermore, the defence-related industries sector has a direct impact on research capacity in Europe,

P. whereas the distinction between civil and military research is becoming increasingly blurred,

1. Welcomes the Commission's communication on the challenges facing the European defence-related industry which is important because it raises this complex issue at the level of the institutions of the European Union;

2. Takes the view that the cooperation in the field of armaments undertaken to date, either in a bilateral or in a multinational framework, or within the WEU or NATO, has revealed its ineffectiveness and that a new approach must be adopted for the production of the military equipment of tomorrow so that Europe may put into the field high-quality equipment with maximum cost- effectiveness which is able to fulfil a broad range of tasks, given the uncertainty of the strategic scenario during the operational life of military equipment;

A European armaments policy and the CFSP

3. Emphasizes that a European armaments policy would be easier to pursue if there was a consensus on the major objectives of the CFSP and, therefore, on strategic options leading to the definition of operational specifications for the military equipment to be used;

4. Notes that the work carried out by the WEAG and the EUCLID unit in this area, however useful it may be, is clearly inadequate since they possess no real decision-making powers;

5. Notes, further, that inter-state collaboration established to date has led to cost overruns rather than to real savings, since it is most frequently the outcome of a compromise between the divergent operational requirements expressed by the various General Staffs and based in most instances on the concept of a 'juste retour' (duplication or triplication of assembly lines, etc.), which would not result in any economies of scale;

6. Takes the view that this concept of a 'juste retour' currently applied on a programme-by-programme basis, must be replaced by the concept of an overall balance assessed over several programmes and in the long term backed up by industrial specialization, since, in the last analysis, all the states will benefit from the existence of a common armaments market enabling them to acquire military equipment at the best ratio of cost to efficiency;

7. Stresses that, in the current economic situation, interoperability of equipment is no longer sufficient and that the aim must be the production, between European states, of common military equipment; this can only occur in optimum conditions if the scale of industrial units and specialization of production are increased;

8. Notes that such intra-European cooperation must not prevent cooperation with other countries such as the United States, where common requirements exist, nor even the purchase of off-the-peg military equipment in third countries, nor should it hamper possible future multinational collaboration including third countries;

9. Believes that the existence of a strong, efficient and viable European armaments industry is one means of developing and giving credibility to the European security and defence identity within the Atlantic Alliance and of equipping the CFSP with the military capability it may need to support its diplomatic activities;

10. Calls for the European Parliament to be given greater powers in the field of early warning and preventive assessment of the consequences of armaments technology if greater efforts are to be undertaken (through EUCLID) in the field of military research and development;

11. Notes that European defence-related industries require a political reference framework if they are to supply the type of military equipment they will be required to manufacture, which presupposes that the European Union defines more accurately, at the level of the CFSP, the international responsibilities it intends to assume;

12. Believes that the General Staffs of the member states of the WEU, where appropriate in cooperation with the observers and other interested states, should give a more precise definition in terms of operational specifications of the equipment required to attain the objectives of the CFSP and carry out 'Petersberg'-type missions or those under Article V of the WEU Treaty, this within the framework of the new geostrategic context;

13. Stresses that Europe does not have adequate capability as regards strategic air transport, in-flight refuelling, space and aerial information (drones) and anti-missile communications and defence systems;

14. Supports the development and construction of the future transport aircraft (FLA project), a long-haul heavy military transport aircraft developed under the aegis of the Euroflag consortium and which has been designed to undertake 'Petersberg'-type missions; notes that its construction is vital both for the European aeronautical industry and the European security and defence identity; calls on the states concerned, therefore, to find the resources required for the funding of the development of this aircraft;

15. Encourages, furthermore, the states concerned to complete the Helios 2 and Horus reconnaissance satellite projects and the MRTT Airbus project and to develop reconnaissance drones as well as an anti-missile system, where necessary in cooperation with the United States;

16. Welcomes the initiatives currently under way to equip the European states with the instruments required to find new and better forms of cooperation on armaments, such as the creation of the Western European Armaments Organization (WEAO) and the extension of the Franco-German initiative to include other countries; hopes that these various cooperation structures will not duplicate each other's efforts and that they will result in joint armaments programmes likely to meet the requirements of the largest possible number of European States;

Considerations concerning Article 223 of the EC Treaty

17. Stresses that a common armaments policy incorporating scientific and technological components is required for the creation of a European defence identity and believes that the gradual establishment of such a policy will ultimately require Article 223 to be revised in order to achieve integrated production, trading and monitoring of armaments; points out that Article 223, however, should not be deleted until a common foreign and security policy including a restrictive arms export policy has been established;

18. Calls on the Member States, until that has been done, to refrain from invoking, save in exceptional circumstances, Article 223 of the EC Treaty to prevent industrial restructuring within the single European market;

19. Emphasizes that the article may serve to protect industries which are crucial for the development of the European security and defence identity from coming under the control of third-country undertakings;

20. Urges the Member States to take the opportunity provided by the IGC to begin an in-depth consideration of Article 223 of the EC Treaty and its possible adaptation, with particular regard to the list annexed thereto, so as to encourage the creation of a European armaments industry;

Considerations concerning the industrial policy aspects of an armaments policy

21. Believes that the European Union should set itself the goal of establishing a single market for the European defence-related industries, the rules of which would be based on those for the single market for civilian goods and services but which would take into account the specific features of the defence related industries;

22. Believes that the Member States should accept the principle of the industrial and technological interdependence of the arms industry, in order to permit the consolidation and merger of European armaments companies based on rational business management criteria; however, also believes that the European Union's anti-monopoly rules should apply to the armaments industry as well as to civil industry;

23. Recognizes that the necessary integration of the European industrial structure in the defence sector will demand political acceptance of some degree of technological and industrial interdependence between the Member States;

24. Takes the view that industrial restructuring in the armaments sector would be made easier if there existed, at the level of the European Union, a legal framework enabling European undertakings to be established; calls again for the introduction of appropriate transnational legal structures, such as the European Company Statute;

25. Calls for the production of military equipment to be based on management methods in force in civil undertakings and for use to be made, where possible, of civil technologies, so as reduce the cost of new weapons or new weapons systems;

26. Notes, further, that industrial restructuring in the armaments sector, which may also affect non-military products, may be supported by existing Community instruments (ERDF, ESF, KONVER, etc.); believes that consideration should be given to how the KONVER programme might be improved to give greater support to the restructuring process and help the defence- related industries to diversify their capabilities and expertise so as to capture new markets in the civilian sector;

Considerations concerning the armaments policy and R& D

27. Notes the fragmentation of European defence research programmes despite the efforts undertaken by the EUCLID unit, the projects supported by the European Union's framework programme for research and the EUREKA Programme; takes the view that there should be better coordination between these various research programmes so as to avoid duplication of effort;

28. Notes that

- the framework programme is a civil research programme,

- civil technology is now considerably further advanced than military technology,

- the framework programme accounts for only 4% of public civil RTD expenditure in the EU,

- the Member States are at present looking at various ways of adapting the role of the military sector in public RTD;

29. Emphasizes the need to support pilot projects and demonstration projects at Community level with a view to developing European capacities in advanced technology sectors;

30. Is convinced that the fifth framework programme could, by continuing to give priority to basic research and generic technologies:

- continue to finance research into dual-purpose technologies,

- help with the conversion of industrial RTD bodies connected with defence;

31. Recommends, further, that initiatives concerning disarmament should be included in the fifth framework programme of research, particularly stressing the issues of mines, biological and chemical weapons and the use of uranium and plutonium in weapons systems;

32. Stresses, however, that there is no case for reorienting Community research towards specifically defence-related goals;

Considerations concerning external economic policy in the field of armaments

33. Emphasizes the trade imbalance in the armaments field between Europe and the United States; hopes that it will be redressed, in particular where equipment used by NATO is involved;

34. Takes the view that, in the defence sector, the Member States should apply to third countries the provisions of the common commercial policy since this would create equal conditions of competition for the European defence- related industries;

35. Takes the view that the Member States should approximate their procedures for the import and export of military equipment and adopt in this area, a common stance based on a restrictive interpretation of the eight criteria adopted by the European Council in 1991 and 1992, taking this action so as to avoid distortions of competition within the single market;

36. Takes the view, similarly, that Community legislation on the conditions of access to public contracts for non-Community companies should be the subject of a change in the specific conditions governing military equipment contracts;

Arms exports

37. Considers that arms exports pose a complex problem involving foreign policy, economic policy and political morality aspects and must be regulated by strict, effective, rational, consistent and democratic control arrangements at international, European and national level, so as to ensure transparency and control;

38. Recalls that legal instruments already exist at European Union level (joint action ((CFSP Decision 94/942/CFSP (OJ L 367, 31.12.1994, p.8).)) and Regulation (EC) No 3381/94 ((OJ L 367, 31.12.1994, p. 1.)) ), as do political instruments (criteria adopted at the European Council meetings held in Luxembourg (June 1991) and Lisbon (June 1992), which enable exports of arms and dual-use goods to be controlled;

39. Calls on the Member States, within the framework of the CFSP, to apply these legal and political instruments effectively;

40. Would like the Commission to draw up a White Paper on this subject so that a better assessment might be made of the place of the European Union in the world arms trade and hence, on that basis, to consider whether the instruments available to the European Union to control and increase the transparency of the arms trade are adequate and, on this basis, to encourage the Council to initiate a joint action on arms transfers, leading to the drafting of a legally binding code of conduct based on a restrictive interpretation of the eight European Council criteria; further believes that future arms control policy should prohibit the export of arms to third countries

- which are suspected of armed aggression,

- whose governments lack minimal democratic legitimacy,

- which do not participate in the UN arms register or regional or global arms agreements;

41. Reiterates its view that greater intra-Community trade would enable European defence companies to reduce their costs;

Institutional considerations

42. Calls on the IGC to give a decisive boost to the development of a common armaments policy by incorporating this objective in the Treaty as an element that is essential for the establishment of a common defence policy; calls further for the monitoring and harmonization of arms export policies to be included in the next Treaty;

43. Considers that the development of an effective common foreign and security policy and a common defence identity will continue to be undermined as long as Member States adopt different arms export policies; considers also that an unrestrained arms trade may well exacerbate regional tensions, which could result in Member States facing an enemy armed by their own industries; therefore calls on the IGC to pay specific attention to the development of a restrictive common arms exports policy;

44. Takes the view that greater synergy must be created, firstly, between the Community pillar and the CFSP pillar and, secondly, between the European Union and the WEU so that an industrial armaments policy may be developed that will serve the European security and defence identity;

45. Calls, to that end, for joint meetings between the European Union and the WEU to be organized at the most appropriate level and underlines in this connection the need for joint consultations between the EU and the WEU at the most appropriate level; notes that, as progress is made towards the definition of a common defence policy, the Union will be required to establish the objectives, the various stages and a timetable for the future incorporation of the WEU into the EU;

46. Calls, further, for joint meetings to be organized within the European Union between the foreign ministers and defence ministers of the Member States within the framework of the CFSP with a view to defining the strategic orientations on the basis of which a common armaments policy might be developed, as well as the line to be taken as regards arms exports;

47. Calls on the Commission and the Member States to review the way in which the CEECs might be involved in the development of a European armaments policy, being aware, in particular, that their future participation in the European security and defence structures will require a radical change in their production methods and their products if they are to meet common defence requirements;

48. Instructs its President to forward this resolution to the Commission, the Council and to the appropriate bodies of the WEU and NATO.