WRITTEN QUESTION E-2075/01

by Bart Staes (Verts/ALE) to the Commission

(13 July 2001)

Subject: Amendment of Article 296(1)(b) of the EC Treaty

In its answer to Question E-1323/01(1) the Commission states that it has no intention of submitting to the Council a proposal to remove all military products from the list of products to which the provisions of Article 296(1)(b) apply. In that connection, it refers to its communication of December 1997 on the defence industry(2). The Commissioner responsible, Chris Patten, states that the Commission wishes to encourage the introduction of specific instruments for the arms sector, with a view to creating the conditions required for the establishment of an internal European market in such goods, thereby rendering any moves to invoke Article 296 redundant.

This approach offers no guarantee that purchases of military material will not go hand in hand with economic compensation, the point on which Question E-1323/01 focused. Compensation payments in connection with military procurement have always been shrouded in an atmosphere of protectionism and unsavoury business practices, since the decision-making process disregards market principles. In that connection, the decision by the Belgian Federation

to do away with national compensation payments sent out an important signal. Moreover, Patten acknowledges this in the answer to Question E-1323/01: the Commission welcomes the decision by the Belgian authorities to bring an end to the link between military procurement and economic compensation payments for firms in Flanders and Wallonia.

1. Why does the Commission take the view that communication COM(1997) 583 on the defence industry offers better guarantees for transparent military procurement, consistent with market principles and free from protectionism and unsavoury business practices, than the removal of all military products from the list of products to which the provisions of Article 296(1)(b) apply?

2. How will communication COM(1997) 583 on the defence industry bring about transparent military procurement consistent with market principles and free from protectionism and unsavoury business practices?

3. In the light of the answers to questions 1 to 3, does the Commission intend, pursuant to Article 296(2) of the EC Treaty, to submit a proposal to the Council to delete all military products from the list of products to which the provisions of paragraph 1(b) of that article apply, a list adopted by the Council on 15 April 1958? If not, why will the Commission not draw up such a proposal, in view of the answers to questions 1 to 3?

(1) See p. 35.

(2) COM(1997) 583.

Joint answer to Written Questions E-2075/01 and E-2076/01 given by Mr Patten on behalf of the Commission

(4 September 2001)

Like the Honourable Member, the Commission is anxious to guarantee transparency and to enforce competition in the public procurement of arms as in other sectors; it would therefore like to add the following comments to its answer to the Honourable Member's Written Question E-1323/01.

The communication of 1997 would have enabled the goal of transparency and respect of competition in the arms sector to be achieved, had the proposals been adopted by the Member States. However, the discussions on this communication within Polarm (Working Party on a European Arms Policy) ended in failure at the end of 1999 after two years of talks, as the Member States were not ready to commit themselves to any of the Commission's proposals to create a European market for arms.

Article 296(1)(b) of the EC Treaty only derogates from the application of EC law if the security interests of the Member States are at stake. This exception to EC law must be interpreted strictly, and does not amount to a general derogation for arms contracts from EC legislation on public procurement.

However, the Commission would stress that this Article is still important for certain strategic and highly sensitive military equipment where the manufacture, purchase or sale of such equipment could in fact undermine the security of a Member State. But, if all military equipment were removed from the 1958 list to which Article 296(1)(b) applies, it would amount to emptying the provision of its meaning and to de facto deleting paragraph 1(b). Furthermore, Article 296(2) stipulates that changes to the 1958 list are made by the Council acting unanimously on a proposal from the Commission. It seems unlikely that all Member States would agree to delete Article 296(1)(b) by deleting all military equipment from the 1958 list. Such a proposal from the Commission would therefore stand little chance of success and would not be in accordance with the positions it set out in its communication of 1997 in which it recognises among other things the special nature of the sector.

The Commission is not therefore proposing that Article 296(1)(b) be deleted; instead it intends to encourage the creation of specific instruments for armaments and to create the conditions for a single European market in these products, rendering recourse to Article 296 redundant. The Commission's opposition to economic compensation for public procurement of arms reflects its belief that these practices are out of place in a competitive market economy. Such practices will only disappear with the introduction of a comprehensive European arms policy.