WRITTEN QUESTION E-1323/01

by Bart Staes (Verts/ALE) to the Commission

(3 May 2001)

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

On 15 December 2000 the Belgian Federation decided that it would no longer link its military procurement to economic compensation for businesses in Flanders and Wallonia. The notification by the Council of Ministers [i.e. the Belgian Government] for an order of night sights includes the following statement: The Council confirms that future orders will no longer contain an economic compensation clause. Previously the government had sought whenever possible to place military procurement orders - worth billions - with Belgian companies. The compensation was always veiled in an atmosphere of protectionism and unsavoury conflicts of interest because decisions were not taken in accordance with market principles. The F16 fighter and Agusta helicopter cases are two classic examples of this happening in Belgium.

The Belgian Government's decision should be emulated at European level. By putting an end to national economic compensation, the procurement of military equipment can in future be placed on a transparent footing, and one which accords with market principles, avoiding protectionism and the mingling of political and business interests. The aims of the European Rapid Reaction Force, as agreed at Helsinki, also require a new approach to military procurement.

Pursuant to Article 296(2) of the EC Treaty, the Council may, acting unanimously on a proposal from the Commission, make changes to the list, which it drew up on 15 April 1958, of the products to which the provisions of paragraph 1(b) apply. Article 296(1)(b) permits Member States to waive the general principle of competition (Title VI of the EC Treaty) in the case of military procurement. By altering the scope of Article 296(1)(b), the procurement of military equipment can in future be based on market principles. More specifically, the Commission would have to propose to the Council that all military products be deleted from the list of products to which the provisions of paragraph 1(b) apply, which the Council drew up on 15 April 1958.

Will the Commission submit to the Council a proposal pursuant to Article 296(2) of the EC Treaty for deleting all military products from the list of products to which the provisions of paragraph 1(b) apply, which the Council drew up on 15 April 1958? If not, why will the Commission not draft such a proposal, considering the need for it in the light of the ambitious objectives of the European Rapid Reaction Force as agreed at Helsinki?

Answer given by Mr Patten on behalf of the Commission

(20 June 2001)

The Commission is delighted by the Belgian authorities' decision to no longer tie military procurement to economic compensation for businesses in Flanders and Wallonia but it would remind the Honourable Member that public procurement of arms does not enjoy a derogation from market rules. Article 296(1)(b) (ex Article 223) of the EC Treaty expressly states that such a derogation is not possible unless justified by the protection of a Member State's essential security interests. Furthermore, Article 298 (ex Article 225) of the Treaty provides for referral to the Court of Justice of any abuse of this provision. Article 296 lays down that such a derogation from Community law may not adversely affect the conditions of competition for products which are not intended for specifically military purposes. It therefore does not exclude the application of Community law: any exception must be interpreted strictly and justified by the essential security interests of the Member State requesting it.

Nevertheless, the issue of military procurement is also closely linked to the conduct of the common foreign and security policy (CFSP) and defence policy, and so is a highly politically sensitive matter which makes it a special case. The Commission and the Member States drew up a text on the matter within Polarm (Working Party on a European Armaments Policy), which was approved by the Committee of Permanent Representatives (Coreper) in December 1996 and incorporated in the Commission's communication on the defence industry in December 1997(1).

This is why the Commission will not be submitting to the Council a proposal that all military products be deleted from the list of products to which the provisions of paragraph 1(b) apply, which the Council drew up on 15 April 1958. The 1958 list to which Article 296(1)(b) applies is a list of military equipment. Deleting military products from this list would mean that the list would have no raison d'être and military products would lose their special status.

The Commission's position is 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.

(1) COM(97) 583 final.