Opinion of the European Economic and Social Committee on the ‘communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions — A coherent Framework for Aerospace — a Response to the STAR 21 Report’ (COM(2003) 600 final)
Date: 2004-03-31
Institutions: European Economic and Social Committee
Subjects: EU industrial policy, arms industry, competitiveness, international competition, research and development, space policy

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Official Journal of the European Union

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Opinion of the European Economic and Social Committee on the ‘communication from the
Commission to the Council,
the European Economic and Social
Committee and the Committee of the Regions — A coherent Framework for Aerospace — a
Response to the STAR 21 Report’

the European Parliament,

(COM(2003) 600 final)

(2004/C 112/04)

On 13 October 2003, in accordance with Article 262 of the Treaty establishing the European Community,
the Commission decided to consult the European Economic and Social Committee on the above-mentioned
communication.

The Section for the Single Market, Production and Consumption, responsible for preparing the Committee's
work on the subject, adopted its opinion on 10 March 2004. The rapporteur was Mr Buffetaut.

At its 407th plenary session of 31 March and 1 April 2004 (meeting of 31 March), the European Economic
and Social Committee unanimously adopted the following opinion by 100 votes to none:

1.

Introduction

1.1
This Commission document is above all a reaction, and
in fact a rehash of the conclusions of the Aerospace Advisory
Group's Strategic Aerospace Review for the 21st Century
(STAR 21).

1.4.1.4
The sector has been affected by the uncertainty of
the European market and the complex and cumbersome nature
of military decision-making, and so European companies are
turning to the much larger and more stable US defence market,
despite the protectionist rules of the USA and without sufficient
guarantees of any technological benefits.

1.2
The Commission links this reflection to the conclusions
of the European Councils of Cologne, Lisbon, Barcelona and
Thessalonica.

It points out that the aerospace industry is a key sector
1.3
in achieving the strategic and economic goals that the Euro-
pean Union has set itself. The sector is very high-tech and
highly-skilled, and operates in both the civil and military field.

1.4

So, what is the situation of the sector in the EU?

1.4.1.5
The space sector is going through a difficult phase.
Mainly civil, it has suffered greatly from the fall in demand for
telecommunications and is now facing strong competition in
the launcher market, which is protected in the USA and is
facing the entry of new actors on the world scene. The plans of
the USA and NASA are geared to current requirements; this
provides an opportunity to bring about an upturn in Europe.

1.4.1.6
Aerospace is a dual sector, whose skills and techni-
ques can have civil and military applications. One of its weak-
nesses is the inadequacy and fragmentation of the defence
market.

The aerospace industry is a cyclical and fluctuating
1.4.1
activity. In the civil field the market depends on the purchase
programmes of airlines, which can be affected by external
events such as terrorist actions, which may seriously disturb
activity.

1.4.2 Findings of the STAR 21 report

1.4.2.1

The report stresses the importance of:

In the military field,

1.4.1.1
is determined by budget
choices and the purchasing policies of states, which are them-
selves determined by geo-strategic data.

it

1.4.1.2
Today, the manufacture of large civil aircraft under-
pinned by the competitiveness of Airbus is and will remain the
key factor in the development of the aerospace industry.

The defence sector is more uncertain. The number of
1.4.1.3
new programmes is limited. However, the European aerospace
industry remains strong and has a strong presence on the heli-
copter market.

— better access to non-EU markets and honest and correct

application of trade agreements;

— greater employee mobility in the sector;

— better coordination of research and development efforts;

— the leading role that the EU should play in regulating civil

aviation;

— better cooperation between the ESA and the EU and the

launching of the GALILEO programme.

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1.4.2.2
conditions on the defence market.

Finally, the report stresses the need to re-examine

For the future,

1.4.5.2
it calls for the introduction of an
overall European policy and for more effective coordination, so
that the European space sector does not lose its current capabil-
ities and technological excellence.

1.4.3 The Commission's approach and proposals

1.4.3.1
considers essential, sector-by-sector.

The Commission identifies

the questions that

it

1.4.4 Defence

1.4.4.1
The Commission deplores the fragmentation of the
market, which is due to the fact that defence lies at the very
heart of states' sovereignty and to the particular features of the
sector (confidentiality, security of supplies, political criteria in
purchase decisions...). It stresses that Europe spends less on
defence than the USA, and that market fragmentation makes it
impossible to get the most out of investments.

1.4.4.2
For the future, it recommends that this fragmentation
of demand be combated, since it is impossible to achieve profit-
able production levels with programmes that are specific to
only one state.

It proposes that military requirements be harmonised and feels
that the setting-up of a ‘European Armaments, Research and
Military Capabilities Agency,’ as part of a European security
and defence policy, would help create a sufficiently important
and coherent market to maintain and develop our aerospace
industry and enter into a credible dialogue with the USA.

1.4.6 Research

1.4.6.1
Aerospace research clearly needs to be better coordi-
nated. Some interesting civil initiatives have been taken (Advi-
sory Council for Aeronautical Research in Europe), but the
situation is not satisfactory as regards defence.

For the future, the Commission thinks it essential to
1.4.6.2
ensure the long-term stability of the structures for funding
research. It also wants to develop an overall plan for research
and development and plan research programmes.

1.4.7 European regulation of civil aviation

1.4.7.1
The Commission wants the European Aviation Safety
Agency to become operational as quickly as possible and trans-
atlantic negotiations to be conducted, in particular on certifica-
tions.

1.4.7.2
It wants air safety issues to be handled at European
level and the EU to play an active part in the relevant interna-
tional organisations.

1.4.7.3
face to improve the use of airspace.

It also calls for the creation of a civil-military inter-

1.4.4.3
The Commission also feels that the initiatives taken
by the defence ministers of France, Germany, Italy, Sweden,
Spain and the United Kingdom could usefully be extended to
the whole of the EU.

1.4.8 Market access

1.4.5 Space

The Commission points out that there is no Euro-
1.4.5.1
pean or multinational structure responsible for security and
defence-related space programmes, a lack which is cruelly felt
when there is a sharp and sustained downturn in the civil
commercial market. This situation is largely due to the provi-
sions of the ESA Treaty, which strictly applies the Convention
on Space prohibiting the use of space for military purposes.
The result is that, unlike the USA, Europe does not consolidate
its civil and commercial space activity with space activity in the
field of defence that is institutionally supported and therefore
not subject to commercial risks. This is all the more regrettable
since space technologies are of a dual nature, and can therefore
have both civil and military applications.

1.4.8.1
The Commission mainly considers issues related to
the commercial difficulties with the USA over defence equip-
ment, due in particular to US protective rules and export
controls.

2. General comments

STAR 21 and the Commission make a number of objec-
2.1
tive remarks that merit support. The aerospace industries
clearly belong to a hi-tech sector whose advanced skills and
technologies may have a valuable impact on other sectors. In
this respect, they have a major role to play in enabling the EU
‘to become the most competitive
to achieve the Lisbon goal:
and dynamic knowledge-based economy in the world, capable
of sustainable economic growth with more and better jobs and
greater social cohesion.’

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2.2 Market fragmentation in the defence aerospace industry
is due to the very nature of the sector and its sovereign activity
of defence, i.e. possibly war. So, it is logical that states have
wanted to ensure security of supplies and the secrecy of tech-
nologies by using national companies, often with close links to
the state. The secrecy of technologies is currently ensured by
means of various bilateral and multilateral agreements.

3. Specific comments

3.1 Defence aerospace industry

2.3
This vision clashes with the logic of an alliance and the
fact that the huge investments of the defence industries can no
longer be guaranteed a return from the national markets which
are their main support, especially at a time of budget restric-
tions. Moreover, international competition is particularly keen
from US firms, which are supported by a vast and stable
national market.

2.4
The Commission's proposals to overcome market frag-
mentation are interesting, but too much trust seems to be
placed in such structures as a European armaments agency. In
the field of defence, which by its very nature is a question of
national sovereignty, nothing is possible without a stated poli-
tical will and this can only be stated as part of a European
world policy that is clear and shared by all, which is not the
case. Moreover,
in a hi-tech activity that calls for skills and
know-how of very high level, it is advisable to make sure that
the cooperation planned does indeed generate technological
added value and does not lead to skill dilution.

The EESC notes the difference between what the Euro-
3.1.1
industry has been able to achieve with
pean civil aircraft
Airbus and the relative weakness of
the military aircraft
industry due to the fragmentary nature of the market. It feels
that this is due to the lack of an overall political plan for
Europe's defence. This situation only reinforces the dominance
of the USA, which has been able to use its defence agreements
with various countries for the benefit of its own industries,
thus making the world market almost a captive one. The aero-
space industry is a concentration of the strategic technologies
that determine future economic growth.
It therefore fits in
perfectly with the Lisbon strategy, which aims to make the EU
‘the most competitive and dynamic knowledge-based economy
in the world, capable of sustainable economic growth with
more and better jobs and greater social cohesion’. In addition,
the technological independence of European companies in the
defence-related sectors is one of the preconditions for the Em's
independence.

The EESC points out that as regards military aviation
3.1.2
(as with space activities), the USA uses various instruments or
legal concepts that in fact amount to protectionist practices. It
therefore asks the Commission, which is in charge of the Em's
commercial policy, to take action against these practices, parti-
cularly in the WTO, to restore our trade balance in this area.

2.5
The EESC would point out that a recent defence agree-
ment signed between France, Germany and the UK should lead
to operational aspects in 2005. This could open up some inter-
esting perspectives for industry, as the British, French and
German markets combined would achieve the critical mass
necessary for our military aircraft industry.

It notes

the defence agreement between France,
3.1.3
Germany and the UK which is a sign of change in the approach
to Europe's defence. While it is not desirable to have an EU
where everyone does their own thing, neither would it be advi-
sable to stand in the way of initiatives which may provide a
lead for others.

2.6
The latest developments regarding space (framework
agreement with the ESA, provisions of the draft treaty insti-
tuting a constitution for the European Union which are not at
issue in the IRC's failure) are along the lines wished by the
Commission and the EESC. The basic question is whether the
budget appropriations are sufficient for the EU and Member
States to have the means to achieve their space ambitions. This
is the main issue of the White Paper, which is a quality docu-
ment despite a glaring weakness regarding broadband telecom-
munications.

3.2 Space

3.2.1
The EESC feels that the proposals in the White Paper
more than fulfil STAR 21's recommendations. It again stresses
the major strategic importance of space activities for the EU
and asks that the Em's political approach to cooperation and
international relations be based on a realistic vision of its inter-
ests.

The Commission proposals on the European regulation
2.7
of civil aviation appear justified both at a practical level and in
terms of safety and consistency. Moreover,
this could only
strengthen our position in the transatlantic negotiations.

3.2.2
It recalls that this sector employs 30,000 highly skilled
people and that it is imperative to maintain and enrich this
formidable human potential.

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3.2.3 Owing to the IRC's failure, and pending a European
treaty giving the EU competence in space matters, it recom-
mends that
the Commission develop to the maximum the
potential of the framework agreement concluded with the ESA.

Finally,

3.2.4
it asks that the budget authorised for space
policy correspond at least to scenario B ‘political act’ in the
appendix to the White Paper.

3.3 European regulation of civil aviation

3.3.1
The EESC totally supports the call for the rapid crea-
tion of a European Aviation Safety Agency and the wish to
achieve, as soon as possible, mutual acceptance of certifications
granted by regulatory authorities on both sides of the Atlantic.

3.3.2
It also wants effective promotion of European air
safety standards, as a factor in the competitiveness of the Euro-
pean aerospace industry, and therefore the active participation
of the EU in international organisations with competence in
such matters.

4. Conclusions

4.1
The European Economic and Social Committee considers
that the Commission Communication on the STAR 21 report

Brussels, 31 March 2004.

rightly draws attention to the weaknesses of military aerospace
activity in Europe. However, it feels that the Commission prob-
ably attaches too much importance to the institutional side of
things, and that the main thing is that a real political desire for
autonomous Community defence should emerge in Europe.
Only that will enable our industries to be given a solid base.

4.2
In the field of space, the EESC notes that the White
Paper drawn up by the Commission fully answers the requests
made by STAR 21.
the Commission/ESA
It considers that
framework agreement and the political guidelines defined by
the White Paper should enable Europe's ambitions in space to
be revived.

4.3
The EESC would point out that the European aerospace
industry provides jobs for millions of Europeans and requires
highly skilled staff able to master the most advanced current
technologies. It is therefore clear that if the aim of making
Europe ‘the most competitive and dynamic knowledge-based
economy in the world’ is not to remain only an empty and
hollow formula, it is up to the Member States to take appro-
priate action by defining genuine and ambitious European poli-
cies as regards armament and space activities, coordinated and
synthesised at EU level so that our continent can regain its
rightful position in the new world order.

The President

of the European Economic and Social Committee

Roger BRIESCH