Friday, 16 January 2009

EU Law: Defence Transfers Directive

The European Parliament adopted, with amendments, the proposed Directive on simplifying terms and conditions of transfers of defence-related products within the Community on 16 December 2008 by 545 votes to 66, with 44 abstentions. The provisional text adopted is available at the web site of the European Parliament (P6_TA(2008)0603).

The vote was based on a report (A6-0410/2008) by the EP’s Committee on the Internal Market and Consumer Protection (IMCO), prepared by the rapporteur Heidi Rühle (Greens / ALE, DE).

The new Defence Transfers Directive is awaiting formal adoption by the Council.

After publication in the Official Journal of the European Union and entry into force, the member states have 24 months to transpose the provisions of the Defence Transfers Directive into national law, by adopting the laws, regulations and administrative provisions necessary to comply with the Directive. They then have an additional 12 months to apply the measures.

The Defence Transfers Directive applies to intra-Community transfers of defence-related products (Article 1) and these products are listed in the Annex (Article 2).


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Framework

For pedagogic reasons, we position the new Directive within the treaty framework. This comprises the legal base, i.e. the powers to legislate, and the exceptions or derogations limiting the applicability of the Defence Transfers Directive.


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Legal base

The Defence Transfers Directive is based on Article 95 (ex Article 100a) of the Treaty establishing the European Community (TEC).

Article 95 TEC allows legislative measures, adopted by co-decision, for the approximation (harmonisation) of member states’ laws, regulations or administrative actions with regard to the internal market objectives, namely the free movement of goods, persons, services and capital mentioned in Article 14 TEC.


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In the consolidated Treaty of Lisbon version of the Treaty on the Functioning of the European Union (TFEU) the corresponding Articles are 114 TFEU and 26 TFEU.


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Generally applicable derogations

According to Article 1(3) of the Defence Transfers Directive its application is subject to Articles 30 and 296 TEC.

Quantitative restrictions on imports and all measures having equivalent effect are prohibited between member states according to Article 28 TEC (ex Article 30), and the corresponding prohibition on export restrictions is contained in Article 29 TEC (ex Article 34).

Article 30 TEC (ex Article 36) then offers member states the possibility to prohibit or restrict imports or exports on certain grounds. As exceptions to (derogations from) the normally applicable treaty rules (and objectives), they have to be interpreted narrowly.

These derogations or exceptions can still be called general in the sense that they can, in principle, be applied to all sorts of exports or imports, if justified:


Article 28 TEC

Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States.


Article 29 TEC

Quantitative restrictions on exports, and all measures having equivalent effect, shall be prohibited between Member States.


Article 30 TEC

The provisions of Articles 28 and 29 shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of public morality, public policy or public security; the protection of health and life of humans, animals or plants; the protection of national treasures possessing artistic, historic or archaeological value; or the protection of industrial and commercial property. Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States.


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In the consolidated Lisbon Treaty, which may enter into force before the member states have transposed or begun to apply the Defence Transfers Directive, the corresponding provisions are found in the substantially unchanged Articles 34 to 36 TFEU, with the same grounds for exceptions:

· public morality
· public policy
· public security
· the protection of health and life of humans, animals or plants
· the protection of national treasures possessing artistic, historic or archaeological value
· the protection of industrial and commercial property


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Specific derogations

The Defence Transfers Directive does not affect the existence of Article 296 TEC (ex Article 223), with its limitations on grounds of member states’ essential security interests connected with the trade in arms, munitions and war materials, although the new Directive tries to limit the application of such specific exceptions to the free flow of goods between the EU member states:

Article 296 TEC

1. The provisions of this Treaty shall not preclude the application of the following rules:

(a) no Member State shall be obliged to supply information the disclosure of which it considers contrary to the essential interests of its security;

(b) any Member State may take such measures as it considers necessary for the protection of the essential interests of its security which are connected with the production of or trade in arms, munitions and war material; such measures shall not adversely affect the conditions of competition in the common market regarding products which are not intended for specifically military purposes.

2. 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.


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In the consolidated Lisbon Treaty this provision appears as Article 346 TFEU, without substantive change.


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Interpretative Communication on Article 296 TEC


The difficulties arising between the free movement objectives of the treaty, the essential interests of member state security connected with the production of or trade in arms, munitions and war material and the generous practices of member states to restrict the application on security and arms trade grounds are discussed in the Commission’s Interpretative Communication on the application of Article 296 of the Treaty in the field of defence procurement, Brussels, 7.12.2006 COM(2006) 779 final, available here:

http://eur-lex.europa.eu/LexUriServ/site/en/com/2006/com2006_0779en01.pdf


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Arms, munitions and war material


The TEC and TFEU refer to the list of arms, munitions and war material drawn up by the Council on 15 April 1958. It can be changed on a proposal by the Commission by unanimous Council decision.

The Defence Transfers Directive applies to its Annex List of defence-related products.


Recital 37 of the Directive expresses the desire to update the list in the Annex of defence-related products in strict conformity with the Common Military List of the European Union (CML).

The latest version of the frequently updated CML was adopted by the Council on 10 March 2008 (equipment covered by the European Union Code of Conduct on Arms Exports) (updating and replacing the Common Military List of the European Union adopted by the Council on 19 March 2007) (CFSP), published OJEU 18.4.2008 c 98/1.

This desire is given legal force in Article 13(1) of the Defence Transfers Directive.


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National concerns


Legal materials concerning the treaty background and reflecting the objectives of the Commission and the European Parliament can now be contrasted by an example of concerns expressed at national level, in this case the United Kingdom.




The UK House of Commons European Scrutiny Committee cleared the Defence Transfers Directive from scrutiny, after discussing national prerogatives, the continued scope for Article 296 derogations as well as the updating of the Annex list to define the scope of defence-related products for the purposes of the Directive:


http://www.publications.parliament.uk/pa/cm200809/cmselect/cmeuleg/19-ii/1913.htm



Ralf Grahn