Is there a European defence market?

Is there a European defence market, or are there 27 national defence markets?
The European Parliament adopted a new Defence Transfers Directive in December 2008 to harmonise the intra-Community licensing systems and a new Defence Procurement Directive in January 2009 to create a “third pillar” for public procurement alongside the general Procurement Directive 2004/18/EC and the special sectors Utilities Directive 2004/17/EC.

The intergovernmental European Defence Agency (EDA) was established by Council Joint Action
2004/551/CFSP of 12 July 2004 on the establishment of the European Defence Agency (published OJEU 17.7.2004 l 245/17) to:

· Develop defence capabilities in the field of crisis management
· Promote European armaments cooperation
· Strengthen the European defence industrial and technological base (DTIB)
· Work for the creation of an internationally competitive European defence equipment market (EDEM)

The Commission’s Defence package included a Communication on the European defence industry COM(2007) 764 final.

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Depressing results

Despite some progress, the overall assessment is that NATO, the WEU and more recently the European Union have tried for decades to improve multinational armaments cooperation with depressingly little success.

In Towards a European Defence Market (Chaillot Paper No 113, November 2008, 126 pages), published by the European Union Institute for Security Studies (EUISS), four researchers describe the current state of affairs and the prospects for progress.

The publication is available at www.iss.europa.eu and the individual contributions are:

Daniel Keohane: Introduction – Towards a European Defence Market

Erkki Aalto: Interpretations of Article 296

Christian Mölling: Options for an EU regime on intra-Community transfers of defence goods

Sophie de Vaucorbeil: The changing transatlantic defence market


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Article 296 TEC

In Interpretations of Article 296 (page 13 to 49), Erkki Aalto deals with the unclarity of the derogations offered by Article 296 of the Treaty establishing the European Community (TEC).

The Commission’s Interpretative Communication has tried to put in place some restraints on the member states’ blanket application of the derogations on essential security grounds offered by paragraphs one and two of Article 296, but even the interpretation leaves many crucial issues hanging in the air.

The provision has been left substantially unchanged since 1957 (and the Council Decision of 15 April 1958 listing the arms, munitions and war material is still officially unpublished!), but the world has changed dramatically since then.

Aalto hopes that the ECJ would use the pending customs cases brought against member states to clarify the scope of Article 296 TEC.

In my view, Aalto’s cautious interpretation is a valuable contribution to the discussion, although only his ‘internal market option’ even begins to answer the challenges posed by the rationale behind the European defence industrial and technological base (DTIB) and an internationally competitive European defence equipment market (EDEM).


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In a wider perspective, Europe is going to continue as a ‘hobbled giant’ as long as it does not create effective EU level powers and democracy in foreign and security policy and defence.



Ralf Grahn