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Fact Sheet on Restructuring of the European
Defense Industry
What is the Letter of Intent?
On 6th July 1998, the Defence Ministers of the
six leading European arms manufacturing countries (France,
Germany, Italy, Spain, Sweden and United Kingdom) signed a
Letter of Intent (LoI) setting out a framework for discussion
on measures to facilitate the restructuring of the European
defence industry. These six countries account for around 90%
of all EU arms exports. After two years of negotiations, it
is expected that a "Framework Agreement" will be adopted on
July 24th at Farnborough Air Show. The agreement
will be legally binding, with the status of an international
treaty, requiring ratification by national parliaments.
What will the "Framework Agreement" do?
The Framework Agreement will have a direct impact on the export
control policies and procedures of the signatory countries.
The aim of the agreement is to facilitate the restructuring
of the European defence industry in order to make it more
competitive in the global market. Although the text of the
agreement is not public, it is understood that the agreement
will do the following:
-
Simplify and reduce export control procedures on all
joint ventures among any of the six participating states:
Industry currently argues that existing licensing procedures
impedes joint ventures across European borders, thereby
undermining the future of the European defence industry.
This agreement will allow for the free circulation of
components and finished products in joint ventures amongst
the six participating states. It is expected that it will
eventually result in the lifting of nearly all controls
on arms transfers between the six countries, for goods
for their own use, or subsequent export within the EU.
-
Ensure that export licensing decisions will be taken
by collective agreement of all state participating in
the joint venture: Currently, decisions on where to export
joint venture equipment is the sole responsibility of
the country of final assembly. For instance, France, Germany,
Sweden and the UK may all participate in a project but
if the final product is assembled in France, the decision
on where to export will be taken only by France. Under
the terms of this new agreement all participating
countries will have a say in determining which countries
it will be exported to. However, although this is meant
to be a consensus decision, it is likely that a country's
influence on the final decision will be proportionate
to its role in the joint venture. For instance, if Spain
only provided the nuts and bolts for an aircraft, its
power of veto over an export would be minimal.
-
Establish 'White Lists' of acceptable destinations: For
each venture, participating states will agree a
'white list' of legitimate destinations to which the defence
equipment can be exported. These lists may vary depending
on the project - for instance restrictions on the export
of a helicopter may be different to that of small arms
and light weapons.
What can NGOs do about it?
It is believed that the text of the Framework agreement has
almost been finalized and will be adopted on July 24th.
However, the details of the agreements will be worked
over the course of the next year. In addition, the treaty
will be subject to ratification by national parliaments. The
priority now for NGOs is to ensure that the LoI results in
the most responsible and restrictive export controls which
adhere to the toughest interpretation of the EU Code of Conduct
criteria.
Contact:
Geraldine O'Callaghan, Senior Analyst, BASIC UK
Tel: 44 202 7407 2977
Fax: 44 202 7407 2988
Email: gocallaghan@basicint.org
Kathleen Miller, Analyst, BASIC US
Tel: 1 202 785 1266
Fax: 1 202 387 6398
Email: kmiller@basicint.org
Dave Holland and Bernardo Mariani, Saferworld, UK
Tel: 44 202 7881 9290
Email: dholland@saferworld.demon.co.uk and
bmariani@saferworld.demon.co.uk
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