REPORT on the impact of developments in European defence markets on the security and defence capabilities in Europe

12.5.2015 - (2015/2037(INI))

Committee on Foreign Affairs
Rapporteur: Ana Gomes
Rapporteur for the opinion (*):
Ildikó Gáll-Pelcz, Committee on the Internal Market and Consumer Protection
(*) Associated committee – Rule 54 of the Rules of Procedure

Procedure : 2015/2037(INI)

Document stages in plenary

Document selected :

A8-0159/2015

Texts tabled :

A8-0159/2015

Debates :

PV 19/05/2015 - 9
CRE 19/05/2015 - 9

Votes :

PV 21/05/2015 - 7.6
Explanations of votes

Texts adopted :

P8_TA(2015)0215

MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION
OPINION of the Committee on the Internal Market and Consumer Protection(*)
MINORITY OPINION
RESULT OF FINAL VOTE IN COMMITTEE

MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

on the impact of developments in European defence markets on the security and defence capabilities in Europe

(2015/2037(INI))

The European Parliament,

– having regard to Title V of the Treaty on European Union (TEU),

– having regard to European Council conclusions of 19-20 December 2013 on the Common Security and Defence Policy,

– having regard to the Council conclusions of 18 November 2014 on Common Security and Defence Policy,

– having regard to the Commission communication of 24 July 2013 entitled ‘Towards a more competitive and efficient defence and security sector’ (COM(2013)0542), and the related Implementation Roadmap of 24 June 2014 (COM(2014)0387),

– having regard to Directive 2009/43/EC of the European Parliament and of the Council of 6 May 2009 simplifying terms and conditions of transfers of defence-related products within the Community[1],

– having regard to Directive 2009/81/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of procedures for the award of certain works contracts, supply contracts and service contracts by contracting authorities or entities in the fields of defence and security, and amending Directives 2004/17/EC and 2004/18/EC[2],

– having regard to Council Common Position 2008/944/CFSP of 8 December 2008 defining common rules governing control of exports of military technology and equipment,

– having regard to the Policy Framework for Systematic and Long-Term Defence Cooperation, adopted by the Council on 18 November 2014,

– having regard to the updated Framework Arrangement for Security of Supply between subscribing Member States, adopted by the European Defence Agency (EDA) Steering Board in November 2013, and the associated Code of Conduct on Prioritisation, adopted by the EDA Steering Board in May 2014,

– having regard to its resolutions of 21 November 2013 on the European Defence Technological and Industrial Base[3] and of 14 December 2011 on the impact of the financial crisis on the defence sector in the EU Member States[4],

– having regard to Rules 52 of its Rules of Procedure,

– having regard to the report of the Committee on Foreign Affairs and to the opinion of the Committee on the Internal Market and Consumer Protection (A8-0159/2015),

A. whereas new European defence market legislation was introduced under the 2009 Defence Package and all 28 Member States have transposed the new rules into their national legal orders; whereas the crux of this new legislation is the introduction of a regulatory framework based on transparency, non-discrimination and competition which addresses the specificities of the defence sector;

B. whereas Member States have agreed on the need to develop a European market for defence equipment and services; whereas the European Council has even called for the establishment of an EU-wide security of supply regime; whereas adequate capabilities and supply of equipment and the strategic autonomy of the EU are of crucial importance for the security of the Union and that of its neighbourhood;

C. whereas the success of peacekeeping and security missions under the CSDP depends largely on their ability to respond promptly and immediately, and a key aspect, therefore, is the need to achieve a genuine European defence market to eliminate duplication and reduce red tape;

D. whereas the lack of consolidation, cost-efficiency and transparency in European defence markets means that external dependencies in the European defence sector could further increase at a time of multiple and direct threats to European security that are unprecedented since the end of the Cold War;

E. whereas investments in research and technology in the defence sectors of all Member States, as well as common investments in research and technology in the defence sector under the framework of European cooperation, have decreased at an alarming rate in recent years;

Developments in defence markets put European autonomy at risk

1. Remains seriously concerned by the widespread and largely uncoordinated cuts to the defence budget in most Member States; emphasises that the cutting of defence budgets is weakening the defence potential of Member States and the EU, and leaves a question mark over the levels of preparedness to ensure national and European security; is of the view that these uncoordinated cuts, coupled with structural problems and unfair and untransparent practices, put the Union at risk by relinquishing strategic assets and capabilities and by forfeiting the opportunities that the coordination of defence policies and the pooling and sharing of defence assets could bring as regards the fulfilment of the EU’s prosperity and peace, in line with Article 21 of the Treaty on European Union, its security of supply and the defence of its citizens and interests;

2. Is gravely concerned over the surge in armed conflict, low-intensity crises, hybrid war and war waged by proxy, state failure, instability and widespread human rights violations in the EU’s immediate neighbourhood and the threat of terrorism inside and outside the EU; believes that the current security threats are common to the EU as a whole and should be addressed in a united and coordinated fashion, pooling and sharing civilian and military resources; strongly believes, in this regard, that it is imperative not to waste resources and that it is essential to better use tax payers’ money and make progress on the establishment of a European defence equipment market and on the development of a competitive European Defence Technological and Industrial Base (EDTIB), capable of generating synergies through increased cross-border coordination and providing the necessary capabilities for the CSDP; also believes this will be crucial to increase efficiency and cost-effectiveness of European action within the framework of NATO operations to guarantee security and stability in Europe and its neighbourhood;

3. Is worried, therefore, by the slow-paced and inconsistent implementation by the Member States of the 2009 Defence Package directives and calls on the Commission to take specific measures to ensure that the directives are correctly implemented, by monitoring national transpositions, with the aim of avoiding market distortions; recognises that the introduction of new legislation is a lengthy process, but warns that incorrect and diffuse application risks generating bad standards of practice, in so doing jeopardising the accomplishment of the objectives set forth in the directives and, thus, compromising the establishment of the European market for defence equipment and weakening the development of an EDTIB; underlines that the Defence Package should also contribute to create incentives for defence cooperation in Europe and encourages the Commission and EDA to cooperate closely in that regard; recalls with regret that the joint procurement in the defence sector has stagnated, and in recent years even declined;

4. Warns of the risks of external dependencies in the European defence sector at a time of an increasingly complex and challenging security environment; warns, in particular, of the combination of Member States’ uncoordinated defence budgets, persisting market fragmentation despite new internal market rules, the growing dependence of the defence industry on extra-EU exports and increased foreign investment in Europe’s defence sector in some countries, which could lead to lack of transparency and to yielding control of strategic national and European defence industries, assets and technologies;

5. Considers that special attention should be paid to the impact of certain projects on the autonomy and independence of the EU, such as cooperation with Russia in sensitive areas like satellite launching, with Soyuz rockets, and strategic airlift; stresses the need for Member States to conduct a priority review of their military/defence industries and to provide incentives for their development to the extent permissible under EU law;

6. Stresses that a highly competitive, modern and integrated European industrial defence strategy is vital to ensure Europe’s defence capabilities and to have a positive indirect impact on other related economic sectors; points out that increased cooperation of economic resources and human capital is essential in order to make progress in dual-use research that minimises our external dependence and secures our supplies and raw materials for industry, especially those of a critical nature;

7. Notes that while the December 2013 European Council failed to provide an adequate response to this situation, it nevertheless outlined a number of lines of action to improve the Common Security and Defence Policy and committed to reviewing progress in June 2015; regrets that despite the further worsening of the security environment both internally and to the east and south of the EU, which is compromising its security, no real progress has been made in addressing the current security challenges and threats;

8. Urges the European Council to draw the necessary lessons and take concrete measures towards overcoming the fragmentation of the European defence market; calls on the European Council to provide specific guidelines for defence policies and the European defence market, taking into account the specificities of the defence sector, in order to increase its transparency and competitiveness, and to guarantee the availability of the defence capabilities needed to ensure European security and fulfil the objectives of the CSDP;

Declining European demand due to budget cuts: need for further cooperation

9. Believes that the years of uncoordinated national defence budgets in Europe must be offset by increased cooperation and coordination among Member States, including through the articulation of defence budget policies and the coordination of strategic choices concerning the acquisition of military and dual-use equipment, in line with transparent public procurement standards; stresses the need for upfront planning on strategic investment in the purchase and renovation of equipment among Member States; reiterates its call for demand consolidation across the EU in order to promote and sustain a competitive and independent EDTIB; stresses that developing an efficient and transparent EDTIB is a key element for Europe’s ability to protect its citizens, interests and values, in line with the objectives of the Treaty and to fulfil its responsibilities as a security provider; calls on the Commission to develop an industrial strategy which defines key capabilities on which an EDTIB could be built;

10. Recalls that the 28 EU Member States are still the world’s number two when it comes to both defence spending and arms exports; believes that this fact shows that the EU Member States and the Union still play a key role in global arms sales and defence procurement; considers a combined annual defence spending of 190 billion EUR an enormous amount of tax payer’s money; also recalls that numerous recent studies showed that the main problem lies in the fact that in many of the 28 EU Member States defence budgets are being spent in a very inefficient way leading to long delays, higher costs and in many cases to helicopters, fighter jets and other technology being not operational although brand new; stresses the need to deeply restructure the relationships between national defence administrations and defence industries and to introduce strict qualitative criteria for the output of procurement projects;

11. Is of the view that the current budgetary constraints in EU Member States should represent an opportunity for more and better cooperation in the field of defence equipment acquisitions, to ensure better value for taxpayers’ money and ensure adequate military capabilities across the EU and a sustainable security of supply system; considers that Member States face a choice between cooperating effectively to face common challenges or loosing strategic capabilities and not defending national and European citizens and interests;

12. Recalls the need for greater convergence between national defence planning processes and welcomes, in this context, the adoption by the Council of the Policy Framework for Systematic and Long-Term Defence Cooperation; finds regrettable, however, its non-binding nature and the fact that it has not introduced a clear and structured process; underlines that this document should be welcomed by the European Council in order to become a key driver; encourages Member States to request the support of the EDA in their national defence reviews and to share information on national investment plans and priorities inside the EU Military Committee; calls on the Member States to launch permanent structured cooperation (PESCO) as means for better coordination and to use EU financing for peacetime cooperation; calls on the Vice-President of the Commission / High Representative of the Union for Foreign Affairs and Security Policy (VP/HR) to deliver realistic plans for the successful launch of PESCO;

13. Demands that cooperation and pooling and sharing initiatives be given priority and that incentives be created to this end; calls on the European Commission to put forward a proposal clarifying how non-market distorting tax incentives could serve these objectives; notes the decision of Belgium to grant VAT exemption to EDA’s ad hoc projects and considers that this exemption should be generalised to all EDA’s collaborative activities; welcomes the work of the EDA on a pooled procurement mechanism and expects it to contain measures to incentivise the cooperative acquisition of and support for defence equipment;

14. Recalls that under Horizon 2020, COSME and the European Structural and Investment Funds, defence industries, and in particular SMEs, can apply for EU funding for dual-use and other projects; calls on the Commission and the Member States to assist companies, particularly SMEs, in adequately seizing European funding opportunities for defence‑related projects;

15. Points out that, lately, the EU has increasingly had to contend with threats and challenges in cyberspace, involving a serious threat to the security of individual Member States and to the EU as a whole; believes that such threats should be assessed properly, and action be taken, at EU level with a view of providing for technical and other security measures in the Member States;

16. Calls on the European Council to address at its meeting in June 2015 the need to streamline public procurement and contract award processes in relation to cybersecurity, and to ensure greater coordination between Member States, in order to enable the Union to deal promptly with major global threats such as cyber-terrorism and cyber-attacks;

17. Reiterates its call on the VP/HR and Council to elaborate an EU Common Position on the use of armed drones, giving utmost importance to respect for human rights and international humanitarian law and addressing issues such as the legal framework, proportionality, accountability, the protection of civilians and transparency;

Growing external dependencies: need for a common approach

18. Warns that European defence companies are increasingly compensating for their reduced turnover in Europe through extra-EU exports; expresses concern at the potential drawbacks of this approach, such as the transfer of sensitive technologies and intellectual property rights to their future competitors and moving production outside the EU, thus compromising Europe’s security of supply; believes that exposing the EU to the risk of the EDTIB being dependent on customers in third powers with different strategic interests constitutes a serious strategic mistake;

19. Recalls that the EU Common Position on Arms Exports defines a common understanding for the control of exports of military technology and equipment serving the coordination of national export control systems; believes that more coherent application of its eight criteria is necessary in order to make sure not only that overarching foreign and security policy objectives have priority over short-term economic gains, but also that a level playing field exists for European industries;

20. Urges the Member States to comply with the principles of the Common Position and to report fully, in the context of the annual reports, on the state of their defence equipment exports to third countries; invites the Council and the VP/HR to look at ways of improving the compliance with the reporting obligation and of increasing the transparency and public scrutiny of the export control framework; recalls that adherence to the Common Position is fundamental to the fulfilment of EU principles and values, particularly in the fields of international human rights law and international humanitarian law, and of its responsibilities in local, regional and global security;

21. Notes the Commission communication on the review of export control policy of dual-use items and stresses, in this context, the necessity to ensure control modalities that do not hinder the free flow of goods and technology within the internal market and prevent diverging interpretations of EU rules; urges the Commission urgently to come forward with a new legislative proposal to update the dual-use export control regime to improve its coherence, efficiency, transparency and a recognition of human rights impact, while ensuring a level playing field; stresses that this proposal must take account of the changing nature of security challenges and the speed of technological developments, especially when it comes to surveillance and intrusion software and equipment and the trade in software vulnerabilities;

22. Notes that while the growing importance of dual-use technologies offers benefits in terms of synergies between the defence sector and commercial production, it also makes it dependent on civilian supply chains, which often base their production outside Europe; requests information from the Commission and the EDA on the possible risks of growing internationalisation and the possible effects that changes in ownership in the defence sector may have on the security of supply and also the heightened risks for European and national security, including to the EU's digital infrastructure; calls on the Commission to inform Parliament in due time on the status of the Green Paper on the control of defence and sensitive security industrial assets which it had announced for the end of 2014, and requests information on the outcome of the announced stakeholder consultations;

23. Welcomes the work of the EDA and the Commission on an EU-wide Security of Supply (SoS) regime, as mandated by the European Council, and looks forward to a roadmap with specific steps to be presented for endorsement by the heads of state and government in June 2015; calls on the European Commission and the EDA to explain in detail the extent to which the Parliament proposal on “a comprehensive and ambitious EU-wide security-of-supply regime (...) based on a system of mutual guarantees and an analysis of risks and needs, and possibly using the legal basis of permanent structured cooperation” (A7-0358/2013) has been included in the preparatory work; believes that past methodologies used by the Commission, such as mapping and monitoring, have been insufficient; stresses the need to focus on new approaches on how to ensure the free circulation of military equipment for the armed forces of the 28 Member States;

24. Considers mutual assurances of SoS between the Member States to be a fundamental element in the construction of an integrated European defence market; welcomes the EDA’s updated framework arrangement on SoS as an instrument which strengthens mutual confidence and solidarity, but regrets that it does not create any legal obligations; takes the view that the EU-wide SoS regime needs to be based on the implementation of existing legislation, and, in particular, on the full implementation of the directive on intra-EU transfers in order to remove barriers to the movement of defence products inside the EU;

Using internal market rules to their full potential

25. Stresses that the Defence Package launched by the Commission aims to support the competitiveness of the European defence sector and that one of its goals is to limit the problems stemming from the fragmentation of the European defence market, from certain protectionist attitudes in the award of defence contracts and from the lack of coordination between different Member States’ control regimes on transfers of defence-related products;

26. Stresses that a single defence market would ensure full transparency and prevent duplication of effort, which gives rise to market distortions; points out that the success of CSDP peace and security missions depends to a large extent on their rapid response capabilities and that greater integration is of key importance in streamlining processes and cutting costs;

27. Points out that the completion of a European defence market calls for a highly competitive, innovation- and technology-driven industrial base that can generate synergies through closer cross-border cooperation, and that advances in dual-use research are of key importance in guaranteeing our independence and ensuring security of supply, in particular of critical items;

28. Points out that in order to strengthen European defence and technological innovation and make substantial savings, Europe needs to build economies of scale and have a common EU market for defence procurement, also with a view to fostering a modern, integrated and competitive European defence industry; stresses that internal market rules should be used to their full potential to counteract the ongoing fragmentation of the European defence and security sector, which leads to duplication of defence equipment programmes and a lack of transparency regarding the relations between national defence administrations and the defence industry, through enhanced cross-border cooperation; urges the Member States to remove national rules that do not comply with Directives 2009/43/EC and 2009/81/EC and that are hindering the internal market for defence procurement, and to correctly implement and enforce Directive 2009/81/EC, concerning procurement in the fields of defence and sensitive security, and Directive 2009/43/EC, concerning the transfer of defence-related products; calls on the Commission to take specific steps to ensure that the directives are properly applied and to check and monitor national transposition procedures to make sure that they do not result in market distortions;

29. Calls on the Commission, with a view to making the best possible use of resources, to encourage Member States to make joint purchases through central purchasing bodies such as the EDA, as provided for in Directive 2009/81/EC;

30. Urges the Commission to step up its efforts to achieve a level playing field in European defence markets in order to fight protectionist practices by Member States by promoting cross-border cooperation and better access to defence industry supply chains, and by taking steps to put an end to the situation whereby some Member States act solely as suppliers and others solely as buyers of defence technology; believes, in this regard, that the use of exclusions in accordance with Directive 2009/81/EC has to be duly justified; calls on the Commission to inform Parliament of the effects of the seven sets of Guidance Notes (on, respectively, Field of Application, Exclusions, R&D, Security of Supply, Security of Information, Subcontracting, Offsets) that have already been published, and notes that the Commission plans to release two more in 2015; believes that these notes constitute the perfect opportunity for the Commission to establish a dialogue with the Member States on subjects that have never been addressed in a structured and open manner, and requests information on the outcome of such a dialogue with the Member States;

31. Notes that, in its current wording and in practice, Article 346 TFEU still offers the Member States a great deal of scope for discretion as regards resorting to its application and thereby derogating from applying EU defence procurement laws in defence contracts; calls, therefore, on the Member States to apply Article 346 TFEU in a correct and effective manner that is consistent with the requirements set forth in EU rules, in the Internal Market Directives and in defence procurement rules; recalls that, according to settled case law of the Court of Justice of the European Union, measures under Article 346 should be limited to exceptional and clearly defined cases, and must not go beyond the limits of such cases; warns that resorting incorrectly to derogations from Single Market rules actively impairs EU competition, curtails transparency, facilitates corruption and thus damages the establishment of a EU defence market, and is detrimental to a functioning EDTIB and the development of credible military capabilities;

32. Takes note that, in the long term, the full phase-out of offsets will contribute to a better functioning of the internal market in the European defence sector; calls, therefore, on the Commission to continue to check that Member States are phasing out offsets not duly justified on the basis of Article 346 of the Treaty; views this as indispensable for ensuring the smooth functioning and transparency of the internal market in the European defence sector and a level playing field for suppliers, in particular SMEs;

33. Recalls that framework agreements, subcontracting and division into lots should be a means of opening up established supply chains for the benefit of SMEs; points out, nonetheless, that the principles of transparency in the subcontracting chain and of joint liability must be guaranteed; calls on the Member States, the EDA and the Commission to work together, and with prime contractors, in order to ensure that SMEs are fully familiar with the various stages in the value chain, as this will help them consolidate and facilitate their access to defence procurement and counter the geographically uneven development of Europe’s technology and defence base;

34. Notes that the uptake by industry of the main instruments of the Defence Transfer Directive, specifically general licences and the certification of defence firms, remains very limited, and that there are loopholes in the administrative cooperation between Member States to ensure appropriate control measures in order to prevent breaches of the terms and conditions of transfer licences; urges the Commission and the Member States to ensure the effective use of these instruments in practice and welcomes, therefore, the initiative of the Commission to establish a working group, with the Member States, on the harmonisation of the Intra-EU Transfers Directive;

35. Acknowledges the 2014 Commission roadmap entitled ‘Towards a more competitive and efficient defence and security sector’ and the undertaking made by the Commission in that document to look into how the adverse impact of offsets required by third countries could be mitigated, and what impact offsets have on the internal market and European industry; stresses the importance of the timely implementation of the roadmap and of taking additional measures as necessary; fully supports the Commission’s efforts to provide practical guidance to SMEs using European funds in dual-use projects;

36. Recalls that the Member States urgently need to improve the transparency of procurement practices in the defence sector vis-à-vis the Commission and EU agencies; underlines that specific procurement procedures, such as the negotiated procedure without prior publication of a contract notice, should be limited to exceptional cases and justified only by overriding reasons of general interest connected to defence and security, in compliance with Directive 2009/81/EC; urges the Commission to ensure appropriate monitoring so as to enable comprehensive reporting, in respect of both directives, to Parliament and the Council in 2016 as scheduled;

37. Recalls the importance of regular checks on defence and security equipment by the relevant supervisory authorities, including checks on proper accounting;

38. Underlines that cooperation between strategic partners is essential for European security of supply, and hence encourages the Commission and the Member States to take defence procurement into account when negotiating international trade agreements;

Review of the defence procurement package

39. Calls on the Commission in its implementation reports to Parliament and the Council on Directives 2009/81/EC and 2009/43/EC in 2016 to evaluate thoroughly whether, and to what extent, their provisions have been enforced correctly, and whether their objectives have been achieved, and to come up with legislative proposals accordingly, if the findings of the report point in this direction;

40. Stresses that further special reporting obligations should be introduced for Member States, coupled with provisions for appropriate confidentiality safeguards;

41. Recalls that the purpose of the modernisation of the EU public procurement rules as set out in Directives 2014/24/EU and 2014/25/EU, adopted in 2014, is to ensure transparency in the subcontracting chain and compliance with environmental, social and labour law; points out that the new directives afford opportunities for more streamlined procedures, such as the use of electronic procurement, aggregation of demand and the use of the most economically advantageous tender, which can be tailored to the specificities of the defence and security sector;

42. Calls, with a view to building an innovative and competitive European industry and making the best possible use of security and defence budgets, for the new ‘innovation partnership’ procedure to be introduced in defence procurement, allowing contracting authorities to establish this procedure for the development and subsequent purchase of new, innovative products, services or works, providing the necessary market incentives and supporting the development of innovative solutions without foreclosing the market;

43. Stresses that ensuring the maximum protection and security of the civilian populace must be taken into account during procurement procedures for defence and security equipment;

44. Instructs its President to forward this resolution to the President of the European Council, the Vice-President of the Commission / High Representative of the Union for Foreign Affairs and Security Policy, the Council, the Commission, the parliaments of the Member States, the NATO Parliamentary Assembly and the Secretary-General of NATO.

[1] OJ L 146, 10.6.2009, p. 1.
[2] OJ L 216, 20.8.2009, p. 76.
[3] Texts adopted, P7_TA(2013)0514.
[4] OJ C 168 E, 14.6.2013, p. 9.

OPINION of the Committee on the Internal Market and Consumer Protection(*) (24.4.2015)

for the Committee on Foreign Affairs

on the impact of developments in European defence markets on the security and defence capabilities in Europe
(2015/2037(INI))

Rapporteur (*): Ildikó Gáll-Pelcz

(*) Associated committee – Rule 54 of the Rules of Procedure

SUGGESTIONS

The Committee on the Internal Market and Consumer Protection calls on the Committee on Foreign Affairs, as the committee responsible, to incorporate the following suggestions into its motion for a resolution:

1. Welcomes the European Council’s decision to include the topic of European defence markets on the agenda for its June 2015 summit; nevertheless, points out the fact that the adoption of strategic actions by the European Council in December 2013 has not resulted in specific measures and closer cooperation between the various Common Security and Defence Policy (CSDP) stakeholders; calls on the European Council to provide specific guidelines for defence policies and the European defence market, taking into account the specificities of the defence sector, with a view to bolstering the internal security and defence market;

2. Recalls that internal market and defence policies should not be seen as opposing one another; underlines that a well-functioning internal market for defence-related products would strongly contribute to achieving the objectives of the CSDP, and regrets the fact that little progress has been made so far in this direction despite the adoption in 2009 of the Defence Package Directives; stresses that correct implementation of the legal framework for EU public procurement by the Member States could contribute to more efficient national defence spending and strengthen the European Defence Technological and Industrial Base (EDTIB); believes, in this respect, that closer cooperation between Member States will help to guard against duplication of efforts and will have a more positive indirect effect in the various sectors that are interconnected;

3. Points out that, given the impact of the economic crisis and the cuts being made to Member State defence budgets at a time of heightened global challenges and threats, it is now more important than ever to make the best possible use of resources by improving coordination, in particular on defence capabilities; stresses the need for advance planning of strategic investment in the purchase and modernisation of equipment by Member States;

4. Stresses that the Defence Package launched by the Commission aims to support the competitiveness of the European defence sector and that one of its goals is to limit the problems stemming from the fragmentation of the European defence market, certain protectionist attitudes in the award of defence contracts and the lack of coordination between different Member States’ control regimes on transfers of defence-related products;

5. Stresses that a single defence market would ensure full transparency and prevent duplication of effort, which gives rise to market distortions; points out that the success of CSDP peace and security missions depends to a large extent on their rapid response capabilities and that greater integration is of key importance in streamlining processes and cutting costs;

6. Points out that the completion of a European defence market calls for a highly competitive, innovation- and technology-driven industrial base that can generate synergies through closer cross-border cooperation, and that advances in dual-use research are of key importance in guaranteeing our independence and ensuring security of supply, in particular of critical items;

Using internal market rules to their full potential

7. Calls on the Commission, with a view to enhancing the effectiveness of CSDP missions, to bring the financial rules governing the EU general budget into line with the provisions of the new public procurement and contract award directives, in particular as regards CSDP missions, with a view to ensuring swift and flexible implementation of civilian operations;

8. Points out that in order to strengthen European defence and technological innovation and make substantial savings, Europe needs to build economies of scale and have a common EU market for defence procurement, also with a view to fostering a modern, integrated and competitive European defence industry; stresses that internal market rules should be used to their full potential to counteract the ongoing fragmentation of the European defence and security sector, which leads to duplication of defence equipment programmes and a lack of transparency regarding the relations between national defence administrations and the defence industry, through enhanced cross-border cooperation; urges the Member States to remove national rules that do not comply with Directives 2009/43/EC and 2009/81/EC and that are hindering the internal market for defence procurement, and to correctly implement and enforce Directive 2009/81/EC, concerning procurement in the fields of defence and sensitive security, and Directive 2009/43/EC, concerning the transfer of defence-related products; calls on the Commission to take specific steps to ensure that the directives are properly applied and to check and monitor national transposition procedures to make sure that they do not result in market distortions;

9. Calls on the Commission, with a view to making the best possible use of resources, to encourage Member States to make joint purchases through central purchasing bodies such as the EDA, as provided for in Directive 2009/81/EC;

10. Urges the Commission to step up its efforts to achieve a level playing field in European defence markets in order to fight protectionist practices by Member States by promoting cross-border cooperation and better access to defence industry supply chains and by taking steps to put an end to the situation where some Member States act solely as suppliers and others solely as buyers of defence technology; believes, in this regard, that use of exclusions as stated in Directive 2009/81/EC has to be duly justified; calls on the Commission to inform Parliament of the effects of the seven sets of Guidance Notes (Field of Application, Exclusions, R&D, Security of Supply, Security of Information, Subcontracting, Offsets) that have already been published and notes that the Commission plans to release two more in 2015; believes that these notes constitute the perfect opportunity for the Commission to establish a dialogue with the Member States on subjects that have never been addressed in a structured and open manner, and requests information on the outcome of such dialogue with the Member States;

11. Notes that, in its current wording and in practice, Article 346 TFEU still offers the Member States a great deal of scope for discretion as regards resorting to its application and thereby derogating from applying EU defence procurement laws in defence contracts; calls, therefore, on the Member States to effectively and correctly apply Article 346 TFEU in a manner that is consistent with the requirements set forth by EU rules, the Internal Market Directives and defence procurement rules; recalls that, according to settled case law of the Court of Justice of the European Union, measures under Article 346 should be limited to exceptional and clearly defined cases, and must not go beyond the limits of such cases; warns that incorrectly resorting to the derogation from Single Market rules actively impairs EU competition, curtails transparency, facilitates corruption and thus damages the establishment of a EU defence market, and is detrimental to a functioning EDTIB and the development of credible military capabilities;

12. Takes note that, in the long term, the full phase-out of offsets will contribute to a better functioning of the internal market in the European defence sector; calls, therefore, on the Commission to continue to check that Member States are phasing out offsets not duly justified on the basis of Article 346 of the Treaty; views this as indispensable for ensuring the smooth functioning and transparency of the internal market in the European defence sector and a level playing field for suppliers, in particular SMEs;

13. Recalls that framework agreements, subcontracting and division into lots should be a means of opening up established supply chains for the benefit of SMEs; points out, nonetheless, that the principles of transparency in the subcontracting chain and of joint liability must be guaranteed; calls on the Member States, the EDA and the Commission to work together, and also with prime contractors, in order to ensure that SMEs are fully familiar with the various stages in the value chain, as this will help them to consolidate and facilitate their access to defence procurement and to counter the geographically uneven development of Europe’s technology and defence base;

14. Notes that the uptake by industry of the main instruments of the Defence Transfer Directive, specifically general licences and the certification of defence firms, remains very limited, and that there are loopholes in the administrative cooperation between Member States to ensure appropriate control measures in order to prevent breaches of the terms and conditions of transfer licences; urges the Commission and the Member States to ensure the effective use of these instruments in practice and, therefore, welcomes the initiative of the Commission to establish a Working Group with Member States on the harmonisation of the Intra-EU Transfers Directive;

15. Acknowledges the 2014 Commission Roadmap entitled ‘Towards a more competitive and efficient defence and security sector’ and the undertaking made by the Commission in that document to look into how the adverse impact of offsets required by third countries could be mitigated and into the impact offsets have on the internal market and European industry, while stressing the importance of its timely implementation and of taking additional measures as necessary; fully supports the Commission’s efforts to provide practical guidance to SMEs using European funds in dual-use projects;

16. Recalls that the Member States urgently need to improve the transparency of procurement practices in the defence sector vis-à-vis the Commission and EU agencies; underlines that specific procurement procedures such as the negotiated procedure without prior publication of a contract notice should be limited to exceptional cases and justified only by overriding reasons of general interest connected to defence and security, in compliance with Directive 2009/81/EC; urges the Commission to ensure appropriate monitoring so as to enable comprehensive reporting, in respect of both directives, to Parliament and the Council in 2016 as scheduled;

17. Invites the Commission to consider publishing as soon as possible its Green Paper on the control of assets, initially scheduled for the end of 2014, in accordance with its 2014 Roadmap, and to carry out a proper and comprehensive analysis of the impacts of the implementation of the Defence Package, including a consultation with defence industries’ associations, Member States, the EDA and other relevant stakeholders, including organisations active in conflict prevention, peace and security;

18. Recalls the importance of regular checks on defence and security equipment by the relevant supervisory authorities, including checks on proper accounting;

19. Underlines that cooperation between strategic partners is essential for European security of supply, and hence encourages the Commission and the Member States to take defence procurement into account when negotiating international trade agreements;

Review of the defence procurement package

20. Calls on the Commission in its implementation reports to Parliament and the Council on Directives 2009/81/EC and 2009/43/EC in 2016 to evaluate thoroughly whether and to what extent their provisions have been correctly enforced and whether their objectives have been achieved, and to come up with legislative proposals accordingly, if the findings of the report point in this direction;

21. Stresses that further special reporting obligations should be introduced for Member States, coupled with provision for appropriate confidentiality safeguards;

22. Recalls that the purpose of the modernisation of the EU public procurement rules as set out in Directives 2014/24/EU and 2014/25/EU, adopted in 2014, is to ensure transparency in the subcontracting chain and compliance with environmental, social and labour law; points out that the new directives afford opportunities for more streamlined procedures, such as the use of electronic procurement, aggregation of demand and the use of the most economically advantageous tender, which can be tailored to the specificities of the defence and security sector;

23. Calls, with a view to building an innovative and competitive European industry and making the best possible use of security and defence budgets, for the new ‘innovation partnership’ procedure to be introduced in defence procurement, allowing contracting authorities to establish this procedure for the development and subsequent purchase of new, innovative products, services or works, providing the necessary market incentives and supporting the development of innovative solutions without foreclosing the market;

24. Stresses that ensuring the maximum protection and security of the civilian populace must be taken into account during procurement procedures for defence and security equipment.

RESULT OF FINAL VOTE IN COMMITTEE

Date adopted	23.4.2015
Result of final vote	+: –: 0:	27 6 1
Members present for the final vote	Dita Charanzová, Sergio Gaetano Cofferati, Daniel Dalton, Nicola Danti, Pascal Durand, Vicky Ford, Ildikó Gáll-Pelcz, Evelyne Gebhardt, Maria Grapini, Antanas Guoga, Sergio Gutiérrez Prieto, Robert Jarosław Iwaszkiewicz, Liisa Jaakonsaari, Philippe Juvin, Antonio López-Istúriz White, Marlene Mizzi, Eva Paunova, Jiří Pospíšil, Virginie Rozière, Christel Schaldemose, Olga Sehnalová, Ivan Štefanec, Catherine Stihler, Róża Gräfin von Thun und Hohenstein, Mylène Troszczynski, Anneleen Van Bossuyt
Substitutes present for the final vote	Pascal Arimont, Cristian-Silviu Bușoi, Birgit Collin-Langen, Dawid Bohdan Jackiewicz, Julia Reda, Ulrike Trebesius, Ulla Tørnæs
Substitutes under Rule 200(2) present for the final vote	Andor Deli

MINORITY OPINION

on the impact of developments in European defence markets on the security and defence capabilities in Europe (2015/2037(INI))

Committee on Foreign Affairs, Rapporteur: Ana Gomes

Minority Opinion tabled by GUE/NGL MEPs Sabine Lösing, Takis Hadjigeorgiou, Sofia Sakorafa, Pablo Iglesias

The report postulates that strengthening the European Defence Technological and Industrial Base (EDTIB) is of utmost importance in order "to protect its citizens, interests and values, in line with the objectives of the Treaty and to fulfil its responsibilities as a security provider". Therefore, it supports various measures to consolidate the European defence sector which, taken together, will end up in the creation of a highly uncontrollable and influential Military-Industrial-Complex (MIC).

We object to the report since it:

• does not reflect EU's negative and escalating role regarding current military conflicts;

• postulates that defence budgets are underfunded while military expenditures of Member States are still on a high level;

• calls for the creation of a MIC as there is a need to strengthen a strong and autonomous EDTIB;

• calls for the consolidation of the defence sector - which is highly corrupt and lacks transparency - by developing an European market for defence equipment and services;

• promotes that "cooperation and the pooling and sharing of initiatives be given priority" and tax incentive to foster these goals;

• advocates European funding opportunities for defence‑related projects and that defence industries "apply for EU funding under Horizon 2020".

We demand:

- disarmament and a transfer of funds from military to social and development budgets;

- to ensure that there is no military or dual-use funding from the EU-budget;

- a total ban on arms exports;

- the conversion of arms manufacturers into civilian companies.

RESULT OF FINAL VOTE IN COMMITTEE

Date adopted	4.5.2015
Result of final vote	+: –: 0:	40 4 7
Members present for the final vote	Lars Adaktusson, Michèle Alliot-Marie, Francisco Assis, Petras Auštrevičius, Bas Belder, Klaus Buchner, Fabio Massimo Castaldo, Lorenzo Cesa, Aymeric Chauprade, Arnaud Danjean, Mark Demesmaeker, Georgios Epitideios, Anna Elżbieta Fotyga, Eugen Freund, Michael Gahler, Sandra Kalniete, Eduard Kukan, Barbara Lochbihler, Sabine Lösing, Andrejs Mamikins, Ramona Nicole Mănescu, David McAllister, Francisco José Millán Mon, Javier Nart, Ioan Mircea Pașcu, Tonino Picula, Kati Piri, Cristian Dan Preda, Jozo Radoš, Sofia Sakorafa, Jaromír Štětina, Charles Tannock, Johannes Cornelis van Baalen
Substitutes present for the final vote	Reinhard Bütikofer, Neena Gill, Ana Gomes, Andrzej Grzyb, Liisa Jaakonsaari, Anneli Jäätteenmäki, Marek Jurek, Antonio López-Istúriz White, Urmas Paet, Gilles Pargneaux, Soraya Post, Marietje Schaake, Jean-Luc Schaffhauser, István Ujhelyi, Traian Ungureanu, Paavo Väyrynen, Janusz Zemke
Substitutes under Rule 200(2) present for the final vote	Victor Boștinaru

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