Procedure : 2019/2204(INI)
Document stages in plenary
Document selected : A9-0025/2021

Texts tabled :

A9-0025/2021

Debates :

Votes :

PV 25/03/2021 - 2
PV 25/03/2021 - 17
CRE 25/03/2021 - 2
CRE 25/03/2021 - 17

Texts adopted :

P9_TA(2021)0102

<Date>{08/03/2021}8.3.2021</Date>
<NoDocSe>A9-0025/2021</NoDocSe>
PDF 223kWORD 81k

<TitreType>REPORT</TitreType>

<Titre>on the implementation of Directive 2009/81/EC, concerning procurement in the fields of defence and security, and of Directive 2009/43/EC, concerning the transfer of defence-related products</Titre>

<DocRef>(2019/2204(INI))</DocRef>


<Commission>{IMCO}Committee on the Internal Market and Consumer Protection</Commission>

Rapporteur: <Depute>Andreas Schwab</Depute>

AMENDMENTS
 EXPLANATORY STATEMENT - SUMMARY OF FACTS AND FINDINGS
 MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION
 OPINION OF THE Foreign Affairs COMMITTEE
 INFORMATION ON ADOPTION IN COMMITTEE RESPONSIBLE
 INFORMATION ON ADOPTION IN COMMITTEE RESPONSIBLE
 FINAL VOTE BY ROLL CALL IN COMMITTEE RESPONSIBLE

 EXPLANATORY STATEMENT - SUMMARY OF FACTS AND FINDINGS

Procedure and sources

On 6 November 2019, the rapporteur was entrusted with the task of preparing a report on the implementation of 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 (hereinafter the ‘Defence Procurement Directive’)[1] and 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 (hereinafter the ‘Transfers Directive’)[2].

The purpose of this implementation report is to inform Parliament about the state of implementation of the two Directives in order to allow the plenary to draw conclusions and to make recommendations for concrete actions to be taken, whether in terms of improving implementation or possibly proposing legislative revisions. The report will take stock of the implementation and application of the two Directives in Member States, their effect on opening up the internal market for defence products and establishing a European Defence Equipment Market (EDEM), and their contribution to the consolidation of the European defence and technological industrial base (EDTIB), with a focus on SME involvement.

Since his appointment, the rapporteur has collected information and relied on a number of sources in the preparatory work on this report, including the following:

 an online exchange of views with two experts and the shadows rapporteurs, held virtually on 23 June 2020;

 Study on the implementation of the “EU Defence Package: Defence Procurement and Intra Community Transfers Directives” by the European Parliament Research Service (DG EPRS), finalised in September 2020;

 a meeting at technical level with DG DEFIS on 15 July 2020.

As a result of the findings gathered through these sources, the rapporteur identified the following main three areas of focus for the present report: the need for better implementation and enforcement of the Defence Package, the prospects for the establishment of a European Defence Equipment Market (EDEM), and the ascertation of the current level of participation of SMEs in defence procurement markets.

Defence Package - introduction

The objectives of both Directives — comprising the so-called ‘Defence Package’ — was to open up the internal market for defence products, facilitate cross-border procurement, and build an EU-wide industrial base in the European defence and security sectors. There were delays in many Member States in transposition and implementation. The Commission completed its first evaluation report in 2016, taking stock of the implementation practices from 2009 until 2016. While the Commission had difficulties in gathering sufficient input from Member States, it concluded nonetheless that no revision of the Directives was necessary. At that time, IMCO decided not to take any action in terms of replying to the evaluation.

Need for better implementation and enforcement

The Rapporteur believes that better implementation of both Directives remains crucial in order to achieve fully the objectives of the Defence Package. Continuing problem of uneven use and low degree of application by Member States of both Directives is striking and moreover, exacerbated by the impact of COVID-19, Brexit, and future defence spending cuts, as well as by budgetary constraints on R&D and R&T. In this context, it is important to underline that the Commission has initiated a number of infringement proceedings. Most recently, five infringement cases were launched in 2018, out of which two cases remain pending.

Defence Procurement Directive

In order to improve the effectiveness of Defence Procurement Directive and in turn its efficiency, with the aim of increasing competition, transparency and non-discrimination across Member States, the Directive has to be effectively implemented. However, the Rapporteur sees that the essential impediment to full and proper implementation of that Directive, remains:

 the systematic use of the exclusion provision by Member States under the Directive as well as Article 346 TFEU foreseeing solely an ex-post invocation in case of potential litigation, despite the interpretative guidance[3] issued by the Commission. It has to be underlined that several Member States introduced in their legislation a specific procedure applying to contracts covered by article 346(1)(b) TFEU, still making it difficult to assess whether the article 346 exception has been used for justified reasons of protection of national essential security interests, or just as a way to limit the application of Directive 2009/81/EC. That raises questions whether the issue of exclusions has still to be addressed both in legislative terms (in order to limit the use) and in terms of control and enforcement action by the Commission;

 the insufficient level of cross-border penetration and of SME participation in defence contracts;

 the low level of cooperation, common planning, common understanding of needed defence capabilities, and alignment on technological and strategic sovereignty within the Union.

At the same time, the Rapporteur would like to underline some positive trends on the progressive implementation of the Directive:

 the increasing number of contract notices and contract award notices by Member States (Tenders Electronic Daily (TED) data), which is still quite recent in comparison to non-defence procurement Directives. However, this increasing trend seems not to be apparent when it comes to the voluntary ex-ante transparency notices;

 increasing publication rate (i.e. the proportion of procurement that have been tendered competitively through TED) from 8,5 % in the 2011–2015 period to 21,14 % over the years 2016–2018, just to compare with the rate of procurements tendered under the general Directive which accounted for 11,71 % in average.

Transfers Directive

The 2016-Commission-evaluation identified a number of barriers to effective application of the Transfers Directive, resulting either from its transposition or from its provisions. Amongst the main issues identified were the need to increase uptake of the existing legislative framework on transfers of defence-related products, to improve the availability of General Transfer Licences (‘GTLs’) throughout the Union, and to examine the limited application of the certification scheme.

Major problems seem to originate from the lack of harmonisation in the implementation of GTLs across Member States, slow uptake of new licencing options and certification, and a varied level of the extent to which possible exemptions from prior authorisation had been taken up between Member States. While some Member States use all the possibilities for exemptions offered by the Directive, some only use few options and some do not use any. Moreover, transfers between Member States remain a complicated issue that continues to create a lot of administrative burden. That consideration refers especially to the use of General Transfer Licences, where bureaucracy and persisting divergences between Member States on exports to third countries constitute main obstacles. The Rapporteur believes that this necessitates some improvements regarding a common understanding of which items are sensitive and need to be controlled, and which ones are not.

Establishment of a European Defence Equipment Market (EDEM)

Procurement policy is only one of several contributing factors to a long-standing Union ambition to develop the EDEM and ensure the efficiency and competitiveness of the EDTIB. Numerous other linked issues have become increasingly relevant in recent years, including emerging Member State consensus on the need for technological and strategic sovereignty, the need for greater defence spending overall and greater investments in key technology and capabilities, as well as an evolving security landscape. An in-depth analysis of the interplay of the Defence Package with other EU defence policy initiatives (PESCO, EDF, CARD, EDAP) is an additional dimension of consideration going beyond the scope of this report. However, taking into consideration the complexity of the defence market in the EU, the establishment of a fully-fledged EDEM remains a real challenge calling for more coherent procurement and industrial policy. To this end, as stressed in many studies, the quasi-total absence of dedicated NACE or NC codes hinders any attempt to measure the evolution of the structure of the European defence industry. In absence of such data, it is merely impossible to assess the true Europeanisation of defence value-chains (especially as they have been experiencing a relative hybridisation with non-defence ones, such as electronics) or the cross-border market access of defence SMEs and mid-caps.

However, the Rapporteur believes that the objectives of the Defence Package Directives, namely fostering competition, transparency and non-discrimination across Member States, can strongly contribute to the establishment of the EDEM and its potential remains to be fully developed.

Participation of SMEs

The principal issues faced by SMEs in the European defence procurement market were summarised in the Commission Recommendation (EU) 2018/624 on cross-border market access for sub-suppliers and SMEs in the defence sector[4], as well as during the exchange of views held with experts on 23 June 2020 and through the EPRS study. Alongside the general market entry barriers of geographic distance, linguistic barriers, and lack of cross-border market knowledge, the SMEs in the defence sector also face additional administrative hurdles in terms of the particular complexity of defence procurement documentation and the scale of defence procurement tenders, security of supply concerns, the complexity of the subcontracting provisions, and the high costs of certification.

Against this complex backdrop remains the varied and uneven implementation of the Defence Package Directives across the Union, as outlined above. The goal of increasing SME participation — in addition to the wider goals of opening up the internal market, achieving greater security of supply and improving competitiveness — has therefore only been partially achieved. Moreover, the lack of statistics and data for measuring the cross-border access of the defence market by SMEs is also problematic.

It has also to be noted that the subcontracting provisions under the Defence Procurement Directive, were also not of great effect in increasing SME participation in the defence procurement market in terms of indirectly facilitating market access and opening up supply chains to greater cross-border competition. The provisions of the Directive enable Member States to impose an obligation on successful bidders (usually prime contractors) to publicly tender parts of the contract to SMEs and sub-suppliers via competitive procedures. However, the level of use of subcontracting provisions seems very low (only 26 subcontract notices have been published since 2011), which demonstrates the unsuitability of these provisions with both Member States’ needs and industrial reality. Moreover, the Directive does not introduce any incentive for the opening of value-chains. On the contrary, the future European Defence Fund seems to be a better tool to structure these value-chains at European level.

Moreover, the assessment of the added value of the certification mechanisms available under Article 9 of the Transfers Directive remains below expectations. According to the Register of the Certified Defence-related Enterprises (CERTIDER), the number of certified enterprises remains rather low, with 66 companies being certified across the EU, which is an increase of merely 27 compared to five years ago. This could be caused by the fact that SMEs are not usually the market participants set to benefit from certification, as the process targets primarily recipients of defence-related products, such as system integrators or Original Equipment Manufacturers (OEMs). In addition, the complexity and expense of the certification process also deter SMEs.

Rapporteur’s position

Taken into account all challenges related to the implementation of the Defence Package Directives, the Rapporteur considers that certain elements of the Defence Procurement Directive and Transfers Directive can be further improved, for example, greater consistency with general Public Procurement Directive. However, the Rapporteur believes that no revision of these Directives is necessary since the existing regulatory framework should be sufficient if correctly implemented and properly used.

Furthermore, the Rapporteur stresses the necessity of a strong enforcement policy where the Commission acts on a proactive basis and is not afraid to start infringement procedures when needed, for example in cases of systematic use of the exclusions. The Rapporteur considers that in order to achieve a strong enforcement policy, it is essential for the Commission to have access to qualitative data.

With regard to the further implementation of the Defence Package, the Rapporteur welcomes the work of the Commission and believes that future cooperation between the Commission and Member States on the implementation of the Directives is needed to achieve the objectives of the Defence Package.

The Rapporteur further notes that the level of SME participation in the defence market remains low. He therefore believes that thorough analysis should be made on the reasons why SMEs do not succeed in fully entering the single market for defence products. He welcomes the work already done by the Commission and emphasizes that they should continue to take appropriate measures in order to support SMEs.

The Rapporteur then highlights that, in order to achieve an open EDEM, Member States will have to work on their cooperation, mutual trust, common planning…

Finally, the Rapporteur considers that there have been multiple changes that affect the European Defence Equipment Market since the Defence Package entered into force, for example the establishment of PESCO. He is thus of the opinion that there should be a follow‑up analysis of the efficiency of the Defence Package in the light of these changes in order to achieve an open EDEM.

 

 


 

MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

on the implementation of Directive 2009/81/EC, concerning procurement in the fields of defence and security, and of Directive 2009/43/EC, concerning the transfer of defence-related products

(2019/2204(INI))

The European Parliament,

 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[5] (‘Defence Procurement Directive’),

 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[6] (‘Transfers Directive’),

 having regard to the report from the Commission to the European Parliament and the Council of 30 November 2016 entitled ‘on the implementation of Directive 2009/81/EC on public procurement in the fields of defence and security, to comply with Article 73(2) of that Directive’ (COM(2016)0762),

 having regard to the report from the Commission to the European Parliament and the Council of 30 November entitled ‘Evaluation of 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’ (COM(2016)0760),

 having regard to the Commission notice of 30 November 2016 entitled ‘Guidance on the award of government-to-government contracts in the fields of defence and security (Article 13.f of Directive 2009/81/EC)’ (C(2016)7727),

 having regard to Commission Recommendation (EU) 2018/624 of 20 April 2018 on cross-border market access for sub-suppliers and SMEs in the defence sector[7],

 having regard to the Commission notice on guidance on cooperative procurement in the fields of defence and security (Defence and Security Procurement Directive 2009/81/EC (2019/C 157/01)[8],

 having regard to the European Parliamentary Research Service (EPRS) study of September 2020 entitled ‘EU Defence Package: Defence Procurement and Intra Community Transfers Directives’,

 having regard to Rule 54 of its Rules of Procedure, as well as Article 1(1)(e) of, and Annex 3 to, the decision of the Conference of Presidents of 12 December 2002 on the procedure for granting authorisation to draw up own-initiative reports,

 having regard to the opinion of the Committee on Foreign Affairs,

 having regard to the report of the Committee on the Internal Market and Consumer Protection (A9-0025/2021),

A. whereas the Defence Procurement Directive seeks to introduce fair and transparent rules for defence procurement to make sure that defence companies in the Member States can access other Member States’ defence markets;

B. whereas the Transfers Directive sets out to improve the functioning of the European defence equipment market (EDEM), promote integration of the EU defence supply chain and increase security of supply, by simplifying the rules and procedures for intra-EU transfers of defence-related products;

C. whereas both directives set out to boost the internal market for defence-related products and to strengthen the competitiveness of the EDEM;

D. whereas the Defence Package directives are needed to further develop a common European security and defence culture, based on the Union's shared values and objectives, with respect for the specific character of the security and defence policies of the Member States;

E. whereas the 2016 Commission evaluation concluded that the objectives of the Defence Procurement Directive had only been achieved partially, since it allowed for an initial increase in competition, transparency and non-discrimination in the EU’s defence procurement market, but that much more progress in Member States’ consistent use of the directive was needed to achieve those objectives fully;

F. whereas the EPRS study pointed out the insufficient effect of the Defence Procurement Directive on the Europeanisation of defence value chains;

G. whereas the 2016 Commission evaluation showed that differences in how the Transfers Directive had been transposed posed major barriers to its effective application, which resulted in slow or incomplete application in individual Member States, a general lack of harmonisation in requirements and procedures between Member States, and highly diverging conditions and limitations in the General Transfer Licences (GTLs) published by Member States;

H. whereas, in addition to the general market entry barriers of geographic distance, linguistic barriers, and lack of cross-border market knowledge, small and medium-sized enterprises (SMEs) in the defence sector also face additional administrative hurdles such as concerns regarding the security of supply, the complexity of the sub-contracting provisions, and the high costs of certification;

I. whereas SMEs face major challenges when participating in public procurement procedures;

J. whereas a major reason for the lack of participation of SMEs is the lack of cross-border access to supply chains; whereas defence supply chains have a substantial national focus, which adds challenges for SMEs that wish to enter defence supply chains in other European countries; whereas, moreover, original equipment manufacturers continue and limit themselves to subcontracting SMEs with which they have a pre-existing working relationship, owing to financial constraints;

K. whereas there is a need to develop a comprehensive and holistic concept for a European defence equipment market which formally connects all existing fragments such as the European Defence Industrial Development Programme (EDIDP), the Preparatory Action on Defence Research (PADR), the European Defence Fund (EDF), Permanent Structured Cooperation (PESCO), the Common Position on Arms Exports, the Dual-Use Regulation, the two directives of the 2009 Defence Package and future initiatives such as common rules on security of supply;

L. whereas without policy coherence and an effort to build links between different fragments of policy there is a risk that action at the EU level will add to existing market distortions and other highly inefficient processes and policies in the defence sector;

Improving the functioning of the internal market for defence products through better implementation and enforcement of the Defence Package

1. Reiterates its support for the ambitions of the Defence Package directives, which were established to promote further integration of the EU defence supply chain and increase mutual trust and transparency between Member States, equal treatment and the overall competitiveness of Europe’s defence industry;

2. Stresses that the effective implementation of the directives is a step towards the EU’s ambition of strategic autonomy and a European Defence Union; underlines that the directives could make EU defence policy more coherent and foster the development of the European defence industry, provided that Member States have a common vision and shared strategic outlook on European defence initiatives;

3. Regrets the continued fragmentation of the EU’s internal market for defence products, which is still leading to unnecessary duplications and the multiplication of inefficiencies in defence spending by the Member States;

4. Welcomes some of the positive trends witnessed in the progressive implementation of the Defence Procurement Directive, namely the increasing number of contract notices and contract-award notices issued by Member States, and the increasing proportion of procurement that has been tendered competitively through Tenders Electronic Daily (TED); stresses, however, that a very high volume of procurement expenditure is still incurred outside the directive and that an overwhelming percentage of contracts are still awarded nationally; stresses also that the procedures are not easily accessible to SMEs;

5. Underlines that the systematic use by the Member States of the provisions relating to exclusion, in particular those laid down in Article 346 of the Treaty on the Functioning of the European Union (TFEU), could undermine the full and proper implementation of the directive;

6. Recalls the Commission’s interpretative guidance as to the conditions under which Article 346 of the TFEU can be invoked in the field of defence procurement, which aims to prevent potentially abusive recourse to, misuse and misinterpretation of this provision by the Member States; calls on the Member States to strictly follow the Commission’s interpretative guidance and asks the Commission to ensure that it is implemented and enforced consistently;

7. Calls for the correct use of exemptions and offset requirements in defence acquisitions, which limit fair competition in the European defence equipment market, and more particularly for the better monitoring and enforcement of the correct usage of the exemption for government-to-government sales in line with the Commission’s 2016 guidance notice on government-to-government sales and the application of the Procurement Directive; asks Member States, in this respect, for more systematic and comprehensive reporting of consistent, accurate and comparable data concerning their use of exemptions in order to improve scrutiny over and the implementation of the relevant Commission guidelines; believes that the Commission should assume its responsibility for monitoring the necessity and proportionality of exclusions invoked by the Member States in their awarding of contracts outside the scope of the Defence Procurement Directive, and should not be mainly reliant on received complaints filed by the industry; urges the Commission, therefore, to step up its efforts and take bold and proactive measures to prevent the misuse of exceptions and adopt a more assertive enforcement policy, in particular by ensuring the effectiveness of infringement procedures;

8. Considers that there is still a strong need to focus on the effective implementation and enforcement of the Defence Procurement Directive, considers that, for that to happen, the Member States should focus on ensuring equal treatment, transparency and competition as well as on access to public procurement in this field, and that the Commission should focus on implementing common reporting standards and providing the Member States with further guidelines and information on the application of the provisions laid down in the directive;

9. Calls on the Member States to properly implement the Defence Procurement Directive and asks those with a large established defence industry to lead by example;

10. Considers that, in order to provide quality-driven and agile procurement, some aspects of the implementation of the Defence Procurement Directive could be improved, such as the Member States’ use of the open procedure, innovation partnerships or other new procedures as provided for in Directive 2014/24/EC[9], and encourages Member States to consistently apply that directive whenever possible; believes, however, that no revision of the Defence Procurement Directive and the Transfers Directive is needed at this point, since the existing regulatory framework is sufficient if correctly implemented and properly used and enforced;

11. Calls, therefore, on the Commission to monitor the implementation of the directives, to improve their transparency and provide guidance to the Member States in order to ensure their consistent and full enforcement and therefore fully achieve their objectives, as the lack of reciprocity could disincentive Member States with a higher degree of implementation;

12. Observes that, in respect of the Transfers Directive, the take-up of new tools, including GTLs, is rather low compared to Individual Transfer Licences (ITLs), which were intended to be replaced by the new tools;

13. Observes, further, that there was a slower and lower than expected uptake of certification, and that there are still barriers to effective application of the directive, with low levels of awareness, particularly among SMEs, of the tools available under the directive and the opportunities that exist in the internal market, and of the system used by the Member States in their export controls, in addition to the lack of harmonisation in the implementation of GTLs, which act as major barriers to the effective application of the directive;

14. Considers, therefore, that the Transfers Directive has only partially achieved its main objectives, in particular that of smoothing the circulation of defence-related products within the internal market and of having an efficient internal market, greater security of supply and improved competitiveness;

15. Underlines the importance of having a genuine internal market for intra-EU transfers of defence-related products, where national authorities are aware of what and to whom products are transferred and where the export authorisations and other restrictions to exports are brought to a required minimum;

16. Notes, in this context, the progress achieved by the Commission with its recommendations on the scope of application and conditions of GTLs;

17. Calls on the Commission to improve the directive’s implementation in individual Member States by insisting that national authorities resolve outstanding issues;

18. Calls for increased development of contacts and exchanges between the national transfer control communities across the EU to address the existing divergences of transfer control practices and the lack of trust between Member States, as well as to assess the appointment of unique national points of contact for intra-EU transfer-related issues;

19. Calls on the Member States to take due account of the Commission recommendations on the scope of application and conditions of GTLs and to avoid adding conditions for transfers under GTLs, which would contradict or undermine the conditions listed in the recommendations; underlines the need to provide translations of national transfer licence regulations, at least in English; calls on the Commission to fully support and assist Member States in developing harmonised global and individual transfer licences for EDIDP and EDF projects;

20. Welcomes the provisions of the directive that aim to foster cooperative procurement in the field of defence and calls on the Member States to make use of all the cooperation possibilities offered by the directive in a genuine spirit of solidarity, notably under the EDIDP and the future EDF;

21. Calls on the Commission to make the follow-up to the recommendations on the scope of application and conditions of GTLs a priority, including by considering the possibility of converting the recommendations into binding provisions, with a view to a progressive harmonisation as an overarching objective for the coming years;

22. Calls on the Commission and the Member States to increase efforts in raising awareness of the directive’s tools and benefits, in particular among SMEs;

23. Takes note of the Strategic Compass intended to conduct a common threat analysis; believes that the Defence Package should be one of its building blocks contributing to export control policies;

24. Calls on the Commission and Member States to improve the quality, transparency, consistency and availability of data and consider the creation of dedicated statistical classification codes in order to facilitate the monitoring of the implementation of these two directives and provide meaningful scrutiny;

25. Highlights the disparities in publication rates of contract notices between Member States on TED; stresses the importance of ensuring the accessibility and usability of the Register of the Certified Defence-related Enterprises (CERTIDER) online database; emphasises the need to systematically make data available on intra-EU transfers, including quantitative data as well as a breakdown by licence categories, in order to better take into account defence and armament activities; notes that such disparities contribute to the lack of reliable data and may cause disruption to the internal market, and that the lack of reciprocity could disincentive Member States with a higher degree of implementation;

26. Calls on the Commission to study the feasibility of establishing common standardised administrative forms with the objective of lowering businesses’ administrative burden, particularly for SMEs, and to build a European approach to transfers of defence-related products;

27. Calls on the Commission to be strong in enforcing the directives, including, by making more use of its right as laid down in Article 258 of the TFEU to start infringement procedures; asks the Commission to initiate infringement procedures instead of solely acting on complaints filed by the industry;

Combating market fragmentation and increasing SME participation

28. Notes that SMEs appear to be less successful in winning contracts under the Defence Procurement Directive than in general EU public procurement; notes, further, that the subcontracting provisions of the directive have clearly not been used on a regular and structured basis by Member States’ authorities; finds that some Member States experience these provisions as complex and difficult to use, which partially explains the limited impact of the directive, and that there is hence a need for SMEs to be encouraged to participate in this process and for procedures to be simplified;

29. Highlights that certification processes are regarded as costly, lengthy and burdensome, and hence neither accessible nor attractive for SMEs;

30. Asks Members States to systematically follow the Commission’s recommendation on cross-border market access for sub-suppliers and SMEs in the defence sector, such as requirements for the quality of information, the division of contracts into lots or the alleviation of the administrative burden arising from the procurement procedure;

31. Considers, therefore, that the goal of increasing SME participation has only been partially achieved;

32. Is of the opinion that the provisions of the directive with regard to competition between subcontractors have had no or a very limited impact on the cross-border access of sub-suppliers and defence SMEs; calls on the Member States to ascertain that their internal procedures allow for SMEs’ cross-border participation and simplify their access to and participation in tendering processes in the fields of defence and security;

33. Observes that a number of SMEs active in the defence markets are involved in dual-use, while many remain specialised specifically in defence-related activities and are therefore particularly dependant on military and defence-related businesses;

34. Calls on the Commission to continue its work and thoroughly examine the causes behind the lack of SME participation;

35. Calls on the Commission to consider creating an updated map of data on relevant SMEs, which, while guaranteeing the protection of sensitive data and intellectual property, outlines their industrial and technological capabilities and which can be publicly accessed by prime contractors from other Member States in order to identify SMEs with the relevant capabilities needed for specific projects, and to propose other effective tools that could increase SMEs’ participation in the public procurement process;

36. Calls on the Commission to improve access to finance for SMEs;

37. Considers that Member-State action could significantly improve cross-border market access for SMEs and sub-suppliers in the defence sectors, and therefore calls on the Member States to implement the Commission recommendations as comprehensively as possible;

38. Calls on the Member States to make more systematic use of existing tools at EU level, such as the Enterprise Europe Network, to support SMEs’ cross-border activities;

Achieving an open European defence equipment market

39. Considers that better implementation of the directives is critical in order to attain the overarching objective of improving the functioning of the internal market for defence products and of contributing to the establishment of an open EDEM;

40. Calls on the Commission to work towards increasing the uptake of the legislative framework on transfers of defence-related products, improving the availability of GTLs throughout the EU and addressing the limited application of the certification scheme, which can boost the development of the EDEM and thereby improve the functioning of the internal market for defence products;

41. Calls on the Commission to undertake specific actions that set out to build more trust among the Member States in the area of defence and security in order to boost their cooperation and create a genuine single market for defence products;

42. Believes that effective implementation of the directives would also further enhance the effectiveness of defence initiatives launched over recent years, notably PESCO, the Coordinated Annual Review of Defence (CARD), the EDF and the revised Capability Development Plan (CDP), which altogether can boost collaborative defence capability planning, development, procurement and operation; calls on the Member States to boost the EDEM through cooperation on projects under PESCO and the EDF; notes in this regard that lessons learnt and best practices stemming so far from the implementation of the Defence Package should be shared among the Member States in order to remedy an uneven level of their implementation;

43. Underlines that a more coherent interpretation and consistent implementation of the EU Common Position on Arms Exports, taking into account the eight EU criteria on arms exports, is needed in order to limit fragmentation of the EU’s internal defence market and reinforce the consistency of its foreign policy; calls for action to address any loopholes which may exist among the Transfers Directive, the Common Position and the Dual-Use Regulation;

44. Calls on the Member States to demonstrate political will in increasing intra-EU defence acquisition and R&D cooperation and to make use of common defence R&D and acquisitions in order to boost interoperability between their militaries;

45. Calls for renewed efforts to tackle persistent technology and innovation gaps and lags in the EDTIB in order to reduce Europe’s growing dependence on defence imports; stresses that in order to build a reliable and comprehensive European defence equipment market and an efficient defence sector, the Commission needs to present a comprehensive EU-wide security of supply regime strategy;

46. Stresses that EU-UK defence cooperation is not covered by the Trade and Cooperation Agreement and recommends that an appropriate analysis be carried out into what impact Brexit will have on the EU defence equipment market;

47. Considers that, since the adoption of the two directives, the EDEM has experienced many changes; calls on the Commission to analyse the efficiency of the tools available in the light of those changes;

°

° °

48. Instructs its President to forward this resolution to the Council and the Commission.


 

 

 

 

OPINION OF THE Foreign Affairs COMMITTEE (11.12.2020)

<CommissionInt>for the Committee on the Internal Market and Consumer Protection</CommissionInt>


<Titre>on the implementation of Directive 2009/81/EC, concerning procurement in the fields of defence and security, and of Directive 2009/43/EC, concerning the transfer of defence-related products</Titre>

<DocRef>(2019/2204(INI))</DocRef>

Rapporteur for opinion: <Depute>Sven Mikser</Depute>

 

SUGGESTIONS

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

1. Reiterates its support for the ambitions of the Defence Package directives, which were established in the context of the 2008 financial and economic crisis, namely to promote further integration of the EU defence supply chain and increase mutual trust between Member States and transparency, equal treatment and the overall competitiveness of Europe’s defence industry; considers that this would address current shortfalls in defence operational capability and ensure that the EU could rely on sufficient and strategic capabilities, increase interoperability, rationalise defence expenditures and make better use of taxpayers’ money by reducing duplication, fragmentation and industrial overcapacities and boosting the competitiveness of a strong, innovative and resilient European Defence Technological and Industrial Base (EDTIB) and a well-functioning, reliable, open, competitive, modern, robust and efficient European defence equipment market (EDEM); expresses its firm belief that the Member States must improve their defence capabilities and capacities and sees the effective implementation of the directives as a step towards the EU’s ambition of strategic autonomy and a European Defence Union, while fully respecting its alliances and partners, and as serving to strengthen its multilateral action and as a necessary element of the development of the European defence industry and of its security and capacity to defend itself against current and future threats; underlines that the directives could make European defence policy more coherent, provided that Member States have a common vision and shared strategic outlook on European defence initiatives;

2. Highlights the progress emphasised in the Commission’s evaluation reports from 2016 and the study by the European Parliament Research Service (EPRS) of 19 October 2020, which show that both directives have helped to open up the internal market for defence and move toward the completion of an internal market for defence goods and services, but that much more progress is needed; calls for more up-to-date evaluations to be conducted as the lack of reliable, precise and complete data on the use of both directives prevent decision-makers and the relevant stakeholders from fully assessing their implementation and engaging in a meaningful process to generate an effective, robust and modern EDEM, and hinder transparency and scrutiny; urges the Member States to generate high-quality data on the implementation of both directives and to consider the creation of dedicated statistical classification codes in order to measure the evolution of the structure of the European defence industry and assess the Europeanisation of defence value chains; calls on the Member States to fully implement and apply both directives and calls on the Commission to ensure that its interpretative guidelines are implemented and enforced consistently and in full in order to avoid their uneven application across the Member States, including by making use of infringement procedures; expresses the hope that the creation of a Commission Directorate-General for Defence Industry and Space (DG DEFIS), whose remit brings together the monitoring and management of the two directives, will also lead to stronger linkages between the two directives and, eventually, truly integrate the defence industry into the internal market;

3. Regrets the continued fragmentation of the European defence market, which is still leading to unnecessary duplications, to the multiplication of ineffective projects and ineffectual defence spending by the Member States; underlines that in view of the economic recession expected to ensue from the COVID-19 pandemic, which is likely to put pressure on defence budgets, deeper integration of the defence industry is required at EU level; believes that an effective implementation of the directives would also further enhance the effectiveness of defence initiatives launched over the past few years, notably the Coordinated Annual Review on Defence (CARD), the Permanent Structured Cooperation (PESCO) and the European Defence Fund (EDF); underlines and regrets, however, the substantial cuts in funding to the EDF, the European Peace Facility and military mobility;

4. Underlines concerns over the possible renationalisation of supply chains, which would run counter to the directives’ objectives; calls for renewed efforts to tackle persistent technological and innovation gaps and lags in the EDTIB in order to reduce Europe’s growing dependence on defence imports; stresses that in order to build a reliable and comprehensive European defence equipment market and an efficient defence sector, the Commission needs to present a comprehensive EU-wide security of supply regime strategy;

5. Recognises the relevance of EU-UK cooperation in the defence industry and the importance of existing cooperation between individual Member States and the United Kingdom;

Directive 2009/81/EC on defence and sensitive security procurement

6. Highlights that an overwhelming proportion of contracts are still awarded nationally; regrets the persistent lack of transparency and significant degree of opacity of some acquisition practices; deplores the widespread use of exemptions and the persistence of offset requirements, which limit fair competition in the European defence equipment market; calls for a reduction in the use of exemptions and offset requirements in defence acquisitions, thereby enabling the EDTIB to develop faster and better as one of the key strategic aims of both directives; calls for more systematic and comprehensive reporting of consistent, accurate and comparable data by Member States concerning their use of exemptions in order to improve scrutiny and the implementation of the relevant Commission guidelines; calls on the Commission to step up its efforts and take bold and proactive measures to prevent the misuse of exceptions and to enforce the directive, in particular by ensuring the effectiveness of infringement procedures;

7. Notes the disparities between the Member States in the rates of publication of contract notices; points out that these disparities could cause disruption to the internal market and that the lack of reciprocity could disincentivise Member States with a higher degree of implementation;

8. Points to the need to ensure that Member States strictly respect the conditions of applications of exemptions and, in particular, to strictly limit the potentially abusive use of Article 346 of the TFEU, not least given the new reality of multinational supply chains and multinational collaborative defence, in order to increase transparency and equality; calls on the Member States to strictly follow the Commission’s interpretative guidance as to the conditions under which Article 346 can be invoked; calls for a clear definition of the types and characteristics of products that may be subject to exemptions and for scrutiny and a careful assessment of the necessity and proportionality of exemptions invoked by Member States on the basis of Article 346, especially when their use may harm the competitiveness of the EDTIB;

9. Reiterates experts’ warnings that if Member States continue their current practices, whereby on average less than 20 % of defence procurement results in collaborative projects, the European defence industry and its technological innovation capacity will be doomed to decline;

10. Welcomes the provisions of the directive that aim to foster cooperative procurement in the field of defence and calls on the Member States to make use of all the cooperation possibilities offered by the directive in a genuine spirit of solidarity, notably under the European Defence Industrial Development Programme (EDIDP) and the future EDF; recommends that major defence projects currently run on a bilateral or multinational basis by Member States outside the framework of EU defence initiatives should be integrated therein in order to allow the meaningful participation of those Member States willing to take part in the projects, ensure that actions are coherent, avoid duplications to make better use of taxpayers’ money, and consistently deliver added value to the entire Union; calls for enhanced cooperation through common defence-related research and development (R&D) projects and acquisitions to support the development of the EDTIB;

11. Notes that the participation of SMEs in the field of defence procurement remains low; encourages Member States to address the causes of this, to strive to lower entry barriers to and reduce complexities for SMEs, and to systematically follow the Commission’s 2018 recommendation on cross-border market access for sub-suppliers and SMEs, notably as regards translating tenders, announcing large procurement programmes in advance, and dividing them into smaller lots, while taking into account the cost and timeline of programmes; calls on the Member States to ensure up-to-date and advertised mapping of the technological capabilities of SMEs, particularly those working on emerging and disruptive technologies, so as to enable prime contractors in other Member States to identify SMEs with the requisite competences for launching a joint project and to enable and enhance fair and open competition and greater engagement with SMEs, while supporting increased transparency;

Directive 2009/43/EC on intra-EU transfers of defence-related products

12. Calls on the Member States to show full political will in ensuring the effective and harmonised implementation of the provisions of Directive 2009/43/EC and in increasing intra-EU defence acquisition and R&D cooperation; calls on the Member States to make use of common defence R&D and acquisitions in order to boost interoperability between their militaries; calls on the Commission to assist Member States with the implementation of the directive and to continue dialogue with national authorities on this matter;

13. Calls on the Commission to promote the involvement of SMEs in cross-border projects and to raise awareness of the tools and benefits of the directive, with particular regard to SMEs;

14. Underlines that a more coherent interpretation and consistent implementation of the EU Common Position on Arms Exports is needed in order to limit the fragmentation of the EU’s internal defence market and reinforce the consistency of its foreign policy; underlines that in its conclusions of 16 September 2019, the Council noted that the strengthening of a European EDTIB should be accompanied by closer cooperation and convergence in the field of export control of military technology and equipment; calls for action to address any loopholes, inconsistencies or contradictions between the ICT Directive, the Common Position and the Dual-Use Regulation; insists on the importance of giving full consideration to Article 4(8) of Directive 2009/43/EC; stresses that prior authorisation before re-exporting products and components would no longer be required if the Common Position is interpreted and implemented uniformly;

15. Recommends that an appropriate analysis be carried out into the impact of both directives on EU-UK defence cooperation in the post-Brexit scenario; calls for specific provisions on defence industry cooperation between the EU and the UK to be drawn up in accordance with the specificities of any general agreement that may be reached between the parties;

16. Deplores the limited use of general transfer licences (GTLs); calls on the Member States to increase transparency by implementing more thoroughly the Commission’s recommendations on aligning the scope of and conditions for the products to be subject to the use of GTLs; calls on the Commission to assess the implementation of its recommendations and to draw up a report thereon; underlines the need for Member States to provide translations of national transfer licencing regulations; calls on the Commission to fully support and assist Member States in developing harmonised global and individual transfer licences for EDIDP and EDF projects;

17. Stresses the importance of ensuring the accessibility and usability of the online Register of the Certified Defence-related Enterprises (CERTIDER), of making detailed data on intra-EU arms transfers systematically available, and of reflecting on the need to update the current statistical framework so as to take better account of defence and armament activities, in order to provide for meaningful scrutiny and to properly assess the implementation of Directive 2009/43/EC; calls on the Member States to report to the Commission every year on the use of GTLs and individual licences; calls on the Commission to keep the section of CERTIDER on GTLs up to date; calls on the Member States, to that end, to systematically notify the Commission of any changes made to their GTLs.


INFORMATION ON ADOPTION IN COMMITTEE ASKED FOR OPINION

Date adopted

10.12.2020

 

 

 

Result of final vote

+:

–:

0:

51

10

7

Members present for the final vote

Alviina Alametsä, Alexander Alexandrov Yordanov, Maria Arena, Petras Auštrevičius, Traian Băsescu, Lars Patrick Berg, Anna Bonfrisco, Reinhard Bütikofer, Fabio Massimo Castaldo, Susanna Ceccardi, Włodzimierz Cimoszewicz, Katalin Cseh, Tanja Fajon, Anna Fotyga, Michael Gahler, Kinga Gál, Sunčana Glavak, Raphaël Glucksmann, Klemen Grošelj, Bernard Guetta, Márton Gyöngyösi, Karol Karski, Dietmar Köster, Andrius Kubilius, Ilhan Kyuchyuk, David Lega, Miriam Lexmann, Nathalie Loiseau, Antonio López-Istúriz White, Jaak Madison, Claudiu Manda, Lukas Mandl, Thierry Mariani, David McAllister, Vangelis Meimarakis, Sven Mikser, Francisco José Millán Mon, Gheorghe-Vlad Nistor, Urmas Paet, Demetris Papadakis, Kostas Papadakis, Tonino Picula, Manu Pineda, Kati Piri, Giuliano Pisapia, Jérôme Rivière, María Soraya Rodríguez Ramos, Nacho Sánchez Amor, Isabel Santos, Jacek Saryusz-Wolski, Andreas Schieder, Radosław Sikorski, Jordi Solé, Sergei Stanishev, Tineke Strik, Hermann Tertsch, Hilde Vautmans, Harald Vilimsky, Idoia Villanueva Ruiz, Thomas Waitz, Witold Jan Waszczykowski, Charlie Weimers, Isabel Wiseler-Lima, Salima Yenbou, Željana Zovko

Substitutes present for the final vote

Andor Deli, Markéta Gregorová, Bart Groothuis

 

 


FINAL VOTE BY ROLL CALL IN COMMITTEE ASKED FOR OPINION

51

+

EPP

Traian Băsescu, Michael Gahler, Kinga Gál, Sunčana Glavak, Andrius Kubilius, David Lega, Miriam Lexmann, Antonio López-Istúriz White, David McAllister, Lukas Mandl, Vangelis Meimarakis, Francisco José Millán Mon, Gheorghe-Vlad Nistor, Radosław Sikorski, Isabel Wiseler-Lima, Alexander Alexandrov Yordanov, Željana Zovko, Andor Deli

S&D

Maria Arena, Włodzimierz Cimoszewicz, Tanja Fajon, Raphaël Glucksmann, Claudiu Manda, Sven Mikser, Demetris Papadakis, Tonino Picula, Kati Piri, Giuliano Pisapia, Nacho Sánchez Amor, Isabel Santos, Andreas Schieder, Sergei Stanishev

RENEW

Petras Auštrevičius, Katalin Cseh, KLemen Grošelj, Bernard Guetta, Ilhan Kyuchyuk, Nathalie Loiseau, Urmas Paet, María Soraya Rodríguez Ramos, Hilde Vautmans, Bart Groothuis

VERTS

Alviina Alametsä, Reinhard Bütikofer, Jordi Solé, Tineke Strik, Thomas Waitz, Salima Yenbou, Markéta Gregorová

NI

Fabio Massimo Castaldo, Márton Gyöngyösi

 

10

-

S&D

Dietmar Köster

ID

Lars Patrick Berg, Jaak Madison, Thierry Mariani, Jérôme Rivière, Harald Vilimsky

ECR

Charlie Weimers

GUE

Manu Pineda, Idoia Villanueva Ruiz

NI

Kostas Papadakis

 

7

0

ID

Anna Bonfrisco, Susanna Ceccardi

ECR

Anna Fotyga, Karol Karski, Jacek Saryusz-Wolski, Hermann Tertsch, Witold Jan Waszczykowski

 

Key to symbols:

+ : in favour

- : against

0 : abstention

 


 

 

INFORMATION ON ADOPTION IN COMMITTEE RESPONSIBLE

Date adopted

22.2.2021

 

 

 

Result of final vote

+:

–:

0:

32

3

10

Members present for the final vote

Andrus Ansip, Alessandra Basso, Brando Benifei, Adam Bielan, Biljana Borzan, Vlad-Marius Botoş, Markus Buchheit, Anna Cavazzini, Dita Charanzová, Deirdre Clune, David Cormand, Carlo Fidanza, Evelyne Gebhardt, Alexandra Geese, Sandro Gozi, Maria Grapini, Svenja Hahn, Virginie Joron, Eugen Jurzyca, Arba Kokalari, Marcel Kolaja, Kateřina Konečná, Andrey Kovatchev, Jean-Lin Lacapelle, Morten Løkkegaard, Adriana Maldonado López, Antonius Manders, Beata Mazurek, Leszek Miller, Dan-Ştefan Motreanu, Anne-Sophie Pelletier, Miroslav Radačovský, Christel Schaldemose, Andreas Schwab, Tomislav Sokol, Tom Vandenkendelaere, Kim Van Sparrentak, Marco Zullo

Substitutes present for the final vote

Marco Campomenosi, Maria da Graça Carvalho, Krzysztof Hetman, Sven Mikser, Tsvetelina Penkova, Barbara Thaler, Edina Tóth

 

 


INFORMATION ON ADOPTION IN COMMITTEE RESPONSIBLE

Date adopted

22.2.2021

 

 

 

Result of final vote

+:

–:

0:

32

3

10

Members present for the final vote

Andrus Ansip, Alessandra Basso, Brando Benifei, Adam Bielan, Biljana Borzan, Vlad-Marius Botoş, Markus Buchheit, Anna Cavazzini, Dita Charanzová, Deirdre Clune, David Cormand, Carlo Fidanza, Evelyne Gebhardt, Alexandra Geese, Sandro Gozi, Maria Grapini, Svenja Hahn, Virginie Joron, Eugen Jurzyca, Arba Kokalari, Marcel Kolaja, Kateřina Konečná, Andrey Kovatchev, Jean-Lin Lacapelle, Morten Løkkegaard, Adriana Maldonado López, Antonius Manders, Beata Mazurek, Leszek Miller, Dan-Ştefan Motreanu, Anne-Sophie Pelletier, Miroslav Radačovský, Christel Schaldemose, Andreas Schwab, Tomislav Sokol, Tom Vandenkendelaere, Kim Van Sparrentak, Marco Zullo

Substitutes present for the final vote

Marco Campomenosi, Maria da Graça Carvalho, Krzysztof Hetman, Sven Mikser, Tsvetelina Penkova, Barbara Thaler, Edina Tóth

 


FINAL VOTE BY ROLL CALL IN COMMITTEE RESPONSIBLE

32

+

ECR

Adam Bielan, Carlo Fidanza, Eugen Jurzyca, Beata Mazurek

NI

Miroslav Radačovský, Marco Zullo

PPE

Maria da Graça Carvalho, Deirdre Clune, Krzysztof Hetman, Arba Kokalari, Andrey Kovatchev, Antonius Manders, Dan-Ştefan Motreanu, Andreas Schwab, Tomislav Sokol, Barbara Thaler, Edina Tóth, Tom Vandenkendelaere

Renew

Andrus Ansip, Vlad-Marius Botoş, Dita Charanzová, Sandro Gozi, Svenja Hahn, Morten Løkkegaard

S&D

Brando Benifei, Biljana Borzan, Maria Grapini, Adriana Maldonado López, Sven Mikser, Leszek Miller, Tsvetelina Penkova, Christel Schaldemose

 

3

-

S&D

Evelyne Gebhardt

The Left

Kateřina Konečná, Anne-Sophie Pelletier

 

10

0

ID

Alessandra Basso, Markus Buchheit, Marco Campomenosi, Virginie Joron, Jean-Lin Lacapelle

Verts/ALE

Anna Cavazzini, David Cormand, Alexandra Geese, Marcel Kolaja, Kim Van Sparrentak

 

Key to symbols:

+ : in favour

- : against

0 : abstention

 

 

[1] OJ L 216, 20.8.2009, p. 76–136.

[2] OJ L 146, 10.6.2009, p. 1–36.

[3] Commission notice on guidance on cooperative procurement in the fields of defence and security (Defence and Security Procurement Directive 2009/81/EC) (2019/C 157/01), and Commission notice on guidance on the award of government-to-government contracts in the fields of defence and security (Article 13(f) of Directive 2009/81/EC of the European Parliament and of the Council) (2016/C 450/01).

[4] Commission recommendation (EU) 2018/624 of 20 April 2018 on cross-border market access for sub-suppliers and SMEs in the defence sector.

[5] OJ L 216, 20.8.2009, p. 76.

[6] OJ L 146, 10.6.2009, p. 1.

[7] OJ L 102, 23.4.2018, p. 87.

[8] OJ C 157, 8.5.2019, p. 1.

[9] OJ L 094 28.3.2014, p. 65.

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