Defence procurement has been exempted from the normal free competition regime that runs through the single market because of the sensitive nature of national security matters. But the treaty exemption in article 296 is now under attack. A combination of scarce defence budgets and a budding European security ambition has led to a push for an end to cosy national deals on procurement. This could pave the way to a logic based on countries and their national defence budgets benefitting from economies of scale.
On the basis of a green paper launched in September 2004, the Commission on 6 December laid out a two-step approach to open up defence markets. An interpretative communication will clarify the scope of the exemption to "reduce the risk of legal misinterpretation". This is likely to be followed up by a directive.
Internal Market Commissioner Charlie McCreevy said: "Action to clarify and improve EU law on defence procurement is imperative. To deliver real benefits we are almost certainly going to have to go beyond a code of conduct and an interpretative communication."
The European Defence Agency put forward a voluntary code of conduct to boost defence procurement. This was adopted on 21 November 2005. EDA Chief Executive Nick Witney said: “Both the Agency and the Commission are concerned to see more competition in defence procurement to give better value for money."
