Europe moves to boost competition in defence markets

EU defence ministers are set to give the green light to the first major initiative aiming to open up the European arms industry markets, strictly protected by national rules from foreign competition.

Ministers from 24 EU member states - excluding Denmark, due to its opt-out - are gathering for a meeting of the steering board of the European Defence Agency (EDA) in Brussels on Monday (21 November).

The main point on their agenda is the adoption of a voluntary code of conduct for the sale of military equipment, worth around €30 billion a year.

It should apply to defence procurement contracts worth €1 million and above, excluding nuclear weapons and chemical armaments.

EDA chief executive Nick Witney regards the move as "a landmark decision."

"The desire to inject competition into this hitherto protected market has been something that has been recognized as hugely beneficial for decades, but we haven`t found a way to do it," Mr Witney told journalists on Friday (18 November).

The code of conduct - to come into force next July - will oblige signatories to publish tenders for planned defence equipment purchases on the internet, with European companies allowed to compete for most contracts.

The code will not be legally binding, and it will allow exceptions for tenders viewed by national governments as highly sensitive - a move which will need to be justified.

The arms industry has so far been protected by the EU treaty from the regular rules for the bloc's internal market, as it was considered a crucial matter of national security.

Both the European Commission and MEPs have previously supported efforts to open up the arms sector, suggesting that competition will lead to a better use of taxpayers' money.

However, both the commission and parliament suggest the liberalisation of defence markets should be carried out through a legally binding EU directive, rather than using a voluntary code of conduct based on an intergovernmental agreement.