EU to increase competition in defence industry

EU defence ministers are expected to agree on a voluntary code to boost cross-border competition in military equipment in November.

The decision to open up Europe's 30 billion euro defence market is likely to emerge as part of member state co-operation within the European Defence Agency, its chief executive Nick Witney suggested in an interview with the Financial Times.

Mr Witney said the project would be kicked off with one pilot area, which might cover various "land systems", such as armoured fighting vehicles.

He pointed out that up to 10,000 such vehicles will be ordered during the next ten years and as the industry is so highly fragmented, their costs could be very high, if nothing in the current situation is changed.

The defence industry is currently exempted from normal competition rules applied for the European internal market, as it is considered a national security issue.

Commentators argue that a lack of competition means that member states pay too much for the equipment by their national producers, which leaves them with fewer resources for research into new technologies.

The European Defence Agency was set up in July 2004 and it aims to support the EU member states in improving their military capabilities.

Defence ministers of 24 participating countries (excluding Denmark) are represented in its Steering Board, chaired by EU High representative for foreign affairs Javier Solana.

Aside from the member states' initiative to open up military markets, the European Commission is currently studying the results of the public consultation about drawing up common European rules for public procurement within the defence industry.