The European Commission wants to tackle obstacles to cross frontier trade in defence related products within the EU, thereby facilitating cross-border procurement of Member States’ armed forces and industrial cooperation in Europe. So far, the circulation of defence related products within the internal market is constrained by a web of heterogeneous and disproportionate national licensing procedures.

Until now, national systems to control transfers of defence equipment have not distinguished between exports to third countries and transfers to other Member States. Applying heterogeneous and disproportionate national licensing systems hampers the security of supply between Member States, costs business over 400 M€ a year and curtails market opportunities in other Member States for competitive subcontractors from Small and Medium-Sized Enterprises (SMEs).

In order to change this situation, which is incompatible with the aims of the internal market and European security and defence policy, the Directive on intra-EU transfers of defence products will significantly simplify national licensing procedures thereby facilitating cross-border exchanges within the EU. This will help make defence industries more competitive and facilitate SME participation in prime contractors’ supply chains.

By streamlining those procedures, this new proposal proposal will contribute to make European defence industries more competitive. In addition, it should enable Member States to meet military needs at lower cost and enhance security of supply for public procurement and industrial cooperation. To preserve the overall prevailing level of security interests’ protection, the facilitation of intra-EU transfers has been complemented by mutual confidence-building measures.

Concretely, the EU framework will induce Member States to replace as far as possible their existing individual licences by general licences for those intra-community transfers where the risks of undesired re-exportation to third countries is under control, namely:

• Purchases by armed forces of others EU Member States.
• Transfers to certified companies of components in the context of industrial cooperation.
• Transfers of products necessary for cooperative programmes between participating Member States.

Global licences, regrouping several transfers to several recipients by one supplier, should in principle cover most of the remaining of intra-community transfers, individual licensing thus becoming the exception. Member States will remain free to determine the products eligible for the different types of licences, to set terms and conditions of such licences and to continue their cooperation in intergovernmental bodies such as the LoI.

Commission Vice-President Günter Verheugen, responsible for enterprise and industry policy, highlighted that this “approval brings us a decisive step forward towards setting up a true European defence equipment market. Member States will soon cease to consider other Member States as third countries when authorising the circulation of defence-related products within the EU. I am also very grateful that thanks to a collective engagement of all parties concerned the directive has been adopted in less than a year".