EWG 35 EXPORTS: RESULTS OF OUR FIRST 6 MONTHS OF ACTIVITY.
The 13th-14th November 2023 Council of the Presidents of EURODEFENSE approved the Terms of References of the newly created EWG 35 on Arms Exports (ToR see below). The main subject of this exercise is arms exports to third countries.
It appears to be particularly topical in view of:
- The dynamic created by the Trilateral Agreement (FR/GE/SP) regarding defence industry export controls signed in Paris on 17th September 2021 and enforceable from 9 June 2022, with since then 3 countries already having expressed their interest to join: the UK, the Netherlands and Italy.
- The revision of the Common Position (due every 5 years) by the Council of the EU planned in mid-2024.
- The EU Commission proposal of a White Book on the Dual Use R&T goods released the 24 January 2024.
- The Joint Communication of the European Commission (Thierry Breton) and of the High Representative of the Union for Foreign Affairs and Security Policy (Josep Borrell) on the European Defence Industrial Strategy and the proposal for a Regulation establishing the European Defence Industry Programme released the 5 March 2024, with a direct impact of our topic for programs co-funded by various EU instruments.
We organized our work through online sessions associating on a monthly basis the Chapters of EuroDefense of France, Germany and Spain, as co-chairs and of the Netherlands and the UK as well.
Our common view is that, as expressed in our ToR (see below), the arms export regulation, as national sovereign prerogative, represents a critical part of the foreign policy. The export potential is at the same time critical to the international competitivity of the respective national Defence Technological and Industrial Base (DTIB). For the reinforcement of the European operational and technological capacities, the intra-European cooperation is a must, to provide the needed critical mass, as long as it’s not fragilizing its export potential. The dilemma is therefore to make compatible the national sovereignty feature of the arms export regulation and the interdependence willingly created by the intergovernmental and industrial cooperation within Europe.”
We fully converge on the conclusion that the proper balance in this respect has been reached by the Trilateral Agreement (FR/GE/SP) of 17thSeptember 2021, which states as a principle the respect by one partner of the export clearance of the other(s), for governmental or industrial cooperative programs and when this partner’s industrial content remains below a threshold of 20 % (de minimis rule), but keeping the ultimate right to oppose by exception the export concerned, in case of direct interest or national security consideration. In that case, the signatories will hold consultations to unblock the situation or find alternative solutions.
Our 3 key common conclusions and recommendations towards our authorities resulting from the EWG 35 on Arms Exports are:
->Solid control of arms export is a major government responsibility of our respective Member States, but, if cleared among cooperating Member States, strong coordinated political support as well is desirable in a very competitive environment.
-> To achieve a critical mass for our defence industries arms exports to third countries are of critical importance, just as the progressive establishment of a Common Security and Defence Policy within the EU, the European aspiration to strategic autonomy and the development of cooperative programs. The arms exports policy, although it is kept as an area reserved to the sovereign decisions of the member states, is part of the EU’s CSDP. This has been reflected in the approval of the Common Position on Arms Exports, currently under review, in the Regulations that impose sanctions on Russia and other countries, and in Regulation 2012/821 on the control regime for the export of dual-use products.
->Full support of the principles of the current trilateral agreement, its geographical extension and its ability to serve as a common reference for the programs co-funded by the EU instruments and for the updating of the Common Position. Conversely to not recourse to the Trilateral Agreement as the legal framework or as the proper pattern would trigger the creation of a different EU reference which would de facto fragilize the Trilateral Agreement.
We review at each of our session the 8 following points:
-Information of our respective authorities on our EWG Exports, notably its ToR.
-Quality of implementation of the Agreement by the 3 signatories Member States.
-Extension of the trilateral agreement to UK, the Netherlands and Italy.
-Possible extension to Sweden?
-Status of the general licenses conceived for i.a. intra-EU transfers.
-Possible use as a reference of the Trilateral Agreement for the programs co-funded by the EU instruments.
-Possible use as a reference of the Trilateral Agreement for the coming revision of the Common Position.
-Evolution of the Dual Use regulation as envisioned in the White Book of the Commission.
The information gathered and our corresponding recommendations are organized according to the same 8 points:
1-Information of our respective authorities on our EWG Exports, notably its ToR: ongoing
2-Quality of implementation of the Agreement by the 3 signatories Member States:
No observation nor expectation of problems of implementation in France or Spain, but the monitoring of the implementation by Germany is considered important, due to the sensitivity of the subject in Germany. The implementation is considered positive, even if a bit too slow. There are two positive evolutions to be noted: 1) the German administration encourages the defence industry to recourse to the article 2 of the Trilateral Agreement, which concerns the industrial cooperation. 2) the unlocking of the exportation of additional EFAs by the UK to Saudi Arabia expresses a deep understanding by Germany of the merit to converge as much as possible with its partners in handling the export issues of common goods, fruits of the cooperation.
Nevertheless, a remaining concern is that a new legislation on export policy could be still at the agenda of the current coalition in Germany, even if the time before the next election (Fall 2025) is becoming short. Still some ideas are being discussed, which are not compliant with the Trilateral Agreement such as vote at qualified majority of cooperating partners on the exportability of a product of the cooperation, the notion of ‘a white list’, the Europeanisation of the process in contradiction with the national prerogatives on such matter, the creation of specific rights for NGOs to challenge an export license or seek penalization in court of industrialists whose authorized arms exports caused casualties
Important next milestone: the meeting of the Permanent Body created by the Trilateral Agreement which will take place the 23rd of April 2024 in Berlin, supposed to cover its implementation as such, but also the various perspectives of its extension.
3-Extension of the Trilateral Agreement to UK, the Netherlands and Italy:
-The UK case: late 2023, in order to address positively the UK candidacy, 3 documents have been sent by the 3 signatories nations to the UK authorities: note verbale expressing their support to the extension to the UK; interpretative non-paper of the trilateral agreement; courtesy translation in English.
Since some delay in the process, but no indication whatsoever that the UK is changing its intention to join or of any loss of interest by the three partners of having the UK joining.
-The Nl case: work in progress in parallel of the UK’s one. The current caretaker Dutch Government and the new Parliament can pursue the candidacy, without having to wait for the formation of the new government to be formed after the last general elections. Important element of context: In the NL, rejection by the Appeal Court of the authorization of exports of parts of F 35 to Israel (only the 8 criteria of the CP were supposed to apply, not the broader foreign policy considerations). The NL Government announced that it will appeal the decision in the court of cassation, whose decision is now expected end 2024. The no more authorized exportations of spares from the NL most likely being directly supplied by the USA.
-Italy candidacy was mentioned in the Italian-German Strategic partnership released early 2024: the 18th of March, Italy sent a note verbale to France, as point of contact for the Trilateral Agreement, to formulate its candidacy to join. The official submittal took place the 9th of April.
4-Possible extension to Sweden(?): Sweden could be approached pro-actively one way or the other, by reference to the mindset of the Letter of Intent (LoI) Framework Agreement (FA) Treaty signed on 27 July 2000 by the defence ministers of France, Germany, Italy, Spain, Sweden and the UK. It aimed to create the political and legal framework necessary to facilitate industrial restructuring in order to promote a more competitive and robust European Defence Technological and Industrial Base (EDTIB) in the global defence market.
5-Status of the general licenses: conceived initially for intra-European weapon equipment trade but used marginally here and there for reexport facilitation (ex: Ukraine,) or transfers; NL has introduced 3 General Licences regimes; FRA has adopted in 2022 a new reference (LCTFR 111 for facilitating trade between partners working in cooperation. The authorization of general licenses for intra-Community arms trade has been regulated in Spain by a Royal Decree of May 2022, on foreign trade of defence and dual-use equipment. Spain also has adopted (in May 2022) a decree on general licences to ease intra-European trade. Same type of approach in the UK. The use of general licenses is definitely as a useful instrument to smoothen intra EU export of arms or components. But we need the dedicated instrument of the Trilateral Agreement for dealing with Export issues of cooperative projects to third markets.
The Joint Communication of the EU Commission and of the High Representative on “A new European Defence Industrial Strategy (EDIS) indicates that ‘the Commission will take actions to facilitate the intra-EU transfers of defence related products in EU-funded projects and seek to simplify the management of transfer licensing conditions and processes, in particular by introducing clauses on transfers in the concerned Model Grant Agreement with the aim of limiting the recourse to end-user certificates.” This last assertion is debatable in a global context where countries under sanctions still receive arms parts from Western countries. The end-user certificate has on the contrary to be fully implemented and properly controlled.
In this respect, Spain started in 2022 to apply on-site inspections in selected countries of destination after the export had been completed, in order to avoid re-export or to control the use given to the exported equipment. In 2022, 21 operations in 14 countries were subject to these inspections.
6-Use as a reference of the Trilateral Agreement (in the course to be extended) for the programs co-funded by the EU instruments: it should cover programs co-funded by the Commission such as the EDF or EDIP, when adopted, but also the tools funded under the intergovernmental CSDP, such as the European Peace Facility. The reference to the Trilateral Agreement in the process to be extended already to UK, NL and Italy, makes a lot of sense, with two options: either as the legal framework for the signatories countries of the Agreement or as the pattern to be followed to third countries associated to a program but not part or not yet part of the Agreement: i.e. national control, trust in the assessment by the product integrating country when it concerns international cooperation “with no opposition of a concerned transfer or export, other than under exceptional circumstances in cases where the transfer or export will have a negative effect on its direct interests or its national security”. To the contrary, to not recourse to the Trilateral Agreement as the legal framework or as a proper pattern would trigger the creation of a different EU reference which would de facto fragilize the Trilateral Agreement. This recommendation is aligned with the paragraph related to the export issue of the Joint Communication of the EU Commission and of the High Representative on ‘A new European Defence Industrial Strategy ‘(EDIS), re-using the wording of the Strategic Compass: “Considering the ongoing review of the EU Common Position 2008/944/CFSP on arms export control, the Commission together with the High Representative renews the call to Member States to explore ways towards the streamlining and gradual further convergence of their arms export control practices, especially for those defence capabilities that are jointly developed. For the same purpose, Member States should also exchange best practice on export control rules for jointly developed capabilities”. It’s exactly what is currently in progress with the dynamic of extension of the Trilateral Agreement and therefore the governments party to the Agreement should strive to make the principles of the Trilateral Agreement part of future EU-instruments such as the CP and EDIP.
NB: it goes without saying, but it is of utmost importance to make perfectly clear that only the countries concerned by a cooperative, industrial or de minimis issue would have to coordinate on a particular case of exportation and not the all the signatories of the Agreement.
7-Use of ‘Trilateral Agreement (in the course to be extended) as a reference in the Common Position to be revised by the European Council mid 2024.
As for the programs co-funded by the EU instruments (see above), the same logic conducts to strongly advise to refer in the Common Position or in the accompanying Guide to the ongoing convergence of positions of the Member States, having joined or willing to join the Trilateral Agreement.
8-Dual Use: the Commission has released the 24/01/2024 draft of White Book on the dual use goods. Apparent concerns of Member States willing to make sure that the proposal will not entail any confusion on the national sovereign responsibility of the Member States regarding their export control policy. In its context, the wording of the White Paper (Paragraph 5.3) may give rise to concerns: ” The Commission would also be ready to make comments or adopt opinions in situations where it considers that the new National Control List are likely to affect the public security of more than one Member State or the Union’s interest”. The EWG 35 had no time to go deeper together on this important issue and intend to dig deeply into it
3-CONTINUATION OF THE ACTIVITIES OF THE EWG 35 EXPORTS as an OBSERVATORY for properly monitoring the evolution of this topical issue
Terms of Reference of the EWG 35 Exports
The EWG 35 Exports should seek a common understanding of the situation and policy in the Member States (MS) concerned and propose a way ahead for the control and the promotion of export of weapon system and equipment developed in cooperation by MS (government-to-government, B2B, or subcontracting), or by MS with co-funding through the European Defence Fund (EDF), or fully funded by the EDF.
The EWG 35 aims at the reinforcement of the European Union Defence Technological and Industrial Base (EDTIB), through increasing its competitiveness in the global market: its critical mass needs both cooperation and exportation. The sustainability of the EU Arms industry is to be ensured within the framework of a more aligned application of the Common Position 2008/944/CFSP which will be reviewed in 2024.
To that end EWG 35 should examine the following issues:
->seek a common understanding of the situation and policy in each MS concerned as well as the ongoing reflections in the European Parliament, the Commission, and the EEAS (European External Action Service). As instrument of the CFSP, the Working Group on Conventional Arms Exports (COARM) is in charge to prepare the revised version of the Common Position to be adopted in 2024 by the EU Council.
->propose a way ahead for the control and the promotion of export of weapon systems and equipment developed in cooperation by MS, through bi-plurilateral governmental program or industrial partnership or subcontracting (de minimis rules).
->propose a way ahead for the control and promotion of export of weapon systems and equipment by MS with co-funding through the EDF (European Defence Fund), or fully funded by the EDF, and the EPF (European Peace Facility).
->consider as well the weapon systems and equipment dealt by the new mechanisms in preparation such as EDIRPA (European Defence Industry Reinforcement through common Procurement Act), EDIP (European Defence Investment Program) or ASAP (Act in Support of Ammunition Production).
->measure and appreciate the substantial steps ahead in terms of convergence between MS in Arms Export Policy achieved by the bilateral France-Germany agreement signed in November 2019 regarding Defence Industry Export Controls, and then trilateral agreement signed in September 2021 with the junction of Spain with the perspective of extension to other MS or accepted like-minded third parties.
The EWG 35 will try to answer to the following questions with the aim of making proposals to various parties concerned:
1- What are the national political and economic interests that motivate the promotion of exports? Do such interests exist also for a group of MS, or for European Union (EU) as a whole?
2- What are the national modes of control of these exports? Are they amended when participating in a multinational development?
Do existing EU guidelines on internal trade ease the flow of subcontracts in cooperative programs?
Do the EU guidelines on exports outside of EU ease national concerns on control and promotion of cooperative programs’ exports by MS participating in these programs? Or of industrial cooperation or subcontracting between EU industrial partners?
3-What rules/criteria should be selected for controlling and promoting intergovernmental or industrial cooperative programs’ exports outside of EU? Is it sufficient to let the participating MS agree on a set of rules for each governmental or industrial program and for intra-European subcontracting (de minimis rules)?
4-When EDF, European Peace Facility (EPF) and/or coming EDIRPA/EDIP/ASAP co-funds a program, should additional rules/criteria apply? Impact of the dual use goods rules?
What rules for programs fully funded by the EDF (mostly R&T programs producing controlled technologies)?
*****
Background to the ToR of EWG 35,
1. State of the art in the European Union:
The arms export issue is intrinsically part of the national responsibility of each EU Member States on defence matters. As expressed by Article 346 (b) of the Consolidated Version of the Treaty on the functioning of the European Union: “any member State may take (such) measures as it considers necessary for the protection of the essential interests of its security which are connected with the production of or trade in arms, munitions and war material.”
The arms export regulation, as national sovereign prerogative, represents a critical part of the foreign policy, as evidenced by the strategic dimension of the armament relations with third countries of the main word players, being the USA, Russia, France, Germany, China, UK, Spain, Israel, South Korea, Italy (2021 SIPRI ranking), with rising place of Türkiye to be mentioned.
In making decisions on arms exports EU MS apply Common Position 2008/944/CFSP 2008 as a common framework that expresses the values of which the EU has been founded.
The export potential is at the same time critical to the international competitivity of the respective national Defence Technological and Industrial Base (DTIB), taking into consideration the too narrow size of the national markets, with the noticeable exceptions of the USA and of China. Perhaps also India in the medium-long term.
For strengthening the operational and technological capacities within the EU, the intra EU cooperation is a must. That way it will be possible to provide the needed critical mass, as long as it’s not fragilizing its export potential. The dilemma is therefore to make compatible the national sovereignty feature of the arms export regulation and the interdependence willingly created by the intergovernmental and industrial cooperation within the EU and with like-minded third parties.
A balance in this respect has been reached between France and Germany after decades of good practices under the Debre-Schmidt agreement (1971-1972), with the bettered Franco-German bilateral agreement of November 2019, joined by Spain in September 2021. The agreement states as a principle the respect by one partner of the export clearance of the other(s), for governmental or industrial cooperative programs and when this partner industrial content remains below a threshold of 20 % (de minimis rule) but keeping the ultimate right to oppose by exception the export concerned, in case of direct interest or national security consideration.
It's of utmost importance to work on how to extend this “bottom up” approach to other willing Member States and even to accepted candidate third parties.
The Commission itself seconds such an approach in its 15.2.2022 Contribution to the common security and defence policy of the EU:
- “… The Commission encourages Member States to pursue (these) discussions to facilitate exports control procedures for such products (i.e., developed in an EU framework). This process could also draw on the experience of bilateral and multilateral accords between Member States for jointly developed capabilities;”
- “To preserve the attractiveness of joint defence capability projects, the Commission invites Member States to seek an approach according to which, they would respectively not restrain each other from exporting to a third country any military equipment or technology incorporating components from another Member State exceeding a certain de minimis threshold.”
2 - Exporting arms: How and Why?
How? Ethically:
-Article 51 of UNO charter: Help against aggression, deterrence.
-UN, EU and national embargoes and technology control regimes
-O.E.C.D. anti-corruption rules
-EU 2008 code of conduct (Common Position) to be revised in 2024.
-2009 EU directive on exports inside Europe and similar L.O.I. rules.
-respect of client’s long-range interests: no embargoes post contracts in principle, without prejudice of exceptional circumstances.
Why? Foreign policy and industrial policy.
-alliances, bilateral treaties, political influence
-continuity of design bureau between two major programs
-continuity of production skills
-keeping monopolies’ production prices down to international (US)prices
All this applies to the EU Member States and would apply eventually to a unified Europe. Today foreign and industrial policies being national, decisions on arms control must be taken on a national basis, or on a multilateral basis for governmental or industrial cooperative programs or subcontracting from EU Member States (de minimis rules).
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