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Free Movement of Services Balance of Competences Review Public Responses Contents FREE MOVEMENT OF SERVICES BALANCE OF COMPETENCES REVIEW PUBLIC RESPONSES CONTENTS 1. ADS 2. Advertising Association 3. AgustaWestland 4. Airbus Group 5. All-Party Parilamentary Group on Modern Languages 6. Anglo-French Chamber of Commerce 7. Architects Registration Board 8. Association of Chartered Certfied Accountants 9. BAE Systems 10. Bar Council 11. Binley, Brian, MP et al 12. British Association of Snowsport Instructors 13. British Chambers of Commerce 14. British Film Institute 15. British Medical Association 16. British Standards Instituion 17. BT 18. Business Services Association 19. BusinessEurope 20. Cammell Laird 21. Campbell Bannerman, David, MEP 22. Centre for European Reform 23. Commercial Broadcasters Association 24. Confederation of British Industry 25. Engineering Council 26. Federation of Small Businesses 27. Instituion of Civil Engineers 28. Institute of Chartered Accountants of England and Wales 29. Institute of Chartered Accountants of Scotland 30. Institute of Chartered Secretaries and Administrators 31. Institute of Directors 32. Law Societies of England & Wales, Law Societies of Scotland 33. Liberal Democrat MEPs 34. Local Government Association 35. London Chamber of Commerce and Industry 36. Luff, Sir Peter, MEP 37. National Council for Voluntary Organisations CONTENTS (CONTINUED) 38. Northern Ireland Department for Employment and Learning 39. Northern Ireland Department for Enterprise, Trade and Investment 40. Ofcom 41. OpenEurope 42. Pazos-Vidal, Serfain 43. Producers Alliance for Cinema and Television 44. Royal College of Nursing 45. Scottish Government 46. Tannock, Charles Dr, MEP 47. Thales 48. Three 49. TIGA 50. Valenta, Petr 51. Van Orden, Geoffrey, MEP 52. Wirtschaftskammer Österreich Government’s Review of the Balance of Competences between the UK and EU: Free Movement of Services Review About ADS ADS is the premier trade association advancing the UK’s Aerospace, Defence, Security and Space industries, with Farnborough International Limited, the organisation that runs the Farnborough International Airshow (FIA), a wholly-owned subsidiary. ADS comprises around 900 member companies across all four industries, with over 850 of these companies identified as Small and Medium Size Enterprises (SMEs). Together with its regional partners, ADS represents over 2,600 companies across the UK supply chain. The UK is a world leader in the supply of Aerospace, Defence, Security and Space products and services. With strengths in both manufacturing and innovation, the four sectors that ADS represents support one million UK jobs, export £22bn and invest around £3bn in Research & Development on an annual basis. Summary of ADS submission This submission addresses the defence procurement section of the Government’s call for evidence on the single market (free movement of services). The UK Defence Sector believes that the UK Government should resist any initiatives which would extend European Commission competence over defence procurement to the detriment of national member-state competence. The Commission should focus its attention on monitoring implementation of the recent Defence Procurement Directive. It has a role to play in increasing competition in the European market, supporting SMEs, and encouraging cooperation between member- states. The Commission’s Communication on the defence and security sector is a welcome contribution to the debate on the European defence industry. However, the UK Defence Sector would wish to see the UK Government resist the Commission’s proposals to review the negative effects of offsets in third countries and support defence marketing abroad, which would extend Commission competence over international trade in military goods. 1. Member-state competence over defence procurement 1.1. Responsibility for the fundamental European defence policy challenges continues to reside with individual member-states, and not the European Commission. The UK Defence Sector therefore wishes to see the UK Government resist any proposals 1 which would extend Commission competence in defence matters and undermine the national competence of individual member-states. 1.2. European defence industrial activity is dominated by a handful of member-states. It follows that any realignment of defence supply in Europe should be driven by those member-states. 2. Role of the European Commission in defence procurement 2.1. Ongoing financial constraints mean there is an economic imperative to spend more smartly on defence. This will require stronger cooperation between member-states. 2.2. UK industry recognises and supports the Commission’s efforts to foster an open and competitive defence market that encourages innovation, while minimising bureaucracy and the regulatory burden on business. 2.3. The Commission has a key role to support the development of the defence internal market, through monitoring the implementation of the existing Defence Procurement Directive. 2.4. In developing any proposals, close engagement with member-states (particularly those substantially involved in the defence market) is essential to ensure that Commission initiatives complement the policies of member-states. 2.5. UK industry welcomes the recently implemented Defence and Security Directive and Intra Community Transfers Directive. These Directives should improve the performance of the European defence market, but they must be given time to embed before any further changes are proposed. The former directive is designed to increase collaboration; yet recent examples suggest the UK may be taking too restrictive a line in its interpretation of the Commission’s intentions. 2.6. The Commission’s draft regulations on Horizon2020 included unwelcome provisions on the transfer of intellectual property, which have been removed from the current draft. The Commission should understand UK industry’s strength of feeling on this matter, and the UK Government should continue to monitor the situation closely. 3. European Commission Communication “Towards a more competitive and efficient defence and security sector” The UK Defence Sector would wish to see the UK Government resist Commission initiatives in the following areas of procurement outlined in its Communication: 3.1. Action in relation to international trade in military goods. Any action by the Commission will extend or confirm their competence, to the detriment of national competence. UK industry does not therefore support the Commission Communication’s proposals to: review the negative effects of offsets in third countries; and support defence marketing abroad. Commission involvement in defence marketing abroad would be particularly inappropriate, as it would risk undermining government-to-government activity and infringing on the sovereign ability to act. 2 3.2. While the Communication proposes no new legislation, it does intend to launch a Green Paper on control and ownership of critical industrial assets. UK industry does not consider that the Union has a legitimate or useful role in this area. The UK Defence Sector would wish to see the UK Government prioritise the following initiatives, which should be driven by individual member-states based on agreements between national governments: 3.3. Agreement for the restrictive application of Article 346, and a clear definition and justification of member-states’ requirements for sovereign industrial capabilities. The UK Government’s 2012 Defence Technology Strategy White Paper offers a useful template. 3.4. Action by the Commission (as proposed in its Communication) to provide guidelines for the use of Article 346 in the field of State Aid. 3.5. UK Industry supports efforts to prioritise the simplification of rules and improve SME access to defence contract and sub-contract opportunities. The UK has the most extensive defence supply chain in Europe; it is therefore in the interests of UK industry to ensure that European supply chains are open to new SMEs. 3.6. A commitment from individual member-states for a step-change in consolidation of demand across Europe. This should include: 3.6.1. New projects and programmes being based on common capability requirements. 3.6.2. Recognition by member-states that collaboration should be the default (non- binding) option on major new programmes. 3.6.3. Greater use of common purchasing (cf European Defence Agency’s nascent “Effective Procurement Methods”). Other potential measures might focus on: how financial mechanisms and incentives can support collaboration and encourage investment in defence; the availability of EU structural funding to address issues of rationalisation; and whether EU R&D funding could support dual-use technology products in appropriate circumstances. 3.7. Secure an intergovernmental commitment on security of supply of defence goods and services which would provide, at minimum, a political guarantee that, throughout the supply chain, a member-state will not veto exports destined for another member- states’ armed forces. This is important for both procurement in the market as well as collaborative programmes, and would desirably be complemented by a ‘best endeavours’ statement in relation to exports to non-EU end-users. 3.8. Member-states’ agreement to promote the provision of services to national MODs from the private sector to provide efficiencies, stimulate consolidation, and promote economic growth. The UK leads Europe in expanding the remit of the private sector in defence activities, particularly support. 3 Advertising Association response to the Government’s review of
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