Select Committee on Defence Third Special Report


1.  The Government welcomes the interest shown by the Committee in this Agreement and, in particular, its conclusion that "the intended effects of the Agreement should bring overdue improvements in the European defence markets". The Committee, in its report, has drawn particular attention to a number of key issues, which are highlighted below. The Government's views on these issues follow the highlighted text.

2.  Paragraph 7. "¼For the moment, the Framework Agreement is mainly confined to commitments to speedy consultations to resolve any difficulties over supplies¼"

The Government shares the Committee's view that the main commitment in Part 2 of the Agreement is to consult on a wide range of situations that may threaten Security of Supply. Each Party will need confidence that they will have secure lines of supply for defence material produced in the other five countries. The Committee noted that this Agreement would reassure nations by committing the Parties to not unnecessarily hinder the supply of defence material to each other. Moreover, the Parties are also committed to work together on providing supplies from national stocks; priority and allocation of supplies; and reconstitution of supply facilities.

3.  Paragraph 10. "The main value of the Framework Agreement in seeking to ensure security of supply will be by providing a means to apply political pressure to those countries not following the spirit of the Agreement."

The Government agrees with the Committee.

4.  Paragraph 21. "Given the decades it has taken to put collaborative procurement programmes on to a sounder footing under OCCAR, there cannot but be grounds for a degree of scepticism about the hopes for open, competitive and well-managed collaborative research programmes being advanced by the rather imprecise provisions of the Framework Agreement."

The Government acknowledges that the Framework Agreement limits itself to general statements about the conduct of co-operative Research and Technology (R&T). However, it does contain the key principles identified by the six nations for the effective conduct of collaborative R&T. It has always been the intention that these principles should be translated into a more detailed system for the conduct of actual R&T programmes by the development of a suitable Memorandum of Understanding (MoU) amongst the six nations. Other European partners who were willing and able to embrace the same working practices could possibly join this MoU. The EUROPA MoU and its subsidiary documents are intended to be such an instrument. It should also be noted that the six nations already have considerable experience of successful R&T co-operation amongst themselves, through other existing bilateral and multilateral fora.

5.  Paragraph 22. "We nevertheless welcome the Framework Agreement's stipulation that competition should be the preferred method for managing collaborative research."

The Government welcomes the Committee's support.

6.  Paragraph 23. "The UK will continue to have to balance carefully the relative industrial and technological benefits it derives from collaborating with Europe and with the US."

The Government agrees with the Committee. The UK enjoys strong collaborative research relationships with both the US and our European partners, and wishes to sustain both.

7.  Paragraph 23. "Access to US technology developed and matured in US research programmes must remain a vital part of the UK's research strategy."

The Government agrees with the Committee's view.

8.  Paragraph 27. "It is clear, however, that the anxieties within industry about transfer and protection of intellectual property will have to be allayed as work on the Framework Agreement is taken forward. As far as the use of technical information is concerned, that requirement will best be served by industry's close involvement in that process."

The Government recognises the importance of allaying industry's anxieties about the transfer and protection of intellectual property. It intends to do this by ensuring that the relevant Integrated Project Teams will manage the transfer of the information and ensure that disclosure does not breach the rights of third parties. The procedures on the Protection of Commercially Sensitive Information in Part 8 of the Treaty will apply to any such transfer.

Discussions are currently taking place to establish harmonised contractual and legal arrangements for the necessary protection of information. Such discussions will be based upon Article 44 and Part 8 of the Framework Agreement. Industry will be fully consulted during the negotiations. The objective will be to develop a common strategy within the six nations to ensure the protection of industry's commercial information but without unnecessary bureaucracy.

The working group dealing with the treatment of technical information is currently engaged in formulating legal and contractual measures which will secure the protection of industry's commercial information. Such measures will also include a commitment to enter into direct confidentiality arrangements with industry where appropriate. Industry's proposals have been sought in this area and full discussions with industry on the protective measures to be implemented are intended to take place in the near future.

9.  Paragraph 31. "We share the Defence Industries Council's concern about the risk of duplication and overlap if the Framework Agreement results in the creation of any new bodies in this already overcrowded world of European defence requirements harmonisation. OCCAR is a promising candidate to take on the harmonisation role, but if it were used care would be needed to insulate its existing procurement programmes from the inevitably complex and difficult negotiations that there would be to secure common requirements for new capabilities. It would be regrettable if the momentum now achieved for OCCAR in its existing role were lost because it was required to assume additional new roles."

The OCCAR Convention envisages a role for OCCAR to identify harmonised solutions to future operational requirements. However, the Government agrees that, at this early stage of its development, OCCAR should focus on providing effective management for the equipment procurement programmes which have already been assigned to it, and prepare itself to manage the new programmes which have been earmarked for future OCCAR management. It is important that the momentum on this primary activity is not disrupted by other tasks placed upon OCCAR.

10.  Paragraph 33. "We too are sceptical about the Framework Agreement giving the necessary impetus for harmonising military requirements, when other initiatives in this area have not been particularly successful. To minimise the risk that seeking to harmonise military requirements could prove over-ambitious, and jeopardise the implementation of the other aspects of the Framework Agreement, caution is needed in developing this aspect of the Agreement alongside work on its other themes. The UK must ensure that equipment requirements are not contrived to support particular national industries rather than to meet genuine military requirements."

The Government notes the Committee's concern, and fully agrees that acquisition programmes should focus on meeting the military need.

11.  Paragraph 35. "The US authorities have not raised objections to the UK's involvement in the Framework Agreement and it seems to us that their continued acceptance will hinge on the UK's continued protection of US technology. From the UK's perspective, we see much merit in the MoD's approach of establishing parallel arrangements along the lines of the Framework Agreement both with our European partners and with the US. In the end, it may be our European partners who will have more difficulty accommodating the UK's bi-polar approach to defence collaboration."

The Government fully acknowledges the initial importance of the continued protection of sensitive US technology. The Government agrees with the Committee on the merits of establishing parallel arrangements with the US and our European partners. We are aware that most of our European partners in the Framework Agreement have also discussed with the US Government ways to improve transatlantic co-operation.

12.  Paragraph 39. "Although now on a treaty basis, therefore, the effectiveness of the Framework Agreement and its future development depend on the political (rather than legal) commitment of its signatories."

The Government agrees that strong and sustained political commitment will be essential to the success of the Framework Agreement.

13.  Paragraph 40. "As the MoD takes the work of the Framework Agreement forward, it must ensure UK industry is not unduly circumscribed."

The Government agrees with the Committee's view. As before, industry will continue to be consulted on a regular basis on Framework Agreement developments.

14.  Paragraph 42. "Care will be needed to develop the provisions of the Framework Agreement at a pace which maintains the commitment of all the parties, and the US, to the changes being introduced. The intended effects of the Agreement should bring overdue improvements in the European defence market. Ratification of the Framework Agreement is the essential next step, which should not be delayed."

The Government agrees and welcomes the Committee's conclusion that the Agreement should bring improvements in the effectiveness of the European defence market.

After publication of the Committee's Report on 14 February 2001, the Government started the final procedures for ratification of the Agreement culminating in the Secretary of State for Foreign and Commonwealth Affairs signing the instrument of ratification on 28 February 2001. The UK was the first nation to deposit its instrument of ratification. Germany informed us on 12 March that the ratification process has been completed. Their instrument of ratification is expected to be deposited shortly. The Agreement will come into force thirty days after the second nation deposits its instrument.

Ministry of Defence
16 March 2001

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