THE SIX-NATION FRAMEWORK AGREEMENT
36. The Framework Agreement's preamble sets out its
... 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 in the global defence market...
The MoD's role in shaping a robust and efficient
industry is however an indirect one. It told us that
... it is not the role of
government to prescribe the form of the new companies, alliances
and joint ventures that emerge from [restructuring], although
we are not a disinterested party.
We asked in what circumstances, and in what areas,
the MoD would seek to be more proactive. Our witnesses highlighted
four ways in which the MoD could influence the competitiveness
of the European defence industry in the future:
- In research and technology, where governments
can help reduce duplication of effort and co-ordinate the establishment
of capabilities able to compete in world markets.
- Rationalising contract law across European borders,
to make it easier and quicker for companies to manage trans-national
- Releasing information, to facilitate technology
transfer throughout the defence supply chain "Removing
impediments that governments have in place, through making their
research information available to European transnational companies,
is a very good way in which we can improve matters". 
- Establishing security of supply.
37. The Framework Agreement brings together discussions
by the six countries going back to December 1997. A lot has happened
since then in terms of discussions, co-operation and the use of
goodwill and best endeavours.
The Framework Agreement now seeks to consolidate and formalise
What the treaty is intended
to do is to put in place a framework where there will have to
be changes in contract law; there will have to be for some countries
changes in their export control procedures and so forth. I think
it is a very opportune time to consolidate what has happened on
a goodwill [basis] ... and put in place a framework that will
enable industry to operate better at the European level.
38. In many ways the Framework Agreement is simply
a first step, setting the framework for the real work and commitments
that will follow. The MoD acknowledges that there is a great deal
of work still to be done to turn the good intentions of the Agreement
into practical measures. It estimates that a number of its measures,
though complex, can be implemented within about a year. However,
it expects certain measures to take longer, especially those that
require further legally binding agreements, changes in national
laws and regulations, or negotiation with industry.
39. The Framework Agreement puts on a legal footing
what was essentially ' a statement of political intent'.
In theory, therefore, there is more scope for redress in the case
of a breach by one of the parties, and the MoD suggests that there
are practical ways of enforcing compliance with the Agreement.
But the specific Articles of the Agreement include many caveats
that could allow a country to escape its general obligations,
typically citing 'national security',
and the Defence Industries Council highlighted the risk that further
work on the Framework Agreement could easily be dogged by disputes
about national interpretations of its somewhat imprecise provisions.
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.
40. As the work on the Agreement goes forward, the
MoD will have to balance the concerns of important stakeholders
in the process. The UK has important partnerships with the US
and benefits from technology only available in the US. It is vital
therefore that we do not as a result of the Agreement's provisions
end up with a European preference policy.
Although the defence industry witnesses told us that they broadly
welcomed the thrust of the Framework Agreement, some did caution
against its measures being developed in a way that might handicap
industry attempts to restructure or organise joint ventures, which
could make it less responsive in international markets than its
US competitors. As the MoD takes the work of the Framework
Agreement forward, it must ensure UK industry is not unduly circumscribed.
We welcome therefore the MoD's attitude that
If what you are doing
looks as though it is making life more complicated, you should
not do it. The treaty I think is consistent with that rule of
thumb. ...we must take the companies with us. They have to be
the test case, if you like. We have to work with them through
the working groups on each area of this treaty to make sure that
they agree with us that what we are doing is making life easier,
not more difficult.
41. The Agreement provides for an Executive Committee
to be responsible for oversight of the Agreement, monitoring its
effectiveness, and providing an annual status report.
We were told that the nations have yet to agree exactly how it
would work, but that the UK would be pressing the Executive Committee
to develop performance indicators in each of the six principal
areas of the Agreement.
The Agreement will have to prove itself step-by-step,
and our MoD witnesses did not overstate the challenge when it
told us that
There are obviously deep
legal and historical differences, even between the six countries
involved [in the Framework Agreement]. They will take hard work
to overcome ... All the countries intend to pursue this agenda,
but there will be differences in the pace at which people want
to go and differences of perception, which we will have to deal
with through the executive committee structure.
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.
149 Ev p1, para 5 Back
150 Q5 Back
151 ibid Back
152 Q2 Back
153 ibid Back
p4, para A3.3 Back
p3, para A2.1 Back
p8, para A15 Back
point highlighted by the DMA (Ev p38) Back
p36, para 7 Back
159 Q94 Back
160 Q6 Back
4895, Article 3 Back
p3, para A1.2 Back
163 Q95 Back
164 Q9 Back