The European Union Defence and Security Rules

1. The European Union Defence and Security Rules Legal Framework for Defense and Security Acquisition in the European Union 6 November 2018 Michał Kania Visiting Fulbright Scholar (Silesian University, Katowice, Poland)

2. Agenda General information about the EU in the context of defense and security policy The European Defense Fund and the Permanent Structured Cooperation(PESCO) Legal regulation of the Internal Market for defense and security in the EU Conclusions

3. Part 1 General information about the EU in the context of defense and security problems Is it necessary for the European Union to strengthen its defense and security resources? Is the European Union able to build a common, self-reliant defense and security market?

4. General information about the European Union EU – the 28 Member Countries cooperating under Treaties The EU has 508 million inhabitants — the world’s third largest population after China and India The rule of law – The Treaty of Lisbon, signed: 13 December 2007, entered into force: 1 December 2009, purpose: to make the EU more democratic, more efficient and better able to address global problems, such as climate change, with one voice

5. European Military Capacity

6. European Military Capacity France: Population 67 013 000 Military budget $55,7 billion Active personnel 203 000 Nuclear weapons: 300 warheads Tanks 406 Total Aircraft 1076 Total Naval 109 THALES, DCNS GROUP

7. European Military Capacity Italy: Population 60 795 612 Military budget $37,7 billion Active personnel 177 000 Tanks 200 Total Aircraft 811 Total Naval 142 LEONARDO

8. European Military Capacity Germany: Population 82 175 700 Military budget $44,3 billion Active personnel 178 334 Tanks 328 Total Aircraft 776 Total Naval 64 RHEINMETALL

9. Jesus Núñez, a conflict analyst If we added the capabilities we have in the EU together, we would automatically become the second most powerful military force on Earth and the reason we aren’t is because there is no political will This is because each national government would rather be the head of a mouse than the tail of a lion

10. The goals of the European Union Promote peace, its values and the well-being of its citizens Offer freedom, security and justice without internal borders Sustainable development based on balanced economic growth and price stability, a highly competitive market economy with full employment and social progress, and environmental protection Combat social exclusion and discrimination

11. The goals of the European Union Promote scientific and technological progress Enhance economic, social and territorial cohesion and solidarity among EU countries Respect its rich cultural and linguistic diversity Establish an economic and monetary union whose currency is the euro

12. General information about the European Union The formation of the EU: building peace in Europe founded on economic welfare after World War II The different and sometimes very difficult histories of the EU Member States and their relations The lingering question about building the European Army

13. General information about the European Union

14. 100 years of Polish IndependenceThank you Friends

15. General information about the European Union The Polish leader discussed that proposal with President Trump at the White House on Tuesday, trying to get traction for an idea his government has been pushing for months to deter any possible Russian aggression. The Polish government has even been willing to pay — to the tune of $2 billion

16. The challenges for the European Union in 2018 The increased meaning of the EXIT voices BREXIT Who is nex(i)t?

17. The challenges for the European Union in 2018 The increasedforce of the STRONG AUTONOMY voices within EU The real threats from outside – migration from SOUTH, danger from EAST /The Russian invasion of Georgia, annexation of Crimea, and intervention in the Donbas/ The lack of a real defence and security policy in the EU

18. Part 2 The European Defense Fund and the Permanent Structured Cooperation What is the main trend in the European Defense and Security Policy? What is the European way to build the innovative Defense and Security Market?

19. The main goals of the European Defense and Security Policy The coordination in the defense research and the development / since 2017/ The European Defense Fund The Permanent Structured Cooperation (PESCO) The building of the Internal Market for defense and security / since 2009/ Directive 2009/81/EC of the European Parliament and of the Council of 13 July 2009

20. The European Defense Fund June 2017 The Fund will coordinate, supplement and amplify national investments in defence research, in the development of prototypes and in the acquisition of defence equipment and technology € 5.5 billion per year to boost Europe's defence capabilities The Commission proposes a budget of € 13 billion for 2021-2027 be dedicated to the European Defence Fund

21. What should the Fund achieve? Act as a catalyst for an innovative and competitive industrial and scientific base which is able to meet Europe’s defence needs with cutting-edge, fully interoperable technology and equipment By pooling resources, Member States can get better value for their investments and develop technologies and equipment that would not be attainable working independently Offering support all along the research and development parts of the lifecycle will ensure that the results of research are not lost due to the lack of funding for developing prototypes and testing the technology

22. Background President Juncker announced the creation of a European Defence Fund in his 2016 State of the Union address

23. Background Commissioner ElżbietaBieńkowska responsible for Internal Market, Industry, Entrepreneurship and SMEs ,,Europe must become a security provider. The Fund will support collaborative research in defence and the joint development of defence capabilities. It will therefore be a game-changer for the EU's strategic autonomy and the competitiveness of Europe's defence industry’’

24. Economic reasons The lack of cooperation between Member States in the field of defence and security is estimated to cost annually between 25 – 100 billion Euros Up to 30% of annual defence expenditures could be saved through pooling of procurement The fragmented approach when it comes to defence also leads to unnecessary duplication and affects the deployability of defence forces. There are 178 different weapon systems in the EU, compared to 30 in the US. There are 17 different types of main battle tanks in the EU and only one in the US

25. Political reasons The increasing threat of the invasion from East The increase of the migration from South The unstable situation in the international dimension The implementation of the EU – NATO JOINT DECLARATION

26. EU-NATO Joint Declaration Joint declaration by the President of the European Council, Donald Tusk, the President of the European Commission, Jean-Claude Juncker, and the Secretary General of NATO, Jens Stoltenberg

27. EU-NATO Joint Declaration

28. The European Defence Fund: two strands Research: Starting in 2017, the EU offers grants for collaborative research in innovative defence technologies and products, fully and directly funded from the EU budget Development and acquisition: The Fund will create incentives for Member States to cooperate on joint development and the acquisition of defence equipment and technology through co-financing from the EU budget and practical support from the Commission

29. The European Defense Fund REGULATION (EU) 2018/1092 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 18 July 2018 Establishing the European Defence Industrial Development Programme aiming at supporting the competitiveness and innovation capacity of the Union's defence industry

30. The European Defense Fund Who should be supported?

31. The European Defense Fund Public or private undertakings: Established Located Controlled in the EU

32. The European Defense Fund Article 7 Beneficiaries and subcontractors involved in the action shall be public or private undertakings established in the Union The infrastructure, facilities, assets and resources of the beneficiaries and subcontractors involved in the action which are used for the purposes of the actions funded under the Programme shall be located on the territory of the Union for the entire duration of the action, and their executive management structures shall be established in the Union

33. The European Defense Fund For the purposes of the actions funded under the Programme, the beneficiaries and subcontractors involved in the action shall not be subject to control by a third country or by a third-country entity

34. The European Defense Fund An undertaking established in the Union and controlled by a third country or by a third-country entity shall be eligible as a beneficiary or subcontractor involved in the action only if guarantees approved by the Member State in which it is established in accordance with its national procedures are made available to the Commission

35. The European Defense Fund 1. Established in the EU 2. Guarantees approved by the Member State 3. Guarantees approved by the EU Commission The guarantees shall provide the assurances that the involvement in an action of such an undertaking would not contravene the security and defence interestsof the Union and its Member States as established in the framework of the Common Foreign and Security Policy

36. The European Defense Fund Where no competitive substitutes are readily available in the Union, beneficiaries and subcontractors involved in the action may use their assets, infrastructure, facilities and resources located or held outside the territory of Member States provided that that usage does not contravene the security and defence interests of the Union and its Member States, is consistent with the objectives of the Programme and is fully in line with Article 12 The costs related to those activities shall not be eligible for funding under the Programme

37. The Permanent Structured Cooperation (PESCO) PESCO is a Treaty-based framework and process to deepen defence cooperation amongst EU Member States that are capable and willing to do so

38. The Permanent Structured Cooperation (PESCO) The aim is to jointly develop defense capabilities and make them available for the EU military operations

39. The Permanent Structured Cooperation (PESCO) As soon as the EU Foreign Affairs Council had officially made the decision to launch PESCO on 11 December 2017, the “Sleeping Beauty of the Treaty of Lisbon” - as it was dubbed by Commission President Jean-Claude Juncker – had been woken

40. The Permanent Structured Cooperation (PESCO) The projects cover areas such as: training, capability development and operational readiness in the field of defence They include for example a European Medical Command, facilitation of military mobility, a rapidly deployable Crisis Response Operation Core and Cyber Rapid Response Teams

41. Part 3 The legal regulation of the Internal Market for defense and security in the EU What are the grounds for the legal framework of the Internal Market in Defense and Security? How the Internal Market looks in practice?

42. The sources of the EU Law Treaty on the Functioning of the European Union (TFEU) – primary law – Art. 346 The principles of the EU are: Free movement of goods and services, and the national public procurement markets must be open for bidders from other EU countries Directives Regulations Soft Law EJCU Rulings The Member States level

43. Art. 346 Treaty on the Functioning of the European Union 1. The provisions of the Treaties shall not preclude the application of the following rules: (b) 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; such measures shall not adversely affect the conditions of competition in the internal market regarding products which are not intended for specifically military purposes

44. Art. 346 Treaty on the Functioning of the European Union The List from 1958 ofproducts referred to in Article 346 of the TFEU – 15 categories, unchanged since 1958 – warlike – hard defence materiel Common Military List of the European Union adopted by the Council on 9 February 2015 (2015/C 129/01) – list established for the purpose of common rules governing the control of exports of military technology and equipment

45. Art. 346 Treaty on the Functioning of the European Union Measures necessary for the protection of the essential interests of its security The Spanish Weapons from 1999 and other rulings from EJCU

46. The ECJU Rulings on the relation between Art. 346 TFEU and the Internal Market The purchase of equipment, the use of which for military purposes is hardly certain, must necessarily comply with the rules governing the award of public contracts (CJEU in C-337/05 - 8 April 2008)

47. The ECJU Rulings on the relation between Art. 346 TFEU and the Internal Market Even if a product comes within one or other of the categories of materials included in the Council list of 15 April 1958, that product can, if it has technical applications for civilian use which are largely identical, be considered to be intended for specifically military purposes, within the terms of Article 346 TFEU, only if such use is not solely that which the contracting authority intends to confer on it but also, that which results from the intrinsic characteristics of a piece of equipment specially designed, developed or modified significantly for those purposes (CJEU in C-615/10, 7 June 2012)

48. Directive 2009/81/EC – the background The effects of the lack of the Internal Market on defence and security: Protectionism, inefficiencies, corruption Lack of innovation, competiveness, high prices, lack of transparency

49. Directive 2009/81/EC – the background Internal Market for defense and security in the EU – European defence equipment market (EDEM) The gradual establishment of a European defence equipment market is essential for strengthening the European Defence Technological and Industrial Base and developing the military capabilities required to implement the European Security and Defence Policy

50. The scope of the regulation in Directive 2009/91/EC Definition of goods and services Publication in the Official Journal Procurement Procedures - awarding authorities may use: the negotiated procedure with prior publication as a standard procedure Qualification and rejection of bidders Award criteria