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Belatedly but determinedly, Europe is taking up the burden of its own defence. Part of this will be to spend more on weapons. As big a part will be to overcome the parochialism that has left arms procurement across the region uncoordinated and inefficient.
That parochialism was made a lot worse by Britain leaving the EU. Goodwill and political footwork are helping to contain the impact of Brexit on the joint European security effort. The British, in particular, are keen to keep a common interest in defence collaboration uncontaminated by differences in other policy areas. The risks of that are low. The dismay registered at the EU’s decision to reserve the bloc’s common funding for its members and closest associates will dissipate if the UK decides to enter a defence and security pact.
But pooling some defence spending will not change the UK’s self-exile from European supply chains that its hard Brexit entailed. Trade frictions between the EU and UK are, admittedly, not the greatest obstacle to Europe’s rearmament. But they are not irrelevant.
Even within the EU itself, the European Commission identifies what are essentially trade frictions as obstacles to fully efficient defence procurement. Brussels lists insufficient recognition of product certifications, excessive red tape on military mobility, non-harmonised customs procedures and overregulation of intra-EU transfers of defence-related products.
These and other frictions are much more severe vis-à-vis the UK, whose chosen form of Brexit puts it demonstratively outside any EU rulemaking or adjudication. The resulting barriers — for trade, people, data and capital — hamper exchange in all economic sectors, defence included. Finding a way to lower those threatening Europe’s common security is a worthwhile cause.
What would it mean to create a frictionless market specific to the defence industry? Its goal would be, for activities within the sector, that companies could ignore national location and the associated costs of diverging rules or crossing borders. Frictions must be minimised not just for physical goods but for the delivery of services, flow of capital and movement of specialised workers.
A sectoral version, in other words, of the EU’s internal or single market (in its ideal version, not its present incomplete form) and customs union. To avoid triggering the UK government’s neuralgic attitude to those terms, it is best to call it a “common market” for defence.
A pan-European defence-industrial common market would face practical and political challenges. Practical ones include how to delineate the sector. This would be more complex than the exclusion of the primary sectors from the European Economic Area agreement, since defence work includes much more than goods only. On the other hand, countries already treat the defence sector as special — with regard to licensing requirements, for example — so there is something to build on.
Another issue would be how to remove frictions at the border. Inspiration could be taken from the creative solutions in Northern Ireland. Special transport lanes could be accessible for pre-certified shipments from defence contractors, for example. Passport stamps could authorise non-EU/EEA nationals working in defence to enjoy greater professional mobility rights. As for capital, service and data exchanges, these are regulated behind rather than on the border, so it is largely a matter of adapting laws and putting resources behind policing any abuse.
It’s the politics that would be the greater hurdle. There is no way around such a scheme having to run on EU legislation, including European court jurisdiction (again, Northern Ireland offers lessons). That has been anathema for successive British governments — although Labour has opened the door a crack with its product regulation and metrology legislation and its openness to a veterinary agreement.
The EU, for its part, would have to abandon the dogma of “the indivisibility of the four freedoms”, according to which frictionless economic exchange with it is an all-or-nothing affair. This was always slightly hypocritical, as shown by the EEA’s exclusion of agriculture and fish. More recently, the EU’s new agreement with Switzerland shows that it can give partial frictionless access to partners willing to align dynamically with the bloc’s relevant rules.
So it should be possible to find a meeting of minds. If the greater good of common security cannot justify concessions from both sides, what could? Even British Eurosceptics and continental Britain-bashers should acknowledge the overarching advantage of smooth Europe-wide weaponry supply chains — an advantage exceeded only by the greater trust and unity such a common market could build over time.
martin.sandbu@ft.com
