Transatlantic Cooperation on Defence

How can the EU and the US collaborate on joint defence and homeland security technology initiatives to maximise economies of scale?

Intervention by Martin Hill, Vice Chairman NATO Industry Advisory Group

“Distinguished guests, ladies and gentlemen, I would like to start by thanking the TPN for organising this event.  From a NIAG perspective it fits well with our efforts to support NATO smart defence and with our efforts to provide some high level advice on Transatlantic defence industrial cooperation.  The tasking note concerned the EU and the US.  I represent NIAG and I have been detailed to point out that for NIAG the US is only one of our members on this side of the pond, NIAG will not deny Canada their place at the table.  In Europe, institutional membership is even more complex as exemplified by the position of Turkey, which is in NATO not the EU, and it has a large part of its landmass in Asia.  Suffice it to say that NIAG comments must be taken in this context and not specifically EU and the USA.

Some of you will not know NIAG so I thought brief description would help you understand where my remarks come from. The NATO Industrial Advisory Group (NIAG) is a high level consultative and advisory body of senior industrialists of NATO member countries, based on national defence trade associations.  It acts under the Conference of National Armaments Directors (CNAD) and provides a forum for a free exchange of views on R&T, industrial and production issues, including how to foster government-to-industry and industry-to-industry armaments co-operation within the Alliance and provides expert advice on any technical question NATO or the nations may chose to put to industry.  It works in a consensual manner and exclusively in the pre-competitive environment.

I have three points that I would like you to take home for further consideration and development. 

1. The first is that industry is a key partner in the defence environment and has a role to play at all stages from requirements definition, through R&T, supply, support and finally to disposal.
   1. Industry and academia are the sources of the vast majority of technology.  Without industry input government will not know where to invest their R&T money and without insight into defence requirements neither will industry know where it should invest.  A partnership in the pre-competitive phases, leaning on an organisation like NIAG to ensure openness, will lead to  better structured programmes and sound investment decisions by government and industry.
   2. Early insight into requirements will also mean that industry will be able to identify the potential for industrial partnerships for cooperative programmes, and will even be able to propose cooperation.  This will lead to better investment on production and take advantage of economies of scale.
2. The second is that we need a strong North American defence technology and industrial base AND a strong defence industrial base in Europe and this means a profitable and lean industrial base capable of competing in NATO and also at a global level.
   1. There need to be two mutually supporting defence industrial pillars either side of the Atlantic to support the North American and European defence and security interests.
   2. At this moment I must mention the Transatlantic Trade and Investment Partnership.  NIAG welcomes the launch of negotiations for a comprehensive and ambitious TTIP. NIAG recognises the impact it will have on trade and jobs as well as on the multilateral trading system.  Having said that NIAG considers the inclusion of defence and security in the TTIP to be inappropriate and strongly recommends defence and security be excluded from the mandate.  Defence and security are excluded from the WTO Government Procurement Agreement (GPA) and there are good reasons for this. Acquisition of military capability through purchase of equipment and services by sovereign states is not, and cannot be, a simple matter of open competitive procurement.
   3. NIAG further believes that a strong North American and a strong European DTIB will be essential if NATO’s smart defence initiative and pooling and sharing are to work effectively in a transatlantic arena.
3. Our third point is that Cooperation has to be the biggest driver for economies of scale.  However cooperation is a many faceted hydra that needs a major effort of coordination to ensure a successful outcome.  To mention a few:
   1. Harmonisation of requirements must be complemented with harmonisation of supply.  Early industry insights into the requirement will allow constructive advice from industry on the consolidation and help remove some of the national objections on security of supply and even job distribution.
   2. Please also note that if nations can agree on the requirement and then also agree on a staged delivery schedule then many of the problems of synchronising requirements can be managed.
   3. The Regulatory environment is important.  Enhanced transatlantic defense industrial cooperation is a critical strategic and security objective of the allies.  In support of this objective, we recommend continued review of export control processes and policies, with the following aims:

• To facilitate mutual efforts to build capabilities and enhance interoperability;
• To avoid technology transfer policies that unnecessarily impede the transfer of needed equipment and capabilities for allies fighting together on NATO battlefields.
• To ensure that U.S. and European export licensing processes are streamlined and enable simpler and faster export licensing for inter-allied transfers,;
• To promote, through reciprocity and mutually cooperative market access, a strong Defense Technological and Industrial Base (DTIB), both in North America and Europe, while avoiding “fortresses” on either side of the Atlantic.”

1. All countries have their own industrial policies that cover defence and security.  If we are to achieve cooperation then we need some harmonisation at this level.  Air Traffic management and cyber are both areas where there are significant policy development today, which will have a serious impact on defence.  Without policy harmonisation transatlantic defence cooperation in these areas will be made more difficult.

That concludes my preliminary remarks and I look forward to enlarging on the topic during the debate later.

Thank you