Ministry of Defence Press Release, 6 July 1998

Defence Secretary George Robertson and the defence ministers of France, Germany, Italy, Spain and Sweden will tonight set out a plan of action to help Europe's defence industry restructure to meet the challenge of competition from the United States.

The six ministers will sign a Letter of Intent at Lancaster House, London, which provides a framework for developing concrete and practical measures which Governments can take to assist the industry-led restructuring process.

George Robertson said:

'This Letter of Intent which I am signing with my colleagues from the main defence industrial nations of Europe is a major achievement which sends out a strong signal of our determination to drive forward the process of European defence industrial rationalisation.

'Defence industry in Europe is fragmented. There is over-capacity in many sectors and too much duplication of effort. Without restructuring, it will not be strong enough to survive in a market dominated by the American giants.

'Although it is primarily for industry to lead the rationalisation process, there is much that Governments can, and should, do. This Letter of Intent is not a panacea. But it represents an important step forward, one that I am confident will receive the full backing of industry.

'It is vitally important that European defence and aerospace companies seize the opportunity to come together to create viable companies capable of providing competition for their American counterparts.'

The Letter of Intent will be signed this evening by Mr Robertson, Alain Richard of France, Volker Ruhe of Germany, Beniamino Andreatta of Italy, Eduardo Serra of Spain and Bjorn von Sydow of Sweden.

It identifies some of the potential obstacles to restucturing in six key areas, and possible means of removing them. Expert working groups will now be established to carry the work forward. Precise solutions to the problems identified will be set out in separate arrangements or agreements.

The key areas are:

• Security of Supply: ensuring that countries can depend on each other to provide necessary defence equipment if restructuring means equipment production is concentrated in other partner countries.

• Export Procedures: ensuring that companies will be able to export major systems that include sub-systems manufactured in other partner nations.

• Security of Information: ensuring that classified information is protected when it is passed to a newly formed joint company.

• Research and Technology: cutting down wasteful research duplication between countries.

• Treatment of Technical Information: transferring Intellectual Property Rights to newly-formed joint companies.

• Harmonisation of Military Requirements: ensuring that companies will be able to market similar equipment to different countries.