EU to unveil proposals for strengthening defence industry
BRUSSELS, July 23 (Reuters) - The European Commission will put forward long-awaited proposals on Wednesday to strengthen Europe's defence industry which has been hit by austerity-driven cuts in government spending.
The defence industry employs around 400,000 people in Europe and has annual revenues of more than 90 billion euros ($119 billion).
But EU officials fear that sharp cuts in defence spending by governments in response to the economic crisis are eroding the competitiveness of the sector, dominated by companies such as BAE Systems, EADS and Italy's Finmeccanica .
There are also concerns among EU officials and industry figures that the industry is too fragmented, leading to duplication of products.
The EU's executive Commission will publish a document on Wednesday setting out proposals to foster innovation and growth by supporting small defence firms and encouraging synergies between military and civilian research.
The Commission wants to make it easier for defence firms to export by creating standard procedures across Europe for certifying that products meet requirements rather than requiring each product to undergo costly testing in every country, an EU source said.
The Commission would also like to encourage spin-offs for the defence industry from civilian research carried out under the EU's Horizon 2020 research programme, which has an 80 billion euro budget between 2014 and 2020.
"Horizon 2020 is exclusively civilian but of course since many programmes now are more and more both civilian and military we want to explore how we, in supporting civilian programmes, can use the results for the military side," the EU source said, speaking on condition of anonymity.
The Commission's paper is a contribution to a debate on how Europe can strengthen its defence industry and bolster a common defence policy that is set to culminate in a summit of European leaders in December.
The EU and its defence arm, the European Defence Agency, seek to encourage European countries to work together on defence projects to enable them to acquire advanced capabilities at a lower cost.
Many EU officials see the failed $45 billion merger between EADS and BAE Systems last year, which collapsed in the face of political differences, as a missed opportunity to consolidate the European defence industry.
Europe is also lagging in important defence areas such as drones, where the United States and Israel lead the way. ($1 = 0.7565 euros)
(Reporting by Adrian Croft; Editing by David Evans)