Unions have told Ministers that shipbuilding in Britain could face multiple yard closures in 2019 if they continue to use European regulations to avoid building support vessels in the UK.
Minister for Defence Procurement, Stewart Andrew MP, who invited competitive tenders from shipyards in Spain, Italy, Japan and South Korea last Friday has told MPs and campaigners that the MoD will not classify the vessels as warships, which would guarantee their design, manufacture and maintenance in Britain. Instead they say the ships are subject to EU state aid funding rules (Article 346 of the Treaty of the Functioning of the European Union) which say that commercial ships must be open to international competition.
What is Article 346?
EU law requires most government contracts to be procured via an open, competitive process. The main EU legislation in the defence domain is the Defence and Security Directive 2009/81/EC, transposed into UK law by Defence and Security Public Contracts Regulations 2011.13
However, Article 346 of the Treaty on the Functioning of the European Union (TFEU) provides for an exemption to the procurement rules where a country considers it to be necessary for national security reasons: “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”. Article 346 refers to a list drawn up in 1958 by the Council of Ministers of products to which the provisions
At a meeting with national officials and representatives from yards who are either closing or under threat, the unions’ anger was expressed that UK shipyards are being forced to compete against shipyards who receive direct or indirect state subsidy. They are calling on the Ministers to apply for a derogation under existing EU regulations on national security grounds. Independent research, conducted by Defence Analysis, shows that £7.5bn worth of contracts for fleet auxiliary ships, minesweepers, survey ships and landing docks could potentially be put out to international competition by 2030 under the current plans.
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