Transfer of defence goods between states is an issue closely related to defence procurement, in particular collaborative defence procurement: the development and production of the weapon systems produced through collaborative programmes, which are performed by branches of companies and subcontractors located in different states, will always require military equipment and their parts to be moved across borders.

In the EU trade legislation, transfer refers to transmission or movement of a defence-related product from a supplier to a recipient in another EU member state,Footnote ¹ while export means an export or re-export procedure (including by electronic means) to a recipient outside the EU.Footnote ²

Intra-EU transfer of defence goods was until recently regulated by national law and consisted of a complex and fragmented system of licensing that was usually based on individual authorisations given to a specific supplier for the transfer of a specified quantity of a specific equipment to one recipient located in another EU member state. This licensing process was widely considered to be time-consuming and costly.Footnote ³

To address the difficulties that this created, the EU adopted a Directive containing common licensing rules to govern such transfers,Footnote ⁴ which is applicable to material on the EU Common Military List, which is updated annually,Footnote ⁵ whereby, even though the transfer of defence-related products between EU member states remains subject to prior authorisation of the exporting member state, a coherent and simplified system of licensing is created across the EU. It has been argued that those provisions could give products that only contain parts and information manufactured in the EU a comparative advantage compared to products that are produced in another country or that contain parts that are,Footnote ⁶ even though other countries such as the US actually aim to achieve the same results through other means.

Collaborative defence procurement is subject to specific provisions in this Directive. In particular, EU member states participating in an intergovernmental cooperation programme concerning the development, production and use of defence-related products may publish a general transfer licence covering transfers to other member states for the purpose of the programme.Footnote ⁷ A general transfer licence is a published direct authorisation to a supplier to transfer the defence-related products specified in the licence to a category or categories of recipients located in another member state.Footnote ⁸ However, the possibility of using general licenses for collaborative programmes is optional in the Directive and has not been transposed in the legislation of all EU member states. Importantly, large armaments-producing states such as France, Germany, Sweden and the UK have not transposed this option.Footnote ⁹

Further, EU member states may exempt transfers of defence-related products from the obligation of prior authorisation where the transfer is necessary for the implementation of a cooperative armament programme between member states.Footnote ¹⁰ This optional exemption has been implemented in the legislation of some member states, but by far not all. Again, large armaments-producing states such as France, Germany and the UK have not transposed this option.Footnote ¹¹

In addition, these transfer rules remain subject to the Art.346 and 36 TFEU exemptions,Footnote ¹² which could therefore allow an EU member state to apply stricter domestic rules for the transfer of military equipment when those exemptions are invoked.

For dual-use equipment, a specific EU legal instrument applies both to their intra-EU transfer and to their export outside the EU.Footnote ¹³ Dual-use goods are defined as items, including software and technology, which can be used for both civil and military purposes.Footnote ¹⁴ Specifically for intra-EU transfers, a transfer authorisation is only required for a number of listed items: some of them may be covered by a national general authorisation,Footnote ¹⁵ but some others require an individual license for each transfer.Footnote ¹⁶ Even though they cover only a limited range of products (missile technology, nuclear material,…), those provisions would apply equally to collaborative programmes.

The EU also adopted a number of instruments that regulate the export outside the EU of armsFootnote ¹⁷ and dual-use goods.Footnote ¹⁸ Arms exports outside the EU cover items that are included in the EU Common Military List, or in national lists using the Common Military List as a minimum referenceFootnote ¹⁹ and require an application for an export license in each individual case.Footnote ²⁰