Summary: Pursuant to a congressional request, GAO examined European initiatives toward forming a single integrated market, focusing on the: (1) activities and initiatives of the European Community (EC) and the Independent European Program Group (IEPG) and their effect on U.S. defense trade and cooperation; (2) defense trade agreements with the European allies of the North Atlantic Treaty Organization (NATO); and (3) roles of the Departments of State, Defense (DOD), and Commerce and the Office of the U.S. Trade Representative in monitoring, assessing, and managing U.S.-European defense trade and cooperation issues.
GAO found that: (1) EC initiatives for U.S. defense trade and technology transfer policy have important implications for defense tariffs, rules of origin, product standards, mergers and acquisitions, and export controls; (2) IEPG was implementing a plan to integrate the European defense market and industry to better coordinate European defense research and development among the member countries, which could eventually exclude the U.S. industry; (3) since the U.S. defense trade advantage with European allies had significantly declined, the continued usefulness of reciprocal defense procurement agreements were questionable; (4) U.S. government and industry officials perceive an increase for European firms in defense contract awards and new programs; and (5) no State or DOD office fully addressed the defense trade implications of EC or IEPG initiatives.
