US embassy cable - 05BRUSSELS25

UNCLAS BRUSSELS 000025 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: MASS, PARM, ETTC, PREL, CH, EUN, USEU BRUSSELS 
SUBJECT: EU/ARMS EXPORTS/CHINA: 2003 REPORT SHOWS INCREASED 
LICENSE ISSUANCES 
 
REF: REIDHEAD-ERATH ET. AL. E-MAIL 12/21/04 
 
1.  On December 21 the EU released its 6th Annual Report on 
the Code of Conduct for arms exports, covering CY 2003.  The 
report, compiled each year by the COARM (conventional arms 
exports) working group of Member State licensing authorities, 
covers the value and quantity of export licenses issued for 
military equipment by EU governments.  Worldwide licenses 
granted by EU Member States in 2003 were valued at 28.3 
billion Euros (31,038 licenses issued; 360 licenses denied). 
For China (excluding Hong Kong and Macau), the EU issued 159 
licenses valued at 415.8 million Euros, with 43 denials. 
This is almost double the 209.8 million reported (by the 
EU-15) for 2002 and reflects an almost fourfold increase in 
average per-license value.  At the same time, EU Member 
States report only Euros 1.7 million worth of physical 
exports to China in 2003.  Top license issuers were France 
(96 licenses valued at Euros 171.5 million), Italy (3 
licenses valued at Euros 127 million) and the UK (40 licenses 
valued at Euros 112.5 million).  The Czech Republic and 
Germany approved much smaller amounts (Euros 3.6 million and 
Euros 1.1 million, respectively). 
 
2.  For the first time, the 2003 report disaggregates the 
license issuance data by equipment category in the EU Common 
Military List (but only for those Member States willing or 
able to supply such data).  The report is based on data 
volunteered by Member States and covers only equipment in the 
Wassenaar-derived EU Common Military List (EUML).  It does 
not cover brokering, transit and transshipment, licensing for 
overseas production, or intangible technology transfers, 
although these transactions are being considered for 
inclusion in a strengthened Code of Conduct slated for 
adoption during 2005.  The report does not include data from 
Lithuania, Estonia or Cyprus (which were unable or unwilling 
to provide it). 
 
3.  The 2003 COARM Report and EU Common Military List are 
available at 
http://www.ue.eu.int/cms3 fo/showPage.asp?id=408&lang=en 
 
McKinley