Differing Perspectives on Defence Procurement: The Relative Composition of Purchases as a Barrier to Transatlantic Understanding and Trade Liberalisation

Abstract

Freer trade in transatlantic public procurement will be possible only if greater understanding of the two systems is achieved. One of the fundamental differences between the two is their composition of purchases: whereas in U.S. federal procurement 70-80% of purchases are military, defense composes less than .3% of the purchases of Members States' purchases covered under any of the EU's procurement directives. This disparity explains the two systems' distinct procurement procedures. Each is designed to purchase different types of goods and services -- the former defense equipment, and the latter products that can be distinguished on the basis of price. This has ramifications beyond defense, and a better understanding of this question would enable more liberal procurement trade between the U.S. government and the European Union.

Keywords: defence industry, public procurement procedures, European Union, United States

JEL Classification: F52, F55, K23, H56, L38, P51, Y40