However, the EU's arms embargo seems safely in place for the time being, in large part due to U.S. pressure. It now looks unlikely that European defense firms will sell weapons or platforms directly to China, because of political concerns and code-of-conduct restrictions. Nor is wholesale licensing probable. Rather, the most likely policy concern in the future will be military and dual-use technology transfers. Even with the embargo in place, European governments and firms have still exported military and dual-use technology to China.
Examples of European exports include British microsatellite and nanosatellite technology for anti-satellite weapon systems, British airborne early-warning radar for Y-8 aircraft, German engines for Song-class conventional submarines, and French and Italian technology for attack helicopters. In addition, China has invested approximately $240 million in the Galileo navigation satellite system. China Galileo Industries, Ltd., a Chinese state-run company, is developing Galileo's satellite and remote sensing technologies and application systems. According to a cooperation agreement signed by the NRSCC and the Galileo Joint Undertaking in October 2004, China pledged to invest in research and development on space technologies, ground equipment and application systems for the Galileo project. European officials have welcomed Chinese participation in Galileo. "China should remain part of the Galileo project until the end", European Commission Vice-President Jacques Barrot has argued, adding he was delighted by the "strategic partnership which is starting to take shape with China."
However, some European defense firms are likely to refrain from selling weapons to China in order not to risk jeopardizing their ability to compete in the U.S. defense market, which is the largest in the world. EADS has decided, for instance, not to sell military equipment to China regardless of whether the EU lifts the arms embargo. The decision to forgo such sales to China is a reflection of the importance of the U.S. market for EADS and a desire not to endanger potential sales, such as the tanker deal with the Air Force. Moreover, the Chinese market may not be as attractive to some European firms as many U.S. lawmakers fear. China's practice of reverse-engineering foreign technologies in order to produce them itself has angered some European defense firms and may limit the willingness of European firms to sell their defense goods to China.
For the moment, the danger of a U.S.-European clash over arms sales to China has been averted. However, the dispute over the arms embargo underscores the need for closer consultation and coordination of policy between the United States and its European allies in the future regarding dealing with China. This need will become more important as the European defense industry expands in its search for markets.
Finally, there is a need for greater transatlantic defense cooperation more broadly. Given the growing importance of the EU as an international actor and the corresponding consolidation of Europe's defense industry over the last decade, there is little prospect for the creation of a North Atlantic defense community. But it is in the interest of the United States and Europe to coordinate their defense policies more closely and avoid unfettered competition. Streamlining the U.S. export-licensing process, which currently inhibits greater defense collaboration, should be a top priority in this regard.
1 Article 296 was formerly Article 223 of the Treaty of Rome (1957) Seth G. Jones is a political scientist at the RAND Corporation and the author of the forthcoming The Rise of Europe. F. Stephen Larrabee holds the Corporate Chair in European Security at the RAND Corporation.Essay Types: Essay