Aeronautical and aerospace industries in the

EU

The aeronautical and aerospace industry consists of two technologically and

economically separate sectors, which, however, are closely associated on account of their
industrial and political implications and the stakeholders involved and they are examples of
where Europe has a tradition of success, and economic and commercial potential. Both
sectors could build a strong technological and industrial base in support of the European
Security and Defence Policy. However, United States investment in aerospace is three to six
times higher, depending on the sector. In an increasingly demanding competitive
environment, foreseeable aviation requirements worldwide correspond to some 14000 new
aircraft over the first 15 years of the 21st century, representing a market worth EUR 1000
billion. However, whilst the European market constitutes 20% of the world market in civil
aircraft and aviation, the share of the European industry in the world market is less than
10%. The American industry is by far the leading world exporter of both civil and military
aircraft. In the aerospace field, American supremacy is even more pronounced.

During the 1970s the aeronautical industry pushed intra-European collaboration further than
any other industrial sector, but on a bilateral rather than European level
(Concorde and Airbus projects). Such bilateral or multilateral projects suffered from
contradictions between national policies, the non-existence of a common commercial
strategy and the lack of joint financing. Whilst the Concorde and Airbus programmes were
both remarkable technical successes, only the Airbus programme was an immediate
commercial success. The success of the "Airbus industries" consortium troubles the
United States, which sees its commercial supremacy threatened in the domain of civil
aircraft. Although the European Union is not directly involved in Airbus, it brings its full
weight to bear in the negotiations with the Americans in international fora, such as the
World Trade Organisation.

The European policy in the aeronautical industry is based on non-compulsory

legislation, on concerted action and consultation between the Member States, particularly
concerning external aspects [Council Resolution and Council Statement]. In addition to
genuine liberalisation of the aeronautics market, the sector's competitiveness hinges first
and foremost on research and development. Since 1989, the EC/EU has been co-financing
research programmes in the aeronautical-space sector [Regulation 1291/2013 see section
18.4.2]. In the aeronautical industry research covers as a matter of priority the
development of advanced technologies for integrated design and production, and for
reduction of energy consumption, emissions and noise for various aircraft concepts, as well
as the development of technologies improving operational safety and efficiency. Concerning
space, R & D contributes to the development of a European space policy, complementing
efforts by Member States and by other key players, including the European Space Agency
(ESA).

The treaty of Lisbon established a firm legal basis for the space policy of the Union. Article
189 of the Treaty on the functioning of the EU declares that the Union shall draw up
a European space policy, in order to promote scientific and technical progress, industrial
competitiveness and the implementation of its policies. To this end, it may promote joint
initiatives, support research and technological development and coordinate the efforts
needed for the exploration and exploitation of space. The European Parliament and the
Council, acting in accordance with the ordinary legislative procedure, shall establish the
necessary measures, which may take the form of a European space programme, excluding
any harmonisation of the laws and regulations of the Member States. The Union shall
establish any appropriate relations with the European Space Agency.

The European Space Agency (ESA) began work in 1975. At present ESA has 17 Member
States. Its membership coincides with that of the EU-15 plus the Czech Republic, Romania,
Switzerland and Norway. The EU and ESA have no formal relationship. During its first 25
years, ESA raised Europes status from a minor to a major player, with a high degree of
self-sufficiency in most aspects of space technology and a capacity for innovations of world
class. Ariane rockets developed by ESA have captured a large part of the market in
commercial launches of satellites, although the US space industry benefits from large public
funding and technological stimulation from the military space sector, which is relatively
small in Europe.

Europe needs an effective space policy to enable it to exert global leadership in selected policy areas in accordance
with European interests and values. To fulfil such roles, the EU increasingly relies on autonomous decision-making,
based on space-based information and communication systems. In a communication entitled " Europe and space:
Turning to a new chapter", which was adopted in agreement with the European Space Agency,
the Commission defined the objectives of a European strategy for space: strengthening the foundation for space
activities so that Europe preserves independent and affordable access to space; enhancing scientific knowledge; and
exploiting the benefits of space-based tools for markets and society [COM/2000/597]. This strategy aims to establish
the right political and regulatory conditions for space activities, to catalyse joint R & D efforts and to bring together
all the players around common political objectives in projects of Europe-wide interest.

A Framework Agreement between the European Community and the European Space Agency aims at the coherent
and progressive development of an overall European Space Policy [Framework Agreement and
Decision 2004/578]. In particular, this policy seeks to: link demand for services and applications using space
systems in support of the European policies with the supply of space systems and infrastructure necessary to meet
that demand; and secure Europe's independent and cost-effective access to space and the development of other fields
of strategic interest necessary for the independent use and application of space technologies in Europe. The
Framework for Space Surveillance and Tracking Support (SST) contributes to ensuring the long-term availability
of European and national space infrastructure, facilities and services which are essential for the safety and security
of the economies, societies and citizens in Europe [Decision 541/2014].

A key element of the European space policy is the development of a global navigation satellite systems (GNSS) at
European level offering a service meeting the needs of civilian users [COM/98/29, see also section 18.2.6]. The
European satellite navigation programmes, Galileo and EGNOS, cover all the activities needed to define, develop,
validate, construct, operate, renew and improve the European satellite navigation systems [Regulation 1285/2013].
The EC/EU has concluded a multi-annual delegation agreement with ESA covering the technical and planning
aspects of the programmes. It has also concluded an Agreement with the United States of America for the
promotion, provision and use of Galileo and GPS satellite-based navigation systems and related applications
[Decision 2011/901 and Agreement].

The aim of the Galileo programme is to establish the first global satellite navigation and positioning infrastructure
specifically designed for civilian purposes, consisting of a constellation of satellites and a global network of earth
stations. It is expected to contribute to the development of numerous applications in areas that are associated,
directly or indirectly, with common policies, such as transport (positioning and measurement of the speed of moving
bodies), insurance, motorway tolls and law enforcement (surveillance of suspects, measures to combat crime). The
aim of the EGNOS programme is to improve the quality of open signals from existing global navigation satellite
systems as well as those from the open service offered by the system established under the Galileo programme,
when they become available. The Galileo and EGNOS programmes are an industrial policy tool and are part of the
Europe 2020 strategy [see section 7.3]. Regulation 1311/2013 setting the multiannual financial framework of the
Union for the period 2014 to 2020, allocates around EUR 7.1 billion for the financing of activities relating to the
Galileo and EGNOS programmes for this period.

In view of the need to ensure that essential public interests related to the strategic nature of the European satellite
radio-navigation programmes are adequately defended and represented, the European GNSS Agency manages the
public interests relating to the European GNSS programmes [Regulation 912/2010, last amended by
Regulation 512/2014]. This is the licensing authority vis--vis the private concession holder, the Galileo Joint
Undertaking, responsible for implementing and managing the Galileo deployment and operating phases
[Regulation 876/2002]. The GNSS Agency is also entrusted with the responsibility of managing the agreement with
the economic operator charged with operating EGNOS. It coordinates Member States' actions in respect of the
frequencies necessary to ensure the operation of the system and hold the right to use all these frequencies wherever
the system is located. The Council and the High Representative of the Union for Foreign Affairs and Security Policy
have the responsibility to avert a threat to the security of the Union or one or more Member States or to mitigate
serious harm to the essential interests of the Union or of one or more Member States arising from the deployment,
operation or use of the European Global Navigation Satellite System, in particular as a result of an international
situation requiring action by the Union or in the event of a threat to the operation of the system itself or its services
[Decision 2014/496].