The European Commission will soon sail into new policy waters when it launches a public debate next week on a very sensitive subject: cross-border competition in the EU's defence industry.

By long tradition, defence has been verboten to any meddling by the EU, standing aloof from the general competition rules that apply to all other sectors. That is why Europe, split into small and protected national defence markets since the Union's inception 50 years ago, produces some of the world's most costly defence equipment. The Eurofighter is only the most obvious example.

Such blatant inefficiency may start withering away if the commission-led debate is fruitful ...though any withering will not be rushed in a sector where change, as usual, depends on the goodwill of national governments and not the compulsion of EU law.

At issue is the Commission's new green paper on defence procurement, a 12-page document likely to be unveiled in Brussels on September 22. It will set the clock ticking for six months of consultations with governments, industry, parliaments, defence research centres and policy think-tanks.

The purpose of this public debate is to goad national capitals into defining two lists. One will frame those defence products and services critical to national security and thus exempt from EU rules. The other will list all the other products and services that should be...

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