PARIS — Seeking an intergovernmental agreement on arms exports, France and Germany are discussing have discussed the level of national content in weapons as well as and lists of countries mutually acceptable for foreign sales, as the two partner countries pursue an intergovernmental agreement on arms exports, said Louis Gautier, head of the Secrétariat Général de la Defense and Sécurité Nationale.

A bilateral pact for foreign sales of weapons is seen as key to the future of the 50/50 joint venture holding company created by France's state-owned French and German partners Nexter and family-controlled Krauss-Maffei Wegmann of Germany, two specialists in land systems. 

"We hope the new company will be integrated and build common equipment," Gautier said. "So we have to find a simplification of authorization."

SGDSN, which reports to the prime minister’s office, heads the interministerial commission (interministérial pour l’étude des exportations de matériels de guerre) that an interministerial committee which authorizes arms exports. One of the issues under discussion is discussed has been a requiring joint authorization only needed when French or German content in a weapon exceeds exceeded a certain level. That seeks a simplification as weapons which had less than an agreed threshold would need just one clearance, while those above would need approval from both countries.

Another approach would be a bilateral committee drawing up a list of acceptable countries for a company to pitch products. Each exporter country has its own concerns and objectives.

"In my opinion there will be a combination of both approaches," Gautier said.

"Such an agreement will be of fundamental importance," said Hélène Masson, senior research fellow at think tank Fondation pour la Récherche Stratégique. The joint venture will need a success in exports to deliver competitiveness. 

The partnership will have annual sales of almost €2 billion (US $2.3 billion) euros and an order book of €9 billion (US $10.2 billion), and employ more than 6,000 staff, the companies said.

The partnership seeks to cut costs, such as buying raw materials and manufacturing tools, and boost foreign sales by agreeing which products to pitch. Exports account for 56 percent of annual sales for Nexter and some 80 percent for KMW, a French defense official said.

KMW and Nexter closed the joint venture deal in December. Because the intergovernmental talks had been slow, reflecting highly distinct political approaches to exports, SGDNS had suggested it should continue negotiating with its German counterpart, the economy ministry, rather than hold up the corporate talks, Gautier said.

That led to a government statement of intent when the joint venture agreement was announced, but progress has been slow.

There has been slow and disappointing progress on talks on the bilateral pact, Nexter chairman Stéphane Mayer told Feb. 15 the National Assembly parliamentary defense committee.

France will carry on negotiating with Germany but sees no need to hurry as KMW and Nexter will continue to offer independently produced products over the interim period of the next five years, Gautier said.

KMW and Nexter aim to jointly produce hope to build together a future tank to replace the French Leclerc and German Leopard, and that platform weapon is expected to include have a high level of integration of content from each company. the partner’s equipment.

As a joint venture, however, the two companies face unique challenges in arms exports. Germany, for example, is grappling with sensitivities in doing business with An example of German sensitivity lies with Saudi Arabia. Germany's In Germany, minister of economic affairs, economy minister, Sigmar Gabriel, reported government approval has written to the economy committee of the lower house Bundestag that the Federal Security Council has approved for delivery of 23 Airbus helicopters to Saudi Arabia, and other arms deals to Oman, United Arab Emirates, Indonesia and Thailand., Reuters reported.  But that approval That had to be wrested when Gabriel said follows Gabriel saying in January that Berlin may review its policy toward Riyadh after the Saudi authorities executed 47 prisoners. The economy minister, a member of the Social Democrat party, has called for less reliance on arms exports.

Complicating matters is that the The European parliament has voted a nonbinding ban of arms sales by European Union members to Saudi Arabia, responding to concerns over civilian deaths  the loss of civilians due to bombing in Yemen.

France, meanwhile, says it observes international conventions and embargoes, and sees little or no problem in selling weapons to Riyadh.

Paris has simplified its authorization procedure, cutting bureaucracy and installing an online system for applications, but  An authorization can take up to 18 months, with an initial nine months, renewable for a further nine. the timing of an authorization can signal a political judgment, reflecting concerns over international and national risks, and sensitivities of a neighbor to the client country. If a clearance fails to be granted after 18 months, that could be seen as a polite rejection.

Even when an approval has been given, France can restrict the performance of weapons, depending whether the client is a close ally or a purely commercial partner.

One of the grey areas is equipment for dual civil-military use, where the SGDNS does not hold the lead authorizing role. Officials from customs, defense, economy, foreign and interior ministries, and intelligence agencies gather for a A monthly authorization meeting. gathers officials from customs, defense, economy, foreign, interior ministries, and intelligence agencies.

France last year won its largest foreign arms orders of €16 billion ($18 billion US), up from €8.2 billion in 2014, and hopes to garner a similar value this year.

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