The Dutch Ministry of Defence wants to strengthen and protect the Dutch defence industry as well as put it on the international map. Defence is therefore working with the Ministry of Economic Affairs on a law to make this possible.
The new law is open for consultation from 1 July to 1 September, a so-called internet consultation. It consists of three parts: a sectoral investment test, a suitability declaration and a market regulation. The law is part of an action plan to scale up the production and supply of military equipment.
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Controlling mergers, acquisitions and investments
The sectoral investment test prevents mergers, acquisitions and investments in suppliers from leading to risks for the deployment of the armed forces. With this, the government protects the Dutch defence industry.
This new law is a logical follow-up to previous sectoral laws on telecoms, gas and electricity, among others. These too protect the Netherlands’ vital infrastructure.
Unwanted interference and faster upscaling
In addition, the government will issue suitability declarations to Dutch companies that want to compete for contracts abroad. Among other things, the firms will be screened for unwanted interference from other countries in their management structure. This helps to better position the Dutch defence and security industry internationally.
Furthermore, the ministries want to strengthen the defence industry through market regulation. The Ministers of Defence and Economic Affairs will have the possibility to give instructions to companies. These then concern, for instance, the production and maintenance of equipment or cooperation with knowledge institutions.
Market regulation also provides a legal basis to guarantee the supply of defence equipment. With this, the ministries want the defence industry to scale up faster.
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Market regulation in the European Union
Market regulation fits in with European developments. In fact, the European Union is also working on a regulation on this. This includes parts similar to the new Defence law. Think about steering strategic stocks, the supply chain and scaling up production capacity.
Furthermore, other European and allied countries also have elements of market regulation in their legislation. These include Canada, Finland, France and the United States.
After internet consultation, the bill will be sent to the Council of State for advice. The bill will then be debated in the Lower House.
Picture: Dutch naval vessel on the North Sea (by the Dutch Ministry of Defence).
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