Offset in Poland. Hubert Królikowski Director of the Offset Department Programmes

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1 Hubert Królikowski Director of the Offset Department Programmes

2 2 Offset in contrast to Directive 2009/81/EC Directive 2009/81/EC does not directly address the issue of offsets the European Commission issued Guidance Note on Offsets in the Polish law the direct implementation of Directive 2009/81/EC is taking place by amending the Act Public Procurement Law

3 3 Article 346 (1)(b) TFEU any Member State may take such measures as it considers necessary for the protection of the essential interests of its security which are connected with the production of or trade in arms, munitions and war material; such measures shall not adversely affect the conditions of competition in the internal market regarding products which are not intended for specifically military purposes

4 4 The European Commission s Guidance Note on Offsets Guidance Note on Offsets a document issued by DG MARKT: a) offsets are restrictive measures infringing primary law; they can only be justified on the basis of one of the Treaty-based derogations, i.e. Article 346 TFEU b) any decision to apply Article 346 TFEU needs to be based on a case-bycase assessment and can be justified only as a mean to protect essential security interest of the State

5 5 The European Commission s objections to the Polish legal solutions compulsory use of offsets within all procurements of armament or military equipment that fall under Article 296 TEC (i.e. current Article 346 TFEU) obligation to conclude an offset agreement when the value of delivery of armament or military equipment exceeds certain ceiling the value of offset agreement the value of contract of delivery indirect offset commitments

6 6 The European Commission s objections to the Polish legal solutions (cont.) the aims of offset agreement (i.a. economic considerations Article 5 of the Offset Act) lack of evaluation of the need to conclude an offset agreement for the protection of essential interests of security of the State lack of a safeguard clause, i.e. guarantee for the lack of violation against other markets (different than defence)

7 7 Amendment of the Offset Act offset in the Polish law is regulated by the Offset Act and appropriate executive acts currently there are ongoing works on the amendment of the Offset Act in the Ministry of Economy

8 8 The aims of amending the Offset Act adapting to the EU law and practice to ensure maintenance of the use of offset within restrictive measures of the EU ensuring the right application of Guidance Note on Offsets in the spirit of Directive 2009/81/EC taking into account the provisions of Code of Conduct on Offsets taking into account the comments of the European Commission

9 9 Suggested solutions in the amended Offset Act possibility to use offsets within supply contracts of armament or military equipment that falls under Directive 2009/81/EC conclusion of an offset agreement needs to be justified decision on the reasonableness of concluding an offset agreement is to be undertaken by the Minister of Economy in coordination with the Minister of National Defence after obtaining opinion of the Committee for Offset Agreements

10 10 Suggested solutions in the amended Offset Act (cont.) abolition of the threshold amount for supply contracts of armament or military equipment conclusion of an offset agreement is to be possible regardless the value of procurement evaluating and justifying every case of concluding an offset agreement abolition of provisions concerning economical benefits (i.a. indirect offset) abolition of offset multipliers (relation of the value of the an offset agreement to the value of a supply contract)

11 11 Suggested solutions in the amended Offset Act (cont.) abolition of the Catalogue of Offset Needs, offset promise and preoffset abolition of a clause concerning the list of armament or military equipment, whose purchase shall be subject to the obligation of concluding an offset agreement awarding new rights for the Committee for Offset Agreements providing counterintelligence and anticorruption security the inclusion of the representative of the Chief of the Military Counterintelligence Service with the right to vote and the representative of the Chief of the Central Anticorruption Bureau in the sessions of the Committee for Offset Agreements

12 12 Before the Offset Act is amended until legislating the amended Offset Act, offset should be used according to the principle of indirect result (interpreting provisions of the national law in the light of the Community law) the European Commission may verify whether the conditions for using offset were fulfilled according to Article 346 TFEU anytime at the European Commission s request, an information should be provided and should be proved (justified) that offset is necessary for the protection of essential security of the State

13 13 State of the legislative works the draft Act was accepted by the Committee of the Council of Ministers the draft Act was submitted to the Council of Ministers the draft Act was returned due to the agenda of parliamentary works the expected date of entering into force of the amended Offset Act: only after Sejm and Senat of the Republic of Poland of the new term is constituted

14 Thank you for your attention Ministry of Economy Pl. Trzech Krzyży 3/ Warsaw tel fax web Offset Departament Programmes