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Since the end of the Cold War, Europe’s defense industry has undergone important changes. There has been a marked consolidation of the defense industry and a visible increase in intra-European collaboration. In 1993, only two European defense firms — British Aerospace and Thompson S.A. — were among the top ten defense firms in the world. Today, four European firms — BAE Systems, EADS, Thales, and Finmeccanica — are among the top ten. These developments have received relatively little attention outside the boardrooms of a few U.S. defense firms. The consolidation of Europe’s defense industry has largely been driven by a desire to compete with U.S. defense firms on the global arms market. With the partial exception of UK defense companies, European firms have had difficulty penetrating the U.S. defense market. However, if restrictive U.S. licensing polices make it difficult for European firms to compete on the U.S. market, they may have little choice but to sell to third countries such as China. Thus it is in the U.S. interest to revise some of its licensing procedures in order to facilitate greater transatlantic defense cooperation.

Originally published in: The National Interest, no. 82, Winter 2005-2006, pp. 62-68.

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