British arms procurement: protection versus freer trade

Throughout the post-war era, the leading members of the Atlantic Alliance have accepted the desirability of a liberal system of world trade. Ultimately, adherence to this view rests on the principle of comparative advantage, according to which free international exchange permits a country to export those commodities which it produces relatively efficiently and to import those which it produces inefficiently. Exchange on this basis enables the participating states to enjoy the gains from trade arising from international specialisation. However, despite the shared belief that unrestricted international trade is beneficial, the major arms procurers within NATO have, in practice, displayed a distinct absence of enthusiasm for comparative cost considerations in the field of military purchasing. Consequently, weapons procurement is characterised by a pronounced tendency to discriminate in favour of domestic suppliers. That the United Kingdom is no exception to the rule is reflected in a low propensity to import defence equipment. Thus, in recent years only 10 per cent of equipment expenditure has been on contracts placed abroad, a figure which contrasts markedly with the growing proportion of the domestic civil market in manufactured goods accounted for by imports. The purpose of this article is to examine the merits of British indigenous weapons procurement. It begins by outlining the reasons for the rising cost of defence equipment, since it is this trend which is mainly responsible for calling into question the traditional reliance on UK suppliers for most items of military hardware. Next it discusses the advantages and disadvantages of discriminating in favour of domestic arms producers. Finally, the paper seeks to identify how the liberalisation of procurement practices could best be achieved.