European space industry needs a single market approach, recommends Letta report

The EU space market should be integrated, because the European space industry is no longer adequate to compete in the current global space economy, Italian MP Enrico Letta (PD, S&D) writes in his draft full report as seen by Euractiv.

The former Italian prime minister is expected to publish his report on the state of the EU’s single market to European leaders on Thursday (18 April).

“A dynamic space sector, capable of thriving in the harsh global competition and providing the appropriate instruments for Europe’s strategic autonomy and security, is essential for the future of Europe. To achieve this, the current approach […] must be revised,” states the report.

The European space industry has “only partially followed the single market approach,” he writes, suggesting strengthening integration to boost competitiveness on the global stage, particularly in regards to US players.

It “is no longer adequate” that “the majority of industrial resources are concentrated in a handful of countries and companies” within the EU, writes Letta.

The report also highlights the substantially smaller private investments in the space sector compared to the US, and the lack of common EU rules supporting the sector’s competitiveness.

The report states that “the use of civil and commercial space infrastructures for defence purposes is now a fact,” using the example of the war in Ukraine, where both the military and civilians are using Elon Musk’s Starlink system for telecommunications.

Letta believes that European space defence is “relatively underdeveloped” compared to its civil use.

Way forward

To achieve stronger integration Letta first suggests clarifying roles and competencies of the European Space Agency (ESA) and the EU Agency for the Space Programme (EUSPA).

The possibility of the ESA being “within the perimeter of the EU institutions has become even more remote,” since the establishment of EUSPA and Brexit he writes.

To this day, one of the main contributors to ESA is the United Kingdom, which left the EU in 2020.

The upcoming EU Space Law shall ensure “greater coherence and coordination of the rules” in the space sector, says Letta.

He further advises that the law should include single market dispositions “where and when real competition can take place.”

The EU Space Law has been postponed twice, from an initial deadline of the first quarter of 2024 to April, and now finally possibly after summer.

Letta recommends departing from the geo-return method, which directs contracts to domestic space companies based proportionally on how their host country invests in ESA.

He suggests revising the scope of application of the method, limiting its use primarily to R&D and science, but not to competitive market programs.

Lastly, Letta explains that his overarching proposal for a “deeper financial market integration and enhanced public procurement” will stimulate the space economy as well.

“This new approach, while maintaining the necessary institutional support to space activities, would provide a level playing field to the full spectrum of the European space industry,” concludes Letta.

[Edited by Rajnish Singh]

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