diff --git a/3rdparty/CMakeLists.txt b/3rdparty/CMakeLists.txt
new file mode 100644
index 00000000..fb525003
--- /dev/null
+++ b/3rdparty/CMakeLists.txt
@@ -0,0 +1,4 @@
+if (NOT SYSTEM_EXPAT)
+	add_subdirectory(expat)
+endif()
+
diff --git a/3rdparty/expat/CMakeLists.txt b/3rdparty/expat/CMakeLists.txt
new file mode 100644
index 00000000..ed5bebee
--- /dev/null
+++ b/3rdparty/expat/CMakeLists.txt
@@ -0,0 +1,42 @@
+
+
+configure_file (
+    "${PROJECT_SOURCE_DIR}/3rdparty/expat/expat_config_cmake.in"
+    "${PROJECT_BINARY_DIR}/3rdparty/expat/expat_config.h"
+)
+
+
+set(expat_sources 
+	asciitab.h
+        hashtable.h
+        iasciitab.h
+        latin1tab.h
+        nametab.h
+        utf8tab.h
+        xmldef.h
+        xmlparse.h
+        xmlrole.h
+        xmltok.h
+        xmltok_impl.h
+        hashtable.c
+        xmlparse.c
+        xmlrole.c
+        xmltok.c
+        internal.h
+        ascii.h
+        sg_expat.h
+        sg_expat_external.h 
+	)
+
+
+# this code will be linked into SimGearCore shared object, so it 
+# must be compiled with -fPIC too
+
+
+if(SIMGEAR_SHARED AND UNIX)
+	set(CMAKE_C_FLAGS "${CMAKE_C_FLAGS} -fPIC")
+	set(CMAKE_CXX_FLAGS "${CMAKE_CXX_FLAGS} -fPIC")
+endif()
+
+add_library(local_expat STATIC ${expat_sources})
+
diff --git a/simgear/xml/Expat.COPYING b/3rdparty/expat/Expat.COPYING
similarity index 100%
rename from simgear/xml/Expat.COPYING
rename to 3rdparty/expat/Expat.COPYING
diff --git a/simgear/xml/ascii.h b/3rdparty/expat/ascii.h
similarity index 100%
rename from simgear/xml/ascii.h
rename to 3rdparty/expat/ascii.h
diff --git a/simgear/xml/asciitab.h b/3rdparty/expat/asciitab.h
similarity index 100%
rename from simgear/xml/asciitab.h
rename to 3rdparty/expat/asciitab.h
diff --git a/simgear/xml/expat_config_cmake.in b/3rdparty/expat/expat_config_cmake.in
similarity index 100%
rename from simgear/xml/expat_config_cmake.in
rename to 3rdparty/expat/expat_config_cmake.in
diff --git a/simgear/xml/hashtable.c b/3rdparty/expat/hashtable.c
similarity index 100%
rename from simgear/xml/hashtable.c
rename to 3rdparty/expat/hashtable.c
diff --git a/simgear/xml/hashtable.h b/3rdparty/expat/hashtable.h
similarity index 100%
rename from simgear/xml/hashtable.h
rename to 3rdparty/expat/hashtable.h
diff --git a/simgear/xml/iasciitab.h b/3rdparty/expat/iasciitab.h
similarity index 100%
rename from simgear/xml/iasciitab.h
rename to 3rdparty/expat/iasciitab.h
diff --git a/simgear/xml/internal.h b/3rdparty/expat/internal.h
similarity index 100%
rename from simgear/xml/internal.h
rename to 3rdparty/expat/internal.h
diff --git a/simgear/xml/latin1tab.h b/3rdparty/expat/latin1tab.h
similarity index 100%
rename from simgear/xml/latin1tab.h
rename to 3rdparty/expat/latin1tab.h
diff --git a/simgear/xml/nametab.h b/3rdparty/expat/nametab.h
similarity index 100%
rename from simgear/xml/nametab.h
rename to 3rdparty/expat/nametab.h
diff --git a/simgear/xml/expat.h b/3rdparty/expat/sg_expat.h
similarity index 100%
rename from simgear/xml/expat.h
rename to 3rdparty/expat/sg_expat.h
diff --git a/simgear/xml/expat_external.h b/3rdparty/expat/sg_expat_external.h
similarity index 100%
rename from simgear/xml/expat_external.h
rename to 3rdparty/expat/sg_expat_external.h
diff --git a/simgear/xml/utf8tab.h b/3rdparty/expat/utf8tab.h
similarity index 100%
rename from simgear/xml/utf8tab.h
rename to 3rdparty/expat/utf8tab.h
diff --git a/simgear/xml/xmldef.h b/3rdparty/expat/xmldef.h
similarity index 100%
rename from simgear/xml/xmldef.h
rename to 3rdparty/expat/xmldef.h
diff --git a/simgear/xml/xmlparse.c b/3rdparty/expat/xmlparse.c
similarity index 100%
rename from simgear/xml/xmlparse.c
rename to 3rdparty/expat/xmlparse.c
diff --git a/simgear/xml/xmlparse.h b/3rdparty/expat/xmlparse.h
similarity index 100%
rename from simgear/xml/xmlparse.h
rename to 3rdparty/expat/xmlparse.h
diff --git a/simgear/xml/xmlrole.c b/3rdparty/expat/xmlrole.c
similarity index 100%
rename from simgear/xml/xmlrole.c
rename to 3rdparty/expat/xmlrole.c
diff --git a/simgear/xml/xmlrole.h b/3rdparty/expat/xmlrole.h
similarity index 100%
rename from simgear/xml/xmlrole.h
rename to 3rdparty/expat/xmlrole.h
diff --git a/simgear/xml/xmltok.c b/3rdparty/expat/xmltok.c
similarity index 100%
rename from simgear/xml/xmltok.c
rename to 3rdparty/expat/xmltok.c
diff --git a/simgear/xml/xmltok.h b/3rdparty/expat/xmltok.h
similarity index 100%
rename from simgear/xml/xmltok.h
rename to 3rdparty/expat/xmltok.h
diff --git a/simgear/xml/xmltok_impl.c b/3rdparty/expat/xmltok_impl.c
similarity index 100%
rename from simgear/xml/xmltok_impl.c
rename to 3rdparty/expat/xmltok_impl.c
diff --git a/simgear/xml/xmltok_impl.h b/3rdparty/expat/xmltok_impl.h
similarity index 100%
rename from simgear/xml/xmltok_impl.h
rename to 3rdparty/expat/xmltok_impl.h
diff --git a/simgear/xml/xmltok_ns.c b/3rdparty/expat/xmltok_ns.c
similarity index 100%
rename from simgear/xml/xmltok_ns.c
rename to 3rdparty/expat/xmltok_ns.c
diff --git a/CMakeLists.txt b/CMakeLists.txt
index d9c6f61b..a0112491 100644
--- a/CMakeLists.txt
+++ b/CMakeLists.txt
@@ -227,12 +227,18 @@ if (SYSTEM_EXPAT)
     message(STATUS "Requested to use system Expat library, forcing SIMGEAR_SHARED to true")
     set(SIMGEAR_SHARED ON)
     find_package(EXPAT REQUIRED)
-    include_directories(${EXPAT_INCLUDE_DIRS})
+
 else()
     message(STATUS "Using built-in expat code")
     add_definitions(-DHAVE_EXPAT_CONFIG_H)
+    set(EXPAT_INCLUDE_DIRS 
+	${PROJECT_SOURCE_DIR}/3rdparty/expat 
+	${PROJECT_BINARY_DIR}/3rdparty/expat)
+    set(EXPAT_LIBRARIES local_expat)
 endif(SYSTEM_EXPAT)
 
+include_directories(${EXPAT_INCLUDE_DIRS})
+
 check_include_file(inttypes.h HAVE_INTTYPES_H)
 check_include_file(sys/time.h HAVE_SYS_TIME_H)
 check_include_file(sys/timeb.h HAVE_SYS_TIMEB_H)
@@ -346,7 +352,6 @@ set(CMAKE_EXE_LINKER_FLAGS "${CMAKE_EXE_LINKER_FLAGS} ${MSVC_LD_FLAGS}")
 include_directories(${PROJECT_SOURCE_DIR})
 include_directories(${PROJECT_SOURCE_DIR}/simgear/canvas/ShivaVG/include)
 include_directories(${PROJECT_BINARY_DIR}/simgear)
-include_directories(${PROJECT_BINARY_DIR}/simgear/xml)
 
 include_directories(${OPENSCENEGRAPH_INCLUDE_DIRS} 
     ${Boost_INCLUDE_DIRS} 
@@ -364,11 +369,6 @@ configure_file (
   "${PROJECT_BINARY_DIR}/simgear/simgear_config.h"
   )
 
-configure_file (
-    "${PROJECT_SOURCE_DIR}/simgear/xml/expat_config_cmake.in"
-    "${PROJECT_BINARY_DIR}/simgear/xml/expat_config.h"
-)
-
 if(ENABLE_TESTS)
     # enable CTest / make test target
     message(STATUS "Tests: ENABLED")
@@ -402,6 +402,8 @@ if(NOT SIMGEAR_HEADLESS)
 endif()
 
 install (FILES ${PROJECT_BINARY_DIR}/simgear/simgear_config.h  DESTINATION include/simgear/)
+
+add_subdirectory(3rdparty)
 add_subdirectory(simgear)
 
 if (NOT EMBEDDED_SIMGEAR)
diff --git a/simgear/io/DAVMultiStatus.cxx b/simgear/io/DAVMultiStatus.cxx
index 6e1425dc..53b34b67 100644
--- a/simgear/io/DAVMultiStatus.cxx
+++ b/simgear/io/DAVMultiStatus.cxx
@@ -16,6 +16,10 @@
 // along with this program; if not, write to the Free Software
 // Foundation, Inc., 51 Franklin Street, Fifth Floor, Boston, MA  02110-1301, USA.
 
+#ifdef HAVE_CONFIG_H
+#  include <simgear_config.h>
+#endif
+     
 #include "DAVMultiStatus.hxx"
 
 #include <iostream>
@@ -27,10 +31,15 @@
 #include <boost/foreach.hpp>
 
 #include "simgear/debug/logstream.hxx"
-#include "simgear/xml/xmlparse.h"
 #include "simgear/misc/strutils.hxx"
 #include "simgear/structure/exception.hxx"
 
+#ifdef SYSTEM_EXPAT
+#  include <expat.h>
+#else
+#  include "sg_expat.h"     
+#endif
+
 using std::string;
 
 using namespace simgear;
diff --git a/simgear/io/SVNReportParser.cxx b/simgear/io/SVNReportParser.cxx
index a6f80224..93695f16 100644
--- a/simgear/io/SVNReportParser.cxx
+++ b/simgear/io/SVNReportParser.cxx
@@ -16,6 +16,10 @@
 // along with this program; if not, write to the Free Software
 // Foundation, Inc., 51 Franklin Street, Fifth Floor, Boston, MA  02110-1301, USA.
 
+#ifdef HAVE_CONFIG_H
+#  include <simgear_config.h>
+#endif
+     
 #include "SVNReportParser.hxx"
 
 #include <iostream>
@@ -30,11 +34,16 @@
 #include "simgear/misc/sg_path.hxx"
 #include "simgear/misc/sg_dir.hxx"
 #include "simgear/debug/logstream.hxx"
-#include "simgear/xml/xmlparse.h"
 #include "simgear/xml/easyxml.hxx"
 #include "simgear/misc/strutils.hxx"
 #include "simgear/package/md5.h"
 
+#ifdef SYSTEM_EXPAT
+#  include <expat.h>
+#else
+#  include "sg_expat.h"     
+#endif
+
 #include "SVNDirectory.hxx"
 #include "SVNRepository.hxx"
 #include "DAVMultiStatus.hxx"
diff --git a/simgear/xml/CMakeLists.txt b/simgear/xml/CMakeLists.txt
index 8a96949d..e2dae9e9 100644
--- a/simgear/xml/CMakeLists.txt
+++ b/simgear/xml/CMakeLists.txt
@@ -10,28 +10,4 @@ set(SOURCES
     easyxml.cxx
     )
 
-if (NOT SYSTEM_EXPAT)
-    list(APPEND SOURCES
-        asciitab.h
-        hashtable.h
-        iasciitab.h
-        latin1tab.h
-        nametab.h
-        utf8tab.h
-        xmldef.h
-        xmlparse.h
-        xmlrole.h
-        xmltok.h
-        xmltok_impl.h
-        hashtable.c
-        xmlparse.c
-        xmlrole.c
-        xmltok.c
-        internal.h
-        ascii.h
-        expat.h
-        expat_external.h 
-    )
-endif()
-    
 simgear_component(xml xml "${SOURCES}" "${HEADERS}")
diff --git a/simgear/xml/easyxml.cxx b/simgear/xml/easyxml.cxx
index c2fc1213..08a39fa4 100644
--- a/simgear/xml/easyxml.cxx
+++ b/simgear/xml/easyxml.cxx
@@ -17,7 +17,7 @@
 #ifdef SYSTEM_EXPAT
 #  include <expat.h>
 #else
-#  include "xmlparse.h"     
+#  include "sg_expat.h"     
 #endif
      
 #include <fstream>
@@ -136,7 +136,6 @@ XMLAttributesDefault::setValue (const char * name, const char * value)
 }
 
 
-
 ////////////////////////////////////////////////////////////////////////
 // Attribute list wrapper for Expat.
 ////////////////////////////////////////////////////////////////////////