The European Commission is considering introducing a new ‘European Defence Production Act’ to bolster the European Union’s defence industrial foundation. This will encompass aspects ranging from research to collaborative procurement, aiding EU countries in preparing for future emergencies.
The conflict in Ukraine, initiated by Russia, has prompted EU countries to critically evaluate the limitations of their defence production capabilities. They are now actively exploring ways to address the pressing demand for defence equipment.
A high-ranking official from the Commission, during a conversation with EURACTIV, highlighted, “We need a strategy to strengthen and broaden the support for the European industry. Moreover, there’s a need to devise a regulatory structure that can be called upon to enhance defence production when the situation demands it. It’s somewhat akin to the Defence Production Act found in Europe.”
This proposition is reminiscent of the U.S. Defense Production Act, which grants the U.S. President the authority to fast-track and augment the provision of essential materials and services from the national industrial sector for defence purposes.
EU defence authorities have noted the significance of traditional war defence tools like tanks, munitions, and surface-to-air missiles, especially near the EU’s frontiers. There’s a growing consensus about the urgency for firms to supply these tools swiftly when called upon.
EURACTIV has gleaned that this proposal was first broached during a casual assembly of EU defence ministers in Toledo, Spain. It is anticipated that this topic will be discussed in European Commission President Ursula von der Leyen’s upcoming State of the Union speech in Strasbourg on 13 September.
A new potential defence act by the EU might provide a steadfast blueprint designed to oversee the entirety of defence production during times of pressing needs.
One diplomat from the EU expressed that the act might draw inspiration from the temporary models of the European defence industry support via the common procurement fund (EDIRPA). This would boost joint procurement and enhance the EU’s capabilities to upscale ammunition production capacities swiftly (ASAP).
Moreover, the European Commission, earlier in the summer, had included a suggestion for regulatory waivers. Nevertheless, due to time constraints and differences in prioritizing orders, production capacity assessments, and export license waivers, EU nations deferred these discussions.
Proposed regulations, enabling the European Commission and its member states to oversee and be informed about the production capabilities of essential items by industries, have been presented earlier during von der Leyen’s tenure. These were primarily motivated by the significant shortage of essentials like masks and ventilators during the COVID-19 outbreak. However, these regulations met resistance from member states when it came to implementing the Single Market Emergency Instrument (SMEI) or the Chips Act. The primary concern was the potential infringement on private enterprises.
In the U.S., their respective Act was employed during the COVID-19 crisis to boost the production of vital medical supplies and has been used frequently for defence-related production.
Although the European Commission plans to release a document by the end of 2023, the senior official underscored the importance of “allocating the appropriate resources.”
Both the COVID-19 pandemic and the Ukrainian conflict have strained the EU’s budget. In June, the EU executive proposed a mid-term revision, earmarking an additional €66 billion, which currently does not account for a Defence Production Act specifically for defence.
The interplay between this act and the European Commission’s intention to present a new European Defence Investment Programme (EDIP) remains uncertain. Initially, the EDIP was meant to suggest a VAT exemption, but this has been delayed.
A spokesperson for the institution mentioned that the EDIP would be fundamental to “European defence in the foreseeable future.” They also brought up the European Defence Fund, which sponsors tech R&D, and the Peace facility, which funds the provision of both lethal and non-lethal equipment by EU states to other nations.
