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European Defence Industrial Policy

European Defence Industrial Policy

The European Commission's defence industrial policy is designed to promote competitiveness, innovation, support small and medium-sized enterprises (SMEs), and provide a strong industrial base for the EU’s common security and defence policy (CSDP).

European Defence Fund

Measures to support the Commission's defence industrial policy are set out in the communication 'Launching the European defence fund' adopted on 7 June 2017. It aims to help EU countries cooperate and spend money more effectively on defence by:

  • coordinating, supplementing and amplifying national investments in defence research
  • prototype development
  • acquisition of defence equipment and technology

The European Defence Fund has 2 strands:

  • The research strand offers grants for collaborative research in innovative defence technologies and products. EUR 90 million is foreseen to be spent until the end of 2019, with €25 million allocated for 2017. After 2020, the Commission proposes that EUR 500 million per year will be devoted to this strand.
    o    On 7 June 2017, the first call for proposals on 'Preparatory action on defence research' was published.
  • Through the development and acquisition strand, the EU will create incentives for EU countries. These will encourage cooperation on joint development and the acquisition of defence equipment and technology through co-financing from the EU budget. The EU will offer co-financing with €500 million for 2019 and 2020 and proposes €1 billion per year after 2020. A part of the budget will be reserved to encourage cross-border participation of SMEs.

European Defence Action Plan

The basis for the fund is the European defence action plan, adopted on 30 November 2016. It sets out concrete proposals to support a strong and innovative European defence industry and defence capability priorities agreed by EU countries. It proposes to mobilise available EU instruments to ensure that the European defence industrial base is able to meet Europe's future security needs.

In summary, there are 3 main proposed measures. Firstly, a European defence fund for collaborative research projects. And as a separate element, the joint development of defence capabilities, to be owned by EU countries in priority areas. Secondly, supporting SMEs by fostering investments in defence supply chains. Thirdly to ensure Europe has an open and competitive single market for defence.

These measures are designed to enhance Europe's strategic autonomy and strengthen its ability to act with partners as well as stimulating jobs, growth and innovation across the EU.

Background

Policy

This policy builds on the Communication 'Towards a more competitive and efficient defence and security sector' adopted on 24 July 2013. The Communication sets out Commission proposals to strengthen the internal market and support the competitiveness of the defence and security industries.

This followed the Defence Package, adopted in 2007, which was the first stage in establishing a modern policy and legislative framework to improve competitiveness, introduce greater transparency and cut unnecessary red tape.

In December 2013, the European Council adopted Conclusions (181 kB) on a range of issues including the CSDP. These conclusions took into account the Commission's Communication on defence.

In June 2014, the Commission adopted a Report, which sets out an implementation roadmap for the July 2013 Communication. The roadmap provides the basis for the Commission's work programme to strengthen the single market for defence, promote a more competitive defence industry, and foster coordination between civil and military research.

In May 2015, the Commission adopted a Progress Report that outlined the developments regarding the implementation of the Defence Communication since the Roadmap was adopted last year and identified key next steps. The report provided important grounds for discussion in the Defence Foreign Affairs Council on 18 May and contributed to the following debate on defence issues in the European Council in June 2015.

Research

In 2015, key personalities from European industry, government, the European parliament and academia were invited to advise the Commission on establishing a Preparatory Action on CSDP-related research. The primary mission of this Group of Personalities was to help establish recommendations for a long term vision for EU-funded CSDP-related research which can boost European defence cooperation. These recommendations (7 MB) address the overall scope and governance of future EU-funded CSDP research and highlight possible collaboration and coordination mechanisms.

The overarching goal of the Preparatory Action and CSDP-related research is to create a framework that would facilitate a collaborative approach to defence among the EU countries.

Legislation and regulation at European level

The 2007 'Defence Package' included a Communication entitled “Strategy for a stronger and more competitive European defence industry” (COM(2007)764 highlighting the need for regulation at European level, and legislative proposals for two Directives: Directive 2009/43/EC on transfers of defence-related products within the EU; and Directive 2009/81/EC on Defence and Security Procurement.

Read more on Legislation

Supporting SMEs

Defence-related SMEs are key enablers of innovation and growth. They also play an important role in the complex defence supply chains in the EU. The Commission supports SMEs by facilitating clustering and SME connectivity.

The defence sector has the potential to provide an important contribution to regional economic development. The Commission has held workshops to introduce the concept of smart specialisation and regional policy funding to European companies and research centres.

Addressing Skills Shortages

The European Commission aims to encourage the industry together with other stakeholders to make the best use of existing EU programmes and tools designed to address skills gaps and to foster new skills, retraining, and reskilling in the defence industry.

Defence-related studies

The Commission conducts a number of studies on key topics related to defence:

Key documents