EU countries to advance defence industry policy talks despite French opposition

Key parts of the proposed European Defence Industry Programme, designed to bolster production capacity, will face a mock vote on Thursday (26 June) to assess negotiations, in a move that is likely to sideline France’s staunch opposition to using EU funds for foreign-produced defence components.

Three months after the European Commission tabled a proposal for a long-term defence industry policy to increase production capacity, EDIP, the EU countries’ defence experts, have made progress in discussions.

The long process led the Belgian presidency of the Council to issue a last compromise text on parts of the text this week.

Two EU diplomats told Euractiv that a ‘mock vote’ is also planned for parts of the text on Thursday (27 June) in a move designed to gauge the progress of the negotiations.

The final vote on the text, not expected for another year, will require a qualified majority to pass.

The compromise is, however, not in line with what some countries, especially France, would have expected of the text.

Paris has long been against using EU funds to benefit foreign companies and countries and, therefore, is against funding weapons, including components that can be subject to a restriction of use—meaning they come from the US.

This French stance has complicated negotiations on several texts related to the joint procurement of weapons on behalf of the member states or Ukraine with European cash.

The draft compromise, the second one communicated to the capitals, goes in the opposite direction, despite criticism.

While the text first rejects any sponsorship of goods or services that are “subject to restriction” by foreign countries, this rule is followed by a derogation, which could encompass a large number of defence products.

One of the derogations is that the programme can fund joint procurement from foreign companies if countries promise to try and replace that component with an EU-made product, restriction-free. The other derogation considers products already used in member states’ armed forces.

In addition, the text reads that up to 35% of the value of the end product can be of foreign origin.

This derogation is similar to that also found in previously adopted defence industry schemes crafted after the beginning of the war in Ukraine, especially in the €300 million fund to incentivise the bloc’s joint procurement of arms to replenish stockpiles dubbed ‘EDIRPA’.

Until now, the majority of EU countries that want to leave the door open based their argument largely on the urgency of the situation in Ukraine and the fact that the European industries are not in a capacity to provide replacement options for all the products or in a great enough quantity.

Those instruments were meant to fill urgent capability gaps, the Commission said at the time.

The same argument is used in the draft text, which justifies the derogation: “In light of the geopolitical situation and the urgent need to procure defence products with the support of the Programme, the requirement referred to in that paragraph shall not apply to urgent and critical defence products.”

However, the French and their backers would argue that this bill is meant to script the European industry’s behaviour in the long term, if not permanently.

Many issues

EU countries have manifested their reluctance on several aspects of the text already, according to Euractiv’s understanding.

Among the key difficult points are the creation of an Industrial Board within the EU Commission to match needs, offers, and demands, the creation of an ad hoc legal entity to develop equipment (SEAP), and the visibility and monitoring of supply chains, for instance.

Considering the long list of points to agree on, “nothing is agreed until everything is agreed,” one EU diplomat insisted.

The negotiations on the text are expected to continue for months, at least until January 2025, several sources told Euractiv.

[Edited by Alice Taylor]

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