Commission unveils significant actions to contribute to European Defence, boost innovation and address strategic dependencies

16 Feb 2022 04:25 PM

The Commission recently (15 February 2022) put forward a number of Commission-led initiatives in areas critical for defence and security within the European Union. These comprise a Contribution to European defence, covering the full range of challenges, from the conventional defence industry and equipment on land, sea and air, to cyber, hybrid and space threats, military mobility and the relevance of climate change; and a roadmap on critical technologies for security and defence. These new initiatives are concrete steps towards a more integrated and competitive European defence market, particularly by enhancing cooperation within the EU, thereby building scale, mastering costs and enhancing operational effectiveness. With its announcement recently, the Commission provides input in the run-up to the EU Strategic Compass on Security and Defence.

By using all available means in an ever-evolving geopolitical and technological context, the Commission aims at strengthening the Union's ability to counter fast-changing multi-layered threats.

The Commission has, in particular, identified the following main new areas to further strengthen the competitiveness of the European defence market:

• explore how to further stimulate Member States investments in key strategic capabilities and critical enablers that are developed and/or procured in European Union cooperative frameworks;
• further incentivise the joint procurement of defence capabilities developed in a collaborative way within the EU;
• call upon Member States to continue moving towards streamlined and more convergent arms exports control practices, in particular for defence capabilities developed in an EU cooperative framework.

Investments in defence research and capabilities and joint procurement

By the end of 2022, the European Defence Fund (EDF) will have invested €1.9 billion in defence research and capability development projects. This will kick-start key large-scale collaborative capability development projects while stimulating defence innovation. The Commission will also develop further incentives to stimulate Member States' investments in defence strategic capabilities, notably where they are developed and/or procured within EU cooperative frameworks. In particular, the Commission will explore a number of instruments to incentivise the joint procurement of defence capabilities developed in a collaborative way within the EU, including by proposing a Value Added Tax (VAT) waiver, setting up new financing solutions, and reviewing the EDF bonus mechanisms to favour commitments to joint procurement of equipment, maintenance and operations in addition to joint development of the relevant defence technologies. The Commission will include a chapter with observations on developments, barriers and opportunities relative to multinational defence capabilities projects in the Annual Single Market Report, usually published in conjunction with the European Semester Autumn Package.

More generally, the Commission will ensure that other horizontal policies, such as initiatives on sustainable finance, remain consistent with the EU's efforts to facilitate the European defence industry's sufficient access to finance and investment.

Streamlined and more convergent export control practices

While Member States are in charge of issuing export licences for military equipment, the Commission invites them to bring forward ongoing work to streamline and gradually converge further their arms export control practices, especially for those defence capabilities that are jointly developed, in particular in an EU framework. The Commission invites Member States to seek an approach according to which, in principle, they would respectively not restrain each other from exporting to a third country any military equipment and technology developed in cooperation. This work should ensure that EDF-funded products will profit from adequate and competitive access to international markets without prejudice to Member States' sovereign decisions.

Synergies between civilian and defence research and innovation and reducing strategic dependencies

The Roadmap on critical technologies for security and defence outlines a path to enhance the competitiveness and resilience of the EU security and defence sectors by:

• inviting Member States to contribute actively to the Observatory of critical technologies currently being established;
• encouraging dual-use research and innovation at EU level;
• inviting Member States to develop an EU-wide coordinated approach to critical technologies in the context of the Strategic Compass;
• supporting security and defence innovation and entrepreneurship through a number of new tools (e.g. incubator, investment blending facility, etc.);
• creating, together with the European Defence Agency, an EU Defence Innovation Scheme to bring their respective efforts under one umbrella;
• assessing security and defence considerations more systematically, as appropriate, when implementing and reviewing existing or designing new EU industrial and trade instruments, in order to reduce strategic dependencies.

Reducing the identified dependencies in critical technologies and value chains is another important aspect of the Roadmap. In this perspective, the Commission proposes to embed defence considerations in major EU industrial and technology initiatives (e.g. Alliances, standards), protect EU security and defence interests when procuring critical infrastructure (in particular in the digital domain) and reinforce the Foreign Direct investment screening by encouraging all remaining Member States to set up a national screening mechanism.

Strengthening the defence dimension of space at EU level

The Commission will also explore how to further enhance the protection of EU space assets, notably through additional Space Surveillance and Tracking (SST) services and by making full use of the potential of the EU industry. It will promote a ‘dual-use by design' approach for EU space infrastructures, with a view to offering new resilient services that address governmental needs, including in the area of defence.

The Commission and the High Representative will also explore the possibility of activation of solidarity, mutual assistance and crisis response mechanisms in case of attacks originating from space or threats to space-based assets.

Enhancing European resilience

Finally, the Commission will also fully implement key enabling initiatives for European resilience. In particular, to counter hybrid threats, the Commission, in cooperation with the High Representative and the Member States, will assess sectoral resilience baselines to identify gaps and needs as well as steps to address them. Following the adoption of the Strategic Compass, the Commission will contribute to the future EU hybrid toolbox and will consider identifying experts in relevant policy areas.

In addition, to strengthen cybersecurity and cyber-defence, the Commission will propose the Cyber Resilience Act and request the European Standardisation Organisations to develop harmonised standards regarding cybersecurity and privacy; and together with the Member States, it will step up preparedness for large scale cyber-incidents. By the end of this year the Commission, together with the High Representative, will propose an update of the joint Action Plan to enhance military mobility within and beyond Europe. Finally, also this year the Commission will take various actions to address climate change challenges related to defence.

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