Negotiators on Tuesday managed to strike deals on two of the three proposals to accelerate Europe’s defence industry ramp-up with swifter permitting for new defence production facilities.

The files are part of the defence readiness package presented last year by the European Commission to reduce bureaucracy and unlock €800 billion in investment in the defence sector by the end of the decade.

An agreement was first reached on the third file in late afternoon, after the two previous files had initially failed. The third concerns a partial rollback of environmental and chemical regulation for the defence industry, as well as easier access for small enterprises to EU defence funding.

The European Defence Fund (EDF) will also be allowed to cover the costs of testing in Ukraine and defence projects developed jointly with Ukraine under the deal, reached after more than 24 hours of marathon talks.

“This makes it all the more important that we have now made good progress in two of the three key negotiations and have been able to conclude them constructively. This shows that, where the political will exists, Europe can act effectively in the defence sector too,” she added.

The most controversial aspect of the file was a proposal to open intellectual property rights for EDF-funded projects to all participating countries – a step that parts of the defence industry and several EU countries argued would go too far.

Co-legislators eventually agreed on some restrictions under which participating countries would have general access rights but would not be able to transfer ownership of intellectual rights.

This new compromise still needs to be approved by EU countries, as it goes beyond the approved mandate granted to the Cypriot Council presidency.

This first provisional agreement prompted negotiators to reopen negotiations after 7 pm on the second file – after it had concluded earlier in the day without an agreement – and get it across the finish line.

Permitting issue

A compromise proposal by the Parliament on the issue of automatic approval for factory permits, requiring local governments to respond quickly to requests, was accepted.

An exemption for the automatic approval would be possible if an opt-out is strictly limited to legally verifiable reasons such as a grave risk to human health and national security. Broader grounds, as suggested by the EU countries, such as environmental protection, worker safety or public health have been rejected, although health risks from environmental effects can be considered.

“Today’s agreement on the defence readiness and permit-granting proposals is key to facilitating defence investments and conditions for the defence industry, in order to enable us to respond effectively to security challenges,” an official from Cyprus.

Transport licences

But an agreement proved elusive on simplified rules for cross-border transfers of defence goods within the EU and proposals to grant greater flexibility for Europe’s defence procurement.

More technical talks are therefore needed.

Strack-Zimmermann blamed capitals for the lack of progress, saying that “instead of genuine acceleration, we are seeing a constant stream of new demands for national exemptions, special arrangements and maximum flexibility.”

“This is no way to build European defence capabilities. The problem is no longer the technical details of individual regulations, but the political stance of some member states,” she said.

EU countries continue to oppose the Commission’s proposal to establish a general intra-EU transport licence for defence goods, fearing it would infringe on exclusive national competences. As an alternative, the Council has proposed creating a coordination group chaired by the Commission to address the simplification of intra-EU weapon transfers.

Another sticking point concerns Europe-wide tenders. MEPs believe tenders are not needed for weapons that originate from the EU, Ukraine or third countries that have a security agreement with the bloc, provided the contracts remain below a certain threshold. Capitals, however, oppose limiting the exemption geographically.

“It is a true disappointment that the member states refused to move a centimetre in the negotiations, even though all institutions share the same goal of strengthening European defence readiness,” Pekka Toveri, a Finnish MEP from the European People’s Party, said.

“We remain committed to finding a compromise to get the package through, and the coming weeks will be crucial for the negotiations,” he added.

(aw, jp)