Legislative Train Schedule
European Parliament
Please fill in this field to search

Proposal for a Regulation establishing the European Defence Fund

In “A Europe Fit for the Digital Age”

PDF version

On 13 June 2018, the European Commission presented its proposal on the European Defence Fund. The Commission proposes a budget of €13 billion in current prices for the 2021-2027 period. This equals €11.5 billion in constant 2018 prices (2018 is the reference year taken by the Commission for its proposal). The Fund will provide €4.1 billion to directly finance competitive and collaborative research projects, in particular through grants. In addition, the European Defence Fund will provide €8.9 billion to complement Member States' investment by co-financing the costs for prototype development, the ensuing certification and testing requirements.

The European Defence Fund should contribute to the EU’s strategic autonomy by coordinating, supplementing and amplifying national investments in defence. 

The main features of the European Defence Fund are:

  • Financing of priority projects agreed by Member States within the framework of the Common Security and Defence Policy and other regional and international organisations such as NATO;
  • Financing only collaborative projects involving at least 3 participants from 3 Member States;
  • Co-funding common prototypes where Member States commit to buying the final product;
  • Promoting the cross-border activities of small and medium-sized enterprises (SMEs) by e.g. providing higher financing and participation rates;
  • Targeting innovation, with 5% of the funds dedicated to disruptive technology and innovative equipment;
  • Possibility of promoting projects in the framework of the Permanent Structured Cooperation (PESCO) by providing an additional co-financing bonus of 10%.

In the Council, talks about the Commission proposal started in summer 2018.

In the European Parliament, the Industry, Research and Energy committee (ITRE) is the lead committee, whereas the committees for Foreign Affairs (AFET), Budgets (BUDG) and Internal Market and Consumer Protection (IMCO) provided opinions. AFET, at the same time, acts as associated committee.

On 25 June 2018, the ITRE committee appointed Zdzisław Krasnodębski (ECR, Poland) as rapporteur. ITRE adopted the report on 21 November 2018. On 12 December 2018, also the plenary adopted the report and provided the mandate to enter into informal negotiations (trilogues) with the Council. During the trilogues and technical meetings, a partial agreement was reached. The ITRE committee adopted the partial agreement on 25 March 2019, the plenary on 17 April 2019.

Regarding ethical issues, Parliament has prioritised that actions implemented under the Fund shall comply with relevant national, Union and international law, including the Charter of Fundamental Rights of the European Union. These actions shall also comply with ethical principles reflected also in relevant national, Union and international law. The use, development or production of products and technologies which is prohibited by applicable international law shall not be eligible for funding (e.g., lethal autonomous weapons without meaningful human control;). Also not eligible for funding: (i) a serious violation of international humanitarian law; (ii) a serious violation of international human rights law; (iii) an act constituting an offence under international conventions or protocols relating to terrorism or transnational organised crime.

Other main features of the agreement between Council and Parliament include:

  • support to the entire industrial development lifecycle of defence products from research (up to 100%) to prototype development (up to 20%) to certification (up to 80%);
  • small and medium-sized enterprises (SMEs) are given incentives to participate, as they are provided with higher financing rates, and projects by consortia which include SMEs are favoured;
  • projects will be defined according to defence priorities agreed by Member States under the Common Foreign and Security Policy but other priorities, such as those of NATO, can also be taken into account;
  • there shall be no unauthorised access by a non-associated third country or other non-associated third country entity to classified information relating to the carrying out of the action and potential negative effects over security of supply of inputs critical to the action shall be avoided.
  • only collaborative projects involving at least three participants from three Member States or associated countries are eligible.

On 10 November 2020, the European Parliament and German Presidency of the Council had reached a political agreement on the 2021-2027 MFF. Parliament and Council, on 16 and 17 December, gave their consents to the next MFF. Regarding the European Defence Fund, Parliament and Council accepted President Michel's July proposal of €7.014 billion in constant 2018 prices. This equals €7.953 billion in current prices (€2.651 billion for research actions and €5.302 for development actions). At least 4% and up to 8% of the financial envelope should be dedicated to calls for proposals to support disruptive defence technologies.

The Council adoption of its first reading position took place on 16 March 2021.The ITRE committee voted through the final text on 13 April, which was endorsed by the plenary on 29 April. The final act was signed the same day. On 12 May 2021, the Regulation was published in the Official Journal and entered into force, with retroactive application from 1 January 2021.

The European Defence Fund received €1.5 billion top-up within the framework of the mid-term review of the MFF.

References:

Further reading:

Author: Sebastian Clapp, Members' Research Service, legislative-train@europarl.europa.eu

As of 15/12/2024.