EU Defence Industrial Policy

This chapter critically examines the EU’s defence industrial policy as embedded in the instruments for EU subsidies to defence R&D (EDF), and defence-industrial development and collaborative procurement (EDIP) which have been based on Article 173 TFEU. In the wake of the Draghi report EU defence-industrial policy has been positioned as a core component of the prolonged EU industrial policy, while historically defence industries have largely been excluded from economic integration. After the failed attempt by the EU legislature to generally subject military procurement to internal market-based public procurement rules, it has shifted its approach towards industrial interventionism based on subsidizing cross-border industrial cooperation and collaborative procurement. A genuine EU defence-industrial policy, however, would not just steer resources towards Member States’ defence spending but also affect the structural composition of the defence industry. As the EU lacks a supranational defence competence, its ability to do so is severely limited. This chapter sets out these limitations by evaluating the EDF and the EDIP in the context of Member States’ defence industrial policies and the increasing need for European coordination. It concludes that the discussed supranational initiatives lack the ability to substantively shape EU military industries and that a different approach—more strongly embedded within the CSDP—is warranted.