EDIRPA/EDIP: Risks and Opportunities of Future Joint Procurement Incentives for the European Defence Market

For most EU member states, the Russian invasion of Ukraine has acted as an awareness-raising of insufficient stockpiles and of an undersized European defence industry to deal with a sharp and sudden increase in demand. This situation has led to a disorganised and uncoordinated reconstitution of stockpiles on a national basis, including multiple foreign off-the-shelf purchases, which could in the long term weaken a European Defence and Technological Industrial Base (EDTIB) designed for peacetime.

To avoid fragmentation, an inflation of prices and potential supply shortages, as well as to give the EDTIB the necessary visibility to ramp-up, the European Commission has proposed two incentives: EDIRPA (short term) and EDIP (long term). These tools should both consolidate the European demand, by encouraging joint acquisitions, and make the EDTIB more competitive, by increasing the European defence industry’s production capacity.

However, despite the urgency, negotiations are dragging on and the adoption calendar of both texts was delayed. The holding of European elections in May 2024 calls for speeding up the adoption of EDIRPA by the European Parliament and pleads for a quick adoption of EDIP too, at the latest in March 2024, before the European Parliament’s recess. If EDIP negotiations take as long as for EDIRPA, its adoption before the next elections could seriously be compromised, as the draft regulation is only scheduled for June 21, 2023.

Moreover, the relaxation of the initial EDRIPA proposal, and the possible opening of the instrument to third states, which some MEPs call for, weaken the instrument’s legal basis (Art. 173 TFEU), which relies on supporting the EU industry’s competitiveness.

As short-term choices will have decisive long-term effects, it is crucial to ensure coherence between short-term objectives (replenishment of stockpiles) and long-term objectives (strengthening the EDTIB). Decisions to be taken in the coming months will undoubtedly shape the future of the European defence market.

This paper presents the main risks and opportunities for the European defence market of the future EU joint procurement incentives, which have been announced by the European Commission (EDIRPA/EDIP). It also makes recommendations on how these tools should be used to strengthen the EDTIB…