The EU Commission plans to push for the ‘European Defense Production Act’ to strengthen the EU's capacity in the defense industry, which will stipulate R&D and joint procurement.

Due to the war in Ukraine, the EU will push for the introduction of the ‘European Defense Production Act’ by reducing the lack of regional defense production capacity and the need to quickly supply defense materials if necessary.

The bill was recently discussed at the EU Defense Ministers' Council.Detailed information is expected to be announced at the annual corrective speech by EU Commission President Ursula von der Leyen on the 13th (Wed).

The bill will be used as a permanent legal framework for the production and supply of defense supplies in case of emergency, based on the ‘European DefenceIndustry Reinforcement through Common Procurement Act (EDIRPA),’which is a short-term framework for strengthening joint procurement and ammunition production capabilities.

The Single Market Emergency Instrument (SMEI) stipulates that in the event of an emergency, the executive officer orders the company to supply specific orders first, and the obligation to report corporate inventory. EU Council postponed bill negotiations and agreements, citing excessive corporate interference and lack of consultation time.

The Commission proposed an interim review of the EU budget in June, but the European Defense Production Act was excluded due to the use of additional budgets through the review.

Accordingly, it is pointed out that the "European Defense Fund" to support the development of technology in the defense industry and the "Peace facility" to finance exports of lethal and non-lethal weapons to third countries can be used as financial resources for the bill.

However, it is unclear how the ‘European DefenseProduction Act’ will be related to the European Defense Investment Program (EDIP) already proposed by the executive committee to exempt the defense industry from VAT.

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