The European Commissioner for Internal Market, Thierry Breton, on Wednesday 3 May presented the Act in Support of Ammunition Production (ASAP, also of course short for As Soon As Possible).
This act is part 3 of the EU’s proposal to supply one million rounds of ammunition to Ukraine within 12 months and aims to enhance the responsiveness and capability of the European Defence Technological and Industrial Base (EDTIB) to ensure the timely supply of ammunition and missiles to Europe.
According to Mr Breton, who is currently touring the EU’s defence industries, Europeans have retained “real capacities” for production in Europe, but these capacities are idling because of the “peace dividend”. There is “a real desire to increase the power of the industrialists, but they are still not aligned with the immediate needs. There is a need to ‘push’ the industrial base and change the paradigm. We need to go into ‘war economy’ mode”, he explained. According to him, it is also a question of addressing the issue of the ramping up of the supply chain, including powders, explosives and machine tools.
The Commission is therefore proposing to allocate a budget of €500 million, until 30 June 2025, “to support industrial projects that will ensure the ramping up of the European industrial base both in terms of finished products and supply chains by working on: the expansion or modernisation of existing lines, the creation of new lines or industrial capacity projects for the reconditioning of old ammunition”, said Mr Breton.
Financial support should also help to establish cross-border industrial partnerships, including through public-private partnerships, aimed, for example, at securing access to or reserving stocks of strategic components or raw materials, or at reskilling and upgrading the skills of the workforce concerned.
The principle will be that of co-financing (40% from the EU, 60% from Member States and enterprises), with possible bonuses in the event of partnership or priority given to production for Ukraine with an additional 10 percentage points of funding. The EU funds will come from the Instrument for the European Defence Industry Reinforcement through common Procurement Act (EDIRPA) to the tune of €240 million and from the European Defence Fund for €260 million. The Commission encourages Member States to make use of all funding possibilities, including cohesion policy funds and the Recovery and Resilience Facility. According to Mr Breton, defence industries are finding it difficult to access finance.
In addition, the Act will facilitate access to finance for EU companies in the field of munitions and missiles, potentially through a specific mechanism, the ‘Ramp-up Fund’, the Commission announced. The fund would aim to help companies in the ammunition and missile supply chains to access public and private finance to accelerate the investments needed to increase production capacity.
Beyond financial support, the Act aims to map, monitor and better anticipate the existence of bottlenecks and shortages. The Commission will therefore carry out, together with the Member States and in agreement with the Joint Working Group on Defence Public Procurement, a mapping exercise to identify and monitor on an ongoing basis the availability of munitions and missiles and their related components and inputs.
Finally, the Act includes regulatory measures to temporarily remove several regulatory barriers to ramp-up. They concern permitting, according to Mr Breton, citing working time, public procurement procedures and transfers within the internal market of ammunition parts. The ‘priority order’ is affected: “It is important to be able to redirect current production to Ukraine’s needs. We will encourage companies to do so voluntarily, while at the same time providing for mandatory measures as a last resort”, the Commissioner warned.
The Commission’s proposal will be forwarded to the EU Council and the European Parliament. Mr Breton hopes for adoption “by the end of June” 2023. The instrument will cease to apply in mid-2025.
See the act: https://aeur.eu/f/6o8 (Original version in French by Camille-Cerise Gessant)