On the 3rd of May 2023, the European Commission presented its proposal for a Regulation for the Act in Support of Ammunition Production (“ASAP”).
C&V welcomes the proposal of this regulation that intends to boost the production in Europe of ground-to-ground ammunition and missiles, as well as the components and inputs necessary for their manufacturing*.
From a General Perspective, the proposal has three main components: An instrument to financially support the ramp-up of manufacturing capacities, a mechanism to map and monitor the supply chains, and a temporary regulatory framework that allows for the Commission to place priority rated orders and member States to ease administrative processes.
ASAP breaks ground in the EU’s defence industrial policy: It is the first time that the EU budget is used to reinforce the European defence industry at the production and supply chain level. This novelty, together with the other two components of the proposal, help the EU to be on a ‘war economy’ mode.
From a more specific perspective, ASAP presents interesting features, notably on the financial front. In addition to directly co-financing the investments in the supply chain, there is the possibility of using the EU’s budget to facilitate access to private and public finance for defence companies: Among others, through a possible blending mechanism, “the Rump Up Fund”. There is also the possibility for Member States to repurpose and mobilizing EU Recovery (RRF), Investment and Structural Funds to support the production of ammunition and missiles.
Given the current geopolitical context, the mobilization of EU funds demonstrates a clear and long-awaited recognition of the positive and virtuous contribution of the EDTIB to the Union’s security and economic growth.
There are extensive synergies between ASAP and EDIRPA. While EDIRPA focuses on the demand side, incentivizing Member States to do joint procurement; ASAP focuses on the supply side, helping eligible entities to increase the production.
Nonetheless, the funding of ASAP’s Instruments from the EU budget comes at the expense of the EDF and EDIRPA. There are also concerns regarding the availability of funds in the present MFF period for EDIP, which is supposed to replace EDIRPA at the end of 2024 and could be the most ambitious EU defence industrial policy to date. One could ask if, in responding to the urgency, we are not losing sight of the long run.
The European Parliament voted on the 9th of May to speed up the legislative process and adopt its position on ASAP directly in Plenary (possibly at the end of this month). The Council has already begun studying the proposal at the Working Party level. The regulation of ASAP could be adopted as soon as early this summer, and calls for proposals under ASAP’s instrument could open in Fall of 2023.
*ASAP is the third component of the Three-Track Agreement of the 20th of March of 2023 to speed up the production, joint procurement and delivery of ammunition to Ukraine and replenish the stocks of Member States. ASAP constitutes a promising addition and could play a significant role in both supporting Ukraine’s defence efforts and strengthening the EDITB. In addition, we express the hope that it will lead to the promotion of autonomous ammunition production in Europe in line with the EU’s ESG (Environment, Social, Governance) rules.
Interested in hearing more and identify associated opportunities? Arrange a meeting with our team: contact@cnv-consulting.eu