EU seeks to create single market for defense - Aims to consolidate industry to compete with US, China
European Commission President Ursula von der Leyen wants to create a single market for European defense products and services.
The European defense industry is highly fragmented, with the market dominated by major countries such as France, Germany, Italy, Spain and Sweden.
"We are producing a lot of expensive products, but in small numbers," several MEPs said on the issue. "What we need is for the market to provide the necessary quantities of ammunition, missiles and various defensive equipment."
"Countries should consolidate and buy together, giving small and medium-sized enterprises the opportunity to operate equally in the market," added representatives of the European Parliament's committee on security and defence.
The EU has quadrupled production since the start of Russia's military aggression in Ukraine, but no single member state has the capacity to grow the European defense industry and compete with global powers like the US and China.
Commission President Ursula von der Leyen envisions creating a true single market for defense products and services by the end of her term, increasing Europe's manufacturing capacity. The Commission aims to promote joint production and reduce dependencies on third countries. However, some argue that this vision will not be easy to achieve by 2029.
“Defense is essentially a single monopoly customer, which is the state, so there is not really room for a competitive market with many customers exercising their consumer choices and many providers competing for those customers,” the analysts explain. According to them, national security concerns could also be invoked by member states to avoid competitive bidding in joint public procurement.
In recent months, the European Union has repeatedly called on members to increase defense spending and address critical capabilities gaps in areas such as munitions production, drones, air missile defense systems, and artificial intelligence.
To date, the bloc is heavily dependent on US arms imports, which accounted for 64% of the total in the 2020-2024 period, up from 52% in 2015-2019. Promoting more collaborative procurement would help reduce Europe's dependencies on global competitors, including China.
"We should encourage countries to buy equipment together in larger quantities, which would help consolidate the market, adding that tenders should also be opened to companies from other countries such as the United Kingdom, Norway or Turkey," security and defense representatives emphasize.
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