On 19 March 2025, the European Commission (“EC”), in collaboration with the EU’s High Representative for Foreign Affairs and Security Policy, published the Joint White Paper on the Future of European Defence (the “White Paper”), available here.
As outlined in the White Paper, the EU is embarking on an ambitious journey: bolstering its defence capabilities through the “REARM Europe” initiative (as announced by the President of the European Commission here. The REARM Europe initiative is designed to help Member States significantly increase their defence spending, thereby revitalizing Europe’s defence industry.
By creating the necessary conditions to massively frontload investment in defence sector, providing necessary predictability to industry and reducing red-tape, the EU will aim to support Member States to achieve full readiness in 2030. The EU is contributing to this by:
- facilitating greater collaboration and efficient scale for the European defence industry in developing, producing and marketing weapons systems,
- facilitating efficiencies, interchangeability and interoperability,
- lowering costs by avoiding competitive purchasing and improving purchasing power for Member States,
- helping to generate stability and predictability with multi-year industrial demand,
- supporting dual-use infrastructure for mobility and space-based communications, navigation, observation, and
- enabling partnerships.
The White Paper provides a framework for the REARM Europe initiative, by outlining the measures necessary to rearm Europe and establish a strong and competitive defence industrial base in Europe.
To this end, the White Paper identifies seven critical capability gaps currently present in the Member States’ militaries. These are: (i) air and missile defence; (ii) artillery; (iii) ammunition; (iv) drones and counter-drone systems; (v) infrastructure supporting military mobility; (vi) artificial intelligence and electronic warfare; and (vii) “strategic enablers” like strategic airlift and tanker aircraft. The EU will aim to close these critical capability gaps by, for example, providing funding and incentives to help EU Member States achieve the necessary budgetary resources and to spend them in the most efficient and targeted manner.
This unprecedented increase in willingness from the EU to invest in and facilitate the EU defence industries presents enormous opportunities for (EU) businesses, investors and other stakeholders. However, it will also present its challenges, as all will need to navigate not only the EU’s but also Member States’ increasingly complex regulatory landscape. Businesses, investors and other stakeholders interested in these new opportunities must realize that some red-tape will be cut but definitely not all, such as amongst others, antitrust, foreign direct investment, and relevant trade laws. The geopolitical winds are perhaps more permissive in Europe, but navigating these regulatory seas remains tricky. One promising example in the Netherlands is that both the public and private sectors are joined in the so-called Defport platform, which should lower barriers to engage and cooperate.
Please get in touch with your usual Baker McKenzie international trade compliance contacts for support as needed. We’d be happy to assist you as you explore how your business may exploit these new opportunities to their fullest potential.
