The United States is warning the European Union against implementing protectionist measures in upcoming revisions to defense procurement rules, threatening potential retaliatory steps if European companies are unfairly favored. The dispute centers on potential “Buy European” clauses that would prioritize European businesses and products in defense contracts, a move Washington argues would undermine transatlantic economic cooperation.
According to a statement submitted during a recent public consultation by the U.S. Department of Defense, the United States “firmly opposes any modifications that limit the ability” of U.S. Companies to compete in the European market. The U.S. Government considers a protectionist approach “wrongheaded” and has cautioned that it may review exemptions to its own “Buy American” policies, potentially restricting access for European firms to certain U.S. Government contracts. This development highlights ongoing tensions regarding fair trade practices within the defense industry.
While the U.S. Supports European efforts to bolster its defense industry and increase military spending, the Pentagon emphasized that these efforts “must not weaken the transatlantic defense industrial base, jeopardize our collective ability to provide equipment, or place at risk shared economic benefits.” The U.S. Is particularly concerned about the potential impact on interoperability within NATO and the broader defense relationship between Europe and the United States.
Specifically, Washington has threatened to halt exemptions and exceptions currently afforded to 19 European countries under the “Buy American” laws. A European preference, officials stated, “would compromise European rearmament and weaken the interoperability and readiness of NATO.” The U.S. Also argues that such a move would be “inconsistent” with the existing EU-U.S. Agreement on tariffs and that defense procurement remains primarily a national competence.
The American Chamber of Commerce also voiced concerns, albeit in more moderate terms, during the public consultation, warning against overly restrictive “Buy European” preferences. This comes ahead of the European Union’s expected presentation on February 26 of a comprehensive plan for the industry, which is likely to include such clauses for strategic sectors. Further updates to the EU’s 2009 directive on defense procurement are scheduled for the third quarter of the year.
The EU has already begun incorporating minimum European content requirements into existing programs. For example, the €150 billion Safe program and a €90 billion loan package for Ukraine both require at least 65% of the value of equipment to originate from Europe. These existing measures have already set the stage for the current dispute, as the U.S. Seeks to ensure its companies are not further disadvantaged by recent regulations.
