Call for Evidence EU Defence single market


Communication on the Defence Single Market: EU technological base fit for future
The Chemnitz Chamber of Commerce and Industry (CCI Chemnitz) represents the economic interests of more than 80,000 companies in the Chemnitz chamber district and acts as a central voice for the region. The chamber district possesses strong industrial capabilities in mechanical engineering, microelectronics, materials technology, software, and automation, which are of high relevance for both defence and dual-use applications. In order to effectively integrate these potentials into the European Defence Single Market, reliable demand aggregation, transparent procurement structures, improved access for small and medium-sized enterprises (SMEs), as well as investment-friendly and harmonised framework conditions are required. The CCI Chemnitz thanks the European Commission for the opportunity to submit its views within the Call for Evidence.

1. OVERCOMING DEMAND FRAGMENTATION – BINDINGLY AGGREGATING EUROPEAN PROCUREMENT

DEMANDS

  • Binding minimum shares for European cooperative procurement
  • Multiannual, EU-wide coordinated framework contracts
  • Joint definition of requirements and coordinated timelines

EXPLANATION

The central bottleneck of the European defence market lies on the demand side. National procurement logics continue to dominate, despite the political will for European cooperation. The result is insufficient production volumes, a lack of learning effects, and high unit costs. As long as Member States plan their requirements in isolation, European industry remains trapped in small production series. This prevents investments in modern manufacturing, automation, and innovation.
At the same time, a vicious circle emerges: due to the lack of scale, European suppliers appear more expensive or slower, which in turn is used to justify national or non-European procurement. It should be noted that without binding demand aggregation, no reliable investment signals are created for industry, and the European production base remains structurally undersized in the long term. Only predictable, European-level coordinated demand enables industry to build up capacities sustainably and reduce dependencies on third countries.

2. ENSURING TRANSPARENCY – GRADUALLY REDUCING NATIONAL PROTECTIONISM

DEMANDS

  • EU-wide register of planned procurements
  • Mandatory justification for purely national awards
  • Stronger enforcement of Single Market law

EXPLANATION

A functioning market requires transparency. In the defence sector, however, this is largely lacking. Companies often become aware of procurement intentions only at a very late stage, European suppliers are not systematically considered, and national awards are made without a market-opening assessment. This lack of transparency reinforces national preferences and leads to inefficient use of resources, as comparable systems are developed and procured in parallel. At the same time, European companies are deprived of the opportunity to align their capacities with real demand.

It is important to note that a lack of transparency not only restricts competition but also weakens security of supply, as production capacities cannot be built up in time.

3. ANCHORING SMEs AS A STRUCTURAL COMPONENT OF THE DEFENCE INDUSTRIAL BASE

DEMANDS

  • Binding SME lots and subcontracting quotas
  • Simplified security and suitability certifications
  • EU-wide supplier and competence register

EXPLANATION

The European defence industry consists to a significant extent of highly specialised SMEs, particularly in upstream supplies, electronics, software, materials, and mechanical engineering. Nevertheless, these companies are often excluded from the market. Complex procurement procedures, high pre-financing requirements, lengthy security clearances, and a lack of visibility lead SMEs either not to participate at all or only to be indirectly involved through a small number of prime contractors. This weakens supply chain resilience and narrows the innovation space.
SMEs must not be regarded as “marginal players” but as key pillars of industrial value creation. We explicitly call for greater opening of defence markets to SMEs, as they are crucial for technological sovereignty and the speed of innovation.

4. STANDARDISATION AND INTEROPERABILITY AS A CORE INDUSTRIAL POLICY INSTRUMENT

DEMANDS

  • Binding EU standards for key components
  • Mutual recognition of tests and certifications
  • Interoperability as a condition for funding

EXPLANATION

The fragmentation of technical standards is one of the main reasons for small series sizes and high life-cycle costs. Divergent national requirements lead to almost identical systems having to be developed and certified multiple times. Without binding European standards, interoperability remains a corrective measure applied after the fact rather than a guiding planning principle. This hinders joint procurement, multinational operability, and industrial scaling.
Stronger European harmonisation of technical requirements is necessary, as only this enables series production, export capability, and competitiveness.

5. SECURING PRODUCTION CAPACITIES – ENABLING INVESTMENT

DEMANDS

  • European investment premiums and accelerated depreciation schemes
  • Long-term off-take and framework contracts
  • Legal clarity on state aid

EXPLANATION

For years, the European defence industry has been characterised by structurally volatile and hardly predictable demand. As a result, production capacities, depth of manufacturing, and industrial reserves have been reduced. The currently politically demanded rapid ramp-up of defence production therefore encounters real physical and organisational limits. Production lines, machinery, and skilled personnel cannot be made available at short notice, while supply chains must be rebuilt and secured.
To enable the establishment and expansion of production capacities, reliable investment incentives are required. European investment premiums, tax-based accelerated depreciation, and long-term off-take and framework contracts provide the necessary planning certainty to justify substantial upfront investments. In addition, clarity under state aid law is needed to prevent investments from being delayed or blocked by regulatory uncertainty. Only with stable framework conditions extending beyond legislative periods can European industry sustainably fulfil the objectives of Defence Readiness 2030.

6. REDUCING REGULATORY COMPLEXITY – INCREASING SPEED

DEMANDS

  • Simplification of the Defence Procurement Directive
  • Uniform implementation of intra-EU transfer rules
  • Digital authorisation processes

EXPLANATION

The European defence industry is currently confronted with a high level of regulatory complexity that significantly hampers speed, scaling, and cooperation. Lengthy and partly redundant procurement, approval, and transfer procedures contradict the objective of rapid and reliable defence readiness. In particular, differing national interpretations of the European Defence Procurement Directive and the intra-EU transfer rules create legal uncertainty, delay cross-border supply chains, and significantly increase costs for companies.
For industry, especially SMEs, complex procedures constitute a de facto barrier to market access and discourage investment. Simplification and harmonisation of the regulatory framework, together with the consistent expansion of digital approval processes, are therefore key prerequisites for facilitating European cooperation, accelerating the ramp-up of production capacities, and effectively supporting the objectives of Defence Readiness 2030.

7. STRENGTHENING EUROPEAN SUPPLY CHAINS – REDUCING STRATEGIC DEPENDENCIES

DEMANDS

  • Expansion of European programmes for critical raw materials, intermediate products, and semiconductors
  • Recognition of semiconductors and microelectronics as security-critical key technologies
  • Development of robust European manufacturing, testing, and packaging capacities
  • Introduction of a European “Trusted Supply Chain” approach

EXPLANATION

The resilience of the European defence industry is increasingly determined by bottlenecks in upstream value creation stages. In addition to critical raw materials and specialised materials, semiconductors and microelectronics in particular represent central dependencies on third countries. The reports by Niinistö, Letta, and Draghi consistently point out that these dependencies structurally weaken Europe’s security of supply and operational capability.
Semiconductors are indispensable for almost all modern defence systems. At the same time, defence applications are characterised by small production runs, long life cycles, and high certification requirements, making them often unattractive for commercial semiconductor manufacturers. Without targeted political steering, a market failure emerges in which security-critical chips are not reliably available.
A European approach to “Trusted Supply Chains” aims to secure security-critical value chains across the EU on a risk-based basis. This involves the prior recognition of companies and supply chains based on common European security, transparency, and compliance criteria, in order to avoid repeated national case-by-case assessments. Such an approach would facilitate cross-border cooperation, accelerate approval and procurement procedures, and at the same time enhance security of supply without lowering security standards. In this way, a “Trusted Supply Chain” approach can make an important contribution to reducing strategic dependencies on third countries and strengthening the European Defence Industrial Base.