EU Set to Allow U.S. Participation in Joint Defense Projects

(Bloomberg) -- The European Union is closing in on an accord that would allow the U.S. government and American companies to participate in joint defense projects, potentially removing a source of friction in transatlantic ties.

Donald Trump's administration has repeatedly warned the EU about discriminating against U.S. companies as the bloc's national governments press ahead with plans for more defense cooperation. The EU says it needs to develop its own defense capabilities outside of the North Atlantic Treaty Organization, with countries such as France being reluctant to grant access to outsiders to joint military projects.

Following months of negotiations, EU government envoys in Brussels will seek a deal on Wednesday over a proposed rulebook, which would allow third countries to join, if their participation is deemed to add “substantial value” to the projects, according to a draft of the accord seen by Bloomberg.

Only non-EU countries with democratic systems of government, which respect human rights and good neighborly relations with the bloc will be allowed in, according to the document. These terms would exclude China and probably Turkey from defense procurement, but would pave the way for the U.S. and the U.K. to join, post-Brexit.

Non-EU countries will have no say on how the EU will use the capabilities and the systems developed, while participation in each project would be ad-hoc and require a unanimous decision by the bloc's member-states managing it. A single member state would have the power to terminate a third country's participation if it has substantiated “concerns,” according to the draft under discussion, circulated to EU diplomats on Monday.

While the bloc's budget for joint military projects is tiny compared to the U.S., Washington has been demanding the right to participate both as a matter of principle, as well as on the expectation that the initiative will grow in the years ahead.

To contact the reporter on this story: Nikos Chrysoloras in Brussels at nchrysoloras@bloomberg.net

To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net, Richard Bravo, Ben Sills

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