The Commission failed to strike a deal with the UK to grant British arms makers greater access to deals funded by the €150 billion SAFE loans, the EU executive said in a statement. 

“Even if an agreement could not be found at this time, let’s not forget that SAFE is open by design. Without an agreement, the UK can still participate in up to 35% of SAFE procurements,” a Commission spokesperson said on Friday.  

The UK started negotiating with Brussels in September  – together with Canada – but talks stalled over the size of the financial contribution London would have to pay in exchange for more access.  

“Negotiations were carried out in good faith, but our position was always clear: we will only sign agreements that are in the national interest and provide value for money,” said British Minister for European Union Relations Nick Thomas-Symonds. 

Without a deal, British manufacturers can only produce up to 35%  of the cost of components of a final product.  Under SAFE, eligible products must have at least 65% of their components’ costs manufactured in the EU, Norway, or Ukraine. 

To let the UK industry past the 35% cap, London would have had to pay a financial contribution and an administrative fee relative to the estimated benefits.

The Commission proposed that London should pay €4-6.5 billion. During the talks, the EU executive later lowered the fee and London raised its offer, but the two parties could not find an agreement.

“While it is disappointing that we have not been able to conclude discussions on UK participation in the first round of SAFE, the UK defence industry will still be able to participate in projects through SAFE on third country terms,” the Minister added.

The Commission first said it could strike a deal with the UK by mid-November, which would have given EU countries time to include British manufacturers in their SAFE plans due at the end of the month. 

But negotiations languished, and the EU executive postponed its tentative deadline.  

Talks with Ottawa however looked more promising in recent days, said one person with knowledge of the file this week, with similar being said the week before. “SAFE negotiations continue with Canada and we hope to find an agreement before Sunday,” the Commission’s statement reads.

The EU executive asked to update EU ambassadors on Friday’s Coreper, one person familiar with the agenda said.

(cp)