Of all the arguments for protectionism, the infant industry argument probably has the strongest theoretical appeal. By protecting a new industry from its more developed foreign competition, the story goes, tariffs give domestic producers the time to grow, learn, and become efficient enough to stand on their own. Domestic consumers feel the short-term pains of higher prices, but they enjoy the long-term gains of job growth and lower prices as the new industry blossoms.

It's no secret that tariffs have driven significant price increases over the last year and a half. A study from the New York Federal Reserve finds that tariffs "contributed 2.9 percentage points to goods price inflation" and that without tariffs those prices would have slightly declined. Tariff defenders, looking for a new reason to claim these higher prices are only temporary, have reimagined the infant industry argument. Now it's being used to support trade barriers in industries that are over a century old, but the promise is exactly the same: Domestic firms need the protection so they can compete, innovate, and cut costs until prices come back down even further than they were before the tariffs.

Michael Brendan Dougherty recently made such an argument in National Review, arguing that "tariffs can, over time, bring prices below where they started." When economist Don Boudreaux called the argument "bizarre," Dougherty replied that critics had failed to acknowledge the dynamic process by which markets respond to tariffs "by adapting and cutting costs." Although he is light on specific details, he posits that the changed incentives of a "paradigm shift" in tariff policy will spur domestic competition, leading to the theorized price reduction. Of course, firms would still respond to the dynamic processes of domestic competition without a tariff wall, but the point stands.

From there, the reworked infant industry argument becomes the standard version advanced more than two centuries ago by Alexander Hamilton and his disciple Friedrich List. When Hamilton made this claim in 1791, his argument may have seemed suitable for a new nation seeking to firm up its economy and security against established European powers.

Others at the time pointed out that special interest groups—a manifestation of the "violence of faction" so thoroughly dissected in the Federalist Papers—had already begun to coalesce around the fledgling iron industry in Pennsylvania, clamoring for protective tariffs. Two years earlier, James Madison had warned about a "premature policy of stimulating manufactures" driving tariffs too high. In the end, Hamilton recommended and Congress enacted a far more moderate tariff schedule than his theoretical musings portended. American iron manufacturers received a consolation prize of a higher tariff on their competitors than the rate for most general imports. Hamiltonians have been touting the infant industry argument ever since.

Nearly 250 years later, those same infants apparently have yet to advance into adulthood. Steel, the direct successor to the founding-era iron manufacturers, remains a singular focus of President Donald Trump's protectionist tariff policies, just as it was under former President Joe Biden. And former President George W. Bush before him. Indeed, steel has been a recurring beneficiary of protectionism for most of America's existence.

This extended period of protectionist infancy suggests that the argument needs a new name. We propose the "Peter Pan industry argument" for companies that never grow up because tariffs make sure they never have to.

The question tariff advocates rarely ask is: Why do some American producers have higher costs than foreign rivals even in the face of lower-cost foreign competition? The answer comes down to specific rules and choices within particular firms and industries. Tariffs, and protectionism in general, address none of these. No industry illustrates this like steel, but it is far from the only one.

In 1947, United Steelworkers won a contract provision known as Section 2-B. Among other things, this barred mill managers from changing established work practices unless new technology required it. Steel companies tried to get rid of this in 1959, finding it difficult (given union incentives) to establish that technology required change. In response, 500,000 steelworkers went on strike for 116 days. This strike sent buyers abroad, causing 1959 to be the first year the U.S. imported more steel than it exported. One of the then-new technologies that was delayed was basic oxygen furnaces, which could produce steel far faster and cheaper than the open-hearth furnaces that were so common. In 1965, only about 17 percent of steel made in the U.S. was made using the basic oxygen furnace. Japan produced 55 percent of its steel with this faster, more efficient method.

Change finally came from a steel customer. Vulcraft, a maker of steel joists, grew tired of paying Big Steel's prices and waiting for Big Steel's deliveries. In 1969, free from steel unions and preconceived notions, the company looked for new steel-producing technologies and found the answer in the electric arc furnaces that had been adopted in much of the world throughout the 1950s and '60s. Vulcraft's parent company later renamed itself Nucor, and minimills like the ones it pioneered now make most of America's steel.

So the modern steel industry was built by a frustrated steel buyer who found a way around protected companies. In other words, the U.S. steel industry has lagged behind the technologies found around the world.

We could go on, but the broad point here is that the "relatively higher domestic production costs that made the tariff 'necessary' in the first place," as one critic put it, are often the result of preventing competition in the first place. It's odd to suggest that further preventing competition through tariffs will somehow alleviate the ills of already-prevented competition.

Tariff advocates fail to acknowledge that the ability to import steel also comes with the benefit of access to cheaper steel for steel-using industries, such as manufacturing. A 50 percent tariff on steel further closes the release valve that imported steel offers. Buyers of steel are then left to purchase more of the more expensive domestic steel. Because new steel mills take years to bring online, this causes delays and longer delivery times for manufacturers.

We don't have to wonder what happens when a country lowers its tariffs on materials used by manufacturers. India did this in the '90s, and researchers found that newly available inputs accounted for 31 percent of the new products that Indian manufacturers introduced. And what happens when the U.S. imposes tariffs on steel? Downstream U.S. firms become less competitive. This is why American businesses clamor for exemptions to tariffs, especially for tariffs on materials like steel.

Perhaps all this could be forgiven if tariffs advanced national security concerns, as tariff advocates assert. They point out that an adversarial nation could cut off supplies of critical materials during wartime and cripple America's ability to defend itself. Unfortunately, tariffs fail there too.

First, this conflates production with access. While domestic production does ensure domestic access, access can be secured without production. In the case of steel, the Commerce Department reports that in 2025, the U.S. imported steel from 79 countries, with Canada being our top foreign supplier. The top 10 sources of steel are responsible for 77.8 percent of America's steel imports. None of those countries were considered adversaries—at least not until the tariff crusades pushed these friends away. What's more, according to the American Iron and Steel Institute, only 23 percent of finished steel in the U.S. was imported in 2024. Far from being exposed to foreign states' whims, American access to steel is incredibly resilient.

Second, this view ignores the positive effects of trade and globalization on national security. The Center for Strategic & International Studies finds that increased trade between countries reduces the likelihood that they'll go to war against one another. Globalization helps ensure that domestic access continues unabated should war break out, thanks to the diversity of trading partners.

When Hamilton made the infant industry argument, he at least assured us that the industry would at some point advance to adulthood and stand on its own. Steel, like so many other Peter Pan industries, has proven Madison right. These industries have refused to grow up, and it's time to stop pretending that tariffs will fix that.

The post Peter Pan Tariffs for Companies That Never Grow Up appeared first on Reason Magazine.

Ukraine now builds far more weapons than it can afford to buy. A year ago, it promised to sell the surplus abroad and turn the proceeds back into its own army. However, 12 months later, that promise has barely materialized: a state fee of up to 30% is pricing Ukrainian arms out of foreign markets, and no one can say how much the army has actually gained, said Ihor Fedirko, executive director of the Ukrainian Council of Armorers.

President Volodymyr Zelenskyy announced the resumption of controlled weapons exports in October 2025, resting it on four promises: 1) sell what Ukraine makes beyond its own needs, 2) channel part of the proceeds into a special fund for the army, 3) open export offices in Europe and the US, and 4) establish joint ventures abroad.

The surplus is real: Ukraine's defense output is projected to reach $55 billion in 2026, far beyond what the state can finance. A year on, Fedirko checked each promise in turn.

1) Export of surpluses: rules that strangle businesses

On 1 July 2026, the government approved rules for controlled arms exports. They shortened the maximum application review period from 90 to 30 days, but also introduced an export fee: 20% for finished products and technologies, and 30% for components. For finished products exported under the special procedure, the contract value must be at least $334,000.

In September, the Ukrainian Council of Armorers, together with other associations, proposed a zero rate, no advance collection of the fee, refunds for deals that fall through, and simplified test shipments. The industry was promised that its amendments would be taken into account and that the resolution would be rewritten.

Even in early October, however, the rules still needed work. According to Fedirko, the new mechanism has effectively not started working. Whether it can bring in additional funds for defense depends on how acceptable the export terms are to manufacturers.

Fedirko says, though, that judging by current decisions, the state intends to keep the export fee.

“The industry is ready to discuss its contribution to defense financing. But the rate must be economically justified,” he says.

2) Procurement for the Ukrainian military: balance is only being established

He adds that the Ukrainian Council of Armorers intends to push for a rate significantly lower than 20%, one that would let companies fulfill contracts and invest in production.

With such high rates, Fedirko says, the competitiveness of Ukrainian weapons on foreign markets is in question, as is the ability to send even small test batches to potential buyers.

“The fundamental requirement is post-payment: after the contract has actually been fulfilled and the manufacturer has been paid. A company should not pay the state in advance a share of income it has not yet received,” he says.

He added that, given all this, the real export figures remain unclear, as does how much exports have actually brought the military.

“The military and manufacturers must feel the benefit of exports. I sincerely hope that next year will bring much better results,” he says.

In addition, on 12 October, the Ukrainian Parliament passed bill No. 15400 in the first reading. It provides for crediting the export fee to a special fund directed to the Ministry of Defense: 50% for the procurement, modernization, and repair of weapons and equipment, and 50% for the pay of Armed Forces personnel.

The bill has not yet been adopted, but Fedirko says he expects “final adoption and launch of the mechanism.”

3) Export offices: offices in Germany and Denmark

On 3 November, the Ukrainian government named the first cities for export offices: Berlin and Copenhagen. On 15 December, it again spoke of preparing an office in Berlin. In reality, Fedirko says he does not know the office’s status, and it likewise remains unclear how companies can apply to it and how many contracts it has helped close.

4) Joint ventures abroad: There are concrete results in this area

According to Fedirko, eight joint ventures have been created, five of which are already supplying products to Ukraine. He stresses that this is the result of work by Ukrainian companies, foreign partners and the state, and that it deserves recognition.

As early as February 2026, the authorities spoke of plans to create ten joint ventures in Europe within a year. At the same time, they announced Quantum Frontline Industries in Germany, with a planned annual capacity of 10,000 drones for Kyiv.

Beyond the number of ventures and deliveries, however, it is important to understand how other manufacturers can join the Build with Ukraine program.

“Who accepts applications, by what criteria are decisions made, and what support does a company receive?” Fedirko asks.

In other words, joint ventures are already delivering results, but the rules of participation and the state support mechanism must be clear to companies that want to develop production abroad.

A series of lawsuits has created a new de facto regulatory regime as courts order companies like Meta and Google to change their business practices — and pay up.

© Gabriela Bhaskar/The New York Times

In a government office, researchers of drones and electronic warfare gather around a small metal device recovered from a Russian Geran drone. Its purpose —  to measure the Earth’s magnetic field for navigation.

"This is the most recent component we found, about a week or two

Governments and corporations worked throughout the night to update software.

Ukraine’s military intelligence (HUR) published a 3D model and parts list of Russia’s new Filin cruise missile on 22 October. The breakdown names the Russian companies behind the missile and the foreign makers of its electronics.

HUR runs its War&Sanctions portal to trace such parts back to their makers. Its stated aim is to “deprive the aggressors of the ability to produce weapons for terror,” the portal says. Meanwhile, Russia is betting on cheap, fast cruise missiles, Serhii Beskrestnov, a freelance adviser to the president on technology, told Radio NV in mid-September. Naming the Banderol, Dan-T, Dan-M, and Gerbera-5, he warned they would soon outrun Ukraine’s jet-powered interceptors, so Ukraine needed its own cheap missiles to shoot them down.

Composite body, ground launch

JSC NPO Molniya, part of Russia’s Tactical Missiles Corporation, builds the Filin, HUR said. The agency called it part of a Russian defense-industry trend toward cheap jet-powered, ground-launched air-attack weapons. Russia began firing it at Ukraine in late summer 2026.

HUR’s data puts the carbon and fiberglass fuselage at 3.5 m, with a 3 m wingspan. Some parts are 3D-printed. Russia claims a top speed of 800 km/h. The range is 600–1,200 km, and the missile flies at ultra-low altitude or up to 6 km. Versions carry 50-kg or 100-kg warheads. A solid-fuel booster fires it from a ground launcher.

A firm tied to a Shahed-type drone

PLAZ LLC makes the onboard equipment, HUR said. The firm also helps produce the Garpiya, a version of Russia’s Shahed-type Geran-2 drone. Filin and Garpiya units share a similar layout and markings. Guidance combines a Chinese-made inertial navigation system with a 16-channel Kometa anti-jamming module from Russia’s VNIIR-Progress.

The electronics resemble those in other Russian missiles and drones but carry a larger share of Chinese parts. Of 81 components, 35 are American and 22 Chinese. The engine, however, is Russian: an R500 turbojet from Reynolds LLC. A similar engine earlier turned up in the S-71K Kover aviation cruise missile and S-71M Monokhrom, HUR said.

For comparison, Ukraine found more than 20 foreign components in a different cheap missile, the Banderol, in May 2025. They included 10 US microchips, and the Banderol flies on a Chinese jet engine.

The Cali Fund, set up to raise $1bn a year for biodiversity from drug companies, remains near empty

Big pharmaceutical companies have been accused of “free-riding on nature”, after a landmark biodiversity fund that invites businesses to put some of their profits back into conservation was left virtually empty.

The Cali Fund set out to raise $1bn (£750m) annually, by asking companies that profit from nature’s genetics to contribute towards conservation in low-income countries. But more than 18 months after the fund was launched, it remains far below this target.

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© Photograph: Rebecca Cole/The Guardian

© Photograph: Rebecca Cole/The Guardian

© Photograph: Rebecca Cole/The Guardian

France and Germany have teamed up to press the EU to relax its looming combustion car ban. It’s the latest sign the EU's climate agenda is running on empty, says Ben Pile – and the UK isn't far behind.

The post The EU’s Climate Agenda is Running on Empty – and the UK isn’t Far Behind appeared first on The Daily Sceptic.

European Union negotiators have reached a provisional agreement to revise the rules governing the bloc’s carbon market, increasing the number of emissions allowances that can remain in reserve before being permanently cancelled.

The agreement, reached by the Council and European Parliament on 20th October and announced the following day, raises the invalidation threshold of the EU Emissions Trading System’s market stability reserve from 400 million to 700 million allowances.

The compromise reached by EU negotiators follows months of pressure from energy-intensive industries concerned about carbon prices, electricity costs and competition from manufacturers operating under less restrictive environmental regimes.

The measure requires formal approval before entering into force and forms part of a wider review of the EU’s principal carbon-pricing mechanism.

A larger reserve for future market disruptions

Established in 2019, the market stability reserve was designed to address the accumulation of surplus emissions allowances that had weakened the effectiveness of Europe’s carbon market.

Under the Emissions Trading System, companies in covered sectors must surrender allowances corresponding to their greenhouse gas emissions. The total quantity available is progressively reduced, creating a financial incentive to cut emissions.

The reserve adjusts the supply of allowances entering the market, withdrawing them when there is a substantial surplus and releasing them under specified conditions when supply becomes scarce.

Existing rules also provide for the permanent cancellation of allowances held above a threshold of 400 million.

Under the new agreement, that threshold would increase to 700 million, allowing a larger stock to remain available for potential future release.

The change does not automatically introduce 300 million additional allowances into circulation. Releases would continue to depend on the reserve’s operating rules and market conditions.

According to the Council, more than three billion allowances have been invalidated since the mechanism began operating in 2023.

The Commission initially proposed ending automatic invalidation indefinitely, while the Council’s September negotiating position envisaged a temporary suspension followed by a higher threshold.

The compromise retains invalidation but increases the amount protected from cancellation.

Industry competitiveness enters climate negotiations

The agreement follows growing concern about the cumulative cost of European climate regulation, particularly for steelmaking, chemicals, cement and other energy-intensive sectors. Manufacturers have warned that carbon costs, combined with relatively expensive electricity and industrial gas, complicate investment decisions and weaken their ability to compete internationally.

Brussels must also consider the consequences of production shifting to jurisdictions with lower emissions-related costs, a phenomenon known as carbon leakage. Earlier this year, EU Today examined the Commission’s consideration of changes to industrial protections under the ETS, including the relationship between free allowances and the Carbon Border Adjustment Mechanism.

The latest reserve agreement does not directly change the allocation of free allowances, the emissions cap or the obligations imposed on individual industrial installations. Its principal effect would be to preserve a larger buffer that could become available if future market conditions trigger the release mechanism.

For manufacturers planning investments extending into the 2030s, the availability of allowances and the future trajectory of carbon prices influence production costs and the commercial case for decarbonisation technologies.

Carbon market figures reveal changing conditions

The European Commission reported in May that the total number of allowances in circulation during 2025 stood at approximately 1.023 billion.

Its annual market stability reserve calculation provided for approximately 190.5 million allowances to be withdrawn from auctions between September 2026 and August 2027.

These withdrawals reflect the existing mechanism for reducing market surpluses. The proposed higher invalidation threshold concerns how many allowances can subsequently remain in reserve rather than being cancelled.

The overall emissions cap will continue to decline under the legislation already governing the ETS.

Consequently, preserving a larger reserve does not remove the long-term constraint on emissions or guarantee lower carbon prices for European industry.

The agreement also concerns the established ETS covering power generation, industry and certain other sectors, rather than the separate ETS2 regime for emissions associated with road transport and buildings.

The latter has generated its own political controversy, as EU Today reported following the October European Council summit.

Broader ETS reform remains unresolved

The Council and Parliament have agreed that the question of gradually reducing the invalidation threshold should be considered during the broader ETS review.

That exercise will address the carbon market’s operation over a longer period, when the declining supply of allowances could create tighter conditions.

The present agreement therefore provides an adjustment to the reserve mechanism without reopening the entire emissions trading framework. Following legal and technical finalisation, the provisional deal must be endorsed by both institutions and formally adopted.

The new 700 million threshold would apply after the legislation takes effect, while the larger review of the ETS continues through the EU legislative process.

The verdict should be seen as a warning for tech companies that New Mexico will hold them accountable, state Attorney General Raúl Torrez said at a news conference.

Key developments on Oct. 21:

• Zelensky supports resuming trilateral peace talks with US, Russia after Putin claims Kremlin readiness
• 'Everything was in ruins' — At least 2 killed, 2 injured in Russian drone attack on Kyiv
• Russian Su-30 fighter jet crashes in Kaliningrad Oblast during training exercises, Moscow

The guarantee highlights Denmark’s role in helping Ukraine expand defense production beyond its borders as Russian attacks threaten domestic manufacturing and supply chains.

Ukrainian drone maker Wild Hornets is rethinking projects it is currently working on, including launching interceptors from aerial platforms, because of limits on SpaceX’s Starlink satellite internet. Spokesman Mike Orliuk told The War Zone (TWZ) this on 20 October. The company builds Sting interceptors, which it says destroyed over 15,000 Shaheds and Gerberas, a cheaper Shahed lookalike, in a year. Orliuk said Sting’s current operations are unaffected.

The stakes rise as Russia shifts to faster drones. Ukrainian defense technology adviser Serhii Beskrestnov counted more than 2,500 jet-powered Gerans, Russia’s version of the Shahed, in August. President of Ukraine Volodymyr Zelenskyy said on 16 October that these drones fly faster than 400 km/h. He added that some Ukrainian interceptors chasing them work through Starlink. When the link was slowed, Ukraine could not intercept some of them, he said.

How Sting stays connected

“Our own communications system provides the basic connection to our interceptors,” Orliuk said. The company’s remote-control technology can draw on various internet sources, he added, though the military often uses Starlink. Even then, the terminal does not need to move at high speed. It only links the command center to a ground station, which Orliuk compared to a cell tower.

“For these needs, everything is operating normally with Starlink at the moment,” he said.

An air-launch project under review

“Some drones carry a terminal on board and need to fly at high speed with it,” Orliuk said. “In such cases, Starlink’s limitations make their operation impossible.”

That is why the company is rethinking the air-launch project. Wild Hornets has made no clear decision yet but will test alternatives, Orliuk said. He declined to describe them.

“I believe, in any case, depending on a single solution is very risky,” he said.

Other firms share the concern

Orliuk said he has spoken with other companies that rely far more on Starlink and have expressed concerns. He pointed to growing interest in Europe’s Eutelsat network, though “creating something like Starlink won’t be easy.”

Who ordered the slowdown remains unclear. The order to slow Ukraine’s Starshield service came from inside the White House, two US officials and a Western official said. A US official told TWZ the president never made such a request. US Secretary of State Marco Rubio said on 17 October that the slowdown had “nothing to do with the White House” and called “a report on that” “categorically false,” without saying which report he meant.

Mounting anxiety as Russia’s war on Ukraine reaches Nato’s borders with targeting of vessels transporting agricultural cargo

Nato is deploying additional military assets to the Black Sea amid the recent deadly escalation of Russian attacks on merchant shipping, as five more vessels were attacked on Tuesday.

Russia’s military said it ⁠struck ​three cargo vessels in Ukraine’s ⁠port of Reni and two ⁠other cargo vessels en ​route ‌to ‌Odesa.

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© Photograph: MAPN/Romanian Defence Ministry/AFP/Getty Images

© Photograph: MAPN/Romanian Defence Ministry/AFP/Getty Images

© Photograph: MAPN/Romanian Defence Ministry/AFP/Getty Images

Conflict in Middle East is pushing jet fuel costs higher and many carriers are not hedged against such increases, Michael O’Leary says

Ryanair’s chief executive has predicted a record increase in European air fares next year, as airlines grapple with fuel bills pushed higher by the Middle East conflict.

Many carriers are not hedged against rising jet fuel costs, Michael O’Leary said, which he predicted would lead to airline bankruptcies and takeovers. He forecast these pressures would result in the price of plane tickets rising by as much as 20%.

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© Photograph: Alexandros Avramidis/Reuters

© Photograph: Alexandros Avramidis/Reuters

© Photograph: Alexandros Avramidis/Reuters

Drones attacked an oil and fuel pumping station of Russia’s Druzhba pipeline system in Tambov Oblast overnight on 20 October, setting a diesel tank on fire, Ukrainian monitoring channel Exilenova+ reported, citing locals. Druzhba, Russian for “friendship,” is a Soviet-era oil pipeline, about 4,000 km long, that carries Russian crude west to Europe, including through a branch that crosses Ukraine. The struck station is on its Russian section. Tambov Oblast Governor Yevgeny Pervyshov confirmed a fire at an unnamed enterprise in Michurinsk district after what he called a Ukrainian drone attack. The station lies about 400 km from the front line.

Ukraine has spent months striking the refineries, terminals, and pipelines that fund Russia’s war, and its Defense Ministry says the strikes have knocked out more than half of Russia’s refining capacity. Washington wants them stopped. US officials reportedly tied intelligence sharing to a halt in refinery strikes, and US President Donald Trump called their resumption “a disgrace.”

Hours of attack before dawn

Russia’s regional alert system declared a drone threat at 03:38, Ukrainian military outlet Militarnyi reported. By 06:25, Exilenova+ said the Nikolskoye station was under attack, after Michurinsk had been under attack for several hours.

The Nikolskoye fuel pumping station in Russia’s Tambov region is under attack. pic.twitter.com/cA64vMgjsM

— Exilenova+ (@Exilenova_plus) October 20, 2026

Pervyshov said four Ukrainian drones were shot down over the region and no one was hurt. He did not name the site.

More footage from the Nikolskaya oil pumping station. Locals report that a tank containing diesel is on fire. pic.twitter.com/1jvbxSuGHo

— Exilenova+ (@Exilenova_plus) October 20, 2026

Ukraine has not commented. The General Staff’s 20 October list of overnight strikes does not mention Tambov Oblast.

A Druzhba fuel hub hit before

The Nikolskoye station belongs to Transneft, Russia’s state pipeline operator. It stores and pumps crude oil and refined fuels, including diesel, gasoline, and jet fuel. The complex has three tank farms and two pumping stations, and it can move up to 300,000 tonnes a day, according to Current Time.

Ukrainian drones hit a station of the same hub in August 2025, and Ukraine’s General Staff said then that pumping on the pipeline had stopped completely.

Strikes resume despite US pressure

Ukraine paused refinery strikes for three days after Trump announced an “energy ceasefire” on 11 October, while Russia fired 39 ballistic missiles at Ukraine’s grid. Since Kyiv resumed the strikes, drones have also hit an oil terminal and a fuel depot in St. Petersburg.

Kyiv reads other US moves as pressure too, from missed warnings of Russian ballistic launches to a Starlink cap that slows Ukrainian drones. President of Ukraine Volodymyr Zelenskyy told US senators he had offered a 30-day halt on refinery strikes in exchange for Patriot interceptors, but Trump’s envoys showed no openness.

Defence City, Ukraine’s special support regime for arms makers, now has 63 member companies, the Defense Ministry said in a 19 October release. That is more than double the late-May count, and Euromaidan Press calculations show the newcomers are, on average, much smaller firms.

Ukraine already buys most of its weapons at home. More than 75% of its 2025 weapons procurement budget went to domestic manufacturers. Most new weapons models cleared for military use are Ukrainian too: 892 of the 1,000 authorized from the start of 2026 to mid-June. Defence City is meant to turn that demand into more production capacity, and our calculations suggest it is now reaching smaller producers too.

Who is joining

Each resident’s figure in the ministry’s count is its qualified income, meaning revenue from selling weapons and military equipment. Applicants file details of their defense contracts for the previous calendar year with their application, the ministry’s guide shows. So the combined total changes as members join. It does not track month-to-month sales.

The 63 current residents have a combined qualified income of nearly $2.47 billion. At the end of May, 31 residents had $2 billion, the ministry reported. By July, 45 residents had over $2.07 billion, it added.

By Euromaidan Press calculations, the 32 companies added since May bring about $15 million each on average. The first 31 averaged about $64 million each. The math assumes all 31 early members remain, with unchanged figures. If they do, the newcomers are smaller producers on average, because each figure reflects a firm’s own prior-year weapons sales.

What residents get

The profit-tax break comes with a condition. Residents choose where their untaxed profit goes, but it must go to purposes the tax code allows, the ministry explained. If the money goes elsewhere, the break does not apply.

Residents also get customs incentives and state support to relocate plants and better protect production sites. They can rent state property without an auction. They can also ask to restrict access to sensitive information about them in public registries. Some defense export procedures are simplified too.

Resident status also makes a company eligible to be designated critically important to the defense industry. That lets it defer up to 100% of its staff liable for military service from the draft, the ministry noted.

To join, a company must confirm it meets the legal requirements and file an application with supporting documents. By law, the ministry has 10 working days to decide. If approved, a ministerial order grants the status, and the company enters the Defence City register.

The European Commission has selected 77 industrial and technology projects across 23 European Economic Area countries to receive €3.4 billion in funding, as Brussels attempts to strengthen the continent’s manufacturing capacity and reduce dependence on imported energy and critical materials.

The funding, announced on Monday, 19 October, will come from the EU Innovation Fund, which uses revenues generated by the Emissions Trading System to support investment in technologies intended to reduce greenhouse gas emissions.

The selected projects include manufacturing facilities, renewable energy installations, advanced energy storage, critical raw materials processing and industrial carbon management. For the first time, the programme also includes a small modular nuclear reactor project and a direct air carbon capture and storage initiative.

The announcement comes amid growing concern over Europe’s industrial competitiveness, particularly as manufacturers face high energy costs, increasing competition from China and difficulties securing investment for major industrial projects.

Funding for industrial production

According to the Commission’s announcement, the 77 selected projects span energy-intensive industries, clean technology manufacturing, alternative fuels, transport and several other sectors.

Six projects concern critical raw materials, an area in which the EU has been seeking to reduce its exposure to foreign suppliers.

These investments are intended to strengthen European supply chains for technologies including batteries, renewable energy equipment and permanent magnets, which are essential components in electric motors and other industrial applications.

The funding follows renewed political pressure to expand the processing and production of strategically important materials inside Europe.

As EU Today recently reported, the European Parliament has been pressing for stronger measures to reduce dependence on China for critical raw materials used by European manufacturers.

China occupies a dominant position in several international processing and refining markets, leaving European companies exposed to supply interruptions and trade restrictions.

The Commission is seeking to support alternative production capacity through financial assistance, industrial regulation and measures designed to attract private capital.

However, the selection of projects for EU funding does not automatically mean that the proposed facilities will be built. Their implementation will still depend on financing agreements, regulatory approvals and commercial decisions.

Nuclear technology enters funding programme

The inclusion of a small modular nuclear reactor project represents a new development in the Innovation Fund’s portfolio.

Small modular reactors are designed to produce electricity or industrial heat using nuclear technology on a smaller scale than conventional nuclear power stations.

Supporters argue that modular construction could reduce certain project risks and provide stable electricity supplies for energy-intensive industries.

However, the technology faces substantial challenges involving construction costs, regulatory approval, supply chains and the transition from demonstration projects to commercial production.

The Commission published a European strategy for small modular reactors in March, outlining plans to accelerate their development and support the first operational facilities in the early 2030s.

The latest funding decision gives the technology access to a financial instrument principally associated with industrial decarbonisation and clean energy investment.

Another newly represented technology is direct air carbon capture and storage, which involves extracting carbon dioxide from the atmosphere and storing it.

Both technologies remain at comparatively early stages of commercial deployment in Europe, making their eventual costs and performance important considerations.

Emissions trading revenue finances investment

The Innovation Fund is financed through revenues from the EU Emissions Trading System, under which companies operating in covered sectors must obtain allowances for their greenhouse gas emissions.

Part of the revenue generated from auctioning allowances is reinvested into projects designed to introduce lower-emission technologies into industrial production.

The Commission estimates that the 77 newly selected projects could avoid approximately 290 million tonnes of greenhouse gas emissions during their first ten years of operation.

That figure is a projection based on the projects’ anticipated performance, rather than an achieved reduction. Actual results will depend on construction, commissioning and subsequent commercial operation.

The funding announcement also follows the publication of the EU’s broader industrial policy initiatives, which seek to increase domestic production of clean technologies and improve investment conditions for European manufacturers.

The Commission announced a separate allocation of more than €390 million to 135 environmental and climate projects under the LIFE programme on the same day. That funding is distinct from the €3.4 billion Innovation Fund selection.

Funding agreements still to be concluded

The companies and organisations behind the selected Innovation Fund projects must now complete the procedures necessary to obtain their grants.

During the Commission’s 19 October press briefing, officials indicated that project-specific grant amounts would become available when the agreements are signed, currently envisaged for the first quarter of 2027.

The final allocations and implementation conditions therefore remain subject to the grant preparation process.

For industrial companies, the principal test will be whether the European funding attracts sufficient additional investment to bring the selected technologies into commercial operation.

The results will also provide an indication of how effectively Brussels can translate its industrial policy objectives into additional European manufacturing capacity, particularly in sectors where supply chains remain concentrated outside the Union.

Image Credit: © European Union, 2024 / CC BY 4.0

European Union governments have agreed a negotiating position on new agricultural market rules intended to take effect under the bloc’s 2028–2034 budget, advancing reforms to support arrangements for farmers while leaving the most contentious financial questions unresolved.

The Council approved its partial negotiating mandate on Monday, 19 October, covering changes to the Common Market Organisation regulation, which governs agricultural markets across the European Union.

The proposals include new arrangements for wine producers, protein crops and oilseeds, revised marketing standards, changes to the EU school food programme and provisions intended to improve preparedness for agricultural market disruptions.

However, the agreement does not settle future funding allocations or the broader structure of agricultural subsidies, which remain under negotiation as EU governments attempt to reconcile farming expenditure with competing demands for defence, industrial investment and regional development.

Agricultural markets under review

The Council’s negotiating position retains much of the European Commission’s original proposal while introducing amendments intended to accommodate national differences in agricultural production.

Under the proposed arrangements, sector-specific interventions would become mandatory in several areas, including beekeeping, fruit and vegetables and, under certain circumstances, wine production.

The Council has also proposed flexibility for countries where particular sectors are absent or relatively undeveloped.

For the wine industry, governments would be able to seek exemptions from certain obligations where national circumstances justify different arrangements.

This would allow the framework to retain common European rules while avoiding requirements that would be inappropriate for member states with little or no domestic wine production.

Sectoral interventions form part of the mechanisms through which the EU supports agricultural markets and producer organisations. They can cover measures intended to improve competitiveness, manage production and strengthen farmers’ commercial position.

New provisions for protein crops

The Council has endorsed the establishment of a separate sector for protein crops and oilseeds, replacing existing provisions covering dried fodder.

The objective is to encourage domestic production and reduce dependence on imported agricultural inputs, particularly crops used in animal feed and food production.

European livestock producers rely on protein-rich feed ingredients, including soyabeans, that are often sourced internationally.

Greater domestic production could reduce exposure to fluctuations in global commodity prices, transport costs and disruptions to international supply chains.

Under the Council’s proposal, member states would be encouraged to recognise producer organisations specialising in protein crops and oilseeds.

Such organisations can help farmers coordinate production, marketing and investment, although the effectiveness of the proposed measures will depend on how they are implemented nationally.

The proposals follow broader EU efforts to improve supply security in sectors extending from agricultural inputs to critical industrial materials.

School food and product labelling

The negotiating mandate also preserves the EU school scheme, which provides support for the distribution of fruit, vegetables and milk to schoolchildren.

Under the proposed framework, the programme would move from a school-year financing cycle to a calendar-year system, with transitional provisions intended to prevent disruption during implementation.

The Council has maintained the Commission’s objective of encouraging healthier eating habits by limiting products containing high levels of free sugars and fats.

The proposal also opens the possibility of additional marketing standards for several agricultural products, including protein crops, beef, pork, sheepmeat, goatmeat and rice.

These standards could provide consumers with more detailed information about product origins, subject to the final legislation.

Such measures would also have implications for producers and food businesses, which would need to comply with any new requirements concerning classification, marketing and labelling.

The Council additionally supports the harmonisation of rules covering industrial hemp, while retaining safeguards concerning seed certification and the permitted level of tetrahydrocannabinol.

Farming subsidies remain contested

The agricultural market agreement forms part of negotiations over the next Common Agricultural Policy, which will operate within the EU’s new seven-year financial framework.

Under the Commission’s proposed budget structure, several funding streams, including agricultural and cohesion programmes, would be brought together within national and regional partnership plans.

The restructuring has encountered opposition from governments and agricultural interests concerned that farming could lose protected access to EU funding.

As EU Today previously reported, 17 member states have called for agricultural and regional development expenditure to be protected against further reductions.

The Council’s latest position addresses how agricultural markets should operate rather than determining the size of the financial support available to them.

A separate debate concerns the conditions for receiving direct farm payments, including the definition of an active farmer and the degree of discretion granted to national governments.

Those questions remain central to the continuing CAP negotiations, which are due to return to the Agriculture and Fisheries Council on 26–27 October.

Negotiations move to Parliament

The Council’s partial mandate now provides a basis for negotiations with the European Parliament on the agricultural market provisions.

The legislation will still require agreement between the institutions, while its financing will depend on the eventual settlement of the 2028–2034 budget.

Governments must also complete negotiations on the wider CAP framework, including direct income support and the distribution of responsibility between Brussels and national administrations.

The market agreement reached on 19 October therefore establishes important elements of the proposed agricultural rules, but leaves unresolved the level of financial support available to European farmers after 2027.

Registrations of fully electric cars across 17 European markets increased by 70.3 per cent in September, according to industry figures published on Monday, 19 October, as France and Germany seek to ease the European Union’s emissions requirements for new vehicles.

The data show that 300,202 battery-electric cars were registered during the month, accounting for 32.6 per cent of new passenger-car registrations in the markets surveyed.

The figures emerge three days after Paris and Berlin announced a joint position on the future of Europe’s automotive industry, proposing greater flexibility in the EU’s 2035 emissions regime while introducing measures intended to favour vehicles manufactured in Europe.

Electric vehicles gain market share

The latest figures, compiled by E-Mobility Europe, New Automotive and Fier Automotive, indicate that electric vehicle demand accelerated sharply during September.

According to the industry data published on 19 October, approximately 1.98 million battery-electric cars have been registered across the 17 markets during the first nine months of 2026, an increase of 38.1 per cent compared with the equivalent period last year.

Higher oil prices, government incentives and the introduction of more affordable electric models have all contributed to demand.

The figures represent a substantial change in the composition of European new-car sales, although they cover selected markets rather than constituting a complete statistical account of the EU’s 27 Member States.

France recorded 65,243 battery-electric registrations in September, representing 41.7 per cent of its new-car market. Germany registered 88,724 electric vehicles, giving the technology a market share of 34.6 per cent.

Both countries have substantial automotive manufacturing industries and are directly involved in negotiations over Europe’s future emissions legislation.

Significant differences between European markets

Despite the overall increase, electric vehicle adoption remains uneven across the continent.

Norway retained its position as Europe’s most electrified new-car market, with battery-electric vehicles accounting for 98.8 per cent of registrations in September.

Denmark followed with 88.8 per cent, while Finland recorded 62.7 per cent and Sweden 49 per cent.

Electric models also accounted for approximately half of new-car registrations in Belgium, the Netherlands, Ireland and Portugal.

At the other end of the market, battery-electric vehicles represented only 11.2 per cent of registrations in the Czech Republic, 7.6 per cent in Italy and 6.2 per cent in Poland.

These differences illustrate the difficulty of establishing a uniform European transition timetable.

Household incomes, purchase incentives, vehicle prices and charging infrastructure differ substantially between countries. The availability of affordable electric cars is particularly important in markets where buyers are more sensitive to the initial purchase price.

The varying national figures also complicate the EU’s industrial calculations, since manufacturers must operate across markets progressing at different rates.

France and Germany reach automotive compromise

On 16 October, French President Emmanuel Macron and German Chancellor Friedrich Merz agreed on a joint approach to changes in European automotive regulations.

Under the proposed compromise, car manufacturers would be required to reduce carbon dioxide emissions from new vehicles by 90 per cent by 2035 compared with the 2021 reference level.

The agreement would also remove a proposed requirement to compensate for the remaining emissions through measures such as the use of low-carbon steel.

The change would create additional opportunities for manufacturers to continue selling vehicles powered by combustion engines beyond 2035, subject to the final legislative framework.

In their joint declaration on the automotive industry’s future, the French and German governments argued that emissions reduction must be combined with industrial competitiveness, investment and European manufacturing capacity.

The agreement also envisages preferential treatment for vehicles produced in Europe under certain public procurement and subsidy arrangements.

Britain could potentially benefit from provisions allowing selected European partners to qualify under the proposed industrial framework.

The Franco-German understanding is not, however, a final EU legislative decision. Changes to the regulatory regime require agreement through the relevant European legislative procedures.

Automotive competitiveness enters the debate

The principal argument advanced by supporters of greater regulatory flexibility is that European manufacturers need additional time to adapt production, protect employment and compete with international rivals.

German manufacturers retain extensive investment in combustion-engine and hybrid technology, while French producers have placed considerable emphasis on electric vehicles and maintaining European supply chains.

The negotiations therefore concern more than emissions limits. They also involve battery production, access to raw materials, manufacturing costs and the ability of European companies to compete with producers in China and other markets.

Supporters of the existing transition timetable argue that weakening long-term requirements could discourage investment in electric manufacturing capacity just as consumer demand is increasing.

Manufacturers seeking greater flexibility maintain that regulatory targets must account for uneven market conditions and the cost of developing new technologies.

September’s sales figures provide evidence that electric vehicle adoption is accelerating, but they do not establish whether the same rate of growth will continue without existing incentives.

The debate now centres on whether regulatory relaxation will preserve Europe’s automotive industry during the transition or slow investment in the technology that is already capturing an increasing share of the market.