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1. The Union may conclude bilateral or multilateral agreements with acceding, potential candidate and candidate countries other than Ukraine and other third countries with which the Union has entered into a Security and Defence Partnership (NBI) in order to open the eligibility conditions referred to in Article 16 to those countries and their territories, in accordance with paragraphs 2 and 3 of this Article.

2. The bilateral or multilateral agreement referred to in paragraph 1 shall specify how the eligibility conditions referred to in Article 16 are to be applied. It shall lay down, in particular:

(a) the conditions and modalities of participation of contractors and subcontractors established in the third country in the common procurement under the SAFE instrument, including the conditions on the location of the executive management structures and on control by third countries or third-country entities;

(b) the rules related to the location of the infrastructure, facilities, assets and resources of the contractors or subcontractors involved in the common procurement which are used for production of defence products or other products for defence purposes supplied under the contracts resulting from common procurements under the SAFE instrument;

(c) the rules related to the cost of components originating in the third country, including a minimum share of components originating either in the Union, an EEA EFTA country or Ukraine and a maximum share of components originating neither in the Union, an EEA EFTA country or Ukraine or third-country party to the agreement;

(d) the rules related to restrictions imposed by third countries that are not parties to the agreement or by entities established on their territory, on the definition, adaptation and evolution of the design of the defence product procured with the support of the SAFE instrument.

3. The bilateral or multilateral agreement shall:

(a) ensure a fair balance as regards the contributions and benefits of the third country;

(b) lay down the conditions of any financial contribution to be provided by the third country to the Union;

(c) lay down any other appropriate measures governing the security of supply of the procured product;

(d) contribute to an increase in the standardisation of defence systems and a greater interoperability between Member States’ and those other third countries’ capabilities.

4. The contributions referred to in paragraph 3, point (b), shall constitute external assigned revenues in accordance with Article 21(5) of the Financial Regulation and shall be used for programmes supporting the Union defence industry, the Ukrainian defence industry and Ukraine in accordance with the rules of those programmes.