This chapter describes how and why member states reached a unanimous decision in the Council of the European Union (EU) to establish the European Defence Agency (EDA). It looks at how government, commercial and institutional actors viewed calls for the establishment of an EDA, and analyses the negotiations that took place for the creation of the Agency. The chapter also looks at the range of government and firm preferences that were articulated in advance of the establishment of the European Defence Agency. Established in 2004, the European Defence Agency is an intergovernmental agency of the Council of the EU. The creation of the Common Security and Defence Policy and the eventual establishment of the EDA suited Italy’s preferences regarding European defence. One group of member states that coalesced around the UK wanted to keep defence industrial matters off the EDA’s agenda, whereas other states grouped around France saw an opportunity to push defence industrial policy issues to the EU level.