0848 GMT January 20, 2018
The permanent structured cooperation on defense agreement (PESCO) seeks to improve EU coordination on defense and weapons systems development, AFP reported.
It is part of efforts led by Germany and France to reboot the European Union after Britain's shock decision to quit and follows the announcement in June of a 5.5-billion-euro ($6.4 billion) European Defense Fund.
The EU's diplomatic chief Federica Mogherini hailed the agreement as "a new page of European defense", saying countries had already proposed more than 50 projects.
Similar efforts to deepen military links have been frustrated for decades, partly by Britain's fierce opposition to anything that might lead to a European army.
The shift in US policy under President Donald Trump – who berated European partners on military spending at a NATO summit in May – has also led many to question whether Washington can be relied upon to protect Europe as it has in the past.
"It was important for us especially after the election of the American president that we can organize ourselves independently as Europeans," German Defense Minister Ursula von der Leyen said.
"This is complementary to NATO, but we also see that nobody will solve the security problems that Europe has in its neighborhood – we have to do it ourselves."
NATO will retain its primary role, but Mogherini said the EU could offer resources the alliance does not have, such as navigating security and development issues in Africa.