EU to unveil ‘Made in Europe’ bill to shield strategic industries from global rivals

The European Commission is poised to unveil a legislative proposal next week that mandates a minimum “Made in Europe” component for products supported by public funding in critical strategic technologies.

According to a draft obtained by Reuters, the “Made in Europe” initiative is part of a broader effort by the European Union to bolster domestic industries as they struggle to compete with Chinese manufacturers and producers in other nations that are unburdened by the bloc’s stringent regulations and elevated energy costs.

By prioritizing European-origin goods in public tenders, the EU aims to leverage the formidable financial power of member states’ public procurement—which totals approximately €2 trillion (US$2.37 trillion) or 14% of the bloc’s economic output—to fortify domestic industrial capacity.

Local content requirements for critical sectors

The draft of the “Industrial Accelerator Act” (IAA), scheduled for publication on February 26, will establish EU-origin content requirements and low-carbon standards for products purchased through public procurement or those benefiting from production subsidies.

The proposed regulations encompass “key strategic sectors,” including batteries, solar and wind energy, hydrogen production, and nuclear power plants.

Specific local content thresholds have been designated for each technology. For solar panels, the inverter and two other primary components must be manufactured in Europe within one year; this requirement will escalate to three primary components after two years.

Manufacturers of electric vehicles (EVs) purchased or leased through public procurement must ensure the vehicles are assembled within the union and that 70% of their components—calculated by value and excluding batteries—are produced in Europe.

Aluminum producers receiving subsidies will be subject to a minimum 25% European-origin requirement for low-carbon products, while a 5% minimum threshold will apply to concrete.

The draft also suggests a voluntary label for the greenhouse gas emission intensity of steel to improve the visibility of low-carbon products in the marketplace.

Implicit measures targeting China

The draft proposal further outlines conditions for foreign investments exceeding €100 million in strategic sectors, specifically when the investor originates from a nation controlling at least 40% of the global manufacturing capacity for the sector in question.

These criteria stipulate that a foreign investor may not hold a majority stake in an EU company and must license intellectual property rights to benefit from EU investment opportunities.

This contentious proposal has already been deferred twice and may undergo further revisions before its official release by the European Commission, as well as during subsequent negotiations between EU member states and the European Parliament.

A significant point of contention remains the precise definition of “Made in Europe.” The draft currently covers the European Economic Area—including the 27 EU member states, Iceland, Liechtenstein, and Norway—while explicitly excluding the United Kingdom.

However, the draft notes that the Commission may in the future include other “trusted partners,” such as those with reciprocal international commitments under the World Trade Organization’s Agreement on Government Procurement or those contributing to the EU’s competitiveness and security objectives.

Certain exemptions are also envisioned. The “Made in Europe” requirement may be waived if a product is manufactured by only one company globally or if transitioning to European production would incur a cost increase of at least 30%.

Alignments and opposition

The plans enjoy robust support from France, where European Commissioner for the Internal Market Stéphane Séjourné has been instrumental in the legislation’s development.

A significant portion of European industry also backs the initiative, with more than 1,100 business leaders signing a supporting article published this month.

Conversely, automakers have refrained from endorsing the plan, reflecting anxieties that the “Made in Europe” definition could disrupt their increasingly globalized supply chains.

German Chancellor Friedrich Merz has also maintained a cautious stance. Speaking at an industrial event last week, Merz argued that European preference rules should be utilized only as a “last resort,” suggesting instead a “Made-with-Europe” approach that could incorporate a broader range of trading partners.

Other governments remain more critical. Sweden and the Czech Republic have warned that the proposed measures could deter investment in Europe and drive up consumer prices.