European countries and industry question EU's 'Made in EU' bid to revive manufacturing

The European Commission on Wednesday proposed the controversial Industrial Accelerator Act (IAA) to prioritize "Made in EU" goods in public support and procurement, although member states remain split and industry voices warn it may fall short of triggering a real manufacturing rebound.

Long-delayed proposal 

The proposed IAA was an initiative under the EU's Clean Industrial Deal unveiled last year. Politico Europe noted that it has been delayed three times and undergone repeated revisions amid broad-based opposition.

In the draft proposal, the Commission said the IAA would target "strategic sectors" including energy-intensive industries, net-zero technology manufacturing and the automotive supply chain, aiming to embed "Made in EU" criteria into public procurement and state support schemes to boost demand for EU-made and low-carbon products.

The proposal would also tighten conditions on foreign direct investment in what the Commission describes as strategic industries, including batteries, electric vehicles, solar photovoltaics, and the extraction, processing and recycling of critical raw materials.

For major investments in those sectors exceeding 100 million euros (116 million U.S. dollars), the draft sets eligibility requirements including capping foreign ownership at 49 percent and imposing mandatory technology-transfer obligations.

While some countries argue the act amounts to protectionism and warn that strict local-content requirements could distort supply chains, add bureaucracy and invite retaliation, Stephane Sejourne, the executive vice president and European Commissioner for Industrial Strategy, insisted that the measures were meant to strengthen EU strategic sectors.

"Our objective is clear: to raise the share of industry in Europe's GDP to 20 percent by 2035. Today, it stands at 14 percent."

"Yet repeated delays surrounding the proposal and its content illustrate a lack of a common vision and strategic resolve," said Stefan Sipka, head of sustainable prosperity for Europe and senior policy analyst at European Policy Centre.

Concerns over protectionism 

Since the IAA began to take shape, several non-EU partners, including Britain, Japan and the United States, have voiced concerns over "Made in EU" and "Buy European" moves, while free-trade-leaning member states such as Ireland and Nordic countries warn that strict local-content thresholds could jar with the bloc's open-market principles.

Swedish Prime Minister Ulf Kristersson told the Financial Times in February that he was "very sceptical" of Buy European if its purpose was "to protect European business" by avoiding trade or partnerships with other countries. "We need to be able to compete because of quality and because of innovation, not because we try to protect the European markets," he added.

Markus Ferber, a member of the European Parliament, criticized the act as a misguided and protectionist approach. He said Europe's industry is burdened by high energy costs, excessive regulation and weak innovation momentum. "Europe's strength lies in technological excellence and openness to markets--not in isolation," he said.

Wolfgang Grosse Entrup, head of the German Chemical Industry Association, described elements of the act as protectionist experiments and overly detailed industrial planning, from "Buy European" requirements to new obligations for "low-carbon products." "Both are likely to raise costs and create even more red tape, and thus further weaken Europe as a business location," he said.

The China Chamber of Commerce to the EU also said it regretted that the EU was reshaping market access through "Made in EU" rules, forced technology transfer and tighter scrutiny of foreign investment.

"Although we understand the EU's intention to strengthen supply chain resilience, the current design of the bill may shift from a rules-based open market to an exclusive protectionist system," the business group said, adding that it could send "an uncertain signal" to global investors, including Chinese enterprises.

Industry warns of added burdens 

Not only did some countries criticize the IAA as protectionist, but industry insiders and experts also voiced doubts that it would deliver its promised boost to manufacturing and business growth.

In an article, Ignacio Garcia Bercero, a senior fellow at Bruegel, warned that "Made in Europe" requirements could push up costs for export-oriented industries, slowing industrial transformation at home and, in turn, the clean-energy transition.

Although the IAA is billed as a business-simplification drive, "there is still no tangible relief for the broader economy," German business magazine WirtschaftsWoche reported on Wednesday, citing the German Chamber of Commerce and Industry (DIHK).

The chamber noted that extra requirements, extensive rules-of-origin documentation and high standards for so-called lead markets would weigh especially heavily on small and medium-sized enterprises.

Similar concerns were also raised by Javier Villamor, an analyst at the news and opinion site The European Conservative, who said multinational manufacturers view global supply chains as highly complex, making it difficult to calculate how much of a product is "European."

Villamor added that rigid thresholds could push up costs or curb flexibility, and that "the EU already possesses trade defense tools to counter unfair subsidies without introducing explicit local production mandates," questioning whether "Made in EU" can truly bring back a manufacturing revival.