The European Commission is actively seeking backing from major industrial players, including the steel and aluminum sectors, to implement a “Made in Europe” component within forthcoming legislation. This initiative aims to revitalize European industry and address growing concerns about competition from China and the United States. The push comes ahead of the planned announcement of the Industrial Accelerator Act (IAA), designed to accelerate the decarbonization of energy-intensive industries while maintaining the competitiveness of European manufacturers.
The IAA builds on a similar law adopted in 2024 prioritizing domestic production of clean technologies as the EU strives to achieve net neutrality by 2050. According to a letter from French Executive Vice-President Stéphane Séjourné, Europe faces a critical choice: proactively bolster its industrial policy or risk a continued decline in its industrial base, expertise, and economic independence.
Boosting European Industrial Competitiveness
Analysts suggest the Industrial Accelerator Act could significantly strengthen the EU’s industrial position. Both traditional energy-intensive industries like cement and steel, and emerging net-zero technology sectors are currently grappling with weak demand and detrimental international competition. The proposed legislation seeks to level the playing field and encourage investment within the European Union.
However, the plan isn’t without its critics. Some argue that prioritizing domestic production could inadvertently harm competition within the EU’s single market, potentially favoring countries with more established industrial frameworks like France and Germany. Concerns have also been raised about the potential for increased production costs due to stricter environmental standards.
The core principle outlined in the Commission’s letter is that “Whenever European public money is used, it must contribute to European production.” This reflects a desire to ensure Europe remains a powerful industrial force, rather than simply a marketplace for foreign goods.
Concerns from Member States
A coalition of nine EU countries – Czechia, Estonia, Finland, Ireland, Latvia, Malta, Portugal, Sweden, and Slovakia – voiced concerns in December that the IAA could negatively impact competition, pricing, and overall business conditions. Poland and the Netherlands have also requested a comprehensive impact assessment before the legislation moves forward.
Political discussions are ongoing regarding the specific criteria, incentives, and permitting processes for qualifying as a “Made in Europe” product. Financing mechanisms are also under consideration, with the EU’s multiannual budget (MFF) and the EU Competitiveness Fund expected to play a key role in supporting European industries.
While the Commission hasn’t finalized a specific percentage target for domestic production, sources indicate figures between 60% and 80% are being discussed. Any final figure will likely include distinctions for both imports and exports, and may consider production by non-European companies operating within the EU as contributing to “Made in Europe” output.
The Commission is also focused on “creating the conditions to align supply and demand,” according to an EU diplomat. This includes plans to establish “lead markets” to stimulate demand for sustainable, low-carbon industrial products, such as green steel and hydrogen, through targeted policy measures.
Furthermore, the IAA is expected to modify rules surrounding state aid, potentially exempting member states from notifying the Commission when funding decarbonization projects. This streamlining of the approval process could accelerate investment in green technologies.
Industry Response and the Draghi Report
European industry leaders have largely welcomed the Commission’s initiative, citing a “record trade deficit of €350 billion” with China in 2025. They view the IAA as a crucial step towards “economic independence” and a response to the recommendations outlined in the Draghi Report, which warned of “slow agony” if the EU fails to close the competitiveness gap with China and other global players.
The sentiment among businesses is that if other economic powers, like China and the United States, prioritize their own strategic assets, Europe should do the same. Industry leaders are requesting financial support through mechanisms like public auctions, direct state aid, and other financial instruments to facilitate increased production.
They emphasize the need for Europe to produce more, and more strategically, to safeguard its economic security and de-risk key value chains. This focus on strategic autonomy is a key driver behind the push for the “Made in Europe” component.
The presentation of the IAA, initially scheduled for December, is now slated for January 29th, though sources suggest further delays are possible. Stakeholders should continue to monitor developments as the legislation progresses, particularly regarding the final percentage target for domestic production and the specific details of the financing and state aid provisions. The future of European manufacturing and its ability to compete in a rapidly changing global landscape may well depend on the outcome of these discussions.
