EU unveils Industrial Accelerator Act to boost local manufacturing in clean tech, autos and heavy industry, signalling tougher scrutiny of Chinese investment
In a push to revive domestic manufacturing and reduce strategic dependence on China, the European Commission has unveiled a “Made in Europe” industrial strategy targeting clean technology, automotive production and energy-intensive sectors such as steel and aluminium.
At the heart of the plan is the proposed Industrial Accelerator Act (IAA), designed to anchor more production within the European Union as it decarbonises its economy and competes with heavily subsidised Chinese manufacturers.
Brussels has warned that without urgent intervention, the bloc could lose as many as 600,000 automotive jobs over the next decade. Currently, manufacturing accounts for around 14 per cent of EU output; the new strategy aims to raise that share to 20 per cent by 2035.
Local content rules and public procurement muscle
The IAA would introduce “low-carbon” and “Made in EU” requirements for public procurement and state subsidies covering sectors such as aluminium, cement and steel, as well as technologies including wind turbines, electrolysers and electric vehicles.
The EU hopes to leverage the financial firepower of member states’ public procurement — estimated at more than €2 trillion annually, roughly 14 per cent of EU GDP — to support domestic producers and narrow what officials describe as a widening investment gap with global rivals.
“If we do nothing, then it’s quite clear that very soon, 100 per cent of clean tech technology will be produced in China,” Commission Executive Vice-President Stephane Sejourne said while outlining the proposal. He also warned that Europe’s cement and steel industries risk being offshored in the coming years without protective measures.
The sectors covered under the IAA represent roughly 15 per cent of EU manufacturing output. Officials argue the legislation could help preserve or create around 150,000 jobs outside the automotive industry, alongside stemming job losses in carmaking.
Tougher line on China
The initiative marks a sharper turn in Brussels’ industrial policy, reflecting mounting concern over Chinese overcapacity, subsidised exports and supply-chain vulnerabilities exposed during the pandemic and subsequent geopolitical tensions.
China is notably absent from the EU’s preliminary list of “trusted partners” whose exports could qualify as equivalent to EU-made goods under local content rules. The Commission has instead drawn up a list that includes countries with which the EU has free trade agreements or which are signatories to the WTO’s Government Procurement Agreement, such as the United States, Canada and Britain.
Officials said reciprocal market access will be a key criterion in determining which countries retain preferred status. “Many of our partners exercise national preferences. We therefore expect to be integrated into their markets before they can be integrated into ours,” Sejourne said, adding that countries posing economic security risks would be excluded.
The IAA also proposes stricter screening of foreign direct investment. Investments exceeding €100 million from countries accounting for more than 40 per cent of global production in a given sector — a threshold that in many cases would capture China — would face additional conditions.
These may include requirements that at least 50 per cent of staff be EU workers, foreign ownership be capped at 49 per cent, and that investors agree to technology transfer and licensing arrangements. The bloc aims to prevent scenarios where Chinese firms assemble products in Europe using largely imported components with minimal local value addition.
Divisions within Europe
Despite broad agreement on the need to bolster competitiveness, EU member states remain divided over the scope of local content requirements and the definition of “trusted partners”.
France is said to favour a narrower approach centred on the EU27 and single market members Norway, Iceland and Liechtenstein. Germany and some other export-oriented economies advocate a broader list, including the United Kingdom, to avoid disrupting integrated supply chains.
Industry groups are also split. While the European Association of Automotive Suppliers has welcomed the proposal as a foundation for safeguarding jobs, analysts warn that overly aggressive local content rules could raise input costs, particularly in batteries and components where European carmakers remain heavily exposed to Chinese supply chains.
Some critics caution that the legislation risks provoking retaliatory measures from trading partners, potentially fragmenting global trade further. Supporters counter that major economies — including the United States, China, Brazil and India — already operate local content rules and subsidy regimes, leaving Europe little choice but to respond.
The proposal will now move to negotiations between the European Parliament and EU member states, where further amendments are likely.
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