The EU’s new ‘Made in Europe’ rules aim to boost local manufacturing and protect jobs by tying public funds to EU-made content and screening major foreign investments.
BRUSSELS: The European Union has unveiled a new “Made in Europe” industrial strategy designed to bolster its manufacturing base against fierce competition from China, following months of internal wrangling over the plan’s protectionist leanings.
EU industry chief Stephane Sejourne described the proposal as a fundamental change in doctrine, stating it was unthinkable just a few months ago and represents more than just a change in operating procedures.
A core objective of the rules is to ensure that public investments and foreign funding actively support manufacturing within the 27-nation bloc, according to an EU official who explained the broad aims.
Companies seeking public money will now have to meet minimum thresholds for EU-made components, while large investments from dominant foreign firms will be subject to conditions including the employment of EU workers.
The European Commission stated the package aims to increase manufacturing’s share of EU GDP to 20% by 2035, up from approximately 14% in 2024.
Brussels warns that about 600,000 jobs could be lost over the next decade if the bloc’s current industrial decline continues unchecked.
The measures, strongly backed by France, were delayed several times due to disagreements, with critics arguing they contradict the EU’s pro-free-trade spirit and much of the discord centred on the geographical definition of “Made in Europe”.
Sceptics including Germany advocated for a “Made with Europe” approach that would include trade partners, but Brussels ultimately settled on a compromise based on the principle of reciprocity.
Countries with deals allowing EU companies to access public money on par with local firms in strategic sectors will be included, while others like Canada that favour local producers will be excluded unless they change their policies.
The “Made in Europe” requirements, which also seek to boost industrial decarbonisation, will apply to strategic sectors including steel, cement, aluminium, cars, and net-zero technologies.
Governments funding infrastructure projects must ensure a minimum share of European low-carbon steel, cement, and aluminium is used, among other provisions.
Electric vehicle manufacturers will need to ensure at least 70% of their cars’ components are made in the EU to qualify for public money, with similar rules applying to batteries, solar, wind, and nuclear sectors.
Formally known as the “Industrial Accelerator Act”, the proposal also imposes conditions on foreign investments exceeding EUR 100 million in emerging strategic sectors like batteries and EVs, particularly when the investor comes from a country holding over 40% of global manufacturing capacity.
For such projects to proceed, foreign investors must meet four of six conditions, including employing at least 50% EU workers, holding no more than 49% of the related EU company, and transferring technological know-how.
An EU official said this measure aims to counter instances where Chinese firms set up European plants employing mainly Chinese workers with very little local added value.
Neil Makaroff of the Strategic Perspectives climate think tank said the goal is to ensure EU taxpayers’ money is used strategically to strengthen Europe’s industrial base rather than subsidising Chinese overcapacity.
Some experts, however, question the push, with Niclas Poitiers of the Bruegel think tank suggesting existing instruments for investigating unfair foreign subsidies might be more effective if the policy goal is to protect industry from China.
The proposal will now be subject to approval by EU member states and the European Parliament.
The Sun Malaysia
