- EU draft law could prioritise locally produced clean technology in public spending.
- The plan aims to rebuild Europe’s manufacturing share to 20 per cent of GDP by 2035.
- UK and Japan could still qualify for access if markets remain open.
The European Commission has proposed a new “Buy EU” policy aimed at strengthening Europe’s domestic low-carbon industries and reducing dependence on imports from China.
The proposal, outlined in a draft regulation called the Industrial Accelerator Act, would require governments and public bodies across the EU to favour locally produced and low-carbon goods when spending public money.
If adopted, the rules could mark a noticeable shift in economic thinking from Brussels, which has traditionally promoted open markets and free trade. The plan is expected to influence sectors such as green technology, electric vehicles and heavy industry.
Stéphane Séjourné, the European Commission vice-president responsible for industry, described the proposal as “a change in doctrine” that would have been “unthinkable even just a few months ago,” he reportedly said in a news report.
Séjourné also pointed to rising global tensions and volatile energy markets as a reason for the change. Referring to turmoil in the Middle East and its impact on energy prices, he reportedly said Europe needs stronger industrial capacity to protect its economic model.
“Without a strong industrial base, without a European social model, we won’t have any climate transition and we won’t have strategic autonomy,” he said, as quoted in a news report.
The race with China
The policy is widely seen as a response to growing competition from China, particularly in clean technology manufacturing. European officials argue that without intervention, more industries could move abroad.
The EU has already lost much of its solar panel manufacturing to China, and officials say the gap could widen further.
Séjourné reportedly warned that if Europe fails to act, Chinese manufacturers could dominate emerging technologies. “If we do nothing then it’s quite clear that very soon 100 per cent of tech technology will be produced in China,” he said in a news report.
According to EU officials, about 50 per cent of batteries used in the bloc are imported from China, along with 94 per cent of solar photovoltaic modules and cells.
The commission wants to reverse what it sees as Europe’s gradual industrial decline. Under the proposal, manufacturing would account for 20 per cent of the EU’s GDP by 2035, compared with 14.3 per cent in 2024.
To move towards that goal, governments could be required to meet “Made in the EU” thresholds when awarding public contracts or offering subsidies. For example, electric vehicles purchased with public funding could need at least 70 per cent of components — excluding the battery — produced inside the EU.
Authorities may also be asked to prioritise lower-carbon materials such as steel, aluminium and cement, even if those products cost more.
Allies in, rivals scrutinised
Despite the strong local focus, the proposal leaves room for countries with close economic ties to the EU to participate in certain sectors.
Officials suggested that the UK and Japan could potentially be treated as domestic suppliers in areas such as electric vehicle procurement, largely because their markets are relatively open.
Countries with more restrictive markets — including the US and India — could face tougher conditions under the rules.
Séjourné declined to say which countries would ultimately qualify, reportedly promising a future “reciprocity assessment” of trading partners.
Foreign companies investing heavily inside the EU may also face new requirements. Firms investing at least £85m (€100m) in strategic clean-technology sectors could be required to ensure that at least 50 per cent of jobs go to EU workers, alongside conditions related to research, ownership and innovation.
The European Commission believes the measures could create or preserve around 150,000 jobs in clean technology and low-carbon industries.
However, the proposal has already raised concerns among some trading partners. During a visit to Brussels, UK business secretary Peter Kyle reportedly urged the EU to avoid “putting up barriers”.
Industry groups inside Europe have also voiced caution. Thilo Brodtmann, chief executive of the German Engineering Federation VDMA, which represents around 3,000 small and medium-sized companies, warned that strict local content rules could distract from deeper structural problems.
“The focus on local content distracts from Europe’s real challenges – such as high administrative costs, a weakened internal market and Europe’s lack of technological leadership,” he reportedly said in a news report.
The draft regulation is expected to face further negotiation before becoming law, and its final shape could depend heavily on how EU governments balance industrial protection with global trade relationships.
