Stéphane Séjourné, executive vice-president for Prosperity and Industrial Strategy, presented the legislative proposal adopted by the European Commission on 4 March. “A major step in the renewal of European economic doctrine so that the Union is adapted to the 21st century, as recommended in the Draghi report. Faced with unprecedented global uncertainty and unfair competition, European industry can count on the provisions of this text to stimulate demand and ensure resilient supply chains in strategic sectors. It will create jobs by directing taxpayers’ money towards European production, reducing our dependencies and strengthening our economic security and sovereignty,” said the executive vice-president.
The Industrial Accelerator Act (IAA)—which will take the form of a regulation—aims to transform Europe’s manufacturing landscape by stimulating demand for clean technologies and “made in EU” products, while creating sustainable jobs within the Union. The aim is to increase the weight of manufacturing in European GDP from 14.3% in 2024 to 20% by 2035.
Priority to made in Europe
In line with the recommendations of the Draghi report, the IAA is introducing targeted “made in EU” requirements for public procurement and public aid schemes. These will apply to a number of strategic sectors, including steel, cement, aluminium, cars and net-zero technologies such as batteries, solar energy, wind power, heat pumps and nuclear power. This list will evolve over time. Other sectors may be included, such as chemicals. In other words, public money will have to support European production as a priority.
The Made in Europe label will apply to anything produced in the EU and the European Economic Area (Norway, Iceland and Liechtenstein). Countries with which Brussels has “relevant trade agreements” are also eligible, subject to reciprocity, i.e. if they do not have restrictive trade policies.
The legislation also requires Member States to set up a digital authorisation procedure along the lines of a one-stop shop to speed up and simplify the development of industrial projects. The procedures will have to be accompanied by clear deadlines.
Foreign investment under close surveillance
Second revolution: foreign direct investment will be subject to conditions. More specifically, investments of over 100 million in strategic sectors such as batteries, electric vehicles, photovoltaics and critical raw materials from countries controlling 40% or more of the world market — in other words China. These investments should create quality jobs, stimulate innovation and growth, and generate real value in the EU through technology and knowledge transfer, as well as compliance with local content requirements.
They must also guarantee a minimum level of European employment of 50%. In addition, equity participation will be limited to 49%—making the use of a joint venture compulsory. And 1% of turnover will have to be devoted to R&D activities in Europe.
The draft regulation now has to be discussed by the European Parliament and the Council before it is adopted.
