Brussels Eyes 70% European-Made Target for Critical Goods
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Brussels is exploring a policy that would require up to 70% of certain products, including cars, to be produced in Europe. The aim is to prioritize domestically made goods and reduce reliance on China for clean-tech materials and some heavy industries.
According to officials familiar with a draft law set to be unveiled on December 10, this approach could raise EU corporate costs by more than €10 billion annually by nudging firms to source more expensive European components.
The proposal is led by French commissioner Stéphane Séjourné and represents a milestone in years of French efforts to bolster domestic production as Europe’s industries struggle to compete with inexpensive imports from Asia.
An EU official likens the scope of the legislation to China’s industrial policies, such as Made in China 2025 and China Standards 2035, which pushed foreign firms toward joint ventures with Chinese partners to access the market. The official emphasized a goal of balancing essential industry protection with Europe’s longstanding openness.
Previously skeptical nations, including Germany, have signaled a shift, given the current economic landscape, toward favoring more buy-European rules. These rules would likely impact the automotive sector and clean-tech areas like solar panels.
Three EU officials indicated that local-content thresholds up to 70% are under discussion as part of the broader industrial-policy framework, with tiered targets depending on how critical a sector is and the degree of dependency.
For the automotive sector, government incentives would be contingent on meeting these benchmarks. Batteries would also be required to meet a defined European-content level, according to one official.
The measure would apply to the use of public funds—procurement contracts and state-backed loans or grants. Officials also plan an assessment of EU production capacity for each component.
The proposed law, titled the Industrial Accelerator Act, could still be amended or delayed as negotiations continue among Commission bodies, amid divisions within the European Commission. One official noted a preference from the French commissioner to limit the definition of “European” to the EU itself.
The Commission’s trade-directorate remains skeptical of local-content thresholds, which are championed by Séjourné’s industrial-policy team.
World Trade Organization rules typically prohibit favoring domestic producers, though security exceptions exist.
Under the new rules, solar panel inverters that include shutdown mechanisms—seen as potential security risks—could require mostly European manufacture. This is seen as a scenario where higher domestic content would be essential.
There are concerns that European-made products might carry significantly higher costs than their Asian imports, risking price increases for companies.
With many imports used to assemble finished goods in the EU—such as cars—the higher costs could price some products out of the market.
Elevated energy prices and the pressure of tariff regimes in the United States have already pushed EU firms to rely more on cheaper Chinese goods. In 2024, China topped the EU’s list of technology exporters, including solar panels and biofuels, and ranked second for wind turbines.
European heavy industries, including steel, have struggled to preserve margins amid cheap competition from Asia.
The commission’s proposal is expected to include measures requiring public authorities to prioritize European suppliers and efforts to create lead markets for clean technologies. Discussions include a voluntary “green steel” label to encourage procurement of lower-carbon, albeit pricier, steel produced in the bloc.
An EU official cautioned that the 70% target is likely to be softened, and that negotiations over local-content rules remain challenging.
The Commission has not provided a public comment on the proposal.
