What's in the EU's proposed 'Made in Europe' law draft?

Next week, the European Commission will introduce a new law requiring a minimum percentage of products to be "made in Europe" when using public money to support 'key strategic technologies.

What you need to know

Why do it? Why do it? Prioritizing European-made products in public contracts will allow the EU to leverage the financial power of public procurement, which is more than 2 trillion euro ($2.37 trillion), or 14% of EU output.

What will the law do? According to a draft of the "Industrial Accelerator Act", which is due to be published by February 26, it will establish EU-made requirements and low-carbon standards for products purchased through public procurements or manufacturing subsidies.

The proposed rules cover "key sectors" such as batteries, solar, wind, hydrogen production, and nuclear power plants.

For each technology, there is a specific requirement for Europe-made components. Solar panels require that the inverter, along with two other major components, be made in Europe after a year. After two years, three of these components are required.

Electric vehicles purchased or leased under public procurement must be assembled in Europe and 70% of the components, measured in value but excluding the batteries, must be made there. Aluminium producers that receive subsidies would be required to meet a minimum of 25% for Europe-made, low-carbon products. Concrete manufacturers would have a minimum of 5% for Europe-made products.

The draft also suggests a voluntary "label" for the intensity of greenhouse gas emissions in steel to make lower-carbon products visible.

CONDITIONS FOR INVESTMENTS The proposed draft would also establish conditions for foreign investment of more than one hundred million euros in sectors that are strategic, and if the investor comes from a nation that controls at minimum 40% of global manufacturing capacity.

Criteria include that the foreign investor can't hold a majority share in an EU-based company and that he/she must license their intellectual property for the benefit of the EU investment.

What is a European country?

The proposal that has been hotly debated could be changed before it is published by the European Commission and then when the EU countries and European Parliament negotiate the final law.

The key question is: How will "made in Europe" be defined? The European Economic Area is the area that the draft refers to, and includes the 27 EU member states, Iceland, Liechtenstein and Norway but excludes Britain.

The Commission also stated that it could add more "trusted partners" to the list in the future. These include those who have reciprocal commitments on the international level, like the World Trade Organization Government Procurement Agreement or contribute to EU security and competitiveness goals. The draft allows for some exceptions. For example, the requirement that a product be "Europe-made", could be lifted if it is made by only one company in the world, or if switching from Europe-made to a different brand would cost at least 30% extra.

Who is backing it, who has doubts?

France's EU Commissioner Stephane Sejourne, who is in charge of developing the law, has a strong support for these plans. More than 1,100 European business leaders signed his article published in this month, expressing their support for the plan. The absence of carmakers was due to?concerns about a "made in Europe" definition that would exclude their global supply chains.

The German Chancellor,?Friedrich Merz, has also adopted a cautious approach. He said at an industry event held last week that European preferences should only be used as a 'last resort' and suggested a'made-with Europe" approach which could include other trading partners.

Some governments are more critical. Sweden and the Czech Republic warned that these plans could discourage investment and increase prices in Europe.

(source: Reuters)