European Commission proposes ‘Buy EU’ plan to compete against China | European Union
The European Commission has proposed a “Buy EU” plan to support domestic low-carbon industries and help the continent compete against China.
The Commission published a draft regulation on Wednesday, called the Industrial Accelerator Act, which calls for EU-made and low-carbon content on institutions spending public money. The rules mark a major shift in economic thinking in Brussels, long a bastion of open markets.
But following internal disagreements, EU officials have left the door open to include countries with close economic ties to the bloc, such as the UK, in the event of mutual market access.
Stéphane Séjourné, the European Commission’s vice-president for industry, described the law as “a change in doctrine” that was “unthinkable even a few months ago”.
Referring to the turmoil in the Middle East that has caused energy prices to rise, former French foreign minister Séjourné said events in Iran underlined the need for a plan to support European industry. “Without a strong industrial base, without the European social model, we will not have the climate transition and we will not have our strategic autonomy,” he said.
The plan, inspired by ideas from the French government, is a response to intense competition from Beijing that has seen Europe lose its once-thriving solar panel industry to China. Séjourné said: “It is very clear that if we do nothing, very soon 100% of tech technology will be produced in China.”
EU officials suggested that the UK and Japan could be counted among domestic manufacturers because their markets are open for the purchase of electric vehicles.
In contrast, countries with more closed markets, such as the United States and India, are likely to face restrictions. While Séjourné promised a “reciprocity assessment” of the EU’s trading partners in the coming months, she refused to specify “who’s in and who’s out”.
He added that it was quite possible that the European cement and steel industries could be “fully offshored” within the next few years without any action.
About 50 percent of batteries and 94 percent of solar photovoltaic modules and cells used in the EU today are imported from China, EU officials said.
The plan aims to reverse Europe’s industrial decline and sets a target for manufacturing to represent 20% of Europe’s GDP by 2035, up from 14.3% in 2024.
To achieve this goal, local and national authorities will need to meet “Made in the EU” content targets when spending public money or designing subsidy schemes for goods in “strategic sectors”, including green technology and cars. For example, when purchased by governments or using public funds, at least 70% of the components of electric cars (excluding batteries) will need to be produced in the EU.
Authorities will also face having to buy more expensive low-carbon steel, aluminum and cement.
Foreign firms investing in key sectors in the EU will also need to guarantee job creation in the bloc; This is an attempt to reflect China’s needs. For example, a foreign firm investing €100 million or more in clean technology will need to provide at least 50% of jobs to EU employees, as well as meet other conditions related to ownership, innovation and research.
The commission believes the plan could create and protect 150,000 jobs in the clean technology and low carbon sectors.
The plans have sparked alarm among trading partners including Britain, Japan and Türkiye. British Trade Minister Peter Kyle called on the EU Stop “blocking” During his visit to Brussels last week.
Draft arrangement It states that countries that have agreements with the EU creating a free trade area or customs union will be considered local. This includes countries in the European Economic Area, such as Norway and Iceland, and Türkiye, which has a customs union with the EU.
The same clarity could apply to the 21 countries that have signed a WTO agreement on public procurement, including the United Kingdom and Canada.
The plans were generally welcomed by Green MPs co-leader Bas Eickhout. “Europe needs to leave behind some of the naiveté we have,” he told reporters ahead of the final broadcast. “There’s no global open market. Look at the US, look at China, look at all the big players; they’re all implementing industrial policies. It’s time for Europe to start doing that too, and the Industrial Accelerator Act is kind of the first careful step.”
The German Engineering Federation VDMA, which represents 3,000 small and medium-sized companies, warned that local content rules should be drafted with great restraint. “The focus on local content distracts from Europe’s real challenges, such as high administrative costs, a weak internal market and Europe’s lack of technological leadership,” said Thilo Brodtmann, VDMA’s managing director.
