The European Union's proposed Industrial Accelerator Act is slowing down seven months after its March unveiling, stalled by a dispute over what qualifies as "Made in Europe." The initiative seeks to direct more of the €2.6 trillion ($2.9 trillion) that European public authorities spend annually toward strategic sectors like steel, electric vehicles, and renewable energy, according to a new analysis from the Foundation for Economic Education. The core question dividing member states is whether protective trade measures will strengthen or weaken the bloc's struggling industries.
The act would require products purchased through public procurement, auctions, or made with state subsidies to meet low-carbon standards or EU manufacturing requirements. Brussels wants manufacturing to make up 20% of the bloc's GDP by 2035, compared to 14% now. Solar panel inverters and cells would need to be EU-made within three years of the law taking effect, while steel could still come from outside the union but would need to be 25% low-carbon. The EU says its broader deregulation push has already saved businesses around €15 billion ($17 billion), nearly halfway to the €37.5 billion ($42.5 billion) target set for 2029.
France wants "Made in Europe" to mean goods produced within the 27-member union or possibly the roughly 20 European nations outside the bloc, but not the UK. "It will still be possible to have products with some of their added value coming from elsewhere, but production must take place in Europe in order to qualify for public support," French Industry Minister Sébastien Martin said. Germany rejects this as protectionist and favors "Made with Europe" criteria that would include about 80 countries with EU free trade agreements, including Britain. The European Automobile Manufacturers' Association warns that "limited supply will remain the key constraint to expanding the number of cars that would be eligible for the 'Made in the EU' incentives."
The report explains that France's stricter interpretation risks raising costs for businesses and consumers while damaging multinational supply chains, particularly for automakers—the UK's motor industry trade group notes a relationship worth €80 billion ($90.1 billion) could be at risk. But Germany's broader approach creates its own problem: a product assembled in Berlin that's 90% made with Chinese components could be labeled "Made with Europe," which defeats the purpose of boosting EU competitiveness. The act is expected to include exemptions for companies that can't meet requirements without significant cost increases, but too many exemptions could water down the policy's impact. The Commission has signaled it wants to expand the union itself—president Ursula von der Leyen recently proposed Canada become an "associate" member, though she hasn't detailed what that would mean.
The disagreement threatens to push negotiations into 2027, according to the report. Spain has offered a three-tier compromise with EU members at the top, European Economic Area nations and "trusted" partners in the middle, and countries with trade deals in the third tier—but critics say this just repackages Germany's position. The challenge is clear: the EU needs to increase domestic demand for its industries without cutting off key partners or creating loopholes that make compliance voluntary. If Brussels can thread that needle while continuing to slash red tape, the act could inject much-needed energy into European manufacturing.