The “Made in Europe” principle and the future of EU industrial policy
Europe wants to decarbonize without de-industrializing, but the old tools are no longer enough. With the Commission’s legislative proposal of march 2026, called the Industrial Accelerator Act, “Made in Europe” becomes a pillar of EU industrial policy, raising a fundamental question for Ursula von der Leyen’s current mandate: Is European preference the missing engine of industrial revival, or a backlash against the openness to international markets that has long characterized the EU normative power?
The context: a changing industrial landscape
For more than a decade, Europe’s industrial debate has been shaped by a growing contradiction. The European Union has positioned itself as a global leader on climate ambition and free trade, yet its industrial base has steadily declined. Manufacturing remains central to the EU economy, accounting for nearly one fifth of employment and close to a quarter of value added, but Europe’s share of global industrial value added has fallen dramatically over the past two decades.[1]
As highlighted in the September 2024 Draghi Report,[2] high energy prices, structural cost disadvantages, foreign subsidies, global overcapacities and fast-moving technological shifts are reshaping industrial value chains at a pace that Europe is struggling to match. At the same time, geopolitical tensions have exposed deep vulnerabilities in supply chains, particularly in energy-intensive industries, net-zero technologies, critical raw materials and downstream sectors such as automotive. Against this backdrop, the green transition, while necessary, risks becoming a driver of de-industrialization rather than a source of prosperity.
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It is in this context that the Industrial Accelerator Act (IAA) emerges as one of the most politically and economically consequential initiatives of the second mandate of President von der Leyen. Announced as a flagship of the Clean Industrial Deal, the Act is presented as the Union’s main legislative response to long-standing industry concerns related to competitiveness, investment conditions and economic security. The IAA is a multifaced “Frankenstein” Regulation, putting together supply and demand side measures to boost the EU industry and its decarbonization, foreign investment conditionalities and, most importantly, a definition of “Made in Europe” which will serve as a basis for the application on union origin requirements for specific technologies and products.
It should be noted, however, that the final version of the Industrial Accelerator Act appears more streamlined than earlier drafts circulated in February. Several provisions, particularly those related to the scope and automaticity of “Made in Europe” requirements, have been scaled back. This reflects the need to reach a compromise within the College of Commissioners, where concerns were reportedly raised about the definition and potential trade implications of such measures. It also suggests a deliberate effort by the Commission, with Executive Vice-President Stéphane Séjourné leading the file, to table a proposal that remains politically negotiable in the Parliament and the Council.
Nevertheless, even in a more calibrated form, the Industrial Accelerator Act marks an important shift in the Commission’s approach to industrial policy, signaling a greater willingness to combine market openness with targeted tools aimed at strengthening Europe’s industrial base.
Why is the Industrial Accelerator Act coming up now?
The transition to a clean economy offers a historic opportunity to modernize Europe’s industrial base, but this opportunity is unfolding in a far more hostile global environment than anticipated. Manufacturing output in several energy-intensive industries has declined sharply and import penetration has increased for strategic products.
Net-zero technologies tell a similar story. While deployment in the EU is progressing, Europe’s manufacturing share is declining, with production highly concentrated in China, which now accounts for more than 80% of global solar photovoltaic and battery manufacturing capacity.[3] In other technologies, from heat pumps to geothermal and digital energy infrastructure, EU production depends heavily on non-EU components.
A new approach to EU industrial policies
The Industrial Accelerator Act reflects a clear shift in the EU’s industrial policy philosophy. Rather than relying primarily on coordination, funding programs and soft incentives, the proposal establishes a directly applicable regulatory framework designed to accelerate industrial production, scale up decarbonization and strengthen resilience in a limited set of strategic sectors. The ambition is clear: By 2035, manufacturing should account for 20% of the Union’s gross value added.
To achieve this, the Act brings together permitting reform, demand-side intervention, enhanced investment screening and territorial industrial planning within a single Regulation. At the same time, it leverages access to the Single Market as a strategic tool to boost demand for European low-carbon industrial products and net-zero technologies.
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This marks a departure from the EU’s traditional reluctance to influence production location through internal market rules. The Commission is now explicitly using procurement, public support schemes and investment frameworks to steer industrial outcomes. Central to this approach is the creation of lead markets for European clean and resilient products, notably through Union-origin and low-carbon content requirements. It is, indeed, on the Union-origin requirements that the debate on “Made-in-Europe” is taking shape. At the heart of this debate lies a question that has become impossible to avoid: How far should the EU go in promoting “Made in Europe” to safeguard its industrial future?
“Made in Europe”: boosting the EU industry or a protectionist intervention?
The rationale behind European preference is grounded in market failures. High production costs, uneven technological maturity and the absence of scale effects limit the uptake of low-carbon industrial products. In parallel, global competition and asymmetric subsidies undermine Europe’s ability to retain or expand production capacity in strategic sectors.
By embedding “Made in Europe” and sustainability criteria into public procurement and public support schemes, the Industrial Accelerator Act would aim to address these failures and create predictable demand for European products. In the Commission’s view, this is essential to make the business case for industrial decarbonization viable and to prevent Europe from becoming structurally dependent on imported clean technologies.
Yet, this approach also raises legitimate concerns. Union-origin requirements, if applied too broadly or rigidly, could increase costs, complicate procedures and restrict access to cutting-edge technologies. The challenge lies in calibrating European preference in a way that strengthens resilience without undermining openness, innovation and speed of deployment.
The debate over the “Made in Europe” principle is rapidly becoming one of the main fault lines of the EU’s emerging industrial policy framework. While there is broad agreement on the need to strengthen Europe’s industrial base, Member States remain deeply divided on how far the Union should go in deploying European preference and market-shaping instruments. Frictions and fault lines already emerged before the publication of the Act and are now likely to shape future negotiations among Member States.
France represents the most interventionist end of the spectrum. For Paris, European preference is not a protectionist reflex but an economic security tool in a global environment marked by distorted competition, massive foreign subsidies and strategic overcapacity. In this view, public funding should actively support production located in Europe, particularly in sectors critical to the green transition and strategic autonomy. This approach has been strongly endorsed by Séjourné, who has explicitly linked the credibility of EU industrial policy to the creation of stable demand for clean, European-made industrial products. For the “Made in Europe” camp, without robust demand-side signals, the EU risks continuing to impose increasingly ambitious regulatory obligations on its industries while failing to secure the production capacity needed to deliver on its own climate and industrial objectives.
Germany’s position reflects a more cautious and conditional approach. Berlin accepts that EU preference schemes can be justified in specific circumstances, notably within public funding programs targeting selected strategic technologies, but firmly rejects automatic or broadly applied “Made in Europe” rules. Central to the German stance is the concept of “Made with Europe”, which would extend eligibility to free trade agreement partners and like-minded countries in order to preserve competition, avoid new dependencies and maintain integration in global value chains.
Beyond the Franco-German axis, several northern and Baltic Member States have expressed growing skepticism toward an expansive European preference agenda. Countries such as the Netherlands, Sweden, Finland and the Baltic States warn that a broad application of “Made in Europe” requirements could undermine the EU’s simplification objectives by increasing administrative burdens, restricting access to cutting-edge global technologies and slowing down industrial deployment.
Taken together, these diverging positions illustrate the core dilemma facing the Industrial Accelerator Act. The need to strengthen Europe’s industrial base and economic security requires widespread support, yet there is no consensus on the degree of intervention required to achieve it. The challenge for the EU will be to turn European preference into a targeted and credible industrial policy instrument without allowing it to become a source of rigidity, fragmentation and reduced attractiveness. How this balance is struck will shape not only the fate of the Industrial Accelerator Act, but the broader trajectory of Europe’s industrial model in the years ahead.
A defining moment for EU industrial policy
The Industrial Accelerator Act crystallizes a broader transformation in EU industrial policy. It reflects a growing consensus that competitiveness, decarbonization and economic security can no longer be treated as separate policy silos. At the same time, it exposes deep divisions over how interventionist Europe should become in shaping its industrial future.
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If carefully calibrated, “Made in Europe” criteria could help anchor strategic value chains, unlock investment in low-carbon production and rebuild public confidence in the transition. If applied too broadly or without sufficient flexibility, some argue, they risk adding complexity to an already dense regulatory landscape and slowing down industrial deployment at a critical moment.
As negotiations unfold, the real challenge for this mandate will not be whether to pursue European industrial sovereignty, but how to do so without sacrificing openness, simplicity and innovation. The answer will shape not only the fate of the Industrial Accelerator Act, but the credibility of Europe’s industrial strategy for years to come.
Notes:
[1] Businesses in the manufacturing sector – Statistics Explained – Eurostat
[2] https://commission.europa.eu/topics/competitiveness/draghi-report_en
[3] https://www.iea.org/reports/advancing-clean-technology-manufacturing/executive-summary
