The European Union will introduce a wide net of new requirements designed to favor local companies when investment decisions are made by both member states and foreign firms.
At the end of January, the European Commission is said to unveil the proposed Industrial Accelerator Act, which will impose strict conditions on major foreign investments exceeding €100 million.
The rules will require investors to share technology, hire local workers, and establish joint ventures with European companies in strategically important sectors.
This is the beginning of a salient move away from the free-trade principles that have guided EU policy for decades. But Europe has seen a prolonged slowdown in industrial production. Energy-intensive industries are struggling with elevated fuel costs following Russia’s invasion of Ukraine. Simultaneously, supply-chain disruptions have driven up costs.
At the same time, China has gained a dominant position in emerging clean-technology industries, leaving many European firms trailing behind.
The draft invokes a “combination of high energy prices, the need for large-scale decarbonization investments and unfair global competition places energy-intensive industries at a competitive disadvantage, and there are growing signs of industrial decline”.
It adds that the EU’s economic security depends on strengthening supply-chain resilience and protecting the single market and industrial capacity.
The plan has sparked internal debate within the EU.
Some officials have warned that the measures could veer toward excessive protectionism.
Under the proposal, EU member states would also face new restrictions in public procurement. Price would no longer be the sole criterion when governments make purchases, such as acquiring public transport fleets. Instead, buyers would need to ensure that products meet minimum thresholds for European content, though exemptions would apply for countries that have free-trade agreements with the EU.
Additional elements of the draft include the creation of “stockpiling centers” for critical imported raw materials to reduce vulnerability to future supply disruptions.
The legislation would also seek to accelerate approval processes for new industrial projects and introduce a new “green label” for steel production.
The main takeaway for the time being is that this move will give governments more power to steer investment towards European firms, pushing Europe to a model more similar to that of the USA or China. The move carries a risk of inefficiency, particularly given the danger it poses to transparency, but it had to be done, as Europe needed to jolt awake.
