The European Preference: A Double-Edged Sword for Industry
The European Commission’s proposal for a “European preference” has sparked intense debate among industry leaders and analysts. This initiative, part of the Industrial Accelerator Act, aims to prioritize EU-made products in public procurement and set criteria that favor domestic production within EU supply chains. While the plan is designed to boost the bloc’s competitiveness and reduce dependency on foreign imports, it also raises concerns about potential disruptions to existing supply routes and increased costs for downstream industries.
The Goals of the European Preference
Proposed by French Commissioner Stéphane Séjourné, the European preference seeks to create a more self-reliant industrial base by encouraging local production. The initiative is part of broader efforts to protect the EU from global competition, particularly from the United States and China. It also aims to reduce reliance on imported clean technologies, batteries, steel, and other energy-intensive goods.
Commission President Ursula von der Leyen emphasized the necessity of this approach in a letter to EU leaders ahead of an informal retreat. She stated that the preference could help create lead markets in strategic sectors and support the scaling-up of European production capabilities. However, she also stressed the need for robust economic analysis and alignment with industrial priorities while engaging constructively with trusted partners.
Industry Concerns and Criticisms
Despite these goals, many industry representatives have voiced concerns about the potential consequences of the European preference. They argue that while the initiative aims to secure industrial sovereignty, it could risk increasing costs for downstream industries such as construction and automotive manufacturing.
In the automotive sector, the German Association of the Automotive Industry (VDA) expressed skepticism about local content approaches. A spokesperson noted that the sector’s supply chains are highly intertwined internationally, and protectionism could lead to backlash from other countries. They warned that imposing local content production quotas might increase production costs, undermining the competitiveness of European industry.
CLEPA, the association representing automotive suppliers, published a paper suggesting a European local content threshold of 70–75%. It recommended that a component be considered EU-originating if it undergoes its last substantial transformation in a member state’s territory.
Aviation and Aerospace Sectors
Similar concerns have been raised by the aeronautics industry. ASD Europe, which represents the European aerospace, security, and defence industry, highlighted the sector’s reliance on global supply chains. The organization cautioned that a European preference criterion could negatively impact a leading European industry that accounts for 40% of the global market.
ASD Europe Secretary General Camille Grand emphasized the importance of clarity in defining what “Made in Europe” means. He noted that civil aeronautics involves a highly globalized supply chain, making it different from sectors where most elements are domestic or European.
Clean Tech and Steel Industries
The clean tech industry welcomed the Commission’s plan but called for caution to avoid isolating the EU from key economic partners. Victor van Hoorn, director at Cleantech for Europe, said the policy should drive clear demand signals for strategic clean tech made in Europe, ensuring resilience and competitiveness without closing the EU off from the rest of the world.
European steel manufacturers, represented by Eurofer, generally support the Made in Europe criteria. However, they urged the EU to consider rules that cover the entire value chain, not just component assembly. They emphasized that the steel used in components and final products should also be melted and poured in the EU.
Chemicals and Hydrogen Sectors
The European Chemical Industry Council (Cefic) highlighted the challenges of implementing effective criteria for the Made in Europe initiative. A spokesperson noted that choosing starting points in different value chains and tracking origin could be complex. Cefic suggested including partners outside the EU as eligible for procurement, which could make agreements with the EU more attractive and support global alliances.
Laurent Donceel, director at Hydrogen Europe, welcomed the Commission’s plan to boost domestic production. He described it as a meaningful step forward, aligning with the lead-market strategy that Hydrogen Europe advocates. He emphasized the need for political support to retain industrial value chains in Europe, particularly through public financing and funding tools.
Conclusion
The European preference initiative presents both opportunities and challenges for the EU’s industrial landscape. While it aims to strengthen the bloc’s industrial sovereignty and reduce dependency on foreign imports, it also risks disrupting existing supply chains and increasing costs for downstream industries. As the EU moves forward with this policy, balancing these considerations will be crucial to ensuring long-term competitiveness and resilience.
