BRUSSELS — The European Commission is set to navigate a delicate balancing act: encouraging public sector purchases of EU-made products while avoiding accusations of protectionism. This week, the executive was expected to clarify the practical implications of its ‘Buy European’ program by unveiling the Industrial Accelerator Act. However, the proposal, aimed at ensuring billions of euros in public contracts go to European companies, has been postponed until the end of January.
This delay comes as a coalition of nine member states, led by the Czech Republic and including Estonia, Finland, Ireland, Latvia, Malta, Portugal, Slovakia, and Sweden, has voiced significant concerns. These nations fear that the EU may harm its own economy by isolating certain sectors from global competition.
Two competing visions for Europe
The dissent against the legislative proposal highlights a clash of ideologies regarding Europe’s approach to competing with the United States and China. Proponents of the initiative, including those aligned with French President Emmanuel Macron and major industrial powers in the EU, argue that Europe can only thrive in the global arena by giving preferential treatment to its own industrial and technological champions when awarding substantial contracts, particularly in public transportation networks.
Conversely, smaller and more liberal-minded nations contend that their economies can only remain competitive if they are free to select the best products at the most favorable prices, even if that means sourcing from countries like China or South Korea. For years, these nations have expressed concern that the ‘Buy European’ strategy could weaken the EU economy by favoring large Franco-German companies, which might face less competitive pressure and impose unfairly high prices on both suppliers and customers.
A cautious approach needed
Ursula von der Leyen, the President of the European Commission, has supported the idea of allowing governments and public bodies to express a ‘European preference’ in public procurement since beginning her second term last year. The Industrial Accelerator Act serves as a critical test for this principle, as it was integrated into a legislative proposal originally aimed at accelerating investment in decarbonization projects under von der Leyen’s Clean Industry Pact.
During the drafting process, European Commissioner for Industry, Stéphane Séjourné, incorporated the ‘Buy European’ principle into the proposal, along with stricter controls on foreign investments. In their counter-offensive, the Czech Republic has urged Brussels to exercise extreme caution in formulating its ‘European preference’ approach. According to a position paper obtained prior to a meeting of EU industry ministers, they warned that adopting disproportionate rules on ‘European preference’ could exacerbate distrust in the multilateral trading system and undermine the EU’s image as a reliable and predictable partner.
“Adopting disproportionate rules on the ‘European preference’ as a norm in our public policies could risk… increasing distrust towards the multilateral trading system and the EU as a reliable and predictable partner,” the Czech document states.
The concerns voiced in the Czech document resonate beyond Europe. A delegation from the Japanese business federation Keidanren, which includes members like Toyota and Mitsubishi, has recently met with a member of Séjourné’s cabinet to discuss the notion of ‘European preference’. Their proposal suggests exempting ‘like-minded partners’ such as Japan from these requirements.
These apprehensions have also been echoed by some European industry organizations, despite theoretically standing to gain from increased domestic procurement. Peter Kofler, President of Danish Entrepreneurs, cautioned against creating ‘protectionist walls that isolate us from global reality.’ He warned, “Imposing the ‘European preference’ before our solutions are world-class will trap us in a second-tier economy.”
Other industry groups showed openness to local preference requirements but raised concerns about implementation, fearing that these could be perceived as additional administrative burdens at a time when von der Leyen is focused on simplification. Orgalim, a technology lobby, broadly supported the proposal while emphasizing the need to avoid “administrative and regulatory burdens that stifle the sector at a time when we desperately need flexibility to innovate and remain competitive.”
Previously, Poland noted that local content requirements could be valuable tools, but their effectiveness would largely depend on careful calibration. They called for a flexible approach to ‘Made in Europe’, warning that the most advanced countries in the green energy transition could disproportionately benefit.
In a recent event, Aleksandra Kordecka, an expert in Séjourné’s cabinet, attempted to assuage these fears. She stated, “The goal of ‘Made in Europe’, I believe, is to ensure public money goes to European industry and European jobs.” She further added that the Commission aims to create an environment where European industries can compete against massive Chinese overcapacities, clarifying, “This is absolutely not about completely closing the market.”