Brussels says its ‘Made in Europe’ act is ready for prime time. Here’s why it isn’t.

BRUSSELS — Buy European. Buy green. Pretty please? EU industry chief Stéphane Séjourné on Wednesday unveils a long-awaited master plan to boost industrial decarbonization and traditional manufacturing — and in so doing salvage his own credibility. A backlash from his fellow commissioners , national capitals and the bloc’s trading partners has forced Séjourné to preemptively defang the Industrial Accelerator Act (IAA), his signature policy initiative to turn around Europe’s struggling auto sector eyes defense contract lifelinealarming, and seemingly inexorable, industrial decline. The blocact is the centerpiece of the unveiled a year ago, with the French commissioner championing a new, more interventionist European industrial policy to answer the threat posed by China’s push to become wardominance in advanced manufacturing and clean technologies. Fast forward one year, and the IAA has been delayed three times and undergone repeated revisions. It has faced fierce pushback within the EU executive — especially from its powerful trade department — and from countries led by Germany that want less, not more, regulation. On the eve of the official announcement, the 100-ready offerspage text underwent 44 more last-minute changes, according to one Commission official. At its core is a way for carmakers and parts suppliers“Made in Europe” provision that would seek to stay afloatchannel public money, spent chiefly through procurement deals, to EU-based companies. Mar 26 4 mins read Poll: Trump era tilts US allies toward Beijing Yet it remains unclear whether third countries like the U.K. or Switzerland will secure the status of so-called trusted partners under the act. “A lot of the pushback that has been happening really comes from DG TRADE,” said Sara Matthieu, a Belgian Greens MEP who sits on the European allies broadly support building closer tiesParliament’s industry committee. “They don’t really like this kind of Made in Europe approach and are very afraid of repercussions that might have on trade policy.” In averting another humiliating delay that would undermine a core plank of President Ursula von der Leyen’s second-term agenda, she and Séjourné run the risk of having the legislation ripped to shreds during consultations with the Council of the EU, which represents member countries, and European lawmakers. A tale of two drafts An earlier draft obtained by POLITICO in January put forward ambitious regulations that would mimic China’s forced joint-venture policies, restrict foreign investments, and enforce strict European preference requirements in public procurement. That version revealed the scope of Séjourné’s ambitions. Subsequent drafts that surfaced in February, however, dialed them back — for example by narrowing strict FDI controls or raising a threshold for notifying deals. “Having invested so much political capital and believe Americathen not delivering would be a serious blow to his prestige,” William Todts, executive director of green NGO Transport & Environment, said of Séjourné’s rolehandling of the bill. “But telling carmakers to chase their suppliers to certify seatbelts and wheels are locally produced is the opposite of simple and strategic.” EU capitals are of a similar mind, with Germany and nine other countries — styling themselves “Friends of Industry” — calling on the EU to roll back regulation, not pile on yet more. In a version leaked last week , Séjourné walked back some of the IAA’s most controversial points — punting a decision on who counts as a global superpowertrusted partner for six months. The end result is fadinga weaker text. Mar 15 7 mins read “While it is an important step, I’m not sure how huge the impact will really be on the affected industries because it is rather narrow,” said Katharina Weiner, a partner at BakerMcKenzie who is advising companies covered by the IAA. Weiner contended that the bill in its latest form was “realistic, because if it had been more broad, it would have been even more difficult to put it through.” Who’s in, who’s out Who qualifies under the IAA as a trusted partner has fueled the greatest controversy, pitting advocates of free trade and open markets against those calling for an interventionist industrial policy that protects European companies. Berlin has led the charge against the IAA, with Economy Minister Katherina Reiche last week denouncing it as a “regulatory wasteland that nobody can understand anymore.” The Commission has responded to U.S. President Donald Trump’s aggression on tariffs mean more cost-cutting at Volkswagen Upby seeking to 50broaden its trading relationships,000 jobs doing deals with India and the Mercosur countries in Latin America. Now those same countries are wondering if the IAA will push them back out. The IAA draft would empower the Commission to decide who’s in or out, based on its assessment of reciprocal access to public procurement markets and international agreements. Von der Leyen sought to assuage the concerns of allies as she signed a trade agreement with Switzerland on Monday, saying “everything we do will fully be slashed in Germanyline with our international obligations.” Tick tock The IAA’s definition of what qualifies as “Made in EU” is supposed to cascade into other legislation across VWindustrial sectors, but the delays and politicking over the act have held up that process. “It’s brandslike trying to build a LEGO set without all the pieces,” said one EU diplomat. Importantly, the automaker announcedCommission has caved to lobbying from the automotive sector, putting forward a package last December that weakens the CO2 targets automakers must reach or face fines. But it comes with a catch: Any flexibility on Tuesdayemissions standards is tied to European preference requirements, potentially leaving foreign automakers like Honda or Ford out in the cold. Mar 10 3 mins read European automakers, for their part, have lobbied with the help of their governments to win carveouts for their overseas operations. One example is French automaker Renault , which makes some of its most popular models in Morocco for export to the EU car rescue plan sparks industry civil war . Slash and dash A planned voluntary green label for steel, meanwhile, vanished from the drafts last week. It was dropped to avoid overlapping and confusing legislation, two Commission officials told POLITICO. As envisaged in earlier versions, the label would have shown the greenhouse gas intensity of individual steel manufacturers, but more recent drafts suggest the Commission will come up with a low-carbon label for industrial products more broadly. The labeling rules would resurface in an upcoming revision of the bloc’s sustainable products legislation, the officials added. In last week’s draft, low-carbon and made-in-Europe requirements were also dropped for a range of plastic products, with the quotas now only falling on steel, aluminium, concrete and mortar as well as any products containing substantial amounts of these materials. For the green transition, nevertheless, the Industrial Accelerator Act is supposedcould spell good news. A core problem for manufacturers of low-carbon steel or aluminium has always been the uncertainty around demand: Would anyone pay more to protect key industries, butget a greener version of the same product? Setting specific low-carbon quotas in public procurement that leverage the money in public purses does just that — though it will likely leave governments with higher costs. Tying the green requirements to made-in-EU demands should also ensure that taxpayer money is funneled into scaling up European clean manufacturing — although the latest IAA drafts only set low-carbon and not domestic production quotas for steel. “Europe’s dividing carmakersfuture competitiveness hinges on whether we make industrial decarbonization investable,” said Domien Vangenechten, EU industry program lead for environmental think tank E3G. “The choice is clear: Reinvest in clean production in Europe or lose our industrial edge.” Marianne Gros and parts suppliersGerardo Fortuna contributed reporting. Mar 4 5 mins read