What will “Made in Europe” mean in practice? 

The “Made in Europe” framework being developed by the European Commission marks a shift in how industrial policy is applied in the EU. Rather than restricting market access directly, it seeks to condition access to public funding - including subsidies, procurement, and regulatory support - on where products, and their key inputs, are produced.

The underlying premise is straightforward: public money should support economic activity within the EU. In practice, this translates into linking eligibility for support to EU origin requirements, in some cases combined with low-carbon production criteria, reflecting the Commission’s view that clean industrial manufacturing could become a strategic European asset.

This approach responds to several challenges facing European industry, including subsidised competition from abroad, concentrated control of critical inputs, and a pattern in which some third-country firms have limited their EU presence to lower-value assembly. These concerns are increasingly framed through the lens of economic security, with policymakers placing greater emphasis on reducing dependencies and strengthening domestic industrial capacity.

Proponents of “Made in Europe” argue that maintaining capabilities in sectors such as energy, transport, and clean technologies is no longer solely an economic objective, but a strategic necessity. In that context, the framework is intended to ensure that public support translates into tangible industrial activity within the EU.

What has been announced to date? 

“Made in Europe” is not a single instrument, but a framework emerging across multiple policy initiatives. The Clean Industrial Deal, the Industrial Action Plan for the automotive sector, and the Net Zero Industry Act all point towards a reorientation of public funding towards sectors where EU supply chains are under strain (such as steel and automotive) or where the EU is seeking to build a competitive advantage (notably in net zero technologies).

The proposed Industrial Accelerator Act (IAA) is the most explicit attempt to bring these strands together. It sets out how access to public funding could be conditioned on EU origin and sustainability criteria and has become a focal point for debate over how far these requirements should extend.

At stake is not only the design of a single legislative instrument, but the broader scope of the “Made in Europe” approach - and the extent to which it will apply across sectors reliant on public support.

How clear is the framework in practice? 

Despite the level of political attention, the IAA in its current form does not yet provide a stable basis for investment decisions.

The proposal remains fluid across several key dimensions. Drafts have differed on sectoral scope, with technologies such as AI and semiconductors included in earlier iterations but subsequently removed. Thresholds for EU content and low-carbon requirements continue to vary across sectors, and core concepts — including the treatment of “trusted partners” — remain under discussion.

There is also a degree of internal inconsistency in how the framework is currently set out. In some areas, the emphasis is on strict EU-based production, while in others the approach allows for broader participation from third countries, subject to conditions that are not yet clearly defined.

As a result, while the direction of travel is increasingly clear, the detail that will determine how the framework applies in practice is still evolving.

Which sectors face specific rules? 

The IAA takes a targeted, sector-specific approach to local content and sustainability requirements.

In the automotive sector, the focus is on electric, hybrid, and fuel cell vehicles. These would be required to incorporate up to 70% EU-origin components over time (excluding batteries), alongside phased requirements for key sub-components. Assembly within the EU would also be required for eligibility for public support.

In practice, this would require manufacturers to adjust supply chains that are currently optimised at a global level, particularly for components where EU production capacity remains limited. The proposal also introduces potential requirements for the use of low-carbon steel and aluminium — for example, up to 25% - adding a further constraint on sourcing decisions.

More broadly, energy-intensive industries such as cement and paper would face similar low-carbon input requirements. “Net zero” technologies - including batteries, photovoltaics, wind, and nuclear - would also be subject to EU origin conditions across parts of the value chain, although in some cases these focus on specific components rather than entire products, reflecting uneven EU capacity.

The overall direction is clear: eligibility for public support will increasingly depend on the localisation of key stages of production.

What about third countries?

The treatment of third-country production is one of the most sensitive elements of the framework.

The Commission has adopted a more flexible approach than some earlier proposals, allowing products from “trusted partners” - including countries with FTAs, customs unions, or procurement agreements with the EU - to qualify for support. This avoids a strict “EU-only” model and reflects concerns among Member States and industry about supply chain disruption and WTO compatibility.

At the same time, this openness is conditional. The Commission would retain the ability to exclude specific countries, sectors, or firms on grounds of economic security or lack of reciprocity.

As a result, “trusted partner” status is likely to function as a managed and potentially discretionary category rather than a purely rules-based one. At the time of writing, it remains unclear whether vehicles assembled in “trusted partner” countries would qualify for support, or whether final assembly within the EU would still be required. This ambiguity goes to the heart of how the framework will operate in practice. While this flexibility provides the Commission with additional leverage, it also introduces uncertainty for companies operating across borders, as eligibility may depend on evolving policy judgements as well as formal agreements.

What's missing?

The current scope of the IAA is likely to expand over time. The Commission has already indicated that additional sectors linked to economic security could be brought within the framework.

Chemicals are a likely candidate, alongside sectors such as shipbuilding and rail rolling stock. Earlier drafts also included “advanced digital technologies”, such as AI and quantum, as well as critical raw materials - all of which remain central to the EU’s strategic agenda.

These areas are expected to be addressed through separate initiatives, including a forthcoming “tech sovereignty” package and new mechanisms to coordinate strategic stockpiling of critical raw materials.

Taken together, this suggests that the “Made in Europe” approach will gradually extend across a wider set of industries.

Will this work?

The Commission is betting on significant industrial growth as a result of these measures. By 2030, it estimates that the IAA alone will add €445 million for cement, €241 million for steel and aluminium, and an extra €10.5 billion across the EU EV supply chain, creating 148,000 jobs.

In practice, its effectiveness will depend on factors beyond the design of the rules themselves. In particular, the framework relies heavily on Member State funding and existing EU instruments, which may not match the scale or predictability of support available in other jurisdictions, such as the United States or China. Fiscal constraints across Member States could also limit the durability of support.

There is therefore a risk that supply chains adjust in response to policy incentives without achieving the scale or cost competitiveness required for long-term viability.

Much will also depend on how broadly “trusted partners” are defined in practice. The Commission will need to balance calls from industry to avoid unnecessary disruption with its objective of strengthening domestic capacity. Where that balance is struck will shape how far supply chains actually shift.

What does this mean for companies?

For companies, the key challenge is navigating a framework that is directionally clear but operationally uncertain.

In sectors where public funding plays a significant role, eligibility criteria are likely to become an increasingly important factor in shaping supply chain decisions, investment strategies, and market access. Companies will need to assess the extent to which their EU operations depend on public support, and how exposed they are to evolving origin and sustainability requirements.

That assessment will be central to engagement with EU institutions and Member States as the framework continues to develop.

This blog was written by Associate Director Miro Guzzini and Consultants Viktor Jenčuš and Aymane Guenaou, who all work within Flint’s Trade and Markets Access practice with a focus on EU trade.  

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