Paris wants Europe to buy European. Berlin worries that shutting the door on the rest of the world could cost it dearly. Now the rest of the bloc is picking sides in a fight over how to remake EU industry.

The Commission proposed the Industrial Accelerator Act (IAA), dubbed the EU’s “Made in Europe” law, on 4 March. It shifts public procurement and support schemes to revitalise Europe’s industrial base, aiming to raise manufacturing’s share of EU GDP to 20 per cent by 2035, up from 14.3 per cent in 2024. To do so, the act favours low-carbon products, screens large foreign investments in strategic sectors, and fast-tracks industrial permitting.

France and Germany lead the divergence over how strict the IAA should be. France wants tighter origin rules, where few third countries qualify for public money and subsidies. Germany wants them loose enough to keep supply cheap and avoid retaliation.

Paris versus Berlin

The two positions reflect very different exposure to the global economy. France sends around two-thirds of its exports to Europe and just 7.9 per cent to the US; its trade with China runs as a deficit. Germany, by contrast, counts the US as its top export market and China as its biggest trading partner overall. 

The volatile global market has already dealt Germany a blow. Trade with the US fell 5 per cent in 2025, and car exports there fell nearly 18 per cent.

“A change in doctrine” from Europe’s long preference for openness. — Stéphane Séjourné, EU industry chief

Stéphane Séjourné, the Commission’s Executive Vice-President for Prosperity and Industrial Strategy, has become one of the IAA’s main defenders. He calls it a “change in doctrine” from Europe’s long preference for openness, pivoting instead towards an approach designed to shield European manufacturers from cheaper, heavily subsidised imports from China and elsewhere.

At the May debate, member states clustered into these respective camps. Greece and Spain pushed for a stronger, more narrowly defined European preference, siding with France. Luxembourg and Sweden lined up behind Germany, welcoming the proposal’s openness toward the EU’s trading partners.

Member states pick sides

Belgium staked out a middle position, stressing that any openness should be conditioned on reciprocity. The Netherlands warned that the industrial instrument risks turning into an economic-security tool. It said the investment-screening regime should be kept separate from national-security controls and remain WTO-consistent.

Still, most member states supported the law’s core aims and its European-origin logic. Their concerns centred on complexity, administrative burden and market fragmentation. Several ministers argued the Act should be expanded to cover more sectors. 

The file is moving through Parliament. A pro-industry coalition of the centre-right European People’s Party (EPP), the centrist Renew and the Socialists and Democrats is taking shape there.

Doubts before compromise

The Kiel Institute’s Industrial Policy Lab calls the IAA draft ambitious but flawed, faulting it for lacking a “consistently future-oriented perspective“. It warns that the IAA, in trying to serve three goals at once (competitiveness, reduced geopolitical vulnerability and lower emissions), risks falling short on each front.

The debate now passes to the Danish Presidency. It must reconcile the protectionist and open-for-business camps in a compromise text expected after the summer.