A wide majority of EU member states backed the Industrial Accelerator Act, papering over the structural gaps that will decide whether the bloc’s flagship industrial law works at all. These include loopholes that could allow non-EU producers to access EU procurement markets via third countries with trade agreements. That has raised concerns the law could fail in its core objective — shielding European industry from global competition, particularly China.
The Competitiveness Council meeting ended with a wide majority of member states supporting the objectives of the Industrial Accelerator Act (IAA). The support, however, was qualified. Germany, France, Italy, Spain, the Netherlands and Poland all signalled acceptance of the proposal’s broad parameters, even as they differed on questions of pace, administrative burden and how open the framework should be to countries outside the bloc.
“Overall, today’s discussions showed a strong shared commitment to strengthen the resilience and autonomy of European industries and to unleash the full potential of our Single Market so that it continues to deliver for businesses, workers and citizens across Europe,” said Michael Damianos, Minister of Energy, Commerce and Industry of the Republic of Cyprus.
Made in Europe?
Some delegations pushed back on the degree of openness in the proposal, warning it risked hollowing out the ‘Made in Europe’ principle. It is a concern shared by analysts. “The framework as designed is strikingly broad in scope: it extends ‘Union-origin equivalent’ status to all countries holding free trade agreements, customs unions or Government Procurement Agreements with the EU, resulting in a list of over 70 countries,” wrote Elena Schneider and Ciarán Humphreys in an article for Heinrich-Böll-Stiftung.
The text defaults to inclusion rather than exclusion: access is the baseline, and removing a country requires the Commission to act via delegated act — a process that poses political and legal risks. The only country explicitly in the exclusion frame from the outset is China.
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The administrative weight of new procurement and permitting requirements drew separate fire, as did the risk that decarbonisation rules could fragment the single market rather than reinforce it. On timing, member states split between those pushing for rapid rollout and those seeking more room to adapt.
Spain’s backing of the IAA is particularly surprising. The country has become one of the EU hot spots for Chinese electric vehicle and battery investment. Madrid framed its position around local benefit, arguing the IAA’s requirements should ensure inbound investment creates value and jobs on Spanish soil rather than simply routing assembly through Europe.
What was missed
Thursday’s debate did not address two structural problems in the IAA text that will lie at the heart of the outcomes ahead. First, the IAA’s foreign direct investment (FDI) framework targets investors from countries accounting for more than 40 percent of global production in selected sectors. In practice this centres on China — but the text has a specific weakness.
Schneider and Humphreys gave the example of a Chinese manufacturer that sets up operations in Morocco, where the EU has a free trade agreement. Which can then ship into EU procurement markets under Union-origin equivalent status, sidestepping the technology transfer and workforce requirements the IAA was designed to impose.
Second, is steel. Earlier drafts of the IAA included a dedicated low-carbon label for steel, which is now gone from the text. The problem is definitional: each member state is left to determine what qualifies, which is precisely the kind of regulatory patchwork that undermines the common lead market the IAA is designed to build.
The road ahead
The European Parliament remains in preparatory phase and no rapporteurs have been appointed across the three committees sharing jurisdiction. The Industrial Accelerator Act is not expected to be adopted before mid-to-late 2027. The debate between now and then has a lot of ground to cover.
The EU–China relationship is “a 400-metre-long giant container ship loaded with 24,000 containers going to Europe and coming back almost empty”, how Jens Eskelund, president of the EU Chamber of Commerce in China, described the situation at the 2026 Conference on EU–China Relations in Beijing. EU imports from China totalled €559.4 billion in 2025, generating a trade deficit of €359.8 billion.
While the IAA is Brussels’ answer to that imbalance and to Washington’s Inflation Reduction Act, the detailed battle has yet to start.
