A seemingly simple question — what actually counts as European — has opened a significant rift among the European Union’s largest economies, as Brussels races to finalise sweeping new industrial rules designed to shield the bloc’s manufacturers from a wave of low-cost Chinese competition.
At the centre of the dispute is the European Commission’s proposed Industrial Accelerator Act, a piece of legislation that would grant preferential treatment to European-made products — including cars, steel and green technologies — in public procurement contracts across the bloc. The intent is straightforward: give European industry an edge in government tenders and subsidy-linked projects at a time when Chinese manufacturers are undercutting European rivals on price across multiple sectors.
But translating that intent into legal text has proven far more contentious than anticipated, with France, Germany and Spain staking out three distinct positions on where the boundaries of “Europe” should be drawn.
France Wants a Tight Definition, Germany Wants Flexibility
France is pushing for a strict interpretation that would largely confine preferential treatment to goods produced within the EU’s 27 member states. Germany, by contrast, is advocating for a more expansive approach that would extend the benefits of European preference to trusted trading partners, arguing that supply chains are too interconnected for a narrow definition to be practical.
“The Industrial Accelerator Act, from our point of view, must follow a principle – made with Europe,” German Economic Affairs Minister Katherina Reiche said ahead of a meeting of EU industry ministers on Thursday. She suggested that countries such as Norway and Switzerland could reasonably be included in the scheme, alongside select “partner countries” such as Canada — a nod to European Commission President Ursula von der Leyen’s recent proposal, floated during her State of the Union address, to offer Canada a form of “associate” status with the EU as Ottawa seeks closer ties amid its own trade tensions with Washington.
Spain has positioned itself as a mediator between the two camps, issuing a compromise position paper that proposes dividing European preference into three tiers. The first would cover the EU’s 27 members outright. A second tier would extend to European Economic Area countries, including Norway, along with other trusted partners offering reciprocal access to their own public procurement markets. A third, more conditional tier would cover countries with existing free trade agreements or customs unions with the EU, as well as signatories to the World Trade Organization’s Agreement on Government Procurement — potentially including nations that supply components deemed “critical” to the EU’s economic security where domestic manufacturing capacity falls short.
Italy Still Undecided as Ireland Pushes for Resolution
Italy, the bloc’s third-largest economy, has yet to commit firmly to any camp. Minister for Enterprises Adolfo Urso said only that he favoured a European preference model that remained open to “strategic partners,” leaving Rome’s precise position ambiguous as negotiations continue.
Ireland, which currently holds the EU’s rotating presidency, is pressing member states to resolve the disagreement in the coming weeks, aware that prolonged indecision could delay a policy widely seen as central to the bloc’s broader economic security strategy. At a meeting of the EU’s Competitiveness Council, ministers acknowledged they remain divided on the geographical scope of the preference scheme, even as they agree on its underlying purpose: strengthening European industry’s position in an increasingly competitive global market.
Why the Fight Over Definitions Matters
The stakes extend well beyond legal semantics. A narrow definition favoured by France would concentrate the economic benefits of the Act within the EU’s own borders, potentially strengthening domestic manufacturers but risking friction with allies like Canada, Norway and the UK who might feel excluded from lucrative public contracts. A broader German-style definition risks diluting the protective effect the policy is meant to deliver, particularly if it opens the door to components sourced from countries with looser trade ties to Brussels.
For businesses across the bloc — from carmakers to green technology firms bidding for public contracts — the outcome will shape investment decisions for years to come. Companies that assemble products using components from outside the EU’s core will be watching closely to see which of the three competing visions ultimately prevails, as the answer will determine whether they qualify for preferential treatment or find themselves locked out of a significant share of Europe’s public procurement market.
With EU industry ministers now formally engaged in the debate, attention turns to whether Brussels can bridge the gap between Paris’s protectionist instincts and Berlin’s more open, trade-dependent approach before the Industrial Accelerator Act moves toward a final vote.
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