new economy

　　

【European Times, Xia Ying, March 5th】After multiple delays in its release, the European Commission finally announced the contents of the "Industrial Acceleration Act" (IAA) on March 4th. This legislation aims to give the EU the means to regain the initiative.

According to the French newspaper Le Monde, the EU's goal is to increase the share of industry in the EU's GDP to 20% by 2035 (currently at 14%), reaching the level of the early 1990s.

However, due to the IAA introducing European priorities in the granting of public contracts and various forms of assistance, as well as strengthening the regulation of foreign investment, it has sparked intense debate within the EU. As 27 member states and the European Parliament now need to find a compromise solution, these debates will continue.

Fundamentally, the "European Made" label, which has long been advocated by France, is now relatively widely accepted, even though France and Germany have different opinions on it. But behind this concept, there are other debates: about transatlantic connections and the role of the United States, the relationship with the UK after Brexit, and the benefits of free trade and international trade rules.

Clarifying eligibility for public support

This industrial acceleration plan aims to implement a European priority policy in sectors considered strategic industries to prevent the decline of European industry and ensure a certain degree of autonomy for the 27 member states. The plan stipulates that the allocation of public funds depends on the production of part of the decarbonized heavy industries (steel, aluminum, cement, and potentially the chemical industry in the future), clean technologies (wind energy, electrolyzers, heat pumps, nuclear energy, battery energy storage systems, and photovoltaic power generation), and the automotive industry (electric and hybrid vehicles) being located in Europe.

The Commission has clarified the eligibility criteria for these industries to receive public support. For example, if 70% of non-battery components, at least three types of battery components (including battery cells), and 25% of aluminum are produced in Europe, member states can encourage enterprises to equip with electric or hybrid fleets. Additionally, 25% of steel must be green steel. The Commission expects to introduce stricter regulations by 2030, especially in the battery sector. The Commission explained: "Through these standards, we hope to maintain European production at the current level and expand production capacity in the battery sector."

Nuclear energy is another example. Four years after the implementation of the act, if the two most important key components used in the reactors are produced in Europe, the manufacturers will be eligible for state aid. Two years later, three components must be produced locally. "We studied component by component which components can be transferred to European production," the Commission concluded.

How is "European Made" defined?

However, the definition of "European Made" has sparked the most intense debate, and this issue will also continue to cause controversy in the subsequent legislative process of this act. The core issue is: apart from enterprises that produce in Europe, which EU "trusted partners" can enjoy the same treatment as member states and be included in the EU's value chain system?

Ultimately, 80 countries that have signed free trade agreements with the EU can participate in bidding or receive various forms of public support. Similarly, 40 countries that have signed public procurement access agreements with the EU will also benefit from the new system. The premise is that there is a principle of reciprocity in both cases.

The Commission also plans to terminate the practice of foreign investors who establish operations in Europe but do not bring any added value to Europe. In certain fields - batteries, electric vehicles, photovoltaics, key raw materials - these investors must comply with relevant conditions in the future, including having at least half of their employees stationed in Europe.