EU Unveils Ambitious Industrial Accelerator Act for Local Manufacturing Boost

The European Commission plans to boost EU manufacturing through the Industrial Accelerator Act (IAA), focusing on decarbonization and local content. The IAA aims for manufacturing to reach 20% of the EU's output by 2035. While some criticize its potential to sour trade relations, supporters argue it is necessary for competitiveness.

The European Commission is set to reveal its plans on Wednesday, introducing the Industrial Accelerator Act (IAA) designed to enhance the European Union's manufacturing competitiveness. This move comes amidst a push for decarbonization and a shift away from a dependence on inexpensive Chinese imports by implementing local content mandates.

The proposed IAA, seen by Reuters in draft form, will enforce low-carbon and 'Made in Europe' criteria, particularly for subsidies and public procurement in industries such as aluminium, cement, and steel, as well as sectors producing wind turbines and electric vehicles. The act's ambition is for the manufacturing sector to constitute 20% of the EU's economic output by 2035, up from 14% today.

Supporters argue such measures are essential to bridge the EU's investment deficit, rivaling similar policies in the US, China, Brazil, and India. However, critics express concerns about potential trade disruptions. The proposal has faced delays and alterations, including a reduction in required low-carbon steel production levels from 70% to 25% to qualify for subsidies, prompting disappointment among industry stakeholders.