‘Made in Europe’ act: China threatens countermeasures against EU industrial law
The Industrial Accelerator Act (IAA) remains in draft form. If adopted, the European Commission expects the legislative package to boost production, foster corporate growth, and create jobs within the EU. At the same time, the Act aims to support the adoption of clean, future-proof technologies in industry – and will consequently have significant implications for the automotive sector.
Among the initiatives outlined in the draft are new criteria for public procurement and funding programmes. In practice, this means that when governments spend money on procurement or subsidies, certain CO₂ and ‘Made in EU’ criteria must be met in future. Additionally, for large-scale investments exceeding €100 million in strategic sectors – including the automotive industry – specific criteria will apply if a ‘single third country controls more than 40 per cent of global manufacturing capacity’. This provision is likely to affect, for example, battery factories operated by Chinese companies in the EU.
The EU does not intend to isolate its industry completely but aims to remain, in its own words, ‘one of the world’s most open markets’. It is determined to ‘preserve this openness as a key source of economic strength and resilience’. To this end, the EU is calling for ‘greater reciprocity in public procurement’ – granting equal treatment to countries that provide EU companies with access to their markets. If this is not the case, access to EU markets will be restricted for those countries.
Around a month and a half after the IAA was presented, China’s Ministry of Commerce officially responded. As Handelsblatt reports, the ministry submitted its concerns and recommendations regarding the draft to the European Union on 24 April. China’s criticism is sharp, claiming that the draft law contains significant investment barriers and institutional discrimination in the four strategic growth sectors – batteries, electric vehicles, photovoltaic systems, and critical raw materials.
Beijing has also highlighted three main issues with the IAA: first, the law violates certain agreements; second, Chinese investors face discrimination; and third, the law will hinder the EU’s green transition and distort fair competition. Beijing has therefore urged the EU ‘…to remove discriminatory requirements against foreign investors, local content requirements, mandatory intellectual property and technology transfer requirements, and public procurement restrictions from the legislation,’ AFP reports.
China has coupled its demands for amendments with threats: if the EU fails to consider its proposals, proceeds with the law’s adoption, and thereby harms the interests of Chinese companies, Beijing states it will be ‘forced to take countermeasures’. For such scenarios, the Chinese government recently introduced two new legal instruments. These are designed to enable measures to counteract actions by other countries, with ‘Regulation No. 834’ covering industrial and supply chain security, alongside a legal tool designed to ‘[combat] unlawful extraterritorial jurisdiction by foreign states’.
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