The Industrial Accelerator Act and local content requirements

With the Industrial Accelerator Act (IAA), the European Commission aims to expand Europe’s industrial base and to strengthen it in the face of international competition. However, the proposed measures raise some questions, particularly with regard to local content requirements.

A possible paradigm shift is on the horizon

At first glance, it seems obvious that domestic producers, who are under significant pressure, should be given priority in public procurement and the allocation of subsidies as suggested by the IAA. However, “Made in Europe” requirements and restrictions on foreign investment represent a paradigm shift. Our current business model is based on a global division of labor and open markets. Fundamentally, this remains true even at a time when supply chains are repeatedly disrupted and protectionism is on the rise worldwide.

Survey highlights risks and bureaucratic burden

A survey of our member companies shows that the proposed far-reaching regulations carry significant risks: in terms of potential backlash, higher costs for European products, and additional bureaucratic burdens. These concerns must be reliably overcome if local content requirements nevertheless are to be effective. In any case, such interventions must be carried out with the utmost care and they need to be clearly limited in scope and duration. In our position paper, we elaborate on what needs to be considered. Please see the German website for the position paper.

Competitiveness of the business location is key

Measures to accelerate and simplify procedures – which the IAA also envisions – are urgently needed. In addition, much more must be done at the European and national levels in order to create conditions that promote innovation and investment. Europe’s future industrial strength will be determined primarily by the competitiveness of business locations with regard to energy costs, labor costs, taxation, and bureaucracy.