BRUSSELS

The EU is reshaping its industrial policy amid supply chain issues, rising geopolitical tensions, and intensifying global competition, as the bloc introduced the “Made in EU” requirement to revitalize its industry, deeming Türkiye eligible under the framework due to its importance in the region.

The European Commission unveiled the Industrial Accelerator Act on Wednesday to boost domestic manufacturing to 20% of the EU's gross domestic product (GDP) by 2035, while decreasing the bloc’s dependence on China.

The Commission aims to achieve this goal with strict production and low-carbon quotas in the EU’s massive €2 trillion ($2.3 trillion) public procurement market across the automotive, steel, and clean energy sectors. The scheme aims to use this resource to support the domestic industry.

The Made in EU proposal imposes conditions on energy-intensive sectors such as steel, cement, aluminum, and chemicals, as well as net-zero emission technologies and auto and automotive parts production.

The regulation also dictates that a certain portion of production must take place in the EU for strategic purchases made with public funds -- a minimum EU production share to be used in the production or purchase of electric vehicles (EVs), wind turbines, and other critical technologies amid Europe’s efforts to counter China’s rising competition in green technology.

The proposal also outlines European production criteria for strategic sectors, such as batteries, solar and wind energy, hydrogen production, and nuclear energy -- the scheme also aims to ensure that the basic components of solar panels are produced in Europe within three years.

The draft also states that EVs produced through public procurement must be assembled within the EU six months after the law comes into force, and 70% of their components -- except for the battery -- will have to be produced in Europe.

Some 25% of aluminum products used in public procurement will be produced in Europe and be low-carbon, while 25% of steel production will also be low-carbon.

There will be strict rules for foreign investments of over €100 million ($115.7 million) in strategic sectors where a third country holds more than 40% of global production capacity.

Türkiye’s inclusion

Following months of negotiations, the draft legislation recognizes the existing Customs Union between Türkiye and the EU. Türkiye’s inclusion means Turkish-made goods will be classified as having EU origin when competing for European public contracts and state subsidies.

Turkish trade minister Omer Bolat praised the development on Wednesday, saying in a post on the Turkish social media platform NSosyal that confirming the legal basis for Türkiye’s inclusion marks a critical step in bilateral trade relations.

Bolat stated that the inclusion also means Türkiye’s auto and steel sectors will not be excluded from their largest export market.

Türkiye stood out in light of these developments due to its geographical proximity to the bloc, advanced production infrastructure, and its Customs Union agreement with the EU.

Türkiye’s extensive production capacity and skilled workforce make it a prime production and supply hub for the EU.

However, some EU countries expressed reservations about the scheme, while others strongly supported the initiative.

France said it wants the scope of the Made in EU requirement to be narrow, while Germany argues local production requirements could discourage investments and weaken the bloc’s global competitiveness, calling for a “Made with Europe” approach instead to include trading partners.

The proposal is expected to undergo further changes during negotiations in the EU Parliament.

*Writing by Emir Yildirim in Istanbul