EU industry ministers clash over Made in Europe rules for subsidies and procurement

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EU Made in Europe subsidy debate

Highlights

EU industry ministers remain divided over geographic scope of 'Made in Europe' preferences for subsidies and procurement, with formal negotiations delayed until October 7.
France, Germany, and Spain present differing stances as broader definitions risk circumvention by non-EU investment, influencing future rules for EVs and industrial policy.
Debate on the new Chips Act 2.0 and recent lifting of sanctions on Russian oligarchs drives calls for reforming foreign policy decision-making away from unanimity.

Industrial policy debate sharpens in Brussels

As reported by the Financial Times, the Industrial Accelerator Act proposes a European preference for subsidies and public contracts in sectors including electric vehicles and batteries, but member states remain divided over the geographic scope of that preference. Diplomats are not due to formally address the issue until October 7, yet today's meeting is expected to set the political direction for the talks.

French industry minister Sébastien Martin says the "EU is the EU27" and presents that as the starting point for the negotiations. A German position paper seen by the FT backs a broader "made with EU" approach, under which free-trade partners or countries in a customs union would in principle be treated as equivalent to Union origin.

Some member states warn that an expansive definition could weaken the law's goal of supporting European manufacturing. Diplomats say, for example, that Chinese investment in Turkey could create a route around the intended restrictions, while Germany argues it is not in its economic interest to close markets to trading partners.

Spain is preparing a fresh proposal to help break the deadlock, according to several diplomats. France and Germany are also linking the industrial debate to discussions over the 2035 phaseout of combustion engines, with Martin saying France is ready to be flexible if there is a "real Made in Europe" arrangement.

Broader implications for industry and sanctions policy

Poland's deputy industry minister Michał Baranowski tells the FT he supports a balanced approach that recognises the bloc's important links with trade partners and says that is likely where the debate ends up. Ministers are also discussing the bloc's proposed Chips Act 2.0, which is aimed at strengthening Europe's semiconductor industry and reducing strategic dependencies.

A preparatory document seen by the FT says Ireland, which is chairing the discussions, wants political guidance from capitals on how to balance technological sovereignty, economic competitiveness and international co-operation in the semiconductor ecosystem. The outcome is likely to influence not only cleantech and autos, but also the EU's wider shift toward a more interventionist industrial strategy.

Separately, EU defence commissioner Andrius Kubilius criticises the decision to lift sanctions on Russian oligarchs Alisher Usmanov and Mikhail Fridman, calling it "not the best decision" and warning it sends a poor signal. He says the episode should add momentum to efforts to replace unanimity in foreign policy decisions, including sanctions, with qualified majority voting.

Our earlier coverage of the EU’s strategic vulnerabilities ahead of the U.S.–China summit explained how Europe’s limited influence in major security and technology disputes is tied to dependence on U.S. defense capabilities and a weak position in advanced tech such as AI. We also noted that internal divisions and insufficient industrial capacity leave the bloc more exposed to decisions made in Washington and Beijing, reinforcing the push for stronger coordination and domestic capability-building.

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