European Union tightens rules for foreign investors with Industrial Accelerator Act

European Commission is expected to make proposal later this month governing investments over €100m

Trade

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The European Union is changing its approach to industrial policy and moving away from its longstanding free-trade philosophy. Confronted with an industrial slowdown exacerbated by high energy prices and increasing competition, particularly from China in cleantech, the EU wants to give priority to local companies in investment decisions, according to a report in Bloomberg.

This policy shift is laid down in the Industrial Accelerator Act. The European Commission is expected to present this proposal later this month. The law will subject significant foreign investments exceeding €100 million to strict conditions. These include sharing technologies, hiring local workers and setting up joint ventures with European companies. The aim is to strengthen the EU’s industrial capacity and protect the internal market, against a backdrop of growing concern about economic security and the resilience of supply chains.

However, the proposal has sparked debate within the EU. Some officials have expressed concerns about possible protectionist measures, while diplomats from allied countries warn against excessive intervention in industrial development. There are indications that some EU member states are more receptive to this approach than certain segments within the Commission itself.

The provisions of the law go beyond foreign investment. New rules will also be introduced for public procurement by EU member states. Here, European content will be given priority, rather than looking only at the lowest price. Exceptions will be made for countries that already have free-trade agreements with the EU.

Other elements of the draft law include the creation of ‘stock hubs’ for critical raw materials to cushion future supply disruptions, and mechanisms to fast-track new projects. In addition, the introduction of a ‘green label’ for steel products is being considered to promote sustainability within the industry.

Business AM

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