Asked by the Irish Presidency of the Council of the EU to give their views on the details of the proposed Industrial Accelerator Act (IAA), particularly its geographical scope and the types of public support that might be subject to restrictions (see EUROPE 13952/6), the EU27 expressed more “constructive positions, backed by more arguments” on Wednesday 7 October, according to several sources.
“European industry urgently needs the Industrial Acceleration Act. Today’s discussion was an important step towards reaching an agreement”, a spokesperson for the Irish Presidency said in summary.
Although no specific solution emerged from the lengthy round-table discussion, which lasted more than three hours (every Member State spoke), some participants already discerned trends and noted a shared willingness to reach an agreement.
According to some sources, a larger majority of countries would favour a geographical scope that includes “trusted” third countries from the outset: those in the European Economic Area, those with free trade agreements, or those party to the WTO Agreement on Government Procurement.
In that context, reciprocity would have to be complete and closely scrutinised, with several Member States having, according to one source, asked the Commission and Ireland to explain how such strong reciprocity would be verified and put into practice.
There is “broad support for the IAA’s objectives, particularly in light of this week’s developments”, another source said, referring to the letter from Paris and Berlin on China (see EUROPE 13952/1). “A consensus appears to be emerging around a ‘Made with Europe’ approach (broad scope), subject to a reciprocity condition”, the source added.
Another trend also emerged: a willingness to make the IAA as simple as possible for public authorities to understand and apply, without creating additional administrative burdens.
These arguments were raised in particular during the discussion of whether to distinguish between different types of public support. While some said a trend had emerged against restricting public procurement contracts to EU27 companies alone, in the interests of simplifying the instrument, certain countries nevertheless called for public subsidies to companies to be reserved for EU companies, which they considered a logical approach.
On public procurement, the same majority call for simplification was reportedly expressed. Under the Commission’s proposal, contracting authorities would be required to exclude economic operators from the procurement procedures concerned on the basis of the geographical location of their ownership or control.
Origin of product. However, while examining the ownership of bidders for public contracts could provide an additional safeguard against circumvention of the rules, as Dublin noted in its 30 September paper (without such a mechanism, companies from third countries that have not concluded an international agreement with the Union could establish production sites in eligible countries and gain market access, potentially undermining the IAA’s broader objectives), some countries argued in earlier discussions that the place where the product is manufactured should be the only criterion taken into account.
Assessing and verifying ownership in practice “could create a considerable administrative burden”, they warned again on Wednesday.
A majority of countries reportedly aligned themselves with this position, favouring a determination based on the origin of the product rather than the nationality of the company, but with greater consistency with the approach proposed under the Public Procurement Act.
The nationality or control of the operator would, in any event, not be the most relevant criterion. “It could lead to the exclusion from public procurement of an operator controlled by a third country that produces in Europe – when one of the text’s objectives is, on the contrary, to attract quality investment there”, another source said.
One solution would therefore be to define an exclusion criterion based on the origin of products and components, “because it will be easier for public buyers to establish the origin of an imported product”.
France less isolated. While awaiting the Presidency’s next compromise text, possibly in mid-October, with the aim of securing a Council of the EU mandate by the end of November, others also felt that positions had “shifted” during the exchange.
Long isolated, France reportedly gained the support of several major countries, including Italy, for its vision of ‘Made in EU’, initially confined largely to the EU27 but open to adjustment later. Slovakia is also said to have ‘joined’ this camp. If this small group of countries grows, it could potentially derail a majority that does not yet exist at this stage.
Poland, for its part, reportedly reiterated its concerns about the low-carbon criteria and the possibility that its companies would not meet the ‘Made in EU’ requirements unless those criteria were adapted to its circumstances. Warsaw, supported by a number of countries facing a similar situation, therefore wants the text to better recognise national ‘energy mixes’.
‘Shock’ amendment from three EPP Members. The European Parliament’s groups were due to submit their amendments to the draft report on the IAA by the end of the day. More than 6,000 amendments had already been recorded. But it was a first EPP amendment, made public, that caused surprise and dismay within the S&D group. Three EPP MEPs of the Committee on Industry and Research – Germans Christian Ehler and Angelika Niebler, and Sweden’s Jürgen Warborn – called for the IAA to be scrapped outright.
In their view, the IAA does not address the EU’s loss of competitiveness, and Parliament’s current report could even fuel trade wars with “our closest partners”, as well as breach WTO rules. The Members instead recommend strengthening trade defence instruments.
For Pierre Jouvet, S&D co-rapporteur for the Committee on the Internal Market, “wanting to kill the IAA means wanting to kill European industry and the European economy for good. It is a betrayal of European workers. It means submitting to China’s economic, industrial and geopolitical interests. It is an attempt to subjugate Europe and turn it into a vassal state. We will never allow (this) to happen”.
Other observers, however, said the ‘shock’ amendment should be seen as a starting point, “albeit a very low one”, for negotiations. The EPP group, meanwhile, sought to repair the initial damage. “Within the EPP group, discussions on the Industrial Accelerator Act are ongoing. As is the case in other political groups, we are working towards a common position. This is a normal part of the political process, given that different views naturally exist within every political group”, a group source said, seeking to play down the matter. (Original version in French by Solenn Paulic)