EU Unveils 'Made in Europe' Regulations... FTA Countries Included as Origin

Manufacturing Share Targeted to Rise from 14% to 20%
FTA Partners Like South Korea Given Temporary Relief

The European Union (EU) has unveiled new regulations featuring its 'Made in Europe' strategy to strengthen the competitiveness of its manufacturing sector. After lengthy discussions, the EU decided to include countries with which it has free trade agreements (FTAs) in its rules for EU origin, leading to the assessment that countries such as South Korea can breathe a sigh of relief for now.

Stefan Sejourne, European Commissioner for Prosperity and Industrial Strategy, announced the EU 'Industrial Acceleration Act (IAA)' at a press conference held at the EU Commission headquarters in Brussels on the 4th (local time). Brussels (Belgium) = AFP Yonhap News

On March 4 (local time), the European Commission announced the Industry Acceleration Act (IAA), which requires companies to fulfill 'domestic manufacturing' requirements for public procurement and subsidies in strategic industries such as automobiles, steel, cement, aluminum, and green sectors like wind turbines.

Under the IAA, companies must meet minimum thresholds for EU-made components to receive public funding from the EU. Large-scale foreign investment is also subject to conditions such as employing a certain proportion of EU workers. For example, electric vehicle manufacturers must produce at least 70% of their vehicle components within the EU to qualify for government subsidies.

The European Commission plans to raise the share of manufacturing in the EU’s gross domestic product (GDP) from the current 14% to 20% through this strategy, which applies to about 15% of all EU manufacturing. The plan also aims to prevent the expected loss of 600,000 jobs in the automotive sector over the next decade and to maintain or create 150,000 jobs in other industries.

The EU expects that, since the internal public procurement market accounts for about 14% of the total economy, injecting large-scale fiscal resources into domestic manufacturing will support struggling industries and accelerate the transition to new growth sectors.

Stefan Sejourne, EU Commissioner for Prosperity and Industrial Strategy, stated at a press conference in Brussels that day, "We have made significant progress in redefining the economic principles for the EU to become a system fit for the 21st century," stressing that, "By channeling taxpayers' money into production within Europe in the face of unprecedented global uncertainty and unfair competition, we will create jobs, reduce external dependency, and strengthen economic security and sovereignty."

The IAA faced delays in its announcement as member states were divided in their support and opposition during the discussion process. Critics, including Germany, have voiced concerns that the bill could reinforce protectionist policies and provoke retaliatory measures from trading partners. In contrast, supporters such as France have pointed out that major competitors like the United States and China are raising trade barriers to protect their own industries, arguing that similar actions are inevitable if the EU is to strengthen its industrial competitiveness.

The biggest internal dispute over the IAA was the definition of 'Made in Europe.' France maintained that the EU origin requirements should be limited to the 27 EU member states and single market participants such as Norway, Iceland, and Liechtenstein. Northern European countries like Germany insisted that even countries outside the EU, such as the United Kingdom, should be considered equal to EU origin if they are recognized as 'trusted partners.'

Ultimately, the European Commission decided that countries which have signed FTAs with the EU or, among signatories to the World Trade Organization (WTO) Government Procurement Agreement (GPA), countries that guarantee market access to EU companies, would be treated as equivalent to EU origin based on the principle of reciprocity.

The IAA also includes regulations on foreign direct investment (FDI). When a country accounting for over 40% of global production capacity invests more than 100 million euros in domestic industries, the share of EU workers must be set at over 50%, foreign ownership must be capped at 49% or less, and technology transfer is required. These provisions are widely interpreted as being aimed at Chinese companies, which have been criticized for conducting only simple assembly in Europe while making little contribution to employment or technology transfer.

This content was produced with the assistance of AI translation services.