The European Commission is planning to introduce sustainability, resilience, and minimum EU content requirements in procurement for strategic sectors, particularly targeting the automotive industry.
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This includes setting European content thresholds for battery cells and components in electric vehicles, as well as mandating minimum levels of European-made steel. However, critics have said it could cause problems for global automotive supply chains and increase trade tensions with the US and China.
The EU Commission’s Industrial Accelerator Act (IAA) aims to ensure that by 2035 manufacturing represents 20% of the EU GDP. It says it will achieve provide a toolbox to provide access to the European single market in a way that prevents strategic dependencies, creates manufacturing jobs, boosts decarbonisation and climate performance and secure access of European citizens and companies to vital commodities and products at all times.
Automotive companies have said the proposed Industrial Accelerator Act will increase costs and upset global supply chains, while the strategy’s supporters say it will help protect the EU’s industrial base.
Reports say that no major automaker is in favour and signing up to the proposal, though European suppliers – represented by CLEPA – are in favour and have signed up.
One area of contention is how non-EU countries such as the UK, Turkey or Morocco would be treated under new local content arrangements – which stipulate that an electric vehicle should source at least 70% of its parts bill from within the EU to qualify for subsidies and be considered an EU vehicle.
German OEMs are among the strongest opponents of the IAA.
Analysts say further revisions to proposals are likely as the draft proposals now move to the European Parliament.
The UK’s automotive trade association has issued a statement to voice its concerns over the application of potential new EU local content rules and the position of third countries such as Britain.
Mike Hawes, SMMT Chief Executive, said: “The UK automotive sector is gravely concerned by today’s ‘Made in Europe’ proposals set out in the European Commission’s Industrial Accelerator Act. As drafted, it would discriminate against UK-made vehicles and components, damaging a trading relationship worth almost £70 billion annually. It is a position that the UK industry and government sought to avoid, given we are both each other’s largest customers and suppliers. However, the strict EU assembly rules and EU27 eligibility criteria currently proposed would effectively put UK manufacturers at a systemic competitive disadvantage in the EU market, a situation which may also be in breach of the EU-UK Trade Cooperation Agreement – the Brexit deal.
“The UK government and European counterparts must work together urgently to resolve the situation, extending full, trusted partner status to the UK automotive sector. This is not just to ensure choice for British and European consumers – especially in zero emission vehicles – but to deliver the economic growth and security everyone craves.”
