Germany and Spain clash over scope of EU 'Made in Europe' procurement plan

BRUSSELS — Germany and Spain have pitched competing views on the scope of a “Made in Europe” push to favor European companies in public procurement, setting the stage for more hard bargaining over a flagship EU industry bill.

The European Commission unveiled the Industrial Accelerator Act in March aiming to channel the EU’s vast government spending on green technology, energy-intensive industry and autos toward European companies, helping them compete against China’s dominant exporters.

Six months on, the bloc’s 27 governments are still struggling to find common ground. Position papers from Germany and Spain obtained by POLITICO ahead of a meeting of EU industry ministers on Thursday reveal divisions among the bloc’s big economies over where to draw the line.

A core question is how many countries should be admitted to the Made in Europe club, which would give their products privileged access to public contracts for everything from wind farms to the steel and cement used in highways and metro systems.

Germany, the bloc’s export powerhouse, is pushing for a broad “Made with Europe” group broadly in line with the original Commission proposal. That foresees admitting partners that have free-trade or public procurement agreements with the EU, or are in a customs union with the bloc. The eligible pool could run to as many as 80 countries.

“Germany rejects protectionism and discrimination,” the German paper reads. “The EU must remain a reliable partner for its free-trade partners and uphold its legal obligations.” It also calls for an “opt-in” possibility to include other third countries that give the EU reciprocal treatment.

No other EU countries have signed up to the German paper, however. France, the bloc’s second-largest economy, is meanwhile pushing in the opposite direction and advocating a more restrictive approach.

While not denying that Europe has to remain open to its trading partners, French Industry Minister Sébastien Martin emphasized that public money must be directed toward production in Europe.

“In the future, it will still be possible to have products with some of their added value coming from elsewhere, but production must take place in Europe in order to qualify for public support,” Martin said as he arrived for Thursday’s meeting in Brussels.

Rule of three

In an attempt to make the European preference concept workable, Spain has proposed a three-tier structure that would give EU-made products the strongest preference, according to its paper.

“A more granular and risk-based approach could improve both the effectiveness and the political acceptability of the text,” the document reads.

The EU’s 27 member countries would make up the first tier, while the second would include European Economic Area members and other “trusted” partners.

A third tier would be reserved for countries that have a free-trade agreement, customs union or procurement agreement with the EU. Their status could be upgraded to the second level if they deepen their trade agreements with the bloc, the paper says.

Ireland, which is chairing the talks among EU countries until the end of the year, is working to bridge differences among governments. Dublin will convene a discussion of deputy ambassadors on Oct. 7 and plans to put a new compromise on the table by the middle of the month, Industry Minister Peter Burke told his colleagues on Thursday. It hopes to broker a deal in November.

The differences among EU governments also run through party politics, with the German and Spanish wings of the center-right European People’s Party — the largest group in the European Parliament — similarly split over the industry act.

Lead MEPs are scheduled to discuss their draft report at a meeting on Sept. 28, while lawmakers can file amendments — or suggestions for changes — by Oct. 7. The deadline was pushed back by a week at the request of the EPP.

Only when both the Council and the Parliament adopt their respective positions on the bill will it be possible to launch talks among the EU institutions to hammer out a compromise that can become law. With the legislative timeline showing signs of slipping, the Commission’s ambition to strike a deal this year is looking increasingly unrealistic.

The argument over who gets into the club is being followed particularly closely across the Channel.

The EU’s tortuous legislative process is complicating efforts by the U.K. to renew its reset of relations with Brussels, after former PM Keir Starmer’s resignation in June forced a planned summit to be canceled.

New Prime Minister Andy Burnham’s government has brought its concerns about a possible exclusion from Made in Europe into the discussion. EU officials have replied that they can’t pre-empt the outcome of the legislative process for the Industrial Accelerator Act.