Industry associations warn Merz against “Made in Europe” deal with France

The industrial associations ZVEI and VDMA have warned Chancellor Friedrich Merz against a deal with France on industrial policy.

Merz should not agree to strict “Made in Europe” rules in order to achieve CO2 concessions for the auto industry, write Presidents Daniel Hager (ZVEI) and Bertram Kawlath (VDMA) in a letter to Merz, which is available to the Pro-Newsletter Industrie & Handel from the news magazine “Politico”.

“Berlin and Paris would thereby accept a weakening of the very industrial competitiveness that they want to strengthen,” write the associations. “We ask you to avoid such a deal with a strict ‘Made in Europe’.”

Together, the electrical and digital industry (ZVEI) and mechanical and plant engineering (VDMA) represent around 20 percent of German industry, 30 percent of its exports and around 2.2 million employees.

Merz and French President Emmanuel Macron are negotiating a common line on the Industrial Accelerator Act (IAA) and the EU's car package. France supports a narrow interpretation of the Made-in-Europe quotas for public contracts in the IAA to the 27 EU countries. Germany also wants to include the EU’s free trade partners. When it comes to the car package, Merz is pushing for the CO2 requirements to be relaxed. France is against it so far.

Merz should not make the export opportunities of large parts of the industry “a bargaining chip in the exchange of acute goals,” demand the associations. In order to strengthen value creation in Europe, the IAA must involve reliable trading partners. Otherwise, their countermeasures would “additionally affect our companies in their export markets.”

Many companies are in the process of diversifying their supply chains and reducing dependencies. Tight “Made in Europe” rules would exclude the very partners needed for this. This would “make proven supply chains more expensive and force companies to set up costly double structures,” warn the associations.

Romanus Otte is a senior reporter at “Politico” Germany. You can subscribe to the “Industry and Trade” newsletter here.

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