What Is in the EU’s Buy-European Law? Key Rules &

Explaining the EU’s Buy-European Law and Its Impact on Key Industries

By Kate Abnett and Philip Blenkinsop

Overview of the EU’s Buy-European Law Proposal

BRUSSELS, March 4 (Reuters) – The European Commission proposed rules on Wednesday requiring that when public money is spent on manufacturing or purchaseing electric cars, wind turbines and other key technologies, a minimum share must be built in Europe.

Here is what you necessary to know.

Why Do It?

The law, called the “Industrial Accelerator Act”, is part of broader EU efforts to assist local industries compete with producers abroad who do not face Europe’s strict regulations and higher energy prices.

In particular, it aims to avoid losing new green tech industries to China, which already dominates manufacturing of many such products, including producing more than 80% of solar panel parts worldwide.

The EU law aims to utilize the huge financial firepower of its member countries’ public procurement – worth more than 2 trillion euros ($2.37 trillion) or 14% of EU economic output – to shore up struggling domestic industries.

What Will the Law Do?

The legal proposal, published by the Commission on Wednesday, would set EU-built content and low-carbon requirements for products bought through public procurement or receiving manufacturing subsidies.

The rules cover “strategic sectors”, including batteries, solar and wind energy, hydrogen manufacturing, and nuclear power plants.

Requirements by Technology

It sets a specific requirement per technology, depfinishing on whether the aim is to maintain an existing industest – like hydrogen electrolysers, where EU manufacturers currently lead the local market – or to pull back to Europe a compact share of an industest which China dominates.

Solar Panels and Electric Vehicles

For example, for solar panels, the inverter plus the cells – or equivalent parts – would necessary to be Europe-built within three years.

Makers of electric vehicles bought through public procurement would have to ensure their vehicles are assembled in the union, and that 70% of their components – excluding the battery – are Europe-built, six months after the law takes effect.

Aluminium and Steel

Aluminium bought through public procurement would necessary to be 25% Europe-built and low-carbon. Steel would not face Europe-built requirements, but would necessary to be 25% low-carbon.

Earlier drafts of the law, previously reported by Reuters, included an emissions label for steel to build lower-carbon products more visible – but that was scrapped after last-minute neobtainediations.

What is ‘Europe’?

The fiercely debated law was delayed by months, as EU governments and officials wrangled over the details. A key point of contention was how to define built in Europe.

Under the proposal, goods from the 27 EU member states, plus Iceland, Liechtenstein, and Norway – which are part of the single market – are automatically counted.

On top of this, the EU will offer some foreign countries the same treatment, subject to certain conditions.

Eligibility for Foreign Countries

To be in with a chance of being included for EU public procurement, a countest must be among the 21 non-EU signatories to the World Trade Organization’s Government Procurement Agreement. For other types of public spfinishing, the foreign countest must have a trade agreement with the bloc.

The EU then plans to publish another law, to exclude any countries on this list that do not also guarantee equivalent access to EU companies in their domestic public procurement or relevant subsidies.

That could pose problems for countries like Canada, where a “purchase Canadian” policy prioritises local firms over foreign ones.

Potential Exceptions

There are some potential exceptions, for example, if a product is only built by one company worldwide, or if switching to Europe-built would increase costs by 25% in public procurement or 20% in government auctions.

Conditions on Investments

The draft proposal would also set conditions for foreign investments in strategic sectors worth more than 100 million euros, where the investor is from a countest that controls at least 40% of that sector’s global manufacturing capacity – a threshold aimed squarely at China.

The criteria include the requirement that the foreign investor cannot hold a majority stake in an EU company, must employ mostly European workers, and must license its ininformectual property to benefit the EU investment.

Next Steps

EU countries and the European Parliament must now neobtainediate and finalise the law – meaning further alters are likely, given the opposing views among governments.

Political and Industest Reactions

The plans have strong backing from France, which had sought stricter limits on which non-EU countries the law lets in.

Sweden and the Czech Republic have opposed strict rules, warning they could deter investment and raise prices. Germany has also struck a cautious tone, with Chancellor Friedrich Merz declareing last month that European preference rules should be a “last resort” and include other trade partners.

Industries will also be lobbying hard for alters.