Stéphane de la Rosa, Full Professor of Public Law, Université Paris-Est Créteil (UPEC)
In these turbulent times, where the search for new instruments to consolidate the Union’s competitiveness is intertwined with the desire to avoid undermining international commitments, the principle of ‘European preference’ is being put forward as a relevant lever capable of safeguarding strategic sectors of the European economy. However, a brief analysis of current proposals highlights the difficulty of clearly defining the concept of ‘European preference’ and linking it to operational instruments. This conceptual and operational vagueness calls into question the credibility and effectiveness of a European preference in the context of current geo-economic challenges. These difficulties are apparent in the recent proposal, made in early March 2026, for the Industrial Accelerator Act.
The Four Instruments of the Industrial Accelerator Act
The objective of the Industrial Accelerator Act is to increase the share of manufacturing in EU GDP from 14.3% in 2024 to 20% by 2035. However, a detailed examination of the proposal reveals that it does not formally recognise European preference as a general principle or cross-cutting requirement underpinning various areas of economic law, such as public procurement, state aid, and the control of foreign investment in strategic sectors. Overall, this proposal appears to be more of an instrument to support European industry by promoting products manufactured within the Union.
To achieve this, the Act relies on a combination of at least four instruments. Firstly, the proposal includes an exclusion rule. If the IAA is passed, contracting authorities will be required to exclude certain tenders submitted by economic operators located in or controlled by third countries when awarding public contracts. However, this exclusion would apply only to certain product categories and only to operators established in states that have not concluded an international agreement with the EU guaranteeing access to public procurement markets. In practice, this exclusion is intended for operators based in China or India. This follows the significant ruling handed down by the Court of Justice in the so-called ‘Kolin’ case in November 2024.
Second, the promotion of ‘Made in the EU’ is further characterised by the introduction of an obligation to purchase products originating in the Union, as defined in the Customs Code. From 2029, this obligation will apply to the award of certain works and supply contracts and will also indirectly apply to the state aid regime. In practice, contracting authorities and entities will be required to ‘apply the requirements relating to Union origin and low-carbon requirements’ (Article 11 of the proposal) for certain product categories (primarily steel, aluminium, and concrete), alongside the Carbon Border Adjustment Mechanism (CBAM).
Third, regarding state aid, the European preference would take the form of an earmarking requirement to strengthen strategic value chains for activities considered essential from an industrial perspective. In practice, this would mean that a proportion of the national budget allocated to state aid, ranging from 45% to 100%, would have to be directed towards supporting certain sectors, notably the production of electric vehicles which are produced in Europe (or whose main components are originating from EU) (Article 12 of the proposal). A similar approach is also emerging for screening foreign investments. It is therefore envisaged that foreign investments (> €100 million) in batteries, electric vehicles (EVs), solar photovoltaic (PV) systems and critical raw materials should employ a minimum of 50% EU workers and ensure local supply chains.
Fourth and finally, the proposal introduces stricter requirements for certain goods, particularly electric vehicles. In such cases, public support, whether in the form of public procurement or state aid, would be conditional upon the product being assembled within the EU (rule of origin), as well as upon a proportion of essential components, such as batteries, being manufactured in Europe, or upon other equipment meeting low-carbon requirements. Annex III of the proposed regulation contains very detailed provisions on the European production requirement for electric vehicles. These include the vehicle being assembled within the Union, the ratio of the total ex-works price of vehicle components originating in the Union (excluding the battery) to the total ex-works price of all components (excluding the battery) being at least 70%, and the vehicle’s traction battery containing at least three main specific components. This highly technical level of detail could cause issues with implementation at the contract award stage.
Therefore, rather than basing the text on a general principle of European preference, it is instead based on a set of sector-specific instruments aimed at supporting certain industrial value chains.
A Principle of European Preference under Structural Constraints
The recognition of a general principle of European preference, which would imply systematic prioritisation of European operators in the award of public procurement contracts or in state aid funding, faces several constraints.
The first relates to compliance with the Union’s international commitments. Through its membership of the WTO and the conclusion of numerous new-generation trade agreements including substantial chapters on public procurement and investment, the EU regards compliance with international commitments as integral to its identity. However, unless these commitments are disregarded, the introduction of a general preference or express derogations would contradict well-established principles such as non-discrimination and equal treatment. Indeed, the clauses set out in the agreements’ chapters extend rules contained in the directives to third countries. These rules are often more precise than those in the WTO Agreement on Government Procurement. Examples include technical specifications, participation rules, and supplier qualification conditions. In Opinion 2/15, the Court of Justice of the EU held that, as these access arrangements are based on non-discrimination, transparency, and efficiency, they are likely to directly and immediately affect trade in goods and services between the parties.
This means that the proposed Industrial Accelerator Act treats products originating in states that have concluded trade agreements or are parties to the WTO as equivalent to those produced within the Union. According to Article 8 of the proposal, ‘products originating in third countries with which the Union has concluded an agreement establishing a free trade area or a customs union, or which are parties to the Agreement on Government Procurement (WTO GPA), where relevant Union obligations exist under that agreement, shall be considered as originating in the Union’. By treating products originating in third countries covered by free trade agreements (e.g. Canada, Japan, and, in the future, Mercosur) as ‘originating in the Union’, the proposal prioritises compliance with the principles of non-discrimination and equality in international economic law, as well as respect for trade commitments, even if these are severely undermined or ignored by certain partners, over a more assertive approach to European preference that is more explicitly focused on supporting products that originate strictly within the Union. By prioritising compliance with all international commitments, the IAA dilutes and obscures the scope of the concept of European preference. A key issue that will influence the debate on this proposal is the extent to which reciprocity is balanced.
The proposal provides for exceptions to equivalence – notably where a third country has failed to provide national treatment in relation to Union products or entities, or where an exclusion is justified to avoid dependencies or any other developments that may threaten the Union’s security of supply of the products. However, the scope of these exceptions remains rather vague. The extent to which the European preference is diluted within international agreements or applied more strictly will depend on how these exceptions are defined and interpreted.
A second constraint relates to the capacity to support European industry and decarbonisation. It must be made clear that this text is not a roadmap to carbon neutrality. In the spirit of the Draghi report, it considers decarbonisation and strategic autonomy together, but environmental ambitions remain limited to so-called ‘strategic’ sectors and their decarbonisation. There is no mention of the impacts on other planetary boundaries. Resource efficiency in industrial processes and materials is essential for reducing our economic dependencies, yet it is not mentioned. Many sectors are not covered by the texts, including the plastics industry, as well as fertilisers and heavy transport. The Clean Industrial Act’s quantitative approach, with its stated target of 20% of industrial production in European GDP, illustrates traditional political planning methods. As emphasised, “what matters is not producing more, but producing what we need using fewer resources, creating more sustainable products and more circular value chains whilst reducing our dependencies”.
Finally, a third constraint will be political in nature. The perception of European preference varies from one Member State to another because each has a different industrial base and a different level of dependence on third countries (and on China). Member States must also accommodate their trading partners in order to safeguard their own markets. A recent French High Commission for Strategy and Planning report shows that up to 55% of the European Union’s manufacturing output within the internal market could be exposed to unsustainable Chinese competition in the medium term. The level of exposure varies greatly from country to country: it is around 70% in Germany, 60% in Italy, 50% in Spain, and 36% in France. The interests of Member States with regard to suppliers from these countries are not the same: to avoid an even greater loss of business and jobs, some Member States, including Germany, are reluctant to advocate a strict European preference, as this would lead to retaliatory measures from China.
In conclusion, the European Union has spent several years searching for a new economic doctrine to cope with the current geopolitical upheavals, crises and internal tensions facing Member States. This doctrine — the set of principles and paradigms that will shape the EU’s market and policy instruments — has yet to be firmly established. Its conceptual and practical development remains a work in progress. Despite significant recent initiatives, such as the Compass for Competitiveness and the Clean Industrial Act, the Union is struggling to draw the necessary conclusions from its interdependence with numerous third countries and global economic rivalries without breaking free completely from the paradigms on which its own market was built. As part of this search for a new economic doctrine, the pursuit of an elusive ‘European preference’ lies at the crossroads of global transformations, reflecting both geopolitical turbulence and the evolution of European economic law paradigms.
A longer version of this blog is available as a Jean Monnet Network PROSPER Policy Brief.