By Joen Martinsen
As EU leaders gathered at Alden Biesen Castle for their informal retreat on competitiveness, the conversation was shaped by a stark reality. Europe faces intensifying global competition, rising geopolitical tensions and growing pressure on its industrial base. Across the Union, companies are struggling with high energy costs, investment uncertainty and fierce international rivals.
Yet competitiveness cannot be reduced to a short-term political response to these headwinds. For EPICO, it must be approached as a long-term strategy grounded in structural transformation. Europe’s resilience and prosperity will depend on its capacity to decarbonise heavy industry, scale breakthrough technologies and build strong lead markets that reward clean innovation and attract investment.
Following the retreat, Commission President Ursula von der Leyen outlined four pillars for strengthening European competitiveness: 1) Simplification; 2) Building One Market; 3) Building One Energy Market; 4) The Digital.
Within the second pillar, building one market, she referred explicitly to the forthcoming Industrial Accelerator Act and to a European preference criterion as a key initiative. European Council President António Costa was addressing the focus on the European preference aspect of the IAA, pointing to a broadly shared understanding of the need to protect and reinforce strategically important sectors.
There is no doubt that “Made in Europe” has become the most politically visible aspect of the debate. Yet the Industrial Accelerator Act was originally conceived as something broader and more transformative. It was intended to be a flagship instrument to create demand-side measures capable of driving decarbonisation in heavy industry. This is precisely where EPICO has consistently called for ambition from the European Commission when drafting the IAA.
The leaked drafts, however, indicate a new headline objective: ensuring that manufacturing accounts for at least 20 per cent of the Union’s gross value added by 2035.
The realism of this target can be debated. The political intention, however, is unmistakable. Preserving and expanding industrial capacity has moved higher up the agenda than designing effective demand-side mechanisms for low-carbon industrial products.
For EPICO, it would be a strategic mistake to not focus on the transition that it is needed, because that is what will keep us competitive in the long run.
Lead markets are the real competitiveness tool
European preference criteria may play a role, but they cannot substitute for strong and credible demand-side policies. Europe’s competitiveness in a decarbonising world will not be secured by capacity targets alone. It will depend on the ability to create genuine lead markets that generate predictable demand for clean industrial products and give companies the confidence to invest at scale.
The Industrial Accelerator Act should become the central instrument for this shift. Ambition cannot be postponed.
In sectors such as steel, the challenge is clear. Hydrogen-based direct reduced iron projects remain largely at pilot stage and struggle to reach Final Investment Decisions. Without robust demand signals, these projects will not scale. Public procurement can help stimulate early markets, but on its own it is insufficient. It must be paired with targeted investment support that lowers production costs and de-risks first-of-a-kind projects.
The scale and capital intensity of industrial transformation go far beyond what public procurement alone can deliver. Predictable and additional funding will be required, including through the EU’s Multiannual Financial Framework, a dedicated decarbonisation facility or a competitiveness fund. The potential front-loading of ETS revenues could also play a role.
It is encouraging to see a willingness within the Commission to link significant portions of the MFF to demand-side instruments. Still, it is noteworthy that leaked drafts of the IAA do not yet appear to address the role of private procurement. Given the scale of investment required, mobilising private finance will be essential to establishing effective lead markets and attracting capital at the level needed to move markets.
For EPICO, the lead markets must be in the driving seat of this discussion.
EPICO on Made-in-Europe Criteria
Introducing Union origin requirements could complement low-carbon standards in certain sectors. The steel industry illustrates why this discussion cannot be ignored, and why only low-carbon standards are not sufficient.
European producers face competition from cheaper imports and from a structural global overcapacity that continues to grow. OECD projections indicate that excess capacity could reach 721 million metric tonnes already by 2027 China plays a central role in this dynamic, with domestic demand slowing while capacity expands. Some estimates suggest that Chinese excess capacity alone could reach 350 million tonnes by 2050.
Importantly, new capacity is not limited to coal-based primary steel. Significant investments are being made in scrap-based electric arc furnaces, including 7.1 million tonnes of newly approved capacity in the first half of 2025. As a result, low-carbon standards or the Carbon Border Adjustment Mechanism alone may not shield European producers from intensified competition in an oversupplied global market.
Given that steel is widely traded, the question arises why European governments should support domestic production rather than rely on imports. While steel may not be classified as a critical raw material, it underpins critical infrastructure such as electricity grids, defence equipment and transport systems, and is foundational to sectors including automotive and construction. Preserving European production capacity, technical expertise and innovation capability is therefore a strategic consideration.
Although it may appear that the Commission is moving away from including an Union origin criterion for steel (referencing the latest leaked draft of the IAA), on the grounds that existing steel safeguard measures are sufficiently addressing the challenge of excess capacity. At the same time, the op-ed led by Séjourné received strong backing from most major European steel companies, demonstrating broad support within the sector for linking a “Made in Europe” criterion to steel production. We will closely follow what emerges in the final IAA proposal.
Ultimately, a Union-origin criterion could serve as a complementary tool alongside any standard or low-carbon criterion, reinforcing the EU’s broader industrial objectives.
Resilience Framework for Developing “Made-in-Europe” Criteria
At the Antwerp summit, Belgian Prime Minister Bart De Wever warned against a reflexive Europe-first approach. He expressed a preference for “made with Europe” rather than “made in Europe”, arguing that economic resilience means strength through cooperation, not isolation.
EPICO fully share this sentiment and think that building strategic partnerships through friendshoring, needs to be part of the resilience building, strengthening internal capacities while
Building on EPICO’s framework for assessing supply chain resilience, four principles should guide any Union origin requirement.
- First, priority should be given to sectors where dependencies are both economically significant and strategically sensitive.
- Secondly, measures must avoid creating permanent market distortions in sectors that cannot compete without long-term subsidies.
- Thirdly, overly rigid local content rules risk reducing supply chain flexibility, slowing innovation and increasing vulnerability to domestic shocks.
- Fourthly, the integrity of the Single Market must be safeguarded. Excluding all non-EU sources would risk fragmentation and weaken Europe’s position in global value chains.
In practice, this means including the European Economic Area and selected trusted partners under transparent and conditional arrangements. It also means ensuring that any origin requirements are targeted, proportionate and time-limited, with regular reviews reflecting evolving dependencies.
The way forward
At its core, competitiveness is driven by innovation, sustained investment and the capacity to adapt to structural change. Any form of European preference must therefore serve the broader objective of accelerating industrial transformation and technological progress, rather than insulating existing structures from necessary reform.
For EPICO, the priority remains clear. To remain competitive in a decarbonising global economy, Europe must place low-carbon lead markets at the centre of its industrial strategy. Union origin criteria may play a complementary role, but the primary driver of competitiveness should be policies that create demand for clean industrial solutions and enable their rapid scale-up.