Insights from Brussels - Made in Europe: The EU is changing direction
The EU has long seen itself as the last defender of globalization and international trade rules. Are we now seeing a shift towards European protectionism?
How long can you continue to play by the rules if everyone else is breaking them? This is Europe's dilemma in the face of Trump's trade war and Chinese state capitalism. It is principled and honorable to stand up for a rules-based world order in an increasingly fragmented and polarized geopolitical climate. However, one must deal with the world as it is , not how one would like it to be. This is roughly how the arguments for more protection of European industry and markets sound, which are now being heard increasingly strongly both in Brussels and in many national capitals. The so-called trade bazooka is regularly rattled in the face of American tariff threats, and ideas about high and wide tariff walls against China are being floated.
France has long argued for a so-called European preference, a “Buy European” policy to counter the flow of Chinese goods and the active industrial policy the US introduced with Joe Biden’s Inflation Reduction Act . The idea has been that the EU and European states should require European content in public procurement and subsidies, and thus provide market advantages to European businesses. This would be protection, not protectionism , claims President Emmanuel Macron. Other European governments, led by Sweden , among others, have disagreed. Such a preference involves buying more expensive goods and services than necessary, opponents point out. You do not improve competitiveness by making the value chains of European companies more expensive, they believe. Supporters counter that building up one’s own industry requires a phase of protection. They also point out that Europe has come further with decarbonization than others, and that it is therefore reasonable to ensure that there is a market for products that meet the EU’s climate requirements.
The European Commission's draft of a new industrial law, the Industrial Accelerator Act (IAA) , has given a boost to the advocates of protection. It proposes to introduce requirements for both "Made in Europe" and low emissions in public procurement and in public business support. These will apply to strategically important products such as steel, cement, aluminum and cars, as well as to climate technology such as batteries and heat pumps. The draft law sets out an active industrial policy that will significantly increase industrial production's share of European GDP in the years up to 2035. Although it will only apply to selected sectors, the draft must be read as a victory for the advocates of a new European line in trade policy. Their position has probably also been strengthened by a winter in which international crises have succeeded each other in rapid succession. The Greenland crisis was a wake-up call regarding dependence on the United States, and the energy prices that skyrocketed when the Strait of Hormuz was closed show how vulnerable the EU is as a major importer of fossil energy. However, that does not mean that the debate is over. Now the IAA will slowly make its way through the EU system, and there is reason to expect new contradictions related to both structure and scope when the EU Parliament and the national governments in the Council have their say.
So what does this mean for West Norway ? An EU that places more emphasis on economic protection could mean both trouble and opportunity. Trouble if Norway ends up outside new protectionist measures, as has happened with ferroalloys . Opportunities if Norway ends up inside, as it seems to be the case with the new "Made in Europe" preferences.
PS: At the same time as the EU Commission launched the IAA, it presented its new strategy for the maritime industry. Here too, the goal is increased sovereignty and more European shipbuilding and maritime equipment production. This industry is strongly in West Norway , and the strategy is therefore relevant to several of our coastal communities. VNB is producing both a memo and a webinar about the strategy for our members.