This proposal is particularly significant, as it reflects a strategic shift in the EU’s approach to foreign investment — especially from China — at a time when geopolitical challenges are becoming increasingly important. While the move may have Beijing in its sights, the way it has been designed clearly sends an initial institutional message to Washington as well.

The definition of “Made in the EU”

Through the IAA draft, the EU is essentially announcing that it plans to reshape the trade landscape by introducing the concept of “trusted partners.” This means that assistance offered to countries such as the United Kingdom and Japan simultaneously underscores the EU’s strategic objective of placing barriers on foreign investments originating from China.

Restrictions on foreign direct investment would target countries that hold more than 40% of global production in critical sectors such as batteries, electric vehicles, and renewable energy technologies.

Notably, European leaders gathered at Alden Biesen Castle in Belgium to plan strategies for addressing the EU’s economic and industrial decline amid China’s export dominance and the technological superiority of the United States. The President of the European Commission, Ursula von der Leyen, sought to strike the right balance between strong protectionist tendencies from France and calls from Germany and Italy for greater openness toward third countries.

Italy–Germany bloc and diplomatic maneuvering

As European leaders exchanged views, Italian Prime Minister Giorgia Meloni stressed that her positions align with those of German Chancellor Friedrich Merz. This public support signals an effort toward harmony and cooperation, though it does not eliminate the differences complicating European policymaking.

Concerns that the IAA could isolate France remain in the background of discussions, with the UK’s Chancellor of the Exchequer Rachel Reeves emphasizing the need for her country to participate in the new “Made in the EU” framework. EU leaders appear to have reached a two-way consensus around the idea of European preference, examining how it can evolve to support the single market and restore competitiveness.

What seems unchanged are the underlying power dynamics that have often stalled the Union in recent years, allowing Washington, Beijing — and before 2022, Moscow — to benefit.

Concerns from Chinese businesses

The recent leak of information about the IAA has sparked concern among Chinese business circles. The Chinese Chamber of Commerce to the EU has warned that the new proposals could undermine the confidence of Chinese investors and create practical challenges. Requirements for mandatory partnerships with local companies — which are not always economically or technologically viable — risk entrenching planning uncertainties. The use of public procurement is a key element of the bill.

Von der Leyen has argued that European governments should prioritize high-quality domestic products over subsidized foreign alternatives. This message underscores the EU’s determination to invest in internal development while minimizing deliberate exposure to foreign powers.

Prospects and the future

The practical implementation of the IAA will require careful monitoring and cooperation among member states. The upcoming summit on March 19–20 will determine the next steps and the EU’s strategic diplomatic approaches. While leaders stress the need for unity, agreeing on common lines of action remains one of the greatest challenges.

The restructuring of Europe’s industrial strategy may determine not only the EU’s future economy but also its position on the global stage. In essence, Europe is pursuing a multidimensional strategy to safeguard its interests while maintaining partnerships with countries that share its values.

The Industrial Acceleration Act comes at a critical moment and may mark the beginning of a new era for the EU, as efforts to forge a unified strategy for international relations reflect the desire to remain competitive and secure in a rapidly changing world. The greatest risk, however, remains constant — and lies within our own house.