With the newly released Industrial Accelerator Act (IAA), the European Commission seeks to bolster the EU’s competitiveness, limit strategic dependencies and strengthen its industrial base. While it aims to address legitimate concerns about overcapacity and non-market practices undermining Europe’s industry, the uncertainty and new administrative hurdles it creates risk chilling investment decisions and thereby negating the intended benefits.

‘Parts of the IAA have the potential to garner high-quality investments, foster innovation and keep Europe on the road towards decarbonisation,’ said Malte Lohan, CEO, American Chamber of Commerce to the European Union (AmCham EU). ‘To succeed, the EU must steer away from disproportionate and discriminatory requirements and keep the Single Market open to US companies that contribute to European prosperity and strategic priorities.’

With €4 trillion in investment, US companies represent the largest source of foreign direct investment into Europe and are fully integrated into EU supply chains, responsible for cutting-edge innovation and creating value across strategic sectors in the EU. Their contributions are critical for enhancing Europe’s economic resilience and security.

Yet the IAA risks making it more difficult, instead of easier, for Europe to attract the capital necessary to improve resilience and strengthen its industrial base. The proposal includes blanket restrictions on investments that may duplicate and undermine existing transaction review instruments, including investment screening, merger control and the Foreign Subsidies Regulation. The EU is already optimising each of these instruments for its strategic priorities. Instead of adding an additional screening layer, the Commission should assess the effectiveness of the current transaction review framework once the ongoing changes have been implemented and consider ways to improve existing tools to better serve EU-added value.

The IAA’s requirements about content equivalency could also introduce significant uncertainty for all firms with a global footprint that are part of complex, integrated and cross-border supply chains. The Commission’s recognition of the importance of reciprocal trade and public procurement commitments is positive. However, failing to directly clarify in the proposal whether companies with a global footprint can access European public procurement could adversely impact both supply chain security and trade relations.

Only through sufficient legal clarity followed by an implementation process based on sound economic analysis can the IAA grow critical industry in Europe and help diversify access to best-in-class technology. American companies, as an integral part of Europe’s industrial fabric, stand ready to engage with policymakers on how to focus the IAA to strengthen industrial competitiveness.

For more context, read our latest position on Defining 'Made in Europe'.