Brussels is poised to unveil a plan that could significantly reshape industrial policy across the European Union, potentially impacting Hungary’s economic model. The European Commission is expected to present the “Made in Europe” proposal on Wednesday, with EU leaders likely to offer political backing at a summit scheduled for March 19-20. The initiative, a key component of the Commission’s forthcoming industrial policy package, aims to bolster European manufacturers through targeted support and preferential treatment.
The draft proposal, seen by Contexte, calls on EU lawmakers to introduce “targeted and proportionate European preference” in strategic sectors and technologies. This would provide a political foundation for a new system of industrial support rules. The plan comes as the EU seeks to strengthen its economic resilience and reduce reliance on foreign suppliers, particularly in critical areas.
Industrial Accelerator Act at the Heart of the Proposal
Central to the initiative is the proposed Industrial Accelerator Act, spearheaded by European Commission Commissioner for Industry and Space, Stéphane Séjourné. The Act seeks to level the playing field for European manufacturers by prioritizing them in state aid and public procurement processes, potentially through “Made in Europe” criteria. Yet, the path to agreement wasn’t smooth, with internal discussions within the Commission lasting over four hours and requiring a second round of negotiations before reaching a consensus.
The final proposal appears to be more flexible than initial versions. Earlier drafts reportedly considered restricting access to state aid and public contracts to exclusively European manufacturers in certain strategic sectors. The revised version adopts a narrower focus and includes more exceptions. Whereas European manufacturing criteria may still apply to industries like concrete, steel, aluminum, and automotive, the support volumes would be smaller than previously envisioned.
Flexibility and Exceptions Built In
The draft also expands the scope of exemptions. For instance, projects facing delays of more than seven months due to European manufacturing requirements could be granted exceptions. This aims to address concerns about potential bottlenecks and ensure the smooth implementation of industrial projects. The proposal allows for imports from certain third countries to be considered within “Made in Europe” quotas, and even recognizes production from select non-EU manufacturers as equivalent to EU-origin content.
However, a particularly sensitive element for Hungary lies in a provision that would grant the European Commission greater oversight of foreign direct investment in strategic sectors. According to Portfolio.hu, the Commission could grab control of evaluations from national authorities if an investment significantly impacts the single market, threatens supply security, or poses substantial environmental risks. The list of strategic sectors subject to this scrutiny could also be expanded through delegated legal acts.
Implications for Hungary’s Investment Strategy
This increased Commission oversight could disproportionately affect member states heavily reliant on foreign investment, including Hungary. The Hungarian government has actively courted significant investments in the electric vehicle and battery industries, largely from Chinese and South Korean companies. If the Commission were to gain broader, more centralized authority over investments in net-zero technologies, it could directly influence their approval and funding, potentially limiting Hungary’s autonomy in shaping its industrial policy.
The potential shift in power raises concerns about Hungary’s ability to attract and support foreign investment in key sectors. The country’s economic model has, in recent years, been predicated on leveraging foreign capital and expertise to drive growth and innovation. The new regulations could introduce a layer of complexity and uncertainty, potentially deterring investors or requiring them to navigate a more stringent approval process.
Next Steps and Ongoing Debate
The “Made in Europe” proposal is expected to be formally presented by the European Commission on Wednesday. EU leaders will then discuss and potentially endorse the plan at their summit on March 19-20. Following the summit, the proposal will move to the legislative phase, where it will be debated and amended by the European Parliament and the Council of the European Union. The final outcome will depend on the negotiations between these three institutions.
The debate surrounding the proposal is likely to continue, with member states holding differing views on the appropriate level of intervention and the balance between protecting European industries and maintaining an open investment environment. The coming weeks will be crucial in determining the final shape of the “Made in Europe” initiative and its potential impact on Hungary’s economic future.
The European Commission’s move towards greater control over strategic investments reflects a broader trend within the EU to strengthen its economic sovereignty and resilience. As geopolitical tensions rise and supply chains become increasingly vulnerable, the EU is seeking to reduce its dependence on external actors and foster a more robust and competitive industrial base. The “Made in Europe” proposal is a key step in this direction, but its implementation will require careful consideration of the potential consequences for member states like Hungary.
Readers seeking further information on the European Commission’s industrial policy can visit the official website: https://commission.europa.eu/index_hu. Updates on the “Made in Europe” proposal will be available following the European Council summit in March.
