High energy prices, state-induced market distortions, and lengthy permitting procedures are weighing on Europe's industrial base. Against this backdrop, the Industrial Accelerator Act seeks to strengthen industrial value creation within the European Union and incentivise investment in future technologies. The German industry fundamentally supports this approach. At the same time, it warns against viewing the IAA as a substitute for urgently needed reforms to Europe's business location. Competitive energy prices, high-quality infrastructure and efficient administrative procedures remain the key prerequisites for investment.

Demand-Side Instruments Support Strategic Capacity

A central element of the IAA is the introduction of new demand-side instruments in funding programmes, auctions and public procurement. Rules of origin and criteria for low-emission production are intended to support the development of strategically important capacities. The German industry considers such instruments useful if they are applied in a targeted and time-limited manner.

In this context, the European Commission focuses on sectors such as steel, cement, aluminium, automobiles and selected net-zero technologies. This selection appears reasonable in light of existing dependencies, transformation objectives and market potential. At the same time, BDI points out that higher procurement costs may come at the expense of public investment capacity. Careful consideration is therefore required to balance industrial policy objectives with economic efficiency.

The IAA Can Become an Effective Trade Policy Instrument for the EU

BDI places particular emphasis on the trade dimension of the IAA. The IAA must not alienate important trading partners, but if designed appropriately, it can help improve European companies' access to international markets. In many third countries, European suppliers continue to face barriers in public procurement processes and support programmes, while companies from those countries benefit extensively from access to the European Single Market.

BDI therefore supports an approach that recognises existing trade agreements and membership of the WTO Government Procurement Agreement as important points of reference. In addition, the European Commission should be able to assess the status of individual third countries on the basis of objective criteria such as actual market openness and reciprocity. Where European companies do not receive equivalent access to markets, the EU needs effective instruments to advance negotiations on fair competitive conditions.

At the same time, BDI rejects blanket protectionist tendencies. Diversified supply chains, free trade agreements and access to competitively priced intermediate goods remain important foundations of industrial competitiveness. The IAA should therefore strengthen economic security without making new trade barriers the norm.

Avoid Parallel Regulatory Regimes: Provide Legal Certainty for Investment

The proposed regulation still contains considerable ambiguities in several areas. Important definitions and reliable implementation guidelines are lacking for vehicles, net-zero technologies and low-emission construction materials. For companies, this makes long-term investment decisions more difficult.

BDI is also critical of the planned special provisions for foreign investors. Requirements relating to ownership structures, technology transfer or local value-added shares risk creating an additional regulatory regime alongside the existing European investment screening framework. As a result, procedures could become longer, more complex and less predictable, making investment in Europe less attractive.

The German Industry also sees further need for action with regard to permitting procedures. The proposed acceleration measures are a step in the right direction, but they do not solve the problem of an increasingly complex regulatory framework. In BDI's view, Europe needs a coherent approach that harmonies procedures, advances digitalisation and enables investment more quickly.

BDI specifically calls for:

• Limiting demand-side instruments to strategically justified sectors.
• Establishing reciprocal market access as a key criterion in relations with third countries.
• Integrating investment screening into existing European procedures.
• Extending accelerated permitting procedures to both new investment and modernisation projects.

In this way, the Industrial Accelerator Act can contribute to strengthening industrial value creation in Europe. Its effectiveness will, however, depend on whether it facilitates investment, promotes fair market access and avoids creating additional bureaucracy.