- Comparative advantage is built: China and Korea did not inherit dominance in batteries — they manufactured it through scale, subsidies, and decades of state-led strategy.
- The 14.5 per cent question: European-made solar costs 14.5 per cent more over its lifetime, a premium that buys resilience, jobs, and tax revenue that imports never generate.
- A factory that was never built: Carbon’s 3,000-job gigafactory at Fos-sur-Mer collapsed for want of regulatory certainty, proving that delayed “Made in Europe” rules are not neutral.
- Capital is idle, not scarce: Among Europe’s 300 largest listed non-financial companies, net investment fell from 18.9 per cent of gross profit in 2000 to 7.4 per cent in 2024.
- Too weak, not too strong: The Act covers just 15 per cent of manufacturing and works only through public procurement — trade unions want it broadened and made conditional on workers’ rights.
The Industrial Accelerator Act (IAA) could let the EU reverse manufacturing’s decline, but its critics are reaching for the stale laissez-faire arguments that got us into trouble in the first place. A new policy paper by the think-tank Bruegel makes the familiar case: drop the 20 per cent manufacturing target, scrap European-content rules, ease up on Chinese investment, trust markets.
Europe has followed that line for three decades with little success. It has resulted in a shrinking industrial base, growing dependencies, and fragile supply chains. Our problem was never a lack of openness — and once Bruegel’s assumptions are made explicit, its conclusions are not so convincing.
Take unrestricted imports of Chinese panels and batteries. This is defended on the grounds of competition, but real competition requires a level playing field, and Bruegel itself admits that China’s dominance in clean tech is the result of decades of state-led strategy, subsidies, and capacity-building. Having accepted that the market was shaped by state intervention, it is wrong to treat its outcome as neutral. Accepting goods sold below cost is not competition — it is accepting another country’s industrial policy because Europe lacks one of its own.
The argument is flawed on economic grounds too. Europe, we are told, should specialise in what it does well and import the rest. This is the standard 19th-century free-trade playbook of David Ricardo, and the idea is elegant on paper: even if one country is better at everything, both gain if each concentrates on what it does best and trades for the rest. But the elegance rests on a hidden premise — that what a country is good at today is fixed, and cannot be changed tomorrow. Comparative advantage is built, not found.
Take the example of lithium-ion batteries. Costs have collapsed over 15 years, not because of any natural advantage but because producers in China and Korea built scale and drove costs down. Unrestricted imports do not preserve neutrality in this case; they lock in existing hierarchies. A European producer below that scale looks less competitive — not doomed, but never given the chance.
Similar choices are being made in the solar industry. Headline cost figures favour cheaper Chinese modules. A recent study found that European-made solar, over its lifetime, is 14.5 per cent costlier than Chinese-made — a gap it says could fall below 10 per cent with targeted support. But, as Keynes showed, what is rational for one consumer can harm society. The costs and the benefits require deeper scrutiny. The real choice is not cheap versus expensive solar. It is between a limited premium that buys resilience, jobs, and capacity — partly repaid through taxes that imports never generate — and dependence on technologies the EU itself calls strategic.
Europe is already paying a high price for its lack of strategy. Carbon, the French start-up behind a planned 3,000-job photovoltaic gigafactory in Fos-sur-Mer, has abandoned the project for lack of regulatory visibility and investor guarantees. Its collapse shows that weak or delayed “Made in Europe” rules are not neutral: they decide whether factories are built in Europe, or whether European demand is captured by imports.
The Cost of Capital Is a Political Choice
Critics say that European-content rules raise financing costs. But in a Union with a central bank, a public investment bank, and governments able to steer investment, the cost of capital is also a political choice. It does not distort a perfect equilibrium; it creates the conditions for productive investment. The claim that it diverts scarce resources assumes an economy running at full capacity. The reality is that Europe has idle factories, weak investment, and an annual investment shortfall that Mario Draghi puts at close to €800 billion. We need to mobilise the assets that are currently lying idle.
That is exactly the problem identified in Mariana Mazzucato’s recent report for the European Trade Union Confederation (ETUC): among Europe’s 300 largest listed non-financial companies, net investment fell from 18.9 per cent to 7.4 per cent of gross profit between 2000 and 2024. The EU clearly needs rules that direct capital into production, innovation, and quality jobs.
The biggest flaw in Bruegel’s argument is this: the IAA is judged not against the world as it is, nor against realistic alternatives, but against an ideal policy. Harold Demsetz called this the “Nirvana fallacy”: comparing imperfect policies with unattainable ideals, then concluding that intervention is unjustified. It is never applied to free trade itself, whose costs — deindustrialisation, dependence, and weakened resilience — are real but invisible in most models. Demanding overwhelming proof to act while requiring none to keep the status quo is not neutrality. It is a political choice.
The Divisions Run Through Both Camps
This is not a debate about the protectionist left versus the free-market right. Car makers back European preference for vehicles while opposing it for their supply chains, and suppliers take the opposite view. Business federations decry the IAA as over-regulation while governments, including those of Hungary, Spain, and Poland, subsidise battery investment, including Chinese-backed projects. France champions local content while Germany and Italy stress “competitiveness”. National interest is as much a factor as any ideology.
What trade unions are calling for is a policy made in the European interest: one that creates quality new jobs in European industries and strengthens Europe’s strategic autonomy. We do not support the IAA as it stands — we want it to be strengthened. A real “Made in Europe” policy must be based on our European values, with support for companies made conditional on respect for workers’ rights such as collective bargaining, fair taxation, and environmental standards.
It is also too limited in scope, currently applying to just 15 per cent of the manufacturing sector and implemented only through public procurement, which represents 14 per cent of GDP. It should instead reshape the sourcing and procurement decisions of large companies across a broader range of industries, including digital, pharmaceuticals, and rail.
On one point we do agree with Bruegel: waiting until 2029 would be a mistake. An increasingly unstable global economy means Europe needs to go further and faster in rebuilding its own industrial capacity. There is no time to lose on chin-stroking about economic theory.
