The German government has formally urged the European Union to open its planned “Made with Europe” procurement rules to countries outside the bloc, according to a position paper seen by Euronews. The move sets Berlin on a direct collision course with Paris, which wants to reserve public contracts for European-made goods.
At the heart of the dispute is the Industrial Accelerator Act (IAA), a draft EU law that would restrict public procurement — government contracts for steel, batteries, electric vehicles, and other strategic goods — to products and companies meeting minimum EU production requirements. The European Commission’s original text leans toward “Made in Europe,” but Germany is championing a more flexible “Made with Europe” approach.
Under Berlin’s proposal, origin rules would be extended to the EU’s trade partners, provided those countries offer European companies reciprocal access to their own public markets. “Germany rejects protectionism and discrimination,” the position paper states. “In times of geopolitical and geoeconomic challenges, the EU relies on close partnerships — particularly its global network of free trade agreements — to enhance resilience and competitiveness.”
The document was circulated ahead of Thursday’s Competitiveness Council in Brussels, where EU industry ministers debated industrial policy. It highlights a deep strategic divide between Europe’s two largest economies: Germany’s faith in open markets versus France’s determination to use public contracts as a shield for European industry amid what some call the “China 2.0 shock.”
Two visions for European industry
Paris has long argued that public money should support European champions, especially in sectors where Chinese competition is intense. France has pushed for strict local-content requirements in the IAA, fearing that a more permissive regime would allow Chinese firms to route products through third countries and undermine the law’s purpose.
Germany counters that such protectionism would alienate key allies and violate the EU’s international commitments. “The EU must remain a reliable partner for its free trade partners and uphold its legal obligations, compatible with the EU’s international obligations,” the paper insists.
Berlin wants the origin rules to apply to countries that have signed the WTO Agreement on Government Procurement, under which members open public contracts to each other’s companies, as well as to nations with a free trade agreement or customs union with the EU. This, Germany argues, would encourage partners to pursue ambitious trade deals and open their own markets to European firms.
Germany also contends that allowing more bidders into EU public procurement would drive down costs and improve quality for public authorities. To guard against abuse, Berlin proposes an “opt-out” mechanism that would allow the EU to exclude a partner country if it stops offering reciprocal access.
“This ensures a level playing field on a reciprocal basis and creates an incentive to keep markets open to one another,” the paper argues. It adds that the Commission should first try to resolve disputes through existing settlement mechanisms, but if a partner fails to treat EU companies equally, “access to EU procurement markets and support programmes should also be withheld.”
Berlin backs a recent compromise brokered by Ireland, which holds the rotating EU Council presidency, to task the Commission with adding or removing third countries via secondary legislation. However, it wants clearer criteria for those decisions. “To determine, without red tape, whether certain products from specific countries fall under the ‘Made with EU’ approach, the European Commission should draw up a product-specific list of countries or tools,” the document adds.
Such a list would give businesses and public authorities clarity over which products meet the origin rules, rather than requiring them to carry out their own checks. Germany argues this would also better serve one of the IAA’s main goals: diversifying supply chains and reducing dependence on critical inputs, such as batteries, that the EU cannot yet produce at sufficient scale.
Guarding against circumvention
Germany also warns against what it calls “adverse undermining,” a scenario in which a third country sets up production in one of the EU’s partner countries specifically to exploit that partner’s more favourable origin rules, entrenching the very dependencies the law is meant to reduce. This concern reflects a wider fear in Brussels that Chinese companies could relocate parts of their production to countries such as Morocco to sidestep EU restrictions.
To counter this, Germany proposes a two-stage response. First, the Commission would run a preliminary assessment based on indicators rather than automatic triggers, such as a rise in imports from a partner country, increased foreign direct investment, or greater participation by foreign bidders in tenders. Second, the Commission would be empowered to request evidence on short notice, impose strict compliance checks, and exclude specific companies or entire countries from the origin rules.
The clash over the IAA is part of a broader pattern of Franco-German friction on industrial and defence policy. While Berlin and Paris have often managed to find common ground, the current debate over procurement rules could prove particularly contentious, as it touches on fundamental questions about how Europe should respond to global competition.
As the EU moves toward finalising the IAA, the outcome will signal whether the bloc leans toward protectionism or openness. Germany’s push for a wider “Made with Europe” approach may ultimately shape not just the law itself, but the future direction of European industrial strategy. For more on how Germany is navigating its energy transition, see Germany's 2045 fossil fuel exit plan. And for a look at how France is handling its own domestic challenges, check the backlash over a compulsory papal day in French schools.
