On 4 March 2026, the European Commission proposed a Regulation that would, for the first time, make European origin and low-carbon content formal conditions for access to public procurement and public funding across major industrial sectors. The proposal, known as the Industrial Accelerator Act (IAA), is part of the EU's Clean Industrial Deal and draws on recommendations in the Draghi report on EU competitiveness. Its central ambition is to reverse manufacturing's declining share of EU GDP from approximately 14% today to 20% by 2035.
Key features
The IAA introduces EU origin and/or low-carbon requirements in public procurement and public support schemes, varying by sector. For steel, concrete and aluminum used in construction, infrastructure and transport, the proposal establishes low-carbon requirements and, for concrete and aluminum, Union origin requirements. Union origin requirements also apply to net-zero technologies, including batteries, solar PV, heat pumps, wind turbines, hydrogen electrolysers and nuclear technologies, and for vehicles.
The proposal also conditions certain foreign direct investments in four sectors: battery technologies, electric vehicles, solar PV, and critical raw materials. Investments exceeding EUR 100 million where a single third country holds more than 40% of global manufacturing capacity must satisfy at least four of six prescribed conditions covering joint ventures, technology transfer, R&D and local sourcing. A mandatory condition requires at least 50% of the workforce to be EU workers.
The IAA additionally introduces a digital permitting access point and Industrial Manufacturing Acceleration Areas offering streamlined permitting and investor support.
Trade law compatibility
The origin preferences sit in potential tension with the EU's commitments under the WTO Government Procurement Agreement. The FDI conditions chapter raises separate questions under bilateral investment treaties and WTO rules on trade-related investment measures. Companies with cross-border structures should treat compatibility as an open question at this stage.
State aid
The IAA offers companies new meaningful opportunities to access expanded public support schemes and strengthen their position in emerging EU low‑carbon and Union‑origin value chains. At the same time, key state‑aid parameters may not yet be calibrated with the clarity companies need, creating the potential for regulatory uncertainty. This is particularly relevant for third‑country investors, who face both enhanced access prospects and heightened compliance risks as the framework evolves.
Implications for companies
Companies in construction and infrastructure supply chains relying on non-EU steel, concrete or aluminium should assess procurement eligibility under the proposed origin and low-carbon criteria. Foreign-owned manufacturers in the battery, solar PV and electric vehicle sectors should review their EU manufacturing footprint against the Union origin requirements. Non-EU investors considering investments above EUR 100 million in the four covered sectors should note that the mandatory 50% EU workforce condition represents a constraint that could require early attention in investment structuring.
Next steps
The proposal will be negotiated by the European Parliament and Council. Discussions are likely to focus on the scope of origin preferences, trade law compatibility and administrative burden. Given the novelty of some mechanisms, significant changes during the legislative process remain possible.
