The draft aims to embed sustainability, resilience and "Made in EU" criteria into public procurement and state support schemes to boost demand for EU-made and low-carbon products, a provision that was regarded as a trend to protectionism and has drawn criticism from trade partners.

BRUSSELS, March 4 (Xinhua) -- The European Commission on Wednesday proposed the controversial Industrial Accelerator Act (IAA) to prioritize "Made in EU" goods in public support and procurement, even as deep divisions persist among EU member states and the plan draws criticism from some of the bloc's trading partners.

In a draft proposal, the Commission said the IAA would target "strategic sectors" including energy-intensive industries, net-zero technology manufacturing and the automotive supply chain, as Brussels seeks to raise manufacturing to 20 percent of the EU's gross domestic product by 2035.

The draft aims to embed sustainability, resilience and "Made in EU" criteria into public procurement and state support schemes to boost demand for EU-made and low-carbon products, a provision that was regarded as a trend to protectionism and has drawn criticism from trade partners.

The proposal would also tighten conditions on foreign direct investment in what the Commission describes as strategic industries, including batteries, electric vehicles, solar photovoltaics, and the extraction, processing and recycling of critical raw materials.

For major investments in those sectors exceeding 100 million euros (about 116 million U.S. dollars), the draft sets eligibility requirements including capping foreign ownership at 49 percent and imposing mandatory technology-transfer obligations.

The proposed IAA, an initiative under the EU's Clean Industrial Deal, has become a flashpoint within the bloc, exposing fault lines between countries pushing for stronger "EU preference" rules and others warning that strict local-content requirements could distort supply chains, add bureaucracy and invite retaliation.

Free-trade-leaning member states, including Ireland and Nordic countries, have cautioned that strict local-content thresholds could clash with the EU's open-market principles and disrupt established supply chains. The Several non-EU partners, including Britain, Japan and the United States, have also expressed concerns over "Made in EU" and "Buy European" initiatives.

Markus Ferber, a member of the European Parliament, criticized the act as a misguided and protectionist approach. He said Europe's industry is burdened by high energy costs, excessive regulation and weak innovation momentum, and called for cutting red tape, making energy more competitive and concluding new free trade agreements.

"Europe's strength lies in technological excellence and openness to markets--not in isolation," he said.

Wolfgang Grosse Entrup, head of the German Chemical Industry Association, described elements of the act as protectionist experiments and overly detailed industrial planning, from "Buy European" requirements to new obligations for "low-carbon products."

"Both are likely to raise costs and create even more red tape, and thus further weaken Europe as a business location," he said.

The China Chamber of Commerce to the EU also said it regretted that the EU was reshaping market access through "Made in EU" rules, forced technology transfer and tighter scrutiny of foreign investment.

"Although we understand the EU's intention to strengthen supply chain resilience, the current design of the bill may shift from a rules-based open market to an exclusive protectionist system," the business group said, adding that it could send "an uncertain signal" to global investors, including Chinese enterprises.

The draft legislation will now go to EU member states and the European Parliament, which must negotiate and approve the final text.