EU's 'Made in Europe' push unnerves global auto suppliers

In shielding Europe's carmakers from Chinese rivals, the EU risks hurting close partners from Turkey and Morocco to Japan and South Korea. Billions in trade and hundreds of thousands of European jobs are at stake.

As well as supplying vehicles and parts to the EU, Turkey is making its own electric carsImage: Murat Cetinmuhurdar/Turkish Presidency/HandoutAA/picture alliance AdvertisementIt is meant to save Europe's auto industry from China's unfair trade practices. The European Union's Industrial Accelerator Act (IAA), proposed in March, seeks to upgrade European car factories and only subsidize vehicles produced in Europe.

Yet, the EU's "Made in Europe" plan is causing deep concern among other allied carmaking nations — such as Turkey, Morocco, Japan and South Korea — all of them deeply embedded in European supply chains.

After months of deadlock over the IAA's potential impact on their own vehicle production, Germany and France earlier this month reached a key compromise that would allow suppliers from non-EU members like the United Kingdom and Norway to qualify for "European origin" status.

Other key players in the automotive sector, however, will be excluded — including Turkey, which has enjoyed seamless access to the EU market since the mid-1990s.

While the proposals still face major legislative hurdles in Brussels before becoming law, Ayhan Zeytinoglu, chairman of the Economic Development Foundation (IKV), thinks the Franco-German framework could be devastating for Turkey's auto sector.

"73% of Turkey’s total automotive exports go to the EU," Zeytinoglu told DW. "If we encounter a 'Made in Europe' barrier in the EU market, this will cause great damage to our trade with the EU and to our exports."

Excluding Turkey would also harm European automaking rather than strengthen competitiveness against China, he added.

Turkey's auto exporters association OIB calculated that the country's automotive exports to the EU totaled $30.1 billion (€26.8 billion) last year.

The IAA requires that 70% of the total value of a vehicle's components — excluding the battery — should be made in Europe.

However, the initial proposal only applies to battery-electric vehicles (EVs), plug-in hybrids and fuel-cell models, which last year made up just 27% of all new EU car registrations.

Tommaso Pardi, director of the international automotive research network GERPISA and a senior researcher at the French National Center for Scientific Research (CNRS), notes that the 70% target is remarkably generous.