German Chancellor Friedrich Merz is set to raise the sensitive issue of the European Union’s proposed industrial support rules in Brussels. During his recent trip to Japan, Singapore, and South Korea, leaders in all three countries relayed concerns to Merz that the EU’s “Made in Europe” initiative could trigger a new wave of European protectionism. While Brussels is aiming to strengthen domestic manufacturing and reduce dependence on foreign suppliers, there is a risk of straining trade relations with non-EU partners.
On Friday, October 30, Merz emphasized that he takes the concerns of Asian nations seriously and intends to address them both in Berlin and at the European level. According to the German chancellor, Europe must remain open to international trade if it wants its products to be successful on Asian markets.
Asian Partners Fear EU Market Closing
During his week-long Asian tour, Merz visited Japan, Singapore, and South Korea. In each country, he said, officials raised similar objections to the draft EU industry rules.
The main worry is that the planned support for European manufacturers could create new obstacles for companies from outside the EU. If public procurement, investment, or support for strategic sectors primarily benefit European suppliers, foreign firms could lose significant opportunities in the European market.
Asian partners are concerned that measures meant to help European industry could also weaken open trade relations. Such a development could affect European companies as well, particularly those reliant on exports and access to foreign markets.
Merz stressed that these objections were conveyed to him strongly by his Asian counterparts and promised to bring them to the discussion in Brussels.
What Does the ‘Made in Europe’ Initiative Mean?
At the heart of this dispute is the planned Industrial Accelerator Act—a regulation aimed at speeding up the development of industrial capacity and decarbonization within the EU. The objective is to strengthen the Union’s manufacturing base and create more favorable conditions for companies operating in Europe.
The broader aim is to support European manufacturing and encourage the use of local suppliers. Brussels wants to ensure that strategic sectors do not remain overly dependent on imports from countries that could restrict supplies in times of trade or geopolitical disputes.
The debate centers mainly on industries vital for economic security and the EU’s technological future. This includes the production of components, batteries, materials, and other products essential to the modern economy.
Proponents argue that Europe should invest more in its own manufacturing. If it continues to rely heavily on foreign suppliers, the EU could be left vulnerable during crises or trade conflicts.
However, critics caution that giving too much preference to domestic manufacturers could dampen competition and create new trade barriers.
Brussels Wants to Reduce Dependence on China
One of the main reasons the European Union is considering strengthening its industrial base is dependence on China. China holds a dominant position in global supply chains and is one of the world’s most important producers in many sectors.
European companies rely on Chinese supplies for a range of raw materials, components, and technological products. If deliveries were disrupted due to political conflict or trade restrictions, the effects would quickly be felt in European factories.
Brussels is therefore promoting a reduction in strategic dependencies and encouraging production directly within Europe. At the same time, the EU aims to respond to competition from countries where businesses face lower energy costs or different regulatory standards.
This presents a core dilemma. The EU wants to protect its industrial base, but cannot ignore the reality that its economy is deeply intertwined with global trade.
Germany Has Reason to Fear Trade Barriers
Merz’s warning is particularly relevant given Germany’s position as one of the world’s largest export economies. German companies sell their goods abroad, with Asia playing a crucial role in their trade relations.
Countries such as Japan, South Korea, and Singapore are key partners in industry, technology, and investment. Should trade ties between Europe and Asia become strained, German producers could also suffer consequences.
Furthermore, the German economy faces tough competition from Chinese companies. Weaker demand in some international markets and rising industrial competition are putting pressure on German exporters.
Merz therefore advocates for a strategy that helps European businesses remain competitive while keeping trade channels open. He argues that German and other European products can only succeed in Asia if the EU avoids closing itself off from foreign partners.
For more analysis of European competitiveness and domestic industry challenges, see our article “Slovalco to Resume Aluminum Production: Fico Calls it a Return of Strategic Industry, Opposition Criticizes Support Methods.”
Merz Backs Closer Cooperation Among Midsize Countries
During his Asia visit, the German chancellor did not just focus on EU rules. He also pushed for closer cooperation among countries with similar perspectives on international trade and security.
According to Merz, midsize states should work together and coordinate their interests, providing a counterweight to the economic and trade policies of the world’s largest economies, especially the United States and China.
The chancellor also pointed to shifts in US foreign and trade policy. The United States, he said, is redefining its interests, and Europe needs to respond accordingly.
Merz believes such cooperation should not be limited to economics. He sees security and defense cooperation as equally important and wants Germany to deepen ties with regional partners in these areas.
Central European leaders have also debated the need to strengthen Europe’s economy and global position. For more, see “Fico, Babiš, and Stocker Agree: The EU Must Address Weak Competitiveness.”
Final Rules Still Under Negotiation
The draft Industrial Accelerator Act does not yet have a finalized form. EU member states and the European Parliament must still negotiate the final wording, with approval expected next year.
The coming talks will reveal to what extent Brussels is willing to consider the objections of non-European trade partners. The final rules will need to balance support for European industry with fair competition.
This represents a strategic decision for the EU. Too little support for domestic industry could deepen dependence on foreign suppliers, while excessive advantages for local companies could spark trade tensions and restrict European firms’ access to global markets.
Thus, in Brussels, Merz will not only have to advocate for Germany’s interests, but also weigh how Europe can remain competitive against global economic powers while retaining the advantages of open international trade.
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This article was translated from the original Slovak version with the assistance of AI.
