Global competition is challenging Europe’s position in strategic sectors like green tech, steel, EVs, and digital services. With significant Government support, China has invested in these technologies and is now able to outcompete Europe in most of them. In many instances, China has developed excess capacities, which are subsequently being exported into the EU market below market prices.[1] This puts EU companies under increasing pressure as Europe becomes dependent on imports of key products and materials, with sectors such as steel struggling with the low cost imports from China and other Asian countries.[2]
In the face of these pressures, highlighted in the Draghi report on the future of Europe’s competitiveness,[3] the EU is in the process of overhauling its industrial strategy ─ shifting from its open-market paradigm towards a more protectionist approach, while holding up its principle support for global trade. One key element is ensuring that public spending in strategic sectors supports EU-based production. The hope is that giving preference to European-based production will ensure that EU industry has a predictable future and is attractive for investments.
How Content Requirements Will Be Implemented
European content requirements are already mentioned as part of the EU Competitiveness Compass, the roadmap of the European Commission to help restore the competitiveness of European industry [4] as well as several new initiatives including:
- European Competitiveness Fund (“ECF”):[5] On 16 July the European Commission published its proposal for the Multiannual Financial Framework (“MFF”), including the ECF with a proposed budget of €234 billion plus €175 billion for the new research framework programme, FP10 for the period of 2028-2035. Financial support through the ECF will have to include criteria that support the development of manufacturing and exploitation in the EU of strategic technologies and sectors.
Timeline: The legislative procedure will start in September and is expected to take at least two years before the adoption of the proposal.
- Clean Industrial Deal State Aid Framework (“CISAF”):[6] CISAF sets out what kind of state aid is permissible. “Member States are strongly encouraged to include European preference criteria when using competitive bidding processes or other forms of aid allocation.”
Timeline: CISAF applies as of 25 June 2025 and remains in force until 31 December 2030.
- Critical Medicine Act:[7] The Act aims to ensure availability of critical medicines. According to Article 18, contracting authorities may apply procurement requirements to favour suppliers manufacturing critical medicinal products within the EU, based on supply chain vulnerabilities or public health considerations.
Timeline: The legislative procedure is ongoing and likely to last until mid-2026.
- Industrial Decarbonisation Accelerator Act (“IDAA”):[8] The IDAA will aim to create lead markets for the development of European clean and resilient industrial technologies and products, especially for energy intensive industries. To that end the European Commission considers minimum EU content requirements in public, and in some circumstances private, procurement in strategic sectors.
Timeline: The proposal is expected in Q4 2025.
- Public Procurement Directive evaluation:[9] The European Commission will review the Public Procurement Directive. The proposal will likely include European preference for critical sectors and technologies to boost the bloc’s economic security, productivity and demand for industrial goods.
Timeline: The proposal is expected in Q4 2026.
Given the current political focus on European preference, exemplified by the debate towards the resolution on public procurement in the European Parliament[10] it is likely that European content requirements will appear in more upcoming initiatives. We have seen the upcoming proposal on Greening European Corporate Fleets,[11] the Connecting Europea Facility[12] and Security Action for Europe[13] showcase this shift.
Why it Matters
European content requirements will impact business in many ways, especially in sectors that depend on public procurement and public financing, ranging from medical products for hospital to raw materials for infrastructure. Importers might have to deal with a reduced market share while downstream sectors might have to consider European preference when procuring raw materials, which could lead to higher costs. The EU is just at the beginning of using European content requirements and it will be critical that they are implemented in a way to avoid or limit side effects, such as increased costs, less availability of products, reporting burden and antagonising trading partners.
What to Do
The legislative process is just about to start, this means businesses still have a lot of time to provide input and shape the discussion when rules are developed and refined. Staying alert to developments through continuous monitoring and targeted intelligence is vital and assessing how industrial and trade policies – including EU content requirements – affect operations helps define clear priorities for engagement. By identifying and understanding key stakeholders, tailoring messages and building constructive dialogue, well-structured campaigns can ensure that business perspectives are heard and integrated into the policy debate.
Authors: Kerstin Duhme, Senior Managing Director & Arne Koeppel, Managing Director, both in the Energy & Industrials team in Brussels.
The views expressed in this article are those of the author(s) and not necessarily the views of FTI Consulting, its management, its subsidiaries, its affiliates, or its other professionals.
©2025 FTI Consulting, Inc. All rights reserved. www.fticonsulting.com
[1] Esther Goreichy, Jacob Gunter and Grzegorz Stec, “China’s overcapacity and the EU – All you need to know,” MERICS (May 16, 2025) https://merics.org/en/merics-briefs/chinas-overcapacity-and-eu-german-china-policy-under-merz-eu-china-trade
[2] “OECD Steel Outlook 2025,” OECD (May 27, 2025) https://www.oecd.org/en/publications/oecd-steel-outlook-2025_28b61a5e-en.html
[3] Mario Draghi, “The Draghi report on EU competitiveness,” European Commission (September 9, 2024) https://commission.europa.eu/topics/eu-competitiveness/draghi-report_en
[4] “Competitiveness compass,” European Commission (September 10, 2025)
[5] Proposal for a regulation on establishing the European Competitiveness Fund, Article 10 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52025PC0555&qid=1753802586340
[6] Framework for state aid measures to support the clean industrial deal https://eur-lex.europa.eu/eli/C/2025/3602/oj
[7] Proposal for a Critical Medicine Act, European Commission (March 11, 2025) https://health.ec.europa.eu/publications/proposal-critical-medicines-act_en
[8] Industrial Decarbonisation Accelerator Act, Public Consultation and Call for Evidence, European Commission (April 16, 2025) https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/14505-Industrial-Decarbonisation-Accelerator-Act-speeding-up-decarbonisation_en
[9] Public procurement directives – evaluation, European Commission (December 13, 2024)
[10] Press release, Public tenders should look at more than just cheapest price, MEPs say, European Parliament (7 July) https://www.europarl.europa.eu/news/en/press-room/20250707IPR29463/public-tenders-should-look-at-more-than-just-cheapest-price-meps-say
[11] “Greening corporate fleets,” European Commission (July 8, 2024) https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/14111-Greening-corporate-fleets_en
[12] “About the Connecting Europe Facility,” European Commission https://cinea.ec.europa.eu/programmes/connecting-europe-facility/about-connecting-europe-facility_en
[13] “SAFE | Security Action for Europe,” European Commission https://defence-industry-space.ec.europa.eu/eu-defence-industry/safe-security-action-europe_en
