Local Content Rift in EU Industrial Subsidies: Will Turkey and Strategic Partners Be Excluded?

Model Divergence in Subsidy Scope The European Union's (EU) new subsidy package, aimed at boosting industrial strength, has caused deep divisions among member states.
The draft legislation has brought two different approaches face-to-face regarding the scope of subsidies and "local content" requirements.
A group of countries led by France supports the "Made in Europe" model, which stipulates that subsidies in critical sectors should only be granted to products manufactured within EU borders.
In contrast, Germany and its allies argue that global supply chains must be protected.
The Berlin administration proposes the "Made with Europe" model, which envisions the inclusion of strategic trade partners such as Turkey, the United Kingdom, and Japan in the process.
Strict Local Content Requirements in Critical Sectors According to the leaked draft text, artificial intelligence, defense, chemicals, automotive, steel, and renewable energy have been identified as priority areas for subsidies.
Specifically, in the automotive sector, there are plans to require electric and hybrid vehicles to have 70% EU production to benefit from public procurement and subsidies.
Similarly, local content targets of 25% for aluminum and at least 30% for plastic products are being considered.
These requirements aim to reduce dependency on external markets while strengthening internal production capabilities.
Concerns Over Exclusion of Trade Partners Countries with intensive trade relations with the EU, including Turkey, the UK, and Japan, have conveyed their concerns to Brussels regarding the risk of exclusion created by local content requirements.
Industry representatives are also divided on the issue.
While major manufacturers like Volkswagen and Stellantis support the EU production ratio requirement, other actors with global supply chains are demanding a more flexible structure.
Due to ongoing debates and disagreements, the draft law, which was originally expected to be published on February 26, is anticipated to be postponed to a later date.