Industry associations ZVEI and VDMA have issued a warning to Chancellor Friedrich Merz against a potential industrial policy deal with France. In a letter quoted by Politico, the presidents of the two associations, Daniel Hager (ZVEI) and Bertram Kawlath (VDMA), stated that Merz should not agree to stringent “Made in Europe” rules solely to secure carbon dioxide concessions for the automotive industry.
The organizations argue that a deal between Berlin and Paris would compromise the very industrial competitiveness they aim to strengthen. They urge Merz to avoid such an agreement built upon strict “Made in Europe” stipulations. Collectively, the electrical and digital industries (ZVEI) and the mechanical and plant engineering sector (VDMA) represent around 20 percent of German industry, 30 percent of its exports, and approximately 2.2 million jobs.
Merz and French President Emmanuel Macron are currently negotiating a common line concerning the Industrial Accelerator Act (IAA) and the EU car package. France favors a narrow interpretation of the Made-in-Europe quotas for public procurement under the IAA, which should apply across the 27 EU member states. Germany, however, insists that non-EU free trade partners must also be included. Regarding the car package, Merz is pushing for a relaxation of CO2 targets, a position that France has so far opposed.
The associations warned that Merz must not turn the export prospects of large parts of industry into simple bargaining chips in exchange for immediate goals. To genuinely strengthen value creation within Europe, the IAA must incorporate reliable trading partners. Otherwise, any counter-measures taken by those partners could negatively impact German companies in their export markets.
Furthermore, many corporations are actively diversifying their supply chains to reduce dependencies. Rigid “Made in Europe” rules, the associations cautioned, would inadvertently exclude the necessary partners for this shift. This restriction would not only make established supply chains more expensive but would also force companies into building costly duplicate organizational structures.
