The European Union’s leaders endorsed “Buy European” policies during their high-stakes summit addressing Europe’s industrial competitiveness crisis. The meeting brought together all 27 member states to confront evidence that Europe’s traditional approach of open markets has left strategic industries vulnerable to unfair competition and economic coercion.
Commission President Ursula von der Leyen acknowledged that European preference is “a fine line to walk” when she addressed the European Parliament the day before the summit. She affirmed that European preference is “a necessary instrument” in strategic sectors but emphasized that “every proposal must be underpinned by robust economic analysis and be in line with our international obligations.” This careful positioning aims to reassure trading partners that Europe is not abandoning rules-based trade while asserting that legitimate defensive measures are necessary against competitors who have already abandoned those rules.
The Industrial Accelerator Act expected later this month will set targets for European content in strategic products including solar panels and electric vehicles. These sectors have been devastated by Chinese competition enabled by massive state subsidies. Chinese solar panel manufacturers received subsidies that enabled them to sell below cost, destroying most European production capacity. China now dominates global solar manufacturing, creating European dependencies on Chinese suppliers who could potentially use market power for political leverage. Similar patterns threaten in electric vehicles and batteries, where Chinese companies backed by enormous state support are rapidly gaining market share.
European leaders heard from Mario Draghi and Enrico Letta, whose comprehensive reports provided intellectual foundation for the summit’s discussions. Draghi, the former European Central Bank president and Italian prime minister who saved the euro during the sovereign debt crisis, declared that the current economic world order is “dead.” He warned that Europe risks becoming “subordinated, divided and deindustrialised at once” unless it makes fundamental changes. His call for Europe to move from “confederation to federation” challenges the consensus decision-making that gives individual member states veto power over key policies, which Draghi argues makes countries “vulnerable to being picked off one by one” by more unified competitors.
Letta’s report focused on completing the single market, which despite decades of integration still suffers from barriers that fragment European economic space. Services markets remain largely national, preventing European companies from achieving the scale that American competitors enjoy in their continental market. Capital markets remain fragmented, forcing European startups to seek American venture capital or list on American exchanges. Energy markets lack adequate interconnections, preventing efficient allocation of resources and leaving some countries vulnerable to supply disruptions. Digital markets face inconsistent regulations across member states, creating compliance costs that disadvantage smaller European companies against American tech giants who can afford large legal departments.
