Brussels is preparing to unveil a contentious “One Europe, One Market” action plan in March 2026, centered around a “Buy European” initiative, aiming to bolster the continent’s industrial base. While the political impetus – directing European taxpayers’ money towards European industries – is clear, the economic ramifications are proving complex, and have already exposed deep divisions among member states.
A Response to Washington, Constrained by Brussels
The European Commission’s competitiveness roadmap, built upon reports by Mario Draghi and Enrico Letta, seeks to finalize the EU single market by . A key component is redirecting public procurement and industrial funding towards EU-based production in strategically vital sectors including defence, clean technology, semiconductors, chemicals, and automotive. The Commission frames this as a European counterpart to America’s “Buy American” policy.
However, unlike Washington, Brussels operates within the constraints of a 27-nation economic bloc and must adhere to both World Trade Organization (WTO) rules and its existing open trade policies. A proposal initially drafted before Christmas was ultimately withdrawn due to a lack of consensus among member states, resulting in a political declaration at a leaders’ summit without concrete legislative action.
Defence: A Rare Point of Agreement
One sector appears to be nearing consensus: defence. Gunnar Wolf, professor of economics at the Free University of Brussels and a senior fellow at Bruegel, argues for prioritizing European defence industries. “We benefit from US weapons,” he stated, “But these purchases also make us vulnerable to geopolitical leverage of the United States against Europe… in hard security, I think there’s a clear case to buy more European.”
Wolf believes that securing European technological independence in defence is crucial. “Strategic autonomy means you have to have the technology made in Europe because otherwise you will have built dependencies on other players.”
However, Wolf expresses significant reservations about extending such preferences to other sectors. “We need to be extremely careful that this doesn’t just become a protectionist policy set. If you protect your domestic industry without any competition, what you achieve in the end is a lack of innovation and that will be bad for growth.” He emphasizes that the ultimate goal should be “growth of new, interesting, innovative firms, productivity growth, employment growth… that’s what we ultimately need.”
A Sobering Reality Check
Alberto Alemanno, Professor of Law at HEC Paris University, offers a more cautious assessment. “The EU has neither the industrial base nor the supply chains to go it alone in most sectors. A blanket preference would increase costs for downstream industries.”
Alemanno contends that targeted preferences in genuinely strategic sectors are justifiable, but only if “strategic” is defined through rigorous analysis, rather than political expediency – a concern he currently holds. “As it appears to be the case now.”
Divisions within the EU are already apparent. France is advocating for stringent local-content requirements, while Germany favors a more flexible “Made with Europe” approach that would include trade partners such as Canada, the United Kingdom, and Norway. Smaller, trade-dependent nations fear bearing the costs while larger economies like France and Germany reap the benefits. Alemanno notes, “The real tension is between two clusters of states,” adding that “Smaller member states fear it will raise costs and benefit mainly large economies.”
The Complexities of Supply Chains
Fredrik Erixon, director of the European Centre for International Political Economy, highlights the practical challenges. “It’s not that easy to introduce these types of restrictions… Europe is also importing a lot from other countries, which European companies use to export again to other countries. So, if you put in a restriction that is going to lead to a higher cost for you. That is also going to increase the price of European exports.”
Erixon illustrates the problem with a concrete example: a German company constructing a wind farm in the United Arab Emirates, utilizing components sourced from multiple countries. In such a scenario, “European preference” becomes ambiguous, particularly if the UAE government mandates local production as a condition for awarding the contract.
“This is going to be very, very difficult to come up with the exact details for this, [to know] how this is going to work.”
Erixon also points to potential repercussions from allies. The EU currently exports more of these goods than it imports. Excluding partners like Canada, the UK, or Mercosur could trigger retaliatory measures, ultimately harming European interests. “We need to have sort of a trusted partnership system that comes along with it, which enables our close allies and close friends to participate in this, so we don’t shut them out, because if they do, they’re going to respond with a similar measure against us. So, we’re going to be a net loser at them because we export more of these types of goods to them than we import.”
Looking Ahead
The Commission’s proposal, expected in mid-March , is anticipated to target select strategic sectors with tiered EU value-added thresholds, potentially ranging from 60% to 80%, alongside provisions for trusted partner nations.
Nine member states – Sweden, Finland, Ireland, and Estonia among them – have already issued a joint letter cautioning that any preference should be a last resort, time-limited, and sector-specific.
A political agreement appears to have been reached, but the intricate technical details remain unresolved. The coming weeks will be crucial in determining whether the “One Europe, One Market” initiative can navigate the complex economic and political landscape and deliver on its ambitious goals.
