New leaked IIA draft softens ‘Made in EU’ rules, opens door to import steel in public procurement
The latest leaked draft of the EU’s Industrial Accelerator Act (IIA) introduces a significant shift in its “Made in EU” procurement rules, allowing selected third countries to be treated as equivalent to EU producers in public purchasing for strategic industrial goods – including steel, Fastmarkets learned on Thursday February 12.
The change will mark a notable softening of earlier proposals outlined in the first IIA leaked draft and was widely seen as reflecting concerns among some EU member states about excessively rigid Union-origin requirements that could disrupt supply chains and create trade tensions.
The revised text retains the definition of “Union origin” as covering EU and European Economic Aewa (EEA) production but adds a mechanism allowing the European Commission to designate specific third countries as equivalent through delegated acts.
To qualify, countries must demonstrate reciprocal international commitments with the EU and contribute to the Union’s competitiveness, resilience and economic security objectives, according to the draft document seen by Fastmarkets.
The Commission would also be able to revoke this status in the event of serious breaches.
The provision applies to energy-intensive industrial products and net-zero manufacturing technologies listed in Annex II, which has yet to be published but was expected to include steel.
The addition of third-country equivalence underscores the major change, which is that the IIA is no longer framed purely as a “Made in EU” decarbonization tool, Fastmarkets understands.
The IIA draft was still subject to change ahead of being formally adopted, with a final version expected to be published on February 25.
Implications for steel market
The earlier draft leaned toward mandatory combinations of Union-origin and low-carbon production requirements in public procurement and state aid plans, effectively favoring domestically produced low-emissions steel.
The new draft was less prescriptive, allowing member states to apply either Union-origin criteria, or low-carbon criteria, or both.
For steel, this reduces the risk of a rigid “double requirement” system that industry sources had warned could disrupt supply.
“South Korean or Japanese plate is used for wind industry projects in the EUt,” a buyer source in the EU said. “Both countries can supply steel produced with reduced carbon emissions content, so this ‘third country’ addition is an important amendment.”
According to sources familiar with the matter, Germany had pushed back against strict origin rules, citing the integration of EU steelmaking with global raw materials and automotive supply chains. The trusted partner mechanism appeared to reflect that pressure.
At the same time, the draft maintained plans for a carbon intensity label for steel, intended to differentiate low-carbon production – a key objective for EU mills investing in electric-arc furnaces (EAFs) and hydrogen-based direct-reduced iron (DRI) modules.
The practical effect will depend on the still-unpublished annexes defining which steel products will be covered, the origin thresholds and the carbon emissions intensity methodology, Fastmarkets understands.
Steel industry stakeholders agreed that IIA had the potential to “unlock” green steel demand through public procurement.
The shortage of public infrastructure projects in Europe that are capable of mandating green steel procurement has been deemed a significant obstacle to stimulating demand for low-carbon steel, Fastmarkets heard.
“If authorities do not push for green steel use through public procurement, then [green steel] will remain a niche market,” a mill source said.
“The effect of energy prices and also the cost of steel within the green transformation [are among] the key issues,” the distributor source said. “The distribution of green steel will be working… if we make green steel, put a label on it and make it part of public procurement.”
Reflecting the muted trading environment, Fastmarkets’ weekly assessment of the green steel, domestic, flat-rolled, differential to HRC index, exw Northern Europe, remained at €100-150 *$119-178) per tonne on February 12.
