The European Union's proposed Industrial Accelerator Act (IAA) – aiming to boost production in strategic sectors – will be decisive in the future of production and supply chain ties between Türkiye and the bloc, business leaders argued.
The flagship framework lies upon a "Made in EU" specification, requiring specific shares of member states involved in procurement, state aid, and various incentive programs.
The regulation aims to support European production, especially in clean technologies, the automotive sector, batteries, steel, chemicals and critical raw materials, to reduce its dependence on China and boost its production capacity.
The regulation could impact the bloc’s supply chain ties with Türkiye, depending on the extent to which products made in the country will be recognized within the Union origin requirements criteria or "EU content."
Türkiye is highly integrated into Europe’s production and supply chains across many sectors due to the customs union, playing an active role in sectors ranging from automotive and machinery to steel and chemicals, with Turkish industrial products holding a massive share in the EU market.
The draft includes an approach to evaluate production originating from Türkiye as European under certain conditions, but business leaders say this amounts more to preserving the current status quo than creating a new opportunity for Turkish firms.
The draft could potentially change amid negotiations between member states and the European Parliament (EP).
The definition of European content is limited to production carried out in member states, which could harm Turkish producers by reducing their access to certain incentives and public procurement, resulting in Turkish firms benefiting less from the bloc’s industrial incentives and creating a competitive disadvantage against European rivals.
Experts said excluding Türkiye from the Made in EU specification would increase costs for Turkish manufacturers and numerous European firms that rely on Turkish suppliers.
The auto sector is expected to be one of the most affected by the regulation, as Türkiye is one of Europe’s major vehicle production hubs, playing a key role in the supply chains of many global automakers.
Türkiye could secure a stronger position in Europe’s green transition and clean industry investments if kept within the framework.
Mehmet Ali Yalçındağ, chair of the Türkiye-Europe Business Council at the Foreign Economic Relations Board (DEIK), stated that Türkiye has been integral in Europe's supply and value chains for nearly three decades with the customs union, noting that evaluation products made in the country under the Made in EU approach are significant.
He said the auto industry would be the most affected as it is not limited to vehicle production but involves multi-layered value chains like battery technologies, semiconductors, critical raw materials, software, artificial intelligence production systems and energy efficiency.
He noted that Türkiye is one of Europe’s key partners in green and digital transformation due to its strong auto supply industry, advanced supplier network, engineering capabilities, electric vehicle (EV) ecosystem and investments in low-carbon production.
"It is a strategic necessity to ensure products made in Türkiye are integrated into Europe’s industrial ecosystem without being subjected to quotas, obstacles or additional barriers, not only for the Turkish private sector but also for the EU’s industrial transformation and global competitiveness," he said.
"Excluding Türkiye would affect Turkish firms and EU firms investing in Türkiye alike, as well as European manufacturers sourcing from Türkiye, affecting the bloc’s competitive production capacity; restricting Turkish production in strategic sectors would drive up costs, reduce the resilience of supply chains and weaken the EU industry against global competitors,” he added.
Yalçındağ urged the bloc to focus on updating the customs union and implementing common industrial policies to further existing integration instead of creating new barriers.
