EU's unstructured 'Made in Europe' rules risk inflating costs
The EU's increasing use of public procurement to boost strategic autonomy lacks a cohesive design, threatening to raise taxpayer costs and crush the small businesses that win the majority of public contracts.
The European Union is leaning heavily on public purchasing to drive its strategic autonomy agenda, but this "Made in Europe" push is emerging as an uncoordinated patchwork of policies. Since 2022, Brussels has repeatedly conditioned access to contracts and funding on European origin, control, or production to shield the continent from a harsher geopolitical climate.
Public procurement accounts for roughly 14 percent of EU GDP, giving Brussels a massive potential lever. However, international evidence suggests that using this tool to favor domestic suppliers comes with a steep price tag. The Peterson Institute estimates that US local-content requirements inflate costs by 15 to 50 percent, with a central estimate of 20 to 30 percent. American metro carriages bought under Buy America rules, for example, cost 34 percent more than comparable foreign alternatives.
These higher costs stem directly from reduced competition. A study of 600,000 Spanish public awards found that every additional bidder lowers the final price by 2.1 percent. Yet Europe is already moving in the opposite direction when it comes to competition. The European Court of Auditors found that single-bidder tenders jumped from 23.5 percent of the EU total in 2011 to 41.8 percent in 2021.
The fragmented design of the EU's new rules also threatens to lock out the companies that execute most of the work. Small and medium-sized enterprises win 71 percent of EU contracts by number. They cannot absorb the complex documentation burden demanded by overlapping origin-preference tools. These disparate instruments require authorities to verify market shares, rules of origin, beneficial ownership, and corporate control structures, creating a maze of red tape for smaller firms.
Across the EU's more than 250,000 contracting authorities, most of which are small, this complexity guarantees uneven enforcement. Larger bodies will manage the administrative burden, but smaller ones will likely under-enforce the rules or simply tick boxes. Choosing to pay a premium for supply security is a legitimate democratic decision, but the EU is currently making this choice without a structured mechanism to track what is restricted, by which instrument, at what cost, and under whose review.
