With the draft Industrial Acceleration Act (IAA) published by the European Commission, Turkey may be eligible to receive the "Made in EU" label. Strategic products manufactured in Turkey will now be recognized as "EU Origin" in European Union public tenders and incentive programs. This development transforms Türkiye from merely a supplier to a key production partner in the European market.
What Will Change in Brief?
With the Industrial Acceleration Act (IAA), Turkey gains "EU Origin" status for strategic products, granting direct access to European public tenders and incentives. This change transforms Türkiye from a mere supplier into a key "production partner" in critical areas such as automotive and energy. However, the permanence of this new status depends on the full compliance of our production lines with European green standards (CBAM) and the obligation of reciprocal tender access.
What is the Made in EU Label?
This label is essentially a certificate of origin indicating where the product was manufactured. In essence, it signifies the same thing as "Made in China." As you know, where a product is manufactured, or its origin, plays a significant role in determining the amount of tax you pay when importing or exporting it.
If a product is manufactured in Türkiye, it receives a "Made in Turkey" label. This meant that when you exported this product to a country within the European Union, it was considered a "non-EU country."
With the Customs Union agreement signed in 1996, products exported from Türkiye to Europe were exempt from tax, but these products were still considered "non-EU countries." The disadvantage of this was that the criterion of "being manufactured within the EU," a requirement for participation in public tenders opened by European countries, could not be met. Therefore, companies producing in Türkiye could not participate in public tenders in European countries.
At the same time, companies established in Europe and conducting commercial activities within the Union need the products they purchase to bear the "Made in EU" label in order to obtain privileges such as incentives and tax breaks.
With the newly published draft Industrial Acceleration Act (IAA), Turkey may be eligible to receive the "Made in EU" label. This label means that companies producing in Türkiye, provided they meet the necessary conditions, can now bid on public tenders opened by European countries. It also means that private companies operating within the EU may now prefer companies producing in Türkiye to benefit from various incentives and tax advantages.
How to Obtain the Made in EU Label?
Obtaining this label may not be as easy as it seems. While there are normally much more detailed rules, there are fundamentally two ways to obtain the "Made in EU" label:
1. Method: Producing the Product Entirely in Türkiye
You can produce the product entirely in Türkiye, from raw materials to the final screw tightening. In this case, you can obtain the "Made in EU" label.
2. Method: Sufficient Workmanship in Türkiye
In this method, the products you produce must undergo sufficient workmanship in Türkiye. An example of this method is the indispensable example from customs courses: "buying fabric from China and producing jackets in Türkiye." In other words, if you source raw materials from another country and carry out a significant portion of the production in Türkiye, you can still qualify for the "Made in EU" label.
Which Sectors and Products Can Obtain the "Made in EU" Label?
Essentially, any product manufactured in Türkiye can obtain this label, provided it meets the necessary conditions, which I summarized in the previous point. However, obtaining this label doesn't necessarily mean it will be beneficial.
The Industrial Acceleration Act (IAA), which forms the basis of this development, was enacted to support the EU's "Net-Zero" and "Digital Transformation" goals. In other words, Europe provides incentives not for every product, but for those that will maintain its strategic and technological independence.
For example; You can produce plastic cups and obtain a "Made in EU" label as long as you meet the necessary requirements, but when you want to bid on a public or private company tender in Europe, the government will not give you priority, nor will the private company receive tax breaks or incentives simply for purchasing plastic cups from within the EU.
We can examine the sectors that will benefit most from this incentive under two main categories:
1. Strategic Sectors: "Golden Age" Players
In these areas, which perfectly align with Europe's technological independence and "Net-Zero" goals, Turkey is no longer just a supplier, but is rising to become Europe's new energy and technology equipment hub.
Renewable Energy: Solar panels, wind turbines, heat pumps, and biogas plants. These products will fill the "Made in EU" quota in European public tenders through Turkey.
Mobility and Energy Storage: Not just electric vehicles; battery cells, charging stations, and drive systems. Investments in Turkey by global giants like BYD and Chery are the most concrete evidence of this logistical advantage.
High-Tech Equipment: Equipment that will shape the heavy industry of the future, such as green hydrogen systems and carbon capture units.
Defense and Aerospace: Thanks to NATO alliance and Customs Union integration, these sectors will be the areas that will feel the "intra-Union" advantage most strongly and directly in European tenders.
2. Traditional Industries: "Green Charter" and the Critical Threshold
While the "Made in EU" label remains a right in heavy industries, exceeding the Border Carbon Adjustment Mechanism (CBAM) criteria is necessary to exercise this right.
Steel, Aluminum, and Cement: These sectors will now be considered "EU Origin"; however, as long as their production processes remain "dirty" (high-carbon), the advantages provided by the label may be overshadowed by additional taxes.
Strategic Transformation: For these groups, the real power of the label lies in reducing the carbon footprint to European standards through the use of Green Hydrogen and Renewable Energy Integration.
Benefits for TürkIye
The ability of products manufactured in Türkiye to obtain the "Made in EU" label offers significant opportunities for Türkiye:
1- Foreign Direct Investment (FDI) Boom
Especially for Asian technology giants (BYD, Chery, etc.), Turkey is becoming the only key to "tax-free and quota-free" access to the European market. This situation will provide Turkey with not only capital but also technology transfer.
2- "Upgrading to a Higher Class" in Exports
Turkish products will no longer be treated as "foreign" in European public tenders. This means direct access to a market worth billions of Euros (metro lines, power plants, etc.).
3- Nearshoring Leadership
In Europe's strategy to reduce its dependence on China, Turkey has been recognized as the most reliable and closest "production base." This makes our logistics cost and time advantage permanent.
Potential Risks of the Law
Although we have discussed the positive effects of the law so far, we must also consider the potential risks it contains.
The Reciprocity Dilemma
The biggest "cost" of this status is the principle of reciprocity. Turkey may be forced to open its own public tenders to European firms under the same conditions. This situation will create intense competitive pressure for domestic SMEs that have not yet become giants on a global scale.
Pressure for Green Transformation
The "Made in EU" label is like a twin brother to the Border Carbon Adjustment (CBAM). If we cannot rapidly transition our production lines to green energy (solar, wind, hydrogen), this status will remain only on paper, and we will be penalized with additional taxes.
Regulatory Dependency
There will be a need to immediately adapt to sudden changes (regulations) in the EU's industrial policies. This creates a necessity for Turkey to be "the fastest to adapt to the established rules," rather than "setting its own rules."
Conclusion
If this regulation is implemented, Türkiye has significant economic potential. However, the price of this potential growth is compliance with the potentially challenging regulations of the European Union.
If we do not implement and monitor the law and its requirements with the necessary seriousness, this law may do more harm than good to domestic producers. The law, initially seen as a savior, could suddenly become something that "makes it difficult for Turkish companies to participate in public tenders in Türkiye." At this stage, what needs to be done is to ensure the best possible implementation of the law.