Turkish-made products receiving European labeling: “Made in EU”

On March 4, 2026, the European Commission formally unveiled its Industrial Accelerator Act (IAA). The regulation  which would prioritise EU-made, low-carbon products in public procurement and state support programmes — holds both significant opportunity and carefully managed risk for Turkey. The recognition of the Customs Union marks a potential turning point in Turkey’s economic integration with the EU.

The Customs Union Advantage: A Historic Recognition

The IAA’s most critical detail is the provision that countries with a Customs Union agreement with the EU will be treated as falling within the ‘EU origin’ requirement. Through this arrangement, Turkey avoids being treated as a third country and instead gains a status equivalent to that of an EU producer. Turkey is among a small number of countries, alongside those covered by free trade agreements and the Government Procurement Agreement, that benefit from this recognition.

Trade Minister Ömer Bolat described the development as a “tangible fruit of close dialogue,” emphasising that Turkey’s intensive diplomatic engagement with the EU had produced this outcome. The recognition is no accident: it is the product of the longstanding Customs Union framework and the strengthened EU–Turkey economic dialogue of recent years.

The practical implication is straightforward: Turkish companies will now be able to compete in EU public tenders on the same terms as German, French or Italian rivals. In procurement contracts worth billions of euros, the ‘EU origin’ requirement will not exclude Turkish goods — it will include them.

Automotive: The Biggest Gain

Turkey is an indispensable part of the European automotive value chain. Ford, Stellantis (Fiat and Tofas), Toyota, Hyundai and Renault all operate major production facilities in Turkey, with hundreds of thousands of workers employed across the ecosystem. The IAA’s scope — covering electric vehicles, charging infrastructure, trucks and buses, directly affects this sector.

The law’s preference for EU-manufactured electric vehicles in public procurement will strengthen the competitive position of assembly and production facilities based in Turkey. In an environment where Volkswagen CEO Oliver Blume and Stellantis CEO Antonio Filosa have jointly called for a CO₂ bonus for EVs produced in Europe, Turkish-based plants stand to benefit from that same incentive framework.

The battery supply chain also presents a significant opening. During the transitional period, battery systems assembled using Asian-sourced cells will be accepted under the IAA provided final assembly takes place within the EU or, under the Customs Union recognition, in Turkey. From year three, battery cells and cathode active materials will also need to be European in origin, making Turkey an increasingly attractive destination for battery manufacturing investment.

Energy and Green Transition: The Second Front

The IAA’s covered technologies include wind turbines, electrolysers, heat pumps, photovoltaic systems and nuclear energy technologies. Turkey’s manufacturing capacity and geographic position make it a natural partner in EU value chains across these sectors.

In wind turbine manufacturing in particular, Turkey has a deep industrial base. With Vestas, Siemens Gamesa and domestic producers all operating in Turkey, the country is already one of Europe’s significant suppliers of turbine components. The IAA’s local-content preference in green technology procurement opens the door wider for Turkish-sourced components.

Steel and aluminium present a similarly dual picture. Turkey is among the EU’s largest steel suppliers, and bilateral trade within the Customs Union framework has long operated at high volumes. The IAA’s emphasis on low-carbon labelling in the steel sector both compels and incentivises Turkish steelmakers to invest in decarbonisation, a transformation that, if achieved, would firmly anchor Turkey in the EU’s green industrial ecosystem.

Opportunities for Turkey

Public procurement access: Turkish firms will be able to compete in public tenders across all 27 EU member states, plus Norway, Iceland and Liechtenstein, on an equal footing. In infrastructure, energy and industrial contracts worth hundreds of billions of euros, Turkish goods will no longer be classified as ‘foreign.’

Investment attraction: The IAA’s imperative to expand the EU’s production base may redirect investment flows towards Turkey. With a skilled workforce, relatively competitive costs and proximity to the EU market, Turkey is well-positioned as a manufacturing destination of choice.

Value chain deepening: Customs Union recognition offers Turkey the opportunity to deepen its integration into the European industrial ecosystem. The prospect of Turkey being positioned as an external supplier at the margins of European value chains — rather than a partner within them — becomes considerably less likely.

Customs Union modernisation: This recognition may also inject fresh momentum into the long-stalled process of updating the Customs Union. Deeper EU–Turkey economic integration could gain stronger traction on both sides’ political agendas.

Risks and Challenges for Turkey

Low-carbon conditionality: The benefits the IAA offers are not unconditional. Turkish producers in steel, cement and chemicals must meet the law’s low-carbon criteria to qualify. Failure to invest in decarbonisation could effectively push Turkish suppliers out of scope. The opportunity comes with a clear industrial transformation requirement.

Competitive pressure: Gaining EU-origin status places Turkish companies in direct competition with established EU producers in public tenders. Competing against German, French and Italian firms across Europe’s procurement markets is simultaneously an opening and a demanding test.

Foreign investment conditions: For investments exceeding €100 million in sectors where a single foreign country controls more than 40 percent of global production capacity, the IAA introduces qualifying conditions. Some Chinese-partnered investments in Turkey could be affected by these provisions.

Legislative uncertainty: The IAA remains a draft. Parliamentary and Council negotiations could substantially alter the final text. Whether Turkey’s Customs Union recognition survives those negotiations intact is a critical variable that requires close monitoring.

Sectoral Assessment: Winners and Risks

The automotive and electric vehicle sector will feel the IAA’s impact most directly and positively. Production facilities in Turkey stand to benefit from both improved export competitiveness and expanded access to EU public procurement contracts.

Steel and aluminium face a two-sided challenge: procurement access opens on one side, while low-carbon investment obligations intensify on the other. Whether the sector can finance this transformation will be decisive.

Producers of renewable energy components and green technology — wind turbine parts, heat pumps, photovoltaic systems — are positioned to gain the clearest benefit from the IAA. For these firms, access to the EU market broadens significantly under the new framework.

Conclusion: A Window of Opportunity, but Conditional

At first glance, the EU’s “Made in EU” initiative might appear to pose a threat to Turkish exporters. But with the Customs Union recognised within the IAA’s framework, that potential threat transforms — under the right policy conditions — into a historic opportunity.

Two conditions will determine whether Turkey converts this opportunity into real gains: first, accelerating decarbonisation investment in key sectors — above all steel, automotive and energy; second, maintaining active engagement in EU negotiations to ensure that Turkey’s Customs Union status is preserved in the law’s final text.

As Minister Bolat emphasised, this is not merely a trade regulation — it is an opportunity to redefine the nature of Turkey’s economic partnership with the EU. Turkey now stands closer than ever to moving from the position of a peripheral supplier to that of an embedded partner in Europe’s green and digital transformation.