The European Union plans to impose minimum "made in Europe" requirements on public purchases of key green technologies to bolster local industry and cut dependence on Chinese imports, a draft European Commission proposal seen by Reuters showed.

The EU is racing to shore up its industrial base as high energy costs, cheaper Chinese imports and U.S. President Donald Trump's tariffs squeeze European manufacturers.

A draft Commission legal proposal, due next week, would set new sourcing rules for government procurement of batteries, solar and wind energy components, and electric vehicles.

"The EU must act strategically to secure and further strengthen its industrial base, long-term competitiveness and ensure that the climate transition becomes an engine of industrial prosperity rather than a source of de-industrialisation," said the draft, which could still change before publication.

Under the plan, battery systems bought through public procurement would, 12 months after the law takes effect, need to be assembled inside the EU, with the battery management system and two other components sourced within the bloc.

The rules would tighten after two years, requiring the battery system itself to be Europe-made along with more of its core components, including cells.

Brussels wants to curb reliance on China, which dominates production of solar panels and batteries and increasingly competes in sectors where Europe still has strength, including wind turbine manufacturing.

The draft called it a "strategic warning signal" that the EU's share of global industry's gross value fell from 20.8% to 14.3% over 2000–2020.

The proposal would also set minimum shares in public contracts for EU-made, low-carbon industrial goods, and require power cables and EV charging infrastructure to be Europe-made. Foreign direct investments above 100 million euros ($116 million) in strategic sectors would not be approved unless they met new conditions on using Europe-made components and EU labour.

The plans have split EU governments, which must negotiate the law with the European Parliament. France has championed the push, while Sweden and the Czech Republic warn that "buy local" rules could drive up tender prices and undermine the bloc's competitiveness.

($1 = 0.8601 euros)

-Kate Abnett/Reuters