POLITICO — 2026-07-24
News from Brussels
Emmanuel Macron and Friedrich Merz are trying to jump-start the Franco-German engine one final time.
After joint ministerial meetings in Germany last week, the leaders of the European Union’s two biggest economies have tasked their governments with striking a grand bargain that they say would strengthen Europe’s industrial defenses and revive the bloc’s automotive industry — key priorities for the two countries.
The pact would fuse France’s push to reserve more public procurement contracts and subsidies for European industry with Germany’s drive to rescue its ailing carmakers, whose crisis has reached an acute stage after Volkswagen warned recently that it would have to cut 100,000 jobs worldwide.
The emerging deal would see Berlin support tougher “Made in Europe” provisions sought by Paris in the EU’s landmark Industrial Accelerator Act. This would restrict which trading partners qualify for Union-equivalent “trusted partner” status in key public procurement and subsidy programs.
In return, France would agree to weaken the EU’s planned 2035 phaseout of new combustion-engine cars, as sought by Berlin.
“We have been tasked to build a comprehensive deal on these topics,” French Industry Minister Sébastien Martin told POLITICO. “It would be great to have a deal in autumn. I am sure we could get other countries like Italy on board. All countries are waiting for a Franco-German agreement.”
Two senior German officials, granted anonymity because they were not authorized to speak on the record, confirmed the pact was being negotiated.
Officials from either side of the Rhine stressed that the exact terms of the bargain were still to be negotiated as talks are at an early stage. Both sides will likely need to make further concessions to reach a final deal.
Negotiations will continue throughout the summer with the aim of reaching a deal before a meeting of EU industry ministers on Sept. 24 and an EU leaders’ summit on Oct. 15-16, according to Martin.
The talks will coincide with difficult EU-China negotiations over how to rebalance the bloc’s €1 billion-a-day bilateral trade deficit. EU governments and lawmakers are meanwhile doing battle over the text of the industry act, which European Commission President Ursula von der Leyen wants to pass by the end of the year.
Money matters
The bargain comes as Berlin and Paris grapple with the possibility of far-right leader Marine Le Pen succeeding Macron next year, a scenario which is expected to significantly complicate joint work at the EU level.
Macron and Merz vowed to harmonize on EU priorities — including finalizing the bloc’s next seven-year budget, known as the Multiannual Financial Framework — but have framed their urgency as a way to quickly save Europe’s sputtering economy.
Hoewever, the campaign ahead of next year’s French presidential election, from which Macron is barred by term limits, will likely close the window for a budget agreement within months.
Le Pen, the front-runner in the opinion polls, has vowed to drastically slash Paris’ contributions to the EU budget if she is elected.
When asked about the Franco-German talks, an official in Le Pen’s party, the National Rally, said it would share its vision for Franco-German relations when it unveils its campaign platform in the autumn.
Far-left candidate Jean-Luc Mélenchon said on X that any agreements between Paris and Berlin would only bind Macron to the deal — and not France or its next leader.
Cars vs. trusted partners
Germany and its powerful automotive industry have long pushed to weaken the EU’s planned phaseout of new combustion-engine cars from 2035, arguing that carmakers should be allowed greater flexibility and that alternative fuels should play a bigger role.
France has long defended the target as a cornerstone of the European Green Deal. But Macron has become increasingly critical of parts of the bloc’s green agenda, and Paris has recently signaled it is open to greater flexibility for manufacturers that strengthen European supply chains and local production.
The sharper disagreement concerns the Industrial Accelerator Act.
The industry bill, championed by French Economy Commissioner Stéphane Séjourné, would give European companies an advantage in public procurement and subsidy schemes. Germany has been wary of provisions it fears could create red tape or antagonize important trading partners.
To avoid clashing with the bloc’s trade commitments, the European Commission has proposed to extend the benefits of the new rules to a pool of non-EU “trusted partners” whose goods would qualify as Made in Europe if they meet a checklist of to-be-defined criteria.
Germany had previously wanted to see allies such as the U.K. or Canada included, while France wants to limit Made in Europe initially to the bloc’s 27 member states before considering extending it on a case-by-case basis.
“Made in Europe only makes sense if it is made in Europe,” Martin said.
Tom Schmidtgen and Romanus Otte contributed to this report from Berlin. Judith Chetrit and Aude Le Gentil contributed to this report from Paris.