Vulcan View: The latest EU developments 13 October – 17 October

EU mulls new rules on technology transfer targeting foreign companies

The European Commission is considering a new policy that could require non-EU companies, particularly those from China, to share their technology and manufacturing expertise with European partners. This move, part of a broader strategy to boost Europe’s industrial competitiveness, has gained traction following the Dutch government’s recent intervention in Nexperia, a Chinese-owned tech firm. The proposed framework, which could be unveiled on 25 November as part of the European Commission’s Industrial Accelerator Act, aims to curb China’s manufacturing dominance and ensure that key industrial and technological advancements remain within the European bloc.

A new framework for foreign investment

The proposed policy framework, that would be included in the upcoming Industrial Accelerator Act, represents a significant shift in the European Union’s approach to foreign investment. If implemented, it would introduce new conditionalities for non-EU companies wishing to operate or invest in the bloc, particularly in key sectors such as automotive, batteries, and advanced manufacturing. These conditions could include mandatory local operations and, most notably, the transfer of technology and production expertise to European counterparts.

While the rules would apply to all non-EU firms, they are widely seen as being primarily aimed at China, whose companies have been accused of benefiting from an uneven playing field. The idea has found support among some EU member states, with Denmark advocating for Europe to “play by the same rules” as China and implement similar reciprocity measures. Spanish executives are also reportedly in favour of the proposal and are urging their government to support it.

The Nexperia case

The debate over technology transfer has been brought into sharp focus by the recent case of Nexperia, a Dutch semiconductor company owned by the Chinese firm Wingtech. On 12 October, the Dutch government took the unprecedented step of assuming control over Nexperia, citing “acute serious governance shortcomings” that posed a threat to crucial technological knowledge and capabilities.

The move, which was closely coordinated with the European Commission, grants the Dutch Ministry of Economic Affairs the power to block or reverse board decisions, effectively preventing the transfer of assets, intellectual property, or personnel changes without government approval for a year. Moreover, according to new court filings released several days later, the intervention was initiated due to concerns raised by U.S. authorities regarding the company’s leadership structure. Additionally, the company’s inclusion on the U.S. “Entity List” was a factor, stemming from allegations that it was assisting China in acquiring sensitive semiconductor manufacturing technology.

Next steps

The European Commission’s proposal and the Nexperia case highlight the growing determination within the EU to protect its technological and industrial base. The proposed Industrial Accelerator Act, with its potential for mandatory technology transfer, could have far-reaching implications for foreign companies operating in the EU. While the exact details of the framework are yet to be revealed, it is clear that the bloc is moving towards a more assertive industrial policy.

Commission and EEAS: Ready for combat by 2030 with new defence roadmap

The European Commission and the European External Action Service (EEAS) unveiled on Thursday (16 October) the “Defence Readiness Roadmap 2030”, an ambitious plan to build a harmonised European-wide defence market, boost investments in the sector and transform the EU into a fully combat-ready force by the end of the decade.

The roadmap sets out a five-year plan to increase both public and private investment in defence, enhance military mobility and strengthen Europe’s industrial and technological base.

Defence flagships

Central to the plan are four “Defence Flagship” initiatives, each targeting a current strategic vulnerability. The European Drone Defence Initiative is a coordinated effort to counter rising drone threats through shared technology development, joint procurement, and the creation of a common European counter-drone network. The Eastern Flank Watch will serve as a surveillance and intelligence platform to strengthen situational awareness, deterrence, and rapid reaction along the EU’s eastern borders.

The European Air Shield aims to establish an EU-wide air and missile defence network built on interoperable systems and shared command structures. Finally, the European Space Shield will protect Europe’s satellites and space assets, ensuring secure navigation, communications, and intelligence services essential for modern defence. All four initiatives are designed to work in close collaboration and full coordination with NATO.

Harmonised defence market

The roadmap also envisions a harmonised European defence market by 2030 to reduce fragmentation, accelerate joint procurement, and enable large-scale, cross-border production of critical defence equipment. The goal is to streamline rules and procedures so that defence industries across the EU can operate more efficiently and deliver at scale.

This long-lived ambition is often met with caution from member states, many of which are accustomed to protecting their own national industries and procurement decisions from European-level involvement, frequently citing national security exemptions.

Lastly, on the market, the plan includes establishing an EU-wide “military mobility area” by 2027, intended to speed up troop and equipment deployment by land, air, and sea and across borders in response to direct military threats.

Ramp up the production

Another objective is to reinforce the European defence technological and industrial base by increasing production capacity, improving supply chain resilience, and encouraging innovation. To this end, the Commission and EEAS propose deeper collaboration between defence industries through “Capability Coalitions” in nine critical areas, among which areair and missile defence, artillery systems, maritime capabilities, and ammunition. Both institutions foresee a strong role for Ukrainian companies in contributing to European innovation and production.

Strategic planning

The Defence Readiness Roadmap 2030 builds on the “White Paper for European Defence” and the accompanying “ReArm Europe Plan” introduced in March. The White Paper outlined a long-term vision for a European defence union and identified three priorities: closing capability gaps and simplifying defence regulation (through the fifth “Omnibus” simplification package in July), deepening the single defence market via innovation, and enhancing military mobility and operational cooperation.

The ReArm Europe Plan combines national financial flexibility under the bloc’s fiscal rules, available EU funding, and private investment to accelerate the development of defence capabilities. Most important is the Security Action for Europe (SAFE) instrument, agreed by the Council in May, which provides €150 billion in long-term loans to support joint defence procurement, also allowing participation by Ukraine and EEA countries.

MEPs to review EU-US trade deal while trade tensions escalate

The Chair of the European Parliament’s International Trade Committee, Bernd Lange, is expected to present his draft report on the EU-US trade agreement at the next International Trade Committee meeting on 4 November, as global trade tensions mount. The subsequent timeline for the agreement remains open and will be discussed following presentation of the draft report. Meanwhile, trade tensions between the US and China have escalated after China announced tariffs on exports containing trace amounts of Chinese rare earth metals, effective 1 December.

In response, US President Donald Trump used his Truth Social account to announce the introduction of a 100% tariff on Chinese imports starting 1 November, in addition to new export controls on critical software technologies. These developments highlight the fragility of the current US-China trade relationship. The EU, which imports nearly 100% of its rare earth metals from China, is also expected to be affected by the announced measures. EU Trade Commissioner Maroš Šefčovič stated that the EU may coordinate with G7 partners to respond to China’s latest export restrictions on rare earths. In addition, Šefčovič confirmed he has discussed the situation with US Commerce Secretary Howard Lutnick.

Meanwhile, the US Supreme Court plans to hear oral arguments for the case challenging US President Trump’s decision to impose tariffs on 5 November. The case arose due to three US courts ruling that Trump has exceeded his authority in imposing the tariffs.

The Supreme Court may reach a decision by the end of the year. However, since it faces no formal deadline, it could push the decision into H2 2026. The Trump administration is allowed to keep collecting tariffs as it awaits the final decision. There are three possible outcomes from the case:

• The Supreme Court may decide not to allow the tariffs at all and strike down all tariffs imposed by Trump under the International Emergency Economic Powers Act (IEEPA).
• It could strike down some of the tariffs Trump has imposed, but could rule that IEEPA is broad enough to allow some of the duties.
• It could uphold Trump’s duties.

Compliments of Vulcan Consulting – a member of the EACCNY