🍻 Selber Bier Brauen

On 13 February, the High Court of England and Wales ruled that the UK government’s decision to proscribe Palestine Action did not follow the government’s own policy and was contrary to the rights to freedom of expression and assembly (Articles 10 and 11 of the ECHR). The decision is not cast in sweeping terms and does not challenge the legal regime that empowers the Home Secretary to proscribe an organisation. Instead, the ruling is focused on the specific decision to proscribe Palestine Action in light of the circumstances of the case and the available evidence. The ruling is nonetheless significant and provides a warning against the expansive use of proscription powers.

Alan Greene’s post in this blog explains the role of soft law in the court’s decision. The focus here is on the complex free speech issues that arise when an organisation pursues a direct action campaign involving criminal damage, but only a small part of that activity falls within the broad legal definition of terrorism (according to the court). The case highlights how proscription, a sweeping power “designed to ensure that an organisation ceases to exist”, significantly affects the rights of people outside the organisation. Given the breadth of the restriction, the court came to the right conclusion and provided an important safeguard for free speech and protest rights.

Background

To provide some background, the Terrorism Act 2000 grants a power to the Home Secretary to proscribe organisations that are “concerned with terrorism” (which extends to those that promote or encourage terrorism). Terrorism is defined as an action or the threat of action which is “designed to influence the government” or an international governmental organisation, or “to intimidate the public or a section of the public”. To fall within the definition, the action or threat must be “made for the purpose of advancing a political, religious, racial or ideological cause”. The action also has to fall within a list provided in the legislation, which includes “serious violence against a person” and “serious damage to property”.

Given the broad definition under the Terrorism Act, the government cannot proscribe every organisation that it deems to be concerned with terrorism. As the court made clear, once the “concerned with terrorism” threshold is passed, the government has a discretion to proscribe. The discretion is to be used proportionately and should normally be reserved for the most grave risks.

The threshold of violence

Where an organisation does engage in activities that fall within the legal definition of terrorism, a challenge to a proscription decision based on the ECHR raises some complex questions. As is well established, the ECHR protects the right to peaceful protest. While that covers some forms of disruptive activity and direct action, the Strasbourg Court has ruled that violent actions and activities with the purpose of destroying the Convention rights of others fall outside of the scope of protection. For this reason, if an organisation is primarily “concerned with terrorism”, then it seems that much of its activity will normally fall outside the scope of the rights to freedom of expression (Articles 10 ECHR) and freedom of assembly (Article 11 ECHR).

In its judgment on Palestine Action, the court found it untenable to describe the organisation as non-violent. The court also rejected the argument that Palestine Action was engaged in a campaign of civil disobedience, and stated that it was “not engaged in any exercise of persuasion, or at least not the type of persuasion that is consistent with democratic values and the rule of law” (para 23). In coming to these conclusions, the court noted that it had limited information about the structure and organisation of Palestine Action. However, the court looked at the organisation’s publications, including the “Underground Manual” that had been published on its website, which (the court found) “encourages its members and others who align with it to plan and cause damage to property” (para 25). At the same time, the court also noted that a “very small number of its actions have amounted to terrorist action within the definition at section 1(1) of the 2000 Act” (para 138).

The breadth of proscription

A decision to proscribe does not narrowly target those activities that involve or encourage serious criminal damage (or any other terrorist action). Once an order is made, the Terrorism Act 2000 provides that it is a criminal offence not just to belong to a proscribed organisation, but also to express an opinion or belief that is supportive of a proscribed organisation. Under s 13 of the Act, a person also commits an offence if they wear, carry or display an article “in such a way or in such circumstances as to arouse reasonable suspicion that he is a member or supporter of a proscribed organisation”. The court found the order engaged the right to peaceful protest of those who wanted to peacefully express support for the aims of Palestine Action, such as those wanting “to stop genocide and other atrocity crimes by causing disruption to corporate actors who aid, abet, facilitate and profit from those crimes” (para 115). Those making such statements of support did not incite violence or encourage terrorism, and were not excluded from ECHR protection.

When assessing the impact on expression rights, the court placed weight on the potential chilling effect, noting that the heavy penalties meant that “it is reasonable to expect people to be risk averse, to adjust their behaviour and to avoid doing things that run any significant risk that they might commit any of those criminal offences” (para 121). The court therefore had to consider not just the speech which the letter of the law criminalises, but the extent to which reasonable people self-censor. The extent of any self-censorship is difficult to know, but the risk is greater where the law is cast in broad terms and the sanctions are severe. In such circumstances, the desire to avoid the risk of sanction results in the voluntary suppression of speech that would not violate the law if tested in court. Along such lines, the court noted the evidence from organisations that felt inhibited from campaigning against the proscription order, for fear that they would be understood to express support for Palestine Action (para 123).

A vehicle for expression

The court expressed scepticism towards some of the free speech arguments advanced by the claimants. For example, the court explained that proscription does not stop people from expressing support for Palestine, from criticising the government of Israel, or from engaging in protests targeted at companies supplying military equipment (para 117). That is surely correct and the order does not directly restrict support for the underlying cause. The court was nonetheless right to find a significant interference with the Convention rights. While that may seem self-evident, the proscription of an organisation restricts various ways a person can express their views. In particular, it stops the organisation from providing a vehicle for expression, including for those outside of its membership.

Expressing support for an organisation is both a shorthand way to communicate a set of views and to align oneself with a particular outlook or orientation without having detailed knowledge of the issues. Both points are relevant in the case Palestine Action, which claims that it aims “to take direct action against Israel’s arms trade in Britain and to stop the complicity of corporate actors in atrocity crimes” (para 16). By displaying a sign with a slogan expressing support for the organisation, the speaker uses a shorthand way to publicly endorse those aims. The value to the speaker is not just that the slogan is concise, but that it allows them to take a position even if they do not know the specifics about companies supplying equipment to the Israel Defence Force. Such a person may choose to express support for an organisation that does know about such issues and tries to do something about them.

The loss of the shorthand form of expression will be a factor in any case where an organisation is proscribed. If a person expresses support for a neo-Nazi organisation, they align themselves with a particular outlook. In such a case, the loss of the shorthand is less problematic, as the expression of neo-Nazi ideology is likely to fall outside the protection of the ECHR. Similarly, where terrorist activities are a defining feature of an organisation, then support for the organisation may be taken to be a shorthand way of advocating terrorism. The position is different where a small part of the organisation’s activities falls within the legal definition of terrorism. In such circumstances, the expression of support is more plausibly an endorsement of the organisation’s ideological position (which is protected under the ECHR) than of any terrorist methods. The point is not decisive against proscription, but shows that proscription entails a loss of speech rights even if people are still free to speak in favour of a particular cause or viewpoint.

Error and proportionality

The court seemed unpersuaded by the risk of the law being applied in error (such as to those expressing support for Palestine, as opposed to the proscribed organisation). The court referred to the police guidance which aimed to avoid such errors (cited at para 119). The court also thought the risk of error should reduce over time as the terms of the order become better understood. In my view, such a conclusion may be optimistic. The law itself is couched in broad terms, which criminalise the expression of “an opinion or belief that is supportive of a proscribed organisation” (subject to a mens rea of recklessness). The way an opinion can be supportive may be subtle and open to interpretation. The broad terms of the law do not provide a bright line and pose a risk of overbroad application.

While the court did not accept all the arguments advanced by the claimants, it did accept that proscription was a very significant restriction of Article 10 and 11 rights. The court set that against the fact that only a “very small number” of the organisation’s actions amounted to terrorist action. The court therefore concluded the “nature and scale” of the group’s activities, in so far as they were terrorist activities, had not yet reached a “level, scale and persistence” that would justify proscription and its far-reaching consequences.

The wider effects

The decision raises the usual questions about the role of the court in overseeing sensitive questions relating to security. On this point, it is important to remember the limited political checks. The proscription order was considered by Parliament alongside the proscription of two other organisations in a very short space of time. While the decision had its political supporters, critics saw it as a political majority restricting speech and protest on a matter of public importance. By reviewing the decision without being subject to the intense political pressures or tight time constraints, the courts provided an important safeguard for political rights.

The ruling will also generate further debate about whether the government should have an additional intermediate power to proscribe without criminalising expressions of support for the organisation. While such a power would appear to be more proportionate, the risk is that a government may be more willing to exercise an intermediate power in relation to a wider range of organisations that do not meet the threshold for full proscription. More generally, if the purpose of proscription is to ensure an organisation ceases to exist (a type of death penalty for organisations), then it is hard to see how intermediate measures would be effective. The point here is not that less restrictive measures always fail, but that proscription is a drastic measure of last resort and should be used in exceptional cases.

The government has been granted permission to appeal the ruling, and the proscription order remains in place – so the episode is not over. So far, it appears that the decision to proscribe has backfired. Palestine Action has become better known and has been a focal point in the debates about Israel, Gaza and the British government’s response. The perception that the law is being used in an oppressive way may have generated sympathy from people who do not endorse Palestine Action’s activities.

These practical effects, along with the court’s ruling, should also put a brake on any momentum towards the more extensive use of proscription powers. The proscription of Palestine Action was seen to be a first step in using the power in relation to direct action groups, which would set a precedent for proscription to be applied to a wider range of organisations. The experience with Palestine Action provides an important warning that such steps carry legal and political risks.

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The old, cherished post-war international legal order no longer exists. The stakes were clear even before the recent, blatantly illegal attack on Iran led by the United States and Israel. After attacking Venezuela in January, Donald Trump freely admitted that he was only interested in his own morality, not international law. Interestingly, he added that it depended on how one defined international law. He revealed his understanding shortly afterwards at the World Economic Forum in Davos, where he founded the Trump Board of Peace: an undisguised rival event to the United Nations, led by Trump in a personal capacity in the style of a golf club. Although the statutes pay lip service to international law, what this means is, as Trump said, a matter of definition. Meanwhile, Secretary of State Marco Rubio has doubled down by framing the US approach as part of a civilizational struggle at the Munich Security Conference.

Mark Carney and – for sure – Emmanuel Macron articulated the antithesis to Trump in Davos. Both professed their commitment to a multilateral, rules-based order, placing predictability above high-handedness. Carney provided the more honest assessment: alluding to Vaclav Havel, he admitted that international law to date had been based on a collective lie – international law had never applied equally to everyone, but everyone had covered up the bluff because they had also benefited from it. This could not continue.

Trump/Rubio and Carney/Macron represent opposing visions: an international law based on the great powers versus an international law based on – more or less – equal states and citizens. Each vision has a history that can provide insight into the conditions for their success.

International law of empires

Trump’s approach to international law has its precursors in the international law of the great powers and colonialism. It served empires to stake out their spheres of influence. Whether it was the Portuguese and Spanish in the 15th century, the Monroe Doctrine, or the European states at the Berlin Conference in 1884: this international law was built on inequality. the Europeans refused to recognize the Native Americans, African and Pacific peoples as sovereigns of equal right. Their political communities were ignored, their territories declared no man’s land that could be appropriated under any pretext.

However, the international law of empires could only flourish because it rested on, and entrenched, social inequality. Only few segments of society benefited from colonial expansion: rulers, colonial companies, plantation owners. In contrast, indentured labourers, who had migrated from Europe, often lived under conditions akin to those of slaves. Colonial expansion often stalled internal development. It had the advantage of cementing inequality in the mother country and thereby also the existing social order. At the same time, it provided a valve for social inequality, whether through the armed forces, emigration, or the supply of colonial consumer goods like sugar.

With rising living standards and declining inequality, this international law lost traction. At the end of the “long” 19th century, colonial wars came under the critical scrutiny of an increasingly democratic public. This is also evident in the literature on international law. Authors from the comparatively democratic France were more prepared to recognize the sovereign rights of colonized peoples. In the US civil war, industrial workers pushed for the abolition of slavery, as this form of production undermined the value of labour as a whole.

International law of equals

This equalization and democratization gradually gave rise to the vision of a universal, egalitarian international legal order in the first half of the 20th century. It was characterized by a move to international institutions. These institutions were the antithesis of the nationalism of the previous period and the catastrophe of the Holocaust. They were intended to curb international conflicts via cooperation. The new temples of bureaucratic rationality should bring prosperity to broad segments of the population. One of the driving forces behind these institutions was US President Franklin D. Roosevelt, who had rendered outstanding services to social equality in the United States – whether through the New Deal or through his proclamation of the Four Freedoms, including Freedom from Want. The expansion of the welfare state after the Second World War dealt the death blow to 19th-century colonialism. Scarce funds were needed for purposes other than the oppression of the colonized.

However, post-war international law was never entirely egalitarian, as Mark Carney is absolutely right to point out. While political power was redistributed in the wake of decolonization, the leading industrialized nations did not relinquish their economic and military control. The Cold War complicated change; even the Soviet Union only sided with the decolonized states to the extent that it served its interests. In many respects, the international law of equals remained illusory. The stark factual differences between the centre and the periphery could not be overcome.

International law of authoritarian oligarchs

This imbalance has now worsened to such an extent that the US is openly abandoning the international law of equals in favour of an international legal order based on great powers and spheres of influence. Trump is not at the beginning of this development. Rather, this goes back several decades and is deeply entangled with social inequalities. Roughly speaking, the international law of equality came under pressure to the same extent that social inequality rose in the US – which, according to recent research, is a decisive factor in the rise of authoritarian forces worldwide. The rise in inequality can be attributed to the shift towards neoliberalism since Reagan. Although Western corporations benefited from global supply chains, the industrialized countries paid for this with the decline of industrial society. Tax cuts for high incomes under Bush Junior exacerbated the situation. This development created a reservoir of people from the socially stagnating middle classes who could meet the army’s needs for multiple wars. Growing inequality also reshaped the political system: an increasingly Republican-leaning Supreme Court removed barriers to oligarchy such as restrictions for campaign donations. The emergence of social media was able to provide a temporary counterbalance and propel a newcomer like Barak Obama to power. But even social media is now in the hands of a few super-rich individuals who have a symbiotic relationship with Trump and use political power for their own economic gain – and vice versa.

This oligarchy is now aligning global politics with its own interests. This includes control of natural resources, be they rare earths or fossil fuels, which remain crucial for the US energy supply and geoeconomic power – after all, the development and production of non-fossil energy technology have been left to China. Even if oil production in Venezuela may not be economically viable today, the oligarchy cannot allow the world’s largest oil reserves to remain outside its control; or Russia with its considerable resources to disappear into the Chinese sphere of influence; or Iran to destabilize an oil region.

Anything that weakens Europe or Canada and keeps them dependent on America is also good, because Europe, so far, with its regulated market, adherence to a vision of a middle-class society of equals, and trust in international institutions, represents the antithesis of the authoritarian oligarchy. Hence, the Greenland issue is not just about security or resources; Trump’s ambitions can also be read as a rejection of the European way of life, of the model of social and global equality. For the US government, Europeans no longer have a seat at the negotiating table, as they did at the Berlin Conference in 1884. At best, they find themselves on the map on the wall that others are slicing up. European leaders seem to accept their fate: reactions to the recent Iran attack by the United Kingdom, France, and Germany no longer invoke the UN Charter, but lay the blame on Iran. Mark Carney ridiculed his Davos statement by endorsing the attack.

A new international law of equals?

Is there an alternative to the new great politics of the USA? After all the disappointments, is there a future for an international law of equals that consists in more than channelling moral outrage? If at all, then only if the conceptual focus is placed on social equality, both domestically and globally. The answer to the oligarchies’ power politics must be an international law that serves to create middle-class societies with a high degree of social equality, which will then be able to cooperate peacefully. Social equality often correlates with a democratic form of government and can protect it sustainably against authoritarian temptations. However, calling for an international law of democracies is likely to be met with scepticism in the Global South, as democracy has all too often served as a pretext for hegemonic interventions. This would dilute the message of global equality. The “rules-based order”, on the other hand, lacks any sensorium for substantive equality.

However, to be effective, the international law of equals would need a power basis. Although China is more restrained than the US in political, military and legal terms, it has articulated its preference for a world of hegemonic spheres of influence, and social inequality is on the rise. What options remain for a bloc of states beyond these two spheres that does not want to end up as powerless as the non-aligned states during the Cold War?

First of all, there are quite a few countries that could be standard-bearers of a new international law of equals. In addition to Europe and the remnants of the North Atlantic hemisphere, if they are willing to free themselves from American control, important Latin American countries such as Mexico, Colombia and Brazil come to mind; East and South Asian countries including Japan, South Korea, Indonesia and India; and African states including South Africa, Nigeria, or Ghana. Taken together, these states have vastly more economic, political, and military power than the non-aligned states during the Cold War. Even the great powers are too economically interconnected to ignore such an alliance of states under the banner of an international law of equals.

Political unity is likely to be difficult to achieve in such a constellation in many cases, but under external pressure, even the impossible might materialize. The EU’s development over the last crisis decade may serve as an illustration. The envisaged constellation would also be more homogeneous than previous North-South alliances. After all, despite persisting imbalances, global inequality has decreased as inequality within (industrial) societies has increased. This also increases the chances of overcoming previous North-South asymmetries. For international law based on equality can only succeed if this equality is realized – formally and materially – among states and among people. This will require Europe to make some tough concessions. However, it is likely to be far more attractive than creeping colonization by autocrats and oligarchs.

A new international law of equals therefore depends largely on our willingness to act and cooperate for global prosperity. Decades of sovereign debt crises at the expense of the poorest must become a thing of the past, as must economic dependencies or export surpluses at the expense of others and nature. However, this does not necessarily mean a decline in living standards for the population in developed countries. On the contrary, Germany’s export surplus was facilitated by wage restraint. Reparations for past actions will also have to be discussed, whether they concern climate damage or the consequences of colonialism. Compensation does not have to be limited to payments but can also take the form of international agreements that take international law for equals seriously.

Finally, the international law of equals is likely to wield considerable soft power. To quote Gramsci, it may become a hegemonic idea enjoying widespread support. The autocratic regimes that make up Trump’s Board of Peace benefit from the fear of decline that inequality triggers. They lure their followers with the promise of protecting their material and cultural privileges. This is unlikely to last long if autocratic regimes simultaneously drive the erosion of social equality to extremes. At some point, even the last Trumpists will realize that they are not among the privileged few and that one cannot eat culture wars. Then the prospect of a society of equals could shake autocratic governments to their core. Zohran Mamdani has shown in New York how a message of equality can succeed. The international law of equals extends this promise into the supranational sphere: social equality requires and promotes global equality, and vice versa. Equality thus becomes an effective means not only against authoritarianism, but also against great power politics. Europe has the potential to participate in an international law of equal people and equal states – or to give standing ovations to Rubio.

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After months of delays, internal frictions, leaks, and sensational claims that EU industrial policy is going “full China”, the long-anticipated proposal for an Industrial Accelerator Act (IAA) is expected in early March. The IAA represents a continuation and deepening of the Commission’s new industrial policy, distancing itself from a deeply entrenched constitutional imaginary in which the economy was governed primarily through rules designed to enable and protect competitive coordination.

This shift is reflected, first and foremost, in its legal bases. Not unlike the recent Critical Raw Materials and the Net-Zero Industry Acts, the IAA is anchored primarily in Article 114 TFEU. Acknowledging the operative weakness of 173 TFEU, which precludes harmonization measures for industrial policy, the new industrial policy has unfolded through the progressive instrumentalisation of other constitutional bases – most importantly 114 TFEU, with industrial production recoded as a condition of market functioning and strategic capacity-building measures framed as internal-market harmonisation. At the same time, the IAA proposal expressly relies on Article 207 TFEU to recalibrate trade and economic security, enabling the Union to thicken the boundary conditions of the internal market. This produces a hybrid legal architecture that mobilises internal market governance and external commercial policy to steer and safeguard strategic value chains and strengthen productive capacity within the Union.

The constitutional implication is subtle but far-reaching. Industrial steering is no longer framed as a deviation from the competitive order or as a temporary crisis response, but as a structural condition for preserving the internal market’s resilience, security of supply, and productive capacity. Market integration thus no longer primarily disciplines industrial ambition; rather, industrial governance becomes the mechanism through which integration itself is to be sustained under conditions of geopolitical rivalry, subsidy competition, and decarbonisation pressure.

The Two Pillars of New Industrial Policy

The institutional architecture of the turn to new industrial policy is built around two conceptual pillars.

The first is an instrumental approach to markets, aimed at steering, shaping, and generating markets that produce outcomes prefigured by political authority. This approach has manifested in the CRMA and NZIA primarily through supply-side reforms that expand and incentivize industrial capacity and lower investment risk for clean technologies, the procurement and processing of critical raw materials, and the decarbonization of energy-intensive industries, while enhancing a broadly understood notion of economic security. The IAA further purports to create “lead markets” by redesigning the demand side through minimum Union-origin requirements for procurement and subsidies. This emerging regulatory regime of “market instrumentalism” contrasts with a long-standing paradigm of economic liberalism defined by the commitment to the competitive order, a broad understanding of market freedoms, rigid state aid control, and a liberal framework for international trade. On a deeper level, the market instrumentalism of industrial policy casts off the agnosticism about “value” that defined the liberal-competitive paradigm, according to which value could only be discovered and derived through market-mediated competition. Industrial policy instead posits a politically determined conception of value that precedes and reshapes the market and the competitive order.

The second pillar is a reconfiguration of the state–capital nexus intended to sustain this instrumentalism and the pursuit of strategic objectives, captured in the strategic role assigned to “derisking”. The IAA extends an EU industrial strategy that relies on public guarantees and financial backstopping to mobilise private investment in key sectors, actively securing private profitability without disciplining private actors to pursue the strategic objectives when these are at odds with profit calculations. As critics have pointed out, such institutional design does not subordinate investment decisions to collectively defined priorities but instead shifts part of the risk associated with strategic investments from the private sector to the public, opening new frontiers for capital accumulation through the expanded use of blended finance and risk-sharing instruments, the growing role of the European Investment Bank, the increasing use of Power Purchase Agreements, and related mechanisms. The strategy of derisking highlights how, beyond the aspirations of green growth, resilience, and economic security, the contemporary turn to industrial policy represents a strategic repositioning of public power. Derisking, in this sense, is best understood as an effort to stabilize accumulation under conditions of ‘secular stagnation’, characterized by declining profitability, weak investment, and slow growth.

Boundary-Setting and Territorial Embeddedness

Market instrumentalism requires “boundary-setting”: the attempt to stabilize the effects of public steering by conditioning access, limiting external contestation, and thickening territorial embeddedness within the Union’s economic space. Indeed, the leaked IAA proposal does not limit itself to seeking to create “lead markets” but it also develops techniques for ensuring that those lead markets cannot be immediately arbitraged away through global overcapacity, import substitution, or corporate mobility.

A first modality of boundary-setting lies in the re-politicisation of public demand through minimum Union-origin and low-carbon requirements. Public procurement is recast as a strategic lever of economic security and industrial policy and an integral component of an emerging industrial strategy oriented toward rebuilding production ecosystems and anchoring value creation within the Union.

A second modality is the conditionalisation of access to the Single Market in response to third-country restrictions on critical raw materials. Here, the draft sketches a retaliatory-resilience mechanism: where a third country imposes measures that generate shortages or threats of shortages, the Commission may require undertakings from that country to make an in-kind contribution as a condition for placing covered goods on the Union market (i.e., depositing specified quantities of critical raw materials at Union stockpiling centres).

The most far-reaching boundary setting, however, sits in the chapter on foreign investment. This is where the draft moves from shaping demand to shaping ownership and control, and from encouraging territorial embeddedness to structurally constraining exit options and capital mobility. For foreign direct investments in emerging key strategic sectors above a EUR 100 million threshold, implementation is prohibited unless explicitly approved by a national Investment Authority or the Commission. What follows is not classic screening but an attempt at a harmonised investment constitution for strategic sectors: a 49% cap on foreign ownership or control, a joint venture requirement with EU-domestic entities, and operational conditionalities tied to technology, R&D, labour, and input composition.

Three features matter conceptually. First, the joint-venture logic is structural, ensuring “sufficient participation of Union partners” and measurable “value added to the Single Market.” Corporate form becomes an instrument of industrial policy, embedding cooperation and partial EU control into the legal architecture of permissible investment. Second, the technology-transfer dimension is unusually explicit: approval is conditioned on licensing intellectual property and sharing know-how with detailed provisions on ownership of IP developed domestically or jointly. Third, investment legitimacy is tied to ongoing territorial embeddedness through performance thresholds: commitments to R&D spending within the Union, workforce composition requirements, and minimum Union-manufactured input shares in products placed on the market.

Taken together, these provisions recast foreign investment as a potentially distortive market intervention that must be reshaped to serve strategic value creation. The Investment Authority becomes a market-gating institution, policing the terms under which capital may enter, operate, and extract value. This is why the political controversy around “Made in Europe” reflects a deeper constitutional wager. The wager is that the Union can stabilise its emerging industrial strategy by combining demand-side European preference with investment-side conditionality, thereby anchoring production, rebuilding manufacturing capacity, and narrowing the pathways through which global capital can treat the internal market as a space of frictionless arbitrage.

The Contestation of New Industrial Policy

The provisions of the IAA remain susceptible to the critique that the EU prioritizes its own economic security and accumulation processes while simultaneously constraining the policy space of other countries wanting to do the same. Not only has the EU consistently criticized similar industrial policy designs adopted by China, but it has also used newly concluded Free Trade Agreements as an opportunity to block policy instruments typically associated with state-led industrialisation – such as import and export monopolies, dual-pricing schemes, and performance requirements – while adapting its own trade defence practice to impose anti-dumping and countervailing duties on downstream imports from countries that promote domestic processing of upstream raw materials.

At the same time, despite the forthcoming aspirations of a more politically-controlled and steered investment environment, the IAA does not break with but in many ways fortifies the market instrumentalism-derisking dualism. In the absence of direct public investment or public control over financial flows, the IAA relies on incentivised and publicly guaranteed private investment –through procurement and support schemes, alongside financial guarantees. In this sense, the IAA functions as a mechanism for the absorption of risk and uncertainty, ensuring private profitability.

Yet, the IAA also reinforces a broader trend toward the politicisation of economic priorities, departing from a long-standing paradigm of economic regulation characterised by deference to market coordination and global capital mobility. In particular, the IAA pursues strategic value creation through far-reaching conditionalities, monitoring obligations, and potential penalties for foreign investment that promote deeper territorial embeddedness, making corporate exit – and its associated leverage – more difficult. This is why, according to commentators, the FDI provisions are projected to “face a lot of opposition from free traders and multinationals”.

The postponement of the IAA’s adoption by the Commission highlights the political sensitivity of the proposal. The apparent controversy over the “Made-in-Europe” provisions and resistance from industry stakeholders shows that the boundary-setting logic underpinning the Act is already contested. Concerns about market closure, price effects, administrative burden, and compatibility with openness point to a deeper distributive conflict over how far EU industrial policy may reshape market access and investment conditions. The delay thus reflects the concrete political confrontation generated by the emerging industrial strategy: whether strategic objectives can be embedded in law without reshaping the internal market settlement on which the Union’s market order has long depended.

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