Spain proposes three-layer solution to define geography for 'Made in EU' act

BRUSSELS, Sept 24 (Reuters) - Spain has proposed a three-tier system to determine which third countries qualify as "Made in EU" under the European Commission's planned Industrial Accelerator Act, according to a document from sources at Spain's industry secretariat.

The IAA is part of broader EU efforts to help local industries compete with global rivals, notably China, that do not face Europe's strict regulations and higher energy costs.

The proposal would allow treatment to vary by sector, avoiding a blanket approach.

• The first layer would consist of only the bloc's 27 member states. The second layer would include the EEA and "trusted partners" while the third would be countries with a free trade, customs or procurement agreement with the EU.

• The three-tier system would allow the Commission to act "surgically" rather than exclude "an entire country for lack of reciprocity in just one product", the document said.

• Countries producing critical components that cannot easily be replaced in the EU could also qualify for the third tier.

• How the layers are applied could be changed over time as the EU's own capacity grows.

• Under the proposed IAA, goods from the 27 EU member states, plus Iceland, Liechtenstein, and Norway - which are part of the European Economic Area (EEA) - would qualify.

• The final list of exemptions based on trade agreements or reciprocity would not be set until after the act is agreed in 2027, leaving allies such as Britain and Japan uncertain about how their companies will be treated.

(Reporting by Julia PayneEditing by Ros Russell)