Brief Explanation: What are Local Content Requirements?

Local content requirements are regulations that compel businesses to fulfill a defined share of production, value creation, or services within a specific region. They may come into effect in scenarios such as:

• criteria for public procurement,
• product specifications,
• access to funding programs,
• or prerequisites for deployment in security-critical infrastructures.

Potential Consequences of Localisation Regulations

Increasing Costs

• Exclusion of cheap imports increases costs for preliminary and end products
• European suppliers lose price advantages in third markets
• Production may cease if domestic capacities are lacking

More Bureaucracy

• Elaborate proof of the share of European value creation
• Burden also for small and medium-sized enterprises in multi-stage supply chains
• Additional inspection duties for public clients

Risks to Open Trade

• Restricted market access can lead to countermeasures
• Credibility of the EU as a proponent of open, rule-based markets is at stake
• Risk of increasing isolationism and trade conflicts

The DIHK Position at a Glance

• Interventions only in exceptional cases: Companies should manage their procurement and sales markets independently. Local content requirements are only justified in exceptional cases, according to the German Chamber of Commerce and Industry (DIHK).
• Location policy before local content: Many competitive disadvantages arise from high energy and labor costs, complex regulations, and bureaucracy within the EU. These factors should be prioritized for improvement.
• Open markets as the basis of competitiveness: The success of the European economy relies on open, rule-based markets. Exaggerated local content requirements can undermine this foundation.
• Local content as the last resort: Where compelling security or supply policy reasons exist, local content rules may be necessary – but they must be limited in time, clearly defined, minimally bureaucratic, and aligned with trade policy.