EU officials are assembling a broad tech sovereignty play anchored by the Cloud and AI Development Act, or CADA. People familiar with the process say the bloc is debating whether to restrict contracts under CADA to European companies to reduce reliance on non European providers, including US firms.
The package would create levels for cloud and software services. At the top tier, governments would be required to rely exclusively on EU based suppliers for highly sensitive information.
The UK says the EU's direction would damage British digital businesses and maintains it should be eligible to bid under future "Made in Europe" regimes. According to people briefed on the talks, Britain's main objections are twofold: a requirement that providers be physically located in the EU and limits tied to ownership and control.
London also argues that excluding UK firms would violate the post Brexit trade deal that governs relations, a view the European Commission disputes, according to people familiar with the exchanges. A UK government spokesperson said it is in active discussions with the EU as CADA takes shape and will keep pushing to work together in a partnership built on trust, adding that the UK is already woven deeply into Europe's digital and technology landscape.
The UK hosts major telecom and cloud names, including BT and Nscale, that could be hit by new preference rules. The European Commission did not immediately respond to a request for comment.
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Both sides are accelerating talks before the Nov. 20 Brussels summit. Beyond digital rules, the agenda includes closer alignment on moving agricultural and food products, possible links between their cap and trade emissions systems, and expanded pathways enabling young people in each area to take up residence and employment.
UK Prime Minister Andy Burnham has floated the idea of rejoining the EU in the future, raising hopes of a reset a decade after the Brexit vote, and he told Labour Party members last month that Brexit had undermined the country's strength and had not delivered the promised ability to "take back control" of borders and rules.
Trade tensions are also swirling around autos. The UK is under pressure to match EU tariffs on subsidized Chinese car imports in exchange for access to the EU wide procurement model. France and Germany struck a car agreement last week that would allow the UK to become eligible for European subsidies under "Made in Europe" provisions in the upcoming Industrial Accelerator Act. To qualify, the UK would need to align its framework with EU rules on screening foreign direct investment and on trade defense - clearly referencing measures the bloc has adopted regarding China.
Earlier this week, UK Business Secretary Jonathan Reynolds said he is open to tariffs on Chinese electric vehicles to gain better access to European markets, but emphasized the choice would rest on UK interests rather than EU demands.
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