European legislation that threatens to lock British business out of EU industry could derail a planned reset summit between the bloc and the UK, government sources have said.

The “Made in Europe” legislation – formally known as the Industrial Accelerator Act – is designed to curb China’s increasing presence in European industry, but was not on the reset plan agreed by the former prime minister, Keir Starmer, and the European Commission chief, Ursula von der Leyen, in London in May 2025.

A follow-up summit was due to be held in July this year, but was cancelled after Starmer’s resignation. The government is now looking to change the agenda, with one source saying that “Made in Europe should be on the agenda”.

It is understood that Hamish Falconer, the new cabinet minister with responsibility for the reset, told the EU’s trade commissioner, Maros Sefcovic, this was the UK’s new priority when the pair met last week.

On Tuesday, the trade minister, Anas Sarwar, told a gathering of UK business leaders on Tuesday they needed to let their EU partners know the risks posed by Made in Europe, which will prioritise EU suppliers in key industries including car manufacturing and defence.

Ministers have privately expressed fears that the reset has lost significant momentum since Andy Burnham became prime minister, with his focus on the domestic agenda. Agreements have yet to be reached on several key issues, including what tuition fees will be paid by EU students coming to the UK on a mooted “youth experience” programme.

UK sources say that while a food and drink deal and a youth mobility scheme are still on the agenda, the government will not agree to a new summit date until the bigger issues of the Industrial Accelerator Act are included in discussions.

There was talk in London and Brussels that a meeting could be convened on 6 November, but it is understood this could now be pushed backuntil the end of November or beyond.

One government source said: “We are willing to negotiate on the things that matter to them, but they have to be able to negotiate the thing that matters to us. Made in Europe should be on the table, definitely.”

The UK fears the Made in Europe laws could jeopardise billions of pounds worth of trade if British goods are not categorised as European, locking it out of key contracts on the continent.

France, which conceived the Made in Europe laws, is pushing to have the legislation passed by the end of the year, deepening fears that British manufacturing could be left behind.

It is thought that France is sympathetic to the UK’s position, but believes increasing competition from China makes it more important to get the legislation on the books now, and make allowances for third countries later, a process that could take years.

One EU diplomat said that there was substantial backing among key member states for the UK to be included in Made in Europe, though not all agreed.

“The problem is the benefits are seen as asymmetrical,” the diplomat said. “The UK gets more out of it than the EU.”

It is understood the Netherlands, Germany, Poland and Italy are all in favour of the UK’s inclusion, but France remains unconvinced.

The government’s newly assertive approach could give the UK some leverage in negotiations over concessions on youth mobility, something that is a political priority for many EU capitals.

Another UK source said a deal on Made in Europe would be “a good faith demonstration that we can find answers and almost everything else”.

A government spokesperson said: “The UK is a close and trusted European partner, committed to our shared security and economic cooperation.

“We will continue to engage with the EU on Made in Europe and work together, as like-minded partners, to boost growth and open up trade.”

The UK’s desire for a deal on manufacturing rules comes at time when the EU is under pressure from industry across the bloc to loosen China’s growing presence in supply chains.

Last week, manufacturing bosses warned of a potential loss of 300,000 jobs this year unless incentives are put in place to make European products more attractive than cheaper parts from China.

The EU’s deficit with China is now running at €1bn a day, with fears that European companies are being cannibalised from within.

In her state of the union address to the European parliament on Wednesday, Von der Leyen said the EU needed to grow non-Chinese supplies of rare earths and critical minerals vital to manufacturing.

Her surprise offer of an associate membership deal with Canada demonstrated how far Brussels can go to court third country partners.

Speaking in the presence of the Canadian prime minister, Mark Carney, the EU chief said: “We want to bring the relationship with Canada to the highest level possible. We must urgently reimagine our partnerships.”

The EU and Canada are due to hold a summit in late October to develop their future relationship. The 27-member EU has never had an associate membership category, though it has close ties with Norway, Iceland and Switzerland, enabling deep economic integration with these countries, which follow many EU rules including free movement – a red line for the UK.

Carney, who is due to address the European parliament on Thursday, has called for a “unique alliance” with the EU, as his country seeks to reduce its heavy dependence on US trade.

Burnham met Carney at a football match in Liverpool on Wednesday night, where the two Everton fans watched their team in the League Cup. Burnham is also due to meet the US president, Donald Trump, for the first time at the UN general assembly in New York next week.

The potential new alliance between the EU and Canada will worry UK ministers that the bloc’s priorities are shifting. Should Burnham fail to complete a food and drink deal that was already on Starmer’s reset agenda, it could have implications for October’s budget, as the economic effects of easing trade with the EU is priced in as part of growth calculations.

The Conservatives criticised the UK/EU reset on Wednesday, saying a future Tory government would build a wholly independent regulatory system.

Alex Burghart, the party’s deputy leader, and Victoria Atkins, the shadow environment secretary, warned the plans would make Britain less competitive.

Speaking at the Policy Exchange thinktank, Burghart said: “Labour’s EU reset is the worst of both worlds and will leave Britain unable to take advantage of our country’s future growth potential.

“The next Conservative government would not be bound by this arrangement and will begin work now on a genuinely independent regulatory system.”