Since the COVID-19 crisis, the issue of industry has become central to the European Union’s approach, so much so that the European Commission updated its industrial strategy in March 2020 with the aim of supporting European industry in its energy and digital transition.
However, it should be recalled at the outset:
1. In matters of industrial policy, the European Union only has competence to support the Member States.
2. Each State therefore defines its own strategy with the existence of commercial rivalries and power relations between the Member States, making it more difficult to adopt common rules such as reciprocal access to public contracts, the carbon adjustment mechanism for borders or the 15% tax on multinationals.
3. There is also social, fiscal and environmental dumping within the European Union.
4. And state aids are tightly regulated to preserve the principle of free and undistorted competition, with little use of anti-dumping mechanisms to preserve European industries from products from countries whose states do not encumber themselves not the same constraints.
On this subject, an interesting development can be seen with the projects of common European interest (PIEEC) which allow States to finance certain industrial projects such as factories for the production of batteries for electric vehicles.
However, European industrial ambitions may come up against other European policies:
– How to reconcile strategic autonomy with the European Green Deal which will accentuate dependence on critical raw materials?
– How to strengthen the autonomy of the European Union when the interpretation of competition law can slow down the development of world-class companies?
– How to develop European industry when the European Union is struggling to respond in a coordinated way to recent American policies?
The current situation with the United States is indicative of the difficulties of Member States to operate in a coordinated manner.
Thus, faced with the American measures, the reaction of the President of the European Commission, Ursula von der Leyen, was to propose an adjustment of State aid to respond to the competition generated by the American plan to fight against inflation.
An interesting structural response, but insufficient when faced with:
– Inexpensive energy in the United States;
– A marking of tax credits on products assembled on American soil,
– Massive aid for relocation.
For his part, Thierry Breton, European Commissioner for the Internal Market, wants the establishment of a European sovereignty fund, up to 2% of GDP, or 350 billion euros, which would make it possible to compete with inflation reduction American act.
Member States react differently between:
– A massive national plan on the German side;
– A refusal of a new common understanding on the side of the Netherlands,
– A desire for changes to the rules on the Spanish side.
However, beyond aid, the challenge for the European Union is:
– To adapt its tools to the current geopolitical reality;
– To play on equal terms against countries that resort to anti-competitive practices and dumping,
– Adapt quickly to changes in standards in other countries.
Thus, the challenge for the European Union is to preserve its industries and its jobs, and despite this urgency, the ability to respond in a coordinated and massive manner is long overdue…
