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«EU INDUSTRIAL POLICY: ASSESSMENT OF RECENT DEVELOPMENTS AND RECOMMENDATIONS FOR FUTURE POLICIES STUDY Abstract Following disregard in the 1980s, ...»

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This phase is characterized by an acknowledgement of the importance of new technologies generally, and of information technologies specifically. Important documents on this subject are the publications on the global information society (published in 1994) and all the EU policy attempts to promote the information society. “Industrial policy and innovation policy were twin strategies during this phase” (Aiginger and Sieber, 2006)  Fourth Phase Starting approximately at the turn of the century, a renewed interest in industrial policy developed within Europe. This interest was stimulated by globalisation, EU enlargement, fear of deindustrialisation and slow European growth. Both the European Councils in Lisbon in 2000 and in Gothenburg in 2001 recognised the key role of industrial policy in helping “They have failed to make industry competitive by delaying the requirement to implement necessary adjustments, this led to grave misallocation of resources and exacerbated problems of budgetary imbalances….

Sectoral approaches to industrial policy can work for a period, but they inevitably entail the risk of delaying structural adjustments and thereby creating job losses in the future.”

Treaty on the Functioning of the European Union, Title XVII, Industry, Art. 173 (ex Article 157 TEC):

http://eur-lex.europa.eu/resource.html?uri=cellar:ccccda77-8ac2-4a25-8e66a5827ecd3459.0010.02/DOC_1&format=PDF

26 PE 536.320Policy Department A: Economic and Scientific Policy

the European Union meet its objectives. In this context, four main communications were issued31. During this phase a more sophisticated sectoral perspective was added to the horizontal approach, in a so-called “matrix approach”32 to industrial policy33. Thus, in July 2005, for the first time, a Commission communication on ‘Implementing the Community Lisbon Programme: A Policy Framework to Strengthen EU Manufacturing — Towards a More Integrated Approach for Industrial Policy’ (COM(2005) 0474) set out an integrated approach to industrial policy based on a concrete work programme of cross-sectoral and sectoral initiatives. With this communication, the Commission committed to the horizontal nature of industrial policy and to avoiding a return to selective interventionist policies. The idea suggested by this communication is that for industrial policy to be effective, horizontal policies have to take into account the specific context of individual sectors and therefore a combination of horizontal and sectoral policies is needed. Seven major cross-sectoral policy initiatives (see Box 3) were announced in this communication in order to address the common challenges across groupings of different industries and to reinforce the synergies between different policy areas in the light of competitiveness considerations.

Box 3. Cross-sectoral policy initiatives

1. Intellectual Property Rights and Counterfeiting Initiative (since 2006)

2. High Level Group on Competitiveness, Energy and the Environment (2006-2007)

3. External Aspects of Competitiveness and Market Access (since 2006)

4. New Legislative Simplification Programme (2005-2008)

5. Improving Sectoral Skills (since 2005)

6. Managing Structural Change in Manufacturing (since 2005)

7. Integrated European Approach to Industrial Research and Innovation (since 2006) In addition to these cross-sectoral initiatives, a number of new political sector-specific initiatives were identified, based on their nature or particular importance (the full list is in Annex II of the Communication, COM(2005) 0474). Sectoral initiatives existing before the

issue of this Communication include:

- Follow-up to CARS 21 High Level Group on the automotive industry

- LeaderSHIP 2015

- Follow-up to the STAR21 report of the European Advisory Group on Aerospace and the STAR21 Communication (COM(2003) 600)

- High Level Group on textiles and clothing As part of the renewed Lisbon Partnership for Growth and Jobs strategy (in 2007), EU industrial policy was geared towards more sustainable production and consumption, The first was a document regarding industrial policy in the enlarged EU “Industrial Policy in an Enlarged Europe” (European Commission, COM 2002, 714). The second document was a communication from the Commission on “Some Key Issues in Europe's Competitiveness" (European Commission, COM(2003) 704 final).

The third document was a communication on “Fostering Structural Change: an Industrial Policy for an Enlarged Europe” (European Commission, COM (2004) 274). Finally, a communication dated 2005 (European Commission, COM (2005) 474 final), entitled “Implementing the Community Lisbon Programme: a Policy Framework to Strengthen EU Manufacturing - Towards a more Integrated Approach for Industrial Policy,” proposed a taxonomy of clusters of sectors to assess and fine-tune industrial policies.

The term “matrix approach” appears for the first time in the Report on the Competitiveness of Manufacturing 2005 provided by WIFO and partners for the EC.

See Aiginger and Sieber, (2006), Warwick, K. (2013), “Beyond Industrial Policy: Emerging Issues and New Trends”, OECD Science, Technology and Industry Policy Papers, No. 2, OECD Publishing.

http://dx.doi.org/10.1787/5k4869clw0xp-en.

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focusing on renewable energies and low-carbon and resource-efficient products, services and technologies. In this regard, a number of measures were adopted by the Commission in the following years34.

Fifth Phase  As of March 2010 industrial policy has been explicitly related to macroeconomics goals.

Industrial policy is redefined for industrialised countries as a strategy to promote “high– road competitiveness” understood as the ability of an economy to achieve “beyond-GDP” goals, (Aiginger, 2014). In March 2010 industrial policy became a flagship of the Europe 2020 strategy (replacing the Lisbon strategy)35. The flagship initiative ‘An industrial Policy for the Globalisation Era’ aims to promote European industrial competitiveness, thus placing more emphasis on factors such as the growth of SMEs, the supply and management of raw materials and well-paid jobs. It encompasses a whole range of EU policies such as competition, trade, innovation and energy and puts special emphasis on industrial property rights.

The main milestones are:

1) The Commission communication ‘Industrial Policy: Reinforcing Competitiveness’ (COM(2011) 0642), adopted on 14 October 2011, calling for deep structural reforms as well as coherent and coordinated policies across the Member States points out several key areas: Smart Regulation, access to finance, single market etc.

2) Commission Communication "A Stronger European Industry for Growth and Economic Recovery" (COM(2012) 582/3). Focusing on four pillars as means of promoting industrial competitiveness: investments in innovation, better market conditions, access to finance and capital, and human capital and skills. As far as investment in innovation is concerned, the focus is on six priority action lines selected after public consultation: advanced manufacturing technologies for clean production; key enabling technologies; bio-based products; sustainable industrial and construction policy and raw materials; clean vehicles and vessels; smart grids.

For each of these priority lines, a specialised partnership, made up of relevant Commission services, and involving key stakeholders (industry, labour unions, observers, etc.) was established to ensure the timely delivery of reforms (see Box 4).

3) a new communication was adopted on 22 January 2014 as a contribution to the 2014 European Council debate on industrial policy, called ‘For a European Industrial Renaissance’ (COM(2014) 0014). One of the key messages of the new communication is that Europe needs to urgently lay the basis for post-crisis growth and modernisation. To achieve this, the Commission calls on Member States to recognise the central importance of industry for creating jobs and growth, and of mainstreaming industry-related competitiveness concerns across all policy areas.

These include ‘An Industrial Property Rights Strategy for Europe’ (COM(2008) 465 final), ‘Sustainable Consumption and Production and Sustainable Industrial Policy Action Plan’ (COM(2008) 0397), ‘The Raw Materials Initiative’ (COM(2008) 0699), ‘Preparing for Our Future: Developing a Common Strategy for Key Enabling Technologies in the EU’ (COM(2009) 0512).

Out of the seven flagship initiatives, four are especially relevant to making the EU’s industry more competitive:

‘Innovation Union’ (COM(2010) 0546), ‘A Digital Agenda for Europe’ (COM(2010) 0245), ‘An Industrial Policy for the Globalisation Era’ (COM(2010) 0614) and ‘New Skills for New Jobs’ (COM(2008) 0868).

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 The task force on advanced manufacturing technologies address related issues by providing support for market oriented pre-competitive research in manufacturing and in process development via public-private partnerships (‘Factories of the future’ and ‘SPIRE’)36. It also supports demand for advanced manufacturing technologies, e.g. by organising matchmaking events and awareness-raising activities on advanced manufacturing technologies for clean production.

 The task force on clean vehicles is addressing these issues by contributing to policy initiatives such as developing and harmonising at global level type-approval legislation for electric and fuel cell vehicles making them at least as safe as those with a traditional powertrain; by publishing guidelines on financial incentives that will serve as a reference for Member States wishing to introduce demand-side measures promoting clean and energy-efficient vehicles.

 The task force on bio-based products started work by informing public purchasers and raising their awareness. A compilation of lists and databases of bio-based products is now available. Standardisation is in progress in different areas ranging from nomenclature, via measuring bio-based contents, to sustainability assessment and certification of bio-based products.

 The task force of Key Enabling Technology aims to leverage the funding instruments at the EU’s disposal. The priorities of Horizon 2020, the Structural Funds and the European Investment Bank have been aligned to support the deployment of KETs into products and services. In February 2013 a memorandum of understanding was signed between the European Commission and the European Investment Bank with the aim of improving access to finance for investments in KETs.

 The Task force on sustainable construction set up a high-level forum and five thematic groups, involving more than 150 representatives from national administrations and sector associations in order to streamline and coordinate various initiatives currently underway at EU, national and sectoral levels with respect to the strategy.

 With the help of industry stakeholders, the smart grids Task force identified a number of areas requiring policy attention in order to speed up the deployment of smart grids and is in the process of recommending actions to be taken in these areas. Amongst others, the policy actions suggested by the members of the expert group include actions to promote investment in smart appliances and legislative action (Directive/Regulation) for low voltage side networks.

“A number of key priorities are raised for consideration and for policy guidance at the highest political level, the European Council: to continue deepening the mainstreaming of industrial competitiveness in other policy areas; to maximise the potential of the internal market; to decisively implement the instruments of regional development with national and EU instruments in support of innovation, skills, and entrepreneurship; to encourage investment, businesses require access to critical inputs; to further facilitate the integration of EU firms in global value chains; to endorse reindustrialisation efforts in line with the Commission’s aspiration of raising the contribution of industry to GDP to as much as 20% by 2020.” (COM(2014) 0014).

The new Investment Plan worth more than €300 billion proposed at the end of 2014 for 3 years by the new President of the European Commission takes place in this context. Based SPIRE: Sustainable Process Industry through Resource and Energy Efficiency.

PE 536.320 29 EU Industrial Policy: Assessment of Recent Developments and Recommendations for Future Policies on initial public EU investment worth €21 billion (corresponding to funds already allocated to programmes such as Connecting Europe Facility, Horizon 2020 as well as a contribution from the European Investment Bank), it is expected to leverage private investment up to €300 billion. It raises expectations concerning the intention of the European Commission to engage an active growth strategy based on public and private investments.

Overall, in this phase, industrial policy merged with innovation policy and environmental policy has become a subset of a broader design for post-crisis growth and modernisation in Europe.

3.2. Policy fields and means of action This section carries out a detailed inventory of the different initiatives taken at EU level that contribute (explicitly or not) to an EU industrial policy. It distinguishes between policies and programmes for which a budgetary endowment is granted, and initiatives aimed at steering Member States’ actions on an imposed basis, but without any financial contribution. The result is a detailed picture of the areas of intervention, the means mobilised and the weight of the EC’s influence in these areas.

3.2.1. Initiatives with a budget envelope The European Union has put an increasing share of its policy, regulatory and financial levers at the disposal of Member States, regions and industry to foster investment in innovation and to enhance competitiveness. For the period 2014-2020 the EU is committed to investing up to €960 billion37, of which around 87% will be addressed to implementing the EU 2020 strategy through the objectives of smart, inclusive and sustainable growth38.

Figure 8: EU budget 2014-2020 by financial headings, in commitment appropriations (%), price 2011

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