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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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3.3. Concluding remarks This chapter shows how the development of an EU industrial policy is characterised by a sort of path-dependency effect in which past strategic choices still have a bearing on present decisions. It appears clearly that the development of an industrial policy has not been on the EU policy agenda for long, and the relatively recent surge in interest is not matched by a corresponding purposive strategy. That said, the EU appears to have http://www.ipeuropaware.eu/ European Commission (2014), DG Internal Market and Services Management Plan 2014, http://ec.europa.eu/dgs/internal_market/docs/management-plan_en.pdf. According to the latest management plan of DG Internal Market and Services a major priority for the coming year in the area of intellectual property will be to finalise the review of the EU copyright system on the basis of in-depth preparatory work and legal and economic analysis.

Council Regulation (EC) No. 1225/2009 of 30 November 2009 on protection against dumped imports from countries not members of the European Community; Council Regulation (EC) No. 597/2009 of 11 June 2009 on protection against subsidised imports from countries not members of the European Community.

In this regard, a new Regulation on European Standardisation came into force on 1 January 2013 with direct applicable effects on Member States. Standardisation is seen as a key tool for achieving a more integrated and harmonised internal market and also for facilitating international trade and strengthening the competitiveness of SMEs, by facilitating the free movement of goods and services, network interoperability, means of communication, technological development and innovation.

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – "Trade, Growth and World Affairs – Trade Policy as a Core Component of the EU's 2020 Strategy", COM (2010) 612 final, 9 November 2010. Brussels: European Commission.

PE 536.320 47 EU Industrial Policy: Assessment of Recent Developments and Recommendations for Future Policies considerable resources at its disposal – both in financial terms and non-pecuniary – to contribute to restoring the competitiveness of its industrial basis. If taken separately, the initiatives reviewed show reasonable evidence of relative efficiency and effectiveness, the issue at stake is whether they form a whole triggering synergies able to make a difference in the definition of EU competitiveness level and growth paths. The next chapter takes the views of stakeholders and identifies their positions in this respect.

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4. OPTIONS AND SCENARIOS

KEY FINDINGS

 The stakeholders interviewed acknowledge the fundamental importance of keeping a strong industrial basis in Europe as a source of development and resilience.

However, the target of an EU industrial policy should not be too narrow; rather, it should encompass whole value chains and related sectors.

 Business associations recognise the fundamental role that the EU plays in terms of “levelling the playing field”. By contrast, the added value of EU action put forward by EU policy stakeholders is when the EU fulfils the role of knowledge-broker, or knowledge platform.

 Some stakeholders suggest better aligning conceptual underpinnings and intervention logics at the basis of policy developments in some areas, including, for example, environmental policy and other initiatives aimed at fostering competitiveness. Some initiatives are considered to be under-funded (e.g. the SME instrument) and achieving a critical mass is generally called for.

 The notion of Smart Specialisation put forward by DG Regio is often endorsed by other policy stakeholders as a potentially pertinent model to underpin the development of an EU industrial policy.

 The majority of respondents believe that a proper mandate in the field of industrial policy should be more clearly defined at EU level.

 Member States are characterised by distinct socio-economic institutional features determining different growth paths, and contributing to shaping specific policy responses to varying types of challenges. This constitutes different incentives for Member States to take part in an active EU industrial policy. “Peripheral” Member States place high expectations on an EU industrial policy.

This chapter explores options and identifies possible scenarios for the future development of an EU industrial policy. To this end, it turns to the interests at stake, and the institutions where these interests are mediated, and casts the analysis at the level of the perception that the main stakeholders have of an EU industrial policy. The hypothesis is that besides rational arguments defended by economists, experts and informed observers, the positions of relevant stakeholders determined by the perceived gains and losses expected from policy shifts, are fundamental factors impinging on the future development of an EU industrial policy.

The chapter will browse a schematic and concise (not exhaustive, but representative)

conceptual map of the positions defended by the main categories of stakeholders:

policymakers and business associations at EU level, Member States, experts and informed observers. The purpose is to provide readily accessible information on the perceptions and positions held by these stakeholders in the wider debate on EU industrial policy, and thus pave the way for the identification of a possible scenario for the future.





4.1. Stakeholders’ perceptions This section reviews the positions of the main stakeholders at EU level, i.e. business organisations, business support organisations and policymakers at the European

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Commission, and in other EU institutions (see the Annex for a full list of the stakeholders consulted).

4.1.1. What does industry encompass?

On the issue of what “industry” encompasses, there is a wide consensus among the stakeholders reviewed.

There is, first, a strongly converging assessment of the importance of manufacturing as a fundamental element at the heart of economic growth and resilience to external shocks. It was noted that a solid manufacturing basis is the best antidote to withstand the effects of the crisis. On these grounds, the goal set by the new president of the European Commission for manufacturing’s share of GDP to reach 20% by 2020 is generally endorsed.

At the same time, there is also general agreement on adopting a broad definition of manufacturing, or on encompassing different elements. This is expressed in different ways, which reveal some contrasting positions beyond the consensus.

First, the role of services and their growing link to manufacturing is emphasised. There is a common view that industry is already embedding services, and that what is sold on the market is increasingly a set of services rather than a simple manufactured product, or in other terms, a solution. “To be competitive in Europe today means not just producing a good, but rather selling a solution, which of course comprises giving services to customers as well” (UEAPME).

A step forward in this respect is made by those who refer to the ‘servitization of industry’, or the fourth industrial revolution, which clearly goes beyond manufacturing per se to include services in the concept of industry itself. “Fast-expanding business services are already dominant in manufacturing. A wide and growing range of companies – both manufacturing and service – are now involved in designing and delivering new generations of business services. New technologies make services still more relevant to manufacturing.” (EESC Opinion of the Consultative Commission on Industrial Change (CCMI) on the Impact of Business Services in Industry (own-initiative opinion)).

Second, the dematerialisation/digitalisation of the economy is invoked as accompanying – not substituting - re-industrialisation. The issue of industry becoming more innovative is often seen as manufacturing involving digital and dematerialised components. The influence of digitalisation is acknowledged, both on manufacturing and on creating new needs and products.

Third, the notion of the value-added chain is often put forward. It is probably appropriate to adopt an approach that distinguishes between the different segments that make up the manufacturing sector and that participate in the “value-added chain”. In this respect, a thin dividing line emerges between those who focus their attention on the higher end of the value chain and those who are in favour of a balanced approach in which Europe would also concentrate on some strategic traditional and less technologically developed sectors.

Among the latter are business associations; for example Business Europe insists on the need for Europe to nurture a diversified manufacturing sector, comprising both basic, raw material industries and higher value added activities. It is not a matter of choice: while the framework conditions must be set to keep the former in the EU, the latter are also to be promoted. On the face of it, others think that the primary objective is to keep those parts of the production process with the higher value-added in Europe. Focusing on innovative and creative industries, smart specialisation and high value-added sectors is one of the ways in which Europe can try to be competitive and assure the good quality jobs its citizen want.

50 PE 536.320Policy Department A: Economic and Scientific Policy

4.1.2. A general aversion to a sectoral approach Another point of convergence among stakeholders and across categories (business associations and policymakers) is the rejection of what is considered to be a feature of past industrial policies, namely a sectoral approach. Most respondents underline that an EU industrial policy should not target specific industries or sectors as indeed, “picking winners” might be risky. The “old” approach to industrial policy was abandoned, it is argued, because it was often associated with state interventionism and protectionism. A “silos” approach is blind to fruitful cross-fertilisation arising from cross-sectoral relations (CoR).

According to DG Regional and Urban Policy (DG Regio), industrial policy should no longer be organised along sectoral lines, it is not top-down and it is not about picking winners.

Industrial policy should be horizontal and technology neutral (CEMEET).

Yet, there are different nuances, and a number of stakeholders point out some developments that correspond to “soft” forms of sectoral approaches. For example, it is indeed justified and necessary to identify strengths and weaknesses, and to carry out foresight analyses. Also, although essentially cross-sectoral, Key Enabling Technologies have been identified as “enabling the development of new goods and services and the restructuring of industrial processes needed to modernise EU industry and make the transition to a knowledge-based and low carbon resource-efficient economy”. The Specialised partnerships (see Chapter 2) developed on the initiative of the European Commission are also a way of taking sectoral considerations into account.

Finally, some successful examples of sectoral approaches are (timidly) put forward; for example, in the automobile sector with the (successful) introduction of environmental standards (Euro 4, 5, 6) or in the shipping and space industries.

The table below summarises the promising sectors that should be promoted according to the stakeholders overviewed.

Table 3. Examples of promising sectors – or areas of policy intervention identified by stakeholders

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4.1.3. European added-value On this basis, the EU is expected to develop a policy aimed at putting in place the right conditions for industries to develop, taking into account market opportunities and needs.

Unlike in the past, public authorities should only intervene to set a level playing field, fostering a conducive business environment and coordinating actors. This approach was paralleled by one of the interviewees to a new economic writing strand: while the issue was once to find the optimum allocation of resources on markets (shifting and rearranging of

–  –  –

rights), now it is increasingly one of finding the best way to solve a problem. Equilibrium does not exist in reality; it is about probabilities and the adoption of a systemic approach putting in place the right framework conditions for the system to work optimally.

The business viewpoint The key issues for the business associations are a level playing field and business-friendly environment that is conducive to private investments. In general Europe should contribute to generating an attractive area where both private European and foreign investors would find it interesting to start new businesses (or bring businesses back from other geographical areas through re-relocation).

Before dealing with initiatives to foster competitiveness, the first step should be how to ensure that present policies do not harm it. In particular, the notion of competitiveness proofing (or mainstreaming competitiveness) is put forward by all the business associations interviewed. Some differences lay in the identification of which EU policies have a potentially detrimental effect in this respect. For example, there is much concern about environmental regulations/policy, which is often invoked as a potential factor raising the (already high) cost of energy and is implemented at the expense of the survival of some (polluting) industries. Another example mentioned is the EU attempt to establish a complementary pension scheme. The solution would be to carry out impact assessments applied to all new legislation.



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