EU reconsiders green laws to shore up industry[fr][de] 

EU ministers responsible for industry, trade and research are due to agree a new approach to industrial policy that takes greater care of key sectors such as the chemicals and automotive industries as Europe battles through its worst economic recession since the 1930s.

Germany in particular reckons that all additional environmental legislation should be put on ice until economic conditions return to normal, according to one senior diplomatic source.

The REACH regulation on chemicals and the extension of carbon dioxide emission limits to light duty vehicles in the automotive sector were both cited as areas where industry will be offered special treatment.

The aim is to soften the impact of Europe's strict environmental rules as industries fight their way through the economic recession.

Risk of 'production leakage'

Draft conclusions  of the ministerial meeting point to the risk that "regulatory burdens could lead to 'production leakage', notably in the present economic crisis". The term refers to the risk that manufacturing industries might relocate abroad due to strict environmental rules in Europe (see EurActiv LinksDossier on 'carbon leakage').

"Compliance with new requirements should not cause excessive costs to businesses in all policy areas," the draft conclusions read.

"The conclusions [...] will contain horizontal measures targeting all industrial sectors and particular measures for specific sectors (chemicals, cars, the electric and electro-technical industries) following recently concluded work on these sectors by various high-level groups," according to a statement by the Czech EU Presidency. 

"At the same time, the conclusions will acknowledge that focused and coordinated measures may be extended to cover other sectors of the economy facing the consequences of the economic crisis," the statement adds.

This sectoral approach to industrial policy seems to find consensus among EU member states. "We need to have concrete measures, sector-by-sector," said a diplomat from one of the larger EU member states. "We will welcome European action along those lines," said another. 

Chemicals and climate rules under the spotlight

BusinessEurope, the EU employers' lobby, insisted that the recession "does not allow for a 'business as usual' attitude to regulatory policy".

The European business organisation singled out the REACH regulation on chemicals in particular for being too costly and difficult to implement. "Companies are still left with legal uncertainties because of inconsistency or lack of coordination between different pieces of legislation," the organisation wrote in an assessment of the chemicals law two years after it was adopted. It called for more consistency and guidance about how the legislation should be implemented in order to provide companies with more legal certainty.

"REACH is currently too costly and too uncertain," said Philippe de Buck, secretary-general of BusinessEurope, calling for the financial burden to be reduced by introducing staggered payment for registration fees. "This could save around €200 million for companies which have to register chemical substances," De Buck explained.

BusinessEurope applies the same reasoning to climate change and wider environmental policy. "While we recognise that the climate protection agenda will lead to new regulatory initiatives, these initiatives must fully integrate [industrial] competitiveness" objectives, De Buck wrote in a letter ahead of the ministers' meeting.

In some areas, initiatives should be reconsidered and alternatives elaborated if required, he said. "The project of establishing an EU-wide emissions trading scheme for NOx and SO2 should be put on hold," the letter adds.

France and Germany pushing for EU industrial policy

Meanwhile, member states such as France and Germany, which have the largest manufacturing bases in Europe, are hoping to take advantage of the economic recession to revive talks about a more ambitious, EU-wide industrial policy.

In early April, French State-Secretary for EU Affairs, Bruno Le Maire, announced that France and Germany had agreed closely to coordinate their economic policies and lay the foundations of an EU industrial policy.

If the moves were to materialise, this would be "an important development," according to Stanley Crossick, founder of the European Policy Centre (EPC), a Brussels-based think-tank, anticipating progress in the economic aspect of Europe's economic and monetary union (EMU).

According to Le Maire, industrial policy requires a competition policy that will support the establishment of European champions in key industries such as energy and aerospace. It should also encourage the birth of European industrial giants and apply the principle of reciprocity to relations with foreign countries.

"Many will disagree with Le Maire's ideas for an industrial policy," writes Crossick on a comment  posted on the Blogactiv website. And natioinal interpretations may differ as to what constitutes the European interest, as EU initiatives usually find member-state backing only when they fit national agendas.

"We would welcome European aciton along our lines," said one diplomat, illustrating the point that national priorities still dominate when it comes to industrial action at EU level.

Britain warms up to the idea

However, the mood might be changing. Countries such as the UK, which have traditionally been less enthusiastic about the idea of industrial policy due to their stronger reliance on the services sector, now seem more open to the idea.

"There has to be an industrial policy," said a French diplomat. "There is a consensus to say that it is legitimate to care about industrial policy at European level."

A British diplomat confirmed there was "a renewed taste for an industrial policy at EU level," highlighting the UK's new industrial policy unveiled earlier this year.

In April, Prime Minister Gordon Brown launched a "strategic plan" to invest in Britain's economic and industrial future, promising a new era of "activism" in British industrial policy to move the country out of recession.

The initiative, entitled "Building Britain's Future – New Industry, New Jobs ", aims to back businesses in a range of markets and sectors, from pharmaceuticals to life-sciences and plastic electronics.

In their draft conclusions, the ministers "acknowledge the fact that industry and the services sector are increasingly intertwined and that professional, business and product-accompanying services are of […] ever-growing importance to many industrial sectors".

"Achieving a knowledge-based, safe and sustainable low-carbon and resource-efficient economy should be a guiding principle for European industrial policy," the draft conclusions read, a vision which appears more compatible with the UK's proclaimed green goals.

"A new comprehensive and integrated industrial policy has to be decided, which will be part of the post-Lisbon Strategy," said Philippe De Buck of BusinessEurope, referring to the EU's goal of becoming the world's most competitive economy by 2010.