Presenting his five-year political programme earlier this month, European Commission President José Manuel Barroso stressed the need to "strengthen the European industrial base" (EurActiv 03/09/09).
Speaking to journalists before a vote on his re-appointment in the European Parliament earlier this month, Barroso likened EU policies to address climate change and improve energy security to the European Coal and Steel Community (ECSC), which paved the way for European reconciliation after the Second World War (EurActiv 07/09/09).
Modernised industries using environmentally-friendly technologies and swallowing less energy would give the EU first-mover advantages and provide more jobs, he argued.
"Europe stands to benefit enormously from investing in new low-carbon technologies for future jobs and growth. Fighting climate change and the move towards a low-carbon economy provides huge opportunities and will enhance our energy security," Barroso stated in his political guidelines.
But his proposals are vague when it comes to concrete measures to achieve this goal.
Barroso identified a new European supergrid for electricity and gas as one of the "next great European projects" to meet growing energy demand. He also highlighted the Commission's current leadership in launching the Nabucco gas pipeline project and progress made on Baltic interconnectors.
The former Portuguese prime minister also pledged to launch "a major initiative" to "adapt [the EU's] policies to the challenge of climate change".
EU merger, competition rules in spotlight
For businesses, the return of industrial issues to the political agenda is invaluable, especially in France and Germany, which have large manufacturing bases. The secondary sector generates 18% of the EU's GDP and employs 39 million people, just behind the services sector. More significantly, industry contributes 80% of European spending on R&D.
"Speaking about industry is not old-fashioned," agreed industry representatives at a recent summer university debate organised by MEDEF, France's largest employers' union.
But despite the expected benefits of a revived manufacturing base for growth and employment, several obstacles stand in the way of building a European industrial policy.
Benjamin Coriat, an economics professor at Paris XIII University, told the MEDEF event that the first of these is the strict manner in which the European Commission applies its competition rules, a result of past decisions. To develop the single market in the 1980s, the EU first needed to "break national monopolies in order to allow for greater economic integration," he said.
But this initial rigor no longer responds to today's needs, Coriat argued, as European markets are now largely open and are exposed to ever stronger competition from non-EU countries.
The EU executive's control over mergers and acquisitions strengthens the case for a new approach, according to the professor. "The Commission's [merger] authorisations usually come with draconian conditions that often oblige companies to give up a whole series of activities," he said, adding: "This control is much stricter than it is in the US."
Coriat also deplored the weakness of the institutional means and structures dedicated to EU industrial policy. "Since Maastricht, the Commission has not institutionalised the tools and means of intervention" when it has the legal capacity to do so, he said.
EU legislative 'confetti'
Since 2000 and the launch of the Lisbon Strategy, a number of other initiatives have been launched, all of which seek to improve Europe's industrial competitiveness in one way or another. These include the Small Business Act, the promotion of competitiveness clusters, the Competitiveness and Innovation Programme (CIP), and the 'Europe Innova' network.
But this profusion of policy tools actually prevents Europe from acting effectively, experts claim.
Speaking at the MEDEF congress, Jean Therme, director of technological research at the Council for Atomic Energy in Grenoble, described the EU's industrial policy as a "confetti factory".
Moreover, the Commission's approval criteria for some of these programmes are sometimes problematic, argued Professor Coriat, citing "gender parity, the presence of southern countries, new market entrants or SMEs".
In the end, the EU executive finds itself approving mediocre projects which tick all the right boxes rather than "projects of excellence" which fail to fulfil all the administrative criteria, the professor claimed.
Towards an integrated approach?
Finally, Coriat said the Commission is obsessed about comparisons with the United States in areas where Americans are already much better, such as venture capital and young innovative businesses. But instead of trying to imitate the US, Europe should focus on what it does well itself: its "premium products". There is no need to support areas where the US already has a comparative advantage, he explained.
According to the professor, Europe's piecemeal approach to industrial policy should be abandoned in favour of an integrated approach. The Lisbon Strategy, he argues, is a good basis from which to start common actions in the field of technological development. But it should not prevent those member states that wish to do so from launching initiatives of their own, he concluded.
