This article is part of our special report Europe’s Industry : Halting the Decline.
The French industry minister Arnaud Montebourg has launched a broadside at the European Commission, arguing that Chinese and the US industries "don't have Brussels on their backs" when accepting state aid. A group of seven countries, including France and Germany, have sent a letter urging the EU Executive to "switch gear" on industrial policy.
Industry ministers from France, Germany and five other EU countries sent a letter to Brussels on Thursday (11 October) urging more protection from unfair competition for Europe's struggling manufacturing industries.
Ministers from France, Germany, Italy, Spain, Portugal, Luxembourg and Romania signed the letter.
"We are experiencing de-industrialisation, Europe must switch gear," Montebourg said in a video address following a meeting of EU industry ministers in Luxembourg.
"When Americans, Chinese, Indians, Koreans and many others choose to subsidise their industry, they don't have Brussels on their backs," the minister said, referring to the EU's strict state aid rules.
"What Brussels forbids us to do, all other countries do. We need to reorient Europe because it is no longer adapted to the unfairness of world trade," Montebourg hammered the message home.
Industrial production across the 27-member bloc has shrunk in the past five years and millions of jobs have been lost, with the automobile sector having to cut overcapacity in France, Spain and Italy.
Industrial policy revival?
This is not the first public outing against the European Commission by Arnaud Montebourg, who has built a reputation for his fierce attacks against globalisation and the EU Executive's perceived over-liberal stances on economic policy.
This time, the French minister applauded a Commission policy paper, presented the day before, which urged a "new industrial revolution" in Europe and set out a target to increase the share of industrial production to 20% of the EU's GDP by 2020, up from 16% currently.
"At last, the bar is set very high," Montebourg said in reference to the 20% target.
But Europe should go further, the French minister continued, suggesting that the seven countries wanted more regular meetings of the bloc's 27 industry ministers. These would examine industrial sectors one by one, he explained, citing the steel, automotive and digital industries.
One key demand from the seven-country group is to allow a level playing field on state aid to new industrial sectors at the centre of what Montebourg called the "third industrial revolution", such as nanotechnology, smart grids and new materials.
"All our global competitors do it, so we must either protect ourselves against them or do it ourselves."
Sean McGuire, a spokesman for the Confederation of British Industry (CBI), welcomed the European Commission's broad focus on industrial policy, but said it should look beyond manufacturing.
“It is important that this strategy looks at industry in its broadest sense, not just manufacturing. Creative industries and industry-related services are two important potential drivers for growth in the future and creating an environment to foster this growth is important."
François Gayet, from the French industrial lobby the Cercle de l'Industrie believes that the EU's state aid rules should be reformed to take account of the wider international environment in which European companies operate.
"In general, it is clear that many sectors have complained of unfair competition from third countries," he told EurActiv in a recent interview, citing R&D aid for the automobile sector in the US and China. "What we see is that the European Commission has a very liberal, very open attitude, and that, conversely, the markets of major emerging countries, the US and Japan are much more controlled and closed," Gayet said, calling for "reciprocity at all levels".
German industry, for its part, has specifically targeted the poor management of the EU's CO2 trading scheme within the EU executive.
“Investments in power plants and low-carbon technologies need stable and predictable framework conditions in which business solutions can develop. Policy measures as the recently proposed 'set-aside' of CO2 allowances by means of altering the ETS Auctioning Regulation are counterproductive in this regard,” a senior German industrialist told EurActiv, on condition of anonymity.
The European Commission presented a policy paper on 10 October setting our a new aspirational goal to increase the industry's share of EU GDP to around 20% by 2020, up from 16% currently.
The communication, titled Mission Growth: Europe at the Lead of the New Industrial Revolution, urges immediate action to revert the current downward trend and promote the re-industrialisation of Europe.
The pillars of the reinforced industrial policy are investment in innovation, better market conditions, access to finance and building human capital and skills.
- Communication: Mission Growth: Europe at the Lead of the New Industrial Revolution (10 Oct. 2012)
- Press release: Industrial revolution brings industry back to Europe (10 Oct. 2012) [FR] [DE]
- Press release: Although EU leads in energy efficiency and foreign investment, Industrial performance across Member States is not balanced (10 Oct. 2012) [FR]
- Memo: Leading in energy efficiency and foreign investment EU industry needs to seize opportunities in globalization (10 Oct. 2012)