The Single Market is the key to a resilient industrial policy

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV Media network.

The COVID-19 crisis has weakened the EU’s industries. The key to getting back on track and increasing long-term competitiveness is to maintain and develop the Single Market through open and fair competition, writes Simon Kollerup.

The COVID-19 crisis has weakened EU industry. It is crucial that we get back on track and increase long-term competitiveness. The solution is to maintain and develop the Single Market through open and fair competition, writes Simon Kollerup.

Simon Kollerup is Denmark’s minister for industry, business and financial affairs. The article is co-authored by Swedish Minister for Business, Industry and Innovation Ibrahim Baylan, Spanish Minister for Industry, Trade and Tourism Reyes Maroto, and Dutch State Secretary for Economic Affairs and Climate Mona Keijzer.

In a few days, the Commission will present its updated industrial strategy. The call for identifying our critical capacities has grown louder through the COVID-19 crisis. However, opinions on dependencies perceived as critical for our Union are as varied as each of our member states.

We need to prioritise our efforts and we should focus on central issues such as the green and digital transitions and our health emergency preparedness by creating favourable conditions for reinforcing Europe’s manufacturing capacities to guarantee the long term availability of medical products.

But the eagerness to increase strategic autonomy must not come at the cost of our openness to trade and fair competition and cooperation with international partners. In our endeavours to introduce and use new policy tools, especially an ever-increased use of state aid to support our industry, we must not forget to keep up the work on what has been the cornerstone of our increased competitiveness the last three decades: the Single Market.

The Single Market is a proven method and it has to be the starting point for building a new and robustly competitive EU because it can provide us with two things: An open, fair and integrated market that can give European companies stability and security they need to remain globally competitive

Firstly, this means implementing and enforcing our common rules that ensure the free movement. Good examples are the Single Market Enforcement Taskforce and SOLVIT, which address concrete barriers experienced by businesses when trading across borders through pragmatic solutions. By supporting research and innovation, making it easier to provide services across our own borders and securing easy access to finance, European businesses can grow stronger.

In doing so, we can counteract increasing uncertainty for our companies by securing long-term legal certainty and predictability. If not, trade barriers and tensions will continue to bring uncertainty in the international trade environment. The gridlock at the World Trade Organisation has made this uncertainty even greater. We have to work against this, insist on the value of a strong rule-based system of international trade, and promote a global level playing field.

The Single Market can simply provide us with a basis for European companies to be globally competitive.

Secondly, we must also update our structure to support other goals: Resilience, strategic autonomy, development and diversification. The pandemic has made it clear that we cannot put all our eggs in one basket and that we must diversify to achieve resilience.

We should develop our own capacity to provide for what we cannot live without. Addressing shortages revealed during the pandemic and looking forward to green technologies and digital capacities.

We should decrease our dependencies by fostering resilience in global supply chains through diversification and new trading partners. All with the aim of increasing our resilience. This does not mean that Europe should close itself off to the world. Businesses from other countries are welcome, as long as they comply with our common rules and values, including competition and state aid rules as well as standards for privacy and fair markets.

We should also return to a more reasonable level of state aid and uphold the state aid rules that were in place before COVID-19. The pandemic made a crisis response necessary, but moving forward we need to use state aid mindfully to support breakthrough innovation, address market failures and solve societal challenges such as the green and digital transition that cannot be addressed otherwise. A great example of this is the industrial alliance on batteries, where the member states have come together for common projects that benefit the whole ecosystem and the ongoing work on a hydrogen IPCEI.

Now, more than ever, we need to reach a consensus on how to strengthen Europe’s strategic autonomy while preserving an open economy in order to put Europe ahead of the curve. To ensure a resilient Union and take charge of our own future.

The strategy needs to been based on a strategic outlook beyond the current crises, focusing on the green and digital transition and taking into account the needs of SME’s which can be drivers of innovation and new technologies, when creating the conditions for a competitive European industry.

The updated industrial strategy can kick-start this process. Building on the strategy from last year and lessons learned during the crisis, it is all about collectively achieving a well-functioning Single Market.

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