This article is part of our special report Industrial Policy.
SPECIAL REPORT / A European Commission communication to re-launch European industrial policy – to be published next month and seen by EURACTIV – will face diffidence from member states left unconvinced by a string of unfulfilled initiatives and divided over what such a policy should deliver.
The Commission’s communication, called 'Industrial Policy – a contribution to growth and economic recovery', identifies four key pillars: investment in innovation, better market conditions, access to capital, and skills.
Unlike previous industrial policy statements – included within the Lisbon Strategy and the Europe 2020 initiative – it also earmarks six “priority action lines”, specific sectors where it proposes immediate action.
These include: clean production manufacturing technologies, sustainable construction, clean vehicles, bio-based product markets, key-enabling technologies and smart energy grids.
It will also propose measures to improve the functioning of the internal market and European performance in global markets.
Jaded feelings – the legacy of bitter experience
Business leaders who on 19 September called on Industry Commissioner Antonio Tajani to give the energy efficiency industry a central role in the revised policy will doubtless welcome these sectoral focuses.
But the communication will battle against jaded feelings elsewhere in the member states.
Sean McGuire, a spokesman for the Confederation of British Industry, welcomed the broad focus, but added: “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.”
Another policy advisor on industry based in Brussels, speaking on condition of anonymity, spoke bluntly about the limitations of the paper.
“There is nothing that is going to set the world to light. It is just a re-packaging of everything that has already come, and there are no big surprises in there, which is unfortunate,” he said.
Indeed many of the initiatives within the paper relate to proposals already under way within the EU executive’s departments. For example, defining targets for the deployment of smart grids, and setting timetables for standards for these, are processes which have been announced and are already on track within the energy department.
Communication hints at new actions
The same is true of the so-called Key Enabling Technologies, or ‘KETs’ – including micro- and nano-electronics. The communication pledges that these will be key components of European Innovation Partnerships going forward, an intention long made clear by the Commission's research department.
New actions are described in the communication: an innovation partnership for manufacturing technologies for clean production, and an action plan for sustainable construction are two examples.
“That’s all very well, but what exactly that means remains to be seen,” said the policy advisor.
Low expectations abound following the failure of industrial policy to find a strong resonance in the past.
“For most of the past 60 years, industrial policy has at best been a secondary concern. Even though industrial policy acquires the status of one of the Europe 2020 Strategy’s seven flagship initiatives, no specific objectives or precise indicators are set,” said a report by the Party of European Socialists, issued in advance of the communication.
Industrial policy has been fragmented across a range of different aims such as increasing competition and employment and has tended to be viewed from a free-market perspective, rather than a holistic policy.
Tangible pan-European projects have proved difficult
Moreover tangible efforts to promote industry at a pan-European level have witnessed significant setbacks.
The Galileo satellite project, for example, was touted as one of the largest public-private partnerships in history. The private sector showed lukewarm commitment to the multibillion-euro project, however, leaving member states with a huge headache and a bigger bill.
One of the main stumbling blocks has been the definition of industrial policy. Whilst Italy favours beefing up reciprocal trading guarantees to force a level playing field for European trade, France has tended to stress a strategy of picking winners, large industrial companies that reach the critical mass to succeed.
The nature of which sectors should be chosen has always proved controversial in the context of “picking winners”.
The Commission emphasises the need to boost innovative industries at the heart of the paper, but the age-old tension between mercantilist and free-trade ideologies still haunts the European stage.
Trade reciprocity will ignite ideological debate
In northern Europe, the emphasis has been on competition and freedom of industry from regulation. On the other hand, labour interests – under pressure from the economic crisis – are suspicious of an industrial policy that does not incorporate social rights.
These tensions are likely to resurface in the wake of the communication.
In particular a section calling for tight controls over public procurement contracts for non-European companies, emanating from countries where the EU does not enjoy reciprocal rights, is likely to cause friction between the member states.
One of the things that all member states are likely to agree to is a call for “competitive proofing” of legislation, to rid companies of burdensome rules.
The Commission has called for the cutting of red tape before, and even appointed a tsar to oversee the issue.
As elsewhere in the paper, its repetition serves in some ways to underline the shortcomings of past initiatives.