“An increased political intervention is detrimental to innovation and long-term competitiveness”
Last month, the European Commission published an updated industrial strategy that builds upon the previous strategy presented in March 2020. While supportive of the ambitions behind the strategic approach, the Association of Swedish Engineering Industries (Teknikföretagen) has strong reservations to some of the suggested policy measures that indicate an increased political intervention in the European economy.
Teknikföretagen represents over 4,200 member companies that constitute one third of Sweden’s exports, making Teknikföretagen the primary representative of Swedish industry. Teknikföretagen’s member companies comprise both major, renowned, global corporations as well as a majority of micro, small and medium-sized enterprises. A common denominator is that they develop technologically advanced products and services exported in fierce global competition.
– We welcome the European Commission’s ambition to facilitate for European industry to lead the twin green and digital transitions, strengthen our resilience and global competitiveness. These are central priorities for us. However, we have a very different approach as to how that is best achieved, says Maria Rosendahl, Head of Industrial Policy at Teknikföretagen.
While in support of a strategic approach to strengthen European industrial competitiveness, Teknikföretagen has strong reservations to some of the suggested policy measures. A predominant feature of the strategy is to identify Europe’s strategic dependencies on foreign suppliers in politically identified industrial ecosystems and value chains, and suggesting ways of reducing these dependencies.
– We are concerned by the intention to reduce strategic dependencies by utilizing targeted financial instruments to support domestic production capabilities and key technologies, indicating an increased political intervention in the European economy, says Joel Jonsson, Director for EU Single Market and Trade Policy at Teknikföretagen.
Teknikföretagen stresses that this poses a significant risk of distorting competition on the Single Market to the detriment of innovative micro, small and medium-sized enterprises that are essential for European industry’s market driven industrial ecosystems. Consequently, the approach may undermine the functionality of the Single Market and, in extension, Europe’s competitive advantage in the global marketplace.
– Ultimately, targeted financial measures may lead to a less vibrant and dynamic European economy. Therefore, some of the suggested policy measures can be detrimental to the ambition of a more resilient, innovative, and long-term competitive European industry, says Joel Jonsson.
Last week, Teknikföretagen shared the organization’s analysis of the strategy with EU institutions, policymakers, and other trade associations. Rather than targeted financial measures, Teknikföretagen maintains that the political objective of reducing strategic dependencies shall primarily be pursued by enabling diversification in sourcing and strengthening framework conditions for a well-functioning EU Single Market, which attracts enterprise to invest and locate operations in the EU.
– Our member companies are world-leading in developing innovative technical solutions that are key to addressing the twin green and digital transitions. The role of EU industrial policy must be to provide the best possible conditions for European industry to develop these technologically advanced products and services in order for us to meet today’s and tomorrow’s societal challenges, concludes Maria Rosendahl.
Teknikföretagen’s full comments on the European Commission’s updated industrial strategy and key recommendations are available below.