European industry has in recent times faced several challenges, notably spiking energy costs, labor shortages, and supply chain disturbances. Coupled with an increasing regulatory burden on European companies, these factors constitute comparative disadvantages for the European industry in relation to global competitors. These immediate challenges require long-term solutions, according to a joint industry statement by organizations representing the technology industries in Austria (Metaltechnology Austria), Belgium (Agoria), Denmark (Danish Industry), Finland (Technology Industries of Finland), Germany (VDMA), Ireland (Engineering Industries Ireland and Technology Ireland – Ibec), Italy (Anima), and Sweden (the Association of Swedish Engineering Industries – Teknikföretagen). The statement has been sent to EU policymakers ahead of the Competitiveness Council on May 22nd.
The organizations welcome the current EU ambition to limit regulatory burden on European industry. However, the EU needs to go beyond curing symptoms by taking bolder initiative to address regulatory barriers the statement reads.
- Preferably, the EU should seek solutions on a systemic level rather than finding sector or technology-specific exceptions. In the short-term, we call for screening of all currently existing EU legislation, including national implementation, to ensure that regulation is fit-for-purpose and to remove barriers to trade on the Single Market, says Joel Jonsson, Acting Head of Brussels Office & Director for International Trade at Teknikföretagen.
A prominent feature of EU industrial policy has become addressing strategic import dependencies, notably by subsidizing domestic production capacity in politically identified sectors and technologies.
- A risk with import substitution is that it can lead to displacement effects from areas that are competitive to those that are not, resulting in a less vibrant and dynamic European economy. A process of limiting overreliance should focus on broadening the base of suppliers for industry to source from, to be able to manage risk and adapt to disturbances to global trade, says Joel Jonsson.
To strengthen the long-term competitiveness of European industry while addressing short-term challenges, the organizations recommend the following for the consideration of EU policymakers:
- Safeguard competition and a well-functioning Single Market to drive technological advancements necessary for the twin transition
- Ensure an innovation-friendly legislative framework in the EU to stimulate technological uptake
- Reinvigorate the EU’s open trade agenda and limit trade barriers to strengthen security of supply
- Avoid a race to the bottom with excessive use of state aid in the EU in response to global competition
- Competition and international trade drive innovation and technological advancements. As such, they must remain the guiding principles for EU industrial policy, Joel Jonsson concludes.
The recommendations are the result of an EU Industry Dialogue hosted by Teknikföretagen through a set of roundtable discussions taking place in Brussels.
The full statement can be found here
