New EU industrial policy begins to take shape

Antonio Tajani, European Commissioner for Enterprise and Industry

The report looks at the impact of the economic crisis sector by sector and draws overall conclusions of the most significant problems sectors have in common. It was released at the second high-level conference on industrial competitiveness in Brussels earlier this week, providing a basis for discussions that are intended to result in specific policy measures, to be laid out in a Commission communication on industrial policy by the end of the year. The paper is now open for public consultation.

As ever, the importance of creating a favourable entrepreneurial and business environment - especially for small- and medium-sized enterprises - is highlighted in the paper and was discussed at the conference.

“More than ever we need initiative and creativity on the part of businesses,” Antonio Tajani, European Commissioner for Enterprise and Industry said in his opening remarks.

While he agreed on the need for creativity, Xavier Sala-I-Martin, a professor at Columbia University, expressed doubts about the way that the EU is going about achieving this. Setting a target of investing 3 per cent of GDP in R&D is not the solution, he told delegates, adding that it would make little difference whether the target was 3, 4, 5 or 6 per cent.

“Don’t be fooled that this will solve European competitiveness problems,” Sala-I-Martin said. What is needed are policies that foster innovation, and most importantly an education system that encourages students to be critical and have new ideas, not one where they learn everything by rote. “We have rules that lead to the inevitable decline [of Europe’s competitiveness], but the rules are man-made and can be changed,” he said.

Peter Brabeck-Letmathe, the chairman of Nestle, the multinational food company, agreed the 3 per cent target is a distraction. What is far more important is fostering an environment that encourages R&D and allows its results to be applied to new technologies.

There is a tendency to keep invoking the precautionary principle, and this is holding back new technologies, Brabeck-Letmethe said. “With the precautionary principle, we wouldn’t have penicillin and many other major breakthroughs.”

The DG Enterprise and Industry report highlights new technologies that are expected to be of broad significance across a number of sectors, driving the delivery of new goods and services that will reach the market by 2020. Within Information and Communication Technology these will include micro- and nanoelectronics and photonics. Elsewhere, the list highlights advanced materials, to enable major improvements in aerospace, transport, building and healthcare, and biotechnology which will allow non-renewable materials to gradually be replaced with ones from sustainable sources.

MEP Herbert Reul, chairman of the European Parliament’s Industry, Research and Energy committee (ITRE), opposed making prescriptions of which technologies should be encouraged, saying it was impossible to know exactly which would be dominant in a decade’s time.

Reul also argued that Europe 2020, the EU’s strategy for the next decade, puts too much emphasis on green technologies to the detriment of others. “I would love to see the same attention that has been given to climate protection in recent years, also given to industrial policy,” he said.

Other areas that the Commission highlighted include:

• improving energy and resource efficiency and to making the transition to a low carbon economy;

• the importance of the supply of raw materials;

• managing restructuring and ensuring adequate access to finance;

• redressing the skills shortage and helping people retrain for areas of emerging demand;

• the increased importance of the business services sector;

• the need to respond to demographic change and the requirements of improved health and security measures.

All these elements are now in the mix as the Europe 2020 strategy is drawn up and the EU sets out, “an industrial policy for the globalisation era.”