1 EU industrial policy
(a)
(35749)
5489/14
+ ADD 1
COM(14) 14
(b)
(35491)
13964/13
+ ADDs 1-3
SWD(13) 346
(c)
(35492)
13966/13
+ ADDs 1-4
SWD(13) 347
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Commission Communication: For a European Industrial Renaissance
Commission Staff Working Document: Member States Competitiveness Performance and Implementation of EU Industrial Policy
Commission Staff Working Document: European Competitiveness Report 2013 — Towards knowledge driven reindustrialisation
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| Legal base | —
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| Documents originated | (a) 22 January 2014
(b) 20 September 2013
(c) 23 September 2013
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| Deposited in Parliament | (a) 27 January 2014
(b) and (c) 11 November 2013
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| Department | Business, Innovation and Skills
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| Basis of consideration | EM of 7 February 2014
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| Previous Committee Report | None; but see footnotes
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| Discussion in Council | See para 1.10 below
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| Committee's assessment | Politically important
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| Committee's decision | For debate in European Committee C
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Background
1.1 In November 2010, we drew the attention of the
House to a Commission Communication (An Integrated Industrial
Policy for the Globalised Era: Putting Competitiveness and Sustainability
at Centre Stage),[1]
which was followed by a further Communication[2]
in 2012, providing an update. In this latest Communication (document
(a)), the Commission has sought, as its contribution to a debate
on industrial policy at the March 2014 European Council, to provide
an overview of the actions already undertaken, to identify key
priorities for boosting competitiveness, and to secure political
support for selected new actions to speed up the attainment of
these priorities. It is linked to two recent Commission reports
— Member States' Competitiveness Performance and Implementation
of EU Industrial Policy (document (b)) and European Competitiveness
Report 2013: Towards knowledge driven reindustrialisation
(document (c)).
The current documents
1.2 The Commission notes that the EU is emerging
from its longest-ever recession, with GDP growing by 0.2% in the
third quarter of 2013, and the upturn in business sentiment and
confidence indicators suggesting that structural reforms and measures
in the financial sector have succeeded. At the same time, it states
that a strong European industry is necessary for fostering growth
and competitiveness to sustain and strengthen the current incipient
economic recovery, and to achieve the goals of the Europe 2020
agenda.
1.3 The Communication also notes that, overall, EU
industry has proved its resilience in the face of the economic
crisis, and has become a world-leader in sustainability, returning
a €365 billion[3]
surplus for trade in manufactured products (generated mainly by
a few high-end medium technology sectors). However, it says that
the legacy of the crisis has been severe, with 3.5 million jobs
having been lost since 2008, the share of manufacturing in GDP
having fallen from 15.34% to 15.1% in 2013, and the EU productivity
performance having deteriorated in comparison with its competitors.
1.4 The Commission points out that the main challenges
facing EU Industry, and highlighted in the two related Commission
reports, indicate a number of weaknesses which have hampered growth,
including:
- a continuing weak internal demand, undermining
the home market, and keeping intra-EU trade subdued;
- despite an improved business environment in the
EU overall, and particularly in some Member States, progress remains
uneven, with inflexible administrative and regulatory environments,
rigidities in some labour markets, and weak integration in the
internal market, which continue to hold back the growth potential
of firms, especially small and medium-sized enterprises (SMEs);
- innovation and investment levels remain low,
holding back modernisation of the industrial base and hampering
future EU competitiveness; and
- EU firms face higher energy prices than most
of their leading competitors, and have difficulties accessing
affordable materials, qualified labour and capital.
1.5 To deal with this situation, the Commission says
it has been pursuing the integrated industrial policy approach
outlined in the Industrial Policy Communications of 2010 and 2012,
and has issued recommendations to Member States for improving
growth in the context of the European Semester. It also acknowledges
that several Member States, including the UK, France, Spain and
Germany, have defined national and regional industrial strategies
and policies, but it emphasises that full implementation at European
and national levels is critical to ensure future competitiveness
and to increase growth potential.
1.6 The Commission suggests that the key priorities
are as follows:
- mainstreaming to ensure EU reindustrialisation;
- stimulating investment in innovation;
- a more business friendly framework;
- easier access to critical production inputs;
- maximising the potential of the internal market;
- internationalisation of EU firms;
- improving education and training and facilitating
mobility.
1.7 The detailed action proposed under each of these
headings is set out in the Annex to this chapter.
The Government's view
1.8 In his Explanatory Memorandum of 7 February 2014,
the Minister of State for Business and Energy (Michael Fallon)
says that the Government believes that industry has a key role
to play in restoring growth and jobs to the EU, and broadly welcomes
this Communication. In particular, although he points out that
the Commission has limited competence in the area of industrial
policy and trade promotion, it nevertheless has a vital role to
play in creating open, competitive markets (including energy markets),
removing barriers to trade and innovation, creating a robust State
Aid framework, removing unnecessary regulatory burdens at the
EU level, and facilitating direct access to finance for SMEs.
1.9 More specifically, the Minister welcomes the
emphasis on mainstreaming industrial policy across the whole of
the Commission, which he says is consistent with the UK's "whole-of-Government"
approach to industrial strategy, and he also welcomes the commitment
to take further action to improve the single market, particularly
in services, and the renewed commitment to an ambitious and open
trade agenda.
1.10 As regards individual aspects of the Communication,
the Minister says that the Government:
· supports the Commission's attempts to
improve the business environment by removing or simplifying regulation,
and welcomes the recommendation that Member States should undertake
domestic reforms to remove regulatory burdens;
· welcomes its commitment to conduct fitness
checks and cumulative cost assessments in relation to the main
industrial value chains, but believes that more could be done,
and that the Commission should come forward with specific recommendations
to remove burdens from key industries;
· welcomes the funding provided by the Horizon
2020 programme, which will make available almost €80 billion
for research and innovation, in particular through its industrial
leadership pillar, and the significant role which the Joint Technology
Initiatives of the Innovation Investment Package will play in
improving EU competitiveness, not least in areas which are not
readily supported by other Horizon 2020 instruments (thereby helping
the EU to close the gap which exists between successful research
and development projects and getting products and services to
market);
· believes that more could also be done
to make it easier for SMEs to access the risk finance necessary
to invest in and enhance their innovation capability, and to create
new products and services through the effective implementation
of COSME and Horizon 2020 and targeted EIB funding: it also believes
that the Commission should support business efforts to convert
successful research and development outputs into leading-edge
products and services, and that a proposed study to assess the
potential for EU investment in a venture capital fund of funds
should be accelerated;
· notes the Commission's aim of raising
industry's contribution to GDP to 20% by 2020, but does not believe
that this should become a firm target for reindustrialisation,
as it would be potentially unachievable for most Member States;
and
· is committed to ensuring that manufacturing
is able to remain competitive during the shift to a low carbon
economy and to minimising the risk of carbon leakage, and it notes
the measures set out in the Communication[4]
establishing a framework for climate and energy in the period
from 2020 to 2030, its view being that the competitiveness of
energy intensive industries should be an integral part of that
approach.
1.11 The Minister says that the Communication was
to be discussed at the Competitiveness Council on 20 February
2014, and is due to be debated by the European Council on 20-21
March, with follow-up conclusions expected at the Competitiveness
Council on 26-27 May.
Conclusion
1.12 This is a wide-ranging Communication, which
addresses a subject of some importance, and which clearly needs
to be drawn to the attention of the House. The main question,
as with many other such documents, is whether the Communication
itself should be debated (which would be liable to give rise to
a somewhat general and unfocussed discussion), or whether it would
make better sense to clear the document, and to concentrate instead
on the numerous more specific proposals which will eventually
flow from it.
1.13 On the whole, we have tended in previous
such cases to adopt the latter approach, but, given the potential
significance of this Communication, we think it would be remiss
to let it pass without giving the House the opportunity to consider
at this stage the many issues to which it gives rise. We are therefore
recommending it for debate in European Committee C.
1 (32318) 15483/10: see HC 428-ix (2010-11), chapter
14 (24 November 2010). Back
2
(34341) 15168/12: see HC 86-xx (2012-13), chapter 15 (21 November
2012). Back
3
This figure refers to manufactured products only, and does not
include trade flows and raw materials (where the EU presents a
negative trade balance). Back
4
(35754) 5644/14: see chapter 2 of this Report. Back
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