EuropeanCommission-Speech

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AEuropethatprotects,transformsandprojects:industrialpolicytheEuropeanway-SpeechbyCommissionerThierryBretonattheBruegelAnnualMeeting

Brussels,6September2023

Waronourcontinent,climatechange,pandemics,ageingpopulation,globaltechnologicalrace,geopoliticsofsupplychains:tectonicplatesareshifting,andthereisagrowingawarenessthatEuropeneedstodevelopamoresophisticatedanswerthanpitchingso-calledfreetradersagainstso-calledprotectionists.

RecentdisruptionshaveexposedEurope'soverrelianceonahandfulofactors,andthe

importanceofsecuringglobalsupplychains.RememberhowwehadtonegotiatefortheUStoliftitsbanontheexportofvaccinesorvaccinecomponentsproducedbyEuropeancompaniesontheir

territory.VladimirPutin'sattempttoweaponiseourdependencyonRussianfossilfuelimports.Or

recentexportrestrictionsfromChinaonkeymaterialsforsemiconductormanufacturing(galliumandgermanium).

Atthesametime,thereisfierceglobalcompetitiontakingplacetosecurethecleantechanddigitalmarketsofthefuture,bysecuringtheentirevaluechainincludingastrongmanufacturingbase.Whichisshakingthelong-standingbeliefinjust-on-timelogistics,geographicalspecialisationandelongatedsupplychains.Andrightlyso:becauseourdependenciesdonotonlyweakenus

economicallyandpolitically–wealsoneedtorethinkoursupplychainsfroman

environmentalandsocialpointofview.Itistimethatweconfrontourparadoxes,wherewepursueanambitiousGreenDealyetprefertosourcegoodsproducedunsustainablyorincountriesthatmakeusvulnerable.Weneedbothsecureandsustainablesupplychains.

Soinlightofthisnewreality,whatifIputforwardthefollowingambition:“WewillbuildafutureinEurope,withEuropeanworkers,withEuropeancompanies,withEuropeanmadeproducts.”NodoubtIwouldimmediatelybelabelledastheFrenchprotectionist.Well,letmetellyouthatIamsimply

paraphrasingPresidentBiden'sstatementoneyearago,soonaftertheadoptionoftheUSInflationReductionAct.

Thereisatendencytoopposeindustrialpolicyandtrade.Toseeindustrialpolicyasthetrojanhorseofprotectionism.That,too,isasimplisticandself-defeatingvision.Globaltradeaccountsfor

25%ofourGDP.Tradeingoodsrepresentsalmost70%oftheEU'sexports,andweremainthesecondworldexporterafterChinaandconsistentlyaheadoftheUnitedStates.

Thepointis,wewantittoremainthus!Becauseweseeatrendemergingofbeingrelegatedtonetimportersofelectricvehiclesorsolarpanels,thusreplacingourdependenceonfossilfuelswith

industrialandtechnologicaldependencies.

Lastyear,ChinaovertookGermanytobecometheworld'ssecond-largestcarexporter,aseven

EuropeanmanufacturersarenowproducingelectriccarsinChinaforourmarket.In2016,we

imported74000carsfromChina.In2020,200000.In2022?Morethan500000.Halfofthoseareelectricvehicles.

AndChinaproduces98%ofthesolarpanelsweuse.That'sroughlytwoyearsofdeployment,forthewholeofEurope.

Competition–sometimesunfair–isnotonlycomingfromChina.TaketheUSIRAforinstance:itisnot360billiondollarsthatwillbeinjectedintheUScleantechsector;but,accordingtomost

estimates,morethan1trillion!Andwhatmightbegoodfortheclimateiscertainlyachallengeforourindustry:carbonpricingandregulationononeside;andtaxcreditsandsubsidiesontheother.

So,beitchips,batteries,solarpanels,orhydrogen,wewanttheEUtoremainanindustrialleaderthatexportsEuropeanproductsandtechnologies–butnotourjobs.

Toachievethat,weneedtobuildastrongmanufacturingbase–entireecosystemswithsuppliersandSMEs.

JustliketheUSgovernmentlooksaftertheAmericaneconomyandAmericanworkers,weinEuropealsostrivetocreategrowth,competitivenessandjobsforEuropeans.

Qualityandlocaljobs.Thatdoesn'tmeanweshouldfollowtheChinesetrackofunrestrictedsubsidies.Ormimicthe"AmericanFirst"approach.WearedoingittheEuropeanway.

IndustrialpolicytheEuropeanway

Industrialpolicy“theEuropeanway”–whatdoesitmean?

Inanutshell,fourpillars:

1.Rampingupourowncapacities,overcomingbarrierstoscalingproduction,andstrengtheningoursupplychainstoprotectagainstunexpectedshocks;

2.Wideningoursourcingandtechdiplomacy,inparticularthroughstrategicpartnerships;3.Shapingmarketstobecompetitive,productiveandfair;

4.Investingforeconomicgrowth

Letmetrytosummarisewhatweourdoingonthesefourstrands.

1.First,onourindustrialcapacitiesandsupplychains.

Wehavelearned(taketheexampleofvaccineproductionorsolar)thatresearchaloneisnotenough,

thatthereisnoindustrialstrategywithoutfactories,andthatultimatelywithoutastrongmanufacturingbase,Europe'ssecurityofsupply,exportabilityandjobcreationisatrisk.

Alothasbeendonealready,startingwiththeworkofourindustrialalliancesinidentifyingand

championingthemostgame-changingprojects.Takethemorethan800projectsonhydrogen

identifiedbythe

CleanHydrogenAlliance

;orthepipelineofprojectsputforwardbytheBatteries

AlliancetoensurethatEuropeanbatterymanufacturingcapacitymatchesdemandbeyond2025.

Andofcourse,the

EuropeanChipsAct

isthefirstandprimeexampleofournewEuropeanindustrialpolicy:onethatcombinesregulatoryandfinancialsupportwherejustifiedtospeedupproject

development,fromlabcentrestogiga-factoriesalloverEurope.

IthasinspiredtheregulatorytriptychthattheCommissionhasputforward:upstream,theCritical

RawMaterialsAct,toensureasecuredandabundantaccesstotherawmaterialsneededtofuelour

greenanddigitaltransitionbutalsoourspaceanddefenceindustry;downstream,theChipsActandthe

Net-ZeroIndustryAct

,tohelpEuropebuilditsindustrialleadershipindeep,digitalandclean

tech.

Together,allthreeregulationsaimtorampupEurope'smanufacturingcapacities.They

includeconcretegoalstoguideoureffortstowards2030,butalsomeasurestosimplifythebusinessenvironment,inparticularwithregardstopermittingforstrategicprojects.Wealsowanttobuildspecificnet-zeroskillsacademiestotrain,upskillorreskillthehundredsofthousandsofworkersneededforthetransitiontohappen.

Alltheprovisionswehaveputforwardaremeanttocreatetherightregulatoryconditions.Butintheshortrun,wemustuseallpossibleleverstocontinuemovingforward.

Thiscantakemanyforms:usingstrategicallypublicprocurementandauctiondesignforcleantechforinstance;orencouragingofftakerstopromoteenvironmentally-friendly,ethicalandresilient

supplylines–andtopayapremiumforit.

OurindustrialallianceshavebeenworkingsuccessfullyinthisdirectionandIbelievethatthe

proposedNet-ZeroEuropePlatformcouldbeastrongcatalystforpushingthisapproachforwardwithgreatermomentum.

OvercomingbarrierstoscalingproductionalsorequiresensuringthesmoothfunctioningoftheSingleMarket.Thathasbeenmyprioritysinceday1ofthemandate.WeareintensifyingourcooperationwithMemberStatestobringdownexistingbarriersandpreventnewonesfrom

emerging.Justtogiveyouanexample,inthelasttwoyearsonly,theSingleMarketEnforcementTaskForcehasdismantledover260barriersincrossborderservicesandprofessionalqualifications.Andwewillcontinuetopushon.

2.Nowregardingmysecondpoint:sourcingandtechdiplomacy.

Itgoeswithoutsaying:Europecannotreachresilienceonitsown.Wearecooperatingwithourpartnerstocoordinatepoliciesonstrengtheningsupplychains,alignonissuesrelatedtoeconomicsecurityanddiscusstrade-distortingpracticesofnon-marketeconomies.

Wearealsostrengtheningourglobalengagementwithourreliablepartnersanddevelopingmutuallybeneficialdigitalorcriticalrawmaterialspartnerships.

ForEurope,thesepartnershipsareessentialtoaddvalueindevelopingregionalvaluechainsandinsustainabledevelopmentthrough

GlobalGatewayprojects

.

AndtheyarealsoessentialtorebalancetheGreenDealagenda.Whichcannotbeonlyabout

Europetakingrestrictivemeasuresforitsdomesticindustry,arguingthatthemereimplementationoftheParisAgreementwillgiveEuropeancompaniesafirst-moveradvantageinnewsectors.

First,becausenotallcountriesareasdiligentastheEUinimplementingandupdatingtheirpledges;andsecond,becausewhentheydo,theydon'twaitwithopenarmsforEUtechnologiestofloodtheirmarkets.

Sowhyshouldwe?Whyshouldwemostlyburdenourcompanies,reduceourprotectionagainst

carbonleakage?Whycan'twealsohavean“EUmade”approachinmind?Thisisnotincompatiblewithengaginginternationalpartnersthroughnewtypesofpartnershipsandalliances–onraw

materialsandhydrogentoday,maybeongreensteelorsustainablechemicalstomorrow?

Partnershipsinthedigitalfieldareequallyimportant.InJuly,IwentonaG20digitaltourto

Korea

and

Japan

tofurtherstrengthenourcooperationincriticalfieldssuchaschips,AI,5&6G,HPC&quantumandcyber.WehavealreadylaunchedadigitalpartnershipwithSingapore.Atthefirst

EU-IndiaTradeandTechnologyCouncil

weagreedtoincreasetheresilienceofoursemiconductors

supplychains.AndwehavelaunchedanewEuropeansatelliteconstellation

IRIS2

tohigh-speed

broadbandtoeveryoneinEurope,butalsotobeabletoenddeadzonesinAfrica.Thisisthekindofmutuallybeneficialglobalcooperationweneed.

Soletmebeclear:Europeisnotpromotingaprotectionistagenda.NoneoftherecentEUinitiativescontaindiscriminatoryprovisions.None.Wearemaintainingourlong-standing

commitmenttofreeandopentrade.

3.Shapingmarketstobecompetitive,productiveandfair

ButEuropehasalsolearnedthatitneedstobemoreawareoftheriskstoitseconomicsecurity,

moreassertiveinestablishingabalanceofpowerwithglobalpeers,lessna?veinensuringalevel-playingfieldwithindustriesfromthirdcountries.

WhentheUSclosedaccesstofactoriesmanufacturingcomponentsessentialtotheproductionofvaccines,wehadtoactivateasimilarexportcontroltoolinEuropetore-establishdialogueand

reopensupplychains.

Wehaveequippedourselveswithnewtradedefenceinstruments:theForeignSubsidiesRegulation,the

EUForeignDirectInvestmentScreeningframework

,theInternationalProcurementInstrument

andtheproposedAnti-CoercionInstrument.Wewillnothesitatetousethemtosafeguardour

interests.Ourabilitytotriggertheseinstrumentsquicklywhenourindustry'sinterestsareatriskwillbevital.

WearealsostrengtheningEurope'sstanceon

intellectualpropertyandstandard-setting

:theyhavebecomeacrucialcatalystforinnovationandindustrialleadershipintheglobaltechrace.

Ourrecent

EconomicSecurityStrategy

isamajorsteptowardsdefiningEurope'sapproachonthe

globalstage.Wearecurrentlyfinalisingalistofstrategictechnologies,whicharecriticaltoeconomicsecurityandassessingtheirriskswithaviewtodevisingappropriatemitigatingmeasures.

Andwewillnothesitatetopresentnewandreinforcedinstrumentstodefendourinterests:

outboundinvestmentscreening,exportcontrolcoordination,strengthenedFDIscreening.4.Investingforeconomicgrowth

Mylastpointisonfinance.

Noneedtorecalltheinvestmentneeds:morethan700billioneuroseachyearuntil2030incleantechdeploymentforourGreenDealobjectives,includingmorethan100billioneurosincleantechmanufacturingcapacityonly.Nottomentionmassiveinvestmentsrequiredondigital

infrastructure.

Andnoneedtorestatetheobvious:mostofthesewillneedtobefinancedbyprivatemeans.Publicfundingneedstobeallocatedwisely.Becausecompetitivenessisnotaboutwhosecountryhasthedeepestpockets.

Butitisequallyclearthatinternationalcompetitionisrigged.Soyes,weneedtoavoidaglobal

subsidyracewhenthereisnomarketfailure;butno,wecan'tstandbyidlywhenourcompetitors

arefundingoperationalcosts.

So,nowthequestionishow:andforme,theanswerhasbeen–consistently–thesame:more

Europeansolutions.Abasketofthem,ifneedbe,basedontheRecoveryandResilienceFacility,

REPowerEU

,cohesionpolicyfunds,EUETScarbonrevenues,or

InvestEU

,tohelpde-riskinvestmentsandbringotherinvestorsin,includingfromtheprivatesector.

Ourrecentproposalfora

StrategicTechnologiesforEuropePlatform(STEP)

willalsocontribute.Butitiswhatitis:agoodfirststep.Byleveragingexistingprogrammes,STEPcouldbringupto160

billioneurosofnewinvestments.Andnobodyisfooled.STEPwillonlybeagamechangeifitistheembryoofafully-fledgedSovereigntyFund.

Inparallel,wemustpreventasubsidyracewithinourSingleMarket,whereonlythe

MemberStateswithstrongerfiscalspacedopetheirnationalindustry.Whicharenotalwaystheoneswes