SPEECH/06/505
Günter Verheugen
Vice-President of the European Commission responsible for Enterprise and Industry The new European Industrial Policy: From commitment to results
Workshop organised by “The Alliance for a Competitive Industry” 15 September 2006, Brussels
Ladies and gentlemen,
I would like to thank the representatives of “The Alliance for a Competitive European Industry” for having organised this workshop on the new European Industrial Policy.
Two roundtables worked this morning on the right business framework conditions in the Internal Market and Industrial Policy as a tool to face the challenges in a global market. As you know, these issues are at the heart of the Commission’s priorities.
But let me start with the global view before going into the details.
Industry policy as key for Growth and Jobs
We are embarking on a new phase in competition, and structural change will continue to accelerate. The analysis of the Commission shows that some of the industries are strongly positioned to compete in global markets. However EU industry as a whole clearly faces a number of prominent challenges. The European manufacturing industry is still concentrated in sectors with medium-high technologies and low to intermediate labour skills. This exposes the EU to competition from producers in emerging Asian economies that are upgrading the skill intensity of their exports and catching up in terms of the non-price factors. In addition there is a fierce competition for performing R&D from the US economy, and from other emerging countries like China and India.
The watchword for a European society in the 21st century that offers people new opportunities is “competitiveness”, since we know that a “fortress” Portugal, Germany, Poland or Europe is not an option in the open world of the 21st century. We must face and direct global competition – so that we will be in the lead with the best solutions, the best technology and the highest standards in everything.
The renewed Lisbon Strategy for growth and jobs puts emphasis on measures to increase knowledge and innovation and the competitiveness of Europe through a close partnership between the EU and Member States.
As part of this strategy, we need more than ever before an active industrial policy that keeps industry in Europe. The idea that, at world level, industry has become a museum piece is just as mistaken as the idea that industry is primarily a source of pollution. Those who want to drive industry out of Europe are playing with the livelihoods of people employed in industry and working in industry related services. They are playing with the future of the small and medium sized businesses in the long supply chain. We will continue to need a strong industry in Europe in the future, with businesses that are leaders on the world markets. This is a job that cannot be done by any State; businesses must tackle it themselves. We can however give them our backing. The Commission’s new industrial policy is a clear commitment to the competitiveness of European industry.
Concrete examples of this new Industrial Policy
This policy aims at providing the right framework conditions for enterprise development and innovation. Industrial policy is – and should remain - horizontal, meaning that it aims to create a better environment for all businesses, regardless of size or sector. At the same time, we must also be able to respond to sector-specific conditions and needs. That is why the Commission along with stakeholders is currently developing sectoral strategies for a number of sectors, including pharmaceuticals, defence, chemicals, and mechanical engineering.
This does not at all mean sheltering specific sectors from international competition or advocate protectionist measures, but rather identifying at sectoral level issues that may limit market opportunities or hamper productivity growth.
Some of your own industries gave good examples: They faced the challenges of global competition and successfully restructured their business processes and, thereby, helped to maintain the production in the EU by focusing on higher-value and higher-quality products.
The Commission is now implementing specific initiatives for individual sectors and horizontal cross-sectoral initiatives. To give some examples:
1. The High Level Group on Competitiveness, Energy and the Environment was set up to address the increasingly important challenges to competitiveness from high energy prices and strong environmental protection. Its ambitious work programme aims to establish a more integrated approach and develop greater coherence between the competitiveness, energy and the environmental policies.
2. The Commission has taken steps to better ensure the comprehensive protection of Intellectual Property Rights and the effective fight against counterfeiting. In particular, the Commission has agreed an Action Strategy on IPR Enforcement with the US government in order to fight international counterfeiting together. We will boost our co-operation and defend intellectual property rights world wide, focussing initially on China and Russia. European entrepreneurs have to be able to rely on a proper reward for innovation, based on sound and recognised rights, enforceable and enforced in third countries. Otherwise, why would our companies invest more in R&D for the sake of innovation?
3. This leads me directly to the most important word: innovation
The political support for R&D and innovation reached new heights when the Heads of State and Government endorsed the revised Lisbon strategy for Growth and Jobs, putting knowledge and innovation as the first priority for the EU. There is now a clear commitment and I thank the Finnish Presidency that they put innovation as a key element during their Presidency.
In fact, the Commission is now creating an environment which is more conducive to innovation, risk-taking and entrepreneurship.
In view of the next informal meeting of Heads of State and Government in Lahti in October, the Commission has tabled this week a broad-based innovation strategy.
A number of measures address more specifically an innovation-friendly alignment of the EU State aid regime for research and innovation, better use of public procurement, guidelines on the use of fiscal incentives, guidelines on cooperation and technology transfer between public research and industry and the improvement of the institutional framework of European standardisation.
Our innovation strategy also addresses the need of more and better trans-national European cooperation among clusters, in order to raise the prospect of generating world-class European clusters. To support this process, the Commission will in particular map the strengths of national and cross-border clusters and stimulate practical cooperation between regional authorities and relevant economic actors or associations, supporting co-operation between cluster initiatives. The first results of this initiative will be presented in autumn 2007 at a Ministerial Conference, with a view to achieving a common cluster agenda for Europe.
The Commission also seeks to develop the concept of "lead markets" where public authorities facilitate industry-led innovation by creating conditions for a successful market uptake of innovative products and services in a focussed way. Primary targets are areas that respond to societal demands (e.g. areas such as transport or health, internal security, eco-innovation).
4. Let me just briefly mention another priority area for the competitiveness of industry: Simplification and Better Regulation.
Important measures in this area have already been achieved:
a screening exercise has already limited the amount of new and impending legislation a further simplification programme to be adopted in November will reduce and modernise burdensome existing legislation new Impact Assessment guidelines have been introduced, including standards to evaluate administrative costs on businesses
The Commission will continue the simplification programme started in 2005 with a target to examine a total of 220 legal instruments. And we are currently engaged in further examination in various sectors. But still, a lot has to be done and I will push all members of the Commission to pursue the objective of a more selective and effective legislation.
5. Finally, I would like to underline the importance of SMEs for European industry. The organisers of this workshop - The Alliance for a Competitive European Industry - represent large companies and 1.7 million SMEs.
The European Commission has integrated the “Think Small First” principle across EU policies, streamlining the SME activities within a single framework and strengthening dialogue and consultation with SME stakeholders. A crucial role in this process is played by the Commission’s SME Envoy who ensures that the ‘Think Small First’ principle is implemented in all Community policies and that SMEs’ have access to Community programmes.
Speaking about SMEs, the Commission recognizes an urgent need to create a more entrepreneurial spirit in Europe. Europe needs more new firms, more entrepreneurs willing to start innovative ventures, and more high-growth SMEs. To achieve this, we need to stimulate entrepreneurial mindsets. And we need to make our societies think positively about being an entrepreneur.
(Conclusion)
Clearly, companies have the major role to play to remain competitive, but public authorities at EU and national levels can produce the conditions in which companies are created, can grow, and can flourish, providing increasing numbers of jobs.
However, the success of our reforms also depends on the constant and pertinent participation of businesses. Events like this workshop are a valuable support and feedback from industry. The voice of businesses is not always properly heard and understood at EU level. I would therefore encourage you to actively participate in all public consultations to ensure that the voice of business is fully heard.
Thank you very much for your active participation.
