European Union Flexes its Muscles with Launch of New European Industrial Strategy Package
On 10 March, the European Commission published its new
Industrial Strategy package, which must be seen as the missing puzzle piece to complement the “European Green Deal” and the “European Digital Strategy”. It complements the pathway for Europe to lead its twin transitions namely to become a climate neutral continent by 2050 and a data driven digital economy.
The new European Industrial Strategy package is the response of the European Commission to the request of the
European Council in March 2019
for a sustainable and competitive longterm EU industrial strategy.
The new European Industrial Strategy package makes clear that Europe is open but insists that companies wishing to do business with the European market will need to do this on EU terms. This is not all; Europe will defend an open rulebased legal order and insist even more on a fair global level playing field. To uphold this global level playing field the new European Industrial Strategy contains several initiatives.
The new strategy contains a proposal for a White Paper on Industrial and Foreign Subsidies addressing the distortive effects caused by foreign subsidies in the European market. The White Paper will be followed by a proposal for a legal instrument in 2021. The Commission intends that its proposal should go hand in hand with the current work being carried out in the World Trade Organisation and global rules on industrial subsidies. As Executive VicePresident Vestager of the Commission has stated: “competition policy in itself is not enough to protect us against unfair global competition”.
The new strategy also underlines the promotion and the reinforcement of the reciprocity principle through the application of the International Procurement Instrument and will reinforce custom controls by proposing an Action Plan on the Customs Union in 2020.
Also announced in the new strategy is a Carbon Border Adjustment Mechanism if found to be necessary to be proposed in 2021. foreign traders should know that this could lead to a potential import tax on certain (yet undisclosed) goods, or an EUwide carbon tax, or a potential reform of the EU Emission Trading System.
The new European Industrial Strategy package contains a new model for industrial governance, namely the creation of industrial ecosystems. The novelty of such industrial ecosystems is that they encompass all players operating in a value chain, thus, among others, small companies, academia, service providers, suppliers and large companies. The different industrial ecosystems will be analysed by the European Commission, which will also evaluate the different risks and needs of the specific industrial ecosystem regarding the twin transition, the green and digital transition.
If the European Commission detects a necessity for providing support in any particular industrial ecosystem, a dedicated toolbox will be made available. This toolbox can range from regulatory measures to financial support to the full use of trade defence instruments which thus might impact trade from Hong Kong and mainland China to EU customers.
The new European Industrial Strategy also announces a review of the European competition rules, in particular the definition of relevant markets and the European state aid rules. Moreover, the European Commission will also put forward revised state aid rules for Important Projects of Common European Interest (IPCEI) as had been announced in Regulatory AlertEU,
Circular Economy Plan and European Industrial Strategy Take Shape, Featuring Green Policies and “Robust Trade Defence”.
The new strategy also stresses the need to reinforce Europe’s industrial and strategic autonomy. To support this goal, the Commission has announced, as a proposed measure, an Action Plan on Critical Raw Materials, which will include among others, batteries and renewable energies.
The new European Industrial Strategy also includes a number of other new initiatives to lead on the twin transition which might be relevant for foreign traders. The new strategy proposes an Intellectual Property Action Plan to assess whether the current framework is still up to date. It also proposes a new regulatory framework for sustainable batteries, an EU Strategy for Textiles and a Circular Electronics Initiative.
The European Union is intent on flexing its muscles with the launch of its industrial strategy, and therefore foreign traders should be aware that this new European strategy underlines the determination of the European Commission to set global standards and create a global level playing field. This strategy shows the willingness of the European Commission to roll out several new legal instruments to create its much soughtafter global level playing field which will impact trade with the European Union.
