The pandemic triggered everything from vaccine nationalism to trade disruption. Intensive discussions are now underway on the EU’s role in global value chains of the future. However, opinions are divided on how the bloc should act going forward.
At a recent seminar entitled Challenges and opportunities for the EU’s industrial strategy, organised by SNS, Kerstin Jorna, Director General of the European Commission, stated that industrial policy is not a foul word.
– It’s important to support the single market and make a success of the green transition, she said.
One of the European Commission’s key aims is to increase Europe’s independence, for example by highlighting semiconductor technology as one of several strategic areas in which the EU is currently dependent on other countries. Jorna criticized the EU for being dependent on China in a number of areas.
– China recently said that it did not have any more magnesium for us - they stopped trading [in magnesium] with us. Magnesium is important in car [production] so this is problematic. We are now working with member states that have magnesium mines to see what they can produce in the future, Jorna said.
The EU has become increasingly interventionist, stressed Harry Flam, professor emeritus at the Institute of International Economics at Stockholm University.
– In the past, industrial policy was about making the single market work better. To remove trade barriers and the like, but not to promote certain sectors or industries. This has become increasingly prevalent in recent years, Flam said.
There is a risk that this results in taxpayers footing the bill for expensive initiatives, Flam warned.
– In the case of semiconductors, the plan is to support research and development so that the EU can close the gap with competitors in Asia and the US and reduce dependence on imports. This demands an incredible amount of investment. The US and South Korea are investing vast sums, Flam said.
Jan-Olof Jacke, CEO of the Confederation of Swedish Enterprise, emphasized that the EU is facing a crossroads where pressure is growing for more control from the top down. He agreed with Flam’s critique and said that money should above all go to research, especially early-stage research.
– There is a tendency to make technical choices at the political level. That you allocate investment to certain technologies. This is a dangerous path, Jacke said.
He went on to urge pragmatism in the face of the current situation, adding:
– Policy must remove obstacles and focus on improving the market.
Jakob Stenberg
EUEU Industrial Strategy