European Industrial Policy: Breakthrough Strategies

Industrial policy is cross-sectoral and aims at creating framework conditions that foster industrial competitiveness. It is well integrated with other EU policies such as trade, internal market, research and innovation, employment, environment, defence and health. The Union's industrial policy aims to:

• accelerating the adaptation of industry to structural change;
• promote a favourable environment for the initiative and development of enterprises across the Union, especially small and medium-sized enterprises;
• promote a favourable environment for cooperation between enterprises;
• promote a better utilisation of the industrial potential of innovation, research and technological development policies.

The Union's industrial policy instruments aim to create the framework conditions for entrepreneurs and enterprises to take initiative, realise their ideas and seize opportunities. However, industrial policy should take into account the specific needs and characteristics of different sectors. Annual reports on the competitiveness of the single European market analyse the strengths and weaknesses of the Union's economy in general and its industry in particular and can stimulate policy initiatives at cross-sectoral or sectoral level.

Integrated industrial policy

While in the 1980s and 1990s the Union's institutions focused mainly on the creation of the single market, with the creation of economic and monetary union and the enlargement of the Union the focus has shifted to industrial policy. In October 2005, the Commission Communication entitled "Implementing the Lisbon Community Programme: a policy framework for strengthening EU manufacturing - towards a more integrated approach in industrial policy" formulated for the first time an integrated approach to industrial policy based on a specific work programme with cross-sectoral and sectoral initiatives. In the following years, the main measures adopted have focused on sustainable consumption and production, facilitating access to key non-energy raw materials and promoting the use of key enabling technologies in their policies.

New industrial strategy

In 2010, the Lisbon Strategy was replaced by the Europe 2020 strategy, which aimed at smart, sustainable and inclusive growth. The strategy included seven flagship initiatives, four of which promoted industrial competitiveness: the "Innovation Union", the "Digital Agenda for Europe", the "Integrated Industrial Policy for the Age of Globalisation" and "New Skills for New Jobs". Adopted in 2011, Industrial Policy: Strengthening Competitiveness called for structural reforms and coherent policies to enhance the economic and industrial competitiveness of the Union.

In 2012, the Commission published "Strengthening European industry for growth and economic recovery". The aim was to support investment in innovation by focusing on six priority areas: advanced manufacturing technologies, key technologies, bioproducts, sustainable industrial policy, clean transport and smart grids. In January 2014, the Commission adopted the document "For a European Industrial Renaissance" to reverse the trend of industrial decline and achieve the target of 20 per cent of GDP coming from manufacturing by 2020. In 2016, the policy was complemented by the "Digitalisation of European Industry" document on digital transition, financing, ICT standardisation, big data and skills. 2016 also saw the launch of the Start-ups and Growing Companies Initiative.

The ICT, steel, cement, textiles and chemicals industries were included in the roadmap of key actions set out in the 2019 European Green Pact for a clean and circular economy. In the 2020 work programme, the Commission highlighted the strengthening of the Union's digital position through the data strategy and the White Paper on Artificial Intelligence. A New Industrial Model for Europe was presented in March 2020 to help European industry lead the transition to climate neutrality and digital leadership. The COVID-19 pandemic had a significant impact on EU industry. In response to the pandemic, the European Parliament adopted a resolution on coordinated EU action to combat COVID-19 and its consequences.

In November 2020, MPs called on the Commission to review the industrial strategy. In May 2021, the Commission updated the European Industrial Strategy, focusing on the sustainability of the single market, EU dependence in key strategic areas, support for SMEs and start-ups, and accelerating the green and digital transitions. An action plan on key raw materials was adopted in September 2020. In February 2021, the Commission presented an Action Plan on synergies between civil, defence and space industries to strengthen Europe's technological superiority. On 10 March 2023, a Joint Communication on an EU Space Strategy for Security and Defence was presented to protect space assets and strengthen the Union's strategic position and autonomy.

Zero net emissions

On 1 February 2023, the Commission presented a new Green Deal industrial plan for a zero net emissions era, setting out a European approach to stimulate the Union's zero net emissions industry through measures aimed at improving its competitiveness. These measures include three legislative proposals presented by the Commission on 14 March 2023:

• The Zero Emissions Industry Act of 16 March 2023, which aims to simplify the regulatory framework for the production of key technologies, set EU industrial capacity targets for 2030, simplify authorisation processes, facilitate the development of European standards for key technologies and encourage public authorities to procure more clean technologies through public procurement;
• The Key Raw Materials Act of 16 March 2023, aimed at improving the security of supply of raw materials needed to support the transition to zero net emissions;
• Electricity Market System Reform to make the market more resilient, reduce the impact of gas prices on electricity bills and support the energy transition.

The approach to the zero net emissions era also includes measures to facilitate and simplify the process of accessing public and private financing at national or Union level. It also includes measures to develop a highly skilled labour force and measures related to global cooperation and international trade.

Union support

The Union's industrial policy currently includes a large number of strategies, programmes and initiatives covering a wide range of sectors. Examples of initiatives with a budgetary envelope are: the Cohesion Policy, Horizon Europe (2021-2027), the Connecting Europe Facility and the EU Competitiveness Programme for Enterprises and SMEs. In addition, the Investment Plan for Europe and the European Fund for Strategic Investment aim to mobilise at least €500 billion of private and public investment by 2020. SMEs and innovation are constant priorities in these programmes and initiatives.

The first European Defence Industrial Strategy was presented on 5 March 2024 with the aim of increasing defence spending, improving joint procurement, providing predictability for the defence industry and improving interoperability between European armed forces. The proposal for a regulation establishing a European Defence Industry Programme aims to mobilise €1.5 billion from the Union budget between 2025 and 2027. These funds will contribute to improving the competitiveness of the EU's defence technological and industrial base.

Role of the European Parliament

The changes introduced by the Maastricht Treaty to the Treaty establishing the European Community addressed industrial policy issues for the first time. This achievement can be attributed to the initiatives of the European Parliament, which helped stimulate the reorganisation of the steel sector and called for a more dynamic industrial policy. Since then, the Parliament has adopted many resolutions that have further strengthened the Union's industrial policy.

Conclusion

The European Union's industrial policy has undergone a significant evolution, reflecting the changing needs and priorities of the economy. With a focus on competitiveness, sustainable development and digitalisation, the current EU industrial strategy aims to ensure that European industry thrives and leads in an era of zero net emissions and digital transformation. With the adoption of resolutions and the introduction of proposals, the European Parliament continues to contribute to the development and strengthening of the EU's industrial base, ensuring the prosperity and competitiveness of European industry on the global stage.