France will promote ‘Made in Europe’ strategy at the February EU summit
By Jan Strupczewski
BRUSSELS (Reuters), January 16th, 2017 – France has asked the European Union to adopt a “Made in Europe”, industrial strategy in response U.S. subsidies for green investments. This is to prevent industrial firms leaving Europe and to reduce dependence on external suppliers.
EU leaders plan to discuss such industrial policies for the bloc of 27 nations at a summit in Brussels on Feb. 9-10. They are worried that Washington’s $369 billion Inflation Reduction Act subsidizing products from solar panels, wind farms, and batteries will drive companies out of the EU.
“It is essential to implement a strong and ambitious European industrial policy today. France suggests that it should take the form a ‘Made in Europe strategy’, as suggested by French authorities,” France stated in a paper read by Reuters.
Last March, after the Russian invasion in Ukraine, EU leaders agreed that Europe should reduce its dependence on foreign suppliers of energy, critical raw material, semiconductors, and drugs.
French paper calls for urgent measures, in particular to keep Europe’s companies involved in solar panels and batteries, hydrogen, and critical raw material. It also notes that the “Made in Europe” strategy should be built on four pillars.
The EU would first set production targets by 2030 and reduce dependence on outside suppliers. These key sectors would then be subject to EU regulations, just as it did for semiconductors under the Chips Act.
According to the paper, the EU would have to speed up and simplify the process of granting permits for new production sites. It also needs to overhaul its energy market in order to ensure that European industries have affordable access to power.
The second would involve urgently changing EU rules regarding assistance that governments can offer to companies. This would allow for emergency state aid for certain sectors to continue, as per the COVID-19 panademic.
STATE AID and EU FUNDING
The paper suggested that the state aid could take the form of subsidies or tax credits to give clarity to businesses making investment decisions.
Third pillar: EU funding for sensitive sector. This would help to equalise the different fiscal power of EU countries for supporting their industries. This could be a fund that borrows cheaply from the EU, which would then be transferred to individual countries as loans.
Paris also suggested creating an “emergency account” that would use money the EU had already committed to raising for other purposes, and help the EU invest strategically in projects for European industry.
Final word: The EU should establish by the end 2023 a “sovereignty funds”, which would replace the emergency funds and help target sensitive areas.
According to the paper, the last pillar of the strategy is a fully mobilized trade and defense policy.
According to the French paper, such measures would be announced by EU leaders at the summit on February 9-10. This would assure businesses that the EU is determined to increase economic attractiveness and stop firms moving out of Europe. (Reporting and editing by Jan Strupczewski Editing done by Bernadettebaum)