The ongoing technological revolution and China’s rise have sparked fears that Europe’s industry risks falling behind, and that its unmatched openness is being used against its strategic interests.
Amid calls for a more ambitious and strategic EU industrial policy, this paper explores a possible new balance between openness and protection as part of a joined-up strategy to create a more level global playing field, while shoring up industrial innovation and productivity at home.
The European Commission’s decision of 6 February 2019 to prohibit Siemens’ proposed acquisition of Alstom has triggered a new phase in Europe’s ongoing debate on industrial policy. In December 2018, eighteen EU Member States had issued a joint call for a more ambitious and strategic EU industrial policy, highlighting industry as ‘a key driver for growth’.
There is a palpable feeling that Europe risks being left behind unless urgent action is taken. On the one hand, there is rising worry that others are not playing by the same rules and that Europe’s openness is being used against its own strategic interests. On the other, there is a realisation that Europe may not have done enough to prepare for digitalisation and rising competition, particularly from Asia. Both these concerns must now be addressed in a much more concerted and unified manner.
This paper explores a possible new balance between openness and protection; between playing defence and offence – as part of a joinedup strategy. After a brief examination of the SiemensAlstom case, and of the bigger picture and international context in which Europe’s industrial firms operate, it lays out a number of policy options to create a more level global playing field, while shoring up industrial innovation and productivity at home.
The current sense of urgency is long overdue and welcome – and must be used for a fact-based reflection, an honest self-assessment and a vigorous discourse on the way forward. Most importantly, it should result in a number of coordinated and transformative actions that are visible and tangible, both in Europe and across the world. As the world’s second largest economy, the EU can and must do better in defending its industrial excellence, and the time to do so is now.
Compliments of the European Commission