EU Industry Days, 6-02-2019
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I'm honoured to be here today. The European Industry Days bring together many voices in our society. Small and medium-sized companies as well as multinationals. The inventors with bright ideas for Europe and the rest of the world. Trade unions and civil society.
We need that broad involvement. Because the vision for our European industries shouldn’t be set by the loudest voices. It should be formed openly and involving everybody. Exactly in the European way at its best.
I'm particularly pleased that 23 young leaders of industry will also share their thoughts with us. Because today’s discussions are, in the end, really about their future.
Newcomers, just like older and established companies before them, deserve a fair shot at success. At their disposal is a Single Market with 500 million consumers. They have to compete to attract the customers. Here they can test out new ideas and hone in on their core skills so they can become competitive and conquer the rest of the world.
And it has served us well.
We have growth in almost all Member States. And the strongest growth is in those Member States with the lowest GDP to start with. In other words: we are growing together. We have a large trade surplus in machinery - 200 billion euros in 2017. Our surplus for manufactured goods is even larger - 286 billion euros. Seven out of ten Europeans have a job. That figure has never been so high in our history.
There are good reasons to be proud of the work that has already gone into creating a Single Market. There are good reasons to be proud of our industries, which are already flourishing.
At the same time, we have so much work ahead of us. Digitisation is transforming all our industries - not to mention the rest of our society. We are not as strong as we should be in some of the sectors that will form the future. As we get more interconnected, we also get more vulnerable. There are concerns about foreign investments, which can affect our security. An increasingly volatile global political landscape is putting our global trade system under strain.
To tackle all the challenges, you will not be surprised to hear that I, as Commissioner for competition, firmly believe that open and fair competition is going to play an important role.
But, competition is only one ingredient. We also need a strong industrial strategy. A strategy that builds on - but also goes beyond - our Single Market.
The starting point must be what has made Europe strong: its openness and diversity.
Strong in diversity
In my daily work as Competition Commissioner, I have the privilege to meet many businesses. Those companies come from all corners of our continent, and all parts of our economy.
One is designing hearing aids to help millions of citizens communicate with their loved ones. Another is developing groundbreaking biological treatments for cancer. Some are producing important input for others companies - such as steel or copper. Others are building the newest wind and gas turbines to generate the electricity of the future.
They all have one thing in common: their competitive spirit. The drive to become a champion, each in their own field, by simply being the very best at what they do. The exposure to competition is the most important engine for this progress. We get most out of this engine when the competition is open and takes place on a level playing field. And one the great benefits of the Single Market is exactly that it creates room for larger companies to emerge without us having to sacrifice competition.
What is also striking is the diversity. Some of the companies are big. Some are small. Some are well established with a proud and long history. Others are young and dynamic, full of fresh ambitions. We derive strength and resilience from this diversity. We should not fall into the trap of thinking that bigger is always better. Yes, we also need very large corporations, because there are challenges that only they can pull off. At the same time, the ecosystem is stronger if its entire fate does not depend on one or very few companies alone.
Ingredients of industrial strategy
Building on these strengths of diversity and open competition, we need a number of actions within these five areas:
Skills and talent
Infrastructure – both digital and physical
Address market failure
Internationally – fight for fair competition
First of all, we can still do more to remove the barriers that block companies from growing. So the Single Market works seamlessly. There is more work to do especially when it comes to services and the digital market place. The playing field has to be level. That is why we insist that all firms - also the digital giants - pay their fair share of taxes.
Secondly, we must nurture our human talent, from school to the very last job. We need to strengthen research and education. This is reflected in the Commission’s proposal for the next Multiannual Financial Framework (MFF) where we propose to double the budget for Erasmus+. Horizon Europe will be the most ambitious research and innovation-funding programme ever, with a proposed budget of €100 billion.
Thirdly, we need to invest in infrastructure, both digital and physical. Recently, we have simplified our state aid system to allow even more aid to be deployed without the need of first notifying it to us. For the next MFF we have proposed an InvestEU fund, which will use 15 billion euros from the EU budget to unlock 650 billion euros of investment.
Fourthly, our public and private sectors must team up to get the best out of each other. And this is where a genuine industrial strategy comes in – and can work hand in hand with competition policy.
If we want to assert European independence when it comes to some of the most critical cutting-edge technologies, we must bring together an entire value chain – from basic researchers and universities down to the customers.
When the market alone does not allow highly innovative research and development projects to get off the ground, the State should step in. And when taxpayer funding is involved, we must make sure we get a return on our investment and that the knowledge created is shared widely.
A good example are Important Projects of European Interest. (IPCEI). This last December, the Commission gave its first green light to such a project. France, Germany, Italy and the UK will jointly fund a very large Research and Development project in microelectronics. It will unlock significant private funding and it will involve large companies, SMEs, start-ups and researchers. Importantly, they’ll share the knowledge they create as widely as possible.
This was the first project approved under our special, leaner rules for State aid for projects of strategic European interest. Hopefully, now when everybody has this experience to draw from, more projects will follow - because there are a number of other areas that could benefit from such European cooperation. That choice is for Member States and their companies to make.
At a recent conference about the future of competition policy in the digital area we invited Nobel prize winning economist Jean Tirole to give his advice on how to address some of the challenges that digitisation poses for competition policy. He used the opportunity to also advise on industrial policy.
Among others, he urged us to pay close attention to how we decide where the funding is allocated. So that it does not distort competition and is spent where there are market failures to repair - not just where special interests are strong. We must be ready to take risks with our investments. But things do not always turn out as planned. That is why it is a good idea to also involve private investors, as they are usually very good at cutting their losses when necessary.
And I believe that's right.
Fifthly, we must work to ensure a level playing field. This effort should not stop at the border of the Single Market. We must lead by example, as we have done with the modern Free Trade Agreements with Canada and Japan.
At the same time we must use our size to insist on fair competition globally. That is why Commissioner Malmstrom is working to get global subsidy disciplines higher up on the global trade agenda in the World Trade Organisaion (WTO).
This work will take time. In the meantime we must stand ready to protect our interests.
We need robust trade defence enforcement when global competitors are dumping or propped up with subsidies.
We must insist that if other countries want unfettered access to our public procurement market, they should also give us access to theirs.
We must be more serious in screening foreign direct investments that affect our security. The new Foreign Direct Investment (FDI) screening tool is there to pave the way for closer cooperation.
There is indeed plenty of work to do. Some of it is for us in Brussels. A lot of it is for our Member States.
Ladies and Gentlemen.
Great thinkers like Jean Tirole give us homework for these European Industry Days. We must reflect carefully on the right policy proposals for our industry.
But we already see how his thinking could work.
If we ask all the different industries represented in the room today if they believe their sector deserves a bigger share of Europe’s support, I think they would all say yes. That’s only human.
If we instead ask those industries for example to find partners in their value chain and solve a European challenge like climate change, the picture is different. Minds from different corners come together. People who didn’t feel empowered dare to speak up. New ideas spark off.
That type of thinking can renew European industry. It builds on what makes this continent strong ---openness and diversity.
We need an industrial strategy not for the few—but for all of Europe.