Executive Vice-President Valdis Dombrovskis
Opening speech at EU Industry Days
Brussels, 26 February 2021
Thank you for your introduction Jennifer and Kerstin.
Ladies and gentlemen, I am very pleased to address you today.
The European industrial policy can only be successful if policymakers work in close cooperation with industry.
Today I would like to look at industrial policy from my perspective as trade commissioner.
Because trade and industry are two sides of the same coin.
The European Union is the world’s largest trader, not only in terms of volume, but also because we have the most comprehensive global network of free trade agreements.
Our economy is well integrated in global value chains, which ensures sustained demand for our industrial output.
Exports support 35 million EU jobs.
And jobs supported by trade are better paid jobs: there has been a 12% wage premium due to trade-induced competitiveness. 16 million European jobs depend on foreign investment in the EU.
Meanwhile, the EU economy relies on imports, which provide access to critical raw materials and inputs.
60% of EU imports are actually used to produce EU goods. The EU’s increased openness to imports since 1995 has boosted its income by about EUR 550 billion.
Looking forward, 85% of the world’s GDP growth is expected to come from outside the EU in the coming decade.
Asia will be a key growth pole for the world economy.
To take advantage of this growth, it is vital that we maintain our open approach and continue trading with our global partners.
Our current trade surplus is substantial, but to maintain this economic success story, and build on it, we must look outward.
We will also be more assertive in defending European companies and European interests.
Our strong global trade relationships will also help us to project our green and digital transition – and their underlying values - worldwide.
The demand for green technologies, in which our industry is leading, is growing.
We will focus on e-commerce, liberalising trade in environmental goods and services, a greater role for our sustainability agenda and support for our Paris Climate ambitions.
Open. Sustainable. Assertive.
These are the three keywords of the new EU trade policy.
Open trade will help our economies recover from Covid-19 and ensure our future prosperity.
We expect growth to resume in the spring and the EU economy should return to pre-pandemic GDP levels in 2022, earlier than previously expected.
However, uncertainty is still high and there are downside risks.
However, there are grounds for cautious optimism.
Not least because EU Member States have managed to preserve the productive base of their economies.
But there is also an important strategic shift in trade policy:
For the first time, we are spelling out a plan for trade policy to play its full role in the green and digital transformations of our economy.
In this respect, the new strategy makes it clear that trade policy must work in synergy with other key players, including industrial policy.
We must use our policy leadership in green and digital to build a competitive advantage for our companies on global markets. And, at the same time, we must avoid carbon leakage.
Our shift to a more assertive approach will help to protect European businesses against abuse and unfair trade, such as unfair subsidies or forced technology transfers. We will work with our partners to modernise our global trade rulebook and to reform the World Trade Organisation.
At the same time, we need stronger autonomous measures to defend ourselves and enforce our rights.
We have an updated enforcement regulation, a Chief Trade Enforcement Officer, and a screening mechanism for foreign direct investment.
And we have still more measures in the pipeline: we will make legislative proposals on the screening of foreign subsidies in the Single Market. And my services are working on a new anti-coercion instrument, which will enable the EU to act fast when our openness is abused.
Let me say a word on the industrial strategy update.
Our industrial strategy from March 2020 set the course for enabling Europe’s industry to lead the twin transitions and drive our competitiveness.
However, an update is necessary to take into account the reality of the post-COVID world.
First, we need to re-establish a fully functioning Single Market. We have seen how quickly the closure of national borders can put question to this common good that took generations to build.
Over this last year, we have worked hard at EU and national level to support sectors and companies hit hard by the crisis.
The Commission acted fast to relax its fiscal and state aid rules, to make such support possible.
The Temporary State Aid Framework is now prolonged until the end of the year.
Careful policies and well-targeted measures will be needed to support companies on their way “back to normal”. We will be mindful of insolvency risks and we will need to ensure access to finance, especially for SMEs and microenterprises. In that regard, the EU long-term budget for 2021-2027 together with the recovery package NextGenerationEU will provide the largest stimulus package ever financed through the EU budget, €1.8 trillion.
We will have to use it wisely.
Not only to build back from the crisis, but also to invest in the long-term competitiveness of our industry.
We want to support the business case for a greener, more digital industry. And this is my second point. Delivering on the Green Deal will accelerate the transformation of various industrial ecosystems and offer new opportunities for first mover advantage.
The continuing digitalisation of the economy may trigger further structural changes worldwide and affect productivity, employment, sectoral linkages and trade. Digital technologies and data help businesses develop new products, processes and business models. We need to remove barriers to the uptake of these technologies, especially for SMEs. One major barrier is a lack of digital skills in our workforce.
Third, while global value chains have showed remarkable resilience during the COVID-19 crisis, we have also seen increased vulnerabilities and disruptions in some areas.
This was evident on the issue of masks and pharmaceuticals, which faced a sudden and skyrocketing increase in demand.
I can assure you that we are already analysing the lessons learned.
I am confident that every governing board has discussed ways to address vulnerabilities in your respective supply chains.
The key decision-maker for reinforcing the resilience of value chains is actually you, as industrial leaders.
Business leaders know their suppliers and supply risks best.
Yet, there are specific industrial products or technologies that warrant a broader discussion.
On 2 October last year, the leaders of the EU countries mandated the Commission to identify strategic dependencies in the most vulnerable ecosystems, such as health. We would like to count on your expertise and support in this work.
Strategic dependencies can be both technological and industrial.
It is notably the case for certain raw materials required for the production of batteries. Raw materials and rare earth minerals are crucial for the green transition.
Semi-conductors is another example where the EU has to boost its strategic capacity. Recently there were several reports on production lines for cars stopped due to the shortage of semiconductors, also here, in Belgium. Given that these products are vital for automotive and digital value chains, developing capacities to manufacture semiconductors in Europe is a matter of priority.
As in the case of batteries, private and public partnerships can be an efficient way to get there.
Working with like-minded partners, investing in skills, increasing funding for innovation and research are also key for sustaining the competitiveness of our industries.
This week President Biden launched a work stream looking to increase the resilience of America’s critical supply chains. The EU and the U.S. face similar challenges and there is ground for cooperation.
Our industrial ambition does not mean isolating ourselves. It means working towards greater reciprocity in our exchanges with third countries.
Our ultimate objective should be to reinforce Europe’s position in global value chains, in global markets and ensure a level playing field with our competitors.
That is how we understand the concept of “open strategic autonomy”.
The EU will work multilaterally whenever we can. But we will act autonomously whenever we must.
Thank you very much, and now I am looking forward for your questions and comments.