eunbil · H70N4CE479 · 2019-09-24 00:00:00 — , (OR. Preparation of the on Developing our economic base: a) Vision for a long-term strategy on sustainable growth Presentation by the Presidency Developing our economic base: vision for a long-term strategy on sustainable growth A strong economic base and sustainable growth are of key importance for Europe’s prosperity and for jobs creation as well as for its role on the global stage. the years, Europe has successfully created prosperity and well-being for its industries, businesses and citizens. However, the current European growth model is facing new developments such as climate change, fierce global competition, the rapid development and transformation of technologies and the need for new skills for adapting to technological and societal changes. Europe is well positioned to take the global lead on managing these changes and developments. Therefore, the EU needs a new comprehensive, ambitious and forward-looking growth agenda with effective ways to improve its productivity and competitiveness on the global markets while ensuring that economic growth is sustainable, both environmentally and socially. To respond to this need and the call for strengthening our economic base the Presidency has prepared a report on the sustainable growth agenda. The report introduces a new integrated approach to sustainable growth highlighting that contributions from different relevant policy areas with carefully chosen and well-targeted policy measures are more efficient together and offer more synergies than separately. It is clear that the successful and just transition towards a research and innovation-led climate neutral, digital economy is a common objective for all sustainable growth policies. Moreover, a wisely chosen combination of different policy measures could better respond to citizens’ legitimate concerns about their for the future, employment, safety and livelihood in general. The preparation of the Presidency report has been a participatory process and the Member States have expressed their views at several different phases and fora including at the political level. At the Informal Meeting of the Ministers responsible for Competitiveness in on 4 and 5 , the Ministers had an exchange of views on sustainable growth and the priorities of the work programme of the next Commission. The preparation of the report then took place in the Council Working Parties on Internal Market, Industry and Research. on Competitiveness and Growth has contributed to these discussions from the perspective of several different policy areas and priority topics. The outcome of the preparatory work is reflected in the Presidency report that is annexed to this note. 2.The main messages of the Presidency report The report identifies the key policy objectives for the next Commission’s agenda and lists measures to deliver on them. These objectives and thereby the main messages of the report are: •Accomplishing a just transition to climate neutral industries, manufacturing and service sectors, fostering the renewal and level of digitalisation of European industries and developing strong global and European industrial value chains; •Strengthening an innovation-friendly Single Market with a more favourable business environment, in particular for SMEs, scale-up companies and services and examining how businesses ensure that their conduct is environmentally and socially responsible; •Promoting innovation-led transitions with an ambitious policy mix emphasising investments in knowledge, uptake of research results and deployment of innovations recognising R&I as a key enabler and driver for productivity, policies and solutions for sustainable growth; •Making the EU a global leader in the digital economy and a globally attractive market for digitalisation and for digital services; •Enhancing the competitiveness and productivity of Europe by investing in education, continuous learning, reskilling, upskilling and new skills needed in a digital world, in the industrial transformation and in the transition to a climate neutral economy; and •Strengthening the external dimension of the EU’s competitiveness and making better use of the opportunities of the Single Market in order to improve the global competitiveness of European industries. The incoming Commission has been built to respond to the same challenges and opportunities identified here above and in our discussions: climate change, technological opportunities, socially fair transition and new international partnerships. Therefore, the Presidency believes that the strategic and ambitious blueprint for sustainable growth should feature strongly in the new Commission’s Work Programme, connecting and bringing together the relevant policy areas for growth and competitiveness, as described above. The Finnish Presidency invites the Ministers responsible for competitiveness of the EU, industry and internal market as well as research, •to endorse the main priorities and orientations of the presidency report, and consider them as the core of the Commission’s work programme for the next five years; and •to share their views on how to take forward the integrated approach on sustainable growth. VISION FOR A LONG-TERM STRATEGY ON SUSTAINABLE GROWTH Presidency report – preparations for the Scope and purpose of the Presidency report The EU needs a comprehensive, ambitious and forward-looking growth agenda in order to be more competitive on the global markets and to ensure that economic growth is sustainable, both environmentally and socially. The current European growth model is facing new developments such as climate change, fierce global competition, the rapid development and transformation of technologies and the need for new skills for adapting to technological and societal changes. Europe is well positioned and holds great potential to take the global lead on managing these changes and developments. Therefore, the EU needs a new comprehensive, ambitious and forwardlooking growth agenda with effective ways to improve its productivity and competitiveness on the global markets while ensuring that economic growth is sustainable, both environmentally and socially. The EU growth agenda should be holistic in nature and include policy priorities from policy areas such as modern industrial policy, single market, research and innovation, digitalisation and skills. The successful and just transition towards a climate neutral, circular and resource-efficient economy is a common objective for all these sustainable growth policies. The following priorities should thus form the basis of the EU’s future growth agenda: •Accomplishing a just transition to climate neutral industries, manufacturing and service sectors, fostering the renewal and level of digitalisation of European industries and developing strong global and European industrial value chains; •Strengthening an innovation-friendly Single Market with a more favourable business environment, in particular for SMEs, scale-up companies and services and examining how businesses ensure that their conduct is environmentally and socially responsible; •Making the EU a global leader in the digital economy and a globally attractive market for digitalisation and for digital services; •Promoting innovation-led transitions with an ambitious policy mix emphasising investments in knowledge, uptake of research results and deployment of innovations recognising R&I as a key enabler and driver for productivity, policies and solutions for sustainable growth; •Enhancing the competitiveness and productivity of Europe by investing in education, continuous learning, reskilling, upskilling and new skills needed in a digital world, in the industrial transformation and in the transition to a climate neutral economy; and •Strengthening the external dimension of the EU’s competitiveness and making better use of the opportunities of the Single Market in order to improve the global competitiveness of European industries. In our view, this strategic and ambitious blueprint for sustainable growth should feature strongly in the next Commission’s Work Programme. The preparation of the Presidency report has been a participatory process and the Member States have expressed their views at several different phases and fora including at the political level. At the Informal Meeting of the Ministers responsible for Competitiveness in on 4 and 5 , the Ministers had an exchange of views on sustainable growth and the priorities of the work programme of the next Commission. The preparation of the report then took place in the Council Working Parties on Internal Market, Industry and Research. on Competitiveness and Growth has contributed to these discussions from the perspective of several different policy areas and priority topics. The outcome of the preparatory work is reflected in the Presidency report that is annexed to this note. The Finnish Presidency invites the next Commission and the future Presidencies to build on the findings of this report and to follow up on them systematically. 1.Introduction: Setting the scene 1.The EU – the Member States and the new European Commission – should embrace the need for the of sustainable growth. In order to respond to peoples’ legitimate concerns about their for the future, employment, safety and livelihood in general as well as their concerns related to environmental issues, the Commission work programme should provide an ambitious growth agenda for Europe at a time when global competition is intensifying and traditional industries, enterprises and jobs are undergoing fundamental changes. 2.The European Council conclusions of 20191 identified the way forward: a strong economic base is of key importance for Europe’s prosperity and competitiveness, and for its role on the global stage. The present European growth model is not sufficient for European businesses to compete successfully and to scale-up or tackle the issues of technological development and climate change without considerably improving productivity, to start with. 3.The key question for Europe from the competitiveness and employment perspective is: Which measures does the EU need to take in order to ensure that EU economies and citizens will succeed in the global economy, whilst taking into account the accelerating pace of technological change and the need for social and environmental sustainability? 1EUCO 1/19; Priority areas for a future growth policy have been addressed in a number of different contexts, such as at the (2019), the New Strategic Agenda of the EU 2019-2024, the report of the Industry 2030 High Level Industrial Round Table (2019), the declaration by the Friends of Industry (), and the letter by 17 Member States concerning the future development of the single market and digital policy (February 2019). In addition, the on Competitiveness and Growth has discussed the issue from the perspective of several different policy areas and priority topics. 4.The EU needs an overall focus on policies that truly contribute to improving productivity growth. They must be underpinned by knowledge, research and innovation. Improving productivity and enabling value creation across all economic activities is crucial for sustainable development and well-being. The pace, scale and extent of knowledge-based policies and innovation will increasingly determine the success in the creation of economic value and sustainable growth and jobs. New technologies and in particular innovative use of technologies, making better use of research results and speeding up their market uptake is crucial. In turn, this requires strategic focus on new skills, continuous learning and education systems. 5.Environmental sustainability and competitiveness should go hand in hand in the future. The EU should strive for transformation to a climate neutral economy to achieve the EU 2030 climate and energy targets, the goals of the Agreement and United Nations Sustainable Development Goals. This represents a huge challenge but should also be seen as an opportunity. It is important for the transition to a climate neutral society to be just and for social and regional differences to be taken properly into account. The EU should facilitate this just transition whilst maintaining its external competitiveness and avoid carbon leakage, in particular through supporting and mobilising investment and innovation in technologies promoting climate neutrality. 6.As research and innovation are key drivers for better productivity and for reaching climate neutral economy in a just , additional investments in research, development and innovation are needed at national and EU-level. For example, new multidisciplinary approaches, ambitious deployment of digital solutions and advancing the bioand circular economy solutions, smart-energy systems and resource efficiency are crucial in achieving both climate targets and growth. The new, sustainable, knowledgeand innovation-led growth model requires a renewal of Research Area (ERA) and a renewed political commitment for multilevel governance that enables better links between education, research and innovation. 7.The sustainable growth agenda should also involve citizens, comply with and promote European social values as well as the fundamental principles of the EU, including in terms of inclusiveness, territorial cohesion and geographical and demographic distribution. It is crucial to address the need to regain trust of citizens and ownership of Member States, which are vital for the future development of the EU. Responsible business conduct is a key ingredient in trust and further ways should be explored to encourage the private sector to play its part in making growth truly sustainable. 2.The need for a new holistic EU Sustainable Growth Agenda 8.A strategic and ambitious blueprint for sustainable growth should feature strongly in the next Commission’s work programme, interlinking the relevant policy areas. Europe’s policy agenda will need to be in tune with quickly evolving socio-economic, technological and market developments. 9.The agenda would have clearly defined policy objectives (listed in chapter 3 of this document) and make it clear that an integrated approach with contributions from different relevant policy areas will deliver more efficiently than policy measures chosen separately. In addition, a monitoring mechanism should be set up to help ensure that the growth agenda is systematically implemented and its progress monitored and regularly reported. 10.The implementation of the EU growth agenda and its monitoring could largely build on existing monitoring systems and reorganisation of those systems. It could also be explored whether Semester or its successor instrument could be used to monitor the implementation of the EU growth agenda and better serve the monitoring of integrated policy objectives. The monitoring indicators needed would remain for the Commission to develop in close cooperation with the Member States. 11.The progress of implementing the growth agenda should be regularly reported. The outcome of these reports could be discussed in the . The current competitiveness check-up could be renewed and, for example, include a progress report on the implementation of the growth agenda. The possible renewal of the competitiveness check-up needs to be discussed more in depth between the Member States and the Commission. Also, cooperation between different council formations would be a useful contribution to make the integrated approach a reality. 12.Enhancing productivity, creating value and ensuring an efficient and just transition to a climate neutral economy should be the main objectives of the next Commission. To this end, the Presidency, in close cooperation with the Member States, has identified the following key policy objectives for the EU´s growth agenda and the means to achieve those policy objectives. These should become the core of the next Commission work programme. The list of policy measures, however, is not exhaustive. Accomplishing a just transition to climate neutral industries, manufacturing and service sectors and improving, the rate of renewal and the level of digitalisation of European industries and developing strong global and European value chains 13.The success of European industries is largely dependent on their ability to embrace new technologies and business models which promote digitalisation, climate neutrality and effective and environmentally friendly use of resources. They also need to be cost-efficient for the whole life cycle and be able to contribute globally to the climate change mitigation. It is crucial how undertakings of different sizes manage to create and access value chains, which meet customer needs and operate across borders or cover more than one sector. It is also essential that they can be actively involved in and take advantage of the innovation ecosystems. This requires a strong focus on research and innovation policy. Developing and adapting new technologies requires new types of skills, which companies need to be able to rely on. Furthermore, effective competition and a well-functioning single market are absolute conditions for improved economic growth and productivity as well as being the pathway for European companies to compete successfully in global and European markets and to become not only European champions but also global leaders, thus serving also the strategic autonomy in a forward-looking way. 14.Future EU policy approaches should be more effective in bringing about the renewal of European industries and businesses, and enabling them to scale-up and improve their access to global and European markets. At the same time, there is an increasing pressure on businesses to ensure that their conduct is environmentally and socially responsible. EU policies should facilitate this development. 15.Innovation-led growth is essential for the creation of a level playing field for European businesses and makes it possible for them to scale up and grow quickly. Moreover, it is important to ensure the best possible ecosystem for the flourishing of innovation activities. The quality of the regulatory and legislative culture in relation to innovation is therefore becoming increasingly important for the EU´s global competitiveness. This also requires the adoption and implementation of ambitious reforms at national level. 16.It is of the utmost importance to support the creation and development of strategic value chains and their connection to global value creation networks. Special attention should be paid to finding the means to ensure that European industries, in particular SMEs and mid-caps across Europe, are fit and able to create joint strategic value chains. Europe as a business environment should ensure the possibilities for companies to scale-up and maximise their value creation and role in global value chains, which cover the entire range of activities involved in providing a product or service. These activities span across multiple countries, and they include both arm’s-length relationships and exchanges within an enterprise. Value chains may also change quickly, in particular due to rapid technological and especially digital developments. 17.Industries are increasingly dependent on services due to the servitisation of manufacturing industries. On the other hand, services market needs prosperous European industries in order to develop and diversify further. The industrial and single market policies should therefore be developed in close inter-relation to optimise the synergies of the two policy areas and the possibilities offered by the increasing interdependence of services and industry in creating added value within global value chains. 18.Policy measures needed: •Supporting the development of strategic value chains such as in key digital, circular and clean technologies and their connection to value creation networks to the transformation of European industry. These policy approaches, including Important for Common European Interest (IPCEIs), should ensure equal opportunities for frontrunner companies, new players and SMEs. It is important that the results are available to the wider European industrial ecosystem. •Breeding a business environment that stimulates innovation and technology uptake to create a market for cost-efficient sustainable solutions and circular economy business models. This requires a consistent regulatory framework to ensure industry invests in new technologies to make it possible for European industries and businesses to become indispensable suppliers of a climate neutral and circular economy. •Strengthening existing and developing adequate new financial instruments to support a climate neutral industry and to scale up innovative SMEs. As regards access to financing, the EU needs to more private funding to European projects, in particular through public-private partnerships. •Creating the best possible ecosystem for the flourishing of innovation activities, for example, by taking full advantage of intellectual property (IP) policy. In light of new economic and technical developments, a broad IP strategic approach is needed to ensure the smart use of IP by businesses and the innovation community. Continued investments in open standards are necessary to create global value chains accessible for all, in particular to enable SMEs to participate in the value creation and to maintain European leadership in critical fields of digital technology whilst ensuring a well-functioning European licensing system. •Ensuring that European-wide markets are characterised by effective competition. At the same time, the enforcement of rules in individual cases needs to be based on a correct understanding of the functioning of the market or markets concerned. •Enhancing, for example through business-support organisations such as clusters or Digital Innovation Hubs, the possibilities of SMEs to scale-up in all regions of Europe as well as their access to financing. Promoting their digitalisation and skills development is also important. •Examining, how businesses ensure that their conduct is environmentally and socially responsible in such a way that it becomes a competitive edge. Strengthening an innovation-friendly single market with a more favourable business environment in the EU, in particular for SMEs, scale-up companies and services and examining how businesses ensure that their conduct is environmentally and socially responsible 19.Further progress of the single market is an essential element in creating a genuine level playing field for European industries and businesses and making it possible for them to scale - up, as well as to enable new businesses and business models to develop quickly. The single market should be fair, fit for digital era and support the transition to a climate neutral economy. 20.The priorities for the single market are the further development of the markets for services and goods, based on facts and needs, on Council Conclusions of 27 2019 and better implementation, application and enforcement of the current single market rules. 21.Value creation networks in manufacturing industries have undergone fundamental changes, as servitisation is increasingly important for value creation in those networks. Leading global manufacturers have also become service providers. This change is increasingly driven by the digital economy, for example platforms. In fact, huge growth potential lies in the field of services, especially in digital services and this potential needs to be realised. Europe should therefore create a real services market to enable European companies, in particular SMEs and mid-caps to scale up and become global leaders.