[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 5.10.2005

SEC(2005) 1217

COMMISSION STAFF WORKING DOCUMENT

Annex to the Communication from the Commission “Implementing the Community Lisbon Programme: A policy framework to strengthen EU manufacturing - Towards a more integrated approach for industrial policy” IMPACT ASSESSMENT {COM(2005) 474 final}

IDENTIFICATION OF THE PROBLEM

The Challenges to EU Manufacturing industry

Manufacturing plays an essential role in the EU economy. It directly provides around a fifth of EU output and employs some 34 million people in the EU. However manufacturing’s importance to dynamism and competitiveness of the EU economy is much larger than its size might suggest.

- Manufacturing is the key to exploiting the new knowledge economy - over 80% of EU private sector R&D expenditures are spent in manufacturing. Manufacturing industries therefore provide the major impetus for the development and adoption of new technologies.

- The share of manufactured products in international trade is far larger than that of services. Manufacturing provides some three-quarters of EU exports, dominating the current account balance. The ability of the economy to pay for energy and the import of other basic resources therefore depend on manufacturing exports.

- Manufacturing makes intensive use of inputs from other sectors of the economy, creating growth and jobs in the wider EU economy. Input-output tables indicate that manufacturing sales are around three times as large as manufacturing value-added. For example, manufacturing’s purchases from the services sector alone amount to some two-thirds of the value of manufacturing value-added. (EU Sectoral Competitiveness Indicators).

Global manufacturing is currently undergoing a revolution with new opportunities and challenges emerging from the simultaneous emergence of new technologies and the increased internationalisation of the world economy.

The new technologies allow the fast introduction of new products and the increased flexibility of production processes. In increasingly knowledge and technology intensive industries, intellectual property, network externalities, and industry standards are increasingly important to competition and competitiveness.

- The information and communication technology (ICT) industries have seen an enormous expansion of technological opportunities resulting in strong increases in both output and productivity.

- The development of biotechnology and other life sciences technologies has provided the basis for new industries, but raised new challenges in terms of financing R&D and protecting intellectual property.

- The spill-over effects of the new general purpose technologies, such as ICT and biotechnology, provide both challenges and opportunities for other sectors of manufacturing. Major reorganisations of business methods, management techniques, and work practices are required to benefit fully from the new opportunities.

At the same time, the world economy is becoming increasingly internationalised. This is being driven by:

- improved transport linkages and falling communication costs

- reduced in trade barriers, such as tariffs and non-tariff barriers as a

- the integration of newly developing economies into the world trading system, particularly the Asian emerging economies, including China and India.

- the increased financial integration of the world economy, leading to increased competition for international investment

- an increasingly well-trained scientific and engineering workforce, leading to increased competition for R&D spending

EU industry has important strengths and has responded well to these challenges.

- Individual EU manufacturing sectors have on the whole performed well in comparison with their counterparts in other industrialised economies. Productivity growth in the overwhelming majority of individual sectors has been consistently higher in the EU than in the US.

- Several important EU manufacturing sectors have a substantial revealed comparative advantage and record very substantial trade surpluses against the rest of the world, such as mechanical engineering, chemicals, and motor vehicles.

However, there are important weaknesses that have been identified for EU manufacturing:

- Whilst EU industry is particularly strong in medium-high technology industries, it is notably weak compared to some of its competitors in ICT-production and high technology industries. Overall therefore there has been a manufacturing productivity growth differential between the EU and other industrialised economies, particularly the US, despite the good performance of the majority of individual industry sectors.

- The R&D intensity of EU lags behind its major competitors, particularly the US and Japan. Latest comparable figures show that the EU spent only 1.9% of GDP on R&D, compared to 2.6% in the US and 3.2% in Japan. Whilst China currently has a lower R&D intensity of 1.3% of GDP, its R&D spending is increasing strongly. Moreover, there is mounting evidence that the EU is becoming a less competitive location for international research. Between 1997-2002, R&D expenditures by EU firms in the US expanded much faster than spending by US firms in Europe. US investment has also been growing at a much faster rate in areas outside the EU – notably China, than in the EU. (EU Key Figures 2005 for Science, Technology, and Innovation).

On the whole therefore, the performance of individual EU manufacturing sectors over the recent past has been positive. However, further adaptability and structural change are the key factors needed to respond to these developments and to ensure the competitiveness of EU manufacturing, especially in the light of increasingly strong competition from China and the emerging Asian economies. The challenge for EU industry and individual sectors is to be able to maintain and further improve this performance in the future in the face of further technological breakthroughs and continued internationalisation.

The Screening of Policy Challenges for Particular Sectors

To carry out an assessment of the potential role of industrial policy in individual sectors, over the last months the Commission has undertaken a systematic screening of 27 separate sectors of manufacturing industry. For each sector, a competitiveness assessment has been made, together with an evaluation of opportunities and threats. The potential relevance of various key policy areas for each sector has then been assessed.

The Communication on Fostering Structural Change: an Industrial Policy for an Enlarged Europe” (COM 274, April 2004) identified the following policy areas as being particularly relevant to industry. These areas were:

- ensuring an open and competitive Single Market, including competition;

- knowledge, such as research, innovation, and skills

- better regulation

- ensuring synergies between competitiveness, energy, and environmental policies

- ensuring full and fair participation in global markets

- facilitating social and economic cohesion

Whilst these policy dimensions are not exhaustive, they were chosen because of their particular relevance to manufacturing sector productivity growth and international competitiveness.

The screening process has resulted in a thorough and systematic identification of the competitiveness and policy challenges of each individual sector in both a quantitative and qualitative fashion. The following sections set out the main policy challenges that have been identified. The tables therefore only reflect the challenges of highest priority amongst the many issues relevant for each individual sector. Much more detail on these and other issues on an individual sectoral basis are set out in the accompanying Staff Working Paper.

The key results of the screening process can be divided into a group of challenges that were common to across a number of sectors and a number of sector-specific challenges.

Increasing R&D and promoting more efficient innovation

In the light of increasing internationalisation and fast technological development, these are key challenges for almost every sector of EU manufacturing. The most important factors needing to resolved are:

- the need to stimulate private sector R&D spending – especially for SMEs - through better public policy tools through review of state aids and public procurement rules

- need for partnerships such as technology platforms to focus research needs across the whole sector

- the need for Community-wide R&D initiatives to ensure synergies between EU policies and financing, national policies, and private investments

- the need to improve collaboration and knowledge transfer between universities and industry through fostering strong clusters and innovation poles in the EU.

Protecting intellectual property rights

The issue of protecting intellectual property rights is of key importance for a wide range of sectors. The lack of a Community patent is a key issue for the pharmaceuticals, biotech, and mechanical and electrical engineering industries. These industries are also concerned about the protection of intellectual property rights in international markets. Origin marking, avoiding counterfeiting, and market surveillance in both EU and international markets are key issues for the fashion and design and the ceramics and glass industries.

Improving skills

The need to improve skills was identified as a key issue by a wide range of different industries, including pharmaceuticals and the ICT, mechanical and electrical engineering industries, autos, shipbuilding, the fashion and design industries, and a number of basic and intermediate goods industries. The nature of the skills challenges range from the urgent need for an increase in highly skilled personnel in specific fields, the need to reduce the apparent mismatch between the qualifications offered by educational institutions and the needs of industry, and the need to ensure better in-service and vocational training programmes encompassing all levels of management and workers.

Better regulation in the single market

Improving the regulation in the single market have been identified as key challenges in the life sciences industries (cosmetics, pharmaceuticals, biotech, and medical devices), the ICT and engineering industries, and the chemicals and construction industries. These industries particularly rely on the continual adaptation and updating of the regulatory framework in order to keep up with technological progress.

Facing energy and environmental challenges

Energy and environmental issues are key challenges for many basic and intermediate product industries, because of their energy intensity and proportionally higher expenditures on environmental protection[1]. The objectives of energy policy include making energy markets more efficient through liberalisation measures, increasing investment in renewable and non-fossil fuels, and integrating climate change into energy policy, for instance through the EU emissions trading scheme. The exact balance between these different policies is crucial especially for most energy-intensive industries because of their effects on energy prices. Ensuring the coherence between the multiple energy initiatives is therefore a considerable challenge for industry’s global competitiveness. Concerning environmental policies, recycling and waste issues also involve complex potential trade-offs, involving the whole life-cycle of material and resource use. For many industries, waste has become a valuable resource. Many sectors are covered by specific legislation that needs to be fully coherent with each other. Substantially reducing harmful emissions to water and air is a key issue for a number of industries.

Ensuring full and fair participation in international markets

A key factor for competitiveness is the ability to compete fairly in foreign markets. Whilst enormous progress has been made towards this objective through multilateral trade negotiations and a network of bilateral free trade agreements, market access continues to be a priority issue for several sectors, particularly for the internationalisation of SMEs. These include cosmetics and pharmaceuticals, the engineering and automotive industries, most of the fashion and design industries, and a number of basic industries (ceramics, glass, and wood industries).

Facilitating social and economic cohesion

Mobilising the potential for growth that exists in all regions, including those affected by changes in the manufacturing industry, helps to improve the geographical balance of economic development and raises the potential rate of growth in the Union as a whole. Economic and social cohesion can also be strengthened by addressing the appropriate sectoral challenges and by enhancing the co-operation across regions faced with similar problems. There is a need for continued flexibility and structural adjustment to make the most of the new opportunities presented by enlargement, the developments of new technologies, and the internationalization of the economy. The primary responsibility for these adjustments rests with the private sector. For instance, many of the fashion and design industries need to make adjustments in the face of strong international competition from low-wage countries to ensure an increase the value-added of their products. However, a policy challenge arises from the need to facilitate this adjustment. A series of actions to improve human capital, worker skills, and health, and to bolster training would be relevant to a wide range of sectors. The screening process identified potential structural change as an issue for the textiles, leather, furniture, footwear, and ceramics industries, printing, motor vehicles, shipbuilding, steel, and parts of the food industries.

Sector-specific challenges

In addition to the cross-sectoral challenges described above a number of sector-specific challenges have also been identified.

- Pharmaceuticals Industry Challenges

Key challenges for the pharmaceuticals industry are the fragmentation of the European pharmaceutical market, work will focus on R&D issues and regulatory matters at Member state level, such as the crucial issues related to pricing and relative effectiveness.

- Life Sciences and Biotechnology Challenges

The life sciences and biotechnology industries are particularly successful industries, with enormous potential to contribute to health, the aging process, food, and the environment. There is a need to anticipate potential regulatory issues, propose priorities, and make recommendations for public. The Commission’s Strategy for Life Sciences and Biotechnology COM(2002) 27 is now ready for its mid-term review.

- REACH and the chemicals industry

Following the expected adoption in 2007 of REACH, the new chemicals regulatory framework, there is a need to ensure the successful enhancing of the competitiveness of the chemicals industry.

- Defence industry challenges

Key issues for the defence goods industry are the fragmented legal and regulatory framework for the industry, the need to create EU market procurement rules, and the need for increased standardization.

- European Space industry

The space sub-sector is of the aerospace industry is an important infant industry in the EU with vast development potential. The development of the European Space Programme and the Global Monitoring for Environment and Security (GMES) satellite system are important issues for the sector.

- ICT industry and take-up challenges

There is a clear need to both enhance the competitiveness of the EU’s own ICT industries and to ensure the identification and removal of the obstacles to ICT take-up in the wider EU economy.

- Mechanical Engineering challenges

The mechanical engineering is a major sector of the EU economy, making a large contribution to the external balance of payments. Finding the best way to enhance the competitiveness of the sectors and address potential longer term weaknesses is an important policy challenge.

- Improving information on sector-specific competitiveness

The need for further information on sectoral competitiveness was identified for a number of sectors, including for the ICT, food, and fashion and design industries

OBJECTIVES

In its Action Programme for Growth and Employment, the Commission declared its commitment to focussing the renewed Lisbon Strategy on growth and employment in order to unlock the resources to meet its economic and social ambitions and to reach its environmental objectives. To do this the EU’s priorities were declared to be:

- Making Europe a more attractive place to invest and work

- Putting knowledge and innovation at the heart of European growth

- Shaping policies to allow businesses to create more and better jobs

The Communication on industrial policy was announced under the Community Lisbon Strategy of July 2005 and represents an important contribution to the achievement of these objectives. The main role of industrial policy is to provide the right framework conditions for enterprise development and innovation in order to make the EU an attractive place for industrial investment and job creation. It is primarily private sector businesses themselves that create economic growth, not the public sector. Businesses have the primary responsibility to exploit new markets and find new opportunities resulting from technological developments and internationalisation. In exploiting these new opportunities, corporate social responsibility and sustainable development play a key role.

From an industrial policy perspective, the role of public authorities is to act only where needed, i.e. when some types of market failures justify government intervention, or in order to foster social and economic cohesion in the face of structural change. The latter may require the introduction of accompanying measures to reduce the social costs of structural change and on the basis of an on-going dialogue with stakeholders. For this the public authorities can make use of policy such as better regulation, single market, innovation and research policy etc. These instruments apply generally across the economy without distinction between sectors or firms.

However, the scope of policy instruments should not be seen just as only broad horizontal measures. For industrial policy to be effective, account needs to be taken of the specific context of individual sectors. Policies need to be combined in a tailor-made manner on the basis of the concrete characteristics of sectors and the particular opportunities and challenges that they face. This inevitably has as a consequence that whilst all policies are important, in the EU today some policies have greater importance for some sectors than others.

The Commission therefore stands by its previous commitments to use industrial policy to encourage and facilitate the process of industrial innovation and change. To achieve this, an integrated and anticipative approach to industrial policy is needed, based upon a partnership between the EU and Member States.

Identification of Policy Options

A screening process of the 27 industrial sectors resulted in the identification of a series of key cross-sectoral policy challenges:

- Research and Innovation

- Intellectual property rights

- Need to improve skills

- Better regulation in the single market

- Facing energy and environmental challenges

- Ensuring full and fair participation in international markets

- Facilitating social and economic cohesion

In addition, a number of sector-specific challenges were identified.

For each of the policy challenges, the following options were considered:

Option a: Do Nothing

For each of the identified policy challenges, the “Do nothing” option was discarded at early stage. For each of the challenges identified in section 1, there is a clear role for public policy intervention at the EU level, either to directly address the market failures in these areas or else to facilitate social and economic cohesion in the face of structural change.

Option b. Undertake a more detailed review or further monitoring of the issues to examine problem in more detail.

Undertaking a study or further monitoring is appropriate where there is an important information gap or alternatively an information overload. This option is appropriate when initially developing policies in a particular area and where the information is largely of an objective or technical nature. Examples would be the undertaking a competitiveness analysis of a particular sector in order to obtain a better assessment of the key opportunities and challenges faced.

Option c. Develop policy initiatives through co-ordination of Commission services, whilst consulting with stakeholders

Undertaking further policy development within the Commission itself, where the policy challenges mainly relate to the need for the co-ordination of policy making in different areas and where the issues are particularly technical. A number of the policy challenges identified above exactly have this characteristic: e.g. the need to bring together a number of different policy perspectives with a focus on their implications for competitiveness.

Whilst such policy development will be undertaken within the Commission, this will normally be done following extensive consultation with the relevant stakeholders and the Member states. Commission rules on consultation are set out in the Communication “Towards a reinforced culture of consultation and dialogue - General principles and minimum standards for consultation of interested parties by the Commission” COM(2002) 704.

Option d. Extensive co-ordination and consult with relevant stakeholders and member states to further develop a consensus on the way forward and develop a joint policy agenda.

This co-ordination and consultation with stakeholders can take a range of different forms:

Industry ad hoc meetings or fora

Such meetings serve to bring together key stakeholders at working level in order to exchange views and pool information on a range of key issues. Such meetings can be ad hoc or at regular frequencies. They allow an exchange of views by industry experts and other stakeholders and can achieve much valuable progress, particularly in cases where issues are relatively technical and solutions largely involve co-ordination issues.

High Level Groups

High level groups are informal temporary bodies bringing together senior representatives of key stakeholders and Member states in order to compare their points of view on each sector's difficulties and opportunities and achieve a consensus and common vision for the future. Successful examples of recent High-Level Groups are G10 Medicines, the LeaderSHIP 2015, and the CARS21 which will continue to make an important contribution in the future.

It is important to point out that, in view of the nature of the challenges outlined above, the likely benefits of these initiatives – consisting of a better identification of problems and the preparation of further policy actions – far outweigh the costs to the Commission, Member States, Industry and other stakeholders. Any further policy actions resulting from the work launched in this Communication will, of course, be subjected to Impact Assessment.

WHAT IMPACT IS EXPECTED FROM THE COMMUNICATION?

The Communciation “Implementing the Community Lisbon Programme: A Policy Framework to Strengthen EU Manufacturing - towards a more integrated approach for Industrial Policy” does not itself propose new instruments and policy measures. Rather it sets out a series of future initiatives for further work on a number of specific policy challenges that have been identified as crucial for the competitiveness of individual sectors.

The benefits of the proposed policy initiatives are therefore expected to be strongly positive in relation to the costs of undertaking this further work. Nonetheless, the Commission has examined for each policy initiative which policy instruments would be most appropriate to tae it forward.

Intellectual Property Rights

Intellectual property rights were identified as of key importance for the competitiveness of many industrial sectors. While key areas have already been harmonized, more can be done to ensure that the regulatory framework meets the needs of industry at a time of rapid technological development and societal change. Companies and their clients need IPR which stimulates innovation, provides a stable context in which to make investment decisions, and encourages the development of efficient new business models. The debate engendered by the proposed directive on the patentability of computer-implemented inventions has demonstrated that framing IPR rules which balance the needs of all stakeholders is by no means easy. In addition, the proper enforcement of IPR within the internal market and in third countries is of the highest importance to fight counterfeiting and piracy. Infringements of IPR can jeopardize legitimate businesses, threaten innovation and sometimes pose problems to public health and safety. Many companies are still not aware of their rights to obtain adequate IP protection, whilst counterfeiting continues to be a major problem in many areas of trade. The potential benefits from developing further policies in this area is therefore considerable.

In terms of the appropriate instrument, it is proposed to launch a dialogue with industry and other interested parties to determine what more might usefully be done to provide European industry with a sound IPR framework and to undertake an internal Commission review of the state of progress in the area of IPR with a particular focus on competitiveness issues. The issues involved are highly technical and many of the instruments concerning intellectual property issues are already covered by Community legislation or international agreements. It is hoped that this review would be able to come up with suggestions on how to improve the situation in 2006.

Competitiveness, Energy, and the Environment

The potential benefits from improving the synergies between competitiveness, energy, and environmental policies are undoubtedly considerable and would contribute to all of the pillars of sustainable development. Sectorally, energy and environmental issues have been identified as key challenges for many basic and intermediate product industries.

Given the wide range of different issues and stakeholders involved in fields of competitiveness, energy, and the environment, it was felt appropriate that the appropriate instrument to take this policy forward would be through a High Level Group designed to examine the links between competitiveness, energy, and the environment to ensure the coherence of individual initiatives, whilst improving both sustainability and competitiveness. This will be achieved through the balanced participation of all stakeholders, facilitating the development of a consensus and common vision for the future

External Aspects of Competitiveness and Market Access

Access to international markets was identified as a priority issue for most of the sectors and would thus appear to have considerable potential benefits for EU industry and consumers.

Because of the nature of the issues, a two stage process for policy developments has been considered appropriate. First, the Commission is internally working on the revision of Market Access Strategy, reviewing the existing Strategy and instruments to focus on those sectors and markets with greatest potential gains for competitiveness. The Commission in cooperation with stakeholders would develop and implement a detailed strategy on how to tackle barriers in the selected sectors and countries. Secondly, the Commission also intends to launch a wide process of reflection and debate on the external aspects of EU competitiveness through a further Communication dealing inter alia with trade issues related to Intellectual Property Rights, regulatory issues, investment and government procurement.

New Legislative Simplification Programme (October 2005)

Better regulation at various levels has been identified as a key challenge for several sectors, including construction, motor vehicles, ICT industries, and the food and life sciences industries. In addition, the waste regulations have been identified as particularly important to a wide series of different sectors and particularly to SMEs. Improving legislation and reducing administrative costs could lead to substantial potential benefits.

The Commission has already announced[2] that it intends to re-launch its work on the simplification of existing legislation. Following consultation with stakeholders, a Communication will be published in October setting out a Simplification work programme including the three priorities that have already been identified for this approach: the automotive sector, the construction sector, and waste legislation. In fact, the CARS21 High Level started the screening of existing legislation with the aim of completing this process by the end of 2005.

Improving Sectoral Skills (2006)

Skill shortages were identified as a key challenge in a wide range of different industries, including the ICT and engineering industries, the textile and leather industries, and a number of basic and intermediate goods industries. Moreover there is some evidence that relocation of industrial activity is in some cases motivated more by skill shortages than by cost factors. A number of industries have developed their own responses to skills shortage issues.

The Commission has already begun to address skill shortage issues through a number of policies[3]. To supplement these existing initiatives, it is proposed to make assessments of the nature of the skill problems in particular industries. These assessments would include the identification of current sectoral skill requirements and skill gaps, and would examine likely developments in sector-specific competences, including where possible effects on SMEs. Building upon the on-going work by the Cedefop, this information base would allow the articulation of future specific policy initiatives in the light of sectoral competitiveness requirements.

Managing Structural Change in Manufacturing (Autumn 2005)

Whilst the private sector has the primary responsibility for undertaking structural adjustment, the EU has useful levers at its disposal to anticipate and accompany change, as acknowledged in the recent Communication on the employment effects of restructuring[4]. It is essential that EU-level industrial initiatives are fully integrated with the use of the Structural Funds and the policy instruments of individual Member states. The screening process has identified a number of industries for which potential structural adjustment is an issue and it is believed that considerable benefits could arise from a more sectoral focused approach to restructuring.

The Commission intends to ensure that better anticipation and positive management of economic restructuring are included in the new Structural Funds programmes. In line with the Community Strategic Guidelines for Cohesion, 2007-2013, support for programmes aimed at modernisation of labour markets and anticipation of gradual changes throughout the Union in sectors for which structural adjustment has been identified as an issue needs to be included in the new Structural Funds programmes, alongside active measures to reinforce the economic well-being of regions[5]. The Commission will also further explore the issue of enhancing the co-operation across regions faced with similar problems and challenges.

A European Industrial Research and Innovation Monitoring System (2006)

Better exploitation of the EU’s science base by industry would make a considerable contribution to improving the EU’s competitiveness. R&D and innovation are considered to be key challenges for the overwhelming majority of sectors.

The forthcoming joint Research and Innovation Action Plan[6] sets out a number of new initiatives highly relevant for industrial sectors and integrates all relevant policies and actions in support of research and innovation. As a follow up to this Communication, a European Industrial Research and Innovation Monitoring System will be established in 2006 to provide an input for stakeholder views and a consolidated overview and analysis of available information and research and innovation initiatives. This will ensure the availability of industry- and policy-relevant data and intelligence, helping to anticipate both barriers and opportunities to improving research and innovation investment, and the commercialisation of new technologies in Europe. A High-level Stakeholders Group, including policy-maker representatives, will be set up to provide guidance and feedback on the focus and relevance of this activity for competitiveness. The European Technology Platforms, which have already demonstrated themselves as a very important voluntary, bottom-up process for shaping industrial and policy strategies in well-defined key technology domains via their ‘strategic research agendas’, can also contribute to increasing industrial investment in research and innovation and Europe's capacity to commercialise new technologies.

Sector-specific challenges

The variety of sector-specific challenges initiatives

- Pharmaceuticals challenges – it has been considered that an annual Pharmaceuticals Forum consisting of Member States (at Ministerial level), senior representatives of industry and other key stakeholders such as patients and health professionals would be the best way of meeting the challenges.

- Life sciences and biotechnology – A mid-term review of the successful CommissionStrategy for Life Sciences and Biotechnology is proposed.

- REACH and the chemicals industry – a High Level Group on the chemicals industry following the adoption of REACH would allow the industry and other stakeholders to best way to examine how to enhance the competitiveness of the industry.

- Defence industry challenges - a High Level Group on the defence industry would be able to bring together stakeholders to come forward with a common vision on the key issues such as the transfer of defence goods, procurement, and standardization.

- European Space industry - The European Space Programme provides a common, inclusive and flexible programmatic basis for the activities of European Space Agency, EU and their respective Member states. On the Global Monitoring for Environment and Security (GMES) satellite system, the Commission will develop how to move from a so-far project based approach towards operational services.

- ICT industry and take-up challenges - a taskforce with stakeholder representatives to help mobilize the sector and to draw the attention of Member states to the barriers to the competitiveness of ICT manufacturing in Europe and to the obstacles to wide and effective ICT take-up.

- Mechanical Engineering challenges – A policy dialogue is proposed for the mechanical engineering industry to bring together stakeholders to analyse the future strengths and weaknesses of the sectors and anticipate how any weaknesses could be addressed in the longer term.

- Improving information on sector-specific competitiveness – Studies will be carried out on sectoral competitiveness was identified for a number of sectors, including for the ICT, food, and fashion and design industries

CONSULTATION

In the preparation of the screening exercise, extensive consultation took place at individual sectoral level through the sectoral units of DG Enterprise and Industry. In addition, a meeting was held with UNICE and representatives of major manufacturing sectors such as CEFIC, CEMBUREAU, CEPI, CIAA, EURATEX, EURELECTRIC, EUROMETAUX, EUROPEAR, ACEA, and EICTA and a further meeting held with the ETUC. Consultation was also carried with Industry Ministries of Member States through circulation of documents and a meeting of Director-Generals.

MONITORING AND EVALUATION

The Commission intends to make separate reporting on each of the proposed individual initiatives, using a variety of different and appropriate mechanisms, including further Communications and potentially subsequent White or Green papers making more specific proposals for future legislation.

A mid-term review of the work programme will be undertaken in a Communication scheduled for 2007 which will also report on progress on the work programme presented above.

CONCLUSION – THE OUTLINE OF WORK IN THE COMMUNICATION

For the reasons described above, it has been considered important to bring forward a new Communication outlining an outline of work on a set of key issues in industrial policy. The current Communication supplements the previous two Communications on Industrial Policy that were issued in 2002 and 2004 respectively. In particular, the current Communication meets the commitment given previously to exhaustively screen individual sectors of manufacturing and the construction industry with respect to a number of broad policy challenges that were identified in the Communication of 2004. This screening of policies has allowed the development of a concrete outline of work on industrial policies.

It is considered that the proposed set of policy initiatives will yield considerable net benefits to the competitiveness of the EU economy and hence will contribute to the achievement of the Lisbon strategy goals. Given the existing limitations of information, the requirements for an increased co-ordination of policies, and the need to obtain a common vision amongst stakeholders, the Commission has evaluated a range of different ways of pursuing the new initiatives. It is satisfied that the set of new policy initiatives proposed in the Communication provide a robust and practical way forward for industrial policy. Finally, any further actions launched on the basis of the initiatives announced in the Communication will themselves be subject to further impact assessment.

[1] See Eurostat’s “Environmental protection expenditure by industry in the EU” Statistics in Focus, 9/2005.

[2] In the Communication on Better Regulation for Growth and Jobs

[3] Through the Action Plan on Skills and Mobility COM(2002) 72, the Education and Training 2010 work programme, including the European Qualification Framework, and the Copenhagen process in the field of vocational education and training.

[4] “Communication on Restructuring and Employment” COM(2005) 120.

[5] COM(2005) 299 final, 5.7.2005.

[6] “Investing in Research and Innovation in support of the Growth and Employment Strategy: A joint Reaearch and Innovation Action Plan” COM(2005). The recent Communication on State Aid for Innovation additionally proposes to facilitate the granting of state aid to tackle market failures associated with innovation.