OPINION OF THE ECONOMIC AND SOCIAL COMMITTEE on the communications from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions: an industrial competitiveness policy for the European Union, and the action programme and timetable for implementation of the action announced in the communication on an industrial competitiveness policy for the European Union
Date: 1995-11-22
Institutions: European Economic and Social Committee
Subjects: EU industrial policy, action programme, competition policy, competitiveness, industrial cooperation













EUR-Lex - 51995AC1296 - EN






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51995AC1296

OPINION OF THE ECONOMIC AND SOCIAL COMMITTEE on the communications from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions: an industrial competitiveness policy for the European Union, and the action programme and timetable for implementation of the action announced in the communication on an industrial competitiveness policy for the European Union  


Official Journal C 039 , 12/02/1996 P. 0001 





Opinion on the  communications from the Commission to the Council, the European Parliament, the Economic and Social  Committee and the Committee of the Regions: - an industrial competitiveness policy for the European Union, and- the action programme and  timetable for implementation of the action announced in the communication on an industrial  competitiveness policy for the European Union(96/C 39/01)On 11  November 1994 the  Commission decided to consult the Economic and Social Committee, under Article  198 of the Treaty  establishing the European Economic Community, on 'an industrial competitiveness policy for the  European Union'. On 20  September 1995 the Council decided to consult the Economic and Social Committee, under  Article  130 of the Treaty establishing the European Economic Community, on 'the action programme  and timetable for implementation of the action announced in the communication on an industrial  competitiveness policy for the European Union - draft proposal for a Council Decision on  implementation of a Community action programme to strengthen the competitiveness of European  industry'. The Section for Industry, Commerce, Crafts and Services, which was responsible for preparing the  Committee's work on the subject, adopted its Opinion on 7  November 1995. The Rapporteur was Mr  Petersen. At its 330th Plenary Session (meeting of 22  November 1995), the Economic and Social Committee  unanimously adopted the following Opinion. SUMMARYI. Introduction (page 4)The Committee supports the Commission's plan for a  policy setting clear and predictable conditions for the optimum allocation of resources via the  market, accelerating the process of structural adaptation and boosting the competitiveness of  European firms. The public authorities play the role of catalyst and pathbreaker for innovation,  and firms can expect them to provide not only clear and predictable conditions but also the right  prospects for their activities. The main responsibility for industrial competitiveness lies however  with firms themselves. (See point 1.1.3.)The Committee feels that Article  130 of the EC Treaty  provides a coherent legal basis for a horizontal Community industrial competitiveness policy. (See  point 1.2.5.)II. The competitiveness of European industry (page 6)The macroeconomic variables  used by the Commission in its empirical analysis show that the position of European firms in the  context of the international division of labour is clearly inferior to that of major competitors.  The Committee regrets that the Commission has paid insufficient attention in its analysis to the  time factor (shorter production cycles). (See points 2.1.3 to 2.1.7.)The Commission is right to  point out that macroeconomic data cannot reflect certain fundamental elements underlying  competitiveness: the microeconomic dimension, the enterprise spirit, high quality of the labour  force, individual effort. (See point 2.2.1.)The Committee therefore supported the strategic line  of the White Paper on Growth, Competitiveness and Employment, which identifies a  technology-intensive, highly productive and profitable industry as the backbone of a European  economic development model. (See points 2.1.1 and 2.1.2.)III.The Community's priorities for  industrial policy action (page 8)In its Opinion the Committee concentrates on the Commission's  industrial policy action programme of  March 1995. The Committee feels however that the priorities  break down into too many individual measures and that existing policy areas are dispersed. It is  also unclear how the roles are to be allocated between firms and the state and between the  Community and its Member States. There is also a lack of clarity over the allocation of objectives  and measures if the industrial policy Communication is compared with the action programme -  (COM(95) 87 final). (See points 3.1.1 and 3.1.2.)The Committee supports the (two-year?) priorities  for action put forward in the Commission's action programme: development of the internal market,  better taking industry's needs into account in research policy, establishment of the information  society and promotion of industrial cooperation. It is surprising however that other, no less  important priorities are mentioned only in passing or are indeed entirely omitted. (See point  3.2.1.)The Commission has submitted an action programme with objectives and programmed measures  and an indicative timetable for the implementation of the industrial competitiveness policy. As in  its industrial policy communication of  September 1994, the Commission here sets out four  priorities for action, reflecting the need for technological change and guiding the future approach  to industry policy: - promote intangible investment; - develop industrial cooperation; - ensure fair competition; - modernize the role of the public authorities. Promotion of intangible investment (page 11)The Committee regrets however that the proposed  individual measures for education show no evidence of an overall plan. Only if education and  employment systems are better coordinated than in the past can labour-market tensions and problems  be alleviated. More weight must be given to further vocational education. (See point 3.3.3.1.)The  Committee regrets however that whilst the Commission specifically advocates modernization of the  forms of labour organization, it does not propose concrete measures. (See point 3.3.3.4.)The  Commission's intention of laying down a suitable framework for promoting the development of  environment-friendly technologies and ensuring their rapid dissemination is to be welcomed. (See  point 3.3.3.6.)Promotion of industrial cooperation (page 13)As the Commission rightly points out,  the European Union is not responsible for setting up industrial cooperation schemes. The EU must  nevertheless endeavour to promote such schemes, inter alia by establishing discussion rounds in the  industry. The Committee regrets that the Commission says nothing about the composition of these  discussion rounds. (See point 3.3.4.1.)The Committee unreservedly shares the Commission's view  that there are still no suitable legal instruments for cross-border organization and cooperation  for EU firms. It is now time to offer firms European legal vehicles. The European Company proposals  are particularly relevant here. (See point 3.3.4.2.)The Committee supports the initiatives listed  concerning closer cooperation with the associated Central European states and the independent  republics of the former Soviet Union. (See point 3.3.4.5.)Guarantee of fair competition (page  14)The Commission's intention of seeking multilateral competition rules and effective control  mechanisms aimed at achieving greater openness of foreign markets deserves support. The Committee  fears, however, that plans such as competition rules with binding arbitration procedures are at  present unrealistic. The Commission should, as a first step, improve cooperation between the  existing competition authorities of the main trading partners in order to achieve convergence of  administrative practice. (See point 3.3.5.3.)With regard to the internal market, the Committee  regrets that in the field of competition policy the Commission has concentrated purely on  subsidies. Here it is doing insufficient justice to the role of competition policy as one of the  pillars of European industrial policy. The Committee feels that EU competition policy has not kept  pace with the internationalization of business activity. With the exception of merger control, the  Community's procedures in matters of competition date from the early 1960s and were designed for  six Member States. (See points 3.3.5.8, 3.3.5.9 and 3.3.5.11.)The Committee unreservedly welcomes  the Commission's announcement that it will reconsider its policy on monitoring national subsidies.  The results of the Commission's most recent report on subsidies confirm the Committee's fears, that  during the reporting period (1990/1992), differences between the Member States widened relatively,  to the detriment of the Member States in the process of 'catching up' (Greece, Ireland, Portugal  and Spain). The Commission must do more to document and assess the distortions of competition  caused by national subsidies. (Publicly accessible register proposed). (See points 3.3.5.12 to  3.3.5.14.)Modernization of the role of the public authorities (page 16)The Committee welcomes the  Commission's initiative to redefine the responsibilities of the public authorities. This will  include the further, targeted development of the instruments with which the state carries out its  many policy tasks. Anyone expecting the Commission to put forward concrete proposals in the action  programme will be disappointed. However, the Committee also regrets that in its action programme  the Commission deals only sporadically with macroeconomic conditions. In its relevant Opinions the  Committee has repeatedly stressed the importance of stable and foreseeable macroeconomic conditions  for the strengthening of industrial competitiveness. (See points 3.3.6.1 and 3.3.6.2.)Other areas  for joint state action are the promotion of socially significant growth sectors of the kind  referred to by the Commission in its strategic objectives. The Committee feels that the Community  and its Member States have considerable scope for action in these growth areas, in particular the  whole area of infrastructure (transport, energy, environment). There is further scope for action in  the setting of legal, public order, regulatory and political conditions. The Committee feels that  government should make specifically targeted use of its scope for action, creating conditions  conducive to the release of innovative energies. Wherever possible and appropriate, the commitment  of the private sector can be exploited to smooth the way. (See point 3.3.6.5.)For the Commission  the continuation of the process of deregulation is an integral part of its action programme. The  Committee feels that too many unduly complicated provisions, guided too little by economic  criteria, risk restricting firms' ability to act, weaken the market's self-regulatory forces and  threaten corporate flexibility, especially in the small/medium business sector. At the same time  the Committee stressed that the flexibility which firms needed to have should not jeopardize  workers' social protection. In relation to the report on legislative and administrative  simplification submitted by an independent group of experts, the Committee supports the proposal  that all new draft laws should indicate the expected positive or negative impact on employment and  competitiveness, costs and innovation. (See points 3.3.6.6 to 3.3.6.8.)The Commission intends to  support and accelerate industrial change with the help of structural policy financial instruments,  in particular via improvements in the new programmes for Community initiatives, forming  partnerships between large firms and SMEs and setting up networks and clusters. The Committee  appreciates these plans but points out that official influence going beyond this catalytic function  would be out of place. Government should encourage the various parties and the industrial operators  to come together in a dialogue. (See point 3.3.6.9.)The Committee feels that further expansion of  the objectives of the Structural Funds should not be allowed to place an excessive burden on the  system. The Commission should therefore constantly review its list of measures qualifying for  support (timely evaluation) and set more priorities. The Committee also feels that the individual  Funds should be more closely coordinated than in the past. (See point 3.3.6.10.)Timetable for the  action programme (page 18)The Committee regrets that the Commission's timetable for its numerous  initiatives is incomplete. Above all, in relation to certain important actions to strengthen  industrial competitiveness, there appears to be no plan as to the steps to be taken or the  timetable. The Committee hopes that the report on the progress of the industrial policy measures,  and possible adjustments, to the action programme, which the Council asked be drawn up for 1996,  will be used by the Commission to fill gaps. (See point 3.3.7.1.)IV. Coordination of industrial  policy activities (page 19)The Committee shares the Commission's concern that the public  decision-making centres shaping industrial activity are growing in number and exercising their  powers without any real overview or constant coordination and reminds the Commission that Article   130(2) of the EC Treaty stipulates that the Member States shall consult each other in liaison with  the Commission and, where necessary, shall coordinate their action. (See point 4.1.)The Committee  feels that the Commission's coordinating task covers two main areas: first, coordination of  national industrial policies with each other and with Community-level industrial policy  initiatives; secondly, closer coordination of the numerous industrial policy activities between the  Commission's departments. The Committee considers the first of these two areas to be imperative.  The Council should therefore adopt the proposal for a Decision submitted by the Commission on  implementation of a Community action programme to strengthen the competitiveness of European  industry. The priorities should be implemented without delay by the Commission and the Member  States. (See point 4.2.)The Committee feels that social dialogue is an important component of the  competitiveness of European industry. Although the Committee fully supports the ongoing dialogue  between government and the various groups, it is concerned at the number of advisory bodies and the  speed with which they are multiplying. The Committee urges that in setting up such bodies more  attention be paid than hitherto to transparent selection criteria and the professional competence  of their members; due consideration should be given to the social groups here (e.g. employers' and  workers' representatives). Finally, the Commission should also make the results of these bodies'  discussions public and ensure that there is an appropriate follow-up. (See points 4.3 and 4.4.)1.  Introduction1.1. Towards a modern and dynamic industrial policy1.1.1. 'If there is any area in  which the Community needs strengthening and deepening, it is industrial policy' (). The Commission  has firmly held to the belief that industrial development policy could be used to give an impetus  to European policy in general. But for decades initiatives met with little response. The Member  States' widely differing views on industrial policy nipped in the bud any attempt to establish a  Community policy. Some Member States placed more emphasis on interventionism, subsidies and  external protection, whilst others concentrated on the market and competition (). The Commission  repeatedly attempted to resolve this basic disagreement by making concessions to both sides. The  desired consensus was not achieved however. The fundamental differences in the Member States'  industrial and trade-policy views persisted, and were bridged with great difficulty by European  Councils. 1.1.2. The Commission's first success on developing a Community industrial policy came at the end  of 1990, with its Communication on Industrial Policy in an Open and Competitive Environment:  Guidelines for a Community approach (). The very title showed that the Commission had begun to  place more emphasis on market economy principles in its approach to industrial policy, as a way of  securing the industrial base. What was needed according to the Commission was a revived Community  industry. The Committee entirely agreed with the Commission's assertion that for years the debate  on the theme of industrial policy had been blurred by the lack of an appropriate conceptual  framework (). The Committee therefore welcomed the Commission's attempt to develop a blueprint for  a modern and dynamic industrial policy for the Community as a whole, which could at the same time  be integrated into a long-term industrial and technological plan. 1.1.3. Basically, the Commission is aiming for a policy setting clear and predictable conditions  for the optimum allocation of resources via the market, accelerating the process of structural  adaptation and boosting the competitiveness of European firms. Defensive, protectionist and  sectoral approaches, which, the Commission admits, were pursued all too often in the past, are  eschewed. Instead, industrial problems at regional or sectoral level are increasingly to be solved  by means of horizontal measures. The public authorities play the role of catalyst and pathbreaker  for innovation, and firms can expect them to provide not only clear and predictable conditions but  also the right prospects for their activities. The main responsibility for industrial  competitiveness lies however with firms themselves. 1.1.4. This Communication was followed by a number of Council Resolutions and Conclusions on  industrial policy. Several Commission Communications and Reports, as well as the White Paper on  Growth, Competitiveness and Employment, underpin and complement the Community's activities. The  Commission justifies this multiplicity of measures with the argument that 'the action taken by the  Community on industrial policy contributes to a general improvement in competitiveness by means of  measures under all the relevant Community policies' (). Nor should the Commission's sectoral  initiatives be forgotten, which aim to improve the economic environment in individual markets. In  this connection the Commission mentions the aviation, motor vehicle, electronics, mechanical  engineering and textiles industries, as well as the maritime economy. 1.2. Article  130 of the EC Treaty1.2.1. The Committee considers it logical that the main  principles of the market-orientated industrial policy proposed in 1990 should have been  incorporated into the Treaty on European Union. Article  130 of the EU Treaty empowers the  Community and its Member States to ensure that the conditions necessary for the competitiveness of  the Community's industry exist in accordance with a system of open and competitive markets.  Measures which might distort competition are prohibited. Specific action in support of industrial  policy measures taken in the Member States in order to achieve the Council's objectives may be  adopted only by unanimity. 1.2.2. The Commission's 1990 Communication met with approval even in those Member States which had  hitherto adopted - mainly on grounds of public policy - a reserved attitude to all the Community's  industrial policy ambitions. Some reservations have, however, been expressed over the inclusion of  Title XIII (Industry) in the EU Treaty. Criticism is focused primarily on the blurred division  between national and Community-level industrial policy responsibilities. The Commission's  contention that industrial policy must be implemented in accordance with the principle of  subsidiarity is a statement which is too 'broad brush' to be satisfactory. However the Committee  endorses the Commission's reproach that the views advanced by the Member States in the Council  often have less to do with Article  3b of the EU Treaty than with their basic position on the  content of a proposal. The Committee therefore feels that the Commission should periodically remind  the Member States that the subsidiarity principle is not intended as a way of impeding Community  policy without justification or blocking it from the outset. This applies in particular to the  completion of the Internal Market. 1.2.3. The Commission should also point out that in the sensitive area of European industrial  policy the interdependence of national and Community responsibilities is long established in  certain areas and that the demarcation functions. To quote a single example which is of great  significance for industrial policy, the principle of subsidiarity has been enshrined in the  competition provisions of the Treaty of Rome from the outset. Articles 85, 86, 92 and also 90 of  the EU Treaty apply only where agreements between undertakings, decisions by associations of  undertakings and concerted practices may 'affect trade between Member States'. European merger  control too, under which the allocation of responsibility to either national or Community level is  determined by a threshold, also takes sufficient account of subsidiarity (). 1.2.4. Other objections are levelled at the fields of activity listed in Article  130(1) of the EU  Treaty. Its all-embracing and yet vague drafting contains no clear and binding restriction on forms  of dirigistic industrial policy (). In view of the public policy principles contained in the same  Article, the Committee does not, however, feel that there are grounds for concern. At the same time  the Committee regrets that insufficient attention is paid to the Commission's 1990 Communication on  which Title XIII (Industry) is based. If the discussion of industrial policy in the EU Member  States were more greatly influenced by this Communication, the debate would be more credible and  some of the reservations expressed would lose their force. 1.2.5. Critics of European industrial policy quote theoretical examples to underline its alleged  dangers. It is hardly surprising therefore that it has been suggested in various quarters that the  1996 Intergovernmental Conference should scrap Article  130 of the EU Treaty. The Committee opposes  this proposal, pointing out that Title XIII is an important component of a coherent legal basis for  a horizontal Community industrial competitiveness policy. Remove this component, with its important  public policy principles, and European industrial policy will once again become a patchwork, as it  was for many years. There is a real danger that the defensive, sectoral and protectionist policies  of the past will return, and much sooner than some of the critics would like. Essential processes  of adjustment would be delayed and impeded. This would tie up resources which could be used more  productively elsewhere. 1.3. Industrial policy principles put to the test1.3.1. In its Resolution on the strengthening of  the competitiveness of Community industry of  November 1994 () the Council quite rightly notes that  the industrial policy principles agreed in 1990 have proved their worth. Important objectives set  at the time (completion of the internal market, conclusion of the GATT Uruguay Round) had also been  achieved. At the same time the Council called on the Commission to report on all measures  implementing the Resolutions and Conclusions adopted by the Council on questions of European  industrial policy since 1990. 1.3.2. The Committee welcomes the Report recently submitted by the Commission () and considers it  comprehensive and instructive. Some of the measures taken have related to horizontal industrial  policy, whilst other initiatives have aimed at improving the economic environment in individual  markets. There is no evidence of dirigistic interference in the structure of the economy. The Media  II programme is the only concrete example of application of Article  130(3) of the EU Treaty ().  Under this programme the Council, at the proposal of the Commission, is to adopt by unanimity  specific measures to promote European enterprises in the audiovisual programme industry. With a  view to the measures planned by the Commission over the next five-year period, the Committee feels  that it would be appropriate for further reports to be drawn up from time to time on the  implementation of Council Resolutions and conclusions. 2. The competitiveness of European industry2.1. Macroeconomic findings2.1.1. Over the last few  years cyclical and structural disruptions slowed overall economic growth, leading to significant  job losses in the European Union and an intolerable rise in unemployment. Although a new cyclical  upswing is now underway, there are, as the Commission rightly points out, still considerable  dangers, and important economic policy questions remain unresolved. One welcome development at  least is the increasing recognition that in the long term economic recovery requires European  industry to be competitive, efficient and innovative. In one of its Opinions on the Commission's  White Paper on Growth, Competitiveness and Employment () the Committee said that the position of  European industry was at stake and needed to be strengthened, otherwise the whole of the European  economy would be the loser and jobs would be at risk. In the long term the social security system  would be at risk. If firms can be made more competitive the chances will improve of securing jobs  permanently and creating new ones. But all the efforts to improve productivity and employment  growth require a flexible economy in order to be able to exploit the opportunities offered by a  rapidly changing technological and social environment. 2.1.2. At the same time the Committee endorses the view of the Competitiveness Advisory Group,  which in its first report () stressed that whilst competitiveness embraces issues such as  productivity, efficiency and profitability, it is not an end in itself. Rather, it is an important  instrument for raising living standards and increasing social welfare, in other words a means to an  end. It follows therefore that competitiveness cannot be judged in isolation from the development  model desired for the future. The Committee supported the strategic line of the White Paper on  Growth, Competitiveness and Employment, which identifies a technology-intensive, highly productive  and profitable industry as the backbone of a European economic development model. 2.1.3. The Commission's empirical analysis of European industry's efficiency presents a varied  picture. Strengths and weaknesses vary between markets, sectors and Member States as well as  between the European Union and non-Community countries, and the picture is constantly changing.  Sectoral and employment structures are in a constant state of flux. As impressively shown by the  Commission study on the state of, and outlook for, EU industry and services, some traditional  industries and 'national champions' are undergoing a structural crisis, whilst other sectors are  showing positive development trends (). These (changing) imbalances and shifting proportions need  not be a bad thing per se; rather, they are the expression of macroeconomic trends. Furthermore,  industries written off as having no future have often improved their growth prospects by developing  new products, achieving productivity gains and opening up new markets. 2.1.4. If scope for economic growth becomes more restricted, structural adjustment is made more  difficult, employment problems are exacerbated and social tensions heightened. In its industrial  policy Opinion of November 1991, the Committee therefore argued that horizontal measures  facilitating structural change and corporate flexibility must be supplemented by industrial-policy  action to buttress necessary (regional and sectoral) adjustment measures in problem areas to  cushion the social effects of structural change. Specifically, what is needed is a regional  balancing policy, which - with due regard to growth objectives - will strengthen the potential and  ability to develop of underdeveloped regions or regions with structural adaptation problems. This  must be supplemented in the event of structural crises and rationalization measures involving  significant job losses by specific temporary measures to facilitate adaptation and offset social  hardships. 2.1.5. The macroeconomic variables selected show that the position of European firms in the context  of the international division of labour is clearly inferior to that of major competitors (). The  discrepancy between the EU's leading position in certain peripheral markets and inadequate presence  in the markets of newly industrialized countries, e.g. in the Pacific, can be criticized. There is  an imbalance between the EU's high market share in mature or slow-growing markets and its  relatively weaker position in more dynamic markets. But the Commission also points out that the  results have to be treated with caution. The empirical analysis is based on only a few  macroeconomic indicators. Other studies (e.g. the World Competitiveness Report) have used a large  number of quantitative and qualitative variables. Moreover, the selected indicators used are  usually highly aggregated averages which conceal a great deal and vary widely from Member State to  Member State and sector to sector. Coverage of the services sector is insufficient, although,  according to Commission estimates, this sector accounts for more than 60 % of the value added and  employment of the Community's entire productive economy. The problem of defining and measuring  technology-intensive products has also not been adequately solved. The same applies to world market  share which, as studies show, only applies to international trade. And finally, the Commission  refers to the weak level of macroeconomic activity over the last few years; it is not known to what  extent this may have influenced and distorted the indicators. 2.1.6. The weaknesses highlighted by the Commission, the Committee feels, also point to the need  for European firms to become more competitive, be it on the internal or world market. It is above  all high manufacturing costs (labour, capital and energy costs), inadequate expenditure on research  and development, delays in turning R& D results into marketable products and clear shortcomings in  infrastructure, public administration and education which have caused long-term damage to firms'  competitiveness. 2.1.7. The Committee regrets that the Commission has paid insufficient attention in its industry  policy scenarios to the time factor, although this has become a strategic objective for firms,  alongside costs, quality and world-wide mobility. Product cycles are becoming shorter and the costs  of developing and launching new products (including manufacturing investment) are constantly  rising. These costs have to be recovered in the markets in an ever shorter time in order to keep up  in the race. Economies of scale through high volumes are becoming a significant contributing factor  to success. Merely delaying the market launch of a product by a few months can in many cases  significantly impact a firm's growth and profit potential. The dizzy pace of innovation and huge  increases in output are particularly striking in microelectronics, which in turn affects the  competitiveness of firms in other large and important sectors. Timing is all-important for firms in  this sector. Being competitive means winning the race. 2.2. The microeconomic approach2.2.1. Strictly speaking, the discussion of economies'  attractiveness to business on the basis of macroeconomic data is meaningful only if at the same  time the causes of the weaknesses revealed are sought and identified. Individual indicators - which  refer to other factors - tell us relatively little about firms' competitiveness. The Commission is  right to point out that macroeconomic data cannot reflect certain fundamental elements underlying  all competitive performance: the microeconomic dimension, e.g. the enterprise spirit, high quality  of the labour force, individual effort, the commercial approach of individual companies, and the  dynamism of subsidiaries and clusters of companies. 2.2.2. In a 1991 Opinion on industrial policy the Committee stressed that the idea of global  competitiveness, often referred to as the objective of a Community industrial policy, is vague and  ambiguous. Clearly the business environment is of significance for European firms' worldwide  competitiveness. It is however impossible to speak of the general competitiveness of the European  Union, the Member States or individual sectors. A different (microeconomic) approach is therefore  needed to assess the competitiveness of individual firms. Benchmarking is increasingly used by  firms. This is defined as a process whereby a firm constantly compares and measures itself against  other firms worldwide. The purpose of benchmarking is to 'ensure that a firm's attention is  permanently fixed on the outside world and to protect it against misassessment of its own  competitiveness' (). Detailed study is needed to assess whether competition benchmarking can, as  recently suggested at the European Round Table of industrialists (), also make a contribution in  the economic policy arena, providing new insights and strategies to improve the macroeconomic  environment in the Member States. At present the Committee is sceptical, given the fundamental  objections to the use of macrodata for assessing the competitiveness of firms. 3. Main areas of Community industrial policy activity3.1. Industrial competitiveness  policy3.1.1. In this section of the Opinion the Committee concentrates on the Commission's  industrial policy Communication and draft proposal for a Council Decision on implementation of a  Community action programme to strengthen the competitiveness of European industry (hereafter  referred to as the 'action programme') of  March 1995 (). The Commission's proposals are however  closely connected with those contained in the  September 1994 Communication (hereafter referred to  as the 'industrial policy Communication') (). The Committee considered it appropriate therefore to  touch on the earlier Communication in the part of its Opinion dealing with political processes, and  - where necessary - to highlight differences between the two Communications requiring  clarification. 3.1.2. In its Communication of  September 1994 the Commission identifies areas in which the action  by the Community should be stepped up. The Commission's main concern is an improved presence for  European industry presence on markets offering good future prospects and employment-generating  potential. The Commission states that its 'industrial competitiveness policy can be implemented  effectively by pinpointing a limited number of objectives and activities'. Contrary to the  Commission's stated intentions however, the priorities break down into numerous individual  measures. Existing policy areas (such as research and development policy) are dispersed among  several priorities. It is virtually impossible, for example, to gauge whether the individual policy  fields form a coherent whole. Some passages are regrettable being either too weak or ambiguous.  Ultimately it remains unclear how the roles are to be allocated between economic players, between  firms and the state and between the Community and its Member States. 3.1.3. In its Resolution of 21  November 1994 () the Council welcomed the Commission's  Communication of  September 1994 on an industrial competitiveness policy and noted its conclusions.  At the same time it reminded the Commission of its objectives and industry policy initiatives for  the second half of the 1990s. The Council drew attention in particular to the Commission's failure  to spell out the details of the programme and to lay down a timetable for the implementation of the  proposed initiatives. The Council considers that action by the Community and the Member States  within the framework of their respective powers is particularly urgent in the following five  spheres, each of which were subdivided: creation of stable, economically viable framework  conditions, eliminating unnecessary bureaucratic burdens for enterprises, ensuring undistorted  internal and external competition, strengthening of industrial cooperation with the third countries  most concerned and promotion of intangible competitive factors. 3.1.4. The Commission's  March 1995 Communication contains the clarifications requested by the  Council. An action programme is submitted with objectives and programmed measures and an indicative  timetable for the implementation of the industrial competitiveness policy. This primarily concerns  actions intended to bring existing Community policies up to date or to introduce initiatives which  do not require a new formal decision. This includes most of the follow-up measures which the  Commission listed in its Report on the implementation of the Council Resolutions and Conclusions on  industrial policy (). A variety of objectives and measures is proposed. This variety once again  demonstrates the breadth of the EU's approach to industrial policy. But there will be a lack of  clarity if the allocation criteria are changed within a few months. The  September 1994  Communication contained a list of measures which only six months later became a list of objectives,  whilst the original list of objectives had been effectively dropped. 3.1.5. In the introduction to the Communication of  March 1995 () the Commission once again  stresses that it is up to companies to ensure their own competitiveness. It is government's job to  provide the necessary conditions. Moreover, industrial competitiveness and economic and social  cohesion should mutually strengthen each other. The Committee fully endorses these statements. But  the views which the Commission goes on to advance on economic and social cohesion do not accord  with the Committee's expectations of this area of policy. The Committee has repeatedly referred the  Commission to Article  130a of the EU Treaty, which unequivocally states that 'in order to promote  its overall harmonious development, the Community shall develop and pursue its actions leading to  the strengthening of its economic and social cohesion'. There is little evidence of this objective  in the Commission's paper. What, for example, does the following sentence actually mean? 'Greater  economic and social cohesion can generate externalities which make the private sector more  efficient by improving infrastructure and optimising the general level of investment'? The  Committee feels that clear strategies need to be developed and clearly formulated. 3.2. Comments on the priorities for industrial policy action3.2.1. As mentioned above, in its  action programme the Commission lists four objectives (priorities for action) which are of the  greatest importance for industrial competitiveness policy: - development of the internal market; - better taking industry's needs into account in research policy; - establishment of the information society; and- promotion of industrial cooperation (). The Committee agrees with the Commission that these objectives are of great relevance to an  industrial competitiveness policy. What is surprising however is that other, no less important  industrial policy objectives are mentioned only in passing or in very general terms, or indeed  entirely omitted. In its  September 1994 Communication () the Commission, in the context of  investment promotion policy, still attached the highest priority to intangible investment, which  for the Committee includes investment in the humanization of labour, and placed the improvement of  vocational training and the promotion of human resources at the top of its list of objectives. It  also stated that the opening up of world trade and the promotion of competition on the internal  market were particularly important for industrial competitiveness and needed to progress and  strengthen each other mutually. The Commission also said that the modernization of the role of the  public authorities was an absolute precondition for improving industrial competitiveness. In these  areas the Commission proposed a common procedure to all the parties concerned, to ensure that the  necessary initiatives would rapidly show results. The Committee cannot see why the Commission has  within a few months changed so radically the weighting of the measures which it announced in   September 1994 and described as urgent. 3.2.2. Development of the internal market3.2.2.1. The Commission sees the EU's main contribution to  strengthening industrial competitiveness as the further development of the internal market, in  order to ensure that it will actually function. From an overall economic point of view the  Committee endorses this view. The Committee is pleased to note that the Competitiveness Advisory  Group has now taken up this issue and that it wholeheartedly endorses the Committee's view that the  internal market process should be specifically promoted, both with regard to its implementation and  to more far-reaching integration through fewer and better EU rules. The Competitiveness Advisory  Group feels that if existing obstacles were removed in this area this would have a positive impact  on jobs and the quality of services. 3.2.2.2. Unfortunately, the Commission's comments on the development of the internal market are  very general. The Committee feels that it would have been better had the Commission submitted in  its Communication a detailed package of measures to accelerate the intra-Community process of  integration. Last year the Committee began to monitor regularly the implementation of the measures  establishing the legal framework of the internal market. To this end an additional working  instrument-an observatory-was established. In its first Opinion on the question () the Committee  made a series of recommendations aimed at the further consolidation of the internal market. The  Committee suggests that the Commission adopt these recommendations and implement them. 3.2.2.3. With regard to the free movement of goods, the Commission should above all urge that  Article  115 of the EC Treaty finally be dropped. As the Committee argued in its 1991 industry  policy Opinion, national protective measures are incompatible with the principles of an open,  competitive industrial policy. At the time the Committee emphatically supported the Commission's  view that the removal of national quotas and measures of similar effect applicable to non-Community  countries was an important aspect of industrial policy. National markets would thus be exposed to a  greater degree of worldwide competition, which would prepare them better for global challenges. If  Article  115 were to be dropped however, the Committee feels that in particularly difficult cases  it would be appropriate to adopt accompanying structural measures so that structural adjustments  can be made relatively smoothly. 3.2.2.4. There are problems with the lack of transparency and uniformity of the rules and practices  relating to standards, in the product safety and liability rules, as well as in the environmental  and product-labelling rules. Nor should the liberalization of public purchasing be forgotten, which  is of great significance in all areas. The Committee has repeatedly noted with concern that SMEs  still have inadequate access to public purchasing contracts. Further improvements are needed in  particular with regard to sub-contracting; upper limits should be set in individual cases. There  are also barriers to free movement of services, persons and capital. The Commission must set about  dismantling these barriers as rapidly as possible by means of appropriate measures. The Committee  also hopes that in future reports the Competitiveness Advisory Group will make specific  recommendations on selected internal market areas. 3.2.3. Better taking industry's needs into account in research policy3.2.3.1. In justification of its  second priority for action, the Commission states that innovation plays a decisive role in  improving industrial competitiveness. The Committee fully shares this view. Product, process and  market innovations, complemented by new forms of networked thinking, can make a central  contribution to solving growth and employment problems. That firms actively involved in research  and innovation have better market prospects and offer good employment opportunities is beyond  dispute. The Commission argues, however, that the transfer and use of research results in industry  must be permanently improved. 3.2.3.2. The cost of research and innovation is rising steadily. This is a considerable burden,  particularly for small and medium-sized companies, and constrains their R& D work. If these  companies are not to have to do without technological innovations, they must, in full accordance  with the Commission's approach, be provided with know-how via technology transfer and advice. This  will at the same time tangibly accelerate the translation of technological discoveries into  marketable products and processes. 3.2.3.3. The Committee is pleased to note that the Commission intends to develop several joint  projects of industrial interest in order to pool R& TD efforts through closer cooperation  (including cross-border cooperation) and to create synergies through use of the internal market.  The Committee also supports the plan to draw up a Communication on linking research and industry  and a Green Paper on promoting innovation policy in the European Union. The annual report on  research and technological development activities and the dissemination of results required by  Article  130p of the EU Treaty is, the Committee feels, an important instrument for making research  policy transparent. The Committee hopes that the Commission will be submitting the first report  this year. 3.2.4. Establishment of the information society3.2.4.1. The Commission sees measures to promote the  information society as another priority step. The new technological revolution will tangibly  influence all industrial activity, and not only in the European Union. It will secure and  strengthen firms' ability to innovate, it will put its stamp on future production and employment  and it will affect the development of living and working conditions in many ways. The Committee has  supported the Commission's information society initiatives from the beginning, as well as the  action plan to prepare Europe for the information society. In its relevant Opinion () the Committee  regrets however that the action programme does not provide the same precise initiatives for all the  areas. Moreover, insufficient attention is paid to social and cultural aspects. Whilst they play a  part in the proposed measures, they continue to be disregarded in the actions already underway.  This applies particularly to the areas of health, education, environment, vocational training, the  disabled and the film industry. 3.2.4.2. At present the Commission sees one priority task as being to accelerate the process of  liberalization in the telecommunications sector, with infrastructures (cables, radio networks,  satellites) and services at present still in monopoly hands being opened up to competition. In its  1995 work programme the Commission said that the priority objective was therefore to create a  regulatory framework for competition in the telecommunications sector. 3.2.4.3. The Committee agrees with the Commission that conditions of access to information, to the  networks through which information moves and to the services which facilitate its use will play an  increasing part in industrial competitiveness. The Committee therefore welcomes the intention of  creating a clear and reliable public order framework, but at the same time feels that the  transition to the information society needs to be accompanied by other measures in the fields of  technology, employment and social policy. 3.2.4.4. With a view to the numerous challenges to be encountered on the road to the information  society, the Committee supports the setting up of two independent advisory bodies which will  maintain close contacts with all the parties concerned. This is no doubt the right step to ensure  that the information society can meet the needs of all citizens and firms (). In the Information  Society Forum representatives of social groups (including MPs, social partners, user groups and  network operators) will meet to discuss various aspects of the information society. An annual  report will provide information on the work of the Forum and the overall progress achieved. The  second body, a high-level group of social experts, will elucidate the social aspects of the  information society and its work will cover the six main themes highlighted in the paper submitted  to the Essen European Council entitled The Information Society in Europe: a first assessment since  Corfu (). The fourteen experts have also been appointed and an initial interim report (which will  also cover employment potential) is to be drawn up by  November 1995. 3.2.4.5. Also to be welcomed is the Commission's intention of using pilot projects to increase  acceptance of the information society and to amass further experience of modern information and  communications technologies. An information society office is to serve as a central coordinating  point for such pilot projects and to promote the exchange of experience. 3.2.5. Promotion of industrial cooperation3.2.5.1. That leaves the fourth pillar of the priorities for  action, which also has its own place in the Commission's (multiannual) action programme (paragraph  3.3.5). In order to prevent overlap as far as possible the Committee will restrict itself to a few  comments at this point. In particular the Commission refers to the Leonardo programme which  promotes cooperation between firms and other vocational training operators. The Commission also  mentions the Integrated Programme in favour of SMEs and the Craft Sector of  May 1994, through  which the growth and employment potential of SMEs is in particular to be mobilized (). The  Committee gave full expression to its approval of the Integrated Programme last year (). In  particular, it welcomed the attempt to approach the problems of European SMEs in an integrated way  and to coordinate and combine the various programmes in favour of SMEs at EU level and in the  Member States. The Commission should, however, ensure that in assessing specific support measures  or in attempting to raise the efficiency of the support programmes, sight is not lost of the  necessary dismantling of national and Community subsidies. 3.2.5.2. The Committee regrets that the Commission has not given priority to any further specific  measures to develop industrial cooperation. Instead, there is merely the statement that 'The Union  must therefore endeavour to remove the obstacles to industrial cooperation while developing tools  for industrial cooperation'. The Committee feels that the Commission should work for the  development at European level of guidelines for improved supply relationships between firms of  different size and between manufacturing and service industry. Complex manufacturing systems mean  that European industry more than ever needs partnerships between firms with the aim of long-term  cooperation. The classic (three-sector) structural model for industrial change must be replaced by  an integrated approach. A new kind of network of goods, services and information is needed. What is  needed is qualitative changes in existing structures, which will certainly necessitate a  considerable effort by all concerned. The close cooperation between firms must begin at an earlier  stage. Manufacturers and suppliers should work together on joint cost planning, rationalization,  quality control and logistics for future products. Unsatisfactory therefore the Commission's  sweeping statement that 'to promote such cooperation, every possible industrial, economic,  commercial and investment link and transfers of know-how to third countries must be strengthened to  help integrate these countries fully in the world economy'. Above all, the Committee sees no  evidence of concrete initiatives by the Commission, for instance a statement of its intention to  re-examine European competition law to establish whether it hinders global industrial cooperation. 3.3. Comments on the (multiannual) industrial policy priorities for action3.3.1. In accordance  with the multiannual action programme (), the Commission Communication of September 1994 makes  clear that four priorities for action, reflecting the need for technological change, will guide the  Commission's approach to industry policy in future: - promote intangible investment; - develop industrial cooperation; - ensure fair competition; - modernize the role of the public authorities. 3.3.2. The priorities for action embrace three categories of measure: action already underway or  which can be started in the near future and which could make an immediate contribution to  industrial competitiveness; action requiring more detailed political guidelines so that a start can  be made in due course; action requiring the adoption of proposals for legislation. 3.3.3. Promotion of intangible investment3.3.3.1. The Commission's intention of promoting intangible  investment is strongly endorsed. The Committee regrets however that the proposed individual  measures for education show no evidence of an overall plan. In its 1991 industrial policy Opinion  () the Committee made it clear that the spread of data and information technologies into all  branches of the economy and society made the proper handling of new technology an important part of  more and more people's lives and plans. The new information technologies can provide specific  information at a speed and in quantities hitherto undreamt of. The ability to sort details and to  recognize links is becoming increasingly important. These changes pose new challenges for the  education systems of the Member States. They have to take account of the new, mostly higher, skills  needed to cope with technological change and help to ensure that basic instruction in information  technology is provided at school. At the same time education must help people to master this change  intellectually. 3.3.3.2. Only if education and employment systems are better coordinated than in the past can  skills be matched more successfully to demand and labour-market tensions and problems be  alleviated. Differing gifts and differing workplace requirements in terms of knowledge skills and  abilities will create a need for a greater variety of courses and qualifications of equal value.  Connected, analytical thinking should be particularly encouraged, as use of the new technologies  requires this to a high degree. Training in school, college and workplace provides only the basic  equipment, however, which needs to be constantly developed in the course of the individual's  working life. More weight must therefore be given to further vocational education, so that the  exploitation of technical progress does not fail for want of skills and acceptance. The  Competitiveness Advisory Group has said that, in their own interests and for the good of society at  large, European firms must play a greater role in education. There is an extraordinarily important  role to be played in the retraining of workers and in promoting the habit of life-long learning.  What is needed is further education which is customized and tailored to needs. 3.3.3.3. The further education of managers is also essential. Management practices have a lasting  impact on the quality of work, the working climate, motivation and other factors affecting firms'  efficiency. The objectives of further education must be geared to this. In addition to the  deepening of specialist and job-related knowledge, what is required is above all schooling in the  use of modern methods of industrial management. Further education must contribute to the rapid and  successful application of useful knowledge derived from research and practice. Entrepreneurs will  be failing in their task if their answer to the dynamic progress of technology and innovation is to  maintain the status quo while waiting on events. Stronger international competition makes it  necessary constantly to develop and apply new solutions. Entrepreneurs must be open to change - in  the interests of their employees. 3.3.3.4. The Commission advocates modernization of the forms of labour organization, but does not  propose concrete measures. Here the Committee is not thinking of proposals for improving firms'  internal processes. This is not the business of the Commission or any other official body. But the  Committee feels that there is a lack of any constructive contribution to the creation of relevant  conditions. Moreover, the search for new forms of labour organization - whether at national or EU  level will not sufficiently exploit the available potential for creativity and productivity unless  workers or their legally recognized representatives are involved. The vocational skills and  motivation of workers are important resources in seeking a solution to this many-facetted problem.  The Committee therefore supports the Commission's intention of intensifying the social dialogue  with due consideration for national procedures and experience. This also applies to the  participation of the social partners in initiatives which have an impact on employment. 3.3.3.5. The Commission's plan to seek to establish favourable legal conditions for industrial and  intellectual property, above all in the field of patents, trademarks, plans, models and  designations of origin, deserves support. The instruments for the protection of intellectual and  commercial property almost all already exist: the Munich patent agreement, the patent cooperation  treaty, the EC Regulation on trademarks, the EC Regulation on the Community design system (being  prepared), various Directives on copyright (computer programs, leasing and lending rights, term of  protection). It is regrettable however that the Directive on the legal protection of  biotechnological inventions failed in the European Parliament. This was no doubt discouraging for  the research industry. Anti-piracy Regulation 3295/94 () gives customs officials at external  frontiers the right to act against imports which infringe patents, copyright or design regulations.  But their success depends on the ability of customs officials actually to detect suspect  consignments in sufficient quantity. Practical improvements needed by customs authorities should  therefore be looked into. It is essential that international cooperation be stepped up, e.g. with  the Eastern European partner states, to ensure that piracy is effectively combated in the countries  in which it originates.3.3.3.6. The Commission's intention of laying down a suitable framework for promoting the  development of environment-friendly technologies and ensuring their rapid dissemination is to be  welcomed. The range of possibilities is broad: from recycling technologies and the re-use of  production residues and waste to microelectronics, which on the production and applications side  can be regarded as the environment-friendly technology par excellence. The Committee feels that the  development of new markets will be tangibly facilitated if environment-policy goals are set, but it  is left up to firms to choose the best way of achieving them. This approach favours an innovative  climate which will accelerate technological progress and at the same time create incentives for  positive growth and employment effects. It is worth stressing the Commission's correct judgement  that environmental protection is a cross-border challenge which cannot be met by individual  countries acting alone. The European Union and its Member States should - with the participation of  the social groups - define a desirable, necessary and economically acceptable level of  environmental protection in order to adopt and implement on this basis effective measures for the  attainment of ecological objectives. The Commission feels that a global approach which takes  account of conditions dictated by international competition makes more sense than imposing a wide  variety of new taxes on individual products (). 3.3.4. Promotion of industrial cooperation3.3.4.1. As the Commission rightly points out, the European  Union is not responsible for setting up industrial cooperation schemes, which are, above all, the  responsibility of the businesses and businessmen themselves. The Commission must nevertheless  endeavour to promote such schemes, inter alia by establishing discussion rounds in the industry, of  the kind conducted with Japan, the Baltic States and in various sectors. The Committee regrets that  the Commission says nothing about the composition of these discussion rounds. Merely convening say  the group of Directors-General to talk about industrial cooperation measures should at all costs be  avoided. The Committee seriously doubts whether the Commission and the representatives of the  governments of the Member States are able on their own to form a comprehensive judgement on such  issues and to make practical proposals. The Commission's intention to remove legal and tax  obstacles to industrial cooperation and to submit a Green Paper on the legal instruments of  industrial cooperation at Community level is to be welcomed. The Committee also supports the  Commission's objective of integrating the Eastern European countries into a pan-European economic  area. 3.3.4.2. The Committee unreservedly shares the Commission's view that there are still no suitable  legal instruments for cross-border organization and cooperation for EU firms. The Regulation on the  European Economic Interest Grouping is confined to narrowly defined types of cooperation. After the  great strides made in approximating internal market legislation, it is now time to offer firms  European legal vehicles. 3.3.4.3. The European Company proposals are particularly relevant here. The Committee has already  voiced its views on the subject on several occasions, most recently in its Opinion on the European  Company Statute (), and it has pointed to the need to improve cross-border cooperation between  companies and to promote economic integration in the Community. The Competitiveness Advisory Group  has expressed a similar view: even more important than the potential cost savings is the  opportunity for companies large and small to expand more easily throughout Europe, thus giving a  lasting boost to integration. The proposals for the European cooperative society, European mutual  society and European association statutes are suitable legal instruments for certain fields of  activity and have been emphatically welcomed by the Committee (). The Committee calls on the  Council to resume discussions on the European Company Statute, currently blocked for political  reasons, and to adopt the proposed Regulation and Directive. The internal market, as the  Competitiveness Advisory Group puts it, will be complete only when European firms can operate  flexibly and efficiently throughout the Union. 3.3.4.4. The Commission's call for the development of a coherent legal approach towards a common  and efficient support of European investment abroad is unclear. The Committee shares the  Commission's view that it is extremely important for European firms to enjoy a high level of  protection for their direct investments in non-Community countries. However, the OECD is already  working on a comprehensive investment protection agreement. The Committee feels that on this basis  an investment protection agreement should be drawn up at international (WTO) level too, including  the developing and newly industrialized countries and the Central and Eastern European countries. 3.3.4.5. The industrial policy Communications of  September 1994 and  March 1995 () repeatedly  refer to cooperation with the associated Central European states and the independent republics of  the former Soviet Union. The Committee supports the initiatives listed. The Committee has already  commented in detail in a number of Opinions on the Europe Agreements. The same is true of the  Partnership and Cooperation Agreements with individual CIS republics (Russia, Ukraine and Belarus)  (). However, the initiatives proposed by the Commission cover only a few aspects of industrial  cooperation with the Central and Eastern European states. 3.3.4.6. Thus, the industrial cooperation laid down in the Partnership and Cooperation Agreement  with Ukraine - to quote one example which can stand for the provisions of the other treaties -  covers the following initiatives: the development of business links between economic operators of  both sides (e.g. in view of the transfer of technologies and know-how); Community participation in  (Ukraine's) efforts to restructure and technically upgrade its industry; the improvement of  management; the development of appropriate commercial rules and practices (including product  marketing); environmental protection; adaptation of the structure of industrial production to the  standards of an advanced market economy; the conversion of the military-industrial complex. 3.3.4.7. Cooperation between small and medium-sized enterprises is also dealt with in detail: this  includes technical assistance (in particular the development of a legislative framework for SMEs),  the development of an appropriate infrastructure for SMEs and the development of technology parks.  There are also comprehensive agreements on investment promotion and protection. The main focus is  on better conditions for investment protection, the transfer of capital and the exchange of  information on investment opportunities. The Committee has commented in detail on the content of  the treaties. The Committee will not therefore comment again here on the initiatives for the  Central and Eastern European countries contained in the two industrial policy Communications. In  this context it would refer to its Opinions on the Europe Agreements and the Partnership and  Cooperation Agreements. 3.3.5. Guarantee of fair competition3.3.5.1. In its industrial policy Communication of  November 1990,  the Commission states that an open trade policy is a necessary complement to the opening up of the  internal market. This concept implies that 'the rules of the game be respected by all trading  partners since the Community's economy will become more sensitive to such practices in line with  its even greater openness' (). The Commission therefore attaches particular importance to 'fair'  competition and trade. Both, it maintains, are the logical outcome of free trade. In order to  achieve its objective the Commission intends to carry out external and internal market measures. 3.3.5.2. The Commission maintains that equal conditions of competition on foreign markets should be  achieved, inter alia, via the complete adoption of the Uruguay Round agreements. The negotiations  in the areas of steel, aviation and services and the work to harmonize non-preferential rules of  origin must be continued and concluded in the foreseeable future. Multilateral solutions in the  framework of the WTO are required. Connected with this is the Commission's plan to participate, in  collaboration with the International Labour Organization, in the discussion of social questions,  above all with a view to the promotion of social progress. 3.3.5.3. The Commission's intention of seeking multilateral competition rules and effective control  mechanisms aimed at achieving greater openness of foreign markets deserves support. The Committee  fears, however, that it is at present unrealistic. Effective competition laws already exist in the  triad (the EU, the USA and Japan) where competition is fiercest, but enforcement varies widely.  Instead of proposing new laws, the Commission should, as a first step, improve cooperation between  the existing competition authorities of the main trading partners in order to achieve convergence  of administrative practice. Furthermore, the authorities should reach agreement on their respective  responsibilities in international cases. Parallel procedures and extraterritorial application of  national competition rules should in future be avoided. Where global transactions are concerned,  firms have a lively interest in short and foreseeable procedures. Multilateral competition rules  with a binding arbitration procedure can be envisaged only as a long-term objective. The Member  States' views on the subject still diverge too greatly. 3.3.5.4. The situation with regard to the Central and Eastern European states is different. In its  Opinions on the Europe Agreements the Committee unreservedly endorsed the relevant treaty  provisions on competition and state subsidies. The Community should work on the associated treaty  partners to persuade them to align their national competition laws as closely as possible on those  of the European Community. As the Commission rightly points out, this does not mean merely  approximating legal texts, but at the same time setting up the administrative systems to ensure  that the rules are enforced (). The Committee considered the competition provisions of the  Partnership and Cooperation Agreements with the independent republics of the former Soviet Union to  be a weak point. The signatory states are directly required to adopt and apply competition laws.  But the provisions are - compared with the Europe Agreements - so weak and non-binding that no  claims are likely to arise from them, either by the signatories or by European firms. The Committee  hopes however that the Community will consider it to be in its interests to urge the Eastern  European treaty partners in the Cooperation Council to adopt competition legislation closely  aligned on EC principles. 3.3.5.5. In international (European) trade it is often the 'minor' rules which constitute the  greatest barriers to market access, for example standards. The Committee has repeatedly stressed  that harmonized standards are a key factor in the integration of markets. They remove technical  trade barriers and have a deregulatory effect, facilitating cross-border industrial cooperation and  permitting the potential for economies of scale to be exploited by firms. The Committee calls on  the Commission to step up its efforts to harmonize standards - at Community level and  internationally - and to work towards the establishment of efficient procedures for the application  of standards. The Commission must tackle these problems as rapidly as possible in cooperation with  its international trading partners. The Committee therefore welcomes the Commission's announcement  that it will establish an Industrial Assessment Mechanism. This instrument has proved effective in  promoting mutual understanding, particularly in connection with the efforts to open up the Japanese  market. 3.3.5.6. The Committee feels that there is an urgent need for improved coordination between  national and Community investment promotion. The purpose of such coordination must be to raise the  efficiency, transparency and effectiveness of investment promotion and to prevent duplication of  work and waste of resources. The Community's export promotion system also leaves room for  improvement. Above all it lacks transparency. The Member States, private bodies and the Community  have built up parallel structures. The resulting duplication of work also gives rise to  considerable costs. The Committee feels that competition between national and Community export  promotion measures should be prevented. The efficiency of existing structures should be assessed. 3.3.5.7. Although the Committee agrees with the Commission on most of the proposed measures, it  would sound a warning against attempting to achieve 'fair' competition at international level by  means of one-sided initiatives. The Commission's plan to 'improve, with the intention of making  them more effective and operational, commercial policy instruments, taking account of the changes  in production structures and trade trends, particularly of the consequences of the increasing  internationalization of production' gives particular cause for concern. Similarly the Commission's  intention of seeking 'ways in which commercial policy and defence instruments may contribute to the  development of services associated with the growing move away from a purely production-based  economy, and with a view to the smooth operation of markets' (). These statements place the  Community's essential openness to the world in doubt. It would be far better for the Commission,  together with trading partners, to solve specific problems via the bilateral and multilateral  procedures of the proposed Industrial Assessment Mechanism. 3.3.5.8. With regard to the internal market, the Committee regrets that in the field of competition  policy the Commission has concentrated purely on subsidies. Here it is doing insufficient justice  to the role of competition policy as one of the pillars of European industrial policy. Where the  Commission touches on the Treaty's competition rules and their operation at all, it restricts  itself to the obvious, such as the role of strategic alliances. These are nothing other than  cooperation between firms at world market level. They deserve neither preferential nor  discriminatory treatment by the competition authorities. The Committee can see no acute dangers  which would justify making a coherent and coordinated approach to strategic alliances a main  activity. 3.3.5.9. EU competition policy has not kept pace with the internationalization of business  activity. With the exception of merger control, the Community's procedures in matters of  competition date from the early 1960s and were designed for six Member States. In a Community of  Fifteen they are outmoded and unrepresentative of the current state of the law, in particular with  regard to basic rights and the rights of hearing and defence. Firms also criticize excessively long  procedures, the complexity of the law, the lack of transparency of the decision-making procedures  and the Commission's failure to set priorities in dealing with cases. 3.3.5.10. The policy hitherto pursued by the Commission of invoking the prohibition provisions of  Article  85 of the EU Treaty in relation to all vertical cooperation should be re-examined. As long  as there is no restriction of competition a flexible procedure should be applied. The Commission's  block-exemption Regulations for certain categories of contract have resulted in unclear, and in  some cases mutually contradictory, laws. The Commission's imposition of uniform contracts on firms  gives rise to a competition policy imbalance. The Committee points out that, in a European internal  market, firms must in principle enjoy freedom to organize their sales. The Committee is pleased to  note that the Commission will shortly be issuing a Green Paper on the future competition treatment  of these cases. The Committee suggests that only cases of vertical cooperation be taken up which  threaten to erect tangible barriers to market entry in the internal market. Only if this threshold  is crossed, is it meaningful to speak of a restriction of competition within the meaning of Article   85(1) of the EC Treaty. 3.3.5.11. The Commission should take greater account of the international competition situation  than hitherto. The Committee regrets that the Commission does not consistently apply economic  criteria in its administrative practice. For example: in its recent administrative practice the  Commission has become increasingly restrictive in delineating the relevant markets. This applies to  European merger control, but also to the application of Article  85 of the EC Treaty. The Committee  once again recommends that the Commission, in applying the competition rules, take greater account  than hitherto of international competition. Markets are in a state of flux not only in Europe but  worldwide (information society). Competition law must not hinder the necessary restructuring by  firms. 3.3.5.12. The Committee unreservedly welcomes the Commission's announcement that it will reconsider  its policy on monitoring national subsidies. However, the Committee has reservations on the  suggestion by the Commission that the achievement of economic and social cohesion is always  consistent with the proposition that fair competition should lead to the reduction of state aids.  State subsidies (including those of regional and local authorities and other bodies) should be  reduced across the board, with due consideration for regional imbalances. The approval criterion  for subsidies need to be overhauled, coherence between structural policies and the monitoring of  national subsidies improved and the existing rules simplified. The Committee stresses the  importance and urgency of the measures announced. In a functioning internal market, firms feel  competition-distorting effects of national support measures more strongly and directly, as well as  those of Community support programmes. 3.3.5.13. The results of the Commission's most recent report on subsidies confirm the Committee's  fears, in that the annual average of the Member States' subsidies to industry fell only slightly  during the reporting period (1990/1992) (). Measured as a proportion of the gross value added by  manufacturing industry, the average fall in state subsidies in the four largest economies () of the  European Union was only from 4 % (1988/90) to 3,3 % (1990/92), whilst for countries in the process  of 'catching up' (Greece, Ireland, Portugal and Spain) the same indicator showed a much sharper  fall, from an average 6 % to just over 3 %. The trend in the proportional breakdown of total EU  subsidies by country was similarly unsatisfactory: the share of the four smaller states fell from  an average of 15 % (1988/90) to 8 % (1990/92), whilst the share of the four largest countries fell  only from 82 % (1988/90) to a good 72 % (1990/92). There are thus still considerable differences  between the Member States, and the relative trend during the reference period was to the detriment  of the smaller Member States. The Commission rightly feels that the smaller average proportional  fall in public subsidies in the four largest Member States runs counter to the objective of  cohesion. It is true that the distortions of competition caused by public subsidies are to some  extent counter-balanced by Structural Fund intervention, but this is by no means sufficient to  realize this Community objective. 3.3.5.14. In its industrial policy Opinion of 1991 () the Committee already appealed to the Member  States, and particularly the four largest, to cut national subsidies further. The Committee once  again calls on the Member States finally to carry out a careful assessment of the need for any  subsidies they grant. The volume of subsidies must be tangibly reduced throughout the Community.  The same rules on subsidies should be applied to Community support as to national measures (Article   92, EU Treaty). Moreover, the Commission must do more to document and assess the distortions of  competition caused by direct and indirect public subsidies. It should therefore do more in the way  of consulting competitors; it should operate a positive system of priority management and consider  whether it would be possible - without undue bureaucracy - for the Commission to set up a publicly  accessible register of all subsidies granted. As the Commission puts it, 'a firm aid discipline is  a prerequisite to the increased competition without which very little of the projected gains from  the internal market will be realized'. In the light of global competition, the Commission must also  consider subsidies applied by non-EU countries. The Commission should at all events refer any  material subsidies applied by non-EU countries to the WTO's dispute settlement body. 3.3.6. Modernization of the role of the public authorities3.3.6.1. In its industrial policy Communication  of  November 1994 and  March 1995 () the Commission has been right to stress repeatedly that the  main responsibility for industrial competitiveness lies with firms themselves. As already  indicated, the role of the public authorities should be mainly that of innovation pathbreaker and  catalyst from which firms can expect clear and predictable conditions and the right prospects for  their activities. But there is more: in their important capacity as both customer and investor the  public authorities can contribute decisively to the dynamic development of markets. The Committee  welcomes the Commission's initiative to redefine the responsibilities of the public authorities.  This will include the further, targeted development of the instruments with which the state carries  out its many policy tasks. Anyone expecting the Commission to put forward concrete proposals in the  action programme, however, will be disappointed. Instead of this, there is merely the laconic  statement that the responsibilities of the public authorities remain to be redefined. 3.3.6.2. The Committee also regrets that in its action programme the Commission deals only  sporadically and partially with macroeconomic conditions. In its relevant Opinions the Committee  has repeatedly stressed the importance of stable and foreseeable macroeconomic conditions for the  strengthening of industrial competitiveness. Long-term investment presupposes the ability to  calculate both costs and returns. The sooner macroeconomic conditions are improved for business  activity, the more rapidly the scope will be broadened for all those involved in the economic  process, and the incentives for taking economic and technological risks and the willingness to  perform strengthened. Political conditions, the effect of which in shaping structures is usually  neglected, are also important. 3.3.6.3. The importance of infrastructure, and in particular the Trans-European Networks, are also  paid insufficient attention in the Commission's action programme. A highly developed industry  requires efficient infrastructure. The European Union is still far from this objective. Even the  traditional transport infrastructure is no longer satisfactory. Growing traffic jams and  bottlenecks and the resulting tangible loss of welfare point to a need for urgent action. In the  majority of Member States most ground needs to be made up in the field of future-orientated  infrastructure, such as information technologies. There are also significant shortcomings in  trans-European links. The Committee stresses once again that efficient infrastructure is a major  source of added value for European industry. By cutting transaction and transport costs  productivity is raised. Finally, the Committee is critical of the fact that, despite well phrased  declarations, not even the organizational, technical and financial problems of projects assigned  the highest priority by the European Council have been solved. 3.3.6.4. Furthermore, the Council and the Commission ought now to tackle far more thoroughly than  hitherto the question of how all the interested parties can coordinate their action. Article   130(1) of the EC Treaty after all requires the Community and the Member States to ensure that the  conditions necessary for the competitiveness of the Community's industry exist. Other priorities at  macroeconomic level, as the Council stressed in its Resolution of 21  November 1994 (), are  consistent alignment of Member States' policy on Community convergence targets, resolute pursuit of  budgetary consolidation at all state levels, implementation of the Economic and Monetary Union and  long-term reliability in all areas of government action. Of equal importance are limiting the  financial and non-financial burdens on business to reinforce their investment capability and with  it the capability of industry to create new jobs. 3.3.6.5. Other areas for joint state action are the promotion of socially significant growth  sectors of the kind referred to by the Commission in its strategic objectives. Here too closer  cooperation and more efficient coordination of measures are required. The Committee feels that the  Community and its Member States have considerable scope for action in these growth areas, in  particular the whole area of infrastructure (transport, energy, environment). There are many  instruments available, ranging from public contracts to the various hybrid forms of financing (e.g.  in the energy infrastructure area). The Community and the Member States have further scope for  action in the setting of legal, public order, regulatory and political conditions. This can be seen  for example in the areas of information, bio- and environmental technologies. The Committee feels  that government should make specifically targeted use of its scope for action, creating conditions  conducive to the release of innovative energies. Wherever possible and appropriate, the commitment  of the private sector can be exploited to smooth the way. 3.3.6.6. For the Commission the continuation of the process of deregulation is an integral part of  its action programme. This involves on the one hand the elimination of differences between national  laws (Art. 101 and 102 of the EC Treaty) and on the other, the removal of regulatory and other  obstacles. As early as 1990 the Commission wrote that the internal market should be made as  unbureaucratic as possible. At the time the Committee, in its Opinion on industrial policy, also  said that too many unduly complicated provisions, guided too little by economic criteria, would  restrict firms' ability to act, weaken the market's self-regulatory forces and threaten corporate  flexibility, especially in the small/medium business sector. At the same time the Committee  stressed that the flexibility which firms needed to have should not jeopardize workers' social  protection. The Commission also accepted that a suitable level of social protection offered a  'safety net' which reduced the risks inherent in (structural) change and thus improved mobility. 3.3.6.7. An independent group of experts submitted its report on legislative and administrative  simplification to the European Council in Cannes (26/27  June 1995) (). The Council took note of it  without comment and asked the Commission to submit concrete measures for the simplification of  administrative regulations by the end of the year. The Committee agrees with the European Council  that in order to stimulate employment, competitiveness and innovation, excessive regulation should  be combatted where simplification is justified, without however calling the 'acquis communautaire'  into question. In other words, what is needed is regulations which support social and economic  change in the longer term and which restrain the striving for perfection in legislation and  administration. The European Parliament expressed similar views in its report on the Commission's  industrial policy Communication of September 1994 (). In the report the Parliament argues that what  is needed is reasonable and innovative regulation, including, depending on the initial situation,  the dismantling of superfluous rules, the simplification and acceleration of administrative  procedures, the increased use of market economy incentives and, where appropriate, privatization. 3.3.6.8. The Committee is pleased to note that in a general part of the report the experts have  made procedural proposals aimed at stemming the flood of regulatory measures. A significant  proposal in this part of the report is that when draft legislation is being prepared those who are  most concerned, particularly consumers, firms and workers, should be effectively, systematically  and promptly consulted. Another is that the explanatory memorandum of all new proposals should  indicate the expected positive or negative impact on employment and competitiveness, costs and  innovation. And finally, the Committee supports the proposal that the Commission should monitor  progress on legislative simplification at EU and national levels and report to the Council. The  Committee assumes that it will also be informed, along with the European Parliament. 3.3.6.9. The Commission intends to support and accelerate industrial change with the help of  structural policy financial instruments, in particular via improvements in the new programmes for  Community initiatives (), forming partnerships between large firms and SMEs and setting up networks  and clusters. The Committee appreciates these plans but points out that the building, for example,  of partnership, i.e. structured cooperation between firms, is a matter for the participating firms.  Official influence going beyond this catalytic function would be out of place. The Committee  assumes that this is also the Commission's view. The Committee therefore recommends that such  fields of activity be defined very carefully in order to preclude from the outset any false  signals. On the other hand - not least as a result of radical structural change - the willingness  of all concerned to engage in dialogue is growing. Government should encourage the various parties  and the industrial operators to come together in a dialogue and to search for promising solutions.  The outstanding problems are too difficult to be solved via outright confrontation and increasing  polarization. The authorities (Member States and European Union) have an important mediating role  to play here. 3.3.6.10. With regard to the financing of the various initiatives contained in the action  programme, the Commission, repeatedly refers to the use of the Community's Structural Funds. For  the Committee this is an obvious approach, but concerns are growing that constantly expanding the  objectives of the Structural Funds will place an excessive burden on the system and lead to a loss  of focus. So far the Structural Funds have a proven track record for fulfilling their core  objectives. In order to ensure that this does not change in the future, the Commission should  constantly review its list of measures qualifying for support and set more priorities. Financial  appraisals and assessments of the effectiveness of support measures should also be improved. The  European Court of Auditors' reports are a welcome step in the right direction. The Committee  recommends that as a first step prompt evaluations be carried out to enable measures unlikely to be  successful to be discontinued. With regard to the additional claims on financing, the Committee  feels that the individual Funds should also be more closely coordinated than in the past. 3.3.7. Timetable for the action programme3.3.7.1. There is little point in commenting on the timetable,  which is intended only as a rough guide. Many factors, of which only the Commission is aware, are  involved here. It is however unfortunate that, in relation to certain important actions to  strengthen industrial competitiveness, there appears to be no plan as yet as to the steps to be  taken or the timetable. This applies to the urgently needed revision of the approval criteria for  aid, to improved coherence between the structural policies and the monitoring of state aid and  between the rules governing state aid and Community financing conditions in the framework of other  non-structural policies. It remains to be hoped that the report on the progress of the measures  which the Council asked be drawn up for 1996 and possible adjustments will be used to fill gaps in  the multiannual action programme and the timetable in order to be able to set credible industrial  policy priorities for the coming years. 4. Coordination of industrial policy activities4.1. In its industrial policy Communication of   September 1994 the Commission expresses concern that the public decision-making centres shaping  industrial activity are growing in number and exercising their powers without any real overview or  constant coordination (). The Committee shares these concerns and reminds the Commission that  Article  130(2) of the EC Treaty stipulates that the Member States shall consult each other in  liaison with the Commission and, where necessary, shall coordinate their action. The Commission may  take any useful initiative to promote such coordination. The Committee believes that accumulated  experience suggests that there is an urgent need for action. The Committee calls on the Commission  to consider as soon as possible how the many bodies actively involved in industrial policy can be  simplified and reorganized. Duplication of work and consequent loss of efficiency in the field of  industrial policy should as far as possible be prevented. 4.2. The Committee feels that the Commission's coordinating task covers two main areas: first,  coordination of national industrial policies with each other and with Community-level industrial  policy initiatives; secondly, closer coordination of the numerous industrial policy activities  between the Commission's departments: - The Committee considers the first of these two areas to be imperative. The Council should  therefore adopt the proposal for a Decision submitted by the Commission on implementation of a  Community action programme to strengthen the competitiveness of European industry (). The  priorities should be implemented without delay by the Commission and the Member States. The  Committee is pleased to note that the Community-level discussion of the right approach to  industrial policy and market orientation has set off a positive chain reaction in the Member  States. Now a joint industrial policy path has to be mapped out and consistently followed. - In order to improve coordination at Community level, the Commission has set up several high-level  panels (e.g. for the maritime industry, the aerospace industry and the auto-oil programme).  High-level groups covering the information society, and round tables for individual countries  (Japan, Russia) and regions (Central and Eastern Europe, the Mediterranean and Asia) have either  already been set up or are planned. Finally, task forces for selected areas have been set up or are  planned, e.g. with a view to the joint definition of European research objectives and better  coordination of research programmes (including the car of the future, multimedia learning  programmes and aircraft construction). 4.3. The Committee emphasizes the importance of the social dialogue - it feels that it is an  important component of the competitiveness of European industry. 4.4. Although the Committee fully supports the ongoing dialogue between government and the various  groups, it is concerned at the number of advisory bodies and the speed with which they are  multiplying. If the work of these bodies is to be properly coordinated and their work efficiently  organized their number must be kept within reasonable limits. Moreover, any attempt to  institutionalize the participation of these advisory bodies in the formation of government policy  should be nipped in the bud. These bodies must have a purely advisory function; they cannot become  makers of policy. The Committee urges that in setting up such bodies more attention be paid than  hitherto to transparent selection criteria and the professional competence of their members; due  consideration should be given to the social groups here (e.g. employers' and workers'  representatives). Finally, the Commission should also make the results of these bodies' discussions  public and ensure that there is an appropriate follow-up. The Committee calls on the Commission to  take account of the Committee's call for the Commission's initiatives to be implemented without  delay. In so doing of course, politically sensitive subjects such as the modernization of the role  of the public authorities should be put off no longer. Done at Brussels, 22  November 1995. The Presidentof the Economic and Social CommitteeCarlos FERRER() See COM(70)  100 final.  () An overview of the various industrial policy measures can be obtained from a study carried out  by the US International Trade Commission: Foreign Industrial Targeting and its Effects on US  Industries. Phase II: The European Community and Member States. Report to the Subcommittee on Ways  and Means, US House of Representatives on Investigation, No  332-162, USITC Publication 1517, April  1984.  () COM(90) 556 final.  () OJ No C 40, 17. 2. 1992.  () SEC(95) 437 final.  () OJ No C 34, 2. 2. 1994, p. 83 and OJ No C 388, 31. 12. 1994, p. 41.  () Guidelines for the regulatory policy of the European Union (Report of the advisory committee of  the Federal Economics Ministry, Tuebingen, 31  August 1994).  () OJ No C 343, 6. 12. 1994, p. 1.  () SEC(95) 437 final.  () COM(94) 523 final.  () OJ No C 295, 22. 10. 1994, p. 47.  () Enhancing European Competitiveness. First Report to the President of the Commission, the Prime  Ministers and Heads of State (Competitiveness Advisory Group,  June 1995).  () European Commission: Panorama of EU industry-1994.  () European Commission: Panorama of EU Industry-1994.  () K. Kleinfeld, Benchmarking fuer Prozesse, Produkte und Kaufteile. Ein Weg zu permanenter  Verbesserung im Unternehmen. In: Marktforschung und Management, 38, 1st quarter 1994.  () European competitiveness. The road to growth and jobs. European Round Table of Industrialists,  15  November 1994.  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() Report of the group of independent experts on legislative and administrative simplification,  COM(95) 288 final/2.  () Report on the communication from the Commission on an industrial competitiveness policy for the  European Union (COM(94) 319 final). Committee on Economic and Monetary Affairs and Industrial  Policy. European Parliament 29  May 1995.  () In particular the SME, Adapt and Leonardo initiatives.  () COM(94) 319 final.  () COM(95) 87 final.