Opinion of the European Economic and Social Committee on the "Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions — Industrial Policy in an Enlarged Europe" (COM(2002) 714 final)
Date: 2003-07-17
Institutions: European Economic and Social Committee
Subjects: EU industrial policy, enlargement of the Union

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Official Journal of the European Union

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Opinion of the European Economic and Social Committee on the ‘Communication from the
Commission to the Council, the European Parliament, the Economic and Social Committee and
the Committee of the Regions — Industrial Policy in an Enlarged Europe’

(COM(2002) 714 final)

(2003/C 234/18)

On 12 December 2002, the European Commission decided to consult the European Economic and Social
Committee, under Article 262 of the Treaty establishing the European Community, on the above-
mentioned communication.

The Section for the single market, Production and Consumption, which was responsible for preparing
the Committee’s work on the subject, adopted its opinion on 25 June 2003. The rapporteur was
Mr Simpson.

At its 401st Plenary Session held on 16 and 17 July 2003 (meeting of 17 July), the European Economic
and Social Committee adopted the following opinion by 113 votes in favour, no votes against and
1 abstention.

1. Summary

1.1.
The EESC welcomes the initiative taken by the Com-
mission in the preparation and publication of this Communi-
cation on industrial policy in an enlarged Europe.

1.2.
There are two interdependent strands to the issues
provoked by this Communication. First, this is a timely review
of topics of concern to industry within the EU. Second, the
preparation for enlargement makes it appropriate to integrate
some thoughts on the implications of enlargement for industry
(both within the existing EU and in the countries about to join
the EU).

1.3.
The EESC appreciates that this Communication is
essentially a panoramic perspective of the range of relevant
questions. It is not, itself, designed to offer detailed policy
applications. However, the logical sequence is that the Com-
mission must now follow through on the policy implications
and adopt pro-active policies in support of industrial develop-
ment. The EESC will then offer the benefit of its experience
and opinions to the Commission.

1.4. Whilst the positive contribution of this Communi-
cation is welcome, the EESC does have concerns that the
transition to an enlarged EU will be more difficult than the
Commission expects. The Commission should,
therefore,
monitor closely the anticipated consequences of enlargement
and review the measures that may be appropriate to offset any
unacceptable consequences.

1.5.
The Committee agrees that industrial policy tools will
have to be applied taking account of the specific needs of

candidate countries. The identification of these specific needs
and the Commission response remain a critically important
process for the years ahead.

1.6.
The EESC has concerns that there may have been an
insufficient appreciation of the impact of enlargement in a
number of areas.

1.7.
A critical feature for the extension of the single market
is that the infrastructure endowment of many of the new
Member States still lags behind the standards of the rest of the
European Union. An appraisal of the priorities and financing
mechanisms (with a defined contribution from Community
sources) to modernise key parts of the infrastructure, including
the modernisation of trans-European networks, is commended.

1.8.
Although the statement has been made many times,
one of the key elements of an improved framework for
industrial policy is that, within the EU (15), many of the
unfinished measures to define a single market should be
implemented.

1.9.
The EESC welcomes the willingness of the Commission
to examine sectors facing particular economic difficulties to
test the merits (if any) of further supplementary (vertically
specific) policies to support sustainable growth.

1.10. Whilst the EESC acknowledges that, in border regions,
localised cross-border distortions as part of the adjustment
process to an enlarged Community are likely, the responses to
these developments are, the EESC suggest, a shared responsi-
bility. The Community must apply the rationale and expertise
built-up by the Interreg Programmes (and other special
initiatives of this type) and define the scope for action by the
more local governmental institutions.

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1.11.
The value of the Commission Communication is that
it sets a framework for a better understanding of the pressures
affecting the development of industry in the Community. The
essential theme of this Communication, endorsed by the EESC,
is that
industrial
the combined efforts of industry itself,
associations, local and regional government, national govern-
ments and the Community must acknowledge and respond to
the need to maintain, and enhance, industrial competitiveness
within a context that offers a sustainable and viable future.

1.12.
The EESC welcomes the proposal outlined in this
Communication for the launch of a continuing review of all
EU policies that impact on industry. The Committee welcomes
this positive re-orientation of policy making and commends
the intention to use evaluation methods based on impact
assessment analyses.

1.13.
partners, will be a critical
refocused emphasis on the contribution of industrial policy.

The dialogue with the EESC,
feature of

including the social
the improved and

1.14.
Commissioner Liikanen described this Commission
communication as the first step in a larger process that will
place industry back on the policy agenda. That is a sentiment
welcomed by the EESC.

2.

Introduction

2.1.
The European Union continues to depend critically on
the strength and vitality of its industrial sector as a major
contributor to the economic development of the Union. The
strength and growth of the sector further depends on the
competitiveness of the sector and that, in turn, depends on the
actions of those who control and contribute to the individual
firms as well as the supportive actions of official agencies,
Member State Governments and the Community institutions.

there is little doubt that

2.2.
A successful industrial structure has been, is, and will
continue to be a critical feature of the European economy.
Therefore,
the European Union
should have an explicit analysis of the factors affecting the
development of the industrial sectors to inform policy and
decision making both for the Community as a whole, through
the Community institutions, and within the Member States.

2.3.
As the Communication from the Commission empha-
sises, in its introduction, ‘Industrial policy has a key role to
play in helping the EU meet the Lisbon and Gothenburg
objectives ... a review of this policy is timely, so as to ensure
that the EU has the tools with which to respond to the needs
of an enlarged Europe’ (1).

2.4.
Industrial policy is multidimensional. Many aspects of
economic policy at EU and national level contribute to the
shaping of industrial policy. Some industrial policy issues are
co-incident with, or overlap with, other policies. Key examples
are the efforts to create a genuine single market, the develop-
ments to ensure an effective and equitable competition policy
regime, the strengthening of appropriate external trade policies
(particularly as they affect traditional sectors such as textiles,
steel and shipbuilding), efforts to increase the application of
enhanced research and development policies, opening the
market place through enhanced public procurement oppor-
tunities, and aspects of environmental, social and employment
policies.

2.5.
In some respects, the argument can be made that the
best basis for a successful industrial sector within the EU is
that there should be an effective and expanding single market,
shortly to be the world’s largest internal market, that offers the
advantages of scale to all producers and maintains a level
playing field between competitors regardless of national
boundaries.

2.6.
Industrial policy is not only important and relevant to
manufacturing industry. Many of the policies appropriate to
success must acknowledge these implications for other sectors,
including services, and should take account of the growing
degree of inter-dependence of manufacturing and related
services.

2.7.
In order to fully harness the potential of the internal
market, economic policy should, therefore, be orientated to
increasing the growth of the economies in the EU so that, inter
alia, there is an expanding market for industrial products.

the market are removed,

Industrial policies should aim (1) to create a competi-
2.8.
tive European market place where distortions and disruptions
that fragment
(2) to encourage
favourable conditions for enhanced productivity by strength-
ening and exploiting the potential for innovation and new
to enhance the
forms of
competitive strength of firms in the EU.

industrial organisation and (3)

(1) COM(2002) 714 final.

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2.9.
There are a number of very diverse interfaces between
the industrial policies and other actions of the EU, acting for
the Community, the actions of national governments,
all
and the institutional arrangements within Member States. A
rational and coordinated approach, resolving any tensions in
and between these interfaces, is therefore vital to the effective
development of industry.

2.10.
Becoming the ‘most competitive and dynamic know-
ledge-based economy in the world’ implies that, within the EU,
there should be a single economy with the removal of the
remaining barriers to the completion of the internal market
and that industry must contribute to that process.

The combination of

2.11.
the Lisbon and Gothenburg
conclusions brings together the ambition for industrial policies
to contribute to sustainable economic development taking
account of the impact on social cohesion and contributing to
better environmental protection.

3. The Commission review

3.1.
The Commission review of industrial policy explicitly
acknowledges that competitiveness is central to the goals of
the European Union as embodied in the conclusions, on the
need for a dynamic knowledge-based economy, agreed at the
Lisbon summit. Further, this is acknowledged to depend on
the ability to maintain and develop the competitiveness of the
manufacturing sector.

The Communication has prepared this review partly to
3.2.
test whether the industrial policy established and developed
since 1990 is capable of responding to the changed conditions
created by increased globalisation, enlargement and the objec-
tive of sustainable development.

to the main developments that underpin knowledge-based
investments in education, vocational training and research. In
relation to innovation, the Commission underlines the need
for innovative actions in all sectors of the economy and
acknowledges the need for the conditions to be in place
to stimulate vigorous innovation. Examining the role of
entrepreneurship, the Commission notes (what it regards as)
the reluctance of too many Europeans to bear entrepreneurial
risk. The Committee doubts whether the emphasis on the
scope for greater entrepreneurship should be expressed as a
general ambition rather than a significant option for only a
small group of people, only a few of which would previously
have been unemployed. To acknowledge the importance
of sustainability in industrial production, the Commission
encourages appropriate initiatives influencing production and
consumption in ways compatible with sustainable develop-
ment.

3.5.
The EESC notes that the emphasis in the analysis
appears to be that industrial policy should usually be essentially
horizontal in nature and should aim at securing the framework
conditions most favourable to industrial competitiveness. This
rests on the instruments of enterprise policy that enable
entrepreneurs and businesses to take initiatives, exploit ideas
and build on the opportunities.

3.6.
This horizontal classification includes all the related
Community policies for competition, the development of the
internal market, encouraging R&D, education and training
investments, and questions of trade arrangements and of
sustainable development. Hence, the EU’s Lisbon agenda offers
an excellent framework for implementing the concerns of a
forward-looking, horizontal industrial policy both nationally
and at EU level.

3.3.
Although the Communication does not explicitly say
so, the implication of the analysis is that there is scope for a
reconsideration of the main elements of industrial policy and
an opportunity now to grasp a larger potential contribution
arising from the enlargement of the Community.

3.4.
In the search for improved industrial competitiveness,
the Commission identifies four key factors that deserve
particular attention: knowledge, innovation, entrepreneurship,
and the orientation needed to ensure the sustainability of
development. In support of the former, the Commission relates

3.7.
In a potentially significant statement, the Commission
allows that industrial policy may need to be applied to meet
the specific needs of particular sectors. The horizontal basis
would be adapted for specific selected sectoral applications.
This acceptance of occasional specific needs might be described
as a vertical application of sector-specific measures. Whilst
these specific measures should not be an unjustified preference
for certain sectors over others (possibly because economic
forces are changing in ways that are unpopular), their rationale
depends on the degree to which framework conditions need,
to some extent, to be sector specific and this needs to be
reflected in devising policy that allows adequate support over
a long enough period to facilitate necessary changes.

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3.8.
The Commission regards the Communication ‘as the
start of a process of examination of the appropriateness and
balance with which its industrial policy is applied.’ This is,
however, linked with an invitation to Member States also to
examine their own industrial policy particularly in the light of
the principles set out in this Communication.

(including commercial

framework,
law, competition rules,
fiscal and labour rules, and intellectual property rights), the
rules that set standards for specific goods and services,
institutions to facilitate the operations of the market place, and
those conditions that set a basic macro-economic framework
or ensure political stability.

The EESC welcomes this opportunity to contribute to

3.9.
that examination.

Examples of the key strands of horizontal policies

4.3.
include:

4. General comments

4.1.
The EESC supports the main principles underpinning
an industry policy that builds a competitive framework where
progressive businesses can compete successfully in global
markets. Also, the EESC welcomes the existing degree of
success in creating the framework for a Single European
Market where industry has easier (but not yet completely
unrestricted) access to markets within the existing 15 Member
States, shortly to be 25 and later possibly 27 (or more). This
competitive framework, linked to preferential access to the
internal market and enhanced global markets, also creates the
opportunities and threats that may emerge when the single
market is chosen as a location by foreign-owned companies.

4.1.1.
Of course, the enlargement of the EU brings not just
the need to consider the impact of industrial policy on 25 (or
27) Member States instead of 15. It also brings a greater range
of disparities, structural differences and social and cultural
variations that make the search for agreed policies more
difficult. Over the past decade the accession countries have
increased competition between the 25 countries, particularly
through the different fiscal advantages offered to companies.
There are examples of companies relocating from one member
state to another for many differing reasons, some linked to
unhelpful competition in state aids.

4.1.2.
Building a new series of measures to assist industrial
development calls for a careful analysis and evaluation of the
successes and failures of measures adopted in earlier years.
Such an evaluation would serve to put the Commission’s
future recommendations on a firmer footing.

4.2.
The role of the Community is indeed to enhance the
impact of the single market through the development and
implementation of a series of policy measures of a horizontal
nature. For the EESC there is no ambiguity in acknowledging
the importance of the main categories of framework con-
ditions (1). This includes the rules that set the general market

( 1) As set out in section V.2.1, p. 21 et seq. in the English version.

a)

completing the single market;

b)

strengthening innovation policy generically, or as appro-
priate to specific sectors, and related research and devel-
opment incentives;

c)

encouraging the benefits of business clusters;

d)

efforts to strengthen territorial and social cohesion;

e)

instruments to facilitate social dialogue;

f)

stronger social cohesion, particularly through enhanced
skills training;

g)

supporting services of general interest;

h)

improving the physical infrastructure;

i)

efforts to increase the flow of students into scientific and
technological disciplines and courses in engineering and
entrepreneurship.

j)

promoting business financing.

4.4. Within the Community, the success of the last 50 years
has been the degree to which these conditions have now been
accepted across the Community. There is, of course, still more
to be achieved. A substantial proportion of the measures
needed to completely adopt these conditions also lie in the
remit of the Member States (for example in transposing
legislation) or with Member States acting through the Council
of the European Union (in adopting suitable Community-wide
policies).

4.5.
The EESC notes the conclusion by the Commission
that ‘although industry in the future Member States is broadly
ready to compete in an enlarged EU, deeper integration will
inevitably entail some localised problems. Further restructuring
will be necessary, particularly in the steel sector ...’ The EESC is
concerned, however, regarding the social consequences of job
losses. Additionally, the Commission acknowledges that the
cost of complying with the Community acquis, especially
environmental legislation, may in the short term have negative
implications for the cost structure of businesses.

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4.6.
These risks point to the need for a carefully targeted
series of EU sector specific actions that are motivated to
encourage the emergence of more competitive businesses and
also take account of the possibly painful adjustment processes
that will affect some businesses and their employees.

4.6.1.
Business financing and a functioning European capi-
tal market are particularly important given the difficulties in
the European banking sector, the Basle II debate and the
increasing significance generally of capital market financing
for European industry. This issue therefore requires close
attention and it is essential to promote business financing
tools.

4.7.
A critical societal feature of enlargement is the degree
to which key assumptions about the nature of mature market
economies should not be assumed to apply equally to the new
Member States. The cultural inheritance of a mature market
economy offers features such as a legislative framework for
modern business, an acceptance of the role and need for a
strong entrepreneurial culture and an approach to business
that includes the acceptance of risk taking.

The institutions of the EU must take account of these

4.8.
features and the tensions that they create.

However, the EESC is not completely reassured that,
4.9.
for the new Member States,
‘enlargement is a reality for
industry and has opened up new opportunities’. Even if only
because these new Members have not yet absorbed the full
acquis, the basis for arguing that enlargement is a reality seems
insecure. The Committee comes closer to agreeing with the
Commission when it argues that industrial policy tools will
have to be applied taking account of the specific needs of the
future member states. The identification of these specific needs
and the Commission response remains a critically important
process for the years ahead. These specific needs include
investment, adjustment and modernisation to cope with
changing opportunities and go beyond purely short-term
competitiveness criteria.

sectors within the existing EU may be exposed to low cost
competition from within the enlarged Community. The EU
institutions should work to devise policies relevant for the
whole of the Union to make best use of the human resources
of a community of 25, partly to counter any concerns that
short-term policies may lead to exorbitant costs in terms of
the need for retraining and avoidance of social decay.

Alternatively, enlargement may offer some EU com-
4.11.
panies a better chance of survival
in the face of stronger
(internal and external) competition if they are enabled to draw
on a pool of relatively inexpensive well trained labour in the
new Member States.

5. Specific comments on the communication

A number of aspects of the communication merit

5.1.
more critical examination.

5.2.

These include:

1)

the consequences for industry of enlargement;

2)

3)

the single market,
the need for the completion of
including the elimination of the remaining deficit in
horizontal measures;

the circumstances where vertical measures can be justified
as they affect specific sectors;

4)

adjustments affecting industry in border regions;

5)

some key challenges for industrial policy.

In this opinion, these differing aspects are examined in turn in
the following paragraphs.

5.2.1. C o n s e q u e n c e s o f e n l a r g e m e n t

5.2.1.1.
The Commission acknowledges that, at the insti-
tutional and framework levels, the candidate countries have
made considerable efforts to prepare for accession. It also
acknowledges that there are large differences in some sectors
that may give rise to complaints of low cost competition or,
conversely, an inability to compete when faced with the
enlarged market.

4.10.
The EESC is particularly concerned that, for some
sectors, the enlargement of the Community will mean that
some less productive plants with higher cost structures will
face serious market loss, or financial losses, when exposed to
competition from established EU businesses. In reverse, some

5.2.1.2.
In preparation for enlargement the Commission
has negotiated a number of specific transitional measures
appropriate to the period of change. The several accession
treaties have specified these measures and the EESC believes
that they offer an acceptable institutional framework.

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5.2.1.3.
Amongst the key issues will be the impact of
differences in technology and productivity as well as differ-
ences in labour costs.

5.2.1.4.
The assessment of the EESC is that the Commission
has understated the degree of adjustment that will need to take
place. In addition, the Commission has overstated, possibly
in a too complacent manner, the potential benefits from
competitive reorganisation in the enlarged Community. Whilst
the synergy of an enlarged market should be positive, there
may be some casualties in the early years after accession.

5.2.1.5.
The EESC suggests that the Commission should
acknowledge these risks and pay particular attention to the
needs and problems of the future Member States in the design
and the implementation of industrial policies.

5.2.2. T h e c o m p l e t i o n o f t h e s i n g l e m a r k e t

5.2.2.1.
Although the statement has been made many
times, one of the key elements of an improved framework for
industrial policy is that, within the EU (15), many of the
unfinished measures to make the single market effective should
be implemented.

5.2.2.2.

This includes:

i)

the introduction of a Community Patent (1);

ii)

an effective competition policy;

iii)

reduction, or removal, of unmerited State aids;

iv)

agreement on progress to a single market in financial
services;

5.2.1.6.
The EESC has concerns that there may have been
an insufficient appreciation of the impact of enlargement in
some, or all, of the following areas:

v)

fiscal harmonisation;

vi)

adequate policies to encourage research and development;

— the particular needs of SMEs that become more vulnerable

to competition in some sectors and regions.

vii) means of opening the market through effective public
procurement policies and cooperative defence procure-
ment policies;

— the impact of enlargement on incentives for some

businesses to relocate to new areas.

viii) agreed application of environmental policies;

— possible migration of people seeking employment oppor-

tunities.

— the new orientation needed of customs duty enforcement
along the new external
frontiers of the Community
and associated anti-smuggling and anti-counterfeiting
measures.

5.2.1.7.
A critical feature for the extension of the single
market is that the infrastructure endowment of many of the
new Member States still lags behind the standards of the rest
of the European Union. An appraisal of the priorities and
financing mechanisms (with a defined contribution from
Community sources) to modernise key parts of the infrastruc-
ture, including the modernisation of trans-European networks,
is commended. Equally, the major national networks are also
worthy of modernisation whilst their services of general
interest are retained.

5.2.1.8.
As well as the possible migration of workers from
the new Member States seeking employment opportunities
(point 5.2.1.6), it must not be forgotten that, in some Member
States, skilled labour will be in short supply as a result of
demographic trends. This has wider and important impli-
cations for EU policies, impacting on education and training
across the European Community.

ix)

improved recognition of professional qualifications;

x)

common customs administration at the external borders
of the EU.

5.2.2.3.
In addition, the support of an effective, open and
guaranteed market place for safe energy and transport services
is needed. These infrastructural needs should be supported by
the creation of adequate Trans-European Networks to meet
the capacity needs of the enlarged Union.

5.2.2.4.
For the new Member States, the impulsion to create
the framework for industrial development relies on the need
to adopt and implement the acquis already in the Community
and then to keep pace with the evolving policies and pressures.

5.2.2.5.
many of them need to take action on:

For these States, the Commission has noted that

a)

b)

standards and technical regulations;

property rights,
rights);

including IPRs (intellectual property

(1) The Council approved the framework for the introduction of a

Community Patent on 3.3.2003

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c)

d)

e)

f)

g)

h)

harmonising the application of company law and respect-
ing the plurality of different forms of enterprise;

liberalisation of energy markets;

building competitive conditions for privatised firms;

removal of some forms of State aid;

opening access to FDI (foreign direct investment);

supporting the conditions that might assist the creation
and development of SMEs.

The initial, short-term, costs of compliance with
5.2.2.6.
environmental regulations is a particular concern because of
the front-loaded nature of the costs.

The Commission has acknowledged that there have
5.2.2.7.
been fears that there would be some dislocation of production
in sectors where relocation was motivated to find lower costs
and wages in some of the CEEC countries, particularly in the
textiles and clothing industries. Alternatively, there may be
dislocation because firms move to lower cost locations in
other countries. These fears are considered by the Commission
not to be large since most relocations motivated by these
factors may already have taken place (1). The EESC has a
concern that this may prove an optimistic interpretation.

5.2.2.8.
Nevertheless, such processes are an inherent conse-
quence of the increasing globalisation of the market place for
industrial products.

5.2.3. V e r t i c a l m e a s u r e s a f f e c t i n g s p e c i f i c

s e c t o r s

The EESC commends the merits of the introduction
5.2.3.1.
further and faster
of policies that will be supportive of
the EESC would
industrial development.
support a process where the Commission introduced defined
strategies for key sectors where the benefits of further invest-
ment and the application of sector specific research and
training policies would be outlined.

In this context,

5.2.3.2.
The most difficult aspect of industrial policy is how
to cope with specific conditions where simply to allow market
competition to operate can lead to outcomes that are judged
to be undesirable.

5.2.3.3.
The justification for specific temporary measures is
likely to call for judgements at national or now, more usually,
Community level that are complex. Different industries must
adapt continuously to changing market conditions, changes in
technology and production processes, changes in the usage of

( 1) See the discussion in the Commission Staff Working Paper on the
Impact of Enlargement on Industry, SEC(2003) 234, section 2.2.

key skills, and changing cost structures. Many difficult
decisions, which are usually motivated by the ambition to
make products available on a more competitive basis to final
or intermediate customers, and which are appropriate to the
conservation of resources for future generations, would be a
necessary response to changed conditions. Almost as inevi-
tably, responses to change in the status quo bring threats of
loss of business and/or employment for those who cannot, or
do not, adapt quickly through consultation, within a frame-
work of social dialogue. The Commission should take account
of this factor in industry-related policies to give industry a
greater degree of medium-term security to plan ahead.

5.2.3.4.
Critical, therefore, to the work of the Commission,
Member State Governments and other industrial policy agenci-
es, is the preparation of positive responses to enhance the
benefits of change rather than help to maintain an unsustaina-
ble status quo.

5.2.3.5.
The Commission has many years of experience in
responding to (but not necessarily agreeing with) representa-
tives of several sectors including shipbuilding, steel, coal,
textiles and clothing.

The Commission reports, in this Communication,
5.2.3.6.
that aid to steel making has only been allowed in as far as it
was accompanied by capacity reductions and not to maintain
existing capacity. Extra measures were permitted to mitigate
the social impact of restructuring and also to support R&TD.
The emphasis on R&TD and targeted training policies is
regarded as adequate although the Commission adds that
efforts will be needed to maintain competitiveness. Somewhat
inconclusively, the Commission acknowledges the need to
ensure all these instruments are well coordinated. No further
proposals are outlined.

5.2.3.7. Whilst the EESC accepts that adjustments in indus-
tries such as steel must face the new commercial realities and
cannot, or should not, rely on State aids and subsidies to offset
competition, the Commission policy framework appears to
lack measures to adequately ease the transition. The EESC
recommends a sectoral review of vulnerable industries, particu-
larly affected by enlargement (such as steel), to assess the
restructuring process and outline transitional measures to ease
the changes.

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5.2.3.8.
In shipbuilding, the argument, over the years, for
intervention payments was tightly constrained and linked to
partially offsetting the effective price subsidies offered by non-
EU countries.

In each of

5.2.3.9.
the Commission had,
these cases,
necessarily and logically, to be persuaded that, in one form or
another, there was ‘market failure’.

An alternative justification for specific measures
5.2.3.10.
occurs where market forces operate in a way that leads to
unsustainable development. Examples include the need to
encourage new ‘clean’ technologies and charges linked to
environmental damage or controlling waste linked to the
guaranteeing of safe energy supplies.

5.2.3.11.
The merits of introducing targeted measures for
specific sectors applies both to the existing Member States and
the new Member States.

5.2.3.12.
Interestingly, the Commission also identifies sec-
tor-specific needs for more modern sectors such as chemicals,
space and aerospace, biotechnology and telecommunications.

5.2.3.13.
The EESC welcomes the willingness of the Com-
mission to examine individual sectors to test the merits (if any)
of
further supplementary policies to support sustainable
growth sponsored by the European Union.

5.2.3.14.
Sector-specific policies are not necessarily a plea
for subsidies. Sector specific policies may include, inter alia,
education and training policies, energy policies, trade policy
and the application of ICT. In addition, such sector specific
policies may need to take account of external artificial
distortions affecting global trading conditions.

5.2.4. B o r d e r r e g i o n s

5.2.4.1.
The EESC agrees with the Commission that there
may be particular problems or disruption of trade and industry,
especially for smaller and medium-sized businesses (1), in the
regions next to the border between new and old Member
States as well as in regions bordering other east European
countries.

5.2.4.2. Whilst the EESC acknowledges that localised cross-
border distortions or disruption as part of the adjustment
process to an enlarged Community is likely, the responses to

( 1) This issue is discussed in more detail in the Commission Staff
Industry’,
of

Enlargement

on

Working
‘Impact
Paper
SEC(2003) 234, section 2.2.

these developments are, the EESC suggest, a shared responsi-
bility. The Community must apply the rationale and expertise
built-up by the Interreg Programmes (or other special initiatives
of this type). This can be most effective if a cross-border policy
framework is set by the Commission and designed to facilitate
acceptable local measures by the local government or regional
agencies in these border regions.

5.2.4.3.
The critical starting point for such responses must
be to aid a transition to the new horizontal conditions rather
than an attempt to enshrine longer-term protectionism.

5.2.5. T h e k e y c h a l l e n g e s

5.2.5.1.
affecting competitiveness are:

The current key challenges for industrial policy

— the challenge of globalisation;

— technological and organisational change;

— innovation and entrepreneurship;

— sustainability and new societal demands;

— regaining full employment;

— defence procurement;

— vocational training and lifelong learning;

— minimising

environmental

the
environmental impact of related energy and transport
developments);

(including

damage

— the availability of adequate and appropriate financial

resources for investments.

The first
Commission in its review of industrial policy.

four of

these are specifically identified by the

5.2.5.2.
These reflect the key factors underpinning and
influencing the current processes of economic change. The
EESC acknowledges that the first of these is driven by the
opening-up of world markets and the advance of technology
and science. For the others, the EESC agrees with the Com-
mission that, whilst there is no single prescription for their
development,
‘industrial policy will have to pay particular
attention to nurturing these strengths’ (2).

(2) As set out in section V.1, p. 18 in the English version.

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The value of the Commission communication is
5.2.5.3.
that
it sets a framework for a better understanding of
the pressures affecting the development of industry in the
Community. The essential theme of
this communication,
endorsed by the EESC, is that the combined efforts of industry
itself, industrial associations, local and regional government,
national governments and the Community must acknowledge
and respond to the need to maintain, and enhance, industrial
competitiveness within a context that offers a sustainable
future. European-level policy must ensure that
industrial
competitiveness
strengthened by reducing costs and
bureaucracy, in line with the Lisbon strategy.

is

The impact of increasing globalisation means that
5.2.5.4.
different industrial sectors will need to adjust to a more
competitive-trading environment in which cooperation and
interdependence should increase involving employees, sub-
contractors, universities and research institutes.

Critical

5.2.5.5.
to the adaptation process will be the
incorporation of new technologies and the acceptance of
organisational change. This has major implications for the
upgrading of employees’ skills and points to a need for an
increase in public spending on education and training, revers-
ing the apparent fall in the last decade. Employers have a
crucial role to play in the workplace in making lifelong
learning a reality for all their employees. Sufficient skills also
make changes more easily acceptable and may even be seen as
opportunities, as well as threats.

5.2.5.6.
The European Commission should continue to
improve vocational training and lifelong learning programmes
to support understanding and knowledge among the civil
services of the new member states not only of European law
but, in particular, also the effects of legislation on the economy.
Similarly, coherent training programmes are needed among
functioning
entrepreneurs and the social partners. Well
employers associations and trade unions should be encouraged
in the new member states together with improved institutional
frameworks to meet the needs of the market-based economy.

6. Policy revisited

6.1.
The basis for Community industrial policy can be seen
in Article 157 of the Treaties. The evolution of industrial

policy in the Community in the years ahead will, according
to the Communication, be based on the following linked
approaches:

— ensuring the most appropriate framework conditions;

— a more systematic EU approach for improving framework

conditions;

— improving the integration of EU policies with an impact

on industrial competitiveness;

— responding to the specific needs of

industry in the

accession States;

— striving for improved global governance;

— testing the sectoral relevance of this approach.

6.2.
The EESC accepts the logic of this approach but
notes that this will call for detailed policy developments at
Community and, sometimes, Member State level. Nevertheless,
this might be a useful approach if it assists the identification
of appropriate measures.

This communication is not

the vehicle to devise
6.3.
detailed proposals for the improvement of policy for industry.
It is, however, a critical overview that, when endorsed, can set
the principles for the actions that should follow. The next
steps, which are now a pressing priority, must focus on the
themes outlined above, in paragraph 6.1.

The EESC welcomes the proposal outlined in this
6.4.
Communication for a continuing review of all EU policies that
impact on industry. This will, of necessity, cover a wide
spectrum of policies and policy-making.

6.5.
The continuing review will also be enhanced by the
application of the new measures adopted by the Commission
to simplify the governance mechanisms of the Commission,
and the introduction of well-defined consultation commit-
ments and related impact assessments of policy proposals
that will
include assessments of the economic, social and
environmental implications. This review will need to incorpor-
ate a systematic surveillance of the cost impact on industry of
any new draft regulations. In addition to the specific impact
assessment of individual measures, the Commission should be
asked to publish on a periodic basis its assessment of the
cumulative effects of any EU decisions on the costs and
performance of industry both in total and for specific vulner-
able sectors.

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Official Journal of the European Union

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6.6.
A more systematic impact-assessment process would
offer a more transparent process and also offer a basis for
wider dialogue with stakeholders on the acceptance of the
policies and debate about
their impact. This will be of
particular value in assisting the further work of the EESC.

Lest the conclusion might be drawn that industry
6.7.
policy turns narrowly on official actions,
the EESC also
commends the role of industry, industry sectoral associations
and industrial associations,
in cooperation with the social
partners,
in taking an active role in ensuring that industry
continues to build its contribution to the economies of the EU.

6.8.
In his presentation to the Committee of the European
Parliament (1), Commissioner Liikanen described this Com-
mission communication as the first step in a larger process
that will place industry back on the policy agenda. It would
also open an exploration of how different EU policies interface

( 1) Speech on 22.1.2003.

Brussels, 17 July 2003.

with the performance of European industry and allow an
examination of what should be done to reinforce competi-
tiveness of EU companies.

6.9.
vThe EESC welcomes this re-visitation of critically
important aspects of EU policy-making and will welcome the
opportunity to contribute further to the debate as it evolves.

6.10.
The EESC also welcomes the reshaping of the Council
of the European Union so that a new formation brings
together, in an appropriately named format, a Competitiveness
Council with many of the main responsibilities relevant to
industrial policy.

6.11.
Nevertheless, the EESC does not need to remind the
Council, or the Commission, that, whilst industrial policy must
place a key focus on factors directly influencing competi-
tiveness,
the successful and legitimate encouragement of
industrial development calls for the better understanding of
how industry is influenced by, and itself influences, many
other Community actions.

The President

of the European Economic and Social Committee

Roger BRIESCH