Communication from the Commission - Implementing the Community Lisbon Programme : A policy framework to strengthen EU manufacturing - towards amore integrated approach for industrial policy {SEC(2005) 1215} {SEC(2005) 1216} {SEC(2005) 1217}
Date: 2005-10-05
Institutions: European Commission
Subjects: EU programme, economic and social cohesion, economic policy, industrial policy, processing industry, small and medium-sized enterprises, social policy

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 5.10.2005 
COM(2005) 474 final 

COMMUNICATION FROM THE COMMISSION 

Implementing the Community Lisbon Programme: A policy framework to strengthen 
EU manufacturing - towards amore integrated approach for industrial policy 

{SEC(2005) 1215} 
{SEC(2005) 1216} 
{SEC(2005) 1217} 

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   EN 

 
 
 
  
TABLE OF CONTENTS 

1. 

2. 

3. 

4. 

4.1. 

4.2. 

5. 

EU Industrial Policy and the Action Programme for Growth and Employment ......... 3 

The Importance of EU Manufacturing Industry........................................................... 4 

Assessing the Diversity of Policy Challenges across Sectors...................................... 6 

Towards an Outline of Work for Industrial Policy ...................................................... 8 

Cross-sectoral policy initiatives ................................................................................... 8 

Sector-specific initiatives ........................................................................................... 11 

Conclusion.................................................................................................................. 13 

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COMMUNICATION FROM THE COMMISSION 

Implementing the Community Lisbon Programme: A policy framework to strengthen 
EU manufacturing - towards amore integrated approach for industrial policy 

1. 

EU  INDUSTRIAL  POLICY  AND  THE  ACTION  PROGRAMME  FOR  GROWTH  AND 
EMPLOYMENT 

In setting out its renewed Action Programme for Growth and Employment1, the Commission 
declared  its  commitment  to  focussing  the  renewed  Lisbon  Strategy  on  growth  and 
employment. To do this the EU’s priorities were declared to be: 

•  Making Europe a more attractive place to invest and work 

•  Putting knowledge and innovation at the heart of European growth 

•  Shaping policies to allow businesses to create more and better jobs. 

This  Communication  on  industrial  policy  was  announced  under  the  Community  Lisbon 
Programme2  of  July  2005  and  represents  an  important  contribution  to  the  achievement  of 
these  objectives.  The  health  of  manufacturing  industry  is  essential  for  Europe’s  ability  to 
grow.  Whilst  it  is  currently  undergoing  important  changes  and  facing  major  challenges,  it 
needs a favourable business environment to continue to develop and prosper. 

The main role of industrial policy is to provide the right framework conditions for enterprise 
development  and  innovation  in  order  to  make  the  EU  an  attractive  place  for  industrial 
investment  and  job  creation.  It  is  evident  that  it  is  primarily  private  sector  businesses  that 
create economic growth, not the public sector. Businesses have the responsibility to develop 
their  products  and  processes  and  to  improve  skills  in  order  to  unlock  new  markets  and  find 
new  opportunities  resulting  from  technological  developments  and  internationalisation.  In 
exploiting  such  opportunities,  corporate  social  responsibility  and  sustainable  development 
play a key role. 

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

The  Commission  is  committed  to  the  horizontal  nature  of  industrial  policy  and  to  avoid  a 
return  to  selective  interventionist  policies.  Nevertheless,  the  scope  of  policy  instruments 
should  not  be  seen  just  as  only  very  broad  horizontal  measures.  For  industrial  policy  to  be 
effective, account needs to be taken of the specific context of individual sectors. Policies need 

1 
2 

“Working Together for Growth and Jobs: a New Start for the Lisbon Strategy” - COM(2005) 24. 
“Common  Actions  for  Growth  and  Employment:  the  Community  Lisbon  Programme”  -  COM(2005) 
330. 

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to be combined in a tailor-made manner on the basis of the concrete characteristics of sectors 
and  the  particular  opportunities  and  challenges  that  they  face.  This  inevitably  has  as  a 
consequence that whilst all policies are important, in the EU today some policies have greater 
importance for some sectors than others. 

The Commission therefore stands by its previous commitments to encourage and facilitate the 
process of industrial innovation and change3. However, a new approach to industrial policy is 
required  aimed  at  achieving  better  designed  policies  that  are  more  relevant,  integrated,  and 
consensual.  

The  Communication  on  the  Action  Programme  for  Growth  and  Employment  noted  in 
particular that industrial policy is based on a partnership between the EU and Member states4. 
Several  industrial  policy  challenges  need  to  be  addressed  at  the  European  level,  since 
individual Member states acting in isolation cannot succeed in tackling issues such as major 
competition  cases,  the  regulation  of  the  single  market,  or  social  and  economic  cohesion. 
However,  Member  states  also  have  responsibilities  for  many  elements  of  industrial  policies 
and  this  is  emphasised  in  the  Guidelines  for  National  Reform  Programmes.  This 
Communication  deepens  and  supplements  the  EU  framework  for  industrial  policy  by 
focussing  on  its  practical  application  to  individual  sectors.  The  range  and  diversity  of  the 
policy  challenges  posed  by  different  sectors  has  thus  been  examined  in  some  detail,  based 
upon  a  systematic  screening  of  opportunities  and  challenges  for  27  separate  sectors  of  EU 
manufacturing  industry  and  construction5.  On  this  basis,  an  outline  of  work  for  industrial 
policy over the coming years has been constructed. 

2. 

THE IMPORTANCE OF EU MANUFACTURING INDUSTRY 

A  strong  and  healthy  industrial  sector  is  essential  to  fully  exploit  the  EU’s  potential  for 
growth and to enhance and sustain the EU’s economic and technological leadership.  

•  EU manufacturing industry is important in its own right - it provides around a fifth of EU 

output and employs some 34 million people in the EU. Beyond this: 

•  Manufacturing  is  the  key  to  exploiting  the  new  knowledge  economy  -  over  80%  of  EU 

private sector R&D expenditures are spent in manufacturing6. 

•  Manufacturing generates the new and innovative products that provide some three-quarters 

of EU exports. 

•  EU manufacturing industry consists of a large majority of SMEs: over 99% of companies 

and 58% of manufacturing employment are SMEs. 

3 

4 
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6 

See “Industrial Policy in an Enlarged Europe” - COM(2002) 714 - and “Fostering Industrial Change: an 
Industrial Policy for an Enlarged Europe” - COM(2004) 274. 
Article 157 of the Treaty Establishing the European Community. 
See  the  accompanying  Staff  Working  Paper  SEC(2005)  1216.  The  challenges  facing  the  Business 
related  services  sectors  are  described  in  the  Communication  on  the  Competitiveness  of  Business 
Related Services and their Contribution to the Performance of European Enterprises - COM(2003) 747, 
which also announced an Action Plan on Business Related Services. 
Sources: Eurostat Business Statistics. 

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•  Manufacturing creates growth and jobs in the wider EU economy: it is closely inter-linked 
with  the  service  industries,  providing  demand  for  business  services  and  supplying  key 
inputs to the services industries. 

EU  manufacturing  is  currently  undergoing  a  revolution  with  new  opportunities  and 
challenges7. New technologies are emerging that allow the fast introduction of new products 
and  the  increased  flexibility  of  production  processes.  At  the  same  time,  EU  companies  are 
presented  with  an  increased  internationalisation  of  the  world  economy  driven  by  improving 
transport linkages, falling communication costs, reduced barriers to trade and investment, and 
more vigorous competition. The EU is thus increasingly facing international competition as a 
location for investment, production, and R&D spending.  

EU  manufacturing  industry  is  responding  to  these  challenges.  Whilst  there  has  been  a 
productivity  growth  differential  between  the  EU  and  other  industrialised  economies, 
particularly the US, this has been to some extent the result of an industrial composition effect 
due to the lower share of ICT-producing sectors in EU manufacturing. In fact, the majority of 
individual  EU  manufacturing  sectors  have  performed  well  in  comparison  with  their 
counterparts in other industrialised economies. Nevertheless, the industrial structure of the EU 
economy  as  a  whole  makes  it  less  than  ideally  positioned  to  face  the  ongoing  globalisation 
process.  While  important  EU  manufacturing  sectors  such  as  mechanical  engineering, 
chemicals and motor vehicles have a substantial revealed comparative advantage and record 
trade surpluses against the rest of the world, EU trade is overall still concentrated in sectors 
with medium-high technologies and low to intermediate labour skills8. This exposes the EU to 
competition  from  producers  in  emerging  economies  that  are  upgrading  the  skill  intensity  of 
their  exports  and  catching  up  in  terms  of  the  non-price  factors  that  often  underlie  the  EU 
competitive  edge  on  world  markets.  Hence,  adaptability  and  structural  change,  allowing  a 
shift towards a more robust situation of comparative advantage, are critically needed if the EU 
is to maximise the gains arising from the integration in the world economy of China, India, 
and other fast growing economies. 

EU foreign direct investment flows towards the emerging Asian economies have increased in 
recent years, however their share in total flows remains limited9. International relocations of 
EU jobs to low cost countries have also been limited in most manufacturing sectors, although 
these  can  have  painful  consequences  on  a  local  or  individual  sectoral  basis,  especially  on 
lower  skilled  workers  that  should  be  helped  to  cope  with  the  consequences  of  industrial 
restructuring.  

There is also increasing international competition for R&D spending. Shifts in global markets, 
together  with  factors  such  as  human  resources,  the  quality  of  local  research  and  innovation 
systems,  and  the  presence  of  clusters  or  poles  of  excellence,  play  an  increasingly  important 
role  in  determining  the  location  of  R&D  spending.  There  is  evidence  that  the  EU  is  not 
competitive  enough  as  a  location  for  research.  The  US  and  Japan  are  attracting  more 
international R&D expenditure than the EU, whilst there is emerging evidence that countries 
such as China and India are becoming important locations for new R&D investments. The US 
has also been more successful than the EU in attracting researchers and highly skilled staff. 

7 

8 
9 

See  also  the  forthcoming  EU  Annual  Economic  Review  that  analyses  the  factors  affecting  the 
competitiveness of the EU economy as a whole. 
See section VI of the EU Sectoral Competitiveness Indicators 2005. 
Eurostat “EU Foreign Direct Investment in 2003” Statistics in Focus, 20/2005. 

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These  trends  are  a  matter  of  considerable  concern  in  so  far  as  they  lead  to  a  loss  of  R&D 
investment and researchers from the EU.  

On the whole therefore, while the performance of individual EU manufacturing sectors over 
the  recent  past  has  been  positive,  there  are  still  important  challenges  ahead.  In  particular, 
promoting the conditions to ensure increased adaptability and structural change is essential in 
order  to  ensure  the  competitiveness  of  EU  manufacturing,  especially  in  the  light  of 
increasingly strong competition from China and the emerging Asian economies.  

The challenge for EU manufacturing industry and individual sectors is to be able to maintain 
and  further  improve  their  performance  in  the  future  in  the  face  of  further  technological 
breakthroughs and continued internationalisation. The challenge for policy makers is to make 
a  clear  and  coherent  response  by  making  substantial  improvements  to  the  framework 
conditions and general environment in which European industry operates. 

3. 

ASSESSING THE DIVERSITY OF POLICY CHALLENGES ACROSS SECTORS 

In  order  to  build  on  EU  industry’s  existing  strengths,  the  Commission  services  have 
undertaken  a  detailed  screening  of  the  competitiveness  of  27  individual  sectors  of 
manufacturing industry and the construction industry10, with inputs from stakeholders and the 
Member states. The screening aimed to determine to what extent their performance is or could 
be influenced by the instruments of industrial policy. The policy areas chosen for screening 
were  those  particularly  important  for  sectoral  productivity  growth  and  international 
competitiveness: 

• 

• 

• 

• 

• 

• 

ensuring an open and competitive Single Market, including competition 

knowledge, such as research, innovation, and skills 

better regulation 

ensuring synergies between competitiveness, energy and environmental policies 

ensuring full and fair participation in global markets 

facilitating social and economic cohesion. 

The  screening  process  has  resulted  in  the  systematic  identification  of  the  most  important 
competitiveness  and  policy  challenges  of  each  individual  sector  in  both  a  quantitative  and 
qualitative fashion as summarised in Annex 111.  

10 

11 

Since  only  limited  sectoral  data  was  available  on  the  New  Member  states,  the  screening  must  be 
regarded as preliminary. The missing data is currently being compiled and analysed by the Commission 
and will be fed into the on-going policy initiatives. 
The  table  indicates  with  crosses,  the  cases  in  which  a  policy  challenge  is  considered  of  the  highest 
priority for each sector amongst the many relevant policy challenges. Hence the absence of a cross does 
not  therefore  necessarily  denote  that  the  challenge  is  unimportant  to  a  sector,  only  that  it  is  not 
considered  as  an  issue  of  greatest  priority.  More  detail  on  these  and  other  issues  are  set  out  in  the 
accompanying Staff Working Papers. 

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As a result of the screening, individual sectors have been grouped into four broad categories: 
the  food  and  life  sciences  industries;  the  machinery  and  systems  industries;  the  fashion  and 
design  industries;  and  the  basic  and  intermediate  product  industries12.  Each  of  these  broad 
categories of industries is characterised by its own distinctive set of particular challenges. 

Food and life sciences industries 

The food and life sciences industries (e.g. food and drink, pharmaceuticals, biotech) make up 
one fifth of EU manufacturing value-added and are characterized by medium to high growth 
rates. The main cluster of challenges for this group relates to knowledge and better regulation. 
As highly innovative industries, key knowledge challenges are R&D, protection of intellectual 
property  rights,  and  the  financing  of  innovation  for  highly  innovative  SMEs.  The  industries 
also  rely  upon  the  continued  adaptation  and  updating  of  regulations  to  keep  up  with 
technological  progress,  whilst  ensuring  health  and  safety.  International  regulatory 
convergence is hence also an issue for many sectors. Key sector-specific challenges include 
the  need  to  make  more  progress  towards  creating  a  fully  competitive  single  market  for 
pharmaceuticals  products,  and  environmental  and  market  access  issues  relating  to  the  food 
and drink industries, pharmaceuticals, and cosmetics. 

Machine and systems industries 

The machine and systems industries (e.g. ICT, mechanical engineering etc.) account for about 
one third of EU manufacturing value-added and are characterized by medium to high growth 
rates  with  high  rates  of  R&D  spending.  The  challenges  for  these  sectors  therefore  mainly 
relate  to  innovation,  intellectual  property  protection,  and  ensuring  the  availability  of  high 
skilled  personnel.  The  Single  Market  for  many  of  these  industries  depends  upon  technical 
standards that need continual updating. Better access to international markets is also essential 
for some industries, notably ICT, electrical and mechanical engineering, and motor vehicles. 
The transport industries also face a number of environmental challenges, particularly the need 
to continually improve the environmental performance of their vehicles, planes, and ships. 

Fashion and design industries 

The  fashion  and  design  industries  (e.g.  textiles  and  footwear)  make  up  just  8%  of 
manufacturing  value-added,  but  have  experienced  low  or  negative  output  growth  and 
relatively  low  R&D  spending  over  recent  years.  Successful  structural  adjustment  is  the  key 
challenge for these industries. Improving innovation, IPR protection, and skills are essential to 
be  able  to  continue  to  improve  the  quality  and  product-diversity  of  their  output.  Obtaining 
better access to currently heavily protected world markets is also a key policy requirement for 
these industries.  

Basic and intermediate industries 

The basic and intermediate industries (e.g. chemicals, steel, and pulp and paper) account for 
some  40%  of  EU  manufacturing value-added.  As  suppliers of  key  inputs for  the rest of  EU 
industry, these industries can be an important source of innovation for other sectors. Growth 

12 

See  the  table  in  Annex  1  for  an  overview  of  the  classification.  A  broadly  similar,  but  not  identical, 
classification was used in the “Industry Memorandum: Heart for Industry” of the Netherlands Ministry 
of Economic Affairs (October 2004). The classification was based on common industry challenges and 
similarities in characteristics such as products, processes etc. 

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rates in this sector have been medium to low, with the exception of the strongly performing 
chemicals and rubber industries. These industries are largely energy-intensive and hence the 
main  cluster  of  challenges  relates  to  energy  and  the  environment.  Important  sector-specific 
challenges  include  the  REACH  legislation  for  the  chemicals  industry  and  legislative 
simplification  issues  for  the  construction  sector.  Structural  adjustment  is  an  important  issue 
for the ceramics, printing, and steel industries. 

4. 

TOWARDS AN OUTLINE OF WORK FOR INDUSTRIAL POLICY 

The outline of work set out in this section involves a new approach to industrial policy, aimed 
at  achieving  better  designed  policies  that  are  more  relevant,  integrated,  and  consensual. 
Starting from the screening of horizontal policies in terms of their concrete implications for 
specific  industrial  sectors,  this  approach  enables  the  identification  of  the  policies  most 
relevant  for  each  sector.  Through  linking  together  under  a  single  initiative,  a  number  of 
different policy dimensions of key relevance to industry, it will provide increased coherence 
and integration between policies with a more powerful effect on competitiveness. Finally, it 
attempts to achieve a greater consensus over policy, through the involvement at an early stage 
of  key  stakeholders  and  Member  states  in  policy  making.  The  European  social  partners  are 
invited to contribute to this work, both at horizontal and sectoral level. 

The outline of work in this section focuses on a series of specifically new initiatives to foster 
the competitiveness of different sectors. It is thus not exhaustive. Under the new Community 
Lisbon  Programme,  a  number  of  other  actions  and  policy  initiatives  with  an  impact  on 
industry  in  general  and  on  sectors  have  already  been  launched  across  the  range  of  policy 
domains. 

4.1. 

Cross-sectoral policy initiatives 

Seven major cross-sectoral policy initiatives are announced in this Communication in order 
to address the common challenges across groupings of different industries and to reinforce the 
synergies between different policy areas in the light of competitiveness considerations.  

An Intellectual Property Rights and Counterfeiting Initiative (2006) 

Intellectual  property  rights  (IPR)  are  of  key  importance  for  the  competitiveness  of  many 
industrial sectors. While key areas have already been harmonized, more can be done to ensure 
that  the  regulatory  framework  meets  the  needs  of  industry  at  a  time  of  rapid  technological 
development  and  societal  change.  Companies  and  their  clients  need  IPR  which  stimulates 
innovation, provides a stable context in which to make investment decisions, and encourages 
the  development  of  efficient  new  business  models.  The  debate  engendered  by  the  proposed 
directive  on  the  patentability  of  computer-implemented  inventions  has  demonstrated  that 
framing  IPR  rules  which  balance  the  needs  of  all  stakeholders  is  by  no  means  easy.  The 
Commission  will  therefore  launch  a  dialogue  with  industry  and  other  interested  parties  in 
2006  to  determine  what  more  might  usefully  be  done  to  provide  European  industry  with  a 
sound IPR framework. In addition, the proper enforcement of IPR within the internal market 
and in third countries is of the highest importance to fight counterfeiting and piracy occurring 
in  many  sectors.  Infringements  of  IPR  can  jeopardize  legitimate  businesses,  threaten 
innovation  and  sometimes  pose  problems  to  public  health  and  safety.  Many  companies,  in 
particular  SMEs,  are  still  not  aware  of  their  rights  to  obtain  adequate  IP  protection,  whilst 
counterfeiting  continues  to  be  a  major  problem  in  many  areas  of  trade.  Taking  account 

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existing and planned anti-counterfeiting and anti-piracy instruments and measures, including 
those  in  the  enforcement13  and  customs  fields,  the  Commission  will  review  the  state  of 
progress in the whole area of IPR with a focus on competitiveness issues and come up with 
suggestions on how to improve the situation in 2006. 

High Level Group on Competitiveness, Energy, and the Environment (end 2005) 

Competitiveness, energy and environmental policies are closely interrelated and their impact 
is of significant importance in particular for many basic and intermediate product industries. 
Given the need for consistency of policy and legislative initiatives in these areas and in order 
to  exploit  fully  the  synergies  between  them,  closer  coordination  and  the  development  of  an 
integrated  approach  is  of  the  essence.  For  this  purpose  a  High  Level  Group  on 
Competitiveness, Energy and the Environment will be set up. It will function as an advisory 
platform  bringing  together  the  Members  of  the  Commission  for  Enterprise  and  Industry, 
Competition, Energy, and the Environment as well as all relevant stakeholders. It is designed 
to examine the links between industrial, energy and environmental  legislation and to ensure 
the  coherence  of 
improving  both  sustainability  and 
competitiveness. This will be achieved through the balanced participation of all stakeholders 
with  the  objective  of  creating  a  stable  and  predictable  regulatory  framework  where 
competitiveness,  energy  and  environment  go  hand  in  hand.  Likely  issues  to  be  addressed 
include:  (i)  concrete  implementation  of  better  regulation  principles;  (ii)  climate  change, 
particularly  the  emissions  trading  scheme,  energy-efficiency  and  renewables;  (iii)  the 
functioning of energy markets, particularly the electricity market; (iv) implementation of the 
thematic  strategy  on  the  prevention  and  recycling  of  waste,  and  related  legislation;  (v)  the 
improvement  of  resource  efficiency  and  the  uptake  of  environmental  and  other  innovative 
technologies.  

initiatives,  whilst 

individual 

External Aspects of Competitiveness and Market Access (Spring 2006) 

Access to international markets is a priority issue for most of the sectors. The Commission is 
currently working on a possible Communication on the revision of Market Access Strategy, 
reviewing  the  existing  strategy  and  instruments  to  focus  on  those  sectors  and  markets  with 
greatest  potential  gains  for  competitiveness.  Market  access  objectives  will  be  regularly 
prioritised  in  combination  with  a  more  effective  use  of  the  Trade  Barriers  Regulation.  In 
cooperation  with  stakeholders,  a  detailed  strategy  will  be  developed  and  implemented  to 
tackle barriers in the selected sectors and countries. A specific market access action plan has 
already  been  introduced  for  textiles,  and  has  been  expanded  to  cover  leather  and  footwear 
products. The Commission also intends to launch a wide process of reflection and debate on 
the  external  aspects  of  EU  competitiveness  through  a  further  Communication  dealing  inter 
alia with trade issues related to Intellectual Property Rights, regulatory issues, investment and 
government  procurement,  particularly 
the  possibility  of  an  “External  Procurement 
Instrument”  to  create  incentives  for  third  countries  to  negotiate  the  opening  of  their  public 
procurement markets on a reciprocal basis. 

13 

Including  the  Commission  proposals  for  a  directive  on  “EU  criminal  law  provisions  to  combat 
infringements of intellectual property rights”, July 2005.  

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New Legislative Simplification Programme (October 2005) 

Better regulation at various levels has been identified as a key challenge for several sectors, 
including  construction,  motor  vehicles,  ICT  industries,  and  the  food  and  life  sciences 
industries. In addition, the waste regulations have been identified as important to a wide series 
of different sectors, and particularly to SMEs. The Commission has already announced14 that 
it  intends  to  re-launch  its  work  on  the  simplification  of  existing  legislation.  Following 
consultation  with stakeholders,  a Communication  will  be  published  in  October  setting  out  a 
Simplification  work  programme  including  the  three  priorities  that  have  already  been 
identified  for  this  approach:  the  automotive  sector,  the  construction  sector,  and  waste 
legislation. In fact, the CARS21 High Level Group started the screening of existing legislation 
with the aim of completing this process by the end of 2005. 

Improving Sectoral Skills (2006) 

Skill  shortages  were  identified  as  a  key  challenge  in  a  wide  range  of  different  industries, 
including the ICT and engineering industries, the textile and leather industries, and a number 
of basic and intermediate goods industries. Moreover there is some evidence that relocation of 
industrial activity is in some cases motivated more by skill shortages than by cost factors. The 
Commission has already begun to address skill shortage issues through a number of policies, 
such  as  the  Education  and  Training  2010  work  programme,  including  the  European 
Qualification  Framework  (EQF)  that  will  serve  as  a  common  reference  for  European 
education  and  training  systems,  facilitating  the  transparency,  transfer,  and  recognition  of 
qualifications  with  a  special  reference  to  the  sectoral  level15.  To  supplement  these  existing 
initiatives, it is proposed to make assessments of the nature of the skill problems in particular 
industries.  These  assessments  would  include  the  identification  of  current  sectoral  skill 
requirements  and  skill  gaps,  and  would  examine  likely  developments  in  sector-specific 
competences, including where possible effects on SMEs. Building upon the on-going work by 
the  Cedefop,  this  information  base  would  allow  the  articulation  of  future  specific  policy 
initiatives in the light of sectoral competitiveness requirements. 

Managing Structural Change in Manufacturing (End 2005) 

The  private  sector  has  the  primary  responsibility  for  undertaking  structural  adjustment. 
Nevertheless, the EU has useful levers at its disposal to anticipate and accompany change, as 
acknowledged in the recent Communication on the employment effects of restructuring16. It is 
essential that EU-level industrial initiatives are fully integrated with the use of the Structural 
Funds  and  the  policy  instruments  of  individual  Member  states.  The  screening  process  has 
identified  the  following  industries  for  which  potential  structural  adjustment  is  an  issue:  the 
textiles,  leather,  furniture,  footwear,  and  ceramics  industries,  printing,  motor  vehicles, 
shipbuilding,  steel,  and  parts  of  the  food  industries.  The  Commission  intends  to  ensure  that 
better  anticipation  and  positive  management  of  economic  restructuring  are  included  in  the 
new  Structural  Funds  programmes.  In  line  with  the  Community  Strategic  Guidelines  for 
Cohesion, 2007-2013, support for programmes aimed at modernisation of labour markets and 

14 
15 

16 

In the Communication on Better Regulation for Growth and Jobs 
“Work Programme on the Objectives of Education and Training Systems” adopted by the Council and 
the Commission on 14 February 2002; see also the “Commission’s Action Plan on Skills and Mobility” 
- COM(2002) 72. 
“Communication on Restructuring and Employment” - COM(2005) 120. 

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anticipation  of  gradual  changes  throughout  the  Union  in  sectors  for  which  structural 
adjustment has been identified as an issue needs to be included in the new Structural Funds 
programmes,  alongside  active  measures  to  reinforce  the  economic  well-being  of  regions17. 
The  Commission  will  also  further  explore  the  issue  of  enhancing  the  co-operation  across 
regions faced with similar problems and challenges. 

An Integrated European approach to Industrial Research and Innovation (2005) 

The forthcoming Communication on Research and Innovation18 will set out a new, integrated 
approach to policies and actions in support of research and innovation, including a number of 
initiatives highly relevant for industrial sectors. The recent Communication on State Aid for 
Innovation  additionally  proposes  to  facilitate  the  granting  of  state  aid  that  tackles  market 
failures  hampering  innovation.  As  part  of  the follow up  to the Communication on Research 
and  Innovation,  a  European  Industrial  Research  and  Innovation  Monitoring  System  will  be 
established in 2006 to provide a consolidated overview and analysis of developments relevant 
to industrial research and innovation, and a conduit for stakeholder views. This will ensure the 
availability  of  industry-  and  policy-relevant  data  and  intelligence,  helping  to  anticipate  both 
barriers  and  opportunities  to  improving  research  and  innovation  investment,  and  the 
commercialisation  of  new  technologies  in  Europe.  A  High-level  Stakeholders  Group, 
including  policy-maker  representatives,  will  be  set  up  to  provide  guidance  and  feedback  on 
the focus and relevance of this activity for competitiveness.  

The  European  Technology  Platforms19,  which  have  already  demonstrated  themselves  as  an 
important  voluntary,  bottom-up  process  for  shaping  industrial  and  policy  strategies  in  well-
defined  key  technology  domains  via  their  ‘strategic  research  agendas’,  will  contribute  to 
increasing  industrial  investment  in  research  and  innovation  and  Europe's  capacity  to 
commercialise new technologies. 

4.2. 

Sector-specific initiatives 

In  addition  to  the  cross-sectoral  initiatives,  a  number  of  new  political  sector-specific 
initiatives  have  been  identified,  based  on  their  nature  or  particular  importance.  These 
initiatives take a variety of different forms. Some of these involve new high-level groups or 
policy fora, following up the successful examples of G10 Medicines, the LeaderSHIP 2015, 
and  the  CARS21  which  will  continue  to  make  an  important  contribution  in  the  future. 
Whenever  a  new  sectoral  initiative  is  proposed,  full  attention  will  be  given  to  ensuring  its 
coherence  with  other  initiatives,  particularly  the  recently  proposed  technology  platforms, 
sectoral innovation panels, and networking initiatives under the European INNOVA initiative 
and the i2010 initiative on a European Information Society for Growth and Employment. A 
full  list  of  new  and  existing  cross-sectoral  and  sector-specific  initiatives  for  all  of  the 
individual sectors is summarised in Annex 2. These include political, regulatory, or technical 
actions, depending on the nature of the issue.  

17 
18 

19 

COM(2005) 299, 5.7.2005. 
“More  Research  and  Innovation:  Investing  for  Growth  and  Employment:  A  Common  Approach”  - 
COM(2005) forthcoming.  
Report to the European Council on European Technology Platforms and Joint Technology Initiatives: 
Fostering  Public-Private  R&D  partnerships  to  boost  Europe’s  industrial  competitiveness  -  SEC(2005) 
800, 10.6.2005 

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The new initiatives the Commission will bring forward are: 

•  Pharmaceuticals Forum (first meeting in 2006) 

The pharmaceuticals strategy will be overseen by an annual Pharmaceutical Forum consisting 
of  Member  states  (at  Ministerial  level),  senior  representatives  of  industry  and  other  key 
stakeholders,  such  as  patients  and  health  professionals.  Addressing  the  fragmentation  of  the 
European  pharmaceutical  market,  work  will  focus  on  R&D  issues  and  regulatory  matters  at 
Member state level, such as the crucial issues related to pricing and relative effectiveness. 

•  Mid-Term Review of Life Sciences and Biotechnology Strategy (2006-2007) 

The life sciences and biotechnology strategy will undergo a mid-term review in 2006-2007. 
This  will  involve  closer  cooperation  with  industry  through  the  Competitiveness  in 
Biotechnology  Advisory  Group  and  a  regular  annual  triangular  dialogue  with  industry  and 
identify  problems,  propose  priorities,  and  make 
Member  states 
recommendations for actions.  

in  order 

to  help 

•  New High-Level Groups on the Chemicals Industry (2007) and the Defence Industry 

Following  the  expected  adoption  of  REACH  in  2007,  the  new  chemicals  regulatory 
framework,  it  is  proposed  to  set  up  a  High-level  Group  to  examine  how  to  enhance  the 
competitiveness  of  the  chemicals  industry.  A  further  High-level  group  will  be  set  for  the 
defence industries, examining issues such as the transfer of defence goods, procurement and 
standardization in the defense area. 

•  European Space Programme  

The  European  Space  Programme  will  be  the  common,  inclusive  and  flexible  programmatic 
basis  for  the  activities  of  European  Space  Agency,  EU  and  their  respective  Member  states. 
Work is also underway on a Communication on the Global Monitoring for Environment and 
Security (GMES) outlining how to move towards operational services in 2008. 

•  Taskforce on ICT Competitiveness (2005/2006) 

To ensure that public policy provides a supportive environment for the competitiveness of an 
evolving ICT sector, a taskforce with stakeholders’ representatives will be set up. Adding to 
the initiatives the Commission is undertaking under i201020, it will identify key obstacles to 
competitiveness  and  possible  policy  responses,  for  example  in  terms  of  better  regulation, 
skills, IPR, and standardization. The taskforce will also permit a structured dialogue to help 
mobilize  the  sector  and  to  draw  the  attention  of  Member  states  to  the  barriers  to  the 
competitiveness  of  ICT  manufacturing  in  Europe  and  to  the  obstacles  to  wide  and  effective 
take up. 

•  Mechanical Engineering Policy Dialogue (2005/2006) 

The mechanical engineering policy dialogue will analyze the future strengths and weaknesses 
of the sectors and anticipate how any weaknesses could be addressed in the longer term.  

20 

“i2010 – A European Information Society for growth and employment” - COM(2005) 229. 

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•  A  series  of  competitiveness  studies,  including  for  the  ICT,  food,  and  fashion  and  design 

industries 

These studies will analyze the trends affecting the competitiveness of industrial sectors with a 
view to deriving further proposals for concrete policies and actions where necessary. 

5. 

CONCLUSION 

This  Communication  sets  out  an  outline  of  work  for  industrial  policy  in  manufacturing 
industries  for  the  coming  years.  The  Commission  thereby  stands  by  its  commitments  in  the 
Action Programme for Growth and Employment to contribute to a strong industrial base. To 
achieve  this,  it  will  take  the  necessary  actions  to  improve  the  framework  conditions  for 
manufacturing industry and to ensure the consistency of various policy areas. The horizontal 
and sectoral initiatives outlined in this Communication are intended to complement work at 
Member  state  level  to  help  address  the  key  challenges  faced  by  the  various  sectors  of 
manufacturing industry. This approach will have to be extended through further analysis and 
proposals for concrete policies and actions as necessary. A mid-term review of the outline of 
work  will  be  undertaken  in  a  Communication  scheduled  for  2007  which  will  report  on 
progress on the work programme presented above and consider possible further extensions to 
other focuses of the economy, such as for example environmental technologies. 

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KNOWLEDGE

BETTER REGULATION

ENVIRONMENT & ENERGY 2)

TRADE

STRUCTURAL 
CHANGE

SECTOR 
SPECIFITIES

SECTORAL ACTIONS 4)

Annex 1

Industry

R&D/Inno
vation

IPR, 
Counter-
feiting

Skills

Access to 
finance for 
SMEs

Admin. 
burden/ 
Complexity 
of sectoral 
regulation

Internal 
Market

Health and 
Safety

Techn. 
Standards

Climate 
change1) Waste

Water 

Air

Intensive 
Energy 
Use

Access to 
markets

Access to 
raw 
materials

Trade 
distortions 
subsidies / 
dumping

Regulatory 
issues

e
f
i
L
d
n
a

d
o
o
F

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t
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M

n
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c
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s
a
B

Food, drink & tobacco

Cosmetics

Pharmaceuticals

Biotech

Medical devices

ICT 3)

Mechanical engineering

Electrical engineering

Motor vehicles

Aerospace

Defence industries

Shipbuilding

Textiles

Leather and leather goods

Footwear

Furniture

Non-energy extractive industries

Non-ferrous metals

Cement and lime

Ceramics

Glass

Wood & products of wood

Pulp, paper & paper products

Printing & publishing

Steel

Chemicals, rubber, and plastics  

Construction

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X 

X

X

X

X

X

X

X

X

 X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X 10)

X 10)

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

  X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X 5)

X 6)

X 7)

X 8)

X 9)

X

 X

X

X

X

 X

X

X

X

Pharmaceutical Forum

Mid-Term Review of Strategy "Life sciences and bitoechnology"

Taskforce on ICT Competitiveness

Dialogue for mechanical engineering

CARS 21 HLG

European Space programme/GMES

HLG Defence

HLG LeaderSHIP 2015

HLG (2007)

IPR

Int. Euro. Approach 
to Industrial R&I

New Legislative Simplification 
Programme

External Aspects of Competitiveness and 
Market Access

Improving Sectoral 
Skills

HLG on Competitiveness, energy, and 
environment

Structural Change

1) With regard to installations belonging to energy activities all sectors fall under the 
ETS provided the installation in question is above the capacity threshold indicated in 
Annex I of the Emisisons Trading Directive 2003(87) EC. The sectors marked in this 
table are included in the ETS for their process related CO2 emissions.

2) Many sectors will also be affected by the new legislation framework for 
chemicals (REACH) 

3) ICT: challenges are sector specific; ICT uptake is a general 
challenge for the industry. 

5) GMO

8) Access to land

6) Energy Using Products (EUP)

9) Energy and feedstock costs, logistics

4) Includes legislative  actions and/or actions involving members of the Commission

7) Financial instrument 

10)  Market surveillance

The table indicates with crosses, the cases in which a policy challenge is considered of the highest priority for each sector amongst the many relevant policy challenges. 
Hence the absence of a cross does not therefore necessarily denote that the challenge is unimportant to a sector, only that it is not considered as an issue of greatest priority.

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ANNEX 2  

SECTOR

Sectoral Actions

Horizontal Actions

Follow-up Textiles High Level Group

European Techology Platform on Textiles

Textiles & clothing

Innovation Panel for Textiles

Leather and leather goods

Study on competitiveness, economic situation, and location of production in 
textiles and clothing, footwear, leather, and furniture industries

Discussions with social partners on structural adjustment
Reduce/eliminate trade barriers for access to raw materials

Study on competitiveness, economic situation, and location of production in 
textiles and clothing, footwear, leather, and furniture industries

Discussions with social partners on structural adjustment

Footwear

Study on competitiveness, economic situation, and location of production in 
textiles and clothing, footwear, leather, and furniture industries

Furniture

Shipbuilding

Discussions with social partners on structural adjustment
European Technology Platform on Forest products

Study on competitiveness, economic situation, and location of production in 
textiles and clothing, footwear, leather, and furniture industries

HLG LeaderSHIP 2015

European Technology Platform on Shipbuilding (Waterborne)

Discussions on access to finance (within Commission and with EIB) 

OECD negotiations/possible bilaterals with China

High Level Group

Defence industries

Internal Market: measures on transfers, procurement and standardisation

Mapping of defence related industries

European Space Programme

Aerospace

Global Monitoring for Environment and Safety (GMES) initiative as the 
Community's contribution to the European Space Programme

European Technology Platform and potential Joint Technology Initiative  on 
aeronautics, air transport and air traffic management

Potential Joint Technology Initiative "GMES"

Follow-up of Boeing-Airbus WTO  dispute

Dialogue on mechnaical engineering

Mechanical Engineering

Study/competitiveness analysis (EU-10, including electrical engineering)

European Technology Platform on advanced engineering materials 

European Technology Platform Manufuture

Electrical Engineering

Study/competitiveness analysis (EU-10)

IPR and counterfeiting

Skills 

Market Access 

Restructuring

IPR and counterfeiting
Skills 

Market Access 

Restructuring

IPR and counterfeiting
Skills 

Market Access 

Restructuring
IPR and counterfeiting
Skills 

Market Access 

Restructuring

IPR and counterfeting

Restructuring 

Skills

IPR and counterfeiting

Skills 

Market Access

IPR and counterfeiting

Skills 

Market Access

Non energy extractive industries

In depth assessment of the competitiveness of the sector/ External evaluation of 
the Communication on promoting sustainable development in the  non-energy 
extractive industry

High level group on competitiveness, energy, and 
the environment

European Technology Platform on Sustainable Mineral Resources 
Communication on the impact of raw materials and energy supply on the 
competitiveness of the European metals industry

Skills
High level group on competitiveness, energy, and 
the environment

Steel

European technology platform on steel (ESTEP)

Skills

Non-ferrous metals

Remove obstacles to access to raw materials
Communication on the impact of raw materials and energy supply on the 
competitiveness of the European metals industry

High level group on competitiveness, energy, and 
the environment

Remove obstacles to access to raw materials

Skills

Cement and lime

Competitiveness analysis

High level group on competitiveness, energy, and 
the environment

Continuation of working group set up in 2004 on the future of glass and 
ceramics industries.

High level group on competitiveness, energy, and 
the environment

Ceramics

Staff working paper on competitiveness

Market Access 

IPR and counterfeiting

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SECTOR

Sectoral Actions

Horizontal Actions

Chemicals and Rubber

HLG on the competitiveness of the chemical sector
European Technology Platform on Sustainable Chemistry

High level group on competitiveness, energy, and 
the environment

Staff working paper on competitiveness

Glass

High level group on competitiveness, energy, and 
the environment

Construction & construction products

Continuation of working group set up in 2004 on the future of glass and 
ceramics industries.

Market Access 

IPR and counterfeiting 

Simplication of Construction Products Directive                                  

Simplification of legislation

European Technology platform on construction

Competitiveness assessement with stakeholders

Initiative against illegal logging ( EU FLEGT action plan)

Skills

High level group on competitiveness, energy, and 
the environment

Wood & products of wood

European Technology platform on the forest sector

Skills

Pulp, paper & paper products

Rationalisation of technical standards regarding wood products

Communication on Forest-based Industries
Remove obstacles to wood supply in various policies: biodiversity, bioenergy, 
forestry strategy

European Technology platform on the forest sector

Printing & publishing

Launch of a study on delocalisation

High level group on the competitiveness, energy, 
and the environment

High level group on the competitiveness, energy, 
and the environment

Restructuring Task Force

Skills

Skills

IPR  and counterteiting 

Restructuring 

Market Access

Market Access

IPR and counterfeiting

Market Access

IPR and counterfeiting

Simplification of legislation

Task Force on ICT Competitiveness 
Analysis of the competitiveness, strengths and weaknesses of the of ICT sector
European Technology Platform and potential Joint Technology Initiative on 
nanoelectronics
European Technology Platform and potential Joint Technology Initiative on 
"Embebbed Computing Systems"

European Technology Platform on mobile wireless communications

European Technology Platform on new electronic media

Innovation Panel for ICT

Review the ICT standardisation policy of the Commission 

Cars 21 HLG

Innovation Panel for Automotives

European Technology Platform on Road Transport
European Technology Platform and potential Joint Technology Initiative  
"Hydrogen and Fuel Cells"

Implementing actions of the 7th amendment (Directive 2003/15/EC) of the 
Cosmetics Directive
Continuation of international regulatory dialogue in Cosmetics Harmonisation 
and International Cooperation meetings 

Pharmaceutical Forum 

European Technology Platform and potential Joint Technology Initiative on 
Innovative medicines

Mid-term review of the strategy "Life sciences and biotechnology - A 
strategy for Europe" started in 2002
Comprehensive cost-benefit analysis of economic, social and environmental 
effects of biotechnology
Innovation Panel on Biotechnology

European Techology Platform on Plants for the Future

European Techology Platform on Sustainable Chemistry

Review of directive 93/42/EEC concerning medical devices

Active participation within the Global Harmonization Task Force

ICT

Automotive

Cosmetics

Pharmaceuticals

Biotechnology

Medical devices

Food, drink & tobacco

Launch of a Study on the competitiveness of the Food processing industry

Restructuring

European Techology Platform on Food for Life
Communication on the competitiveness strategy for  the food industry 
accompanied by an Action Plan 

Simplification of legislation

Market access

The sectoral actions include only studies and actions directly related to identified challenges, 
unless otherwise addressed through horizontal actions. The Integrated European Approach to 
Industrial Research and Innovation by its nature will apply across the board to all sectors.  

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