COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS An Integrated Industrial Policy for the Globalisation Era Putting Competitiveness and Sustainability at Centre Stage
Date: 2010-10-28
Institutions: European Commission
Subjects: competition, industrial policy, intellectual property, single market, sustainable development

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EUROPEAN COMMISSION 

Brussels, 28.10.2010 
COM(2010) 614 final 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

An Integrated Industrial Policy for the Globalisation Era 
Putting Competitiveness and Sustainability at Centre Stage 

SEC(2010) 1272 
 SEC(2010) 1276 

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TABLE OF CONTENTS 

Europe needs industry .................................................................................................. 3 

A Fresh Approach to Industrial Policy......................................................................... 4 

Improving framework conditions for industry............................................................. 5 

Competitiveness-proofing and implementing smart regulation................................... 5 

Improving access to finance for businesses ................................................................. 7 

Strengthening the Single Market.................................................................................. 8 

Developing the Single Market and enforcing intellectual property rights................... 8 

Competition Policy....................................................................................................... 9 

Improving infrastructure ............................................................................................ 10 

Standardisation........................................................................................................... 11 

A new industrial innovation policy ............................................................................ 12 

Industrial innovation .................................................................................................. 12 

Skills base................................................................................................................... 15 

Capitalising on globalisation...................................................................................... 16 

Trade and international regulation ............................................................................. 16 

Ensuring access to raw materials and critical products.............................................. 18 

Promoting industrial modernisation........................................................................... 19 

Resource, energy and carbon efficiency .................................................................... 19 

Structural excess capacities........................................................................................ 21 

Building on Corporate Social Responsibility............................................................. 22 

The sector-specific dimension — a targeted approach .............................................. 23 

Space: a driver for innovation and competitiveness at citizens' service .................... 24 

Sustainable mobility................................................................................................... 25 

Tackling societal challenges ...................................................................................... 26 

Re-invigorating the competitiveness of the EU through the value-chain .................. 28 

Addressing concerns of energy-intensive industries.................................................. 29 

An enhanced sectoral approach.................................................................................. 30 

Conclusions: A new EU governance for industrial policy......................................... 30 

1. 

2. 

3. 

3.1. 

3.2. 

4. 

4.1. 

4.2. 

4.3. 

4.4. 

5. 

5.1. 

5.2. 

6. 

6.1. 

6.2. 

7. 

7.1. 

7.2. 

7.3. 

8. 

8.1 

8.2. 

8.3. 

8.4. 

8.5. 

8.6 

9. 

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1. 

EUROPE NEEDS INDUSTRY 

Now more than ever, Europe needs industry and industry needs Europe. The Single Market, 
with  500  million  consumers,  220  million  workers  and  20  million  entrepreneurs,  is  a  key 
instrument in achieving a competitive industrial Europe. One out of four jobs in the private 
sector in the European Union is in manufacturing industry, and at least another one out of four 
is in associated services that depend on industry as a supplier or as a client. 80% of all private 
sector  research  and  development  efforts  are  undertaken  in  industry  –  it  is  a  driver  of 
innovation and a provider of solutions to the challenges our societies are confronted with. 

It is essential to increase productivity in manufacturing industry and associated services to 
underpin the recovery of growth and jobs, restore health and sustainability to the EU economy 
and  help  sustain  our  social  model.  Industry  is  therefore  at  centre  stage  of  the  new  growth 
model for the EU economy as outlined in the Europe 2020 Strategy.  

The  financial  and  economic  crisis  has  refocused  attention  on  the  central  importance  of  a 
strong,  competitive  and  diversified  industrial  manufacturing  value  chain  for  the  EU’s 
competitiveness  and  job-creation  potential.  This  communication  sets  out  a  strategic 
framework  for  a  new  integrated  industrial  policy  that  will  stimulate  economic  recovery  and 
jobs by ensuring a thriving world-class industrial base in the EU.  

SMEs make up some 2/3 of industry’s employment and a large share of EU industry’s growth 
and  jobs  potential  is  to  be  found  in  its  lively  and  dynamic  SMEs.  Promoting  the  creation, 
growth and internationalisation of SMEs thus has to be at the core of the new EU integrated 
industrial policy. 

In  the  last  decade  the  global  business  environment  has  changed  radically1.  This  results  in 
both  challenges  and  opportunities  for  European  industry:  industrial  policy  should  help 
industry seize these opportunities. EU industry competes with China, Brazil, India and other 
emerging economies also on high-value products. Technology, ICT and skills are becoming 
increasingly  important  for  international  competitiveness.  International  value  chains  are 
becoming  increasingly  interlinked  and  there  is  increasingly  strong  competition  for  scarce 
energy  and  raw  materials.  EU  industry  must  also  take  the  lead  in  the  transition  to  a  low-
carbon resource-efficient economy. 

There  are  reasons  to  be  confident  about  the  ability  of  EU  industry  to  overcome  these 
challenges and to continue being the motor for growth in the EU economy. Up to the onset of 
the  financial  and  economic  crisis,  European  industry  had  fared  rather  well  in  this  rapidly 
changing  environment.  It  had  successfully  maintained  its  share  of  world  trade  over  the  last 
decade in the face of stiff pressure from new competitors. Manufacturing itself accounts for 
75 %  of  exports.  Sectors  such  as  pharmaceuticals  and  engineering  developed  strongly.  The 
motor, chemicals, and aerospace industries were also expanding. Whilst the economic crisis 
initially  triggered  a  temporary  collapse  of  manufacturing  output,  a  sharp  recovery  has 
followed  as  world  trade  growth  resumed  and  as  excess  stocks  were  eliminated.  Of  course 
some sectors have been more substantially and durably affected than others. 

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DG Enterprise and Industry: ‘EU Manufacturing Industry: What are the Challenges and Opportunities 
for the Coming Years?’. 

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A  vibrant  and  highly  competitive  EU  manufacturing  sector  can  provide  the  resources 
and  many  of  the  solutions  for  the  societal  challenges  facing  the  EU,  such  as  climate 
change, health and the ageing population, and the development of a healthy, safe and secure 
society and thriving social market economy.  

The necessary transition to a more sustainable, inclusive and resource-efficient economy 
will have to be supported by both horizontal and sectoral policies at all levels and will require 
strengthened European governance and social dialogue. 

2. 

A FRESH APPROACH TO INDUSTRIAL POLICY 

This  Communication  proposes  a  fresh  approach  to  industrial  policy  that  will  put  the  EU 
economy on a dynamic growth path strengthening EU competitiveness, providing growth and 
jobs, and enabling the transition to a low-carbon and resource-efficient economy.  

An  ambitious  strategy  framework  for  a  new  industrial  competitiveness  policy  must  put  the 
competitiveness  and  sustainability  of  European  industry  at  centre  stage.  This  requires  that 
industrial policy is understood in its wider sense: 

First,  it  is  about  those  policies  that  have  an  impact  on  the  cost,  price  and  innovative 
competitiveness  of  industry  and  individual  sectors,  such  as  standardisation  or  innovation 
policies, or sectoral policies targeting e.g. the innovation performance of individual sectors. 

Second,  it  is  necessary  to  consider  the  competitiveness  effects  of  all  other  policy 
initiatives  such  as  transport,  energy,  environmental  or  social  and  consumer-protection 
policies, but also the single-market policy or trade policies. They are crucial components of 
the overall package as they can have an important influence on the cost, price and innovative 
competitiveness of industry. 

This fresh approach is characterised by:  

•  Bringing together a horizontal basis and sectoral application. The existing challenges 
require  demanding  adjustment  efforts  and  ambitious  transition  strategies  by  different 
economic sectors. All sectors are important and the Commission will continue to apply 
a  tailor  made  approach  to  all  sectors.  Where  relevant,  the  Commission  will  consider 
appropriate  measures  to  inform  consumers  and  promote  industrial  excellence  in  given 
sectors.  Coordinated,  European  policy  responses.  The  division  of  labour  across  the 
whole  globe  is  intensifying  and  the  concepts  of  national  sectors  or  industries  with  little 
interaction with other sectors or the rest of the world are becoming less relevant.  

•  The  whole  value  and  supply  chain  must  be  considered,  from  access  to  energy  and  raw 
materials to after-sale services and the recycling of materials. And some parts of this chain 
are  bound  to  be  outside  Europe;  hence  it  is  necessary  for  all  industries  to  have  a 
‘globalisation reflex’.  

•  The  Commission  will  regularly  report  on  the  EU’s  and  Member  States’ 
competitiveness  and  industrial  policies  and  performance.  As  many  of  the  relevant 
framework conditions for a competitive and sustainable industry are set at Member State 

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level,  the  monitoring  should  not  only  cover  competitiveness  performance  but  also 
competitiveness policies2. 

The success of this new industrial policy will translate directly into increased growth and jobs 
and the improved international competitiveness of Europe’s industry. Moreover resource and 
energy  use  and  greenhouse  gas  emissions  should  be  decoupled  from  output  growth  in  line 
with the overall ambitions of the Europe 2020 strategy. 

3. 

IMPROVING FRAMEWORK CONDITIONS FOR INDUSTRY 

3.1. 

Competitiveness-proofing and implementing smart regulation 

Despite a well-developed body of EU legislation and regulation, there is still significant scope 
for  better  regulation  at  the  European  and  the  national  level.  A  further  move  towards  smart 
regulation3 at all levels of regulatory intervention and across all of the different policy fields 
affecting industrial competitiveness is essential. This has two dimensions. 

First,  it  is  important  to  ensure  that  all  policy  proposals  with  a  significant  effect  on  industry 
undergo a thorough analysis for their impacts on competitiveness. Examples of such measures 
are new internal market legislation, major financial markets regulations that may affect access 
to finance, and new climate change or environmental legislation. The analysis of impacts on 
competitiveness would be carried out through the existing impact assessment process by:  

–  assessing and reporting the overall impacts of a proposal on competitiveness, including the 
investment, cost, price, and innovative implications for industry and individual sectors, as 
well  as  consumer  satisfaction  and  taking  particular  account  of  the  potential  interactions 
between a policy proposal and other existing or planned legislation and regulation; 

–  ensuring  the  transparency  of  planned  impact  assessment  work  through  the  publication  of 
roadmaps for all initiatives likely to have significant impacts, including in particular those 
on competitiveness; 

–  soliciting the opinion of businesses and other stakeholders in the preparation of significant 
legislative  initiatives  through  stakeholder  consultation  and  by  encouraging  them  to  make 
use of the roadmaps in preparing their inputs into the policy making process; 

–  continuing  to  ensure  that  all  significant  Commission  proposals  likely  to  have  significant 
effects,  including  action  plans  (and  trade  negotiation  mandates),  undergo  an  impact 
assessment and are submitted to the Impact Assessment Board. 

–  indicating  in  the  roadmaps  accompanying  the  annual  Work  Programme  which  measures 

would undergo impact  assessment. 

The  second  element  will  be  ex  post  evaluation  of  the  effects  of  legislation  on 
competitiveness.  The  systematic  evaluations  of  legislation  must  become  an  integral  part  of 
smart regulation. Evaluation of the results will lead to more responsive, evidence-based and 

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Commission  Staff  Working  Document  on  Member  States'  competitiveness  performance  and  policies 
SEC(2010)  1272.  The  key  findings  of  this  report  regarding  challenges  that  are  shared  by  many  EU 
Member States are highlighted in boxes in the text. 
COM(2010) 543 

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transparent policy-making and help to identify new opportunities for improving the quality of 
legislation, including simplification and administrative burden reduction. Since legislation in 
the  past  naturally  focussed  on  tackling  primary  objectives  (such  as  ensuring  Single  Market 
regulation,  meeting  environmental  objectives  etc.),  potential  spillovers  on  industrial 
competitiveness  and  in  particular  the  cumulative  impact  of  legislation  was  not  always  fully 
evaluated.  The  Commission  thus  intends  to  complement  evaluation  of  individual  pieces  of 
legislation  with  more  comprehensive  policy  evaluations.  These  “fitness  checks”  will  assess 
whether the regulatory framework for a policy area is fit for purpose and, if not, what should 
be  improved.  This  process  will  aim  to  reduce  excessive  burdens  and  streamline  layers  of 
legislation  built-up  over  time  by  identifying  overlaps,  gaps,  inconsistencies  and  obsolete 
measures.  The  experience  gained  with  the  simplification  of  legislation  in  the  context  of  the 
"New  approach"  for  the  Single  Market  for  goods  might  provide  valuable  insights  in  this 
respect. 

Despite substantial progress in recent years, the large majority of the Member States still face 
serious and identifiable challenges regarding smart regulation and the business environment, 
especially  for  SMEs.  Increased  and  more  systematic  efforts  need  to  be  made  by  Member 
States to reduce administrative burden, to pursue better regulation and e-government policies, 
to  apply  the  "think  small  first"  principle  and  to  simplify  support  schemes.  The  exchange  of 
best  practice  among  policy  makers  can  allow  policy  objectives  to  be  achieved  in  less 
burdensome ways. 

It is also necessary to continue to improve the business environment especially for SMEs. In 
this respect, much progress has already been made under the Lisbon Strategy and the Small 
Business  Act  adopted  by  the  Commission  in  June  20084.  However,  further  progress  is 
essential  through  sustained  application  of  the  ‘think  small  first’  principle  and  through  new 
initiatives  to  support  SMEs’  competitiveness,  such  as  access  to  eco-markets  and  eco-
innovation, and cooperation between enterprises and internationalisation. 

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The Commission will:  

•  carry  out  a  reinforced  analysis  of  the  impacts  on  industrial  competitiveness  for  all 
important  new  policy  proposals  with  significant  effects  on  industry  as  part  of  the  impact 
assessment  process,  and  engage  in  ex-post  evaluations  and  ‘fitness  checks’  of  EU 
legislation including industrial competitiveness issues (2011 onwards); 

•  review the Small Business Act in order to continue to improve the business environment for 
SMEs  and  address  emerging  issues  such  as  access  to  eco-markets  and  eco-innovation, 
cooperation between enterprises and internationalisation. (2010) 

Member States are invited to:  

•  ensure  an  assessment  of  the  impacts  on  industrial  competitiveness  of  their  own  major 

policy proposals, implement ‘fitness checks’ of their own legislation, 

•  implement  the  Small  Business  Act,  make  further  improvements  in  the  business 

environment, and ‘think small first’. 

3.2. 

Improving access to finance for businesses 

It is essential to make financial markets more resilient and efficient and to ensure that they 
have the right incentives to finance the real economy and investment, rather than engaging in 
financial market speculation. Financial market regulation must avoid jeopardising the shorter-
term financing needs of the real economy and the ability of companies to hedge risks.  

Access  to  finance  has  been  identified  by  most  Member  States  as  an  important  bottleneck 
especially for SME and innovation financing. Many countries have used the Temporary State 
Aid Framework to develop economic recovery measures. In particular, Member States have 
reinforced  export  credit,  export  insurance  and  SME  bank  loan  guarantees  schemes.  Late 
payments by the public sector still remain a problem in the majority of countries and in some 
countries there is clear scope to substantially reduce payment delays. 

In the wake of the financial and economic crisis, access to finance for businesses remains a 
major  challenge,  especially  for  SMEs.  Credit  availability  is  still  not  back  to  normal  and 
financial  markets  remain  risk  averse.  The  Commission  has  established  the  SME  Finance 
Forum  with  financial  institutions  and  business  representatives  to  assess  and  propagate  best 
practices  and  find  new  innovative  solutions  to  ensure  access  to  finance  for  businesses, 
especially SMEs.  

Modernising  Europe’s  industrial  base  and  the  infrastructure  on  which  it  relies  will  require 
substantial  new  investment,  entailing  more  private  capital  for  productive  investments,  in 
particular  through  venture  capital  markets.  This  applies  especially  to  the  financing  of  start-
ups,  dynamically  growing  firms  and  research  and  development  and  innovation  that  often 
cannot  be  financed  out  of  cash-flow.  Given  the  current  very  significant  deterioration  in  the 
state  of  public  finances  in  several  Member  States,  new  and  innovative  solutions  should  be 
explored, including schemes co-funded by EU Regional Policy and the CAP for the agri-food 
sector, in order to ensure efficient and effective financial support to help align public funding 
and incentive mechanisms with the strategic targets of the EU.  

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Large-scale  private  investment  projects  and  infrastructure  investment  also  rely  on  well-
functioning financial markets. They can attract private and public capital from outside the EU, 
including  foreign  direct  investment  from  sovereign  wealth  funds.  It  is  essential  that  such 
funds operate  in  an  open  investment  climate  and  adhere  to  certain  standards  with  regard  to 
transparency  and  governance,  in  line  with  the  best  practices  established  by  the  IMF  and 
OECD. 

The Commission will:  

•  in  line  with  the  Communication  on  next  steps  in  financial  services  reform5,  will  bring 
forward  legislation  to  ensure  that  financial  markets  become  more  resilient  and  efficient, 
whilst  ensuring  that  they  do  not  jeopardise  the  financing  needs  of  the  real  economy. 
Potential impacts on access to finance, especially for SMEs,  will be evaluated and taken 
fully into account when preparing future legislation; 

•  will  examine  whether  European  financial  instruments  can  be  refocused  in  the  next 
programming  period  post-2013  to  help  overcome  market  failures  in  financing  small 
businesses and innovation; 

Member States are invited to develop and share best practices on governmental schemes for 
access to finance (2011/12). 

4. 

STRENGTHENING THE SINGLE MARKET 

4.1. 

Developing the Single Market and enforcing intellectual property rights 

The  single  market  has  been  one  of  the  main  motors  of  economic  growth  in  the  European 
Union  over  the  last  20  years.  It  has  provided  EU  industry  with  considerable  reductions  in 
cross-border  trading  costs,  increased  competition,  and  provided  considerable  economies  of 
scale  and  scope  from  the  availability  of  a  Europe-wide  market.  Yet  a  number  of  barriers 
remain. They include divergent national rules, duplication of procedures and difficulties with 
accessing some market sectors. The Single Market Act aims to address these barriers and at 
the  same  time  to  renew  confidence  in  the  single  market.  The  confidence  of  businesses, 
workers, investors and consumers that they will all benefit from a single market that gives rise 
to a highly competitive social market economy. 

A substantial approximation of law has taken place in numerous fields of legislation relevant 
for  economic  activity.  Nevertheless,  European  industry  and  citizens  are  typically  still 
confronted with 27 very detailed different legal environments at national level, as well as the 
regional  level.  This  hampers  the  efficient  allocation  of  resources  in  Europe  and  the 
competitiveness of European industry.  It is thus  important to  screen existing  legislation and 
identify  the  scope  for  further  efficiency-enhancing 
administrative  procedures 
harmonisation. Whilst some of this work has already started, in many areas work still needs 
to be undertaken. 

to 

Business-related  services  such  as  logistics,  facility  management,  design,  marketing  and 
advertising  are  becoming  ever  more  essential  to  modern  manufacturing.  They  are  both 
essential inputs and enhance the value of products. Whilst the implementation of the Services 

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COM(2010) 301. 

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Directive has removed administrative barriers to cross-border service provision, there are still 
other  areas  where  barriers  remain  and  where  the  functioning  of  the  internal  market  for 
services needs to be improved. Industrial users of external services are thus confronted with a 
market which is heavily fragmented, non-transparent, and often lacking well-defined quality 
standards. Creating a thriving Single Market in business-related services requires these issues 
to be urgently addressed. 

Improvements in the European system of intellectual property rights are essential and long 
overdue,  especially  an  effective  EU  Patent  and  patent  litigation  system.  More  effectively 
assignment,  management,  and  use  of  intellectual  property  rights  are  the  key  to  unleash  the 
R&D  and  innovation  efforts  that  are  crucial  for  lasting  competitiveness.  Moreover,  the 
assignment of these rights must go hand in hand with effective enforcement. Counterfeiting 
and  piracy  in  the  Single  Market  and  abroad  affect  an  increasing  number  and  variety  of 
sectors  and  a  wide  range  of  individual  businesses.  The  counterfeiting  of  goods  such  as 
pharmaceuticals,  electronic  equipment  and  auto  parts  can  cause  serious  health  and  safety 
risks, as well as reducing industry profitability and the incentive to innovate. 

The Commission will:  

•  ensure the timely implementation of the Single Market Act; 

•  draw up a multi-annual EU action plan to develop EU market surveillance. Moreover, in 
cooperation with national customs and market surveillance authorities, develop guidelines 
for customs control in the area of product safety.  

•  screen  EU  legislation  in  selected  areas,  including  in  particular  the  free  movement  of 
goods,  to  identify  where  further  harmonisation  could  significantly  reduce  the  costs  of 
doing business across borders; 

•  set  up  a  High  Level  Group  on  Business  Services to examine market gaps, standards and 
innovation  and  international  trade  issues  in  industries  such  as  such  as  logistics,  facility 
management, marketing and advertising (2012); 

•  will set out its future action to enhance the enforcement of intellectual property rights in 
November  2010,  including  in  particular  an  initiative  to  strengthen  the  European 
Observatory on Counterfeiting and Piracy. 

The Council and European Parliament are invited to:  

•  adopt  urgently  the  proposals  for  an  EU  patent  and  a  unified  patent  litigation  system  to 

allow the first patents to be issued in 2014; 

•  develop  and  share  best  practices  and  materials  relating  to  market  surveillance,  customs, 
and general business support to improve the enforcement of intellectual property rights. 

4.2. 

Competition Policy 

Functioning competitive markets contribute to the competitiveness of European industries in 
several  ways.  Competition  drives  innovation  and  efficiency  gains  and  creates  the  incentives 
for  firms  to  increase  their  productivity.  By  maintaining  a  level  playing  field,  competition 
policy ensures access to the large and sophisticated EU internal market. Competitive markets 

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also  increase  the  pressure  to  realise  the  necessary  efficiency  gains  to  become  and  remain 
competitive.  

Moreover,  competition  rules  provide  specific  frameworks  to  support  the  competitiveness  of 
European  industry  and  the  transition  towards  a  more  resource-efficient  industry.  Through 
State  aid,  antitrust  and  merger  control,  the  Commission  ensures  undistorted  competition 
within the internal market. In addition, competition policy enforcement is an important tool to 
protect European firms from damaging practices for competitiveness, such as market sharing, 
capacity hoarding or prevention of cross-border activities, which lead to higher prices. This is 
in  particular  essential  for  input  markets,  such as  industry-related  services  that  are  important 
for the cost competitiveness of European industries. 

Furthermore,  by  enhancing  innovation  and  productivity,  competition  policy  is  an  efficient 
instrument  for  European  firms  to  tackle  emerging  global  competitiveness  issues,  including 
their position in international markets. In particular merger control is an essential tool to allow 
companies  to  restructure  through  mergers  so  as  to  expand  their  reach,  whilst  ensuring  that 
European industrial customers and consumers are protected against price increases and other 
anti-competitive effects. 

State  Aid  control  is  essential  role  to  avoid  distortion  in  the  Single  Market;  moreover,  the 
design  of  State  aid  rules  contributes  to  promote  the  competitiveness  of  industry  in  Europe. 
State  Aid  rules  provide  a  framework  that  directs  Member  States'  investments  to  address 
identified market failures.   

4.3. 

Improving infrastructure 

The competitiveness of European industry crucially depends on the quality and efficiency of 
the  energy,  transport  and  communication  infrastructure  services.  The  upgrading  and 
modernisation  of  these  networks  is  essential.  Transport  networks  need  to  be  improved  to 
overcome  bottlenecks  and  improve  cross-border  connexions.  Energy  networks  must  be 
upgraded and modernised to incorporate smart grids, facilitate the integration of renewables, 
ensure  a  fully  functional  internal  energy  market  and  improve  security  of  supply.  Further 
efforts  need  to  be  made  to  upgrade  infrastructure  in  the  new  Member  States  and  less-
developed  regions.  These 
the 
development  of  innovative  financing  solutions  such  as  project  bonds  and  private-public 
partnerships.  The  Digital  Agenda  flagship  initiative  illustrates  the  challenges  and  proposes 
policy  remedies  in  the  field  of  communication.  Similarly,  the  upcoming  Communication  on 
energy  infrastructure  and  the  White  paper  on  sustainable  transport  will  address  this  issue  in 
the context of energy and transport infrastructure. The European Regional Development Fund 
(ERDF) and the Cohesion Fund play a significant role in the development and upgrade of this 
infrastructure.  

improvements  will  require  massive 

investments  and 

Competition,  the  efficiency  of  public  and  private  services,  and  infrastructure  are  important 
determinants  of  industrial  competiveness  in  Member  States.  In  many  Member  States, 
increasing competition in the network industries remains a challenge. In some Member States, 
road  transport  and  energy  infrastructures  need  attention.  Lengthy  permitting  procedures  and 
public acceptance also constitute important bottlenecks to the development of infrastructure. 

Certain  European  network  services  are  often  provided  at  a  relatively  high  price.  European 
electricity  prices  are  on  average  high  by  international  standards.  Thus  there  is  a  need  for 
effective internal market implementation in the energy sector, and the recently adopted Third 

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Energy Package will be a major tool in this exercise.. A stronger enforcement of competition 
rules in the sector is necessary to reduce competition distortions such as abuses of dominant 
position by market players. Failure to address this issue would increase the risks of relocation. 

Finally,  the  different  energy,  transport  and  communication  networks  must  become  more 
integrated  to  allow  the  provision  of  new  competitive  services.  At  the  same  time,  this 
integration would also provide new sources of growth and innovation. 

The Commission will:  

•  take concrete actions to further develop an efficient internal market in road, air, rail and 
waterborne  transport  (forthcoming  White  Paper  on  Transport  Policy)  and  overcome 
transport  bottlenecks through  the upcoming revision of the TEN-T guidelines based on a 
new methodology for TEN-T planning structured around the creation of a core network; 

•  adopt  an  energy  infrastructure  package  to  support  inter  alia  the  development  of  an 
internal energy market by addressing missing infrastructure links of European significance 
and proposing the tools necessary to ensure their timely realisation; 

•  step up its efforts to liberalise EU energy markets in order to enhance competition in the 
energy  sector  and  avoid  putting  the  EU’s  manufacturing  industry  at  a  significant 
disadvantage in the global markets; 

•  develop,  together  with  the  EIB  Group,  an  infrastructure  funding  strategy  including  the 

creation of EU project bonds and fostering the use of public private partnerships. 

Member States are invited to 

•  put  particular  emphasis  on  addressing  identified  transport  bottlenecks  and  cross-border 

inter-connection of energy grids. 

•  promptly implement the Third Internal Energy Market Package. 

4.4. 

Standardisation 

One key policy for gaining economic benefits from harmonisation and economies of scale is 
standardisation, be it at European, international or at national level. Also markets themselves 
often generate factual standards through technological leadership, market agreements, and/or 
market dominance. 

European  standards  already  play  an  important  role  in  facilitating  the  market  penetration  of 
innovative  goods  and  reducing  production  costs.  A  competitive  standard-setting  process, 
whereby  various  technology  providers  compete  on  merits,  supports  industrial  policy  by 
ensuring  that  industrial  customers,  and  ultimately  consumers,  benefit  from  standards  where 
technologies  are  not  priced  at  supra  competitive  levels.  For  manufacturing  industries,  the 
overall  goal  in  the  decade  to  come  is  to  develop  a  standards  system  for  Europe  that  will 
meet the expectations of both the market players and European public authorities. This needs 
to be achieved in a rapidly changing world and society, and should preferably also promote 
European  influence  beyond  the  single  market  in  the  globalised  economy.  Europe  must  also 
take additional measures to maintain its strategic position in international standardisation. 

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Besides  this,  standards  need  to  be  adapted  to  help  European  policy  address  the  ‘big  issues’ 
such  as  climate  change,  sustainability,  ageing,  and  innovation  in  general.  Standards  need  to 
become an integral part of research and policy development from the outset. By driving the 
development of European or international standards for these newly emerging tradable goods 
and technologies (such as nanotechnology and other key enabling technologies, electric cars, 
technologies,  energy-efficient  products,  renewables,  and  other  environmental 
health 
technologies,  and  business  services)  Europe  can  create  a  competitive  advantage  for  its 
companies and facilitate trade. If standards are to play this role as an enabler of innovation, as 
described  in  the  EU  flagship  initiative  Innovation  Union,  Europe  needs  to  develop  more 
flexible methods for working with standardisers and ask them in turn to use the whole range 
of  deliverables  (specifications,  workshop  agreements)  to  support  European  policies  in  way 
that is ‘fit for purpose’. This will allow more flexible and faster development of standards in 
innovative areas.  

The efficiency and effectiveness of European standardisation must be optimised, by fostering 
stronger structures for harmonised standards, improved standard setting processes at all levels 
and  rapid  adoption  of  the  best  available  global  standards,  where  global  standard  making 
practices  are  well  established  such  as  in  the  ICT  sector.  Standards  should  not  create  an 
additional  burden,  e.g.  to  SMEs.  Instead,  they  should  lead  to  efficiency  gains  and  act  as  an 
incentive for innovation. The ultimate aim should be convergence of standards at world level. 

The Commission will: 

•  In early 2011, present through a standardisation communication and legislative proposal a 
strategy to promote  a stronger role for European standard setting in a rapidly changing 
world and society. This will include speeding up standardisation processes, inter alia the 
ICT sector, broadening the involvement of SMEs and other stakeholders, and developing 
standards  for  services.  The  Communication  will  also  examine  options  for  ensuring,  in  a 
longer  term  perspective,  that  the  standardisation  system  is  able  to  adapt  to  the  quickly 
evolving  environment  and  contribute  to  European  strategic  internal  and  external 
objectives, including through an independent review.  

5. 

A NEW INDUSTRIAL INNOVATION POLICY 

5.1. 

Industrial innovation 

Meeting  the  challenges  of  global  competition  and  increased  sustainability  requires  the 
achievement of excellence in innovation. Innovation is a key driver for productivity, increased 
energy  and  material  efficiency,  the  improved  performance  of  goods  and  services,  and  the 
generation of new markets. However, Europe is not good enough at turning its excellence in 
ideas  into  marketable  goods  and  services.  A  new  industrial  innovation  policy  is  needed  to 
encourage the much faster development and commercialisation of goods and services and to 
ensure  that  EU  firms  are  first  onto  the  market.  Without  such  innovation,  Europe’s  industry 
will  be  unable  to  compete  successfully  in  the  global  market,  both  in  technology-driven  and 
traditional industries.  

The  Innovation  Union  flagship  initiative  outlines  the  overall  approach  for  a  successful  and 
distinctive  European  innovation  model.  There  is  an  urgent  need  for  better  coordination  of 
education,  R&D  and  innovation  efforts,  more  coherence  in  science,  technology  and 
innovation cooperation with the rest of the world, a global approach to societal challenges, the 

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establishment of a level playing field for R&D and innovation, an enhanced access to finance 
and risk capital, and an appropriate focus on both competitiveness and societal challenges. 

A  key  challenge  is  to  urgently  develop  and  bring  to  market  Europe’s  research  strengths  in 
emerging  technologies.  Key  enabling  technologies6  such  as  industrial  biotechnology, 
nanotechnology,  advanced  materials,  photonics,  micro-  and  nano-electronics,  and  advanced 
manufacturing systems can provide the basis for a wide variety of new processes and goods 
and  services,  including  the  development  of  entirely  new  industries  over  the  next  decade. 
Europe has a leading position in scientific research, but the timely deployment and take-up of 
these technologies throughout EU industry, including by SMEs, needs to be ensured. Closer 
cooperation  on  technology  policies  and  programmes,  better  access  to  financing,  and 
strengthened  support  for  pilot  and  demonstration  projects  are  essential  to  accelerate  the 
development of commercial technologies. Timely internal market legislation, faster standard-
making,  addressing  consumer  concerns  early,  and  commercial  and  pre-commercial  public 
procurement are needed to create a vibrant Single Market for innovative goods and services. 
Innovation  Union  announced  a  mid-term  review  of  the  state  aid  guidelines  for  R&D  and 
innovation, clarifying which forms of innovation can be supported, including for key enabling 
technologies  and  innovations  addressing  major  societal  challenges,  and  their  best  use  by 
Member States.  

Member States with above-average innovation performance were proactive in response to the 
economic  crisis,  particularly  using  additional  temporary  measures  to  stimulate  research  and 
innovation. This was not generally the case for the countries below the EU average, indicating 
the likelihood of a widening gap in R&D and innovation performance. The need to improve 
skills  and  strengthen  the  share  of  technology  and  skill-intensive  activities  is  even  more 
important in their case. 

European industry must also strengthen its knowledge base to remain competitive, investing 
in research and innovation for a smart, sustainable and inclusive economy.  Since 2004, that 
Commission has supported the creation of European Technology Platforms to bring industry 
stakeholders together at EU level, develop a shared vision on R&D, and encourage feedback 
on  EU  policies.  Joint  Technology  Initiatives  have  been  set-up  to  further  research  at  a 
European level in areas with high innovation potential. The Commission also launched three 
Public-Private Partnerships as part of the European Economic Recovery Package: ‘Factories 
of  the  future’,  ‘Energy-efficient  buildings’  and  ‘Green  cars’,  to  support  medium  and  long-
term  research  and  development  to  respond  to  the  urgent  competitiveness  and  sustainability 
challenges  in  major  industrial  sectors.  The  Knowledge  and  Innovation  Communities  of  the 
European  Institute  of  Innovation  and  Technology  integrate  at  EU  level  the  entire 
innovation  chain  from  education  and  research  to  commercialization,  with  a  focus  on  strong 
governance, and provide role models for stimulating innovation. 

Improved  use  of  ICT  for  industrial  competitiveness,  resource  optimisation  and 
innovation  will  be  essential  for  future  competitiveness  too,  as  set  out  in  the  Europe  2020 
flagship on the Digital Agenda7. EU business is likely to face increasingly severe shortages 
of  ICT  specialists  and  advanced  ICT  users.  In  parallel,  a  more  innovative  use  of  ICT 
throughout industrial value chains needs to be encouraged to streamline business transactions, 

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for example by e-invoicing, and boost overall competitiveness through demonstration projects 
to promote the integration of enterprises, especially SMEs in global digital value chains.  

For effective innovation policy, we need better insight into sectoral innovation performance 
and  future  potential.  The  Commission’s  Sectoral  Innovation  Watch  has  identified  key 
challenges  in  a  number  of  sectors  and  illustrated  major  differences  between  countries  and 
sectors.  It  is  essential  to  improve  the  design  of  EU  policy  instruments  to  support  structural 
change  and  innovation,  especially  in  mature  industries.  Moreover,  closer  cross-sectoral 
cooperation  can  boost  creativity  and  innovation  in  companies.  This  requires  companies  to 
look beyond their own sectors, so new mechanisms are needed to ensure the cross-fertilisation 
of ideas and business models. The potential for these contacts between different sectors needs 
to be further explored and translated into policy responses. 

Clusters  and  networks  improve  industrial  competitiveness  and  innovation  by  bringing 
together  resources  and  expertise,  and  promoting  cooperation  among  businesses,  public 
authorities  and  universities.  Regional,  national  and  EU  cluster  policies  should  aim  to 
overcome existing market failures and funding gaps, especially to supply the bridge between 
companies and research institutions. The EU's Regional Policy and the research Framework 
Programmes  assist  regions  to  adopt  ‘smart  specialisation  strategies’  to  strengthen  their 
competitiveness  through  developing  innovation  niches.  Building  upon  existing  successes, 
there is a need to develop more globally competitive clusters and networks for both traditional 
and R&D and innovation clusters. Through local clusters that are connected Europe-wide, a 
critical mass can be achieved for R&D and innovation, skills, funding, the cross-fertilisation 
of  ideas  and  entrepreneurial  initiatives.  However,  the  various  cluster  initiative  need  to  be 
consolidated and streamlined. 

The  current  community  framework  for  State  Aid  for  Research  and  Development  and 
Innovation provides a bonus in aid intensities for collaborative R&D and innovation projects, 
i.e. projects are carried out in at least 2 Member States or involving collaboration with SMEs. 
It also allows Member States to notify aid to promote the execution of important projects of 
common  European  interest  under  Article  107(3)(b)  TFEU.  Member  States  could  be 
encouraged to make use of this instrument.  

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The Commission will: 

•  launch  an  initiative  to  promote  the  wide  and  timely  deployment,  take-up  and 

commercialisation of competitive Key Enabling Technologies; 

•  promote  industrial  research,  development  and  innovation  on  advanced  manufacturing 
technologies, building on the ‘Factories for the Future’ initiative, in order to facilitate the 
modernisation  of the EU industrial base and  providing a response to  societal challenges 
like energy efficiency, climate change and resource scarcity; 

•  promote initiatives bringing together higher education and businesses to improve Europe's 
highly  skilled  workforce,  such  as  an  e-skills  initiative  focused  on  advanced  ICT  users  in 
industry,  and  the  Universities-Business  Forum  pilot  action  funding  Knowledge  Alliances 
between universities and businesses; 

•  promote  new  business  concepts  and  related  manufacturing  technologies  focused  on  the 
development of sustainable, user-driven design-based products in the textile and clothing 
sector as well as other large consumer markets; 

•  develop  policy  approaches  to  foster  the  potential  for  greater  cross-fertilisation  between 

sectors, including traditional manufacturing sectors and SMEs; 

•  present a new Strategy for globally competitive Clusters and Networks including specific 
action  to  promote  globally  competitive  clusters  and  networks  in  both  traditional  and 
emerging industries (2011);  

•  encourage the parallel notification of Aid to cross-border collaborative R&D&I projects . 

Member States are invited to: 

•  foster  closer  cooperation  between  policies  for  key  enabling  technologies  to  maximise 

synergies and complementarities in technology deployment; 

•  promote  ‘smart  specialisation’  through  EU  Regional  policies  to  develop  clusters  and 

improve the innovation performance of regions . 

5.2. 

Skills base 

Modernising Europe’s skills base will be one of the main aims of the flagship initiative ‘An 
Agenda for new skills and jobs’.  It will help support Europe's industrial base by proposing 
action to improve the functioning of our labour markets and to ensure our workforce has the 
right skills. Although there is high unemployment, European industry is still struggling to find 
employees  possessing  the  skills  needed  to  fill  their  vacancies.  These  skills  mismatches  are 
projected to increase once the shrinking of the active labour force due to demographic change 
is taken into account. Modernising industrial structures will call for new skills, new working 
conditions, and more frequent career shifts. Workers need support to manage these processes 
successfully  through  flexicurity  in  lifelong  learning.  Closer  coordination  between  national, 
regional and local governments with a strong involvement of the social partners is necessary. 
The  role  of  the  European  Social  Fund  must  be  reinforced  to  support  the  implementation  of 
active  labour  market  policies  and  better  matching  between  workers  and  jobs.  Close 
coordination  between  the  public  sector  and  industrial  partners  is  needed  in  education  and 

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training policies. In particular, it is essential to increase the number and quality of science, 
technology,  engineering  and  maths  graduates.  The  number  of  medium-skilled  workers  also 
needs  to  match  the  demands  from  fast-growing  industries  such  as  the  environmental  and 
energy  sectors.  EU-level  policies  can  have  significant  added  value,  particularly  through 
helping to share information and best practice.  

The Commission will:  

•  encourage  the  networking  of  Member  State  industry,  education  and  employment 
authorities to share information and best practice on labour markets and skill strategies; 

•  propose  guidance  principles  on  framework  conditions  for  job  creation,  including  on 
investment in the development of graduates in science, technology, engineering and maths. 

Member States are invited to: 

•  increase their usage of the European Social Fund for skills upgrading and restructuring. 

6. 

CAPITALISING ON GLOBALISATION  

6.1. 

Trade and international regulation 

Successful trade liberalisation through, inter alia, multi- and bilateral agreements and falling 
transport and communication costs have helped create a vibrant global marketplace and rapid 
growth in new markets for EU exports. The newly emerging economic heavyweights such as 
China, India and Brazil are rapidly bridging the still existing productivity and innovation 
gap  with  the  industrialised  world.  Hence  the  need  for  industry  to  continue  to  benefit  from 
those market opportunities through transforming and modernising to maintain its competitive 
advantage.  Clear  benefits  have  been  derived  for  EU  industry  from  these  new  trends  in  the 
post-crisis  upturn,  when  emerging  markets  have  provided  for  significant  growth.  The 
‘Communication on Trade Growth and World Affairs’8  sets out the Commission’s new 
trade policy approach as part of the Europe 2020 strategy 

Particular  efforts  should  also  be  made  to  ensure  that  this  rising  competitive  pressure  from 
emerging  economies  is  not  based  on  growth  strategies  relying  heavily  on  protectionist 
measures to promote exports and discriminate against imports. Indeed, tendencies have been 
observed  towards  the  undue  use  of  non-tariff  barriers  to  trade,  hidden  subsidies, 
discriminatory public procurement, forced technology transfer, managed exchange rates, and 
poor enforcement of social and environmental protection. It is therefore essential to continue 
to  monitor  closely  such  state  interventions  that  distort  competition  and  to  take  appropriate 
action. The EU market access strategy is an important tool to address the different kinds of 
trade barriers which European companies are facing in third country markets. In reinforcing 
the  strategy,  particular  attention  will  have  to  be  paid  to  areas  such  as  public  procurement, 
foreign  direct  investment,  and  restrictions  on  raw  material  exports.  Likewise,  effective 
protection  and  enforcement  of  intellectual  property  rights  and  geographical  indications  in 
third countries are crucial to enable European businesses, notably those in innovative sectors, 
to enter and compete in third markets. 

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Trade defence instruments are also essential for the protection of EU industry from unfair 
practices.  They  need  to  be  made  more  accessible,  especially  for  SMEs.  More  generally, 
continued  efforts  should  be  paid  to  implement,  monitor  and  enforce  multi-  and  bilateral 
agreements concluded. 

Success in the intensively interacting new world economy depends on enterprises’ ability to 
access  international  markets  and  exploit  global  value  chains.  The  current  multilateral 
rules-based  system  which  offers  reliable  prospects  of  effective  enforcement  and  dispute 
settlement would greatly facilitate this; as would closer global convergence of regulation and 
standards  for  traded  goods  and  services  that  should  be  extended  and  strengthened. 
Furthermore  this  multilateral  system  should  be  complemented  by  regional  and  bilateral 
agreements. New areas including competition policy, state aid and foreign direct investment 
should be addressed.  

In  the  regulatory  domain,  a  particularly  urgent  need  is  for  globally  compatible  rules  and 
standards  for  newly  emerging  tradable  goods,  services  and  technologies.  Rules  and 
standard-setting should be based on better regulation principles and thus be as cost-effective 
as  possible.  The  ultimate  aim  is  the  convergence  of  rules  and  standards  at  the  international 
level whenever possible. Where this cannot be achieved, the mechanisms offered by the WTO 
agreement  on  Technical  Barriers  to  Trade  (TBT)  should  be  used.  The  EU  will  also  seek  to 
prevent  the  creation  of  new  non-tariff  barriers  and  promote  good  regulatory  practice  in  its 
bilateral regulatory dialogues with major partners.  

In  case  where  European  legislation  imposes  traceability  requirements,  they  contribute  to 
product quality and safety and apply to imports as well goods produced in the EU. In some 
cases, the EU may find it worthwhile to propose their extension to our trading partners.  The 
EU  has  a  particular  interest  in  seeking  closer  economic  integration  with  neighbouring 
countries  through  the  European  Neighbourhood  Policy.  Agreements  on  Conformity 
Assessment and Acceptance of industrial products (ACAAs) based on alignment with the EU 
can  ensure  the  free  movement  of  goods.  The  closer  economic  integration  of  neighbouring 
countries in certain Single Market areas can provide concrete advantages for both parties and 
can strengthen trade and investment. The EU will also target a greater share of funds available 
under the European Neighbourhood and Partnership Instrument to capacity building and good 
economic governance in partner countries. 

Internationalisation of value and supply chains offers significant growth potential, but it also 
poses particular challenges for SMEs. Only 25% of SMEs currently export to markets inside 
and  outside  the  EU9.  To  help  SMEs  go  international,  they  need  the  right  information  and 
support in markets outside the EU. Some Member States and business organisations already 
provide  this  kind  of  support,  but  there  remains  substantial  potential  for  greater  synergies 
between the efforts of the EU, Member States and these organisations. The Enterprise Europe 
Network  has  already  played  an  important  role  in  mentoring  and  facilitating  international 
business  cooperation,  especially  with  the  Mediterranean  countries,  and  its  international 
assistance to SMEs should be further developed. Building on the experience with the China 
SME  IPR  Helpdesk,  the  Commission  will  further  reinforce  support  for  the  protection  and 
enforcement  of  intellectual  property  rights  with  special  attention  to  other  key  third-country 
markets. As regards trade defence investigations, the special situation of SMEs - as importers, 
users, complainants or exporters - will be addressed. 

9 

DG Enterprise and Industry ‘Internationalisation of SMEs’, 2010. 

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The Commission will:  

•  once negotiations are concluded, prepare for the Council and the Parliament an economic 

analysis of consequences of the proposed deal for the EU, prior to signature;  

•  make an annual report on trade and investment barriers for the Spring European Council, 
including  ‘beyond  the  borders’  measures  and  industrial  policy  practices  and  identifying 
priorities for market access strategy and enforcement action. (2011 onwards); 

•  develop  international  regulatory  co-operation  initiatives  with  a  view  to  urge  our  major 
trading  partners  to  adhere  to  any  new  or  existing  international  scheme  and  to  develop 
globally compatible rules and standards. In that respect, our trade agreements should also 
promote the use by our partners of international rules and standards, as well as of trade-
friendly conformity assessment procedures.  

•  seek closer economic integration with neighbouring countries by extending the benefits of 
the  European  Single  Market  in  selected  areas  through  the  European  Neighbourhood 
Policy,  and  give  greater  priority  to  market  institutions  and  economic  governance  in 
relations  with  development  partners  (Communication  on  trade  and  development  in  early 
2011); 

•  present a strategy for support for the internationalisation of SMEs with concrete measures 

building on policies set out in the Small Business Act (Communication in 2011); 

•  integrate  traceability  requirements  for  third  country  in  Commission  proposals  where 

relevant 

The Commission invites the Council and the Parliament to: 

•  accelerate the adoption of the Commission’s proposal on the indication of the country of 

origin of certain products imported from third countries. 

6.2. 

Ensuring access to raw materials and critical products  

Secure, affordable, reliable and undistorted access to raw materials is essential for industrial 
competitiveness,  innovation,  and  jobs.  Security  of  supply  is  less  a  question  of  import 
dependency,  but  rather  of  the  degree  of  diversification  of  suppliers  and  their  reliability, 
wherever  they  are  located.  Well-functioning  global  markets  for  raw  materials  and 
commodities  are  essential  for  an  efficient  allocation  of  global  resources  and  to  enable 
technological  progress.  However,  short-term  movements  in  these  prices  necessitate  hedging 
of substantive risks, while at the same time the rise of the emerging market countries in the 
world economy has increased global competition for such resources.  

To address these issues, the Commission notably launched the  Raw Materials Initiative in 
November  2008  and  a  detailed  analysis  of  the  demand  and  potential  scarcity  of  key  raw 
materials in June 2010. These initiatives have prepared the ground for an EU strategy on raw 
materials underlining the concept of “added value chain” which will continue to follow the 3-
pillar strategy to: (i) ensure a level playing field in access to resources in third countries; (ii) 
foster  sustainable  supply  of  raw  materials  from  European  sources,  and  (iii)  reduce 
consumption  of  primary  raw  materials  by  increasing  resource  efficiency  and  promoting 
recycling.  

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New  rules  and  agreements  on  sustainable  international  management  and  access  to  raw 
materials  are  needed  at  multilateral  level,  as  well  as  policy  actions  to  address  export 
restrictions  and  unjustified  constraints  on  exploration  and  extraction  by  third  countries,  in 
particular  strategic  partner  countries  and  Africa.  Vigorous  application  of  the  EU's  existing 
competition rules in cases of anti-competitive agreements or market concentration threatening 
to endanger access to raw materials is also essential. There is also a need to promote mining 
and processing technologies leading also to resource efficiency, recycling, substitution and 
the increased use of renewable raw materials to reduce the critical dependence of the EU on 
primary  raw  materials,  and  improve  the  environmental  balance,  inter  alia  through  increased 
use of secondary raw materials (scrap), end of life electronic equipment and vehicles exported 
to  third  countries;  enforcement  of  the  Waste  Shipment  Regulation;  reuse  or  recycling  of 
products and materials based on agreed minimum standards. The framework conditions for a 
sustainable  supply  and  management  of  raw  materials  within  the  EU  also  need  to  be 
addressed through boosting the efficient use of EU's own resources, recycling and increased 
substitution. Increased  investment  in discovery of new  EU  deposits of  raw  materials  can  be 
promoted through the exchange of best practices in the area of land use and maritime spatial 
planning  and  administrative  conditions  for  exploration  and  extraction,  while  ensuring 
sustainability. Promotion of investment in new and more efficient exploration and extractive 
technologies  is  also  essential.  In  sectors  such  as  food  sector,  competitive  local  sourcing  of 
sustainable raw materials is addressed by EU agricultural policy. 

The Commission will: 

•  present  a  Strategy  on  Raw  Materials  including  proposals  on  fostering  better  framework 
conditions  for  sustainable  supplies  of  domestic  primary  raw  materials,  increased 
recycling, and finding substitutes for other raw materials (2010). 

7. 

PROMOTING INDUSTRIAL MODERNISATION 

7.1. 

Resource, energy and carbon efficiency  

EU  industry  must  speed  up  its  transition  to  the  low-carbon,  resource-  and  energy-efficient 
economy.  Combating  climate  change  and  increasing  resource  efficiency  can  achieve  cost 
reductions and reduced environmental impact from enhanced resource and energy use. These 
are increasingly essential both to deliver sustainable growth and jobs and to gain competitive 
advantage  in  response  to  increasing  global  competition  for  resource  and  environmental 
constraints.  The  forthcoming  flagship  initiative  on  Transition  to  a  Resource  Efficient 
Europe  will  provide  a  framework  to  deliver  a  smooth  and  ambitious  decoupling  of  carbon 
and resource use from economic growth. Likewise, there is a need to develop specific longer-
term  measures  on  energy  efficiency  in  order  to  tap  the  energy  savings  potentials  in  the 
industrial,  energy  and  transport  systems.  The  EU  roadmap  for  a  low-carbon  economy  by 
2050, including milestones for 2030, will highlight pathways for technological improvements 
and  structural  change  in  the  industrial,  energy  and  transport  systems  that  are  critical  to 
stimulate innovation, boost growth and job creation, and strengthen the EU's energy security. 

A concrete and realistic longer-term strategy is thus needed to stimulate carbon and energy- 
and  resource-efficient  investment  throughout  industry.  Private  and  public  research  and 
innovation  are  needed,  along  with  smart  and  market-based  environmental  regulation 
effectively and equitably implemented across the Single Market. New regulation must reflect 
the need for transition to a resource-efficient economy whilst taking into account the potential 

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short-term costs or burdens. Carbon leakage and other competitive disadvantages arising for 
EU  industry  must  be  avoided  to  avert  a  delocalisation  of  production  and  jobs  outside  the 
European  Union.  In  the  context  of  international  climate  negotiations,  the  EU  is  currently 
working  on  improving  the  scale  and  effectiveness  of  the  international  carbon  markets,  and 
stimulating  international  investment  flows  for  R&D  and  innovation  in  low  carbon 
technologies. Moreover, the EU is developing policies that can reduce the cost of long-term 
climate  and  energy  strategies  through  large-scale  carbon  capture  and  storage  and  other 
innovative renewable projects. 

In the framework of National Energy Efficiency Plans, all Member states have implemented 
actions to assist enterprises in reducing their energy intensity. Some Member States have also 
developed  concrete  action  plans  to  encourage  eco-technologies  and/or  improve  the 
environmental performance of specific industries. However, only a few Member States have 
yet developed more general resource efficiency strategies.  

In  a  world  of  smart  regulation,  economy-wide  resource  efficiency  can  boost  EU  industrial 
competitiveness  whilst  delivering  on  EU  environmental  objectives.  Legislation  must  be 
predictable  and  proportionate  and  provide  the  legal  certainty  required  for  longer-term 
investments. New policies should encourage innovation and take into account life-cycle cost-
effectiveness,  investment  lives,  and  purchase  decisions  of  enterprises  and  consumers.  With 
use  of  forward-looking  smart  regulation,  achievement  of  environmental  ambitions  and 
industrial policy goals can be mutually consistent. Environmental and industrial policies must 
go hand in hand. A careful assessment of the economic and social impacts of environmental 
legislation  and  other  costs  and  benefits  to  society  are    part  of  the  Impact  Assessment 
accompanying  Commission  regulatory  initiatives  and  should  also  be  done  at  Member  State 
level. In this  way, environmental regulation can  act  as  a  beneficial  lever  for  innovation  and 
industrial development, rather than as an impediment. 

In this context, the EU’s sustainable industrial policy focuses explicitly on opportunities for 
sustainable growth and job creation while making the transition to more resource efficiency 
across  industry  as  a  whole.  Other  policies  include  product  policy  through  a  life-cycle 
perspective  that  goes  beyond  the  production  phase;  the  use  of  instruments  such  as  the  Eco-
design  directive,  the  energy  labelling  of  household  appliances  and  the  European  Ecolabel. 
Encouraging  voluntary  industry  initiatives  and  wider  adoption  of  best  environmental 
management  practices  through  the  European  Eco-Management  and  Audit  Scheme  (EMAS) 
and ISO14001 schemes are also essential. Close monitoring of progress will help to measure 
progress and identify delivery gaps. 

In order to develop the EU market for environmental goods and services, the EU needs to 
ensure a fair and transparent  internal market that rewards innovation, with improvements to 
standardisation  and  certification  schemes,  a  more  harmonised  implementation  of  the  acquis 
(e.g.  Waste  Framework  Directive),  wider  use  of  green  public  procurement  and  the 
development of the eco-design directive and inclusion in Free Trade Agreements.  

Successfully negotiating the constraints of global resource scarcity, including environmental 
constraints will require numerous breakthrough technologies to successfully penetrate global 
markets. However, incremental but massively deployed innovation will have to deliver in the 
short  to  medium  run.  In  particular,  an  innovative  approach  needs  to  be  taken  to 
environmental  technologies  on  similar  lines  to  that  adopted  for  key  enabling  technologies 
and  the  Strategic  Energy  Technologies  (SET)  plan.  The  future  Eco-innovation  Action  Plan 
will  put  in  place  the  tools  to  identify  development  and  deployment  requirements  for  key 

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environmental  technologies,  enhance  coordination  and  cooperation  between  the  EU  and 
Member States in developing and deploying these technologies and generate awareness of the 
potential  of  new  technologies.  Barriers  to  cross-border  enterprise  activity  would  need  to  be 
addressed  by  establishing  an  appropriate  regulatory  framework  and  ensuring  more  uniform 
implementation of the existing regulatory frameworks. 

The Commission will: 

•  in line with the forthcoming EU roadmap for a low carbon economy by 2050, develop the 
long-term  sectoral  industrial  strategies  and  policies  needed  to  assist  the  transition  to  a 
low-carbon, resource and energy-efficient economy; 

•  monitor  sustainable  competitiveness,  including  EU  industry’s  voluntary  initiatives  aimed 

at resource sustainability; 

•  review  the  Sustainable  Consumption  and  Production  /  Sustainable  Industrial  Policy  and 

consider the possible extension of the Eco-design Directive to new products (2012); 

•  launch an Eco-innovation Action Plan to ensure the commercialisation and deployment of 

key environmental technologies. 

Member States are invited to:  

•  foster  closer  coordination  between  policies  for  environmental  technologies  to  maximise 
synergies and complementarities in technology deployment, including policies for boosting 
demand, in particular in eco-innovation. 

7.2. 

Structural excess capacities  

An  important  priority  of  the  new  industrial  policy  must  be  to  help  EU  industry  to  recover 
swiftly and to make the necessary adjustments after the economic crisis. In particular, the 
emergence of structural excess capacities in some industries requires tailor-made responses at 
company  level,  ranging  from  engaging  in  new  business  models  and  products  to  definite 
market exit. Companies and social partners have the primary responsibility for restructuring to 
ensure  their  future  competitiveness  and  viability,  since  experience  has  shown  that 
competitive-driven structural adaptation is quickest and most efficient.  

The  Rescue  and  Restructuring  aid  guidelines  allow  for  aid  only  if  it  results  in  restructuring 
capable  of  restoring  the  long-term  viability  of  the  beneficiaries  without  further  support, 
ensures  appropriate  contribution  of  the  beneficiary  to  the  costs  of  restructuring,  and  is 
accompanied  by  measures  to  address  the  resulting  competition  distortion.  Lessons  learnt  in 
the crisis will feed into the revision of the Rescue and Restructuring Aid Guidelines. 

Member  States  also  need  to  support  reallocation  of  labour,  within  the  framework  of  a 
flexicurity system. Better anticipating and managing restructuring would help employees 
and  companies  to  adapt  to  transitions  imposed  by  excess  capacities  as  well  as  by 
modernisation and structural adjustment. Existing State aid rules offer Member States ample 
possibilities  to  use  state  aid  to  accompany  change,  e.g.  through  training  or  R&D&I  aid,  or 
support to risk capital. At the European level, the Regional and Cohesion Funds can stimulate 
investment  and  innovation  to  strengthen  the  resilience  of  local  economies.  The  ERDF  has 
increasingly focused on investments facilitating shifts up the value chain by both hi-tech and 

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traditional  sectors  through  investments  in  R&D,  innovation  and  ICT,  whilst  the  Cohesion 
Fund invests in particular in EU transport priorities which can improve physical accessibility 
as  well  as  environmental  infrastructure  in  the  less-developed  Member  States.  Such 
investments  facilitate  regions  to  develop  their  own  innovation  niches  based  on  smart 
specialisation.  

An expanded European Globalisation Adjustment Fund could also improve the ability of 
Member States and regions to manage the fall-out of the crisis and help provide retraining and 
other active labour market measures for redundant workers.  

Management and workers’ representatives are the key players to agree on restructuring 
strategies at the company level. Policy interventions should accompany such restructuring to 
avoid  social  hardship  and  promote  new  skills  and  jobs,  thus  avoiding  mass  layoffs  and  the 
decline  of  entire  regions  or  the  delocalisation  of  entire  industries  and  facilitating  economic 
reconversion and professional transitions. The ETUC, Business Europe, CEEP and UEAPME 
agreed  on  ‘Orientations  for  reference  in  managing  change  and  its  social  consequences’  in 
2003.  These  orientations  need  to  be  revisited  to  integrate  knowledge  subsequently 
accumulated on the best ways to anticipate and manage restructuring and to take into account 
the experience of the economic and financial crisis. Updated orientations on restructuring can 
be  very  useful  in  reinforcing  the  capacity  of  businesses  and  workforce  to  adapt  to  a  fast-
changing economic environment.  

The Commission will: 

•  review  Community  support  for  re-integrating  redundant  workers  into  new  jobs  including 
through  the  review  of  the  European  Globalisation  Adjustment  Fund  (EGAF)  regulation 
(2011); 

•  launch  a  consultation  of  European  social  partners  on  a  European  framework  for 

restructuring. (2011); 

•  review the Rescue and Restructuring Guidelines for State Aid (2012); 

•  support  Member  States  and  regions  through  Cohesion  Policy  in  the  diversification  of 
existing industries, upgrading industrial capacity, stimulating investment and innovation to 
re-develop and strengthen the resilience of local economies; 

•  present  proposals  to  accelerate  the  implementation  and  improve  the  focus  of  European 
Structural  Funds  through  the  Fifth  Cohesion  Report  (2010)  and  in  the  new  Cohesion 
policy regulatory framework (2011).  

7.3. 

Building on Corporate Social Responsibility 

Corporate  social  responsibility  can  contribute  to  the  competitiveness  and  sustainability 
performance of European industry. It helps to strengthen trust in business, which is important 
for the creation of a business environment in which industry can thrive. The financial crisis 
showed a new approach is needed to the balance between short-term profit maximisation 
and  sustainable  value  creation  in  the  longer  run.  European  companies  need  to  take  into 
account their contribution to sustainable growth and job creation and consider the interests of 
the employees and citizens affected by business decisions. Sound business ethics and values 
can contribute to the recovery from the crisis. 

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Corporate  social  responsibility  can  position  European  companies  as  leaders  in  markets  that 
are  putting  an  increasing  premium  on  social  and  environmental  issues.  EU  industry  has 
already launched a number of significant initiatives aimed at resource sustainability, including 
the chemical industry’s Responsible Care initiative, the Global e-sustainability initiative, and 
the Materials Stewardship Policy of the International Council on Mining and Metals.   

Encouraging  sustainable  growth  implies  giving  consumers  the  information  they  require  to 
purchase environmentally friendly goods and services. This should include information on the 
ecological  footprint  of  products  and  services.  The  Commission  will  work  on  a  common 
European  methodology  for  assessing  environmental  impacts  associated  with  consumer 
products, based on life-cycle analysis and objective criteria.  

The Commission will: 

•  put forward a new policy initiative on corporate social responsibility addressing emerging 
issues  such  as  business  and  human  rights,  and  company  disclosure  of  environmental, 
social, employment-related, and governance information (2011); 

•  monitor  EU  industry’s  voluntary  initiatives  aimed  at  resource  sustainability.  (2011 

onwards); 

•  examine  before  2012  the  possibility  of  an  initiative  on  the  Ecological  Footprint  of 

Products.  

8. 

THE SECTOR-SPECIFIC DIMENSION — A TARGETED APPROACH 

As all sectors are important, the Commission will continue to apply a targeted approach to all 
sectors. Some sector-specific initiatives could be taken for certain types of sectors:  

•  a sectoral industrial policy for space based on  the new competences given by the Lisbon 

Treaty. 

•  Motor vehicles and transport equipment industries will play a major role in developing the 

solutions for sustainable mobility. 

•  Sectors  which  are  most  promising  in  meeting  the  other  future  societal  challenges  of 
climate change,  health,  and  security (for example healthcare, environmental goods  and 
technologies, energy supply industries, and security industries). 

•  Sectors  where  value-chain  considerations  are  particularly  important  (for  example 
chemicals,  engineering,  transport-equipment  manufacturers,  agro-food,  and  business 
services). 

•  Energy-intensive  sectors  exposed  to  international  competition  need  the  advantages  of 
competitive energy markets, which offer favourable framework conditions that will enable 
them to prosper in the EU (access to energy and raw materials at competitive prices, level 
playing field on the global market, etc.). 

The theme of all the following initiatives and demonstration projects is to promote industrial 
innovation.  Indeed,  sustained  competitiveness  of  European  industry  and  all  its  sectors  can 
only be achieved if industry improves its ability to innovate. In this context, innovation should 

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be understood in its wider sense, i.e. going beyond technology and also comprising business 
and  organisational  models.  All  sectors  must  improve  their  innovation  performance,  be  they 
traditional or low-tech sectors, or new or high-tech sectors. This ability should be supported 
by policy in cases where the market alone does not deliver. These actions will be carried out 
by making use of available financial resources. 

8.1 

Space: a driver for innovation and competitiveness at citizens' service 

The space manufacturing industry is a high-tech, high-risk and investment intensive industry. 
It  is  highly  subsidized  in  all  space-faring  nations  where  it  mainly  depends  on  institutional 
programmes. Europe already has a large, hi-tech space industry that supplies a significant part 
of  the  world's  commercial  requirements  for  satellite  manufacture,  launch  and  services. 
European  industry  delivers  systems  and  services  in  the  fields  of  telecommunications, 
navigation and Earth observation which guarantee security for the EU, address major societal 
challenges such as climate change, and boost the competiveness of European industries.  

In an increasingly competitive environment, with the emergence of new space powers, Europe 
needs  to  build  on  its  achievements  to  foster  a  solid  and  balanced  industrial  base.  The 
European  space  industrial  policy  should  cover  the  whole  supply  chain,  including  SMEs,  to 
ensure greater international competitiveness and non-dependence in strategic sectors (such as 
launchers)  and  the    development  of  a  market  for  space  products  and  services,  notably  new 
satellite-enabled services from GNSS (Global Navigation Satellite Systems), GMES (Global 
Monitoring for Environment and Security) and satellite communications infrastructures. 

Space policy is driven by three main imperatives: societal (the benefits for citizens well being 
that  can  be  derived  from  space  exploration  and  use),  economic  (space  generates  knowledge 
and  is  a  driver  for  innovation)  and  strategic  (space  contributes  to  the  European  Union's 
projection  as  a  global  actor).  Article  189  of  the  Treaty  on  the  Functioning  of  the  European 
Union  confers  a  shared  competence  to  the  Union  in  space  policy  with  the  specific  aim  of 
promoting 
the 
implementation of its policies.   

industrial  competitiveness  and 

technical  progress, 

scientific  and 

To  achieve  these  objectives  while  capitalising  on  investments  made  and  maximising  space 
innovation  potential,  the  Commission  will  pursue  the  achievement  of  Galileo/EGNOS 
(European Geostationary Navigation Overlay System) and GMES and space and security.  

Galileo/EGNOS  and  GMES  are  well  established  programmes  whose  completion  and 
continuation  beyond  2013  will  be  the  subject  of  legislative  proposals  in  2011  in  line  with 
overall  proposals  for  the  Multiannual  Financial  Framework.  The  Commission  remains 
committed to complete the Galileo constellation and put in place a new governance scheme.  

GMES is the main space contribution of the Union to tackle climate change. It is therefore 
necessary to complete the space observation infrastructures that are designed for land, ocean, 
atmosphere and air quality monitoring, as well as emergency response and security, in order 
to deliver on the "climate change" service of GMES. 

Space applications are an essential tool for the security of the citizen. These security needs 
may  be  covered  by  either  national  capacities  used  in  a  coordinated  manner  or  by  the 
development  of  common  capacities.  The  Union  must  reinforce  its  partnership  with  Member 
States  in  order  to  ensure  that  security  missions  do  not  depend  on  third  countries'  assets  and 
guarantee the continuity of missions undertaken by Member States themselves.  

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Space infrastructures are critical infrastructures, which contribute to citizens' security and well 
being. They must be protected against risks such as those posed by debris or solar radiation. 
Member States' existing protection capacities must be developed so as to establish a reliable 
European space situational awareness system. The Union should define the organisation and 
governance  of  such  a  system  taking  into  account  its  dual  nature  and  the  need  to  ensure  its 
sustainable exploitation.  

Space is an important component of the Union's research and innovation policy. Support for 
space research will be defined during the preparation of the next Framework Programme for 
Research and Technological Development.  

Satellite communications is a key space sector from both an economic and technology stand 
point. It contributes to the Digital Agenda for Europe, and notably to closing the broadband 
gap.  The  Commission  proposal  for  radio  spectrum  policy  programme  is  an  important 
milestone in this endeavour. 

In  order  to  implement  these  actions,  an  improved  governance  scheme  needs  to  be 
implemented.  Firstly,  the  European  Union  needs  to  strengthen  the  partnership  with  the 
Member States and, in line with Article 189 of the Treaty, coordinate the efforts needed for 
the exploration and exploitation of space. Secondly, the Lisbon Treaty commits the Union to 
"establish any appropriate relations with the European Space Agency". The European Union's 
growing involvement in space requires a re-evaluation of its relations with ESA and, in return, 
it requires a gradual evolution of ESA. Thirdly, greater coordination across EU programmes 
and between these and ESA and Member State programmes must be ensured. 

Due regard must be paid to international cooperation, which is key for space, including to 
its development potential, notably for Africa. 

The Commission will: 

•  propose measures in 2011 to implement the priorities of the Space policy based on Article 

189 of the TFEU;  

•  pursue a Space Industrial policy developed in close collaboration with the European Space 

Agency and Member States. 

8.2. 

Sustainable mobility  

Developing  and  deploying  clean  and  energy-efficient  vehicle  technologies  are  an 
opportunity to have a substantial impact on greenhouse gas emissions, air pollution and noise, 
and reinforce the market leadership of Europe’s automotive sector. Going beyond the strategy 
announced  in  April  201010,  substantial  financing  of  investments  in  infrastructure  will  be 
needed,  including  pilot  projects  to  demonstrate  breakthrough  technologies  in  specific  cities 
and  regions.  EU  industrial  leadership  in  key  technologies  will  need  to  be  developed, 
especially  on  battery  technologies  and  potential  replacements  for  lithium.  The  potential  for 
new types of goods and services will also need to be investigated. 

The  ELECTRA  Report  drew  attention  to  the  potential  for  the  deployment  of  rail  energy 
storage  and  automatic  train  supervision  technologies  to  substantially  increase  energy 

10 

‘A European strategy on clean and energy efficient vehicles’ - COM(2010)186, 28.4.2010. 

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efficiency,  including  through  the  hybridisation  of  diesel  traction  and  a  system  approach  for 
onboard and track-side storage systems for electrical traction. The sector would benefit from 
more  investment  in  research,  simulation  and  testing  of  technologies  aimed  at  further 
harmonisation  of  standards  within  the  EU  and  beyond.  High-speed  trains  are  a  market  with 
major  competition  from  extra-EU  competitors.  Greater  cooperation  between  European 
companies in developing high-speed trains could have advantages: this possibility needs to be 
assessed. Undistorted competition in the European market should in any case be ensured. 

The aerospace  industry and some  parts  of  the maritime  industries are highly competitive 
and  globally  successful  components  of  EU  industry.  Efforts  will  be  necessary  to  increase 
efficiency  and  reduce  environmental  impacts.  Substantial  support  is  already  available  for 
research  and  innovation  in  green  aircraft  through  the  Clean  Sky  Undertaking.  Continuous 
innovation  will  be  necessary  to  develop  greener  aircraft  and  low  emission  ships  and  to 
respond to environmental challenge. Alternative fuels, the implementation of the Single Sky 
and  further  aircraft  noise  reduction  are  high  on  the  existing  well-established  policy  agenda. 
An  important  business  opportunity  for  EU  shipbuilding  is  their  involvement  in  the 
construction and reliable operation of offshore wind platforms and necessary support vessels.  

The Commission will: 

•  propose a Clean and Energy-efficient Vehicles platform, bringing together Member States, 
industry,  and  other  stakeholders  to  ensure  infrastructure  investments,  including  pilot 
projects, and to launch research initiatives on key technologies and materials (2012); 

•  launch  a  Strategic  Transport  Technology  Plan  (2011).including  a  strategic  initiative  on 
Clean  Transport  Systems  and  an  e-mobility  package  to  enhance  the  efficiency  and  the 
safety of the transport sector; 

•  undertake  a  feasibility  study  on  demonstration  projects  on  rail  energy  storage  and  the 
hybridisation  of  diesel  traction,  enabling  demonstration  and  further  research  projects  to 
increase energy efficiency and strengthen competitiveness (call for proposals in 2012/13); 

8.3. 

Tackling societal challenges  

The EU’s pharmaceutical and healthcare related, including medical devices, industries are 
world-leading  sectors  that  play  an  essential  role  in  finding  new  medical  treatments  and 
medicines  and  improving  the  health  and  quality  of  life  of  EU  citizens,  in  particular  of  the 
ageing population. In this context, there is a need for a partnership between private and public 
sectors,  building  on  corporate  responsibility  to  enable  accelerated  access  to  medicines  and 
treatments,  and  greater  transparency,  whilst  rewarding  innovation  and  enhanced  industrial 
competitiveness.  The  Innovative  Medicines  Initiative  Joint  Undertaking  implements  such  a 
public-private  partnership  with  the  aim  to  deliver  faster  and  safer  drugs.  Furthermore,  more 
transparency  and  better  coordination  between  Member  State  pricing  and  reimbursement 
systems would help avoid unnecessary market access delays and improve the functioning of 
the internal market for medicine. Furthermore, the Commission will launch a pilot European 
Innovation Partnership on active and healthy ageing11. 

11 

COM(2010) 546. 

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The  EU  security  industry  faces  a  highly  fragmented  internal  market  and  a  weak  industrial 
base.  National  regulatory  frameworks  differ  widely  and  the  market  for  security  products  is 
highly diversified, ranging from cameras to complex scanner systems. To provide a security 
system,  manufacturers,  system  integrators,  and  service  providers  have  to  work  closely 
together  with  clients.  It  is  essential  to  develop  a  fast-track  system  for  approval  of  priority 
technologies;  to  make  substantial  further  progress  on  harmonisation,  standardisation;  to 
consider coordinated public procurement; and to accelerate research on security technologies 
including dual-use. On the latter the Commission will coordinate with the European Defence 
Agency. 

The  construction  sector  can  also  make  a  substantial  contribution  to  responding  to  climate 
change  and  other  environmental  and  societal  changes.  The  revised  Directive  on  energy 
performance in buildings sets the ambition of the transition to nearly zero energy buildings in 
Europe as of 2021, whilst the reinforcement of the energy performance requirements will set 
new standards for buildings. This is an opportunity for the construction and renovation sector.  

The bio-based markets with high demand and favourable legislative framework could make 
a  substantial  contribution  to  the  EU’s  transformation  into  a  more  sustainable  economy.  The 
right  legislation  and  framework  conditions  will  however  be  needed  to  encourage  uptake  of 
renewable  raw  materials  for  industrial  use  (e.g.  wood  and  paper,  but  also  bio-plastics,  bio-
lubricants, pharmaceuticals)) and ensure sustainability; technological innovation needs to be 
stimulated  through  demonstration  projects;  and  European  and  international  standards 
developed for  new  technologies.  Existing work needs to continue on specific product labels 
(e.g. eco-labelling) and public procurement guidance documents and networks.  

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The Commission will: 

•  develop a Healthcare and Pharmaceuticals process involving Member States, industry and 
other  health  stakeholders  to  promote  corporate  responsibility,  improve  access  to 
medicines, and strengthen the competitiveness of the pharmaceutical industry. To facilitate 
the  functioning  of  the  internal  market  for  medicines,  it  will  also  take  the  opportunity  to 
review  Directive  89/105/EEC  on  the  transparency  of  pricing  and  reimbursement 
procedures; 

•  present a Security Industry initiative, including a fast-track system for approval of priority 
technologies,  setting  priorities  for  harmonisation  and  standardisation  and  considering 
coordinated  public  procurement,  and  setting  up  a  European  Security  and  Dual-use 
Platform (2012 onwards). 

•  develop  a  strategy  for  the  Sustainable  Competitiveness  of  Construction  to  ensure 
appropriate  framework  conditions  for  the  Internal  Market  of  construction  products  and 
services,  improve  resource  efficiency  and  environmental  performances  of  construction 
enterprises,  and  promote  skills,  innovation  and  technological  development  to  meet  new 
societal needs and climate risks (2011); 

•  put  in  place  conditions  to  create  bio-based  markets,  improving  relevant  legislation  and 
framework  conditions  for  industrial  use,  promoting  innovation  through  demonstration 
projects, and developing European and international standards (2012). 

8.4. 

Re-invigorating the competitiveness of the EU through the value-chain 

The EU needs to pay greater attention to the manufacturing value-chain. As described above, 
industry  is  increasingly  dependent  on  inputs  of  raw  material  and  intermediate  goods,  and  is 
also crucially dependent on the business services industries that add value and help to design 
and  market  new  goods  and  services.  This  new  perspective  requires  a  different  approach  to 
industrial policy that takes increased account of the interlinkages.  

The  chemicals  industry  is  a  good  example  of  the  new  approach  that  is  needed.  Despite  the 
economic crisis, the chemicals industry remains highly competitive and is one of the motors 
of the EU manufacturing industry. It is a successful international player with a 24 % share of 
the  world  market,  but  faces  increasing  competition  from  China,  India, and  the  Middle  East. 
As  an  intermediate  goods  industry,  the  sector  has  enormous  potential  to  improve  both  the 
competitiveness  and  environmental  performance  of  other  downstream  industries  through 
innovation  in  substances  and  materials.  The  High  Level  Group  on  Chemicals  highlighted  a 
number of potential contributions of the industry to finding solutions for the critical societal 
challenges  facing  the  EU,  such  as  increasing  use  of  renewable  materials,  increasing  energy 
efficiency, and reducing water usage etc... 

The  entire  European  food  supply  chain  has  entered  a  period  of  adjustment  as  a  result  of 
changing  consumer  preferences,  resource  scarcity,  demographic,  health,  and  environmental 
factors,  and  customer  concerns  about  food  safety,  health  and  prices.  The  EU  Agro-Food 
Industry  is  highly  competitive  and  represents  2%  of  Europe’s  GDP  and  13.5%  of  total 
manufacturing  employment.  However,  it  urgently  needs  to  address  these  issues  as  well  as 
imbalances  in  bargaining  power  between  agro-food  producers and retailers  and  improve the 
efficiency of supply structures and facilitate their restructuring. 

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The EU textile, clothing and leather industry has undergone structural change for over 
20  years.  Technological  developments,  combined  with  traditional  strengths  in  design  and 
quality  also  find  their  way  into  large  consumer  markets  beyond  the  sector,  such  as  outdoor 
sportswear;  luxury  products,  or  footwear.  As  a  result  mass-customised  consumer  goods  are 
increasingly  becoming  commonplace,  providing  new  market  opportunities  for  European 
manufacturing. High added value speciality products represent already a substantial portion of 
the sector’s activities, with an increasing share of the production and added value generated to 
provide tailored solutions to other sectors such as healthcare, civil engineering or aerospace. 
Significant  efforts  in  R&D  and  innovation  have  strengthened  the  knowledge  content  and 
sustainability  of  the  sector,  making  this  possible.  It  is  essential  to  promote  new  business 
concepts and related manufacturing technologies focused on the development of sustainable, 
user-driven  design-based  products  in  the  textile  and  clothing  sector  as  well  as  other  large 
consumer markets. 

In  particular,  the  cultural  and  creative  industries  are  important  drivers  of  economic  and 
social innovation in other sectors. Design, architecture, and advertising play an important role 
in supporting investments e.g. in construction,  new  consumer technologies, environmentally 
friendly  solutions  and  the  digital  economy.  Likewise  mobility  and  logistic  services  are 
becoming increasingly important to sustain value  chains  and enable  just-in-time  production. 
Closer  collaboration  between  such  industries  and  EU,  Member  state,  regional,  and  local 
policy makers will promote their contribution to the economy as a whole. 

The Commission will: 

•  follow up the High Level Group on the competitiveness of the chemicals industry, notably 
its  potential  contribution  to  providing  solutions  to  critical  societal  challenges  through 
Innovation Partnerships; 

•  use  the  High  Level  Forum  on  the  Food  Industry  to  ensure  better  functioning  of  the  food 

supply chain; 

•  propose  strategic  initiatives  following  the  Green  paper  on  Unlocking  the  potential  of 
cultural  and  creative  industries,  including  a  Communication  on  key  aspects  of  the 
competitiveness of the fashion industry, launching a European Creative Industries Alliance 
and a European Mobile and Mobility Industries Alliance to bring together policy makers 
and industry representatives (2011). 

8.5. 

Addressing concerns of energy-intensive industries 

Europe  also  needs  to  improve  its  international  competitiveness  by  being  able  to  speed  up 
transition  to  a  low-carbon  and  resource-efficient  economy  in  the  energy-intensive 
industries  such  as  steel,  non-ferrous  metals,  paper,  and  the  chemicals  industry.  This  will  be 
done in coordination with the forthcoming flagship initiative on ‘Resource efficiency’ and the 
SET-Plan. Investments in carbon-efficient production provide the energy intensive industries 
with  a  strong  capability  to  increase  their  competitiveness  and  make  them  less  dependent  on 
future energy prices. 

Energy-intensive industries provide an important part of the value chain of the manufacturing 
industry in the EU and have become one of the world leaders in energy efficiency. They form 
an  integral  part  of  the  industrial  value  chain  and  manufacture  a  good  part  of  industrial 
products  with  CO2-reducing  effect.  Therefore,  energy-intensive  industries  must  find 

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conditions  for  competitive  production  in  Europe  in  the  future.  This  means  that  the  risk  of 
carbon  leakage  for  energy-intensive  industries  must  be  taken  into  account,  including  in  the 
context of possible indirect impacts by emission trading-related increases of electricity prices. 

New  low-carbon  production  technologies  and  techniques  for  energy-intensive  material 
processing  industries  are  being  developed  through  Technology  Platforms  and  Lead  Market 
Initiatives.  However,  appropriate 
further  public-private 
collaboration  are  needed  to  ensure  the  timely  deployment  and  commercialisation  of  these 
innovations across energy-intensive sectors.  

framework  conditions  and 

The Commission will: 

•  bring forward the adaptations to State aid rules allowing for an appropriate compensation 
for indirect ETS costs such as those passed on through electricity prices, while ensuring a 
level playing field in the Single Market and the attainment of the Community objectives in 
the light of international commitments on emission reduction; 

•  bring  forward  a  Sustainable  Industry  Low  Carbon  Scheme  (SILC)  to  coordinate 
framework conditions, funding actions, data collection, and other activities by the EU and 
Member  States  to  promote  the  development  and  uptake  of  low  carbon  technologies  in 
coordination with the SET-Plan (2011 onwards); 

•  in  the  context  of  the  discussion  on  future  research  Public-Private  Partnerships,  consider 
an  Energy-intensive  Industries  Low  Carbon  Implementation  initiative,  bringing  together 
the  relevant  technology  platforms  with  the  EU  and  Member  States,  to  ensure  the 
appropriate R&D, financing and deployment strategies for low-carbon production; 

•  in  partnership  with  Member  States  and  industry,  promote  demonstration  projects  and 
uptake for ultra-low carbon production technologies, including industrial carbon capture 
and storage, while avoiding distortions to competition (2011-16). 

•  further  explore  in  the  context  of  the  Europe  2020  strategy,  the  opportunities  to  bring  in 
further  innovative  incentive  mechanisms  linked  to  the  carbon  market,  namely  for  fast 
movers.  

8.6 

An enhanced sectoral approach 

In addition, the Commission will in 2011 consult with stakeholder on the best way to use and 
strengthen the industrial dimension of Joint Technology Initiatives and European Innovation 
Partnerships as announced in the Innovation Union Initiative, and on priorities in this respect. 

9. 

CONCLUSIONS: A NEW EU GOVERNANCE FOR INDUSTRIAL POLICY  

Whilst  the  economic  and  financial  crisis  shifted  the  focus  of  industrial  competitiveness 
policies towards short-term rescue and recovery actions, in the future the attention of policy 
makers  has  to  focus  on  long-term  structural  challenges,  in  particular  maintaining  global 
competitiveness,  climate  change,  energy,  population  ageing,  skills  and  knowledge.  In  the 
context of fiscal consolidation, competitiveness strategies cannot be built on major spending 
programmes, but are more likely to address structural reforms in areas such as improving the 
business  environment,  modernising  public  administrations,  improving  companies’  ability  to 

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innovate or enhancing energy efficiency. At the same time, policy measures may be needed to 
accompany ongoing structural change within and across industries. 

Delivering the new industrial policy also calls for more effective European governance. The 
concepts of national sectors and national industries with little interaction with other sectors or 
the rest of the world are becoming less relevant. It is now increasingly important to identify 
strategic  European  industrial  interests,  and  uncoordinated  national  policy  responses  must 
give way to coordinated, European policy responses. 

This improved and ambitious European governance has two separate strands: 

•  a holistic and better coordinated vision of policy-making at European level, involving the 
Commission and European Institutions, notably the Council and European Parliament. It is 
essential  to  improve  the  co-ordination  and  interaction  of  the  different  policies  affecting 
competitiveness, including the ‘competitiveness proofing’ of new policy proposals; 

•  closer  co-operation  with  Member  States  and  monitoring  the  success  and  competitiveness 
performance of policies at the European and Member State level. This can now be based 
on  the  new  Lisbon  Treaty’s  TFEU  Article  173  on  industrial  policy  in  the  context  of  the 
Europe 2020 framework, the enhanced economic policy coordination and notably with the 
new "European semester" that, inter alia, should contribute to better design national reform 
programmes12. 

As part of the Europe 2020 strategy, the Commission will thus regularly report on  EU’s and 
Member States’ competitiveness and industrial policies and performance..  

Indeed,  as  many  of  the  relevant  framework  conditions  for  a  competitive  and  sustainable 
industry are set at Member State level, the monitoring should not only cover competitiveness 
performance  but  also  competitiveness  policies,  including  factors  such  as  the  business 
environment, the innovation system, conditions of competition, infrastructure, the efficiency 
of public administration, and progress towards energy and resource efficiency. A first analysis 
of Member States’ competitiveness performance and policies demonstrates that there is room 
for improvement across the board. This analysis will continue to be refined to include better 
coverage  of  industrial  sustainability,  notably  in  the  light  of  the  forthcoming  Resource 
Efficiency  flagship.  The  policy  framework  at  the  EU  level  –  Europe  2020  strategy  with  its 
flagship  actions  and  Article  173  TFEU  on  industrial  policy  –  provides  a  range  of  means  to 
encourage  Member  States  to  step  up  their  efforts  to  bring  about  such  improvements,  thus 
contributing to a more competitive European industry and economy and the Commission will 
use them to the full. 

A  review  of  Member  States’  industrial  and  business  policies  could  lead  to  better 
coordination  and  pooling  of  the  use  of  available  resources,  and  legal  instruments  could 
generate more value for money. This is  the more important the less resources are available, 
and  the  more  comprehensive  and  fragmented  policy  frameworks  have  become  in  recent 
decades. 

This type of monitoring will be organised via the Competitiveness Council and the European 
Parliament  and  will  be  further  developed  through  peer  reviews  and  exchanges  of  good 
practices. It is fully consistent with the Europe 2020 framework,  

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It will feed into the overall monitoring of Europe 2020 but with a specific focus on Member 
States’  competitiveness  performance  and  the  possibility  of  mutual  learning.  This  in  turn 
should  contribute  to  improve  national  policies  as  monitored  through  the  national  reform 
programmes13. 

The following areas are particularly suitable for the exchange of best practice: the reduction 
of administrative burden and the assessment of impacts on competitiveness , “fitness checks” 
and  "think  small  first"  in  national  legislation,  policies  to  facilitate  access  to  finance,  key 
enabling  technologies,  enforcement  of  intellectual  property  rights,  the  development  of  skill 
strategies in connection with industrial needs and in the design of national industrial policies, 
especially  as  regards  individual  sectors  and  the  involvement  of  stakeholders.  Closer 
cooperation  can  bring  forward  synergies,  complementarities  and  better  use  of  resources 
especially  in  developing  and  deploying  key  enabling  technologies  and  environmental 
technologies but, also, in some specific skill areas, where national demand may not justify a 
fully  fledged  curriculum.  Finally,  while  the  rationale  for  exchange  of  best  practice  and 
cooperation is stronger at the level of individual actions, peer reviews are more beneficial for 
more integrated and complex policies. 

These  actions  can  be  of  variable  geometry  as  national  needs  and  circumstances  vary.  The 
Commission  will  discuss  with  Council  and  Member  States  in  the  coming  months  the 
principles and the modalities under which they should be organised as well as their scope and 
hierarchy  of  priorities.  Moreover,  the  Commission  will  monitor  and  report  annually  on  the 
competitiveness and industrial policies and performance of Member States. This will include 
industrial  aspects  of  more  policies  serving  more  general  objectives  such  as  education, 
research, protection of the environment or climate change. Particular emphasis will be put on 
developments regarding the best practice exchange and cooperative actions. The Europe 2020 
Strategy  is  also  of  importance  for  the  EU  enlargement  countries’  reform  agenda.  Candidate 
and potential Candidate Countries should therefore also start pursuing the proposed objectives 
of the new integrated industrial policy. 

Implementing  the  fresh  approach  to  industrial  policy  should  help  businesses  and  investors 
engage in profitable, sustainable and job-creating industrial production in Europe and improve 
international  competitiveness  in  productivity  and  cost  terms.  EU  industry  would  therefore 
benefit from the fast-growing world market provided by globalisation. In other words, Europe 
would see rising industrial output, employment and incomes over the coming decade, while 
significantly decreasing industry’s carbon and resource footprint. 

The following indicators of success will be thus monitored closely: 

•  The improvement in international competitiveness, comparing both the EU’s productivity 

and cost developments with those of its competitors. 

•  The number of new jobs created in industry and industry-related services, with particular 

reference to the number created in SMEs; 

•  The rate at which manufacturing output rises, particularly output in the eco-industries; 

•  The  share  of  medium-  and  high-technology  manufacturing sectors in total manufacturing 

value-added and employment 

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The Commission will, under TFEU Article 173: 

•  Implement the actions outlined in this Communication to strengthen the European policy 
framework  for  industrial  policy,  working  closely  with  the  Council  and  European 
Parliament; 

•  report  to  the  Council  and  the  European  Parliament  on  the  EU’s  and  Member  States’ 

industrial competitiveness and related policies and performance on an annual basis; 

•  initiate  peer  reviews  and  exchanges  of  good  practices  with  Member  States  to  improve 

cooperation on industrial policies across the EUs. 

Member States are invited to:  

•  co-operate and where appropriate coordinate their industrial policies; 

•  engage in peer reviews and exchanges of good practices. 

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