COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS A Stronger European Industry for Growth and Economic Recovery Industrial Policy Communication Update
Date: 2012-10-10
Institutions: European Commission
Subjects: biotechnology, competitiveness, foreign trade, industrial cooperation, industrial financing, industrial infrastructure, industrial reorganisation, innovation, investment promotion, job creation, research and development, single market, small and medium-sized enterprises, technological change

EUROPEAN 
COMMISSION 

Brussels, 10.10.2012  
COM(2012) 582 final 

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

A Stronger European Industry for Growth and Economic Recovery 

Industrial Policy Communication Update 
{SWD(2012) 297 final} 
{SWD(2012) 298 final} 
{SWD(2012) 299 final} 

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TABLE OF CONTENTS 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, 
THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE 
COMMITTEE OF THE REGIONS A Stronger European Industry for Growth and Economic 
Recovery....................................................................................Error! Bookmark not defined. 

I. 

II. 

III. 

The Partnership for a stronger European Industry ....................................................... 3 

The policy and economic context: a central role for Industry ..................................... 4 

The pillars for a reinforced industrial policy: investment in innovation, better market 
conditions, access to capital and human capital and skills........................................... 6 

A. 

Facilitate investment in new technologies and innovation .......................................... 6 

1. Priority Action Lines.............................................................................................................. 8 

i) Markets for advanced manufacturing technologies for clean production............................... 8 

ii) Markets for key enabling technologies.................................................................................. 8 

iii) Bio-based product markets ................................................................................................... 9 

iv) Sustainable industrial policy, construction and raw materials............................................ 10 

v) Clean vehicles and vessels ................................................................................................... 11 

vi) Smart grids.......................................................................................................................... 12 

2. Accompanying measures...................................................................................................... 13 

B. 

Access to markets....................................................................................................... 15 

1. Improving the Internal Market for goods............................................................................. 15 

2. Fostering entrepreneurship to render the Internal Market more dynamic............................ 18 

3. The Internal Market for technology, the unitary patent and the protection of intellectual 

property rights ............................................................................................................ 18 

4. International markets............................................................................................................ 20 

C. 

1. 

Access to finance and capital markets ....................................................................... 22 

Public sector support to facilitate access to capital to industry.................................. 23 

2. Access to capital markets ..................................................................................................... 24 

D. 

IV. 

The crucial role of human capital............................................................................... 25 

Conclusion: governance and goals............................................................................. 27 

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

A Stronger European Industry for Growth and Economic Recovery 

Industrial Policy Communication Update 

I. 

THE PARTNERSHIP FOR A STRONGER EUROPEAN INDUSTRY 

At a time when financial problems persist, Europe needs its real economy more than ever to 
underpin  the  recovery  of  economic  growth  and  jobs.  Our  industry  is  well  placed  to  assume 
this role: Europe is a world-leader in many strategic sectors such as automotive, aeronautics, 
engineering, space, chemicals and pharmaceuticals. Industry still accounts for 4/5 of Europe's 
exports and 80% of private sector R&D investment comes from manufacturing1.  

However, the continuing economic crisis has put Europe's industry under pressure: production 
is  10%  lower  than  before  the  crisis  and  over  3  million  industrial  jobs  have  been  lost. 
Consumer and business confidence are low. Problems in the banking sector make it difficult 
to access finance. Investments are held back and factories are under pressure to close. 

This is happening at a time when the speed of innovation and technological development has 
put  the  world  on  the  edge  of  an  industrial  break-through.  Several  new  technology  areas  are 
converging to lay the foundation of the new industrial revolution based on green energy, clean 
transport, new production methods, novel materials and smart communication systems. These 
will  change  the  global  industrial  landscape  and  our  competitors  in  the  U.S.  and  Asia  are 
investing heavily in these areas. Europe needs new industrial investment at the time when lack 
of confidence, market uncertainty, financing problems and skills shortages are holding it back. 

Europe  needs  to  reverse  the  declining  role  of  industry  in  Europe  for  the  21st  century. 
This  is  the  only  way  to  deliver  sustainable  growth,  create  high-value  jobs  and  solve  the 
societal challenges that we face. To achieve this, a comprehensive vision is needed, focusing 
on  investment  and  on  innovation,  but  also  mobilising  all  the  levers  available  at  EU  level, 
notably the  single market, trade policy, SME policy, competition policy,  environmental and 
research policy in favour or European companies' competitiveness.  

This  Communication  proposes  a  partnership  between  the  EU,  its  Member  States  and 
industry  to  dramatically  step  up  investment  into  new  technologies  and  give  Europe  a 
competitive lead in the new industrial revolution. After an extensive public consultation, the 
Commission proposes to jointly focus investment and innovation on six priority action lines: 
advanced  manufacturing  technologies,  key  enabling  technologies,  bio-based  products, 
sustainable industrial and construction policy and raw materials, clean vehicles, smart grids. 

1 

Industrial  activities  also  have  important  spillover  effects  on  production  and  employment  in  other 
sectors.  For  every  100 jobs  created  in  industry,  it  is  estimated  that  between  60  and 200  new jobs  are 
created  in  the  rest  of  the  economy,  depending  on  the  industrial  sector.  See  annexed  Staff  Working 
Document. 

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The Commission outlines the approach it will take in each of these areas through setting up 
specialised partnership task-forces. It shows how the EU will bring into play policy levers to 
support  the  reindustrialisation  of  Europe  by  mobilising  all  instruments  at  its  disposal  in  an 
integrated way. Industry is expected to play its part by rolling out the necessary investments 
and  products  while  Member  States  and  regional  authorities  should  adapt  these  priorities 
according to their national needs.2 The joint action of industry and public authorities should 
also contribute to reduce competitiveness gaps across the Member States and EU regions. 

Second,  the  actions  proposed  here  aim  to  bring  renewed  dynamism  in  growth  promising 
areas,  namely  the  Single  Market  and  international  markets.  It  will  not  be  possible  to 
stimulate new investments if there are doubts about the ability to sell them or fear of unlawful 
appropriation  of  technological  know-how.  Substantial  progress  has  already  been  made  in 
unlocking  the  potential  of  internal  and  external  markets  through  improved  market  access  to 
companies.  The  Commission  therefore  concentrates  on  selected  themes  where  significant 
scope  for  improvement  still  exists:  reducing  of  costs,  increasing  confidence,  fostering 
entrepreneurship and protecting intellectual property. 

Third,  the  Commission  addresses  two  areas  weakened  by  the  economic  crisis  and  the  fast-
changing industrial landscape. Innovative investments are not possible without financing. The 
economic crisis and difficulties in the banking sector have had a negative impact on lending 
to the real economy and this Communication proposes a series of measures to remedy this 
situation. In addition, new technologies cannot be developed and brought to the market if the 
European  work-force  does  not  possess  the  necessary  skills.  The  Commission  therefore 
reinforces  its  strategy  through  a  series  of  measures  to  equip  Europeans  for  the  future  and 
facilitate industrial restructuring. 

With the renewed industrial strategy outlined in this Communication, the Commission seeks 
to reverse the declining role of industry in Europe from its current level of around 16%3 of 
GDP  to  as  much  as  20%  by  2020.  This  should  be  driven  by  substantial  recovery  in 
investment levels (gross capital formation and investment in equipment), an expansion of the 
trade  in  goods  in  the  Internal  Market  (to  reach  25%  of  GDP  in  2020)  and  a  significant 
increase in the number of SMEs exporting to third countries. 

II. 

THE POLICY AND ECONOMIC CONTEXT: A CENTRAL ROLE FOR INDUSTRY 

This  Communication  builds  on,  and  updates,  the  "Integrated  Industrial  Policy  for  the 
Globalisation Era"4 adopted by the Commission in 2010 as part of the Europe 2020 Strategy. 
It  focused  on  strengthening  industrial  competitiveness  to  support  economic  recovery  and  to 
enable the transition to a low-carbon and resource-efficient economy. The strategic approach 
proposed in 2010 remains fully valid for achieving our longer term objectives and very good 
progress has been made in its implementation.5 However, the harsh impact of the economic 
crisis  on  several  Member  States,  the  subsequent  economic  stagnation  in  the  EU  and  the 

2 

3 
4 
5 

See  the  Country-specific  recommendations  accompanying  "Action  for  stability  Growth  and  Jobs" 
COM(2012)299 of 30 May 2012. 
Manufacturing % of GDP at factor cost, 2011: Eurostat (nama_nace_10_c)  
COM(2010)614. 
See Staff Working Document SWD(2012) 297 for a detailed implementation report on these actions.  

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deteriorating  outlook  for the global economy have  given  a  new  urgency  to  this  Mid-term 
Review of the Industrial Policy6. 

This  year's  Annual  Growth  Survey  has  underlined  that  growth-enhancing  measures  are 
needed  to  strengthen  the  recovery,  to  keep  pace  with  our  main  competitors  and  to  move 
towards the Europe 2020 objectives.  A series of European  Councils in 2011 and 2012 have 
called  for  action  on  areas  addressed  by  this  Communication,  which  was  announced  in 
President  Barroso's  State  of  the  Union  speech  on  12th  September  2012.  This  renewed 
industrial strategy is part of the response to these calls, in particular following the "Compact 
and Growth and Jobs" at the European Council of June 2012. 

The political attention on industry is grounded in the realisation that a strong industrial base 
is  essential  for  a  wealthy  and  economically  successful  Europe.  It  is  vital  to  stimulate 
economic  recovery,  provide  high-quality  jobs  and  reinforce  our  global  competitiveness. 
Industry  can  generate  the  high  productivity  growth  needed  to  restart  sustainable  growth: 
industrial productivity rose by 35% since the worst times of the crisis in 2009. Moreover, only 
industry  can  improve  economy-wide  energy-  and  resource-efficiency  in  the  face  of  global 
resource scarcities and help provide solutions to societal challenges. 

New investment is now urgently needed to stimulate economic recovery and bring innovation 
and new technologies back onto factory floors. If Europe does not keep up with investment in 
the adoption and diffusion of these technologies, its future competitiveness will be seriously 
compromised.  However,  the  investment  outlook  is  bleak.7  Between  2008  and  2011, 
investment fell by 2.5 percentage points of GDP and current economic forecasts predict only a 
slow recovery. Revitalising investment requires business confidence, market demand, finance 
and skills, the four pillars of our policy.  

Affordable  and  reliable  access  to  energy  and  raw  materials  are  becoming  increasingly 
important as they account for a significant part of the cost in many industries. Energy prices 
for European industry went up by 27% in real terms between 2005 and early 2012, which is 
higher  than  in  most  of  other  industrialised  countries,  especially  US.  As  regards  electricity, 
European  industry  is  on  average  facing  higher  prices  than  industries  in  other  developed 
economies such as the US, Canada, Mexico and Korea, and this price gap has increased over 
the last decade8. The impact on the price of energy in Europe should be carefully considered 
when  defining  future  energy  policies.  Effective  implementation  of  a  fully  efficient  internal 
market for energy, more investments in energy infrastructure, further diversification of energy 
sources as well as increased energy efficiency are the key elements in this respect. 

Competition  in  manufacturing  will  in  the  future  gradually  decrease  its  dependence  on  wage 
differentials9 thus our industry has a good chance to restore the attractiveness of Europe 

6 

7 

8 
9 

Accompanying  this  Communication,  a  working  document  reports  on  the  implementation  of  the  2010 
Communication and presents evidence in support of the policy actions included in this Communication. 
Further  support  is  provided  by  the  2012  Competitiveness  report  and  the  "Report  on  Member  State 
competitiveness  Performance  and  Policies"  based  on  Art.  173  TFEU.  This  Communication  has 
benefitted from extensive discussions with the Member States, stakeholders and a public consultation. 
The ‘Mission Growth’ conference on industrial innovation, held on 29 May 2012 in Brussels, provided 
additional input.  
See ECFIN Spring 2012 forecasts 
http://ec.europa.eu/economy_finance/publications/european_economy/2012/ee1upd_en.htm 
International Energy Agency: Energy Prices and Taxes, Second Quarter 2012 
See Boston Consulting Group: "US manufacturing nears the tipping point", March 2012. 

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as  a  location  for  production,  provided  it  can  capitalise  on  opportunities  offered  by  new 
technologies and the size of the EU market. 

III. 

THE  PILLARS  FOR  A  REINFORCED 
IN 
INNOVATION,  BETTER  MARKET  CONDITIONS,  ACCESS  TO  CAPITAL  AND  HUMAN 
CAPITAL AND SKILLS 

INDUSTRIAL  POLICY: 

INVESTMENT 

The  Commission  proposes  a  proactive  approach  to  industrial  policy  based  on  the  following 
four main elements. 

1. 

2. 

3. 

4. 

First,  the  EU  must  provide  the  right  framework  conditions  to  stimulate  new 
investments,  speed  up  the  adoption  of  new  technologies  and  boost  resource 
efficiency. These include technical regulations and Internal Market rules, as well as 
accompanying  measures  such  as  infrastructure  and  R&D/innovation  projects.  As  a 
first  step,  six  priority  areas  for 
this 
Communication. 

immediate  action  are  proposed 

in 

Secondly,  urgent  improvements  in  the  functioning  of  the  Internal  Market  are 
needed. They are presented here and in the Single Market Act II, and are reflected in 
the country-specific recommendations issued to Member States in the context of the 
European Semester. They will contribute to reinvigorate trade in the Internal Market. 
Opening  up  international  markets  will  also  speed  up  recovery.  The  fast-growing 
emerging  economies  of  the  world  offer  new  export  opportunities  for  EU  firms, 
especially SMEs. 

Investment  and  innovation  are  not  possible  without  adequate  access  to  finance. 
Public  resources  have  already  been  mobilised  to  sustain  investment  in  innovation, 
especially by SMEs. However, only unlocking private funds can ensure the level and 
sustainability  needed  to  finance  investment  by  EU  companies.  Improving  access  to 
capital markets is therefore another crucial challenge to increase our competitiveness. 

Finally, accompanying measures to increase investment in human capital and skills 
are key to the success of industrial policy. Policies aimed at job creation and tools to 
anticipate  skills  needs  are  necessary  to  equip  the  labour  force  for  industrial 
transformations. 

This approach focuses on improving framework conditions that reinforce the growth potential 
of  EU  industry.  It  is  fully  mindful  of  the  need  to  stimulate  competition  for  an  efficient 
allocation  of  resources  and  a  dynamic  economy.  Public  intervention  should  create  the  right 
market  environment  and  come  up  with  remedies  to  market  failures.  Industry  must  itself 
develop  its  competitive  advantages  and  strengths.  The  objective  of  industrial  policy  is  to 
foster  competitiveness,  but  businesses  themselves  will  always  be  ultimately  responsible  for 
determining their success or failure in the global market.  

A. 

Facilitate investment in new technologies and innovation 

R&D is by far the most important driver for company innovations. The Commission considers 
R&D policies as a priority as outlined in the Innovation Union flagship.10 However, despite 

10 

"Innovation Union" flagship COM(2010)546 of 6 October 2010. 

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the fact that European research has been excellent and has been responsible for many new 
technologies  used  in  industries  worldwide,  our  past  record  has  not  always  been  so  good 
when it comes to translating scientific leadership into industrial advantage. The situation 
in lithium batteries is a clear example of this with European firms holding more than 30% of 
the relevant patents, without any production of such batteries taking place in the EU. 

Investing in the early stages of the adoption and diffusion of new technologies will give us a 
technological  lead  to  ensure  that  Europe  secures  the  returns  from  its  innovation  in  terms  of 
growth and jobs. "First mover advantage" can boost productivity, resource efficiency, and 
market shares. Unfortunately, the stakeholder consultation shows that uncertainties about the 
future  evolution  of  new  markets  often  adversely  affect  business  confidence  and  hold  back 
investment. It is thus essential to dispel the uncertainties in new markets through the creation 
of  a  simple,  stable  and  predictable  long-term  framework  of  Internal  Market  technical 
rules, standards and other legislation.  

After  extensive  public  consultation  and  analysis,  six  fast-growing  initial  areas  for  priority 
action have been selected. These priority areas can both contribute to economic recovery in 
the short- and medium-term and have a significant impact on our longer-term growth. They 
will  provide  the  industrial  infrastructure  needed  for  what  has  been  identified  as  a  "Third 
Industrial Revolution".11 The establishment of this infrastructure has the potential to create 
thousands  of  new  businesses  and  millions  of  new  jobs  and  lay  the  basis  for  a  sustainable 
global economy in the 21st century. The priority action lines encompass the key components 
needed  for  a  new  industrial  society,  where  new  energy,  information  and  production 
technologies  will  transform  industrial  production  and  markets.  Nowhere  will  the  impact  be 
more profoundly felt than in the six priority areas identified. Investment in new technologies 
in these areas will help deliver the Europe 2020 goal of a sustainable and high-employment 
economy.  

The  priority  areas  are  highly  correlated  with  the  areas  of  investment  for  Cohesion  policy 
2014-202012. They are all markets where new technologies are ready to deliver new products 
or  increase  productivity.  These  new  technologies  will  revolutionize  engineering  (e.g. 
intelligent  materials)  and  transform  the  production  of  goods  (e.g.  3D  printing),  as  well  as 
providing game-changing new foundations for traditional markets, such as smart grids, clean 
vehicles or bio-based plastics. Therefore Member States must take them into account in their 
industrial policies, as well as in their strategies for social cohesion and economic development 
of their regions. 

Of  course,  the  focus  on  these  priorities  does  not  imply  the  neglect  of  other  sectoral  efforts 
currently underway as part of our industrial policy flagship defined in 2010. For instance, the 
review  of  LeaderSHIP  2015  strategy  will  help  to  improve  the  competitiveness  of  EU 
shipbuilding industry which contributes to sustainable sea-borne transport, infrastructure and 
advances  into  maritime  energy  generation.  A  High  Level  Roundtable  on  the  future  of  the 
European  steel  sector  will  identify  the  factors  affecting  the  competitiveness  of  this  industry 
and issue concrete recommendations to maintain its competitiveness. This proactive approach 
to  industrial  policy  will  be  extended  to  other  key  areas  such  as  creative  industries,  space, 
technologies for improved health care in particular for the ageing population, medical devices 
and tourism. 

11 

12 

See  Rifkin  J.  “The  Third  Industrial  Revolution:  How  Lateral  Power  Is  Transforming  Energy,  the 
Economy, and the World » Palgrave McMillan, New York 2011. 
Cohesion Policy 2014 -2020: Investing in growth and jobs COM(2011)614 of 6 October 2011 

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1. Priority Action Lines  

i) Markets for advanced manufacturing technologies for clean production 

Advanced manufacturing technologies that enable clean production are a key part of the new 
industrial revolution. For example, 3-D printing allows production in much smaller quantities 
than  is  currently  economically  feasible,  enabling  low-cost  customised  production  for  new 
niche  products  and  opening  up  new  market opportunities for innovative SMEs. Tomorrow's 
factories  will  use  highly  energy-  and  material-efficient  processes,  employ  renewable  and 
recycled  materials,  and  increasingly  adopt  sustainable  business  models  such  as  industrial 
symbiosis to recover materials and dissipated heat and energy. These technologies represent 
an important business opportunity, with a global market that is expected to double in size 
to over € 750 billion by 2020 . EU industry is already a world-leader in these technologies, 
with a world market share of over 35%13 and a patent share of over 50%14.  

Policy  co-ordination  of  EU  and  Member  State  policies  and  stakeholder  efforts  could  be 
enhanced  through  a  dedicated  Task  Force  for  Advanced  Manufacturing  Technologies  for 
Clean  Production.  This  would  provide  leadership  and  co-ordination  and  ensure  the  wider 
dissemination and commercialisation of the results of the public-private partnerships. It could 
also promote demand-side innovation measures,15 including timely internal market regulation 
and standardisation, and innovative public procurement.  

High cost and high risk investments in proof-of-concept demonstration projects and pilot lines 
will  require  public-private  partnerships  (PPPs)  with  industry  at  EU  level  to  ensure  timely 
commercialisation. A major role may be played by Public Private Partnerships under Horizon 
2020,  such  as  in  the  areas  of  robotics  and  of  sustainable  process  industries,  along  with 
demonstration projects for Key Enabling Technologies. The NER300 funding programme for 
innovative  low-carbon  energy  demonstration  projects  and  the  Sustainable  Industry  Low 
Carbon  (SILC)  grant  scheme  supporting  innovation  in  greenhouse  gas  efficiency  will  also 
play an important role.  

The Commission will lead a Task Force for Advanced Manufacturing Technologies for Clean 
Production in 2013 to foster the development and adoption of these technologies by European 
industry.  Following  industry  consultations,  the  Commission  will  assess  the  impacts  of  a 
potential Public Private Partnership in the area of sustainable process industries.  

Member  States  are  invited  to  promote  the  commercialisation  and  deployment  of  advanced 
manufacturing  technologies  and  to  develop  cross-border  collaboration  taking  into  account 
their national specialisations and needs. 

ii) Markets for key enabling technologies 

The  global  market  in  Key  Enabling  Technologies  (KETs),  which  comprises  micro-  and 
nanoelectronics, advanced materials, industrial biotechnology, photonics, nanotechnology and 

Roland Berger "GreenTech Made in Germany: update 2012"  

13 
http://www.rolandberger.com/media/pdf/Roland_Berger_Umbau_Energiesystem_20120208.pdf 
14 
15 

"European Competitiveness Report 2010" SEC(2010) 1272 
On this concept see “Trends and challenges in demand-side innovation policies in Europe » at 
http://ec.europa.eu/enterprise/newsroom/cf/itemdetail.cfm?item_id=5532&lang=en&tpa_id=135 

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advanced manufacturing systems, is forecast to increase by over 50% from € 646 billion to 
over € 1 trillion by 2015 , which is equivalent to around 8%  of  the  EU's  GDP.  Europe  is  a 
global leader in R&D for KETs, with a global patent share of more than 30%. However, in the 
past  the  EU  has  often  been  slower  than  our  trading  partners  in  converting  research  into 
marketable goods and services. 

A  Communication16  issued  in  June  2012  set  out  the  EU's  strategy  to  speed  up  the 
development and industrial deployment of KETs-based products. This new strategy is based 
on four pillars: the adaptation and streamlining of EU policy instruments; better coordination 
of  EU  and  Member  State  policies  in  order  to  achieve  synergies  and  complementarities;  the 
establishment  of  adequate  and  dedicated  governance  structures  within  and  outside  the 
Commission  to  ensure  effective  implementation;  and  the  mobilisation  of  existing  trade 
instruments to ensure fair competition and an international level playing field. Attention will 
also  be  paid  to  the  development  of  the  Internal  Market  for  innovative  products,  in  order  to 
promote science and technology-related skills and encourage KET-related entrepreneurship17. 
There is a need to examine how to best maintain and develop a strong European supply basis 
for KETs, e.g. for the components used in the telecommunications & IT sectors. 

The  Commission  will  implement  the  European  Strategy  for  Key  Enabling  Technologies 
ensuring  better  co-ordination  of  EU  and  Member  State  technology  policies,  the  funding  of 
essential  demonstration  and  pilot  lines  and  cross-cutting  KET  projects,  and  the  timely 
development  of  the  Internal  Market  for  KET-based  products.  Ensuring  the  industrial 
deployment of KETs will be a key component of relevant European Innovation Partnerships. 

The Member States and the regions are invited to exploit research and innovation strategies 
for  smart  specialisation,  to  support  development  research  including  pilot  lines  and 
demonstration projects and to promote co-operation along the value chain. 

iii) Bio-based product markets 

Bio-based industries use renewable resources or apply bio-based processes in their production 
processes. Bio-based products offer several advantages for industrial competitiveness and the 
environment.  Compared  with  fossil  fuel  processes,  most  bio-based  production  processes 
consume less energy, emit less carbon dioxide and volatile organic compounds, and generate 
fewer  toxic  waste.  They  can  both  reduce  production  costs  and  improve  environmental 
performance.  The  volume growth of EU  bio-based  chemical products up  to 2020, including 
bio-plastics, bio-lubricants, bio-solvents, bio-surfactants and chemical feedstock, is estimated 
at 5.3% p.a., resulting in a market worth € 40 billion  and providing over 90,000 jobs within 
the biochemical industry alone18. 

Establishing an Internal Market for bio-based products requires the development of standards 
and  the  updating  of  regulations19.  CEN  is  already  working  on  standardisation  mandates  for 
bio-fuels and bio-based products in general, as well as on specific mandates for bio-polymers, 
lubricants, solvents and surfactants20.  

16 
17 
18 
19 
20 

"A European strategy for Key Enabling Technologies - A bridge to growth and jobs" COM(2012)341 
KETs have also been identified as a priority area for lending enabled by the EIB capital increase. 
Europe Innova Report “Assessment of the Bio-based Products Market Potential for Innovation” 2010  
" Innovating for Sustainable Growth: A Bioeconomy for Europe" COM(2012) 60 of 13 February 2012. 
http://www.cen.eu/cen/Sectors/Sectors/Biobased/Pages/default.aspx 

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An institutional Public Private Partnership based on the Joint Technology Initiative approach 
on  Bio-based  Industries  for  Growth  could  leverage  private  sector  investment,  facilitate  the 
efficient  and  sustainable  scaling-up  of  biomass  supplies,  support  large-scale  bio-refinery 
demonstration  projects,  promote  Green  public  procurement,  and  develop  new  bio-based 
products  and  materials.  Innovative  processes  and  technologies  can  facilitate  exploitation  of 
currently unused crop residues and marine biomass. 

The  Commission  will  implement  the  bio-economy  strategy  and  will  foster  markets  for  bio-
based  products,  speeding  up  the  development  of  standards  and  their  international 
recognition, promoting labelling and green public procurement, and will work with industry 
to develop detailed proposals for a bio-economy PPP (2013-14 onwards). 

iv) Sustainable industrial policy, construction and raw materials 

Reducing costs, increasing energy and resource efficiency and reducing waste will boost the 
competitiveness  of  the  construction  sector.  The  energy  used  in  residential,  commercial  and 
public  buildings  accounts  for  40%  of  the  EU's  final  energy  consumption  and  contributes  to 
CO2  emissions  and  air  pollution.  New  investments  in  energy  efficiency  in  residential  and 
public buildings and infrastructure have strong growth potential and are expected to be worth 
some €25-35 billion per year by 2020 21. Moreover, it is proposed that a significant share of 
the Structural and Cohesion Funds will support the shift towards the low-carbon economy. 

New  European  standards  are  needed  for  sustainable  construction  products,  processes  and 
works  in  order  to  maintain  a  coherent  Internal  Market  for  both  products  and  services.  The 
international competitiveness of EU building services can be enhanced inter alia by ensuring 
the  international  uptake  of  the  Eurocodes  construction  standards.  The  Energy-Efficient 
Buildings public-private partnership should accelerate the transition from research to market. 

The Ecodesign directive22 has set the requirements for a number of energy-related products, 
including  motors,  pumps,  fans  and  chillers.  Measures  for  other  household  goods  and 
industrial equipment are underway. Although energy has been the main resource targeted so 
far,  the  Directive  foresees  improvements  related  to  all  environmental  aspects,  including 
interalia  material  efficiency.  It  will  be  applied  gradually  to  a  wider  range  of  industrial 
products having significant environmental effects. 

Action also needs to be taken in order to develop further EU-wide markets for waste recycling 
and to move towards a closed-loop economy. New European standards for graded qualities of 
recycled  materials  (e.g.  metals,  wood  and  textiles)  would  also  foster  market  development. 
Additional  demonstration  projects  for  recycling,  dismantling,  and  sorting  technologies  are 
urgently needed for specific applications, such as the RECAP pilot project on better recycling 
mixed  plastics.  Innovative  technologies  for  waste  and  resource  management  could  also  be 
promoted through the exchange of good practices. Cohesion and Structural Funds and other 
public  funding,  incentive  schemes  and  price  signals  could  increasingly  promote  recycling, 
reconditioning, and reuse in preference to incineration. 

Non-energy  non-agricultural  raw  materials  are vital  for  the  competitiveness  of  EU  industry. 
Innovation  can  help  reduce  supply  pressures.  This  can  be  achieved,  for  example,  by 

21 
22

"Impact Assessment of Energy Efficiency Directive" SEC(2011) 779 of 22 June 2011. 
http://ec.europa.eu/enterprise/policies/sustainable-business/ecodesign/index_en.htm 

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developing advanced extraction (including seabed mining) and processing methods, designing 
products  to  facilitate  high-quality  recycling,  and  by  enabling  "urban  mining".  The  EU  must 
improve  co-operation  and  information  sharing  between  Member  States  on  raw  materials  to 
achieve  the  critical  mass  needed  to  develop  closed-loop  solutions  for  material  value  chains. 
The  European  Innovation  Partnership  on  Raw  Materials23  will  bring  together  all  relevant 
stakeholders to accelerate the availability of technological and other solutions to the market. 
The  Commission  will  then  translate  this  Strategic  Implementation  Plan  into  an  operational 
programme. 

New European standards will be developed for sustainability criteria related to construction 
products and processes and the international uptake of Eurocodes will be promoted as part of 
the  implementation  of  the  Action  Plan  on  Sustainable  Competitiveness  of  the  Construction 
Sector in cooperation with the Tripartite Strategic Forum24(2013-14). 

To accelerate the transition from research to market, concrete actions will be proposed within 
the  framework  of  the  Energy-efficient  Buildings  public-private  partnership  and  through  a 
Communication on Sustainable Buildings (2013). 

The  Commission  will  implement  specific  ecodesign  regulations  on  industrial  product, 
including in particular those having a significant impact on the environment during their life 
cycle; support the faster and cheaper delivery of ecodesign policy objectives through sectoral 
voluntary agreements; jointly review the energy labelling directive and certain aspects of the 
ecodesign  directives  to  maximise  their  effectiveness;  support  ecodesign  advisory  services 
through the Enterprise Europe Network to better address the needs of SMEs (2012 onwards). 

The Commission will further  develop stable recycling  markets  and increase collection  rates 
through a planned review of specific aspects of the EU's waste policy (in 2014) and through 
analysing  existing  extended  producer  responsibility  schemes  with  the  aim  of  identifying  the 
most cost-efficient schemes and defining best practices and guidelines (2013/14). 

Following the launch of the European Innovation Partnership on raw materials in November 
2012, the Commission will develop an operational programme on raw materials based on the 
Strategic Implementation Plan ( September 2013). 

Member  States  are  invited  to  develop  strategies  adapted  to  their  national  specificities  to 
promote recycling and develop low-energy buildings. 

v) Clean vehicles and vessels 

Vehicles  with  alternative  powertrains  and/or  using  alternative  fuels  are  a  key  stage  towards 
sustainable mobility. Plug-in electric vehicles and hybrids are expected to account for some 
7% of the market by 2020. Vehicles with combustion engines also will become increasingly 
electrified.  As  well  as  stimulating  growth  and  jobs,  investments  in  clean  mobility  can  yield 
additional benefits, including improved air quality and reduced health impacts. 

23 

24 

"Making  raw  materials  available  for  Europe's  future  wellbeing  –  proposal  for  a  European  Innovation 
Partnership on raw materials" COM(2012) 82. 
Announced  in  the  Communication  "Strategy  for  the  Sustainable  Competitiveness  of  the  Construction 
Sector and its Enterprises" COM(2012) 433. 

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Wide  coordination  is  needed  in  order  to  develop  markets  for  clean  vehicles  and  ships.  In 
particular,  the  deployment  of  electrical  mobility  will  require  profound  adaptations  of 
industrial value chains, business models, skills, and consumer attitudes, as well as setting up 
recharging  infrastructures.  On-going  standardisation  activities  for  interoperability  and 
connectivity need to be concluded quickly and followed up by further standards for vehicles 
and  infrastructures.  UNECE  safety  requirements  for  all  components  and  systems  (including 
batteries) and EU environmental regulations need to be adapted. International agreements on 
standards and regulations notably in the UNECE framework will help to save costs and speed 
up  market  growth.  Cooperation  with  our  largest  trade  partners  on  standards,  research  and 
regulatory aspects will also help uptake, e.g. the EU-US Workplan on eMobility adopted in 
the framework of the Transatlantic Economic Council. 

Legislative  proposals  on  smart  grids,  the  Trans-European  transport  network25  and  on 
alternative  fuel  infrastructures  should  facilitate  the  roll  out  of  recharging/refuelling 
infrastructures, particularly in cities. Regional and local authorities should also play a role in 
encouraging market uptake, e.g. through infrastructure development, public procurement, and 
non-financial incentives such as priority access to city centres. Following on from the Green 
eMotion project, R&D and demonstration projects should be developed under Horizon 2020, 
using Cohesion and Structural Funds, and by Member states, in combination with EIB loans. 

Following  up  the  Final  Report  of  the  CARS21  Group,  the  Commission  will  coordinate  all 
policy actions supporting the market introduction of clean vehicles, including the deployment 
of  plug-in  electric  and  hybrid  vehicles  by  ensuring  timely  regulation  and  standards, 
facilitating  the  roll  out  of  recharging  infrastructure,  and  potentially  providing  seed  funding 
for key R&D and demonstration projects (CARS 2020 Communication by November 2012). 

As  announced  in  the  2011  White  Paper  on  Transport26,  the  Commission  will  issue  an 
alternative  fuels  strategy,  which  will  also  address  an  appropriate  recharging/refuelling 
infrastructure. 

Building upon current industry consultations, the Commission will assess detailed proposals 
to follow up the Hydrogen and Fuel Cells PPP and the Green Cars PPP. 

Taking  into  account  national  specificities  and  needs,  Member  States  are  invited  to  support 
demonstration projects and develop appropriate infrastructures for clean vehicles and vessels 
adapted to their needs and following recommendations in the European Semester. 

The Member States and the regions are invited to exploit research and innovation strategies 
for  smart  specialisation,  to  support  development  research  including  pilot  lines  and 
demonstration projects and to promote co-operation along the value chain. 

vi) Smart grids 

Adequate  infrastructure  (including  smart  grid,  storage  and  balancing  capacity  solutions)  is 
needed  to  integrate  renewable  energy  into  the  electricity  system,  contribute  to  energy 
efficiency,  and  facilitate  new  demands,  e.g.  for  electric  vehicles.  The  Third  Energy 

25 

26 

"Proposal for a Regulation of the European Parliament and of the Council on Union guidelines for the 
development of the trans-European transport network, COM(2011)650/3" 
Roadmap to a Single European Transport Area – Towards a competitive and resource efficient transport 
system. COM(2011) 144 

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Liberalisation Package set out requirements for the installation of intelligent metering systems 
in at least 80% of households by 2020 as a first step towards the deployment of smart grids in 
the EU, whilst the Smart Grids Communication27 sets the overall policy framework to drive 
forward  their  deployment.  Overall, by  2020,  the  EU  will  need  to  invest  an  estimated  €60 
billion in these grids, rising to around € 480 billion by 2035.  

It is essential to set up the right framework conditions for industry to develop the technologies 
and production capacities needed to deliver this investment28. In parallel, the EU must deliver 
the standards needed to ensure the interoperability of smart grids across borders, as well as a 
common  minimum  set  of  standards  for  meters  and  advanced  metering  infrastructures.  The 
Commission has already issued the mandate M/490 in 2011 to the European Standardisation 
Organisations  to  develop  a  first  set  of  Smart  Grid  standards  by  the  end  of  2012.  Regular 
exchange  of  information  takes  place  with  international  actors  such  as  the  US  National 
Institute  for  Standards  and  technology  in  order  to  develop  compatible  standards  where 
possible. A general framework for a broader introduction of smart appliances still needs to be 
put in place, including for the more efficient use of low voltage devices. Based on cost-benefit 
analysis, key performance indicators for public procurement should be compiled to ensure the 
recognition  of  potential  benefits.  The  potential  for  integrated,  efficient  and  flexible  small-
scale  combustion  installations  could  be  achieved  through  timely  setting  of  appropriate 
emissions standards. Finally, appropriate R&D and innovation demonstration projects need to 
be developed through the European Industrial Initiatives on Electricity Grids, the SET-plan, 
and the European Innovation Partnership on Smart Cities and Communities.29  

Based  on  the  forthcoming  report  of  the  Task  Force  on  Smart  Grids,  the  Commission  will 
define  further  targets  for  the  deployment  of  smart  grid  components,  revise  and  broaden 
standardisation  mandates,  develop  guidance  on  key  performance  indicators,  and  identify 
potential Projects of Common Interest30 for trans-European energy infrastructure (end-2012). 

2. Accompanying measures 

The co-ordination bodies described above - or new specialist task forces where appropriate - 
will need to coordinate closely efforts with industry and Member States to deliver their policy 
agendas. These groupings will have different structure and time scope depending on the needs 
of the area of activity. However, all will bring together the relevant stakeholders and public 
authorities  to  define  the  actions  required  to  accelerate  the  uptake  of  new  technologies  and 
investment.31  

•  First,  a simplified, predictable and stable Internal Market regulatory framework for 
new products and services, including the appropriate standards and certification, should be 
agreed and announced as soon as possible. EU regulators and standardisation organisations 
need  to  develop  timely  regulations  and  standards  for  new  technologies  before  their  first 
introduction on to the market - the CEN standardisation mandates for electric vehicles and 
bio-based products are good examples. The task forces will recommend simplifications to 
the regulatory and administrative environment in their respective market areas, especially 

27 
28 
29 
30 
31 

COM(2011)202 of 12 April 2011. 
See the Commission Communication COM(2011) 202"Smart Grids from innovation to deployment". 
Investment in infrastructures is also a priority area for lending enabled by the EIB capital increase. 
Proposal for a Regulation on guidelines for trans-European energy infrastructure COM(2011)658 
They  will  be  set  up  in  full  respect  of  the  rules  on  expert  groups  and  other  bodies  established  by  the 
Commission (C(2010) 7649 and SEC(2010) 1360). 

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to help SMEs. It has also been recommended to Member States to simplify the regulatory 
environment in the European Semester.  

•  Infrastructure development must be coordinated and synchronised with increases in 
production  capacity.  For  example,  investment  in  key  EU  energy  infrastructures  such  as 
smart grids and energy storage is essential to the wide adoption of renewable energy, ICT, 
and the deployment of electric and hybrid vehicles. The provision of adequate and efficient 
transport  infrastructures,  inter-operable  logistics  and  high-speed  broadband  networks  are 
preconditions for industrial development. Likewise, new industrial capacities in production 
technologies must be developed in a timely manner, with investments in low energy and 
resource-efficient machinery and equipment. 

•  Thirdly,  it  is  essential  that  R&D  and  innovation  efforts  should  be  coordinated  across 
the  EU  to  ensure  the  timely  deployment  and  commercialisation  of  the  technologies.  In 
particular,  proof-of-concept  demonstration  projects  and  manufacturing  pilot  lines  are 
preconditions  for  the  deployment  of  technologies  on  an  industrial  scale.  Private-public 
partnerships  can  provide  the  funding  for  such  initiatives  using  Structural  funds  or  in  the 
framework  of  Horizon  2020  and  through  other  Community  programmes.  Risk-capital 
funding from public and most significantly from private sources can also be utilised.  

•  In  addition,  the  Commission  will  take  complementary  measures  to  ensure  that  the 
necessary  skills  are  available  for  the  development  of  these  markets  and  to  stimulate 
demand for the uptake of the new innovations.  

New working practices will help companies to employ an ageing workforce and attract skilled 
people  into  manufacturing.  Novel  technologies  are  changing  the  mix  of  jobs  and  skills 
required.  The  Commission  will  promote  the  transformation  of  workplaces  that  stimulate 
new forms of ‘active jobs’ and encourage the development of new skills, including e-skills.  

Wider  use  of  design,  as  well  as  other  non-technological  innovations,  is  one  of  the  key 
drivers  for  developing  high  value  products,  increasing  productivity  and  improving  resource 
efficiency.  To  enhance  the  role  of  design  in  innovation,  the  European  Design  Leadership 
Board has developed a set of proposals including: better access for companies to design; the 
promotion  of  design-led  innovation  for  manufacturing  systems;  the  promotion  of  design 
competencies;  raising  the  profile  of  design  in  the  EU  research  and  innovation  system;  the 
wider application of design in the public sector; and the differentiation of European design at 
a global level.  

Innovation policy can leverage its impact on economic growth by seamlessly combining the 
introduction of new technologies and working practices with demand-oriented measures such 
as standardisation, promoting the uptake of innovations in global supply chains or providing 
regulatory incentives. Europe has experience in demand-side policies, such as the successful 
Lead  Market  Initiative  that  developed  market-specific  roadmaps  and  demand-side  policy 
instruments.  Recently,  five  European  Innovation  Partnerships  have  been  announced  to  co-
ordinate demand-side and R&D policy instruments. 

Following  the  call  of  the  European  Council  in  March  2012,  it  is  important  to  further 
promote  demand-led  innovation  and  to  create  the  best  possible  environment  for 
entrepreneurs  to  commercialise  their  ideas  on  the  market.  Starting  in  late  2012,  the 
Commission will implement a horizontal action plan with three consecutive phases to boost 
demand  for  innovative  European  goods  and  services.  The  first  phase  serves  to  identify 

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markets, toolboxes and demand-driven models. In the following phase, the Commission with 
stakeholders will develop strategic roadmaps for demand-side actions in wider initiatives. In 
the  final  phase,  the  actions  set  out  in  the  strategic  roadmaps  of  the  second  phase  will  be 
implemented. In parallel, a new monitoring system will measure the impact of demand-side 
policies and the implementation of the strategic roadmaps. 

The Commission will develop and implement a horizontal action plan to boost the demand for 
innovative European goods and services (2012 onwards). 

The  Commission  will  establish  a  learning  network  on  workplace  innovation  in  Europe  to 
promote labour productivity and the quality of jobs (2013) and will implement an action plan 
for accelerating the take-up of design in innovation policy (2012 onwards). 

In 2013, the Commission will launch an independent review to assess whether the European 
standardisation system is able to adapt to the quickly evolving environment and to contribute 
to Europe's strategic internal and external objectives. 

B. 

Access to markets 

1. Improving the Internal Market for goods 

The  Internal  Market  for  goods  accounts  for  75%  of  intra-EU  trade  and  possesses  enormous 
untapped  potential  to  boost  EU  competitiveness  and  growth.  It  is  a  key  tool  to  achieve  a 
highly  competitive  social  market  economy.  In  particular,  globalisation,  specialisation  and 
innovation  are  having  profound  impacts  on  manufacturing  processes,  while  the  distinction 
between  “products”  and  “services”  is  becoming  increasingly  blurred.  However,  this  process 
may be creating new barriers and hindrances. Single market rules and procedures thus need to 
keep  pace  with  these  developments.  Twenty  years  after  the  1992  strategy,  a  wide  range  of 
products  is  still  un-harmonised  and  mutual  recognition  clauses  in  Member  State  legislation 
are not always correctly applied. Next year, the Commission will conduct a critical evaluation 
of  the  acquis  for  industrial  products,  including  a  study  and  extensive  consultation,  and  will 
produce a Roadmap for reform of the Internal Market for industrial products.  

Further  progress  needs  to  be  made  towards  the  full  internal  market  integration  of  certain 
sectors, such as security and defence. Despite the implementation of the Defence package, 
the  defence  sector  still  maintains  a  strongly  national  dimension  and  is  therefore  unable  to 
benefit from the potential economies of scale that are necessary to improve competitiveness 
and profitability. Further EU-level research and innovation initiatives are under preparation in 
the  civilian  security  area.  A  Task  Force  on  Defence  is  helping  to  develop  a  comprehensive 
strategy  for  a  world-leading  defence  industry  that  is  competitive  both  within  and  outside 
Europe.  Likewise,  products  and  services  based  upon  satellite  data  have  a  high  potential  for 
economic growth, and their market development should be encouraged and sustained. 

In  2010,  as  part  of  its  Smart  Regulation  strategy,32  the  Commission  developed  Fitness 
Checks to assess the overall regulatory framework in a particular policy area. These checks 
were  designed  to  identify  excessive  administrative  burdens,  examine  regulatory  overlaps, 
gaps and inconsistencies and assess the cumulative impact of legislation. Their findings serve 
as  a  basis  for  policy  decisions  on  the  future  of  the  relevant  regulatory  framework.  Fitness 
checks  are  underway  in  specific  policy  areas,  such  as  the  information  and  consultation  of 

32 

"Smart Regulation in the European Union" COM(2010)543 of 8 October 2010. 

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workers,  the  type-approval  of  motor  vehicles  and  EU  environmental  freshwater  policy. 
However, the ambition to take an overview of the main policies affecting a single economic 
sector  has  not  yet  been  put  into  effect.  The  Commission  will  therefore  carry  out  pilot 
horizontal sectoral fitness checks. The first two of these will look at petroleum refining and 
the  aluminium  sectors.  Both  sectors  are  critical  for  the  EU's  industrial  value  chain,  but 
urgently  require  new  investment  to  be  made  in  the  face  of  strong  international  competition. 
The fitness checks will focus on the implementation and interaction of those policies that are 
most  important  for  the  competitiveness  of  these  sectors33.  Future  fitness  check  in  other 
industrial products will follow.  

Governance and regulatory obstacles to the Internal Market also arise from policy areas that 
are  regulated  by  Member  States,  for  example  technical  rules,  refusals  to  apply  mutual 
recognition andmismatches between the 27 different sets of taxation rules. An upstream 
analysis  of  draft  technical  rules  can  prevent  the  emergence  of  regulatory  obstacles.  This  is 
precisely the objective of the 98/3434 notification procedure, which requires draft legislation 
containing technical rules on products and information society services to be communicated 
to  the  Commission  before  they  are  adopted.  The  preventive  nature  of  this  procedure  has 
avoided a large number of contraventions of free movement of goods rules. This notification 
procedure  can  also  be  used,  however,  to  improve  national  legislation  in  line  with  "Better 
Regulation"  principles  and  through  benchmarking.  Its  potential  can  be  further  exploited  by 
recommending  that  Member  States  use  competitiveness  proofing  in  the  context  of  national 
impact assessments. 

"Green  products  and  services"  represent  a  dynamic,  innovative  and  growing  market. 
However, the development in parallel of different  and  often inconsistent technical rules and 
labelling schemes in Member States and through private initiatives might lead to confusion of 
consumers,  and  obstacles  to  the  free  movements  of  these  products  and  services  across  the 
internal  market.  The  Commission  is  studying  the  best  possible  ways  to  integrate  "green 
products and services" in the Internal Market, including environmental footprinting35. 

The  lack  of  coordination  between  Member  States  on  methodologies  and  criteria  for  taking 
decisions on pricing/reimbursement of medicinal products causes incoherencies and delays 
in  access  to  innovative  medicines.  Whilst  this  is  being  partly  addressed  through  the 
Transparency directive and the work on health technology assessment, a wider policy strategy 
agenda and roadmap is needed in order to secure the competitiveness and long-term viability 
of the EU pharmaceutical industry. 

There  is  scope  for  improving  the  EU  framework  for  Market  surveillance.  The  General 
Product Safety Directive (GPSD) applies to all consumer products, both harmonised and un-
harmonised,  while  the  provisions  on  market  surveillance  currently  contained  in  Regulation 
765/2008 and in sector-specific legislation apply to harmonised products, whether consumer 
or  industrial.  There  is  thus  the  potential  for  confusion  among  both  national  authorities  and 
economic  operators  as  to  which  system  applies.  A  new  proposal  under  preparation  for  a 
market surveillance regulation would combine all of these market surveillance provisions and 
address the deficiencies of the present legislative framework. 

33 

34 

35 

E.g. the assessments by Member States presented at the Commission's EU Refining Roundtable on 15 
May 2012 concerning the combined impact of EU policies on refining. 
Directive  COM(98/34)/EC  Laying  down  a  procedure  for  the  provision  of  information  in  the  field  of 
technical standards and regulations and of rules on Information Society services. 
The environmental footprint proposal announced in the Single Market Act will be launched in 2013 in a 
Commission Communication. 

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Market  surveillance  protects  European  citizens  from  non-compliant  products  (e.g.  risks  to 
health and safety) and ensures fair trading conditions. The policing of the Internal Market is 
done at national level, with Member States responsible for both surveillance and enforcement. 
Surveillance in particular is an enormous task. There is evidence of weak market surveillance 
for some products, such as capital goods manufactured by the European machinery industry36. 
A multi-annual action plan for market surveillance is needed to energise pan-European market 
surveillance and boost cooperation and mutual assistance. This will make life much harder for 
rogue traders, and help to further integrate the single market for compliant and safe products. 
Responsible operators will therefore no longer be put at a competitive disadvantage. 

As the borderline between services and goods becomes less clearly defined, barriers to trade 
in services are directly hampering trade in goods to an increasing degree. Business services, in 
particular,  are  crucial  to  industrial  competitiveness  and  innovation.  They  are  particularly 
relevant  for  SMEs,  who  rely  more  on  purchasing  services  from  the  market  than  from  large 
companies. 

By  the  end  of  2012,  the  Commission  will  adopt  a  Product  Safety  and  Market  Surveillance 
Package  that  would  consist  of  a  revised  General  Product  Safety  Directive,  a  new  Market 
Surveillance  Regulation  and  a  Communication  on  a  multi-annual  action  plan  for  market 
surveillance for 2012-15. 

The Commission will evaluate the state of the "acquis" in the area of industrial products as a 
whole, with a view to preparing a Roadmap for Reform of the Internal Market for industrial 
products (2013). 

The  Commission  will  undertake  fitness  checks  of  the  aluminium  and  petroleum  refining 
sectors focussing on the implementation and interaction of those policies most important for 
competitiveness. 

The Commission will develop a comprehensive strategy to support the competitiveness of the 
defence  industry  and  enhance  the  efficiency  of  the  defence  market.  A  Communication  is 
expected by April 2013.  

The Commission will bring forward additional initiatives to foster internal market integration 
in the fields of security and space. 

The Commission will further exploit the potential of the 98/34 procedure as an instrument for 
industrial policy and to help guide future EU legislative priorities, in particular to encourage 
Member  States  to  introduce  impact  assessments  and  competitiveness  proofing  at  the  draft 
stage of their national legislative processes. 

The Commission will launch a policy strategy agenda to strengthen the competitiveness of the 
pharmaceuticals industry.  

A High-Level Group on Business Services will be created by the end of 2012. Following the 
report  of  this  Group,  the  Commission  will  develop  a  future  work  programme  with  policy 
recommendations by 2014. 

36 
http://ec.europa.eu/enterprise/sectors/mechanical/machinery/market-surveillance/index_en.htm 

DG ENTR conference on Market Surveillance and Machinery, 24 November 2011: 

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2. Fostering entrepreneurship to render the Internal Market more dynamic  

Although more than one third of all new jobs come from small, high-growth firms, EU small 
firms  do  not  grow  as  fast  as  in  the  US37.  Building  upon  the  Small  Business  Act,  an 
Entrepreneurship  Action  Plan  will  foster  the  growth  of  start-ups,  facilitate  the  transfer  of 
businesses,  provide  support  for  early-stage  businesses,  and  develop  efficient  bankruptcy 
procedures that give entrepreneurs a second chance.  

Entrepreneurs need to exploit the full potential of the digital single market in the EU that is 
expected to grow by 10% a year up to 201638. The Commission has put the development of 
the  internet  and  digital  technologies  at  the  heart  of  the  Europe  2020  strategy  through  the 
Digital  Agenda  for  Europe39  and  Industrial  Policy  Flagships.  EU  policy  provides  the 
framework  conditions  for  the  digital  single  market,  including  the  legislative  basis  for  e-
commerce  (Directive  2000/31/EC)40.  In  the  future,  the  Common  European  Sales  Law  will 
offer uniform rules for cross-border online sales and the digital dimension is a key part of the 
European Consumer Agenda strategy41.  

Member States and the Commission must contribute to speed up the full implementation of 
the Digital Single Market. Member States have to simplify VAT registration procedures and 
create  one-stop  electronic  registration  to  facilitate  cross-border  digital  commerce  by  small 
businesses. The Enterprise Europe Network will provide training and inform those SMEs who 
want to develop online business about their obligations in  the context  of  cross-border sales. 
Guidelines  and  quality  labels  for  eSkills  could  provide  a  commonly  agreed  skillset  for 
education  and  training  providers  both  at  EU  and  at  Member  State  level.  Standards  and 
guidelines are essential for digital inter-operability in supply chains.  

However,  it  is  not  sufficient  simply  to  develop  the  framework  conditions  and  to  encourage 
to  unleash 
entrepreneurs 
entrepreneurship in the digital economy itself in order to succeed. 

the  digital  single  market.  Europe  also  needs 

to  exploit 

The Commission will propose an Entrepreneurship Action Plan setting out recommendations 
to  Member  States  on  improvements  to  the  framework  conditions  and  support  measures  for 
entrepreneurship (November 2012) taking also additional measures to stimulate the uptake of 
digital technologies and e-commerce. The Commission will also propose targeted actions first 
quarter 2013 to support web entrepreneurs in the EU. 

3.  The  Internal  Market  for  technology,  the  unitary  patent  and  the  protection  of 

intellectual property rights 

Intellectual  property  rights  (IPRs)  are  vital  for  innovation  and  growth  as  they  provide 
protection to those companies that invest in R&D. By rewarding creativity and inventiveness 
and protecting companies and innovation from undue appropriation and use of technological 
knowledge, IPRs are at the heart of the innovation system and form the basis of all technology 

37 

38 
39 
40 

41 

Albert Bravo-Biosca "The dynamics of Europe's industrial structure and the growth of innovative firms" 
JRC Conference Seville, October 2011. 
Boston Consulting Group "The internet economy in the G-20" March 2012. 
COM(2010)245. 
COM(2011) 942 "A coherent framework for building trust in the Digital Single Market for e-commerce 
and online  services".  See  also  COM(2011)  942  final  “A  coherent  framework for  building  trust  in  the 
Digital Single Market for e-commerce and online services”. 
COM(2012)225 "A European Consumer Agenda - Boosting confidence and growth". 

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transfers.  It  is  necessary  to  ensure  that  the  IP  framework  serves  the  needs  of  the  new 
economy, in particular for open and collaborative innovation. 

The  introduction  of  the  unitary  patent  and  the  development  of  a  unified  patent  litigation 
system in Europe will reduce costs42 and the fragmentation of patent protection in the Single 
Market,  thereby  eliminating  unnecessary  litigation  costs  and  enhancing  legal  certainty.  In 
addition, a cost free automatic translation tool43 will be available for all European languages 
by the end of 2014. Inventors seeking patent protection have tools available for accelerating 
the  procedure  up  to  the  grant  of  a  patent.  Initiatives  based  on  utilising  the  work  of  other 
offices  as  well  as  an  international  harmonisation  of  substantive  patent  law  (comprising  a 
worldwide harmonised grace period to be elaborated with all its associated issues), can further 
strengthen the patent system in the longer term and contribute to further reducing costs.  

Other  instruments  could  be  used  to  complement  the  patent  system.  Optimising  the  use 
and protection of trade secrets is one of them. Not all innovation steps are patentable, but their 
results  may  merit  protection  against  misappropriation.  Whilst  some  inventions  may  be 
patentable, companies may consider they are better protected through secrecy. Innovators may 
thus  sometimes  choose  to  protect  innovations  (and  the  returns  to  innovation)  just  keeping 
their trade secrets undisclosed. There is no EU law on the protection of trade secrets and this 
area is regulated at national level. However, there are significant differences in national laws 
on the nature and scope of trade secrets protection, as well as regarding the means of redress 
and  remedies.  The  Commission  is  examining  whether  existing  differences  in  national 
approaches  may  create  barriers  and  transaction  costs  for  companies  operating  cross-border, 
not least for SMEs.  

Non-listed  firms  are  subject  to  national  accounting  rules  resulting  from  the  transposition  of 
the  Fourth  Accounting  Directive.  Although  this  directive  allows  Member  States  to  develop 
rules in that sense, there is currently no widespread acknowledgment of the value of patents 
and other IPRs, especially in SMEs' financial statements. Steps will be taken to explore ways 
that  can  allow  firms  to  get  effective  recognition  of  the  value  of  their  patents,  including  in 
their  financial  statements  and  to  explore  potential  benefits  of  such  enhanced  disclosure  in 
terms of access to finance. In addition, insurance schemes against IP litigation are becoming 
increasingly significant. 

An effective IPR system needs to include ex-ante safeguards and ex-post enforcement against 
those  who  do  not  respect  the  rules.  Patent  ambushes,  patent  hold-ups,  patent  wars  and 
infringements of these rights (such as counterfeiting and pirating) harm victims directly and 
undermine the trust in the IPR system. 

Rapid  technological  progress  in  industries  with  economy-wide  significance  has  led  to  risks 
that  may  result  from  patent  thickets44  and  patent  ambushes45.  Studies  have  detected  patent 

42 
43 
44 

45 

Registration and translation costs for obtaining patent protection in Europe will fall by up to 80%. 
See "Patent Translate", http://www.epo.org/searching/free/patent-translate.html. 
"Patent thickets" occur where a significant number of patents bear on a particular product and are held 
by different patent owners. Royalty stacking results from independent pricing of these complementary 
patents.  Patent  thickets  are  prevalent  in  communication  technology,  semiconductors,  optics,  electrical 
machinery and medical technology. 
"Patent  ambushes"  occur  when  the  participant  in  a  standard  setting  procedure  discloses  that  he  holds 
patents or patent applications regarding a technology included in the standard only once the standard is 
adopted and then refuses to grant a licence for these patents or grants it only on unfair, unreasonable or 
discriminatory terms. 

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thickets in 9 out of 30 technology areas. An efficient and proportionate regulatory system 
could foster forms of pro-competitive cross-licensing or patent pool arrangements as effective 
market-driven  instruments  to  mitigate  those  risks.  As  part  of  that  regulatory  system,  the 
Commission will update its rules on agreements on technology transfer. In addition, the work 
on  existing  safeguards  such  as  fair,  reasonable  and  non-discriminatory  terms  (FRAND) 
licensing  can  be  taken  further.  Complementing  the  safeguards,  a  closer  cooperation  and 
information exchange between the patent offices and the standardisation organisations could 
bring significant improvements in the short run. 

IPRs  are  challenged  by  ever  increasing  levels  of  counterfeiting  and  pirating  of  products. 
Commission reports on customs seizures at EU borders show that the number of seizures and 
cases  has  increased  significantly  since  2000.  IP  rights  which  cannot  be  enforced  are 
meaningless. Therefore, a minimum common framework governing the civil enforcement of 
IPR has been in place since 2004 (Directive 2004/48/EC), allowing not only for action against 
direct infringers but also against (online and offline) intermediaries whose services are used 
by  third  parties  to  infringe.  This  framework,  which  is  currently  under  review,  allows 
rightholders to take action if their IP rights have been infringed. 

Complementary  to  measures,  remedies  and  sanctions  provided  for  by  the  law,  voluntary 
collaborative  approaches  could  strengthen  in  a  very  pragmatic  way  the  fight  against 
counterfeiting  and  piracy  such  as  the  EU  Observatory  on  Infringements  of  IPRs46.  Also  the 
Memorandum of Understanding on the sale of counterfeit goods via the internet47 has proven 
to be a successful way to reduce the sale of fakes via the internet. 

- 

- 

- 

- 

- 

The Commission is examining the very fragmented legal framework for trade secrets 
protection  and is working on  possible options to make it efficient and less costly for 
business  and  research  bodies  to  invest  in,  license,  transfer  and  share  valuable 
knowledge and information throughout the Internal Market. 

The  Commission  will  consider  most  adequate  valuation  methods  as  well  as  the 
relationship between the IPR market and the appropriate valuation and disclosure of 
IPRs  in  accounting,  following  the  conclusions  of  an  expert  group  on  these  issues  in 
2013. 

The Commission will consider measures that can contribute to increase transparency 
and improve the treatment of IPR in standardisation. 

The  Commission  will  foster  cooperation  between  patent  offices  and  standard  setting 
organisations including initiatives such as patent landscaping and database linking. 

The  Council  and  European  Parliament  should  urgently  adopt  the  revision  of 
Regulation (1383/2003/EC) on customs enforcement. 

4. International markets 

The European Union is the world's leading trading power, but the world economy is changing 
rapidly  and  becoming  increasingly  multipolar.  The  major  emerging  economies  (notably 
Brazil, Russia, India and China) continue to grow quickly, and most of them have put in place 

46 
47 

Regulation (EU) No 386/2012 of 19.04.2012; OJ L 129, 16.05.2012, p.1 
http://ec.europa.eu/internal_market/iprenforcement/stakeholders/index_en.htm#maincontentSec2  

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ambitious industrial policies with a strong focus on technologies and industrial innovation in 
order  to  "climb  the  quality  ladder"  and  move  towards  greener  production.  There  is  also  a 
disturbing tendency to resort to protectionist measures and discriminatory practices48 . 

The Commission works to open markets and connect Europe to the main sources and regions 
of  global  growth.  The  Commission  will  continue  to  push  for  an  ambitious  trade  and 
investment agenda49, in a spirit of reciprocity and mutual benefit as well as a comprehensive 
enforcement agenda, focusing in particular on market access, dismantling barriers, opening up 
public procurement, ensuring effective enforcement of trade rules (e.g. related to subsidies), 
the  best  standards  of  protection  for  international  investments  and  the  full  protection  of 
intellectual property rights. The consistent application of competitiveness-proofing in impact 
assessments at the start of trade and investment negotiations, and providing a comprehensive 
analysis  for  the  European  Parliament  and  the  Council  once  negotiations  are  concluded,  will 
help to optimise the impact of FTAs on industry and on the EU economy.  

The notification procedure of the WTO Technical Barriers to Trade (TBT) is a powerful tool 
to improve market access, but stakeholders, especially SMEs, do not make sufficient use of it. 
The Commission will ensure that TBT information about market access requirements is made 
more accessible and will make the procedure more visible and accessible to stakeholders.  

In conformity with the Lisbon Treaty, a comprehensive international investment policy is 
being  developed50  through  a  combination  of  bilateral  negotiations,  dialogues  with  key 
partners and the active participation in international fora. This should lead to improved access 
to key markets, high standards of protection of EU investments in third countries and provide 
a level playing field for EU companies. In parallel, it is essential to maintain an open and non-
discriminatory environment in order to further increase the attractiveness of investing in the 
EU51, in particular for green-field foreign direct investments that create growth and jobs and 
improve, where necessary, the transparency of FDI in the EU. 

To  secure  access  to  raw  materials,  and  also  to  its  trade  policy  initiatives52,  the  Commission 
will  continue  developing  its  "raw  materials  diplomacy"53and  improve  the  targeting  of 
regulatory  cooperation  in  this  area.  Target  regions  and  countries  include  Greenland54, 
Mediterranean partner countries, South Caucasus countries, Latin America, Africa and Asia. 

EU  companies  need  to  be  better  supported  and  accompanied  in  their  internationalisation 
process, in order to increase the share of internationally active EU SMEs (currently estimated 
at 13%). Commission-led "Missions for growth" in third countries with representatives of the 
EU  industry  and  SMEs,  which  should  not  be  confused  with  the  traditional  trade  promotion 
activities, can play a positive role in providing a common framework for industrial and SME 
policy cooperation and help foster business relations.  

48 
49 
50 
51 
52 
53 

54 

COM(2012)70, "Trade and Investment Barriers Report 2012". 
COM(2010)612, "Trade, Growth and World Affairs". See also SWD(2012)219. 
COM(2010)343, "Towards a comprehensive European international investment policy". 
European Parliament resolution of 3 July 2012 on the attractiveness of investing in Europe. 
DG TRADE, "EU Trade Policy for Raw materials. Second Activity Report".  
In  this  field  the  Commission  is  also  developing  other  initiatives  such  as  the  so  called  country-by-
country reporting. 
A letter of intent on co-operation in the area of mineral resources with Greenland was signed in June 
2012 - Developing a European Union Policy towards the Arctic Region, JOIN(2012) 19 final 

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The  EU  is  working  on  a  review  of  the  strategy  for  the  enforcement  of  intellectual  property 
rights in third countries as a major component of its initiatives against counterfeiting. In this 
context,  the  Commission  directly  supports  SMEs  to  protect  their  intellectual  assets  in  key 
foreign markets with the SME IPR Helpdesks and user-friendly internet-based tools, like the 
joint  EU  and  US  TransAtlantic  IPR  Portal.  The  effectiveness  of  EU  business  support 
structures in third countries will also be upgraded. 

Finally, the Commission will accompany external actions with internal initiatives and pursue 
mutual  supportiveness  between  policies  and  regulatory  initiatives  in  the  Single  Market  and 
external priorities, avoiding regulatory approaches that distort trade.  

The Commission will: 

– 

– 

– 

– 

Take actions to increase the visibility of the TBT notification procedure and make it 
more accessible to industry, in particular to SMEs. 

Further  develop  the  “raw  materials  diplomacy”  in  a  targeted  way  and  fully 
implement the SMEs internationalisation strategy55. 

Support the enforcement of intellectual property rights in third countries and extend 
tools  to  secure  SME  IPRs  in  international  markets,  including  SME  IPR  Helpdesk 
initiatives in the ASEAN and Mercosur regions and improve the effectiveness of EU 
business  support  structures  in  third  countries  by  linking  them  with  the  Enterprise 
Europe Network. 

Further promote international regulatory cooperation and convergence, notably vis-
à-vis neighbouring countries, in order to accompany the creation of markets for new 
products  and  technologies  and  in  view  of  ensuring  mutual  supportiveness  between 
the Single Market initiatives and external priorities. 

C. 

Access to finance and capital markets 

The recovery and future growth of European industry depend on the availability of capital to 
carry out the necessary investments to adopt new technologies and equipment to increase our 
competitiveness.  Unfortunately,  our  stakeholder  consultation  and  surveys  clearly  show  that 
access to capital markets and credit constitutes a major problem for European business.  

The  weak  demand  for  credit  explains  in  part  the  currently  low  levels  of  bank  lending,  but 
supply side restrictions are very important too.56 Necessary deleveraging and restructuring of 
the  banking  sector  are  likely  to  delay  the  recovery  of  bank  lending.  The  problem  is 
particularly  serious  for  SMEs.  According  to  the  April  “SME  Access  to  Finance  Survey" 
conducted by the ECB, SMEs reported higher rejection rates when applying for a loan (13%, 
up from 10%).  

55 

56 

COM(2011)702,  "Small  Business,  Big  World  -  a  new  partnership  to  help  SMEs  seize  global 
opportunities". 
The ECB’s Financial integration report for 2012 states that “impairment and fragmentation of euro area 
banks’ funding channels also affected, via the transmission channel, the borrowing conditions available 
to the real economy”. ECB, Financial Integration Report, April 2012, page 57. 

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Most European industrial firms rely heavily on bank credit. In the USA, debt securities and 
stock market capitalisation both exceed the total volume of bank assets. Capital market debt 
accounts for corporate funding is just 7% of GDP in Europe compared with 35% in the USA57 
This structural feature of the EU economy makes EU industry more sensitive to the impact of 
the banking crisis, given the limited availability of alternative financing sources. 

Against  this  backdrop,  the  Commission  is  proposing  a  number  of  measures  to  improve  the 
access to capital for industry. A first group of measures relies on public sector support, while 
the second group includes measures that could help facilitate access to capital markets.  

1. 

Public sector support to facilitate access to capital to industry 

The new programming for the Multiannual Financial Framework for 2014-20 will simplify 
and  reinforce  the  effectiveness of  financial  instruments  to  support  innovative  activities.  The 
possibility  of  using  the  resources  allocated  to  the  Horizon  2020  in  combination  with  the 
COSME  programme  will  facilitate  the  transition  from  technological  development  to  the 
industrial  and  market  exploitation  of  new  technologies.  The  expansion  of  the  risk-sharing 
financing facility will help lower risks for high-growth potential companies. 

Cohesion Policy provides an integrated approach to address the needs of SMEs, covering all 
phases of business creation and development, and is the largest source of EU support to SMEs 
with a total volume of EUR 25 billion directly targeted at SMEs in the current financial period 
(2007-13)  out  of  the  EUR  55  billion  for  Regional  Policy  business  support.  The 
competitiveness of SMEs is also a clear priority on which future Cohesion Policy funding will 
be concentrated. The support measures combine direct financial support, both in the form of 
grants  and  revolving  financial  instruments,  with  advice  and  support  services,  including  for 
vocational training and entrepreneurship. Its aim is to help SMEs benefit from networking and 
clustering  and  to  develop  new  business  models  and  bring  new  ideas  faster  to  the  local  and 
global markets. 

The  Commission  will  cooperate  with  the  EIB  and  the  EIF  to  ensure  the  implementation  of 
more efficient and effective financial instruments for the investment of the resources allocated 
in the Horizon 2020 and COSME programmes.  

Member  States  should  ensure  that  the  effective  use  of  cohesion  and  structural  funds 
strengthened  by  the  concept  of  "smart  specialization"  will  contribute  to  growth  and  job 
creation by improving industrial competitiveness (2013).  

To  facilitate  access  to  finance58,  the  Commission  will  launch  a  single  portal  providing 
information on how to access finance from the different EU programmes in each country.59 

In addition to these measures aiming at the medium-to-long term, the capital increase of the 
European Investment Bank of €10 bn is estimated to generate €60 bn of additional lending 

57 
58 
59 

Standard & Poors, "The Credit Overhang", RatingsDirect, July 31.2012, page 5.  
COM(2011) 870 final 
To access EU financial instruments, please visit the following website to locate banks or venture capital 
funds that provide finance in your country: http://access2finance.eu  

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capacity  in  the  near  future.  In  principle,  between  €10-15  bn  will  be  allocated  to  SMEs,  a 
similar amount to innovation and between €15-20 bn to resource efficiency 60. 

In order to speed up recovery and growth: 

– 

– 

– 

– 

The increased lending capacity resulting from the capital increase of the EIB will be 
made available as early as 2013, using the current lending facilities of the EIB. After 
2014,  the  new  instruments  developed  for  the  new  financial  framework  will  enter  in 
action.  

Member States should examine in the context of the current programming period of 
structural funds 2007-2013 all opportunities to direct remaining resources towards 
the  six  priority  lines  defined  in  this  communication  and  in  projects  aimed  at 
increasing the competitiveness of SMEs in particular. 

Implementation of the Action Plan on Access to Finance remains a high priority at 
European level to improve businesses’ access to finance. Member States should also 
take actions to facilitate financing at the local, regional and national levels.  

Member  States  should  also  take  action  to  facilitate  financing  environment  at  the 
local, regional and national levels in compliance with State aid rules.  

2. Access to capital markets 

The crisis has further reduced the already limited number of financing choices available for 
SMEs and midcaps. The securitisation market for SME loans remains flat. A revival of this 
market in an environment of more effective prudential supervision and regulation to preserve 
the stability of financial markets could contribute to long-term financing of projects. 

The  deteriorating  economic  outlook  has  also  taken  its  toll  on  the  availability  of  venture 
capital. Many venture capital funds are nursing their portfolio of companies and are shunning 
new  deals.  European  venture  capital  funds  continue  to  be  largely  nationally  oriented,  too 
small  and  often  unable  to  secure  a  deal  flow  as  the  framework  conditions  are  still  not 
favourable enough.  

Facilitating access to capital markets for SMEs has become an important objective at both EU 
and  national  level.  In  December  2011,  the  Commission  adopted  an  action  plan  to  improve 
access to finance for SMEs.61 Among other measures, this action plan includes proposals to 
create a true Single Market for Venture Capital funds in Europe and for a new European 
Social  Entrepreneurship  Funds  regime  presented  by  the  Commission  in  December  2011. 
Agreement  on  these  proposals  by  the  Council  and  European  Parliament  should  be  reached 
urgently given the importance of these measures for fast growing SMEs.  

In  addition  to  equity,  other  types  of  financing  channels  could  be  considered.62  The  most 
traditional of them is the private placement system - well established in the USA - allowing 

60 

61 
62 

EIB Lending Priorities Associated with a Capital Increase: A joint European Commission and European 
Investment  Bank  report  to  the  European  Council  at  http://www.eib.org/attachments/lending-policy-
associated-with-a-capital-increase-final.pdf 
COM(2011) 870 final. 
Several  Member  States  already  provide  SMEs  and  midcaps  with  innovative  alternative  financing 
means.  In  Germany,  five  stock  exchanges  have  carried  out  50  bond  issuances  for  midcaps  with 

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the insurance and pension fund industry to supply capital directly to business without banking 
intermediation. Other channels include supply chain finance, asset-based financing, factoring 
or invoice discounting, leasing, business angels, and peer-to-peer lending. 

Progress in the development of these financing options will take time and require prudential 
consideration by the regulator. The SME market labels recently proposed in the revision to the 
Markets  in  Financial  Instruments  Directive  (MiFID)  could  be  very  useful  to  strengthen 
investor protection. In the meantime, some building blocks to overcome current obstacles to 
cross  border  activities  can  be  provided  in  the  short  term.  For  instance,  guidelines  could  be 
provided to harmonise the scoring of SMEs across the EU. They would facilitate cross border 
operations by SMEs and midcaps . 

In  the  Green  paper  to  be  presented  around  the  end  of  2012  on  the  financing  of  long  term 
investment  in  the  EU,  the  Commission  will  further  look  into  how  to  facilitate  and  diversify 
access to finance for SMEs and midcaps.  

The  Commission  will  foster  the  exchange  of  best  practices  amongst  Member  States  on 
alternative means of financing SMEs and mid-caps. Countries where venture capital markets 
is still seriously underdeveloped should review the operating environment of venture capital 
funds  to  evaluate  the  appropriate  action  that  would  improve  the  access  to  equity  capital  of 
firms  with  high  growth  potential.  Equally  there  should  be  adequate  incentives  for  business 
angels to make angel investing attractive. 

The  Commission  invites  the  Council  and  the  European  Parliament  to  quickly  adopt  the 
proposal for a Regulation on European Venture Capital Funds63. 

The  Commission  will  in  2012  complete  the  examination  of  tax  obstacles  to  cross  border 
venture  capital  investments  and  present  proposals,  where  necessary  to  facilitate  these 
investments, while at the same time preventing tax avoidance and evasion.  

D. 

1. 

The crucial role of human capital 

Addressing the current challenges: job creation 

Market adjustments during the crisis and its aftermath require close coordination of relevant 
EU policies and for joined-up efforts on the part of the EU and Member States. To that end, 
Member  States  have  been  invited  by  the  Commission  64  to  place  greater  emphasis  on  job 
creation policies, as indicated in the Employment Package proposed in April by the European 
Commission.  Member  States  must  emphasise  job  creation  policies,  especially  in  exploiting 
the  potential  of  new  technologies  and  the  green  economy  and  to  address  youth 
unemployment.  Transforming  the  economy  along  these  paths  will  increase  competitiveness 
and provide important sources of job creation that is indispensable to achieve the 75% EU 
employment target by 2020 through 17.6 million new jobs to be created.  

individual  volumes  usually  ranging  between  30  and  100  million  euros.  Two  new  alternative  markets 
will be launched this autumn in France and Sweden. In Italy, the fixed income market will broaden the 
possibilities  for  trading  to  include  previously  non-listed  securities.  The  Department  for  Business, 
Innovation and Skills in the UK has launched a comprehensive review of alternative financing channels, 
including fixed income markets. 
COM(2011)860 final 
COM(2012) 173 final, Towards a job-rich recovery, COM(2012) 299 final, Action for Stability, Growth 
and Jobs. 

63 
64 

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Competitive and efficient industrial policy also relies on dynamic labour markets and labour 
mobility  is  a  key  adjustment  variable  in  this  process.  The  transformation  of  the  European 
Employment  Services  tool  (EURES)  into  a  European  placement  and  recruitment  tool  is 
designed to facilitate the matching, placement and recruitment in the EU. 

The crisis has  shown that, in  times  of economic contraction, internal flexibility can be very 
effective as a means of maintaining employment and lowering adjustment costs, as confirmed 
in the consultation on the Restructuring Green Paper65, but this requires measures to facilitate 
smooth employment transitions both by social partners and public authorities. Member States 
should pay attention to tailored and balanced reforms in employment protection legislation in 
order to remedy segmentation or to halt the excessive use of non-standard contracts and the 
abuse  of  bogus  self-employment.  Improving  the  quality  of  traineeships  in  Europe  will  help 
facilitate education-to-work transitions and increase the employability of young people. 

A strong social dialogue is a common feature in those countries where labour markets have 
proved to be more resilient to the crisis. It is important, therefore, to involve the European and 
national social partners in more consistent exchanges of views.  

The Commission urges Member States to adopt an ambitious  approach and policies  for job 
creation as part of their National Job Plans. 

The  reform  of  the  network  of  European  employment  services  in  the  EEA  EURES  will  help 
manage skills needs and job transitions. 

A  framework  should  be  finalized  in  2012  to  engage  social  partners  in  the  design  of 
employment  policies,  including  skills  and  training,  within  the  European  Semester  of  policy 
coordination. 

The  Commission  is  working  towards  a  Quality  Framework  for  Traineeships,  which  should 
encourage  companies  to  offer  traineeships  providing  good  quality  learning  content,  decent 
working conditions and a good stepping stone for entering the labour market. 

2. Investments in skills and training to accompany structural change 

The  success  of  European  industry  will  depend  on  its  capacity  to  tap  into  the  existing  and 
future potential of Europe's human capital, with special focus on the six priority action lines 
as  defined  in  this  Communication.  Our  consultation  has  highlighted  the  importance  that 
industry  attaches  to  skills  for  competitiveness.  The  expert  group  on  New  Skills  for  New 
Jobs66 clearly showed the need to bring together education and training with industry to better 
anticipate the future demand for skills.  

Skills are a key driver for growth, employment and competitiveness: they lay the foundation 
for  productivity  and  innovation.  However,  Europe  faces  serious  challenges  related  to  the 
supply  of  skills.  Already  today,  mismatches  –  and  in  some  Member  States  even  skills 
shortages – hamper growth and employment. The education system must provide the right 
skill  set  for  use  in  industry,  particularly  for  school  leavers  and  graduates.  Investment  in 

65 
66 

EN 

"Restructuring and anticipation of change: what lessons from recent experience?" COM(2012)7. 
New  Skills  for  New  Jobs:  Action  Now.  A  report  by  the  Expert  Group  on  New  Skills  for  New  Jobs 
at
Commission, 
prepared 

European 

available 

February 

2010 

the 

for 

http://ec.europa.eu/social/main.jsp?catId=568&langId=en 

26 

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training  is  also  investment  in  innovation,  since  much  technical  change  results  from 
incremental innovations by skilled workers and engineers on the factory floor67. However, a 
prerequisite  to  investing  in  new  skills  and  training  is  the  need  to  further  develop  tools  to 
monitor and anticipate needs and mismatches in the area of skills. At European level, several 
tools are currently being developed to that end. 

3. Anticipation of employment and skills needs and management of restructuring within 
businesses 

Anticipation  of  employment  and  skills  needs  is  recognised  as  vital  to  the  success  of  every 
business;  it  influences  the  competitiveness  and  the  long-term  perspective  of  companies 
irrespective of the industrial sectors in which they are active. In this context, good anticipation 
and well prepared restructuring can have a positive impact not only on businesses' sustained 
competitiveness, but can produce positive spillover effects to other markets and sectors, while 
increasing the overall employability of the labour force and facilitating their transition to new 
jobs.  The  responses  to  the  Commission's  Green Paper  on  "Restructuring  and  anticipation  of 
change:  lessons  from  recent  experience"  confirm  that  anticipation  is  essential  to 
investments  in  human  capital,  while  one  of  the  main  challenges  remains  to  define  the 
employment  and  skills  needs  and  invest  accordingly.  In  particular,  high-growth  small  and 
medium  size  businesses'  capacity  to  anticipate  employment  and  skills  needs  is  much  more 
limited as compared to large companies hence the compelling need to boost their capacity to 
anticipate and make the appropriate choices in terms of human capital investments, also with 
a view to fully tapping their potential to drive innovation and growth in Europe.  

In order to match skills and jobs, the Commission will:  

1. develop a European multilingual classification of Skills, Competences and Occupations; 
2. promote the creation of the European Sector Skills Councils and of Knowledge and Sectors 
Skills  Alliances  and  support  the  development  of  multi-stakeholders  partnerships  in  the  ICT 
sector to improve the skills shortage in the ICT sector. 

The Commission will promote the uptake of standardised skills certification schemes through 
the Intelligent Energy Europe Programme in 2013/2014. 

The  Commission  will  support  Member  States  in  "rethinking  skills"  by  providing  them  with 
policy  guidance  in  a  Communication  in  November  on  implementing  efficient  reforms  and 
developing the effective education and training systems that will lead to a better skills supply. 

IV. 

CONCLUSION: GOVERNANCE AND GOALS 

Industry  can  make  a  major  contribution  to  take  the  EU  economy  out  of  crisis.  This 
Communication has outlined a proactive industrial policy that can raise our competitiveness 
and  lay  the  foundations  to  reindustrialise  Europe.  The  measures  proposed  serve  to  enhance 
and underpin the strategic approach to industrial policy proposed in 2010. 

67 

The European Institute of Innovation and Technology (EIT) plays a fundamental role in nurturing talent 
across borders and fostering people-driven innovation via the integration of research, higher education 
and business – the Knowledge triangle. Through the Knowledge and Innovation Communities (KICs), 
the  EIT  provides  new  career  paths  between  higher  education  and  the  private  sector,  and  innovative 
schemes  for  professional  development.  Entrepreneurship  is  a  key  component  of  the  EIT  KICs 
programmes, through which world-class researchers and students are equipped with the knowledge and 
attitudes to turn ideas into new business opportunities. 

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In  order  to  ensure  the  proper  implementation  of  these  actions,  the  Commission  will  closely 
monitor a number of key variables. 

1. Investment 

– 

Gross  fixed  capital  formation  as  a  share  of  GDP  was  18.6%  in  2011.  Before  the 
crisis, it reached 21.25% of GDP in 2007. The investment effort needed to improve 
our  productivity  would  require  pre-crisis  investment  levels  in  2015  and  average 
levels of above 23% until 2020. Investment in equipment is currently between 6 and 
7%  of  GDP.  To  improve  productivity  and  introduce  new  technologies  it  should 
recover pre-crisis levels and grow steadily at rates above 9% of GDP until 2020. 

2. Internal market trade 

– 

Trade  in  goods  in  the  Internal  Market  is  currently  just  below  21%  of  GDP68.  In  a 
reinvigorated Internal Market, this rate should be 25% by 2020. 

3. SMEs 

– 

In conformity with Commission aspirations for the Digital Agenda flagship Market, 
the number of small firms engaging in e-commerce selling should increase to reach 
33% by 2015. The proportion of SMEs exporting inside the Internal Market was 25% 
according to the 2009 survey69. The medium-tem objective is to have SMEs equally 
engaged in market outside the EU as within the internal market. 

Achieving  these  goals  will  enable  the  Union  to  reindustrialise,  raising  the  share  of 
industry in GDP from the current level of around 16% to as much as 20% in 2020.  

The  success  of  industrial  policy  relies  heavily  on  our  capacity  to  exploit  synergies. 
Community policies must be properly coordinated and synchronised. EU activities in key 
areas  contributing  to  the  achievement  of  Europe  2020  objectives,  such  as  investments  in 
infrastructures,  R&D  and  innovation,  the  development  of  our  Digital  Agenda  for  Europe, 
policy actions for skills and employment, our trade and investment policy, our internal market 
policies, our competition policy, transport and maritime policy, our energy, environment and 
climate  policies,  will  be  closely  coordinated  with  developments  in  industrial  policy.  The 
measure of our success will depend to a large extent on our capacity to deliver with maximum 
joint effectiveness in all of these areas. 

Synergies  between  EU-led  actions  and  Member  States’  industrial  policies  must  be 
improved. The new cohesion policy instruments for 2014-2020 will help Member States to 
increase  their  competitiveness.  A  strategy  for  smart  specialisation  is  required  as  a  pre-
condition  for  the  use  of  the  European  Regional  Development  Fund  under  the  thematic 
objective of strengthening research, technological development and innovation, especially in 
SMEs, which covers most of the investment priorities proposed as priority action lines in this 
Communication. Member States should follow up reforms identified by the country-specific 
recommendations endorsed by the June European Council. 

68 
69 

Source: Eurostat Statistics in Focus 3/2012. 
DG Enterprise and Industry, "Survey on Internationalisation of SMEs", 2010. 

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The  implementation  of  industrial  policy  also  requires  a  more  effective  European 
governance  structure.  Progress  has  already  been  made  in  this  regard  since  the  2010 
Communication: 

•  Closer co-operation with Member States has been achieved through the development of the 
European  Semester  and  the  regular  monitoring  of  competitiveness  performance  and 
policies  at  EU  and  Member  State  level  through  the  Article  173  procedure  of  the  Lisbon 
Treaty. The first of a new series of projects for better practices has been completed on key 
enabling technologies, to be followed by a further project on foreign direct investment. 

•  The  competitiveness  proofing  of  new  Commission  proposals  has  been  successfully 

incorporated into the impact assessment process.  

Nevertheless, there is much room for further improvements in governance. 

•  Assisted  by  the  High  Level  Group  on  Competitiveness  and  Growth,  the  Competitiveness 
Council will annually assess progress in the implementation of structural reforms and on 
the effectiveness of industrial policy measures to strengthen competitiveness, ensuring that 
it fits into the European Semester. 

•  SME  envoys  will  report  annually  on  the  effectiveness  of  national  and  EU  measures  to 
improve  the  competitiveness  of  SMEs  in  their  own  countries  and  feed  into  the  European 
Semester. 

•  The  different  task  forces  for  the  priority  action  lines  will  be  set  up  as  soon  as  possible. 
They  will  report  once  a  year  to  the  Competitiveness  Council.  They  will  include  in  their 
work information resulting from the programming of structural funds.  

•  The  Commission  invites  regions  to  build  research  and  innovation  strategies  for  smart 
specialisation to contribute to the goals of this Communication in close consultation with 
the private sector and research and innovation actors in order to identify strategic priority 
areas for knowledge-based investments.  

•  Further efforts are needed to ensure the combination of the use of Community instruments 
such as Horizon 2020 and COSME, with Structural funds and Member States own funds, 
notably  to  deliver  major  investment  projects,  including  demonstration  projects  and  pilot 
lines. 

EN 

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Annex: Industrial Policy Communication main measures 

Lever 

Key Action 

Proposal by the 
Commission 

Facilitate investment in new technologies and innovation 

1  Priority action lines 

Take, in cooperation with industry 
and Member States, measures for the 
speedy development of production 
and markets. 

Dedicated task forces will 
be created before the end 
of 2012 to define roadmaps 
for each action line.  

-markets for advanced 
manufacturing technologies for clean 
production 

-markets for key enabling 
technologies 

-bio-based product markets 

-sustainable industrial policy, 
construction and raw materials 

-clean vehicles 

-smart grids 

2  Accompanying 
measures 

Ensure a simplified, predictable and 
stable regulatory framework for new 
products and services including the 
appropriate standards and 
certification.  

Further actions will be 
taken in the field of 
standardisation, fostering 
infrastructures and the 
digital market in 2013 

Access to markets 

3 

Improving the 
Internal Market for 
goods 

Simplification and better governance 
of the Internal Market legislation 
making it more stable and 
predictable.  

Better protection of citizens from 
non-compliant products and fair 
market conditions. 

Adopt a Product Safety and 
Market Surveillance 
Package by the end of 2012 
that would consist of a 
revised General Product 
Safety Directive, a new 
Market Surveillance 
Regulation and a 
Communication on a multi-
annual action plan for 
market surveillance for 

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4  Fitness checks 

Improve consistency in the 
implementation and interaction of 
those policies most important for 
competitiveness. 

2012-15. 

A roadmap for the reform 
of the Internal Market for 
Goods will be defined  in 
2013 

Undertake fitness checks of 
the aluminium and 
petroleum refining sectors 
starting before the end of 
2012. 

5  Entrepreneurship 

6 

Intellectual 
Property 

7  Raw materials 

Improvements to the framework 
conditions and support measures for 
entrepreneurship as well as actions to 
stimulate the uptake of digital 
technologies and e-commerce. 

Propose an 
Entrepreneurship Action 
Plan setting out 
recommendations to 
Member States. November 
2012. 

Consider measures to increase 
transparency and improve the 
treatment of IPR in standardisation. 
Support SMEs to protect and 
effectively use intellectual property 
rights in third countries including the 
ASEAN and Mercosur countries. 

Further develop the “raw materials 
diplomacy” and promote 
international regulatory cooperation 
and convergence, notably vis-à-vis 
neighbouring countries, in order to 
accompany the creation of markets 
for new products and technologies.  

New IPR helpdesks will be 
established and become 
operational in 2013 to 
support SMEs.    

Implementation and 
development of agreements 
signed in previous missions 
and new missions starting 
in November 2012 with 
Morocco and Tunisia;  

EN 

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Access to finance and capital markets 
8 

SMEs 

9 

"Smart 
specialization" 

Simplify and reinforce the 
effectiveness of financial instruments 
to support innovative activities by 
SMEs.  

Improve and diversify access to 
finance for the real economy.  

Member States will be able to make 
effective use of cohesion and 
structural funds strengthened by the 
concept of "smart specialization" to 
contribute to growth and job 
creation. In the context of the current 
programming period of structural 
funds 2007-2013, they should exploit 
all opportunities to direct remaining 
resources towards investment in 
innovation.   

The crucial role of human capital  
10  Skills and training  Match skills and jobs by developing 

a European multilingual 
classification of Skills, Competences 
and Occupations.  

Additional facilities to 
increase lending capacity 
will result from the capital 
increase of the EIB that 
will be made available in 
2013. Proposals will follow 
on the basis of the 
conclusions of the Green 
paper on the financing of 
long term investment in the 
EU expected by end 2012. 
New cohesion policy 
provisions for 2014-2020 
Multiannual Financial 
Framework and 
Development of COSME 
and Horizon 2020 
programmes. 

Creation of the European 
Sector Skills Councils and 
of Knowledge and Sectors 
Skills Alliances and 
support the development of 
multi-stakeholders 
partnerships in the ICT 
sector to improve the skills 
shortage in the ICT sector. 
(2013) 
Develop EURES into a 
pan-European placement 
and recruitment tool. 
Establish a Quality 
Framework for 
Traineeships to encourage 
companies to offer 

EN 

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traineeships to young 
people 

EN 

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