On 5 May, European Commission Executive Vice-President Margrethe Vestager and Commissioner Thierry Breton launched two initiatives to boost the European Single market: an update to the industrial strategy and a new regulation to address distortions caused by foreign subsidies.
These initiatives aim to drive the EU's transformation to a more resilient and competitive economy in line with the green and digital transitions. They also aim to address potential distortive effects of foreign subsidies in the Single Market.
Updated Industrial Strategy
The updated proposal follows the initial Industrial Strategy, which was launched right before the outbreak of the COVID-19 pandemic in March 2020, and is based on the following elements:
- Strengthen the Single Market resilience through a Single Market Emergency Instrument to uphold the free movement and a new toolbox for Small Medium Sized Enterprises. Vazil Hudák will act as the SME Envoy.
- Better understand the dependencies in key strategic areas, both technological and industrial, through bottom-up analysis and in-depth reviews on key sectors as well as new industrial alliances.
- Accelerate the digital and green transitions with new measures to create pathways with both industry fields such as a coherent regulatory framework as well as investing on upskilling and reskilling and support to SMEs.
“This is about making sure our industries are equipped to drive the digital and green transformations of our economy while ensuring the competitiveness of our industries with new investments now – in people, in technologies and in the right regulatory framework that guarantees fairness and efficiency,” Executive Vice-President Vestager said during the press conference.
New Regulation to address distortions caused by foreign subsidies in the Single Market
After the adoption of the White Paper in June 2020, this new instrument aims to create a level playing field to avoid unfair advantages of non-EU companies participating in public procurements in the EU or engaging in other commercial activities in the EU.
It includes the introduction of two notification-based tools for concentrations and bids in public procurements as well as a general market investigation tool for all other situations. Examples of these subsidies include zero-interest loans or other below-cost financing, unlimited state guarantees, zero-tax agreements, or direct financial grants.
“Our Single Market is fiercely competitive and attractive to foreign investors and companies. But being open to the world only works if everyone who is active in the Single Market, invests in Europe or bids for publicly funded projects, plays by our rules,” Commissioner Breton said.
Europe has the most advanced industrial sector in the world. European liberals believe that believe that we must invest in and boost strategic sectors while ensuring free movement and free trade. Competitiveness and a fair environment for businesses are key to ensure the Single Market functions well and to foster innovation and investment as well as to increase the capacity of the EU to have a stronger role globally.
Following the release of this proposal, Svenja Hahn MEP (FDP, Germany) shared her thoughts on the potential of such initiative for Europe's recovery and future.
“The Commission needs to address unfair trade practices, like foreign subsidies, to ensure fair competition on the Single Market, without sliding into protectionism,” she said.
Why is the 🇪🇺 Commission proposal for addressing distortions caused by foreign subsidies key for #FutureofEurope? We asked @svenja_hahn MEP for her quick reaction 👇@RenewEurope pic.twitter.com/ipx86TOkVI— ALDE Party (@ALDEParty) May 7, 2021
Photo credit: Aurore Matignoni, EC - Audiovisual Service 2021.