Drawing lessons from the Covid-19 pandemic, the European Commission wants to strengthen the internal market, notably with the presentation of a new emergency instrument for the single market, and the reinforcement of the SMET taskforce on the implementation of the single market. Both measures are included in its communication updating the EU’s industrial strategy, which it published on Wednesday 5 May.
In line with the draft version (see EUROPE 12711/13), the communiqué focuses on the functioning of the internal market, as indicated by its title ‘Building a stronger single market for Europe’s recovery’.
Asked by EUROPE, Commission Executive Vice-President Margrethe Vestager explained that the industrial issue is closely linked to the internal market, with many companies and industries operating across borders. The Executive Vice-President of the European institution, Valdis Dombrovskis, and the European Commissioner for Internal Market, Thierry Breton, recalled how the pandemic has exposed the weaknesses of the internal market.
In this respect, the Commissioners insisted on the presentation, in the first quarter of 2022, of a new emergency instrument for the single market, the Single Market Emergency Instrument, in line with the announcements made by Commission President Ursula von der Leyen earlier this year.
Responding to the press, Mr Breton said that this instrument will take the form of a regulation. The idea is to avoid repeating the ad hoc, piecemeal and hurried solutions deployed by the Commission at the outbreak of the health crisis, when some Member States imposed restrictive measures at their borders that were detrimental to the internal market.
The Commissioner for the Internal Market told EUROPE that the Internal Market Implementation Taskforce (IMET) could play a role. It was still too early to say, however, he cautiously qualified.
Services Directive
As we announced, the Commission wants to strengthen the implementation of the Services Directive. This represents a real point of contention when it comes to the functioning of the internal market, as the electronic services card project has shown (see EUROPE 12261/4).
Also in relation to the internal market and the lessons of the pandemic, the update of the industrial strategy aims to strengthen the resources of the national surveillance authorities, particularly for imported products. An initiative is said to be in the pipeline for the fourth quarter of 2022.
On the social side, the issue of posted workers is mentioned. The European Commission wants to develop a common electronic form which would initially be on a voluntary basis.
SMEs and industrial alliances
In connection with the SME strategy, the European Commission wants to focus on SMEs, as stated by Ms Vestager. One objective will be to stimulate the use of dispute resolution schemes for late payments, in addition to helping to address the creditworthiness of SMEs. In this context, the Commission recalls in particular the role that the REACT-EU anti-crisis instrument can play.
The role of Important Projects of Common European Interest (IPCEIs) is also highlighted. In addition to the industrial alliances already underway, such as in the field of batteries and hydrogen, the Commission is considering launching an alliance on space launchers and another in clean aeronautics. It promises to ensure that the participation of SMEs in these alliances is strengthened.
Dependencies and ecosystems
Following on from the March 2020 Industrial Strategy (see EUROPE 12443/7), the Commission has accompanied this communiqué with an annual Single Market Report, which is flanked by a microeconomic analysis of the 14 industrial ecosystems based on a series of new performance indicators.
Responding to EUROPE, Mr Breton acknowledged that this report had required “adaptations” in the internal organisation of the services (DG GROW), notably within the SME Directorate (see EUROPE 12675/27).
In addition, the European Commission presented a first analysis of the EU’s strategic dependencies, again in the wake of the lessons learned during the pandemic. This analysis identifies no fewer than 137 products (representing 6% of the total value of goods imports) that are highly dependent on third-country production, 34 of which are highly vulnerable. The latter mainly concerns raw materials used in the high-intensity energy sector.
Unsurprisingly, the EU is most dependent on China (52% of the EU’s share of import value), followed by Vietnam (11%), Brazil (5%), and Russia (3%).
The Commission intends to launch a second phase of dependency reviews, but more specifically on products and services needed for the success of the dual green and digital transition.
The issue of European steel
In the context of the ‘greening’ of its internal market policy, the Commission has presented a document specifically dedicated to European steel, which is particularly suffering in the face of international competition, especially from China.
The aim, the document states, is to successfully convert the European steel sector to clean production within 5 years, in order to contribute to the 2050 carbon neutrality target. The EU has a card to play: it is the second largest steel producer in the world, with 150 million tonnes in 2019, far behind China which produced 1 billion tonnes in the same year.
To access the industrial strategy update: https://bit.ly/33jEj4Y
To read the Annual Single Market Report 2021 edition: https://bit.ly/3eW4qo7
To view the introductory analysis of strategic dependencies: https://bit.ly/3tjJqg3
To see the analysis paper on European steel: https://bit.ly/3eU7rp4 (Original version in French by Pascal Hansens)