There is “no room for complacency” following the European Commission’s latest report on the state of the single market and the EU’s competitiveness, and we must “speed up” to remove all possible barriers, the European Commissioner for Justice, Michael McGrath, concluded on Tuesday 3 February in Nicosia.
The Commissioner, who will be presenting the proposal on the 28th regime for SMEs, scale-ups and start-ups (designed to facilitate investment in these small businesses and enable them to operate easily throughout the EU) “next month”, was taking part in the informal meeting of ministers and representatives of ministers from the EU27 responsible for competitiveness and industry.
The Cypriot Minister for Energy, Commerce and Industry, Michael Damianos, invited the representatives to discuss the health of the European defence industry and the funding gaps for SMEs in particular, as well as the results of the first year of operation of the ‘Competitiveness Compass’.
The discussion highlighted a number of “challenges”, in particular the fact that SMEs are “falling behind” and still at a very “low” level in the use of AI, according to the minister. The Cyprus Presidency of the Council of the EU made this an important theme in its discussion notes, referring to a real “two-speed” Europe in this area of AI (see EUROPE 13798/3).
As far as defence is concerned, the ministers were mainly asked to look at how the European Competitiveness Fund and the new EDIP fund (the European Defence Industry Programme) can help this industrial sector and reduce its dependence, particularly on the United States.
At the end of the meeting, the minister stressed the need to remedy the lack of funding for SMEs and to better align research, innovation and industrial production. He stated that member countries should be encouraged to help SMEs that are active in the production of dual technologies.
According to one participant, the ministerial representatives emphasised the importance of making funding under the ‘Competitiveness Fund’ as ‘simple’ and accessible as possible. They also reiterated the need for the EU to improve its sourcing of critical resources and semi-conductors, and to boost the use of AI.
While the countries of the European Economic Area and Switzerland were invited (the ‘European Competitiveness Fund’ will also be open to them), the discussion did not cover other third countries eligible for European defence funding programmes.
On the ‘single market and competitiveness’ front, the future ‘Industrial Accelerator Act’ and the principle of European preference were also raised and encouraged by several delegations.
However, some delegations from the so-called ‘Nordic’ countries are said to have expressed fears, asking that the concept should not backfire on European manufacturers.
The Commission reportedly insisted on the need for perfectly calibrated ‘European preference’ measures to be applied to certain sectors, and explained that the fact that the EU has free trade agreements, the most recent of which was signed with India, would make it difficult to introduce restrictions in the industrial sectors covered by these agreements.
At the end of the proceedings, the European Commissioner indicated that this ‘Act’ would boost “European production, but without closing our economy”.
On arriving at the meeting, a number of officials could only agree with the Commission’s findings on the internal market, including the Spanish Secretary of State for European Affairs, Fernando Sampedro.
“The main way to increase European competitiveness is to strengthen our internal market, our single market. It is there where most of the partners, our companies and our SMEs are facing the damage or the barriers that the internal market faces [with] around a 45% tariff on goods and over 100%, even 110% on services”.
The Polish representative also insisted on the continued simplification of regulations and on a “pragmatic approach to climate legislation and to the ETS”.
Andrej Babiš gives his views on the EU’s competitiveness. On 27 January, the Czech Prime Minister also put his wishes for EU competitiveness in writing, ahead of the European leaders’ retreat on 12 February. “I consider the proper functioning of the internal market, the strengthening of European industry and strategic autonomy, energy security, and affordable energy prices for our citizens and businesses to be of paramount importance. It is essential to prevent the relocation of energy-intensive industries outside the EU and to reinforce our strategic autonomy”, writes Babiš, who (among others) is calling for a postponement of ETS 2 until 2030.
Link to the letter (in Czech): https://aeur.eu/f/kjx (Original version in French by Solenn Paulic)