Attempt at definition. The seminar that the European Commission will devote, next Wednesday, to the Union's industrial policy puts an end to the time when even the words "industrial policy" were banned. In the past, the public authorities and the general public of Member States felt the term evoked Soviet five-year plans and the definition by public authorities of sectoral production targets in contradiction to free market principles and competition. But that time is now over. It is the Chancellor of the Member State that used to proscribe the notion of industrial policy who has for reflection, winning the support of the Commission President (see this heading of 7 May). If I were allowed to have a stab at giving a definition I would say that the EU's industrial policy must aim to:
a) recognise that the production of goods to meet the needs and expectations of citizens represents the essential aim of economic activity, by giving industry its place back compared to the "new economy" (which is also indispensable, but as a complement and support for production);
b) create the legal, scientific, technical and social environment that is appropriate so that industrial activity may develop freely in favourable conditions;
c) take into consideration the traditions and the capacities developed in Europe over the years, taking into account spatial planning and a balance in economic activity;
d) make industry respect social and environmental demands, etc., which determine the "European model of society", but without neglecting the requirements of competitiveness at world level.
Industrial fabric to be safeguarded. The above-mentioned principles, possibly completed and better expressed, represent a point of departure. The important thing is the way they are interpreted and applied. A certain change of mentality is necessary even within the administrations, including the European administration. Not so long ago, the slogan in fashion was: "down with the traditional economy, long live the intangible". That was an aberration. Chancellor Schröder had recalled that, in the United States, the intangible aspect had been added to the traditional economy without replacing it Between New York and Silicon Valley there are thousands of kilometres dense with traditional industry which, fortunately for the US economy, is still there. He called for this to be the same for the European industrial fabric, German especially. So much for the first of the four points listed above.
Justified hesitation. Regarding point b), the scientific environment encompasses encouragement and support to research and innovation; the social environment mainly implies training; the legal environment favourable to enterprise covering all the directives on corporate law, the accounting rules (an increasingly fundamental element) and also the public take over bid regime. The latter aspect has been the object of study in the EU for the past thirty years; a first project failed after quite spectacular ups and downs and the new project will probably not be ready before autumn. Reflections and hesitations on this subject are warranted as recent events, especially in the United States, prove the extent to which the balance between the powers of shareholders and those of company directors must be carefully weighed, and what shameful abuse is possible on the part of the management, to the detriment not only of the shareholders but also and above all the workers and the economy as a whole.
Point c) implies above all the question of "golden shares", indeed clarified by the EU's Court of First Instance (see this heading of 11 June) but still likely to receive divergent interpretation, and it generally covers the limits and the arrangements of eventual intervention by public authorities in certain specific circumstances. One should not forget that, at the time of the first great Japanese offensive in the car industry, it was the whole sector that ran the risk of disappearing in Europe, if a ten-year period of transition (keeping import quotas) had not been negotiated by the European Commission with the Tokyo authorities. And the current vicissitudes of shipbuilding faced by South Korean competition are well known. Point d) comprises above all the balance to be defined between the environmental requirements (mainly for the chemical industry) and those of competitiveness, a balance on which opinions partially differ even within the Commission. To this must be added the public services aspect (their availability and their quality largely determining the localisation of companies) and major European infrastructures.
It is obvious: none of the above-mentioned points is new, as the Commission has been dealing with them for a long while. It is the priorities and the balances that must be established. I shall explain on Monday.
(F.R.)