An almost theological debate. For a long time, the European debate on industrial policy had been unbending, almost theological: the very words were banned, because they were so evocative of Soviet five-year plans and the idea that the State itself decided what goods were to be produced for the good of the people. The Commission's Directorate General for industrial policy changed its name. Today, the semantic battle has done its time and the expression has been released from quarantine, the role of production has been re-evaluated, as has the tendency to consider that Europe should specialise in the production of non-material goods and services (especially financial services), leaving the production of material goods to other continents. This view of things was attributed mainly to the UK, but in fact Tony Blair had given Chancellor Schröder, President Chirac and other Heads of Government a nudge to confirm, with the support of the President of the European Commission (Roman Prodi at the time), that the priority role of industry was to produce goods for the citizens of the Union and for export.
Principles clarified. The guideline of principle in no way implies the definition of a European production policy. I remember at the time (the debate started in 2002) using the image of Molière's “Bourgeois gentleman”, who, when he was talking, was in fact “speaking in prose without knowing it”. In the same way, the EU has made an industrial policy without knowing it, or at least, without saying it: via its competition policy, its fiscal policy, its environment policy, its social policy, its management of the single market, its trade policy. Measures to favour competitiveness, which the big industrial companies lay so much emphasis on, should be the same. It is true that some of these big industrials rather cross the line of what is reasonable in their quest for State aid, tax breaks and other perks, but the wisest and most honest of them know that Europe's role is to create conditions conducive to economic growth and job creation, not to save inefficient companies nor to enrich their directors and shareholders. Fears of the disindustrialisation of Europe have not been averted, but at least we know what instruments we need to face the threat.
At the time, Mr Bolkestein also spoke out as a European Commissioner, with the hard-hitting tone we associate with him: “interventionist industrial policies are inoperative and ineffectual, because bureaucrats and politicians tend to back losers, not winners”. He criticised “the defenders of acquired interests and corporatist arrangements: warnings of disindustrialisation are their last gasp to try to keep the competition down”. In the meantime, Mr Bolkestein has left, and no-one in the Commission seems to have inherited his extreme notions.
Other controversial elements. With a couple of principles thus clarified, what matters now are not declarations but the contents of actions and initiatives to be developed in the context of the Lisbon Strategy, as we have seen in other areas (see this column yesterday and the day before). And from this point of view, much remains to be done. It is easy to cite a few of the other controversial elements:
Tax competition. President Barroso has said that he is in favour of harmonising the tax base for corporate tax, but not of harmonising the rates. To the best of my knowledge, the Commissioner for Tax, Laszló Kovacs, has not yet taken position. The President of the Ecofin Council, Jean-Claude Juncker, seems to be in favour of a uniform rate, and several governments are with him on this;
State aid to big business. In the interview referred to in this column yesterday, Ms Kroes announced a very restrictive policy on aid to big businesses outside assisted regions, expressing her scepticism for the “national champions” theory. But four Member States (Germany, the UK, France and Austria) reacted by listing the reasons which justify such aid (see our bulletin of 2 February, p.9).
State aid in the least favoured regions of the prosperous Member States. This kind of aid should, in the view of Ms Kroes, be reserved for small and medium-sized enterprises (SMEs) and targeted objectives, such as research and innovation. Several Member States feel that on the contrary, all initiatives must be supported in order to boost investment in such regions, whatever scale they are on.
On top of these “cross-cutting” elements come sectorial issues, which have already been touched upon for two sectors, textiles and automotives. This is just the beginning of European action to be developed within this essential, and particularly sensitive, plank of the Lisbon Strategy.
(F.R.)