Allowing European industrial champions to flourish and let their voices be heard

European manufacturing accounts for 75% of European exports, and holds a leading position in a number of advanced sectors on the global markets, including the automotive, aeronautics, nuclear, chemistry and NITC sectors. Despite this, European manufacturing is losing ground. For 20 years, the manufacturing share of Europe’s GDP has consistently fallen, from a bit more than 23% in 1995 to 19% in 2015. In France, manufacturing accounts for 12.6% of our GDP, while our traditionally stronger European neighbours, such as Germany or Italy, are facing fiercer competition as the rules of international commerce grow tougher.

The consequences of this decline in European manufacturing are well-known: higher employment, the impoverishment of the middle class, higher public debt, and a general decline in societal cohesion.

In this context, how can we revitalise our European businesses and give them a brighter, more hopeful future?

"Europe must prepare for the “next wave” by encouraging businesses to enter global growth markets"

Having already fallen behind in the tech race, Europe must prepare for the “next wave” by encouraging businesses to enter global growth markets, without discouraging them from using their competitive advantages.

As it happens, the pressing need for carbon neutrality has turned the energy sector into the central playing field. However, in order for the Green Deal to “become Europe’s hallmark”, as President von der Leyen put it, businesses will need to be in a position to withstand global competition. Recall that despite investing 100 billion Euros in solar panel infrastructure since the early 2000s, Germany has been unable to prevent its businesses from being systematically stamped out by their Asian competitors, which have found in Europe a welcome outlet for their low-price solar imports.

In order for the Green Deal to bring economic success to Europe, our businesses must be able to compete internationally.

In order for the Green Deal to bring economic success to Europe, our businesses must be able to compete internationally. But before we even think about helping them with public assistance, we could simply stop trying to break up the champions we already have or might have.

Historically, the EU has drawn its strength from being a legal construct where the rule of law is paramount. This status has turned Europe into a model on the global stage. Since its founding, it has steadily toughened legal requirements on its internal market using an inward-looking approach to competition law, with the notable and recent exception of its actions against Google, Amazon and Facebook. In doing so, it has addressed only part of the issue of European competitiveness, while the other part has been neglected.

A Europe that is more involved in global affairs will be able to defend Europeans against the risks of abuse by globalised companies.

President von der Leyen has endorsed the idea that the world needs more from Europe. I believe this is true. However, this is primarily because a Europe that is more involved in global affairs will be able to defend Europeans against the risks of abuse by globalised companies. It will also allow European manufacturing, a creator of wealth and jobs, to catch up on the export markets.

This means we need to build up Europe’s manufacturing base in key sectors, wherever possible. It also means that we need to assert a more proportionate degree of control over our internal market, while being much more strict toward the external market. If Europe really wants to defend 500 million citizens and 23 million companies, it will need to exert strength at its external borders, instead of just enforcing its rules within them.

This will also require us to revise Europe’s competition law so that it interprets issues from a longer-term perspective. In February 2019, Bruno Le Maire and Peter Altmaier released a joint manifesto that described the foundations needed for a genuine European industrial policy:

“If Europe still wants to be a manufacturing powerhouse in 2030, we need a genuine European industrial policy. The investments required to enable Europe to compete on the global stage and the development of long-term industrial strategies aiming inter alia at a carbon-neutral economy are so important that we can only succeed if we pool our funding, our skills, and our expertise.”

Our businesses are often [...] more committed to reducing their carbon footprints, than many of their non-European competitors.

Today, among the top 40 biggest companies in the world, only 5 five are European. Building fair global rules will probably require more than a few months or a few years to accomplish. Let us at least give our European companies the means to truly grow and become more competitive, by adopting a European policy that analyses issues on a larger scale and timeframe, with our American and Chinese competitors factored in. Consumer protection ought not to prevent companies from joining forces in order to cultivate home-grown European industries and industrial champions, whenever it is appropriate and creates growth.

Lastly, on a global scale, our businesses are often more diligent in their adherence to environmental and social standards, and more committed to reducing their carbon footprints, than many of their non-European competitors. This environmental diligence should be treated as an asset, and ought not to undermine our international competitiveness. It is time for competition law to incorporate this factor more systematically, in order to alleviate our frequently strained ties with our citizens and demonstrate the EU’s ability to have a positive, non-punitive influence on its own manufacturing sector.