THE INTERNAL POLICIES OF

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• THE INTERNAL POLICIES OF
• THE EUROPEAN UNION
• Industrial Policy in the EU
• Prof. D-r Jovan Pejkovski

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• The European Commission's Enterprise policy aims
  at creating a favourable environment for
  enterprises and business in Europe, thus creating
  productivity growth and the job and wealth
  necessary to achieve the objectives set by the
  European Council in Lisbon in March 2000

3

• A Report from the High Level Group chaired by Wim
  Kok, "Facing the Challenge" (November 2004),
  assessed the current situation and identified
  measures which could form a consistent strategy
  for the European economies to achieve the Lisbon
  objectives and targets
• reducing the total administrative burden
• improving the quality of legislation
• facilitating the rapid start-up of new
  enterprises and
• creating an environment more supportive to
  businesses.

4

• The legal basis for the Commission activities in
  this field is article 157 of the Treaty, which
  calls on the Community and  Member States to
  "ensure that the conditions necessary for the
  competitiveness of the Community industry exist"
  and to encourage entrepreneurial initiative and
  enterprise (particularly SMEs) growth.

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• Enterprise policy comprises a number of policy
  actions related to
• Industrial policy, 
• Framework conditions favourable to SMEs, 
• Multiannual Programme for Enterprise and
  Entrepreneurship, 
• Better business environment.

6

• Industrial policyManufacturing industry still
  plays a key role in Europe's prosperity and the
  Commission has felt a need to put industry back
  at the heart of policy concerns. It is, however,
  facing many challenges and there is a real
  concern about the risk that the Union is facing a
  process of deindustrialisation. In December 2002,
  a communication on Industrial policy in an
  Enlarged Europe laid the foundations that should
  underpin the Union's industrial policy.In
  October 2005, the Commission has launched a new
  industrial policy to create better framework
  conditions for manufacturing industries in the
  coming years.

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• Framework conditions favourable to SMEsThe
  European Charter for Small Enterprises calls upon
  Member States and the Commission to take action
  to support and encourage small enterprises in ten
  key areas.
• Its follow-up has generated a valuable stock of
  good practices which help to improve the small
  business environment throughout Europe.

8

• In November 2005, the Commission adopted a new
  approach intended to provide a single coherent
  policy framework for EU actions in favour of
  SMEs a new Communication puts particular focus
  on a more systematic consultation and cooperation
  with SME stakeholders to involve them in the
  policy-making process at an early stage, and thus
  benefit from their experience and increase their
  commitment in and ownership of the process.In
  2003 the Commission adopted a package of
  documents outlining policy towards SMEs across
  Europe, the so-called SME package.

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Multiannual Programme for Enterprise and
Entrepreneurship

• The Multiannual Programme 2001-2005 (known as the
  "MAP") is an instrument for activities aimed at
  enhancing the growth and competitiveness of
  business, promoting entrepreneurship, simplifying
  and improving the administrative and regulatory
  framework for business, improving the financial
  environment for business, especially SMEs, and
  giving them easier access to Community support
  services, programmes and networks.
• The MAP supports the Euro Info Centres network,
  the financial instruments and policy development
  and does not provide direct support to
  enterprises.

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• From 2007 many MAP activities will be continued
  under the Competitiveness and Innovation
  framework Programme (CIP). In order to ensure the
  continuity of these instruments until the new
  programme, the current MAP legal base has been
  extended until 31st December 2006.
• Better business environmentIn 2002, the
  Commission adopted a Communication on a Better
  Environment for Enterprises which launches a new
  instrument in enterprise policy quantitative
  targets.

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• Economic theory on industrial policy is not to
  be found in a single and coherent body of work.
  This can be partly explained by the difficulty of
  economists to agree on a definition of the
  concept of industrial policy.
• However, the last decade has seen a strong
  resurgence of literature in a series of areas
  closely linked to industry such as
• innovation,
• economic growth,
• technological progress,
• entrepreneurship or
• public policy.

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• European competitiveness is a key policy area in
  the Lisbon strategy.
• Competitiveness as a macroeconomic concept is
  understood to mean rising standards of living and
  employment opportunities for all who wish to
  work.
• Securing rising standards of living requires some
  combination of increasing employment and of
  sustained productivity growth.

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• Competitiveness the ability of the economy to
  provide its population with high and rising
  standards of living and high rates of employment
  on a sustainable basis is at the very heart of
  the ambitious goals set for the European Union at
  the Lisbon meeting of the European Council in
  spring 2000.

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• Achieving this depends on the ability of the
  European Union to maintain and develop the
  competitiveness of its manufacturing industry.
• Industrys interdependence with services cannot
  be ignored and the progressive outsourcing of
  business services has reduced the apparent scale
  of manufacturing industry.

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• Industrial policy concerns the effective and
  coherent implementation of all those policies
  which impinge of the structural adjustment of
  industry with a view to promoting
  competitiveness.
• The provision of horizontal framework in which
  industry can develop and prosper by remedying
  structural deficiencies and addresing areas where
  the market mechanism alone fails to provide the
  conditions necessary for success is the principal
  means by which the Community applies its
  industrial policy (EU Commission, 1991)

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• Three main approaches to industrial policy can
  be identified
• 1. market-based or negative industrial policy
• 2. interventionist or positive industrial policy
• 3. selective intervention or strategic industrial
  policy

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• The approach of EU is aimed at creating framework
  conditions for enterprise to improve its
  competitiveness and which would compensate where
  necessary for market failure.
• Thus the approach has been refined over time, in
  particular to underline the key role of knowledge
  and innovation in a global economy, although the
  basic parameters have remained the same.

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• The attention is drown to the slowdown in
  productivity growth in the EU and warned that
  this may jeoparadise the goal set at the Lisbon
  European Council in 2000 of making the EU, by
  2010, the most competitive and dynamic
  knowledge-based economy in the world, capable of
  sustainable growth with more and better jobs and
  greater social cohesion.

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• The importance of competitiveness and the
  increased need for synergy among industrial
  policy, RD policy and the single market have
  been further underlined by the decision, taken by
  Heads of State and Governments at the Seville
  European Council, to set up a new Council
  formation that will address all
  competitiveness-related issues.

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• As wealth increases, issues such as
  sustainability and safety become ever more
  important to European citizens. This was
  reflected in the adoption, at the Gothenburg
  European
• Council in 2001, of the EUs sustainable
  development strategy, aiming at the simultaneous
  pursuit of objectives under the three pillars
  economic, social and environmental which
  underpin this strategy. The effective application
  of the strategy requires full coherence between
  the policies of the respective pillars.

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• Industrial policy has a key role to play in
  helping the EU meet the Lisbon and
• Gothenburg objectives. On the eve of an
  enlargement that will bring important changes in
  the industrial landscape of Europe and specific
  problems affecting industry in the new
• Member States, a review of this policy is timely,
  so as to ensure that the EU has the tools with
  which to respond to the needs of an enlarged
  Europe. This review should contribute to the
  development of synergies between industrial
  policy and the other policies geared towards
  achieving the objectives of the Lisbon strategy.

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• Developing the growth potential of the European
  Union must remain central to the objectives of
  industrial policy. It aims at reinforcing the
  Unions ability to achieve higher growth rates
  and to generate high living standards and
  numerous and lasting jobs.
• In order to reach this objective, the Unions
  industrial basis must be consolidated through
  specific policies. As a matter of fact, a buoyant
  industry generates positive externalities on the
  economy as a whole, increasing the growth
  potential and the vibrancy of the economic
  fabric, fostering innovation and training as a
  result of increased demand for skills.

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• In this perspective, industrial policy plays a
  key role by concentrating on strategies, the
  creation of a favourable environment and clear
  support to key investments that can generate
  growth.
• On the basis of the horizontal approach aimed at
  creating adequate framework conditions, a number
  of priorities should be identified with a view to
  facilitating the development of domains with a
  strong potential.

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• This approach must be closely coordinated with
  other EU policies that can also foster or
  accompany the development of the Unions
  industrial base.
• Enterprises, for their part, will retain the
  prime responsibility for achieving
  competitiveness.
• They also contribute to EU environmental and
  social priorities, by putting corporate
  responsibility into action on a wider scale.

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Industry as the source of Europes wealth

• A vibrant, competitive industry is essential for
  Europe to sustain and increase its prosperity
  while meeting its wider social, environmental and
  international ambitions.
• In recent years, the structure of production in
  Europe has been experiencing marked changes. The
  share of the services sector in EU output has
  increased from 52 in 1970 to 71 in 2001, while
  that of manufacturing has decreased from 30 to
  18 in the same period.

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• As a result of this tertiarisation, policy
  makers attention has not maintained a
  sufficiently strong focus on manufacturing,
  comforted by the widespread, but ironeous,
  assumption that in the knowledge economy and the
  information and service societies.
• Manufacturing industry no longer plays a key
  role.

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• This statistical trend reflects the impact of
  two forces
• first, high productivity growth in the
  manufacturing sector relative to services, and
• second, the associated increase in wealth, which
  has resulted in more than proportionate increases
  in the demand for household-oriented or personal
  services. In parallel, thanks to productivity
  gains the relative price of manufactured products
  has been declining over time.

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• The interdependence between the service and the
  manufacturing sectors has also increased over
  time, as input-output data show.
• The aggregate national accounts statistics hide
  the fact that manufacturing companies have been
  outsourcing activities regarded as not central to
  their line of business, which were earlier
  accounted for as part of manufacturing.

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• Manufacturing innovations have also opened the
  way for totally new service concepts, as with
  telecommunications and information technologies.
  In turn, industrial competitiveness relies on the
  quality and cost-effectiveness of transport,
  financial and business services.
• Nevertheless, it is finally in manufacturing that
  most new technological applications are
  introduced and result in economic value. Also,
  knowledge-based, scientific breakthroughs only
  lead to new products if a solid and efficient
  manufacturing base exists to produce them.

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• In the face of increased global competition, most
  European industrial sectors have made substantial
  efforts to upgrade their production
  infrastructures and integrate new forms of
  organisation. Through investments in capital
  equipment, in-house research, or contacts with
  the science base, state-of-the art knowledge has
  permeated much of the textile, foodprocessing,
  furniture, farming and fishing, retail,
  engineering and chemical industries.
• All these sectors, labelled as medium or
  low-tech, now use innovative and technology-based
  processes in their production.

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• This process has led to an upgrading of the skill
  content of jobs which, more than the growing
  share of high-technology sectors in total
  production, accounts for the rising demand of
  highly-skilled labour.
• The industrys shift in demand towards higher
  levels of educational attainment, which means
  that industrys competitiveness will increasingly
  depend on the qualitative level of human capital,
  has been matched by a continuous rise in the
  average duration of education of the working
  population in the EU.

32

• However, at 87 and 90 of the US and Japan
  levels respectively, the EU still underperforms
  its main competitors.
• Public spending in education and training as a
  percentage of GDP, albeit at a relatively high
  level, has also been declining steadily from 5.7
  in 1990 to 5 in 2001. This is at odds with the
  Lisbon goals of a substantial increase in per
  capita investment in human resources.

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• The level of private investment in education,
  lifelong learning and scientific investigation is
  also much lower than that achieved by our main
  trading partners. In addition, the efficiency of
  investments in education and training also raises
  concerns.
• Substantial investments in environmental
  protection8, clean technologies and
  environmentfriendly production processes have
  also enabled the European industry to take on
  board the sustainable development dimension,
  breaking the link between production and
  emissions of airborne pollutants.

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• European industry remains a dominant force in
  international trade. The greater presence of new
  trading partners in world markets has eroded the
  share of the EU in world exports.
• However, this trend is less marked for the EU
  than for the US and Japan. The EUs share fell
  from an average of 19.3 over the 1991/95 period
  to 18.4 in 2002. Over the same period, the US
  share went down from 15.1 to 12.1, and Japans
  share from 12.2 to 8.2. Furthermore, in some
  key sectors such as automobiles, aeronautics or
  some categories of telecommunications equipment,
  EU companies have achieved global leadership.

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• In the 1990s, even if some small EU countries
  have recorded outstanding productivity
  improvements, productivity growth in the European
  manufacturing industry has been below the US
  levels.
• A wide gap has emerged in the second half of the
  decade, with the EU displaying a rate of 3.2
  compared to 5.5 for the US for the period
  1996/2000.

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• Despite possible difficulties about the accuracy
  of productivity measurements, the data reflect an
  acceleration of the US rate of labour
  productivity growth, particularly when compared
  to the situation in the second half of the 1980s.
  
• For the whole EU economy the rate of productivity
  growth is lower than for manufacturing alone,
  reflecting the relative weaker performance of the
  service sector, and displays a marked slowdown
  from an average of 1.9 in the first half of the
  1990s to 1.2 in 1995-2001.

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• Overall, these figures entail a dangerous
  deterioration of the growth potential of the EU
  and an obvious risk for the competitiveness of
  its industry.
• The Commissions Competitiveness Reports of 2001
  and 2002 identified insufficient innovative
  activity and weak diffusion of ICT as key
  determinants of Europes under-performance in
  productivity growth.

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• The link between ICT adoption and productivity
  growth is now widely accepted. The EU rate of ICT
  expenditure has been gradually rising over the
  last years, from 5,4 of GDP in 1996 to 7.1 of
  GDP in 2001, almost narrowing the gap with the US
  figures which suffered a marked decline in 2001.
  However, the increase in ICT spending of the last
  few years has yet to translate into productivity
  gains.
• On the other hand, although some EU companies are
  world-class innovators, a low share of European
  patent and RD activity vis-à-vis the EUs main
  competitors indicates that, overall, the European
  innovative performance remains too weak.

39

• In the context of the Lisbon Partnership for
  Growth and Jobs the European Commission and
  Member States made a commitment to focus on
  economic growth and employment. To do this the
  EUs priorities were declared to be
• Making Europe a more attractive place to invest
  and work
• Putting knowledge and innovation at the heart of
  European growth
• Shaping policies to allow businesses to create
  more and better jobs

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• As an important step in the delivery, today the
  Commission has set out a new integrated approach
  for industrial policy aimed at improving the
  coherence between different policy dimensions and
  increasing their relevance to individual sectors.
  
• Whilst the manufacturing industry is currently
  undergoing important changes and facing major
  challenges, it needs a favourable business
  environment to continue to develop and prosper.

41

• Todays new industry policy sets out an outline
  of work for manufacturing industries for the
  coming years. It includes new horizontal
  initiatives and tailor-made initiatives for
  specific sectors.
• They shall complement work at Member State level
  to help address the key challenges faced by the
  various sectors of manufacturing industry.

42

• Seven major policy initiatives are announced to
  address the common challenges across groupings of
  different industries in the light of
  competitiveness considerations.
• An intellectual property rights (IPR) and
  counterfeiting initiative (2006)
• Given the importance of IPR in for the
  competitiveness of many industrial sectors, the
  Commission plans to launch a dialogue with
  industry and other interested parties to
  determine what more might usefully be done to
  provide European industry with a sound IPR
  framework.

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• Taking account existing and planned
  anti-counterfeiting and anti-piracy instruments
  and measures, including those in the enforcement
  and customs fields, the Commission will review
  the state of progress in the whole area of IPR
  with a focus on competitiveness issues and come
  up with suggestions on how to improve the
  situation in 2006.

44

• A high level group on competitiveness, energy,
  and the environment (end2005)
• Competitiveness, energy and environmental
  policies are closely interrelated in their
  objectives and impacts, in particular on many
  basic and intermediate product industries. Given
  the need for consistency of policy and
  legislative initiatives in these areas and, in
  order to exploit fully the synergies between
  them, closer coordination and the development of
  an integrated approach is of the essence. For
  this purpose a High Level Group on
  Competitiveness, Energy and the Environment will
  be set up.

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• It will function as a an advisory platform
  bringing together the Members of the Commission
  for Enterprise and Industry, Competition, Energy
  and the Environment as well as all relevant
  stakeholders. It is designed to examine the links
  between industrial, energy and environmental
  legislation and to ensure the coherence of
  individual initiatives, whilst improving both
  sustainability and competitiveness.

46

• External aspects of competitiveness and market
  access (Spring 2006)
• Access to international markets is a priority
  issue for most of the sectors. The Commission is
  currently working on a possible Communication on
  the revision of Market Access Strategy, reviewing
  the existing strategy and instruments to focus on
  those sectors and markets with greatest potential
  gains for competitiveness. Market access
  objectives will be regularly prioritised in
  combination with a more effective use of the
  Trade Barriers Regulation. In cooperation with
  stakeholders, a detailed strategy will be
  developed and implemented to tackle barriers in
  the selected sectors and countries.

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• New legislative simplification programme
• Better regulation at various levels has been
  identified as a key challenge for several
  sectors, including construction, motor vehicles,
  ICT industries, and the food and life sciences
  industries. The Commission has already announced
  that it intends to re-launch its work on the
  simplification of existing legislation. Following
  consultation with stakeholders, a Communication
  will be setting out a Simplification work
  programme including the three priorities that
  have already been identified for this approach
  the automotive sector, the construction sector,
  and waste legislation.

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• Improving sectoral skills (2006)
• Skill shortages were identified as a key
  challenge in a wide range of different
  industries, including the ICT and engineering
  industries, the textile and leather industries,
  and a number of basic and intermediate goods
  industries. Moreover there is some evidence that
  relocation of industrial activity is in some
  cases motivated more by skill shortages than by
  cost factors. The Commission has already begun to
  address skill shortage issues through a number of
  policies, such as the Education and Training 2010
  work programme, including the European
  Qualification Framework (EQF). To supplement
  these existing initiatives, it is proposed to
  make assessments of the nature of the skill
  problems in particular industries.

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• These assessments would include the
  identification of current sectoral skill
  requirements and skill gaps, and would examine
  likely developments in sector-specific
  competences, including where possible effects on
  SMEs.
• Managing structural change in manufacturing
• The following industries need to manage
  structural adjustment the textiles, leather,
  furniture, footwear, and ceramics industries,
  printing, motor vehicles, shipbuilding, steel,
  and parts of the food industries. The Commission
  intends to ensure that better anticipation of
  economic restructuring are included in the new
  Structural Funds programmes.

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• In line with the Community Strategic Guidelines
  for Cohesion, 2007-2013, support for programmes
  aimed at modernisation of labour markets and
  anticipation of gradual changes throughout the
  Union in sectors for which structural change has
  been identified as an issue needs to be included
  in the new Structural Funds programmes. The
  Commission will also further explore the issue of
  enhancing the cooperation across regions faced
  with similar problems and challenges.

51

• An integrated European approach to industrial
  research and innovation
• The forthcoming Communication on Research and
  Innovation will set out a new, integrated
  approach to policies and actions in support of
  research and innovation, including a number of
  initiatives highly relevant for industrial
  sectors.

52

• As part of the follow up to the above
  Communication, a European Industrial Research and
  Innovation Monitoring System will be established
  in 2006 to provide a consolidated analysis of
  developments relevant to industrial research and
  innovation, and a conduit for stakeholder views.
  This will help to anticipate both barriers and
  opportunities to improving research and
  innovation investment, and the commercialisation
  of new technologies in Europe. A High-level
  Stakeholders Group, including policy-maker
  representatives, will be set up to provide
  guidance and feedback on the focus and relevance
  of this activity for competitiveness.

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• Seven new sector-specific initiatives
• In addition, a number of new sector-specific
  initiatives will be implemented
• Setting up of a new pharmaceuticals forum (first
  meeting in 2006) Pharmaceuticals a new forum
  with government ministers, senior industry
  representatives and other stakeholders will
  concentrate on RD, national regulations and the
  development of a single market.

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• Mid-term review of life sciences and
  biotechnology strategy (2006-2007) it will
  involve closer cooperation with industry through
  the Competitiveness in Biotechnology Advisory
  Group and a regular annual triangular dialogue
  with industry and Member states in order to help
  identify problems, propose priorities, and make
  recommendations for actions.
• New High-Level Groups on the chemicals and the
  defence industry (2007) new high level groups
  will be established to focus on the impact of the
  REACH directive on the competitiveness of the
  chemical sector and to consider procurement and
  standardisation in the defence area.

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• European Space Programme common, inclusive and
  flexible programmatic basis for the activities of
  European Space Agency, EU and their respective
  Member states.
• Taskforce on information and communication
  technologies (ICT) competitiveness (2005/2006) a
  taskforce with stakeholders representatives will
  be set up that will focus on identifying and
  removing the obstacles that inhibit ICT take-up.
  It will also draw attention of Member states to
  the barriers to the competitiveness of ICT
  manufacturing in Europe and the obstacles to wide
  and effective take-up.

56

• Mechanical engineering policy dialogue
  (2005/2006) separate forums will examine the
  sectors strengths and weaknesses and propose
  remedies.
• A series of competitiveness studies, including
  for the ICT, food, and fashion and design
  industries analyzing the trends affecting the
  competitiveness of industrial sectors with a view
  to deriving further proposals for concrete
  policies and actions where necessary.

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• 27 separate sectors grouped in four categories
• The range and diversity of the sectoral policy
  challenges has thus been examined in some detail,
  based upon a systematic screening of
  opportunities and challenges for 27 separate
  sectors of EU manufacturing industry and
  construction. On this basis, an on-going outline
  of work for industrial policy over the coming
  years has been constructed.

58

• Individual sectors have been grouped into four
  broad categories
• 1. Food and Life sciences industries
• The food and life sciences industries (e.g. food
  and drink, pharmaceuticals, biotech) make up one
  fifth of EU manufacturing and are characterized
  by medium to high growth rates. As highly
  innovative industries, key knowledge challenges
  are
• Research development, protection of
  intellectual property rights, and the financing
  innovation for highly innovative SMEs.

59

• International regulatory convergence is hence
  also an issue for many sectors. Key
  sector-specific challenges include the need to
  make more progress towards creating a fully
  competitive single market for pharmaceuticals
  products, and environmental and market access
  issues relating to the food and drink industries,
  pharmaceuticals, and cosmetics.

60

• 2. Machine and systems industries
• The machine and systems industries (e.g. ICT,
  mechanical engineering etc.) account for about
  one third of EU manufacturing value added and
  are characterized by medium to high growth rates
  with high rates of RD spending. The challenges
  for these sectors therefore mainly relate to
  innovation, intellectual property protection, and
  ensuring the availability of high skilled
  personnel.

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• The Single Market for many of these industries
  depends upon technical standards that need
  continual updating. Better access to
  international markets is also essential for some
  industries, notably ICT, electrical and
  mechanical engineering, and motor vehicles. The
  transport industries also face a number of
  environmental challenges, particularly the need
  to continually improve the environmental
  performance of their vehicles, planes, and ships.

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• 3. Fashion and design industries
• The fashion and design industries (e.g. textiles
  and footwear) make up just 8 of manufacturing
  value added, but have experienced low or negative
  output growth and relatively low RD spending
  over recent years. Successful structural
  adjustment is the key challenge for these
  industries. Improving innovation, IPR protection,
  and skills are essential to be able to continue
  to improve the quality and product-diversity of
  their output. Obtaining better access to
  currently heavily protected world markets is also
  a key policy requirement for these industries.

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• 4. Basic and intermediate industries
• The basic and intermediate industries (e.g.
  chemicals, steel, and pulp and paper) account
  for some 40 of EU manufacturing value added. As
  suppliers of key inputs for the rest of EU
  industry, these industries can be an important
  source of innovation for other sectors. Growth
  rates in this sector have been medium to low,
  with the exception of the strongly performing
  chemicals and rubber industries.

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• These industries are largely energy-intensive and
  hence the main cluster of challenges relates to
  energy and the environment. Important
  sector-specific challenges include the REACH
  legislation for the chemicals industry and
  legislative simplification issues for the
  construction sector. Structural adjustment is an
  important issue for the ceramics, printing, and
  steel industries.

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66

• A new integrated industrial policy is oriented to
  create the conditions for manufacturing to thrive
  
• In the face of globalisation and intense
  international competition, the European
  Commission has launched a new industrial policy
  to create better framework conditions for
  manufacturing industries in the coming years.

67

• The manufacturing industry matters to the EU, it
  employs over 34 million people, it accounts for
  three quarters of EU exports and over 80 of EU
  private sector RD expenditure.
• Whether or not a business succeeds or not
  ultimately depends on the vitality and strength
  of the business itself, but the overall
  environment can help or harm business prospects.

68

• The new EU industrial policy will complement work
  at Member State level to support a strong and
  dynamic industrial base. It includes seven new
  initiatives
• on competitiveness,
• energy and the environment,
• on intellectual property rights,
• on better regulation,
• on industrial research and innovation,
• on market access,
• on skills.

69

• Also included managing structural change - which
  will benefit a wide range of industry sectors.
• Seven additional initiatives are targeted at
  specific sectors such as pharmaceuticals, defence
  and Information and communication technologies.

70

• The approach underlying the new industrial policy
  is based on a detailed screening of 27 individual
  sectors of manufacturing industry and
  construction. It builds on the success of several
  joint initiatives undertaken by the Commission
  with, for example the shipbuilding and car
  industries.
• This industrial policy is an important step in
  the delivery of the Commissions new Lisbon
  Partnership for Growth and Jobs.

71

• The industrial policy of the European Union has a
  key contribution to make to the three following
  tasks.
• The first is to set out the boundaries within
  which industry and entrepreneurs can pursue their
  ambitions. It aims to establish a predictable
  legal framework which can be adapted in response
  to policy needs. Its counterpart is that they
  should be confident that, when they respect these
  obligations, European society as a whole accepts
  the pursuit of their activities.

72

• For the Commission, as for Member States, this
  must be an active role, for failure to set this
  framework correctly can lead to risks for the
  public, or to the waste of industrial resources
  and the frustration of entrepreneurial
  initiative.
• The second is to ensure that the conditions are
  present for industry to develop and to realise
  its competitive potential. European society
  cannot be passive in its attitude to the source
  of its wealth.

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• The availability of technology, skills, an
  educated workforce, a positive attitude to
  risk-takers, finance and the other conditions
  which form a truly competitive and innovative
  business environment have to be the active
  concern of its policymakers.

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• The third is to ensure that the frameworks,
  institutions and instruments that are necessary
  to the business environment and for industry to
  be able to act in accordance with its public
  obligations are in place and function
  efficiently, in the broadest sense.
• Although this is horizontal in its nature, it has
  to be applied in a way that is adapted to the
  specific characteristics of different sectors.

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• The goal set by the Lisbon European Council and
  the challenges of sustainability are ambitious
  and can only be met if EU industrial policy is
  fully mobilised.
• A robust set of policy instruments is available
  and there is a general willingness of interested
  parties to contribute. However, success, and
  ultimately the availability of more and better
  jobs and greater social cohesion, will only be
  possible if efforts are fully focused.

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• The Commission intends therefore, over the coming
  months, to screen the way in which its main
  policies interface with the competitiveness of EU
  industry.
• This exercise will also help industrial policy to
  contribute to meeting the objectives of other
  policies. This debate must not remain confined to
  the Commission. All the EU institutions, but also
  the Member States and candidate countries, should
  pick up the challenge in their turn.

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• Improving EU industrial policy, to ensure that it
  stimulates and sustains EU industrial
  competitiveness, is a concern for us all. In this
  respect, the Commission invites all interested
  parties to provide comments on the issues raised
  by this Communication.
• The newly established Competitiveness Council
  will have a key role to play in pushing forward
  the process started with this Communication.

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• It offers a forum to establish the roadmap for
  industrial policys contribution to the Lisbon
  goal and to monitor progress. It can ensure
  coherence between the policies at EU and at
  Member State level and improve their interaction.
  It is well placed to review both the general
  competitiveness situation and that of individual
  industry sectors.

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• This is a process that is starting. The
  Commission will come back to the issue to draw
  further conclusions, in the light of its progress
  and may propose further initiatives.
• The fact that the application of policy needs to
  take account of the specific characteristics of
  sectors does not mean that industrial policy must
  be fragmented.

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• On the contrary, a broad view is needed. This
  will guarantee that the application of industrial
  policy in a given sector is consistent with the
  interests of other sectors.
• In addition, approaches that are tested in a
  given sector can be added to the industrial
  policy toolbox and used as models in other
  sectors confronted with similar needs.