Of all people, Stéphane Séjourné was not there when the European Commission discussed the EU’s competitiveness on Wednesday. The Industrial Commissioner set the tone for the debate, which is scheduled to culminate in a special summit at the end of next week. On Sunday, Séjourné vehemently promoted a “Made in Europe” strategy to protect European industry in a guest article in several newspapers. At the end of February, the Frenchman wants to present a law that will specifically improve domestic companies and thus strengthen them in competition with China and the USA. “We must establish a real European preference in our most strategically important sectors once and for all,” demands Séjourné, who was in Washington at the raw materials summit on Wednesday. Beijing relies on “Made in China”, the USA on “Buy American”. He is certainly well received in Berlin. Federal Finance Minister Lars Klingbeil (SPD) calls for “European patriotism”. He wants to use goods produced in Europe for public investments. This is exactly where Séjourné comes in. When states award contracts or pay premiums for the purchase of e-cars in key sectors such as e-cars, cloud services, drones, a minimum share should come from the EU. The lever is big. Public tenders represent 15 percent of the EU’s economic output. Criticism of detailed quotas Séjourné also wants to limit the influence of investors from third countries in key sectors. You should hold a maximum of 49 percent of the shares. 50 percent of the preliminary products should come from the EU. Half of the affected jobs should be reserved for Europeans. At least that’s what a draft of the “Industrial Accelerator Act” proposed. It lies with the F.A.Z. before. But there was already criticism in the commission. The idea of setting quotas for every industry is absurd, senior officials say. In fact, the proposal goes into extreme detail. “The PV inverter and at least two other specific main components must have their origin in the Union,” is the requirement for solar technologies – for years one to three after the law comes into force. After that there should be three main components. There is also resistance from the CDU. It is said in Brussels that the Federal Chancellery prevented Séjourné from presenting the proposal as planned at the end of January. The deadline is now February 25th. In addition, the Federal Ministry of Economics led by Katharina Reiche (CDU) opposes Séjourné. Instead, Germany promotes “Made-with-Europe” in a position paper published by the F.A.Z. is available, the ministry is not strictly against giving priority to European companies. However, it adds a big “but” to the approach. The paper replaces Séjourné’s “Made-in-Europe” approach with a “Made-with-Europe” one. In short, the EU should not only favor European companies and thus isolate itself from the rest of the world. Rather, it should involve like-minded partners. These are primarily countries that have a trade agreement or similar agreements with the EU. This EU Plus approach should be the standard approach wherever possible. This is driven by the concern that without maximum competitive pressure, Europeans will tend to fall behind internationally. That is why the Federal Ministry of Economics wants to tie any priority for European companies to strict conditions. It should be temporary. This is intended to create an incentive to produce internationally competitive products. The requirements should also be strictly checked for their proportionality. The bureaucratic effort should not be too high. Ultimately, companies would have to document where the goods they use come from. The Commission should examine in advance how much the requirements drive up costs for companies and end customers. There should be no automatism, it goes on to say. Member States should have the final say in selecting the sectors affected. The EU should also regularly review the list of sectors, not least with regard to the geopolitical situation. Economic policy: “We are digging our own grave.” From the perspective of the Ministry of Economic Affairs, the EU should concentrate on defense and products that are important for economic security. These include basic chemical materials, semiconductors and important medical devices or pharmaceuticals. In addition, it could make sense to give preference to European companies when it comes to key technologies, it goes on to say. These include batteries, advanced semiconductors, cloud services, AI models, drones and vehicle automation systems. The paper also mentions green steel and electric cars. Without EU preferential regulations, European suppliers would be faced with severely limited competitive opportunities due to unfair competition from third countries. The Ministry of Economic Affairs receives support for this course from economists. Monika Schnitzer, chairwoman of the Economic Advisory Council, warns that excessive requirements to purchase European products could be a boomerang for the industry. “We are digging our own grave,” she told the F.A.Z. This makes domestic companies even less innovative. If car companies, for example, had a commitment to get rid of their products in this country, they would have less incentive to be competitive in other markets. “This is good for companies in the short term, but very bad in the long term,” said Schnitzer. A warning also comes from Clemens Fuest, President of the Munich Ifo Institute. “It is unclear what is intended to be achieved with this, what is clear is that it is economically damaging,” said Fuest. The bottom line is that a European purchasing quota means having to buy more expensive products, as cheaper competition from abroad is taboo. “It’s self-damaging,” said Fuest.Fuest: “You don’t have to imitate every stupid thing.” He doesn’t accept the fact that China and the USA act similarly as an argument. “You don’t have to imitate every stupid thing,” he said. If you want to conclude new free trade agreements at the same time, giving preference to domestic goods would send the wrong signal to your trading partners. European purchasing quotas could be presented as a threatening instrument in a trade conflict to deter others from protectionism. The economist strongly advises against using the instrument voluntarily. Schnitzer and Fuest assess the situation differently when it comes to security-relevant industrial sectors, such as armaments, software and cloud providers. “In this area, specifications can have value in increasing independence,” said Schnitzer. She sees a need for action, particularly with cloud providers. As long as American providers are used, the American state always has access to the potentially sensitive data of European citizens and companies. Fuest also says: “In the security sector, this can be done under certain circumstances – but you then have to be careful not to create monopolies, which in turn would bring risks.”More on the topicSéjourné, however, receives support from the industry. 1,100 top managers recently publicly approved it, including representatives of German companies such as Bosch, Continental and ThyssenKrupp Steel. Meanwhile, the French government wants to go even further. In the negotiations on the multi-annual EU budget 2028 to 2034, she is pushing for “a very comprehensive horizontal application of the principle of European preference”. This is what it says in internal reports provided to the F.A.Z. present. European money should be reserved for European goods. So far, France has been isolated. It is said that only Italy, Spain, Slovakia and Greece have shown themselves open to it.
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