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EU needs joint funding for common industrial policy, commissioner says

By Thomson Reuters Jun 20, 2024 | 11:09 AM

BRUSSELS (Reuters) – The European Union should come up with goals for a common industrial policy and provide joint funding for it to compete better globally, European Economic Commissioner Paolo Gentiloni said on Thursday.

The 27-nation EU has separate national industrial policies, with EU competition rules to preserve a level playing field. There is no real EU-level industrial policy, while China and the U.S., the EU’s two biggest global competitors, both have policies to support certain industries.

“We will have a discussion on industrial policy,” Gentiloni told reporters on entering a meeting of EU finance ministers.

“The purpose is to establish common goals of industrial policy for the Union and at the same time to discuss the need for common tools, common funding for these common goals,” Gentiloni said.

A European Commission paper prepared for the ministers’ discussions said that France spent around 0.6% of GDP on industrial support in 2019, while Germany and the U.S. spent around 0.4% of GDP each. This compared with 1.7% of GDP for China.

While in France and the U.S. the aid was for research and development, the money in China mainly took the form of production subsidies, credit at below-market rates and subsidised access to land.

The Commission paper said that, because the EU had little money to finance an industrial policy, it could only for now coordinate national policies to avoid fragmentation of its single market.

“Industrial policy would benefit from EU-level funding to facilitate the flourishing of industrial value chains across the Union as a whole,” it said.

Gentiloni said the discussion on industrial policy would be handled by the next European Commission, due to take office in October and the next European Parliament, which will have its first session in July.

(Reporting by Jan Strupczewski; editing by Philip Blenkinsop and David Gregorio)