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Industry plays an important role in the economic structure of the European Union. It accounts for 85% of EU exports, and more than 32 million jobs. This makes it essential for the EU to have a consistent and targeted industrial policy in place, which is able to generate growth and prosperity and to safeguard jobs.

For many years now, much of the legislation shaping the regulatory environment for the industrial sector has been created at European level. European industrial policy is particularly important for Germany, a country which sends approx. 59% of its exports to the EU and sources 58% of its imports from the EU. The German industrial sector accounts for more than 30 % of the total gross value-added generated by the manufacturing sector of the EU 28.

The basis for European industrial policy

Article 173 of the Treaty on the Functioning of the European Union (TFEU) provides the legal basis for the European Union's industrial policy, which seeks to improve the competitiveness of European industry, mostly by taking measures that cut across various sectors. Industrial policy is very much a cross-cutting policy area affecting numerous other policies, for instance with regard to trade, the internal market, research and innovation, employment, and environmental protection.

Nevertheless, sector-specific initiatives also have an important role to play. There have been initiatives to support the automotive sector, electrical engineering, and the chemicals industry, for instance. More specifically, these initiatives seek to address the particular needs of individual industries with regard to cross-cutting challenges such as securing a sufficient supply of skilled labour, promoting innovation, and strengthening intellectual property rights. Ultimately, the objective is to make the European Union a more attractive base for industry.

Important fields of action

Since 2013, the ministers of industry of several EU Member States have convened for an annual Friends of Industry conference, an event used for better coordination on key issues relating to industrial policy. The German Government hosted this ministerial meeting in 2017. At this meeting, the ministers of industry of 20 Member States rallied behind the Berlin Declaration (PDF, 130KB) and reiterated their call for a pan-European industrial strategy to be devised at European level. The declaration provides a summary of those points that Member States have highlighted as particularly important when it comes to strengthening the competitiveness of the European industrial sector.

The European Commission has repeatedly issued communications on European industrial policy, in which it has been defining key lines of action and a specific work programme for this policy area. In its Communication of September 2017 (in German), the Commission focused on efforts to create a deepened and fair single market, on tackling digitisation, and on expanding Europe’s lead when it comes to building a low-carbon circular economy.

Promoting innovation is also high up on the agenda, given that European companies can only compete with low-cost countries if they offer good-quality, innovative products. Support will be targeted at what are called cross-cutting areas to foster innovations that can generate growth across different sectors. These include energy storage, green raw materials and microelectronics.

The European Commission also supports small and medium-sized enterprises (SMEs) as they access important resources such as financing, energy, raw materials, and skilled labour. It has also set out to assist European companies as they venture into international markets and become part of global networks; mainly by negotiating on various free-trade agreements (FTAs) with third countries and by promoting international standardisation.

The European Commission wants to raise the industrial share of EU GDP to 20% by 2020, up from today’s figure of 16%.

DG Growth, the European Commission’s Directorate-General in charge of industrial policy, conducts an annual review of the EU’s overall competitiveness and that of individual Member States. The outcomes of this review are presented in its annual EU Competitiveness Report and in the Member States’ Competitiveness Reports.

Promoting competitiveness and sustainability

An important lesson to learn from the past few years of industrial policy is that the European industrial sector will only remain strong if policymakers at European level and in the member states deploy a coherent overall strategy. In other words, whenever taking political decisions in other policy areas, such as energy or environmental policy, they should do so without losing sight of the objective of strengthening industrial competitiveness and should avoid any undue regulatory burden being placed on industry.

In view of climate change and pollution, industrial policy must also promote sustainability (in German). This means that energy must be used more efficiently, products designed to be more environmentally compatible, and manufacturing processes become leaner. In 2012, the European Commission presented a Strategy for a sustainable bioeconomy in Europe (in German), which seeks to promote a stronger and more sustainable use of renewable resources. One of the major challenges in the years to come will be the implementation of a sustainable, and energy and resource-efficient industrial strategy that does not place an undue burden on consumers or businesses.

On 18 September 2017, Germany and the Netherlands sent an open letter to the European Commission, presenting it with a draft paper on how to strengthen the competitiveness of European industry and sustainable production. In this letter, which is in line with the Berlin Declaration signed by Friends of Industry in June 2017 and with the EU Communication on an Industrial Policy Strategy of September 2017, State Secretary Matthias Machnig and the Dutch Minister of Economic Affairs Henk Kamp set out their demands to the Commission. They do so by highlighting ways of improving the competitiveness of European industries, and particularly of energy-intensive industries and industries embracing digitisation, whilst at the same time strengthening sustainable manufacturing.

Strengthening Franco-German industrial cooperation

The German government and the French Government have jointly declared their intention to further step up Franco-German industrial cooperation on security and defence. Furthermore, the German and French governments are planning to consult with each other regularly on strategic matters relating to the defence industry, to cooperate on the development and procurement of military equipment, and to hold joint procurement programmes.

This close cooperation on defence is designed to uphold our ability to defend ourselves in the interest of safeguarding peace, freedom, security, and stability. The German Government and the French governments have signed a declaration to this effect. In this declaration, the two governments express their support for the decision that is likely to be taken by companies Krauss-Maffei Wegmann and Nexter Systems to engage in strategic cooperation.

This would mark an important step towards strengthening Franco-German cooperation. Our joint goal is to allow both countries to remain competitive in this sector and to uphold their technological capabilities. This has the added advantage of strengthening the European potential for innovation in the security and defence sectors of both countries.

Export controls for military equipment will be upheld

The merger between Kraus-Maffei Wegmann and Nexter Systems will not have any effect on the strict German system of military equipment export controls. The law governing military equipment exports will be fully upheld in substance, procedure and enforcement.

This means that German export control rules will also apply to supplies made between the German and French parts of the company following the merger. All supplies are subject to approval. This applies to complete systems and individual components alike.