The crisis we have been and are still going through, has taught us a lot.
During the Covid-19 crisis, our European vulnerabilities have been exposed in broad daylight. Vulnerabilities regarding health products, as 80% of the active substances in our pharmaceuticals are imported. Vulnerabilities regarding electronics, as we are lacking microchips, essential for our cars, planes, or any electronic device we manufacture in European Union.
Those weaknesses can impair our citizens’ wellbeing and disrupt our companies’ production chains and the workers that rely on them. At the end of the day, they are always the ones who pay the price, with delivery delays or price increases.
Nowadays, especially with the unpredictable developments of the war in Ukraine, we are confronted to the crucial need to strengthen our Union: for our economy, for our energy and food independence. For peace.
It is urgent. Our continent is at a crossroad; geopolitical, economic, environmental and industrial crossroad. If the European Union and its member states wish to remain in the international competition, and if we want to be able to react to another shock, we need to build a new model based on an open strategic autonomy.
“Strategic autonomy” is not an abstract concept. And I want to make it very clear, “strategic autonomy” is not protectionism. It is about being more resilient when it comes to fulfilling the basic needs of our citizens, such as housing, heat, food, health….
To build our open strategic autonomy, our single market is a very strong foundation. We have a very wide market of 450 million consumers, with demanding environmental and social standards. This market is our key asset to build up future growth: we need both to reinforce it, as well as to ensure fair competition with companies from third countries.
For the past two years, the European Union stepped up and made great step toward a more efficient Union capable to provide quick and massive answers to the unprecedented events we had to face and are still facing. It is great progress in the history of the European Union. It is undeniable: we need more Europe to be able to reach our goals and protect our citizens. We have a more comprehensive set of European levers thanks to these past years; It is a very good basis to build upon to reinforce our strategic autonomy.
Our main assets are the Important Projects of Common European Interest, the IPCEI. They will enhance our common ability to innovate, and accelerate the transformation of our value chains while relying on the very best of our SME’s and our medium-sized companies.
We started with two IPCEI’s on microelectronic and electric batteries. And it has been a huge success. On electric batteries, when we started, many said we should rather rely on others than even trying to build our own capacities. But in two years, Europe became the first continent in terms of investment in new generation electric batteries.
We intend to go further. That is why, during the French Presidency of the European Union, we are moving forward on four projects of industrial cooperation.
First, an IPCEI on low-carbon hydrogen. It is a subject on which the European Union can become a world leader. It is also a crucial matter regarding our environmental objectives and the need to decarbonize our industry. Secondly, we launched an electronic IPCEI, which has been broadened to the subject of “connectivity” because we also need to invest massively in 5G and 6G. We also launched a Cloud IPCEI. Looking at the international situation, it is certain that the Cloud is a strategic issue for the future of our continent. Finally, we need to grant our citizens access to the health sector’s breakthrough innovations of, such as genic biotherapies or bioproductions. It is the purpose of the Manifesto we signed, in Paris, on the 3rd of March along with 16 other Member States, to proclaim our will to launch a new IPCEI on health. Starting in June, it will allow our continent to cooperate and bring the best innovations to the European patients and hospitals.
But, beyond these industrial cooperations, our strategic autonomy is also being challenged on two crucial matters: critical raw materials and semi-conductors.
Critical raw materials, in the first place. They are vital in high technology applications for automotive, renewable energy, defense and space. For example, regarding what I said earlier, we crucially need nickel, cobalt and lithium for the electrification of our European vehicle fleet.
Our countries, our continent won’t be able to fulfill the environmental and digital transformations whilst we only control 2% of the metals needed for it. And we cannot geopolitically nor economically allow ourselves switch from a dependency to fossil fuels to a dependency to critical raw materials.
This is why, on the 31st of January and 1st of February, in Lens, I held an informal Competitiveness Council, mainly focused on the issue of our dependency to critical raw materials. Those two days enabled us to find common grounds on three main objectives: securing extra-European supply sources for raw materials, developing recycling and circular economy to keep the resources in Europe, and innovating, producing and extracting domestically those materials.
We are also building our strategic autonomy on the matter of semi-conductors. Last month, the European Commission presented the content of its 43 billion euro plan to produce, by 2030, 20% of the world’s microchips in Europe. This ambitious plan, the EU Chips Act, lays out a complete European strategy in Research and Development for semi-conductors, a framework for international cooperation, and a plan to support the increase of our production capacities. It is a crucial plan for our technological autonomy.
But, all of these actions and industrial cooperation, will only work if we strengthen the European Union and be pragmatic. If we finally choose to set the rules for loyal and fair competition, for a true “level playing field”. If we stop letting our companies suffer from those with lower environmental and social standards in low-cost countries.
The first tool to build this level playing field, is the Carbon Border Adjustment Mechanism. It will help us stem carbon leakage. Today, the risk is that we continue having on the one hand important investments required for the reduction of carbon that reflects on the prices, and, on the other hand, the increase of our imports from countries with lower standards. It results in a double defeat for both the climate and the economy: more carbon footprint and less industrial jobs.
The second tool is the Commission’s proposal for a regulation on distortive foreign subsidies. It would enable us to restrain access to our single market for the companies that benefit from foreign subsidies. In Brussels, during the last Competitiveness Council of the 24th of February, with my European counterparts, we agreed on the need for progress on this important regulation, and the French Presidency will be instrumental for that.
The European Union’s strategic autonomy is crucial. It is crucial because it challenges our ability to master of our own fate and our courage, as leaders, to confront our weaknesses and dependencies. It will decide whether we live up to the great issues of the century: the double digital and environmental transformation, but also the returning of the tragic times of history. And it is only at the European level, as Europeans, that we can face those stakes.