Strengthening the EU’s resilience and strategic autonomy

The sanitary crisis with the disruption of goods and services flows reminded Europe of the vulnerabilities in its economic model, notably its dependency on a limited set of suppliers. Years of offshoring in the pharmaceutical sector has led us to a situation where 80% of active pharmaceutical ingredients are today produced outside of the Union, an overreliance which created severe supply breakdowns of medicine used in reanimation during the crisis.

Yet, beyond their immediate security, a too strong dependence on one supplier can also endanger our citizens’ future prosperity. We should draw the lessons from the crisis and prepare a strategy for the longer term. Our duty, as politicians, is to protect our citizens and businesses from external threats and shocks. All in all, this is about better protecting and strengthening the Union’s strategic autonomy and resilience.

What do we mean by strategic autonomy and resilience?

Strategic autonomy is not about turning away from openness and the benefits of trade. But for certain sectors with a strategic dimension, such as health, defence or digital, we want Europe to secure a minimum production capacity in the EU, or diversify our trading partners.

One way to preserve our strategic autonomy is to improve our resilience. This means our capacity to cope with crisis in the short term. But it also requires us to continue investing, in the digital and green transition, if we want to achieve resilience in the longer term, in addition to the investments necessary to compensate for difficulties our businesses are going through. Similarly, investments in green value chains, for instance recycling industries and more widely the circular economy, contribute to reducing our dependency on energy and raw materials from third countries.

We should develop strategic stockpiling, geographic diversification of supply and, where appropriate, increase European production capacity, to build up our autonomy in these strategic areas.

With a bold and ambitious industrial policy, we will strengthen the Union’s strategic autonomy and lay the groundwork for its future economic sovereignty. It will imply reshoring and relocating some strategic production chains within the European Union.

This will only be possible with sufficient financing. The UE’s recovery plan, as well as progress on Capital Markets Union and Banking Union, will contribute to this policy goal by bringing both public and private investment.

Creating new industrial alliances at European level is also a priority.

We should invest in breakthrough industrial and innovation projects following the model of what we have done for electric batteries.

The French government will continue working in the coming months to build new Important Projects of Common European Interest (IPCEIs) in areas key to our present and future strategic autonomy, especially in hydrogen.

We are also ready to discuss with our European partners further projects in the digital sector, such as a second IPCEI for microelectronics or expanding European the Franco-German GAIA-X data infrastructure project.

Our industrial policy will succeed only if we coordinate our policies at the European level. Our competition policy, must be modernized in order to ensure a level playing field with third country players to give European firms the capacity to compete at the international level. The adoption of an ambitious Digital Service Act will be an opportunity to upgrade the EU’s digital rulebook to respond to the challenges brought by the digital sector.

Competition and trade policy need to be reconfigured to address today’s rising international tensions. The French government will make full use of its investment screening tool, and will encourage its counterparts to resort to the newly introduced cooperation mechanism to better protect our European strategic assets, notably in the context of the COVID crisis. We therefore welcome proposals from the Commission on new instruments against the effects of distortive foreign subsidies in the internal market. We will also continue to support a reinforced use of the Union’s trade defense instruments whenever unfair practices are identified, in line with the recent appointment of a Chief trade enforcement officer within the Commission.

Finally, European’s strategic autonomy might be more easily protected if it becomes one of the main global players. The implementation of a WTO-compliant carbon border adjustment mechanism will strengthen global cooperation against climate change by reducing carbon leakages and incentivizing foreign producers to improve their processes. The EU should build on its asset, the Single Market by further integrating it to protect intra-European flows from future shocks.

The Covid-19 crisis is a turning point for the European Union. By the end of this year, European leaders will have reached an agreement on Europe’s recovery plan and laid the groundwork for our future economic sovereignty.