Underlying themes

Speaking in Brussels, at the opening of the European Trade Union Council (ETUC) conference on Tuesday, José Manuel Barroso, President of the European Commission, reiterated a number of key points that can be said to represent the underlying theme to the current policy direction as envisaged by the Commission. In doing so he had a special message to put across to trade unions throughout Europe.

In brief, I will (purposely) quote directly some of the key sentences from Mr Barroso's speech: "The emergence of the European Union as an economic powerhouse has spread prosperity and sustained peace across the European continent.

"The EU has already shown, as for example through the Single Market, the euro and enlargement, that it can mobilise support for far-reaching reforms. However, in a number of areas, we (in the EU) have done little to close the gap with the United States, for example in productivity growth, or in public and private investment, in research and new technologies.

"To do this we must add two (critical) factors, global competition and an aging population. The need for change is urgent."

What is required (again quoting Mr Barroso directly) is "a renewal of the Lisbon Strategy because we urgently need to boost the performance of the EU economy. We must build on sound economic foundations and on structural reforms that can open markets and deliver stronger productivity growth, boost R&D, foster innovation and investment (in people, in networks, in ideas), raise employment, reduce regional inequality and poverty, and curb environmental damage.

"And stronger growth and more jobs will allow us to tackle better poverty and exclusion, while providing the means needed to modernise welfare states. We share a common goal of matching economic progress with a better quality of life.

"Working together, we must put reform back at the top of our agenda, not only at the European level, but also in each of our 25 member states. Now is the moment for action and Europe's trade unions should rise to the challenge."

Industrial policy

Mr Barroso also reiterated what the Commission has been stating consistently concerning industrial policy within the EU. To boost economic performance in Europe, it is necessary to secure a thriving industrial base.

However, this must not be attempted by seeking to shelter industries artificially from competition. On the contrary, the pressure of global competition must be duly acknowledged such that it can be better understood, such that it may be suitably channelled into new investment and dynamism that can only be achieved as a result of greater innovation and on the strength of a highly skilled, adaptable and flexible workforce.

In the old Soviet terminology, the words industrial policy were often used to describe the situation where the state, through its central planning mechanism, decided which items were to be produced and in what quantities.

This situation provoked a negative reaction and, for some time, it even led many to avoid using the term altogether. However the Soviet era is now part of history and it has been possible, in recent years, to reopen a lively debate on what constitutes an industrial policy and what should be its essential components.

Increasingly the emphasis has shifted away from attempts to support particular lines of industrial activity because this conception of industrial policy has often been shown to have been fundamentally a reactive and defensive one.

The tendency had been to focus primarily on measures to assist industries in difficulty which, however, often tended to be also industries in long-term decline. The emphasis has now shifted towards understanding and promoting those conditions that would best help new industrial activity to develop and prosper.

This could be through the elimination of existing barriers, such as by fostering competition or through the consolidation of the single market. However, it could also be through the facilitation of those factors that are necessary for such industrial activity to establish itself and expand, such as enhanced access to a more highly skilled labour force and a higher level of investment in research and development, together with greater opportunities to reap the practical benefits from it.

Today, it could be said that many aspects of industrial policy are often determined on the basis of provisions developed under the guise of related initiatives, under other policy headings. These include competition policy, trade policy, fiscal policy, social policy and environmental policy.

This is, under many aspects, inevitable, but it is important that it is not allowed to happen accidentally or haphazardly. Instead it must be given direction and rationalised around a unifying vision and accompanying strategy (for example, along the lines of the Industrial Policy Strategy that was published in my last year as Minister for Economic Services).

At the moment, the notion of competitiveness has become the key concept and most discussions about industrial policy are centred on the need for and the means necessary to bolster competitiveness in an increasingly globalised environment.

This is also reflected in the policy areas covered within the portfolio assigned to Gunter Verheugen, Vice-President of the European Commission with responsibility for Enterprise and Industry.

In this context, the term industrial policy is now used in conjunction with the wider designation of enterprise policy. The EU's Enterprise Policy comprises a number of policy actions related specifically to industrial policy as well as other policy considerations that concern the support to small and medium sized enterprises in general as well as measures to foster entrepreneurship.

The European Commission's Enterprise Policy aims at creating a favourable environment for enterprises and business in Europe, thus creating productivity growth and the jobs and wealth necessary to secure a higher standard of living for Europe's citizens.

Council's role

A similar broader perspective to industrial policy has also been adopted within the Council of the EU. As was explained earlier, the Council of the EU meets under various configurations, depending on the particular subject under review, but always bringing together the competent ministers from the 25 member states under the chairmanship of the minister from the country holding the presidency at that point in time.

Since June 2002, three such configurations (Internal Market, Industry and Research) have been merged under a new 'umbrella' configuration and called the Competitiveness Council.

This was specifically in response to the perceived need for a more coherent and better co-ordinated handling of matters that are closely linked to the question of competitiveness. The formula adopted is a flexible one; depending on the items on the agenda, this Council is composed of European affairs ministers, industry ministers, research ministers, etc. It meets about five or six times a year.

This Competitiveness Council is expected to assume a horizontal role in ensuring an integrated approach to the enhancement of competitiveness and growth in Europe.

In that spirit, it reviews on a regular basis both horizontal and sectoral competitiveness issues on the basis of analyses provided by the Commission and gives its views on how competitiveness issues can be properly taken into account in all policy initiatives which have an impact on enterprises.

It also deals with legislative proposals in its different fields of activity, where it decides by qualified majority mostly in codecision with the European Parliament.

The main line of action is to facilitate the adjustment of industry to structural changes, encouraging an environment favourable to initiative and to the development of enterprises throughout the Community, particularly small and medium-sized enterprises, encouraging an environment favourable to co-operation between enterprises and fostering better exploitation of the industrial potential that can be derived from the policies of innovation, research and technological development.