Speech by Commissioner Breton at the conference “A stronger industry for a more autonomous Europe”

Madam Minister,

Ladies and Gentlemen,

I am pleased to be here with you to close one of the first major highlights of the French Presidency of the European Union.

Today you have addressed essential questions that call for a central response: Europe’s ability to take its economic and industrial destiny in hand.

I am deeply convinced that, as in so many other areas, there will be a before and after to the COVID crisis.

Until recently, there was a strong and long-held belief that, in our globalised world, supply chains were unshakeable; that there was no such thing as shortages.

This credo was shattered by the new reality that we now have to face. I was shattered, first of all by the reality of “China First” for masks. Then, by the reality of “America First” for vaccines. This was a wake-up call for many of thus: who would have thought that even our American partners would prevent our own European companies from accessing the  essential elements, which they actually produced themselves on American soil, and which they needed for manufacturing vaccines in Europe!

We are experiencing this new reality well beyond the health crisis.

Take the current shortage of semi-conductors, concrete consequences for our economy and for employment in Europe.

Or the energy crisis, which reminds us how much we depend on imported fossil fuels and how some are using them as a geopolitical lever.

I am also thinking of our dependences on raw materials that are critical for the transition of our industry, such as lithium or synthetic graphite, which are so important for the production of electric batteries.

Or on timber: prices have risen by more than 25% in one year, the largest increase amongst all construction products.

Those are the facts.

The question is: how will Europe take its destiny in its own hands?

I often hear, rightfully, that we need a sovereign Europe, a resilient Europe, an autonomous Europe.

Against this backdrop, my roadmap is straight to the point and hands-on, focused on results for our citizens.

• Europe must invest in cutting-edge products and technologies that allow us to remain competitive and generate quality jobs;
• Europe must be a leader in the markets of the future, not a subcontractor for whoever;
• A “factory” Europe that gives itself the means to cater for its own needs but also to conquer world markets and export;
• A Europe not withdrawn into its shell and wanting to produce everything itself, but rather a Europe that shelters all its supplies from the hazards of what I call the geopolitics of value chains.

This industrial ambition is increasingly federating at European level. Take, for example, the coalition agreement of the new German government, the change in tone in the Netherlands, and the tenor of the discussions in the European Council.

From European market to European power

Only on a continental scale can governments take the measure of the new geopolitical reality.

For two years now, Europe has been updating its software, so to speak, building a genuine continental industrial policy; a more assertive policy, open to the world yet on our terms.

First of all, we now have a good understanding of the areas in which we must reduce our strategic dependencies and increase our industrial capacity.

To do so, the Commission will continue to champion European industrial alliances on batteries, raw materials, hydrogen, more recently on semiconductors and data, and soon to come on space launchers and zero emission aircrafts.

The industrial alliances we launched have played a major role, bringing tangible results, including:

• On batteries: 120 billion euros of public and (mostly) private investment in 2019 and 2020, 3.5 times more than China. 70 major battery projects in the EU announced and under construction, including more than 20 gigafactories. Training programmes for the 800,000 people who need retraining or professional development. A battery regulation under negotiation.
• On hydrogen: 800 million euros from EU funds each year for hydrogen projects. Legislation on the definition and certification of hydrogen under preparation.
• On cloud: 40 European IT companies grouped together to develop the next generation of data processing technologies and position Europe in the race for highly secure, low-latency, state-of-the-art solutions. A technology roadmap already finalised. An important Project of Common European Interest under way.

I would like to commend public authorities and industry for their joint commitment to these industrial alliances. They have now proved their added value and we will continue to promote them.

Yet, rebalancing global value chains also involves diversifying our sources of supply. This includes consolidating our international partnerships in the raw materials sector.

This is why, for minerals or critical raw materials, the EU has signed initial partnerships with Ukraine and Canada We are also working closely with our neighbours – Norway, Serbia – as well as with countries in Africa and Latin America. At the same time, we must strengthen our domestic capacities by developing innovative and sustainable projects.

Finally, the geopolitics of value chains also implies rebalancing the balance of power. I mentioned the example of vaccines at the beginning of my speech. Only when the European Union set up an export control tool – in short, leverage – were we able to unblock the supply chains, component by component, product by product, producer by producer. This is a lesson that we must learn from this crisis.

The Commission has already laid several building blocks, including in particular the foreign direct investment screening mechanism, which has been operational for more than a year, or the proposal for a regulation on distortions arising from foreign subsidies in public procurement and acquisitions. I am confident – and I count on the French Presidency – that it will be adopted in the course of this year.

A few words also on standardisation. Standardisation activities are essential to the deployment of the green and digital transition of European industry. Yet European standards are facing more intense competition at international level, in particular from China.

Thirty years ago, we defined the GSM and 3G standards. It represented over 90% of market share. But see how China, over a year ago, made a breakaway to propose its own standard on ultra-lightweight lithium metal batteries. Europe was nowhere to be seen. This cannot happen again.

It is therefore essential that we strengthen standardisation governance in Europe, to prevent major industrial players from exerting excessive influence on the development of European standards.

This is the very purpose of the standardisation strategy I will present it in a few weeks.

Ladies and Gentlemen,

Semiconductors are an excellent example of Europe taking its destiny in hand.

Semiconductors have been one of my top priorities since the first day of my mandate. They are the linchpin of most of the technologies of the future: 5G, 6G, edge computing, the Internet of Things, artificial intelligence.

Without these technologies, there can be no green transition either. Take, for example, intelligent electricity distribution networks, battery management in cars or energy storage systems.

By the end of the decade, the semiconductor market will double. We have to be ready, and above all we have to prepare the ground for our leadership on the next-generation semiconductors, that is to say below 5 or even 2 nanometres.

We have the best research – LETI in Grenoble, IMEC in Leuven and Fraunhofer in Dresden – and the best technologies in the world, particularly in chip production equipment with ASML. It is up to us to turn this excellence into industrial leadership.

The Chips Act, announced in September by President von der Leyen, will help us do this. Accelerating the transition from research to the factory, investing in European mega-fabs, promoting international partnerships: all the ingredients are there.

The Chips Act will also create the right investment conditions to ensure security of supply along the value chain and better withstand potential crises in this key market for our future industries.

Ladies and Gentlemen,

I was talking about a before and after the crisis. Over and above measures specific to certain sectors, this requires a structural reflection on how to be better equipped for the next crisis which, whatever its nature, may cause major shocks to demand or supply, affecting our industries and fragmenting our single market. We must remember how much the single market was damaged at the beginning of the crisis by the precipitous barriers to free movement, blocking vital products and many workers at the borders.

We were certainly able to implement ad hoc measures (basically phone calls – and I had to make quite a few of them!) to remove these barriers. But now we need to think about a more systemic approach.

We are therefore working on an emergency instrument for the single market, with two main components: better preparation, and a reinforced capacity to react in case of crisis.

This will involve developing a system to determine when our single market is in crisis, structured coordination with and between Member States, and measures to ensure the availability of the most critical goods and services.

It is time to have a discussion, without naivety, and without taboos, on the toolbox we need to guarantee our security of supply for our most critical value chains in case of crisis. It is important for Europe to be on par with our partners who have already put in place measures to become more responsive and stronger in defending their interests.

Ladies and Gentlemen,

I am convinced that Europe has everything it needs to redraw the balance of power.

There is no such thing as fatality. When Europe has the will to come together and march in close ranks, it succeeds.

We have a unique opportunity to write a new page together, in addition to those already written: after the Europe of democracy and the Europe of the market, let us now pave the way for a Europe of power.

Thank you.