By AFP - Agence France Presse
Bureaucracy and rare earths: EU compass charts economic future
Daniel ARONSSOHN
The European Union will unveil on Wednesday a long-awaited plan to revamp its economic model, promising a “shock of simplification.” The bloc is struggling to keep up with China and the United States.
At the start of EU chief Ursula von der Leyen's second term, the “competitiveness compass” publication aims to mark a change of course towards a more business-friendly Brussels.
Faced with tariff threats from US President Donald Trump and China's rapid rise in key industrial and digital sectors, as well as the need to make huge investments in artificial intelligence, the 27-nation bloc is under pressure to make life easier for its companies.
The bloc hopes to get back into the race by implementing the recommendations made last year by former Italian leaders Enrico Letta and Mario Draghi.
- Simplification shock
The European Commission's recent focus on climate change and business ethics has left many companies complaining about over-regulation, which adds to high energy costs and poor investment.
Commission Vice-President Stephane Sejourne has promised, “a shock of simplification without affecting environmental goals”.
Dozens of laws will be revised, with rules on environmental and human rights supply chain standards, corporate sustainability reporting, and chemical safety all facing a cut.
A new category of medium-sized companies will be created to reduce the regulatory burden for some 30,000 companies, according to a draft text seen by AFP.
A European legal regime, distinct from the 27 national jurisdictions, will be created to allow innovative companies to benefit from a single, harmonized set of rules on insolvency, employment law, and taxation.
- Reducing energy costs
Europe is suffering from energy costs that are much higher than those of its international competitors after the war in Ukraine cut off the supply of cheap Russian gas.
Von der Leyen told a meeting of the world's elite in Davos last week that the bloc must “continue to diversify our energy supplies” and “expand clean sources of a generation”, including nuclear power - which was once taboo in Brussels.
The compass also recommends facilitating long-term power purchase agreements and increasing investment in the power grid to improve transmission and storage.
- Encouraging the green industry
The “simplified and targeted aid” will encourage industrial decarbonization, and Sejourne expects the priority to be the greening of the “top 100 CO2 emitting facilities”, which alone account for more than half of Europe's industrial emissions.
The plan also envisages the creation of labels to stimulate demand for low-carbon products, such as “green” steel, which Brussels is keen on but which is in low demand due to its prohibitive costs.
Specific plans will be drawn up for problematic sectors such as chemicals, steel, and automotive.
- Leniency in mergers
The EU would like its competition watchdog to take into account the huge investment needs of technology companies when assessing mergers.
At the moment, the focus is on the potential impact on prices, which prevents the creation of European giants.
Thus, “a new orientation for merger assessment is planned, so that the innovation, resilience, and investment intensity of competitors in certain strategic sectors are fully taken into account”.
- My baby, mine
To reduce the dependence of China and other countries on rare earths and raw materials, Sejourne wants more of this material to be extracted in Europe.
The commissioner said he has already received 170 exploration or mining research projects - which often face local opposition over environmental impacts - and promised to “facilitate” the issuing of licenses to diversify supply.
The compass foresees the creation of a platform for the “joint purchase” of essential raw materials and the development of international partnerships to strengthen supply lines for green technologies such as solar and wind energy, chips, and pharmaceutical ingredients.
A “European preference in public procurement” for essential sectors and technologies is also mentioned.
- Building the savings union
More than three decades after its launch, the EU's single market is still excessively fragmented in sectors such as telecommunications, energy, and defense, where different national rules hamper competitiveness.
The “removal of remaining barriers” is among the priorities cited in the draft compass.
The unification of European capital markets - something that has long been stalled by competing national interests - is at the top of the list.
Although Europe has a single currency, its start-ups are still unable to match the gigantic fundraising campaigns of their North American competitors.
To solve this problem, von der Leyen promised at Davos to create a “European savings and investment union”.
aro/ub/ec/gv
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