What are the strategic value chains for Europe?

The identification of strategic value chains is an excellent initiative of the European Union. It aims to support the emergence of European industrial leaders capable of ensuring Europe’s strategic autonomy.

 European industry employs 32 million people in Europe and accounts for more than 2/3 of our exports.

However, in recent years, despite its essential nature for our autonomy, it has been neglected and is now in decline. Its share of European GDP has fallen from 20% twenty years ago to 16% today.

 In this changing world with the digital transition, the environmental transition and the new phase of globalisation, European industry must be able to adapt and modernise if it is to stay ahead of the game.

That is why we need to develop relevant policies at European level for our industry. By jointly investing in Europe’s industrial strengths and assets, the EU can maintain its leading position in many sectors and face global competition.

 So far, nine strategic value chains have been identified at EU level: Microelectronics, High Performance Computing, Batteries, Connected and Autonomous Vehicles, Cybersecurity, Personalised Medicine and Health, Low Carbon Industry, Hydrogen and the Internet of Things.

Priority was given to areas related to improving global productivity, combating climate change and technological development.

 These 9 priority areas, on which all our efforts must be focused as a matter of priority, are the subject of a strategic action plan and coordinated mobilisation of funding.

These innovative research projects sometimes involve high risks. They require joint and well-coordinated efforts as well as public and industrial investment from several Member States.

This is why the EU has put in place flexible state aid rules to facilitate the funding of these projects.

The Strategic Forum for Important Projects of Common European Interest (IPCEIs) is responsible for providing the Commission with advice and expertise to build a common EU vision on key value chains for Europe and to facilitate agreements to drive forward new joint investments in these key value chains.

It contributes to cooperation and coordination between public authorities and key stakeholders in several Member States.

 Take the example of batteries. Battery production in Europe has been identified as a strategic sector given its potential for clean mobility and energy, job creation (2-3 million jobs) and competitiveness.

It is clear that the demand for electric batteries is expected to increase very rapidly in the coming years, yet the European industry in this sector is lagging behind, particularly in relation to China.

 A European consortium for electric batteries has been set up to keep all the value in Europe and bring together all the players in the value chain, from extraction to recycling, waiting for tomorrow’s new generation batteries (solid state batteries, sodium ion) that are fully in line with the circular economy.

An action plan has been drawn up containing targeted measures for research and innovation, financing and investment, standardisation, regulation, raw materials, trade and skills development.

In view of the significant technological and financial risks involved, the Airbus battery project has been authorised to receive public aid from seven States amounting to €3.2 billion, aid which is expected to generate an additional €5 billion in private investment.

 This is a great victory, but I believe that the existing framework on IPCEIs should be reviewed in order to improve the efficiency of the procedures, particularly with regard to approval deadlines, co-financing by European instruments, access for SMEs, notification procedures and notification provisions for reference amounts.

The work must continue, we must ensure mapping and the development of the necessary skills across the value chains.

We also need to put in place a governance process to monitor progress on these value chains, track technological and industrial changes, and identify future emerging strategic value chains, such as artificial intelligence and satellite technologies.

 While being an effective tool, the identification of strategic value chains cannot be sufficient to ensure EU competitiveness.

In addition to industrial policies, we also need to mobilise policies related to competitiveness. 

The future EU industrial strategy must be ambitious and take all these aspects into account. “It’s time to put an end to naïve Europe,” says Single Market Commissioner Thierry Breton.

We must indeed take into account the global dimension of markets and public support for non-European companies in their countries.

Europe is not demanding enough of foreign investment. State subsidies received by Chinese companies, for example, distort competition on the world market.

We need to strengthen the rules of free trade agreements in order to limit subsidies and anti-competitive practices from third countries, which can harm European companies.