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The French government has completely overhauled the EU’s approach to boosting its industry, offering a “Made in Europe” strategy to counter the flood of US subsidies, according to documents seen by POLITICO.
In a letter dated January 9, the French government called on the EU to accelerate production targets, weaken state aid rules, set up an emergency sovereign fund and mobilize trade defense equipment – all in response to a recent US bill. in response to. anti-inflation lawIncluding $369 billion in climate-friendly subsidies.
It follows step A to pledge from French President Emmanuel Macron earlier this month, in which he jockeyed for the bloc to make progress on its “Made in Europe” strategy. The campaign has become a point of friction within the European Union – while many countries support France’s effort in principle, there is little agreement on how to accomplish it.
production target
In the letter, from France’s General Secretariat for European Affairs, the French say the EU should draw up new production targets “to reduce our dependence” on sensitive sectors.
“Very concretely, the consortium should set itself a production target to achieve by 2030”, based on Block’s draft model. Chips Actthe letter says.
The CHIPS Act is part of a wider EU effort to ensure Europe does not have to rely on countries such as China for the technology that powers modern technology. The bloc is also increasingly rethinking how it gets its energy in the wake of Russia’s war in Ukraine.
The letter states that the EU should introduce “reforms to simplify and speed up the procedures for granting permits for the establishment of new production sites” as well as a full energy market, which would allow companies to make production and investment decisions. Could help.
state aid
The European Commission is also currently in the process of revising its emergency state aid rules, which have gone through a series of iterations since the start of the pandemic and the war in Ukraine.
Traditionally, the EU has been reluctant to offer state aid in all but the most extreme circumstances. But in its letter, France says the EU should introduce “targeted support – through subsidies or tax credits – in limited sectors upstream based on defined criteria”.
“These mechanisms can take the form of tax credits or direct subsidies targeted at strategic sectors,” the letter said.
Those areas – say the French – could include photovoltaics, batteries, hydrogen and critical materials. The letter suggests ending exemptions to these state aid rules only in 2030. They are currently due to expire at the end of this year.
It added that some small and medium enterprises should be exempt from state aid limits, especially if they are involved as participants in the EU’s Key Projects of Common European Interest (IPCEI) programme. And it argues that the aid notification limit for environmental or decarbonisation projects should be increased to €20 million per company and per project.
The Commission’s antitrust enforcers are due to circulate their latest draft of the bloc’s emergency state aid rules to EU countries on Friday.
sovereign fund
France also suggests setting up an emergency fund, backed by money from the EU’s post-pandemic recovery PitcherAs well as repvareu – The bloc’s financing framework to diversify investments away from Russian fossil fuels.
The letter recommends reallocating €365 billion “not yet distributed as a priority to sectors that are strategic for European industry” and €221 billion of loans yet to be allocated, European The countries of the Union “should be able to give priority to the strategic” European Industrial Area. ,
The letter states that the Emergency Sovereign Fund should be operational before the end of 2023.
The French are cautious, however, to ensure that a new influx of state aid does not fragment the EU’s acclaimed single market. The fear is that the loosening of state aid rules could benefit countries with more pockets within the EU. To counter this, the letter suggests replicating SURE, a common debt instrument used at the start of the pandemic that offered favorable loans to countries.
trade defense
To preserve the fairness of competition rules internationally, France’s letter concludes by saying that “the EU’s trade strategy should be more clear around the defense of the European Single Market.” For this the Commission should use the trade defense tools mentioned in the WTO rules, the letter notes.
Commission President von der Leyen is due to present his ideas to EU countries on how to respond to US efforts on 1 February. His message comes just ahead of a February 9-10 summit of EU leaders, in which the issue is set to take center stage.