29 Jun 2021

[Opinion] Four key elements to make the EU Industrial Strategy a success

How can Europe maintain its role of an industrial heavyweight in a digital world? What’s the role of the EU Industrial Strategy and how can the European Commission ensure its implementation is a success? Director-General Cecilia Bonefeld-Dahl outlines four key areas of action.

By Cecilia Bonefeld-Dahl, Director-General, DIGITALEUROPE

Europe is an industrial heavyweight: standing at 19% of the total EU output, industry remains the largest economic activity of the continent. From sensor-equipped machinery to 5G-operated remote vehicles and smart buildings management, digital is the growth engine of the industrial world today, and this must be reflected in a digitally-focused EU Industrial Strategy.

The EU can be the world leader in unlocking the role of digital to reduce harmful emissions and create sustainable jobs. We have a responsibility to channel its full potential if we want to maintain Europe’s prosperity in the years ahead.

The recently updated EU Industrial Strategy has taken a step in the right direction, with the creation of ‘digital pathways’ across all 14 ecosystems. But it still lacks actionable plans to be future-proof.

As a member of the Commission’s Industrial Forum, I see great potential for the Industrial Strategy to succeed, but that will require four key elements.

1. Pushing ahead with global cooperation

Fighting climate change and strengthening our healthcare capabilities will mean enhancing global cooperation. The recent visit of President Biden to Brussels showed that transatlantic dialogue is back on the table. During the high-level roundtable we hosted with US Secretary of Commerce Gina Raimondo, European Commission Executive Vice President Margrethe Vestager and senior executives representing our membership, vital topics such as trade, manufacturing, supply chains and green technologies were at the top of the agenda.

All these areas of growth – and, therefore, the success of the Industrial Strategy – are heavily dependent on a common framework for transferring data beyond the EU. Our newly published study on international data flows shows that keeping our current policy trends – a strict interpretation of the GDPR data transfer mechanisms; lack of a Privacy Shield; no WTO-level agreement on data flows – will cost €2 trillion by 2030 to the EU economy. And the sector that will most suffer is manufacturing, with an estimated loss of €60 billion. Many of the companies affected will be small and medium-sized enterprises (SMEs), which make up a quarter of the EU’s manufacturing exporters.

2. Moving up a gear on implementation

The Industrial Strategy must clearly outline what the private and public sector can do together on immediate challenges. For a start, the Industrial Forum should support the development of all digital pathways with a clear focus on existing barriers and how to overcome them.

Industry associations are best placed to advise on the policy implications of Industry 4.0, including the need for ambitious plans on digital upskilling and adoption of artificial intelligence among SMEs in Europe, just to name two crucial enablers of digital transformation. DIGITALEUROPE and like-minded sectorial associations can help define, too, how digital can advance the EU’s green transition of key industrial ecosystems.

However, our twin transition won’t happen without targeted investments from the Recovery Fund and the EU budget – including in the form of multi-country projects.

Approving the Recovery Fund was a historic act of political compromise. We now stand in front of an equally challenging task: rolling out 70% of the RRF grants in 2021 and 2022 and ensuring 20% of the funds are truly dedicated to digital. We know that some Member States have a poor track record in spending EU money, and the current lack of oversight mechanisms poses a real risk that our targets may remain just a wish on paper.

Solving these challenges also passes by implementing regulatory sandboxes that accelerate digital technology uptake across our industrial base and bring the business-to-business sector closer to the EU Green Deal goals.

3. Restoring the European standardisation system

The success of the Industrial Strategy also depends on harmonised standards. Industry and standardisation bodies struggle today with delays and unpredictability due to recent complexities introduced to the European product compliance framework. This situation is negatively impacting the development and deployment of new technologies in our Single Market.

One-sided technical specifications and implementing acts also make poor substitutes to harmonised standards. They risk cutting off Europe even further, and locking down technologies to the status quo, rather than promoting international uptake and technological innovation.

4. Aligning with the Digital Decade targets

DIGITALEUROPE has defined clear targets and key indicators to measure Europe’s digital success. This approach has been mirrored by the Commission in its Digital Compass – including, for example, ensuring that 90% of businesses adopt cloud computing by the end of the decade.

The Industrial Strategy, on the other hand, defines multiple indicators with no clear quantitative target attached. Rather than duplicating efforts in assessing the success of the industry’s digital transformation, we should establish few, measurable objectives aligned with those outlined in the Digital Decade strategy.

DIGITALEUROPE stands ready to cooperate with EU policymakers to help turn Europe’s vision for digital into reality. Thanks to a 39-strong network across Europe of member trade associations, we have a nuanced understanding of industrial challenges. Add to that our 86 corporate members from digital and digitally-transforming industries such as manufacturing (with our Council of Executives), health and mobility, and our strength in the industrial space is quickly understood.

The future of Europe is tied to the future of its industry. Let’s make sure it is digital.

For more information, please contact:
Vincenzo Renda
Director for Single Market & Digital Competitiveness
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