Draghi to Map Out Strategy in EU’s ‘Whatever It Takes’ Competition Pledge

Jorge Valero, Jillian Deutsch and Lyubov Pronina
·4 min read
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(Bloomberg) -- The European Union must do “whatever it takes” to keep its competitive edge as it pushes industry for a green transition, and has recruited Italy’s Mario Draghi to help map out the bloc’s strategy, the head of the EU’s executive arm said.

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“It is time to make business easier in Europe,” Ursula von der Leyen, head of the European Commission, told the European Parliament plenary session in a speech Wednesday. “It’s an economic and national security imperative to preserve a European edge on critical and emerging technologies.”

Paying tribute to Draghi — the ex-premier and former head of the European Central Bank — as “one of Europe’s great economic minds,” von der Leyen said she has asked him “to prepare a report on the future of European competitiveness.” She went on to quote his 2012 pledge to save the euro.

The EU is launching an investigation into Chinese subsidies for electric vehicles, von der Leyen said, adding that the global market is flooded with cheap Chinese cars.

The bloc reviewed its state-aid rules this year to counter massive subsidies provided by the US and China, especially in green technologies. The EU is particularly concerned about China’s economic practices, calling on Beijing to open up its market to rebalance bilateral trade relations. The bloc has also introduced new tools to counter China’s coercive practices targeting its members, including Lithuania.

Von der Leyen’s last state of the EU address ahead of European elections next June came as the bloc prepares to absorb new countries and discusses new priorities and means to finance them. That’s against a backdrop of Russia’s invasion of Ukraine, heightened rivalry with Beijing and worries about a possible return of Donald Trump to the White House.

“Too often, our companies are excluded from foreign markets or are victims of predatory practices,” von der Leyen said. “They are often undercut by competitors benefiting from huge state subsidies.”

Von der Leyen called for common European funding to finance the bloc’s industrial strategies. With the EU’s “STEP” program, that will use EU funds for critical projects, the bloc could direct money toward everything from clean tech to quantum computing.

‘Economic Security’

Citing China’s recent export controls on gallium and germanium, key for goods like semiconductors and solar panels, she also called on Europe to “step up on economic security.”

She announced that she will convene this year a first meeting of the EU’s new Critical Raw Material Club, a key plank of the bloc’s efforts to develop new supply chains in essential minerals as it works to cut its dependence on single suppliers such as China. Those efforts are set to come to a head when von der Leyen travels to the US this fall with the aim of concluding agreements on critical minerals as well as steel and aluminum arrangements.

The EU will propose a package to help the ailing wind energy industry. It aims to address the bottlenecks and accelerate fast-track permitting, improve the auction systems across the bloc, improve access to finance and ensure stable supply chains. Governments and businesses across the bloc have started voicing concerns about the costs of the green shift.

Enlargement Catalyst

Another big theme of von der Leyen’s speech was the EU’s enlargement debate, with steps to open up membership to Ukraine and nations in the western Balkans in the next few years. “I believe that the next enlargement must also be a catalyst for progress,” she said, adding that the EU could extend to more than 30 members and work effectively.

Von der Leyen said she was open to treaty change if needed, but added that the bloc cannot and should not wait for treaty change to move ahead. “A union fit for enlargement can be achieved faster,” she said.

With the EU set to become the first western government to regulate the fast-moving technology in its Artificial Intelligence act, von der Leyen reiterated the need for an international body to assess the impact of the technology on people, as well as minimum standards for ethical AI.

To ensure Europe can be competitive on developing the latest AI technologies, rather than regulating, she also announced an initiative that would allow startups to use Europe’s high-performance supercomputers to train large language models and compete with the likes of OpenAI’s GPT-4.

--With assistance from Ewa Krukowska, Alberto Nardelli, Katharina Rosskopf, Natalia Drozdiak and Kevin Whitelaw.

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