Draghi Report sparks call for stronger EU Trade and Industrial Policies from AEGIS Europe

Draghi Report sparks call for stronger EU Trade and Industrial Policies from AEGIS Europe (PDF)

Brussels, 1 October 2024 – With the release of Mario Draghi's long-anticipated report, The Future of European Competitiveness, AEGIS Europe—an alliance of over 20 European manufacturing associations and companies—joins the call for decisive action to safeguard the EU's manufacturing base, which is currently in deep crisis: "The global trading system, based on multilateral institutions, is in deep crisis, and it's uncertain if it can be restored.

Unfair trade practices are rising, creating an uneven playing field for EU businesses. While the EU should continue its efforts to reform the WTO – and especially to unlock the dispute settlement mechanism – it must urgently adapt its trade policy to this new reality, as the current approach underestimates the severity of the situation," commented Inès Van Lierde, co-chair of AEGIS Europe.

AEGIS Europe welcomes Draghi's call to closely monitor and improve the design of the Carbon Border Adjustment Mechanism (CBAM) during the transition phase and evaluate delaying the reduction of free ETS allowances if CBAM proves ineffective. Furthermore, export adjustments must be considered to prevent low-emission EU products from being displaced by higher-emission imports. AEGIS Europe fully endorses Draghi's recommendation for the swift application of trade defence instruments, including ex-officio investigations for manufacturing industries, as an uneven playing field can have repercussions for many downstream sectors and poses risks to our strategic autonomy.

Additionally, AEGIS calls for more effective measures to tackle non-market excess capacities. The EU should consider adopting clear-cut border measures, similar to those used by the US and Canada under their existing trade policies (e.g., Section 301 in the US and Section 53 in Canada), to address non-market excess capacities. These measures could generate revenue and offer an effective short-term solution, complementing other approaches like subsidies or energy price controls, which may require more structural and long-term strategies. The EU urgently needs greater alignment between its trade, industrial, and environmental policies. This means ensuring the complementarity and proper implementation of key legislation, such as the Net Zero Industry Act (NZIA) and Critical Raw Materials Act (CRMA), and introducing a strong, forward-looking EU's industrial strategy.

These steps are essential to achieving the twin transition and fostering a stronger, more predictable manufacturing environment. For investors looking to back this transition, a coherent regulatory framework is key but currently lacking. AEGIS Europe shares Draghi's assessment of the negative impact of rising energy and electricity prices on the EU's industry and urges the new Parliament and Commission to take swift action to reduce these costs to levels that allow the industry to remain competitive at the international level.

The alliance also supports proposals to level the global playing field for EU industries by leveraging public procurement via procedures rewarding innovative and sustainable solutions, foreign direct investment screening, and an EU export credit facility. "The EU needs a more comprehensive strategy to revive and secure a better future for the EU manufacturing sector by implementing robust trade and industrial policies that restore the level playing field," concluded Renaud Batier, co-chair of AEGIS Europe.

Media contact: email: info@aegiseurope.eu | www.aegiseurope.eu

About AEGIS Europe: AEGIS Europe is an industry alliance that brings together more than 20 European manufacturing associations and companies representing the whole value chain from metals and ceramics to transportation industries committed to manufacturing in the EU on a truly level playing field ensured by a rules-based free and fair international trade. Our members account for more than €500 billion in annual turnover, as well as for millions of jobs across the EU.