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Brussels wants to cut down EU's dependence on key imports

The new industrial strategy aims at addressing Europe's vulnerabilities and dependencies.
The new industrial strategy aims at addressing Europe's vulnerabilities and dependencies. Copyright MIGUEL MEDINA/AFP or licensors
Copyright MIGUEL MEDINA/AFP or licensors
By Jack ParrockJorge Liboreiro
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The European Commission has identified 137 products in strategic sectors, like healthcare and high tech, where the EU is highly dependent on imports.


The EU is trying a fresh push at diversifying Europe's industry to decrease dependency on key imports from outside the bloc. 

This reliance was painfully exposed during the first months of the coronavirus pandemic. The memory of EU governments scrambling to get a hold of basic personal protective equipment like gloves and masks is still fresh in Brussels.

Drawing on these lessons, the European Commission has updated its industrial strategy, whose first version was presented a day before the World Health Organization declared the new coronavirus a pandemic.

The strategy's main goal is to address and correct the bloc's dependencies in key sectors.

Brussels analysis has revealed, of 5,200 products imported into the EU, the bloc is "highly dependent" on 137. 

The dependencies include areas like pharmaceutical ingredients and advanced technologies (like cloud computing and semiconductors).

About half of all imports of these products originate in China, followed by Vietnam, Brazil, Singapore and South Korea.

Additionally, 34 of the 137 products are considered more vulnerable because they are unlikely to be replaced with EU-made goods. 

Most of these products are raw materials and chemicals.

"For the car industry, in the next [two to five] years, connected car semiconductors will account for 35% of the price of a vehicle. So I mean, it is strategic," said Thierry Breton, European commissioner for the internal market, presenting the strategy.

"We have seen that because we had our supply chain everywhere in the world and most of it [is] in China. Twenty years ago. Europe was producing 40% of the global needs in semiconductor, today it's 9%."

The world economy is currently suffering a global shortage of semiconductors, the chips that power data centres and millions of digital devices, due to the roll-out of 5G networks and the rise in teleworking. The industry is heavily concentrated in Asian countries, like Taiwan, South Korea, Singapore, China and Malaysia.

"[The shortage means] higher prices and basically less availability of options when you want to buy something. So this is the direct impact of this situation on citizens, and this is exactly to protect the European citizens. In this regard Europe needs to intervene," Simone Tagliapietra, a senior fellow at Bruegel, told Euronews.

On the other hand, the trade analysis indicates that the EU has improved its standing in some critical sectors like hydrogen, lithium-ion batteries and advanced manufacturing. Overall, the results paint a picture of a powerful economy that is highly competitive in some sectors and highly dependent in others.

'The real industrial revolution starts now'

The European Commission's industrial strategy is a set of guidelines and recommendations, not an enforceable piece of legislation. 


Brussels hopes that Europe's business fabric will heed its call and design corporate policies and decisions that will help decrease the identified dependencies.

The executive will contribute by launching two new EU-wide alliances: one focused on processors and semiconductor technologies and another one centred on industrial data, edge and cloud computing. These alliances will try to attract private investors, start-ups and SMEs to discuss new business partnerships and models.

The European Commission has already put in place three alliances, specialised in batteries, raw materials and hydrogen. The European Battery Alliance has attracted some 440 actors and around €100 billion in investment commitments.

The updated industrial strategy was presented in parallel with a draft law to monitor acquisitions and subsidies made by foreign governments inside the EU's single market.


The proposed legislation is seen as another tool to boost the bloc's open strategic autonomy and curb unfair practices.

Brussels estimates that "85% of global growth will take place outside of the EU in the next decade", a figure it considers justifies keeping the bloc open to trade and investment.

"We will seek cooperation with like-minded partners wherever we can to support open, fair and rules-based trade; reduce strategic dependencies; and develop future standards and regulations: all of which are critical for our economic strength," said Valdis Dombrovskis, the European Commission's executive vice president.

"The real industrial revolution is starting now – provided we make the right investments in key technologies and set the right framework conditions," added Breton, highlighting that the end goal of the industrial strategy is to support the EU's twin transitions towards a green and digital future.


In the coming months, the European Commission will propose a "single market emergency instrument" to ensure the free movement of persons, goods and services in case of future crises.

The instrument "should guarantee more transparency and solidarity, and help address critical product shortages by speeding up product availability and reinforcing public procurement cooperation", the executive said, in a clear reference to the problems seen throughout the pandemic.

Industry welcomes strategy but adds caveats

Pan-European industry organisations were quick to react to the updated strategy.

BusinessEurope, which represents European companies of all sizes, welcomed the new plan and its approach to industrial alliances.


"The Commission must tailor measures for climate neutrality and digital transition with the main objective to generate growth," BusinessEurope President Pierre Gattaz said in a statement.

"The single market is our biggest asset, and its success will be key to enable the transition. [...] We need strong measures removing the barriers in the Single Market that were present also before the crisis."

CLEPA, the European association for automotive suppliers, said the review "comes at the right time" and urged the EU to "strengthen critical supply chains" while building "on existing strengths".

"Even if public investment has a strong role to play towards accelerating innovation to deliver the green and digital objectives, the industrial strategy should not overlook the importance of providing the right conditions for private investment and access to scalable markets," CLEPA remarked.


DIGITALEUROPE, the trade association of Europe's digital companies, also welcomed the strategy but added it lacked "clear success indicators".

"We want a European industry where at least half of European businesses use advanced cloud computing services, one in three SMEs trade across borders, and enterprises provide ICT training to at least 70% of their employees," said Cecilia Bonefeld-Dahl, Director-General of DIGITALEUROPE.

The European Environmental Bureau (EEB), a network of environmental citizens' organisation, voiced a more critical opinion, arguing "the strategy fails to provide a viable blueprint for a truly green industrial transition based on circularity and binding targets".

"We need European policymakers and industry to stop talking the talk about the green transition and to speed up the walk towards delivering zero pollution," said Christian Schaible, the EEB’s policy manager for industrial production.


For its part, the American Chamber of Commerce to the EU highlighted the Commission's focus on "close allies with partners such as the [United States] to address common issues".

"Transatlantic & global cooperation will be critical for success."

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