Economy

Is Europe’s “#Industrial Renaissance” in jeopardy?

Published

2 years ago

June 12, 2019

The outgoing Juncker Commission has been adamant about the need to prompt an “Industrial Renaissance” in the European Union, recognising as early as 2014 that European industries are intimately intertwined with the entirety of the bloc’s economic fabric and setting an ambitious target of 20% of the Union’s GDP coming from manufacturing by 2020.

Is the current European industrial policy, however, helping further this renaissance—or is it instead causing market distortions which are inflicting a damaging blow on the small and medium-sized enterprises (SMEs) which are the bedrock of the EU’s economy? This pivotal question was at the centre of a POLITICO panel discussion held this Tuesday, June 11^th, in Brussels. European policymakers and industry leaders came together at the event, which was sponsored by the Federation of Aluminium Consumers in Europe (FACE), a Brussels-based organisation dedicated to the European downstream aluminium industry.

In opening remarks, Roger Bertozzi, the Head of EU and WTO Affairs at FACE, suggested that the aluminium industry is a litmus test of how European industrial policy is actually hindering downstream manufacturing. The EU aluminium industry, Bertozzi indicated, is “a concrete example of a strategic and sustainability-oriented sector that suffers from the contrary effects of trade and industrial policies, in contrast with the holistic and synergistic approach that should prevail to effectively foster competitiveness”.

Alongside the event—which featured interventions from German MEP Reinhard Bütikofer (Greens/EFA), Carsten Bermig from the European Commission, think tank director Hosuk Lee-Makiyama and Yvette van Eechoud, Director for European and International Affairs at the Dutch Ministry of Economic Affairs—FACE published a study which it had commissioned from the LUISS Guido Carli University in Rome. The study, which is the most extensive analysis to date of the competitiveness of the European downstream aluminium industry, calls into question the efficiency of certain EU policy measures ostensibly taken to protect the European bloc’s aluminium smelters—specifically, import tariffs of between 3% and 6% on raw aluminium.

As the LUISS study illustrated, not only have these tariffs failed to prevent the steady decline of aluminium smelting in the EU, they’ve had significant negative effects on the continent’s downstream aluminium sector. As EU-based smelters have continued to shutter their doors thanks to high operational costs and expensive energy, the tariffs have inflicted a cumulative 18 billion euros in extra costs on the downstream, causing it to lag behind growing global demand. Indeed, while other countries—particularly China and the Middle East—have seen their production of semi-finished products skyrocket, the EU aluminium downstream remains below its pre-financial crisis levels.

This stagnation is especially devastating because of the downstream’s relative weight in the EU aluminium industry. Of the one million jobs which the industry represents in Europe, the downstream is responsible for a staggering 92%. Of the industry’s annual turnover of €40 billion, the downstream can take credit for roughly 70%.

The SMEs which constitute the lion’s share of this downstream industry are already struggling in the face of stiff—and frequently unfair—competition from overseas, an issue which was repeatedly brought up at the panel. As German MEP Reinhard Bütikofer noted, “China is not playing by the rules. It laughs in our eyes”.

Given that these SME’s are additionally heavily reliant on imports of unwrought aluminium and that they are operating in a low-margin industry in which raw materials can make up as much as half of the cost of producing semi-finished goods, the tariffs have seriously dented the downstream’s competitiveness.

In his remarks Wednesday, Bertozzi denounced the current tariff regime as a “de facto subsidy mechanism” benefitting a small group of primary aluminium producers. The nature of the tariff scheme means in practical terms that EU users and consumers are unable to access any unwrought aluminium at the duty-free price level, because the market premium for all unwrought aluminium sold in the EU—regardless of its origin—incorporates the full value of the 6% tariff.

FACE announced that it is launching a campaign calling for the total suspension, or zeroing, of the tariffs on raw aluminium. Without such a policy shift, the association warned, the very survival of the EU’s downstream aluminium industry may be in peril—a loss which would strike a warning note for the prospects of a broader industrial renaissance in Europe.

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European Central Bank (ECB)

ECB's Lagarde keeps door open to higher inflation

Published

3 hours ago

September 28, 2021

Reuters

Inflation in the eurozone could exceed the European Central Bank's already raised projections but there are few signs of this already happening, ECB President Christine Lagarde (pictured) said on Monday (27 September), writes Balazs Koranyi, Reuters.

"While inflation could prove weaker than foreseen if economic activity were to be affected by a renewed tightening of restrictions, there are some factors that could lead to stronger price pressures than are currently expected," she told lawmakers at the European Parliament.

"But we are seeing limited signs of this risk so far, which means that our baseline scenario continues to foresee inflation remaining below our target over the medium term," she added.

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Agriculture

Agriculture: Launch of an annual EU organic day

Published

1 day ago

September 27, 2021

European Commission

On 24 September the European Parliament, the Council and the Commission celebrated the launch of an annual ‘EU organic day'. The three institutions signed a joint declaration establishing from now on each 23 September as EU organic day. This follows up on the Action Plan for the development of organic production, adopted by the Commission on 25 March 2021, which announced the creation of such a day to raise awareness of organic production.

At the signing and launch ceremony, Agriculture Commissioner Janusz Wojciechowski said: “Today we celebrate organic production, a sustainable type of agriculture where food production is done in harmony with nature, biodiversity and animal welfare. 23 September is also autumnal equinox, when day and night are equally long, a symbol of balance between agriculture and environment that ideally suits organic production. I am glad that together with the European Parliament, the Council, and key actors of this sector we get to launch this annual EU organic day, a great opportunity to raise awareness of organic production and promote the key role it plays in the transition to sustainable food systems.”

The overall aim of the Action Plan for the development of organic production is to boost substantially the production and consumption of organic products in order to contribute to the achievement of the Farm to Fork and Biodiversity strategies' targets such as reducing the use of fertilisers, pesticides and anti-microbials. The organic sector needs the right tools to grow, as laid out in the Action Plan. Structured around three axes - boosting consumption, increasing production, and further improving the sustainability of the sector -, 23 actions are put forward to ensure a balanced growth of the sector.

Actions

To boost consumption the Action Plan includes actions such as informing and communicating about organic production, promoting the consumption of organic products, and stimulating a greater use of organics in public canteens through public procurement. Furthermore, to increase organic production, the Common Agricultural Policy (CAP) will remain a key tool for supporting the conversion to organic farming. It will be complemented by, for instance, information events and networking for sharing best practices and certification for groups of farmers rather than for individuals. Finally, to improve the sustainability of organic farming, the Commission will dedicate at least 30% of the budget for research and innovation in the field of agriculture, forestry and rural areas to topics specific to or relevant for the organic sector.

Background

Organic production comes with a number of important benefits: organic fields have around 30% more biodiversity, organically farmed animals enjoy a higher degree of animal welfare and take less antibiotics, organic farmers have higher incomes and are more resilient, and consumers know exactly what they are getting thanks to the EU organic logo.

More information

The action plan for the development of the organic sector

Farm to fork Strategy

Biodiversity Strategy

Organic farming at a glance

Common Agricultural Policy

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Agriculture

Common Agricultural Policy: How does the EU support farmers?

Published

4 days ago

September 24, 2021

European Parliament

From supporting farmers to protecting the environment, the EU's farm policy covers a range of different goals. Learn how EU agriculture is funded, its history and its future, Society.

What is the Common Agricultural Policy?

The EU supports farming through its Common Agricultural Policy (CAP). Set up in 1962, it has undergone a number of reforms to make agriculture fairer for farmers and more sustainable.

There are about 10 million farms in the EU and the farming and food sectors together provide nearly 40 million jobs in the EU.

How is the Common Agricultural Policy funded?

The Common Agricultural Policy is funded through the EU budget. Under the EU's budget for 2021-2027, €386.6 billion has been set aside for farming. It is divided into two parts:

€291.1bn for the European Agricultural Guarantee Fund, which provides income support for farmers.
€95.5bn for the European Agricultural Fund for Rural Development, which includes funding for rural areas, climate action and the management of natural resources.

How does EU agriculture look today?

Farmers and the agriculture sector were affected by COVID-19 and the EU introduced specific measures to support the industry and incomes. Current rules on how CAP funds should be spent run until 2023 due to delays in budget negotiations. This required a transitional agreement to protect farmers’ incomes and ensure food security.

Will the reform mean a more environmentally-friendly Common Agricultural Policy?

EU agriculture accounts for about 10% of greenhouse gas emissions. The reform should lead to a more environmentally friendly, fairer and transparent EU farm policy, MEPs said, after a deal was reached with the Council. Parliament wants to link CAP to the Paris agreement on climate change, while increasing support to young farmers and small and medium-sized farms. Parliament will vote on the final deal in 2021 and it will come into effect in 2023.

Agriculture policy is linked to the European Green Deal and the Farm to Fork strategy from the European Commission, which aims to protect the environment and ensure healthy food for everyone, whilst ensuring farmers’ livelihoods.

More on agriculture