An ambitious, and controversial, proposal by the European Commission to prioritise products “Made in Europe”, which had been due to be agreed by member states on Wednesday, has been rescheduled for negotiation on January 28th, following objections by Ireland and eight other member states.
The European Commission has been developing this policy over the past year, amid rising global trade and geopolitical tensions. The nub of the plan is that companies involved in the manufacturing of cars and other strategically important heavy industries, as well as clean technologies, would have to use a minimum level of component products made in Europe. In some cases, the minimum requirement could be as high as 70 per cent.
As a policy it is an understandable reaction to the increasingly overt economic nationalism of the US and China. Moreover, it forms part of a broader agenda to make the EU more resilient and independent .
Ireland is one of nine EU pro-free trade member states that signed a letter expressing a number of reservations about the proposals. The main thrust of the objections is that the plan is too protectionist; that it would disproportionately favour France and Germany; and that it would put member states who rely on global trade flows at a considerable disadvantage. Moreover, it would increase the cost of doing business in the EU and thus damage competitiveness.
RM Block
These are legitimate concerns which should be addressed before the legislation can move ahead. The need to boost EU competitiveness and resilience has assumed an even greater importance given the direction of policy emerging from Washington. Adopting protectionist policies may bring short term relief to some EU industries, but it will provide few benefits in the longer term. The EU should prioritise making the Single Market more seamless and efficient as well as developing a capital markets union. These policies would have much a greater impact on boosting EU competitiveness and economic independence in the longer term.
