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2020 is likely to be an era-defining year. A number of developments have surfaced over the last few years that will challenge industry, policy practitioners and civil society alike. The job market is radically changing with the advent of new technologies, while the multilateral trade system is being challenged. The EU’s single market is the world’s second largest consumer market, behind only the US. It has brought prosperity and opportunities to consumers and businesses alike. That is why so many US companies have invested so heavily in Europe in the last 50 years and more. Now we must work to ensure that the single market can continue to work in favour of European society.

Against this backdrop, a comprehensive industrial strategy for the EU is paramount to addressing challenges such as the skills gap, climate change and the continuity of free trade. The manufacturing industry accounts for 80% of European exports, while the number of Europeans employed in the manufacturing sector by US affiliates stands at 1.9 million – that is 40% of the total number of workers directly employed by US affiliates in Europe. As global competition in manufacturing becomes fiercer, we need European industry to be competitive. A comprehensive strategy can further help European industry to thrive within a stronger single market. In order to remain competitive, a future European industrial strategy should rely on four key pillars: the digitisation of industry, a cleaner future, a circular approach to raw materials, and a reinforced rules-based trading system.

Pillar 1 – Digitisation of industry: The amalgamation of traditional industrial processes and practices with emerging technologies will usher in a new era of manufacturing. Imagine a smart factory where connected machines communicate among themselves autonomously, crunching data in real time to produce differentiated products for segmented markets. This will increase the competitiveness of European manufacturing and as a result of this increased competitiveness, more jobs will be created as the sector expands. Re-skilling and up-skilling the workforce will also play a key role in making European industry fit for the future. Commission statistics show that 44% of the European workforce do not possess basic digital skills at present. American companies in Europe are key drivers in plugging this digital skills gap, in running vocational training schemes for current and future employees. Continued work in this regard at the European level by policymakers will stand the EU in good stead for the advent of Industry 4.0.

Pillar 2 – A Cleaner Future: A recent paradigmatic shift has seen the climate emergency come to the fore as a pressing challenge, but also an opportunity for the EU to press home its competitive advantage in cleaner, more sustainable practices than other regions of the world. This opportunity is embodied in the EU’s stated ambition to reach a state of carbon neutrality by the middle of this century. AmCham EU supports current schemes to incentivise technologies, such as the Green Public Procurement initiative, and encourages further use of funding mechanisms to support investment in stable, secure and affordable energy supply and infrastructure. American companies invested in the EU have already made enormous investments in greening their industrial practices. Making European industry more sustainable can pave the way to Europe becoming the workshop of a carbon-neutral world.

Pillar 3 – Accelerating the Circular Economy: Waste reduction is another way in which policymakers, industry and society must work together to find solutions to reduce pressure on the planet’s resources. With growing global competition for the Earth’s finite resources, access to high-quality recycled materials will reduce dependence on virgin raw materials. There are already many, many great examples of industry thought leadership in reducing the use of virgin raw materials. Industry is best placed, and therefore must be empowered, to use its expertise to determine the best product make-up to ensure compatibility with the environment. Policymakers at EU and national level must aim for policy frameworks that are flexible as opposed to prescriptive in order to harness this know-how. Improving the circularity of industrial waste processes will go a long way to making the EU a circular economy and society. It is crucial that reuse and recycling policies are harmonised on an EU level, in order to reduce costs and make the business case for circularity compelling and implementable throughout the European Union.

Pillar 4 – A Reinforced Trade System: The US and the EU are intimately intertwined by trade, with 16 million jobs on either side of the Atlantic riding on the US-EU trade relationship. Furthermore, the EU and the US are world leaders in setting global standards and technological innovations. It is for this reason that we need to defend the principles of an open and fair multilateral trading system, by working together with like-minded international partners to deepen current partnerships. Defending the multilateral trade order is standing up for the jobs, wealth and prosperity that industry creates in Europe. For that reason, safeguarding the current multilateral trade system, by reforming the WTO and bringing the Appellate Body back into working order as soon as possible, must be part of the EU industrial strategy.

2020 is a pivotal year for the future prosperity of Europe. We face a range of challenges that will test business, policymakers and civil society alike. I believe that a comprehensive industrial strategy will go a long to way to securing future competitiveness, jobs, economic prosperity and climate sustainability. Together, we can rise to the challenges that lay before us.

Chairman of the American Chamber of Commerce to the EU (AmCham EU)