BRUSSELS (AP) – European Union (EU) leaders yesterday debated a new ‘European Competitiveness Deal’ aimed at helping the 27-nation bloc close the gap with Chinese and American rivals amid fears the region’s industries will otherwise be left behind for good.
In a volatile geopolitical landscape that create new economic challenges, EU leaders believe there is an urgent need for action.
China, the United States (US) and the European Union are the three largest economies in the world, but the EU’s share has diminished over the past 30 years.
Europe is now feeling pressure amid US and Chinese efforts to support investment in domestic production through subsidies and tax breaks, particularly in renewable energy and green technology.
Before the summit in Brussels, the former president of the European Central Bank Mario Draghi, said the EU did not pay enough attention to “external competitiveness as a serious policy question” and insisted Europe’s biggest economic rivals “are no longer playing by the rules”.
“In the face of a new geopolitical reality and increasingly complex challenges, the EU is committed to strengthening its strategic sovereignty and acting decisively to ensure its long-term competitiveness, prosperity and leadership on the global stage,” leaders were expected to agree at their summit in Brussels, according to a draft of conclusions seen by The Associated Press.
Leaders will hear a proposal for an EU-wide effort to subsidise industrial companies in response to the Biden administration’s support for investment in environmentally friendly technology through the Inflation Reduction Act, and to China’s subsidies for electric cars and solar panels.
The proposals, contained in a report from former Italian Prime Minister Enrico Letta, are in response to widespread concern that US subsidies, which favour domestic production in the US, are drawing investment from Europe and threatening the loss of industrial jobs on the continent.
