EU seeks to legislate itself into technological greatnessEU seeks to legislate itself into technological greatness

The Competitiveness Compass is described as the first major initiative of a mandate providing a ‘strategic and clear’ framework to steer the Commission's work towards making Europe more competitive with other global regions. Though as with lots of the legalise word-clouds it emits into the atmosphere, the application of the word ‘clear’ here seems generous.  

“The Compass sets a path for Europe to become the place where future technologies, services, and clean products are invented, manufactured, and put on the market, while being the first continent to become climate neutral,” proudly states the announcement.

The well-trodden argument goes that over the last two decades, Europe has not kept pace with other major economies due to a gap in productivity growth. But never fear since The EU “has what is needed to reverse this trend with its talented and educated workforce, capital, savings, Single Market, unique social infrastructure, provided it acts urgently to tackle longstanding barriers and structural weaknesses that hold it back.”

What’s been published this week seems to be some more detailed suggestions bolted onto the Draghi Report from last September. The former Italian Prime Minister Mario Draghi then published a report lamenting the lack of EU competitiveness in various sectors including telecoms.

Its diagnosis was that the EU's aversion to dominant players has left it with fragmented markets and a deficit of big players that can compete with their Asian and American and counterparts. The medicine – the EU's M&A rules need to put greater emphasis on regulation that imposes remedies on dominant players that abuse their position, and focus less on regulation that prevents consolidation from taking place at all.

"Today, the EU has dozens of telecom players serving around 450 million consumers, compared with a handful in the US and China, respectively," the report said.

It also had bits around a single telecoms market, encouraging the EU to adopt harmonised rules regarding spectrum allocation, cybersecurity, lawful intercept, and consolidation at the EU level, rather than member state level.

President of the European Commission, Ursula von der Leyen, said in this week’s announcement: “Europe has everything it needs to succeed in the race to the top. But, at the same time, we must fix our weaknesses to regain competitiveness. The Competitiveness Compass transforms the excellent recommendations of the Draghi report into a roadmap. So now we have a plan. We have the political will. What matters is speed and unity. The world is not waiting for us. All Member States agree on this. So, let's turn this consensus into action.”

So about that roadmap. There are three core areas for action under the aegis’s of innovation, decarbonisation and security.

The first one about innovation suggests that the EU: “create a habitat for young innovative start-ups, promote industrial leadership in high growth sectors based on deep technologies and promote the diffusion of technologies across established companies and SMEs.”

It will propose ‘AI Gigafactories' and ‘Apply AI' initiatives, and table action plans for advanced materials, quantum, biotech, robotics and space technologies. Meanwhile a dedicated EU Start-up and Scale-up Strategy “will address the obstacles that are preventing new companies from emerging and scaling up.”

It also puts forward a “joint roadmap for decarbonisation and competitiveness” which seems to be around the idea of using sustainable energy more. “The upcoming Clean Industrial Deal will set out a competitiveness-driven approach to decarbonisation, aimed at securing the EU as an attractive location for manufacturing, including for energy intensive industries, and promoting clean tech and new circular business models.” 

Thirdly it wants to reduce ‘excessive dependencies’ and increase security, which is around the idea of diversifying supply chains. “To keep diversifying and strengthening our supply chains, the Compass refers to a new range of Clean Trade and Investment Partnerships to help secure supply of raw materials, clean energy, sustainable transport fuels, and clean tech from across the world. Within the internal market, the review of the Public Procurement rules will allow for the introduction of a European preference in public procurement for critical sectors and technologies.”

These three pillars are “complemented by five horizontal enablers, which are essential to underpin competitiveness across all sectors.”

The first ‘enabler’ is about ‘simplification’ or reducing regulatory and administrative processes and making procedures for accessing EU funds and getting EU administrative decisions made “simpler, faster, and lighter.” 

The second is about lowering barriers to the Single Market – we’re told a “Horizontal Single Market Strategy” will modernise the governance framework, remove intra-EU barriers and prevent the creation of new ones.

There’s also one about financing. Based on the idea The EU “lacks an efficient capital market that turns savings into investments”, the Commission will present a European Savings and Investments Union to create new savings and investment products, provide incentives for risk capital, and ensure investments “flow seamlessly across the EU.”

There are two more about the idea of skills training and attracting talent from abroad, and a Competitiveness Coordination Tool, “which will work with Member States to ensure implementation at EU and national level of shared EU policy objectives, identify cross-border projects of European interest, and pursue related reforms and investments.” This last one sounds as if it’s about more EU member state coordination.

Commenting on the Competitive Compass, the GSMA seems broadly in favour of the suggestions, in so far as they talk about simplifying regulation and encourage a unified European telecoms market.

“Europe will not regain competitiveness without the digital infrastructure to support innovation and demand,” said Laszlo Toth, Head of Europe at the GSMA. “Our networks are a fundamental enabler for growth across the continent, but remain undervalued and under pressure. 

“Europe has a powerful history as the home of invention and opportunity. But real change is now needed to reestablish that leadership role. The Competitiveness Compass is encouraging, as it acknowledges the need to simplify regulation and prioritise speed and agility while paving the way for a Digital Networks Act by the end of the year. The DNA will represent a welcome and crucial signal of Europe’s future intent to be a global technology powerhouse once more, particularly if it delivers on creating a true telecoms Single Market. 

“Current policy principles were established decades ago and no longer reflect how the sector should function, which is restricting the industry’s ability to source the hundreds of billions of Euros needed for infrastructure upgrades to benefit Europe’s citizens and businesses. Our digital networks are fundamental to Europe’s ability to compete on the global stage, so it is very positive that the new Commission is recognising this.” 

There’s a lot in the announcement, and no doubt there will be a lot more paragraphs to come on the subject. The broad scope of it is well trodden ground – a desire to make Europe a bigger deal economically and technologically on the world stage – and this list of suggestions seems to be both about removing red-tape and bureaucracy as well as bring individual national policies more in line with a broader EU roadmap – which presumably has the potential to generate a bit of extra red tape and bureaucracy in itself.

While the comparison may not be entirely fair since part of the Competitive Compass talks about the issue of financing, when the US recently signalled its intent to shore up its technological lead in the AI sector with The Stargate Project, the point was there was a $500 billion bag of cash dumped on the table to propel the ambition.

So it just depends where it all lands, how much of it is feasible when it gets beyond the talking stage, and how well executed it is. When the EU rolls its legislative tanker around towards something it can get things done, like making the entire gadget industry use the same charger. The question remains can any number of guidelines, roadmaps, and ‘horizontal enablers’ coral a continent into the sort of technological and economic transformation the EU has on its vision board?