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European Commission

Antonio TAJANI

Vice President of the European Commission responsible for Industry and Entrepreneurship

"A Stronger and More Competitive European Car Industry"

Action Plan CARS 2020 / Brussels

8 November 2012

Today the European Commission approved the action plan for the competitiveness and the sustainable development of the European Automotive Industry: CARS2020.

This Plan is the first measure of the new strategy of industrial policy adopted last October 10 and follows the dialogue started in 2010 with the High Level group CARS 21.

THE EUROPEAN MARKET CRISIS

We are in the middle of the worse crisis since World War II, which is affecting significantly the majority of the automotive sector, with negative spill-over effects on the SMEs that operate in the automotive satellite industries and other sectors such as the steel industry; furthermore, the crisis is having extremely negative effects on employment.

In the first half of 2012 the EU market saw a 6.8% decline, with peaks reaching -19.7% in Italy and -14.4 in France. Even in Germany, in September, the market registered a -10.9%.

The automotive crisis is related mainly to Europe and is connected to the significant decline of the internal demand due to the combined effects of the recession and austerity measures. Worldwide demand, and especially that of emerging countries, experienced a relatively positive trend instead.

After five consecutive years of decline of the European market, the risk of closure for industrial sites is real and, in part, it already occurred. As a result, the employment crisis is even more dramatic and it further worsens public finances.

It is necessary to do everything possible to defend this essential and strategically part of our industrial base.

THE AUTOMOTIVE INDUSTRY AT THE CORE OF THE NEW INDUSTRIAL REVOLUTION

In Europe, over 12 million jobs are dependent, directly or indirectly, on the automotive sector, which is also the main private investor in research with around 28 billion per year. The automotive industry is one of the key actors of the new industrial revolution with a transition towards more energy efficiency and alternative sources, and advanced technologies and materials for production.

Only focusing on quality value added and technology, and on the car of the future, Europe can remain an industry leader defending its strong production base.

The action plan is based on measures to support the industry to transform the challenges it is facing into opportunities for growth and further competitiveness.

THE FOUR PILLARS OF THE STRATEGY

The new industrial strategy is articulated around the following four pillars:

(i) More innovation;

(ii) A European framework for competitiveness;

(iii) Better access to markets of third countries;

(iv) Education and management of restructuring.

(i) More Innovation:

To strengthen the technological leadership and attract investments more support for research and innovation is needed, with the mobilization of available financial resources at the European and national level.

Thanks to the Green Cars Initiative EU funds and EIB loans are already available. We want to reinforce these actions as a driving force to attract private investments. As a result I will propose to double the funds available for the automotive sector from EUR 1 to EUR 2 billion in the context of the new framework 2014-2020 for research "Horizon 2020". This would allow the access to at least 10 billion additional investments. It would be desirable to use these structural funds to promote innovation.

The EIB played a fundamental role, during the crisis, in supporting the sector with 14 billion of loans in the last four years. The forthcoming increase in capital to 10 billion will allow the bank to maintain ambitious levels of support for the sector.

To avoid the logic of "everyone on its own" or of "every man for himself" it is important to support the competitiveness and restructuring of the sector as much as possible within the European framework. Even the innovation funds must, to the extent possible, be provided on a non-discriminatory basis, in order to avoid favouring countries with more resources to distribute. Thus it is important not to weaken the proposal from the Commission on the research & innovation funds within the new Multiannual Financial Framework.

(ii) European Framework on Competitiveness

In order to attract investment we need a regulatory and standard framework that is clear, predictable and stable, and that will favour competitiveness and innovation without obstacles and useless costs.

It is time to say "no" to useless rules or procedures that have higher costs that the positive effects they create. The "smart regulation" and "competitiveness test" principles will be applied meticulously, excluding the regulations on safety and health. Promoting environmental sustainability must be a competitiveness factor, not a handicap in the global competition. For example, on the CO2 emission reduction, we decided to take a realistic approach that would reconcile the environmental efforts with competitiveness.

In relation to harmful emissions for the health of people, we have defined a schedule to obtain a completely reliable measuring system.

Shortly, we will propose a regulation on the development of necessary infrastructure for alternative fuels, such as electric fuel, gas and hydrogen.

By the first half of 2013 we will adopt a common standard for electric recharge infrastructure to promote the development of the European electric vehicle market.

In order to stimulate the demand and direct it towards more efficient and clean models, the Commission is in favour of national policies to promote the demand. But it is essential to avoid proceeding chaotically, to guarantee the proper functioning of the EU market. Consequently we will adopt, by the end of the year, some guidelines on national incentives.

We will introduce new regulations for a simpler approval (type-registration) process, with an effective control on the EU respect of safety and quality standards, especially for vehicles or other important components.

(iii) Access to Third Markets:

70% of the growth from now until 2020 will take place in emerging countries. The automotive sector is following a similar pattern. For example, the Chinese market wills double reaching 30 million vehicles. While demand in mature economies is expected to remain stable, the global one will growth from today's 75 to 110 million. The competitive pressure will increase but so will opportunities for those players, like Europe, with quality products. Thus it is essential to support the internationalization of the sector.

We want to ensure a balanced access of the European vehicles to the global markets, also through an increased harmonization of standards and technical regulations, and trade agreements guaranteeing an effective access, assuming equal conditions in third countries.

It is important to reinforce cooperation at the multilateral and bilateral level to define a framework of common regulations and standards at the global level that would allow increased exports for the vehicles produced in Europe without technical or bureaucratic barriers.

In order to do so we have created, together with USA, Japan and Canada, a working group to define common standards for safety and sustainability of electric vehicles by 2014. We are improving the framework of multilateral cooperation within the United Nations to include the emerging countries in the working groups to define standards and international type approvals for cars.

We cannot "sacrifice" key sectors, such as the car industry, for supposed commercial advantages in other areas. Commercial agreements will need to be preceded by an exhaustive impact assessment to evaluate the spill-over effects on the European industry competitiveness. An agreement will be signed only if it can ensure real advantages to the industry.

Soon, the Commission will launch an investigation on the effects of agreements already signed on the automotive sector, in particular that with Korea and the future ones, starting with Japan.

(iv) Education and Management of Restructuring

In a market defined by a strong technological evolution, with new production systems and advanced materials, and facing new challenges such as climate change, demographic growth or resource scarcity, it is essential for human resources to keep up with the pace of the rest. Specifically, a non-self-referential education is needed, but it needs to be aligned with the industrial needs and with the demand for qualified workforce. In order to do so, it is necessary to deploy more resources from the European Social Fund, even with the goal of transforming endless restructuring processes in chances for professional requalification.

A GREATER EU COORDINATION FOR THE RESTRUCTURING

In view of new possible company closures, our duty is to make every effort for greater coordination at EU level abandoning the national logic that is likely to further aggravate an already very serious situation.

The Commission, as watchdog of the Treaties, will naturally enforce the rules for the proper functioning of the internal market, including those on State aid.

The rules on consultation of workers should be respected. All available funds must be mobilized to inform the European Social Fund and the Globalisation Fund to support workers.

But this is not enough.

For the beginning of December I will invite stakeholders and social partners in Brussels. I have just sent a letter to the Ministers of Industry for inviting them to a meeting for the next Competitiveness Council on December 10.

I am convinced that it is urgent to have a discussion involving governments, industry and unions to find a coordinated European response to the crisis.

I am thinking, for example, of more common resources to cope with the social consequences of restructuring and, at the same time, to strengthen incentives to maintain production capacity in the EU.

It is also essential to ensure a genuine coordination of any national support measures in order to avoid a dangerous bidding contest to save some plants at the expense of others.

CONCLUSION

In line with the new industrial policy strategy, we need to avoid the decline of key sectors, include the automotive industry. This is the first test, as difficult as it is vital, of our real willingness to promote a new policy. This goal will be possible only with a real willingness to act together and with the coherent application of other policies like research, trade, competition, energy, environment, internal market or infrastructure.

The automotive sector will also be the first in which a task force will be create among governments, Commission and stakeholders, as provided for in the Communication of October 10.


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