PROGRAMME COUNCIL “Industrial Policy”

BRIEFING PAPER
15 NOVEMBER 2023

Taking the bull by the horns, or the Elephant in the room

Towards a position paper on "Buy European” – What do we want?

All major economies are seeking to improve competitiveness of their industries in the economic field of the
future and competition is growing fierce and fast (Annex 1, Cefic overview of major policy initiatives and
support schemes in various countries around the world for the deployment of green technologies). For
example, the US, China, Canada and Japan have introduced public financial incentives to ramp up their
investment plans in clean technologies. In the US, the “Buy American” provisions, introduced in 2021 by
President Biden, are ensuring that when the Federal Government spends taxpayer dollars, they are spent
on American made goods by American workers and with American-made component parts. The 2022
“US Inflation Reduction Act (IRA)” also aims to catalyse investments in domestic manufacturing capacity
by providing an estimated $400 Billion in federal funding for clean energy, mostly via subsidies and tax
incentives. Despite the fact that EU, South Korea, Japan, China and Russia have all complained at the WTO
that this measure violates international trade rules by unfairly discriminating against foreign
manufacturers, the US IRA has successfully attracted $614 Billion so far in commitments to invest in the
USA. More recently, in July 2023, the US issued an executive order “Invent it here, make it here”, stating
that federal agencies will have to prioritise domestic manufacturing when US-funded innovative
technologies are brought to market. On the other hand, China has made subsidizing their clean tech and
renewables industries a top priority of its Five-Year Plan. In July 2023, China announced restrictions on the
export of raw materials used in the manufacturing of a wide range of technical applications, including
semiconductors and other advanced technologies. China’s pipeline of announced investments in clean
technologies exceeds $280 billion.

The EU needs a strong economic base that ensures its long-term competitiveness and a level playing field
both internally and globally. “Buy European”, local content or Rules of Origin are often discussed in
connection with Government support received (e.g. in the case of US IRA). For example, on 26 October
2022, French President Macron called for a "Buy European Act" to protect carmakers in the EU in the face
of competition from China and in response to the United States' IRA. The French President also criticized
the European Union as being “too open” on the topic of state subsidies for electric cars as it seeks to
accelerate its transition to greener energy sources. Despite the fact that the issue has become contentious
within EU Institutions and Member States, it remains high in the EU political agenda. In the last few months,
a “buy-local clause” is considered as the key to unlock an EU agreement for setting the Ukraine Defence
Fund, under the European Peace Facility, an off-budget €20 billion fund to reimburse states for arms
deliveries to Kyiv. While France is in favor, some EU countries would prefer cheaper arms delivered from
non-EU countries like South Korea, the U.S. and Turkey. On the pharmaceutical sector, in particular, a “Buy
European” approach, could be connected to Public Purchasing. However, it does not imply one cannot
trade.
It should be noted that EU increasingly follows French preferences and ideas, like in the case of CBAM. The
upcoming EU elections in 2024 might bring EU policy makers from France into key positions inside the new
European Commission. Finally, the on-going war in Ukraine, the huge crisis in the Middle-East and the
possibility of other countries being involved in these wars is directly affecting EU’s status quo and could
fundamentally affect its long-term strategy, making a “Buy European” approach a possible policy option.

In this context, PC IP Members are asked to provide their answers on the following two questions:

1. Would you support a “Buy European” Strategy to be put forward by the next European
Commission? (Yes/No and why)

2. Should Chemicals by part of such a “Buy European” strategy? (Yes/No and why)”

KEY CONTACTS
Cefic: George Kapantaidakis  +32.498.17.27.26