„Buy European Mainstreaming“
What do economic and trade policies look like in the age of geoeconomics? The EU has provided various answers to this question so far, including defensive mechanisms such as the Anti-Coercion Instrument (ACI) and initiatives to reduce critical dependencies such as the Critical Raw Materials Act (CRMA) and the Critical Medicines Act (CMA). Another approach that is increasingly being discussed in Brussels is “Buy European.” This involves European preference criteria that serve to give domestic industry preference over international suppliers. The aim is to strengthen the competitiveness of Europe's own industry and make the European economy as a whole more resilient. In response to the question of how this should be implemented, a veritable “Buy European mainstreaming” can be observed. It could be implemented through public procurement under the Industrial Accelerator Act (IAA), through the Competitiveness Fund of the next Multiannual Financial Framework (MFF) or – as demanded by Volkswagen and Stellantis – through crediting against the fleet limits of the automotive industry. How narrowly or broadly the sectors or technologies to which “Buy European” should apply are defined remains as controversial as the instruments for implementation.
Free trade agenda takes priority
It is undisputed that the EU cannot continue to play soccer while major trading partners play rugby. However, the EU must not allow this approach to undermine its international trade agenda. Why should the EU conclude trade agreements with the Mercosur countries, India, and Australia, only to then restrict market access for them again through the back door? “Buy European” can create a false sense of European competitiveness – competitiveness on the European market, but not globally. However, export-oriented industries in particular must take the global market as their benchmark and view competition as a fitness centre. With a view to strengthening resilience, more international partnerships with reliable partners must be the answer, especially in critical areas such as raw material supply.
Implementation questionable
What role can “Buy European” play in times of geoeconomics? It could be used as one of several instruments in a catalogue of measures in narrowly defined areas. For example, public procurement could be used to maintain a certain industrial capacity in the EU for strategic reasons. For example, a core capacity for steel production in Europe could be secured for security policy reasons – in the event that international competition threatens to lead to the shutdown of large parts of European steel production.
Application in a narrowly defined area the mix of instruments is crucial
What role can “Buy European” play in times of geoeconomics? It could be used as one of several instruments in a catalogue of measures in narrowly defined areas. For example, public procurement could be used to maintain a certain industrial capacity in the EU for strategic reasons. For example, a core capacity for steel production in Europe could be secured for security policy reasons – in the event that international competition threatens to lead to the shutdown of large parts of European steel production.
The mix of instruments is crucial
The geo-economic toolbox also includes targeted countervailing duties, international alliances to reduce critical dependencies, and the promotion of innovation in strategic capabilities. Within the framework of this catalogue of measures, “Buy European” (Made in Europe) would be the last resort, as it largely excludes international partners. International alliances (Made with Europe), for example with a minimum price for critical raw materials, would be preferable. Targeted countervailing duties, on the other hand, are more open, as they continue to allow trade with all other partners. For example, countervailing duties on automobiles from China partially offset the unfair competitive advantage they enjoy as a result of subsidies, tax advantages, and an undervalued renminbi. In contrast to “Buy European,” the European market remains open to other manufacturers and suppliers and thus part of the international division of labour and the associated efficiency gains.
