Updated Industrial Strategy: digital transition of SMEs at the core

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The European Commission has published an update of its Industrial Strategy to lead the global transition towards climate neutrality and digitalisation. The update complements the first version of the Industrial Strategy, which was published on 10 March 2020, just one day before the World Health Organisation declared the Coronavirus a pandemic. It translates the lessons learnt by the COVID-19 crisis into practical actions on the basis of a comprehensive analysis of the European economy’s performance in 2020 (described in the Annual Single Market Report 2021).

The Updated Industrial Strategy reaffirms the priorities set out in the 2020 Strategy and offers new measures to accelerate the green and digital transitions by strengthening the resilience of the European Union’s Single Market in key strategic areas where a strategic dependency is found. For this reason, the delivery of the Updated Industrial Strategy is linked to the publication of a new proposal for Regulation on foreign subsidies distorting the Single Market, which aims to ensure a level playing field for European SMEs in the internal market. SMEs are at the core of the updated strategy, with tailored financial support and measures to address payment delays, solvency and the uptake of digital and sustainable solutions.

In order to increase the resilience of European companies, the Strategy announces a proposal for a Single Market Emergency Instrument to address critical product shortages through a speed-up of product availability and reinforcing public procurement cooperation (Q1 2022). Its ultimate goal is to ensure the free movement of persons, goods and services in case of future crises. Furthermore, the updated strategy fully enforces the Services Directive, to ensure that Member States comply with their existing obligations, including the notification obligation to identify and eliminate new potential barriers. It also strengthens the market surveillance of products by supporting national authorities to increase capacity and step up the digitalisation of product inspections and data collection.

With regards to the twin transitions, new measures are provided to support the digital and sustainable transformation of businesses by stimulating partnerships and pathways involving industry, local authorities, social partners and other stakeholders. New investments in digital upskill and reskill are also included, alongside with providing SMEs with Sustainability Advisors and supporting data-driven business models. Most importantly, the new strategy will set out a coherent regulatory framework to achieve the targets of the European’s Digital Decade and “Fit for 55 Package” ambitions, including the rollout of renewable energy sources and the ambition to ensure access to abundant, affordable and decarbonised electricity.

Finally, the updated Strategy puts a focus on the key strategic areas on which the EU Single Market is heavily dependent from a technological and industrial perspective, as evidenced by the Annual Single Market Report 2021. In the Strategic Dependencies and Capacities report, the European Commission has identified 137 products for which the EU is highly dependent and which represent 6% of the EU’s total import value of goods, with a subset of 34 products being potentially more vulnerable given their possibly low potential for further diversification and substitution with EU production. The report also develops 6 in-depth reviews of strategic areas (raw materials, batteries, active pharmaceutical ingredients, hydrogen, semiconductors, and cloud and edge technologies) and will be accompanied by further second-stage reviews of potential dependencies in products, services or technologies key to the twin transition, such as renewables or energy storage and cybersecurity. In order to address those dependencies, the Commission will work in close cooperation with the relevant stakeholders to reinforce the EU’s position in global value chains, including by strengthening and diversifying external trade. A more digitalised and circular economy will also contribute to reducing dependencies and strengthening resilience.

Ecommerce Europe will  continue to follow the activities around the Updated Industrial Strategy which are relevant for the sector and eventually get involved if deemed necessary.

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