EU-US ‘structural gap is widening’, warn French businesses

1 year ago 62

A ‘proliferation of EU norms’ may hamper EU business’ competitiveness in the face of China and the US, French business association Medef’s Chief Patrick Martin said while unveiling the association’s ‘EU strategy’ on Monday to a small group of journalists, including Euractiv.

If the Medef is “fundamentally pro-EU,” more must be done to cut down the growth of EU norms, which weigh on businesses’ compliance capacities, Martin said.

A myriad of legislations in the works, including the Due Diligence and Late Payments Directives, may create more bad than good as companies struggle to comply with a fast-moving regulatory ecosystem.

This could result in profound competitiveness divergences between the EU and the US and may affect the entrepreneurial spirit between the EU and the rest of the world”.

IRA v NZIA

It’s not just norms and rules Martin is concerned about. “The EU invests less than half as much as the United States,” he warned, as just over a quarter of Next Generation EU (NGEU) money – an investment tool created through common public debt during the pandemic – is effectively being used Agefi reported in October.

Meanwhile, the US’s Inflation Reduction Act (IRA), a $400-billion investment and tax break package, is being rolled out at faster speed, with lower administrative burdens for US companies to benefit from public cash.

As a result, “a structural gap is widening between the EU and the US,” Martin explained.

The EU’s response to the IRA, which has consisted chiefly of the relaxation of State Aid rules and the introduction of a new Net-Zero Industry Act (NZIA), has been perceived by the Medef as “more complicated, more laborious, slower [and] less clear for companies” than what the US provides.

Moving forward, Martin wants “a European industrial strategy on critical materials, energy, [and] training […]” to best face up to American competition.

‘Superb isolation’

Meanwhile, as this industrial policy “paradigm shift” slowly materialises, Medef is rebuilding ties with an unexpected friend: the large Federation of German Industries, BDI.

This, Martin notes, marks the end of several years of BDI’s “superb isolation” from their French counterparts while the German economy was on the high. But, with economic growth falling into negative territory, German businesses are keen to recreate a “closer cooperation” with other countries’ partners, including France.

This includes BDI’s support in the growth of nuclear energy – an issue of primary importance to France, while the German government has enshrined a no-nuclear policy altogether.

“The German government is not absolutely coherent or cohesive,” Martin said, warning that “if the German economy falters, this will necessarily have negative effects on France too”.

(Theo Bourgery-Gonse | Euractiv.fr)