MNI EXCLUSIVE: EU Push For National Champion Industrial Policy

--Draft EU Summit Communique Moots Competition Steps Vs China's State-Owned

Enterprises, EU State Aid

--Draft Also Points to Strengthening Capital Markets Union And Single Market

By David Thomas

     BRUSSELS (MNI) - EU leaders look set to endorse key elements of a

Franco-German push for a national champion policy to ensure Europe's status as a

global economic player, according to amended draft conclusions for this week's

Brussels summit seen by MNI.

     While the new draft calls for "an assertive industrial policy allowing the

EU to remain an industrial powerhouse", it also contains a nod to the Hanseatic

and Nordic grouping, which promotes a more open and free trade approach.

     Both France and Germany are pushing for longer-term changes to the EU's

traditionally consumer- and market-focused competition policy in the wake of the

Commission's controversial decision to block the merger of engineering giants

Alstom and Siemens. The two countries want to promote EU companies capable of

competing with their Chinese and U.S. counterparts at the global level.

     The draft calls on the Commission to come up with a "long-term vision" for

the EU's industrial future by March next year along with "concrete measures to

implement it".

     But the draft communique also calls for "further steps" to be taken to

deepen Capital Markets Union and to strengthen and deepen the Single Market.

     One EU official said the communique synthesised the "free and fair trade

approach", balancing the aims of both the Hanseatics and of Germany and France.

     The conclusions also strengthen language calling for a rapid start to talks

with the U.S. on industrial tariffs, as reported by MNI on Monday, indicating

that Germany's case for an early start to those talks may be gaining traction

among EU leaders. France in contrast had been said to want to delay the talks

until after the May 22-23 European elections.

     The draft says "necessary steps should be taken for the rapid

implementation of the U.S.-EU Joint Statement of 25 July 2018."

     The leaders also call for "fair competition" in trade both within the EU

and globally.

     The draft calls on the Commission to identify gaps in EU law to "address

fully the distortive effects of foreign state ownership"- a clear reference to

China where critics argue that the low cost of capital for state-owned

enterprises distorts competition and creates an unlevel playing field for

private sector businesses and foreign competitors. The Commission is also asked

to look into the distortive effects of state-aid financing within the EU Single

Market.

     Such statements have to be seen in the light of growing EU concerns that a

bilateral U.S.-China deal could leave the bloc out in the cold and a belief that

more needs to be done to increase the EU's global economic heft - particularly

at a time when the euro zone economy is slowing sharply and many of its major

export industries have been hit by a series of geopolitical shocks.

     ECB President Mario Draghi is due to update the leaders on eurozone

economic developments on Friday morning.

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

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