Content module II. Industrial and agricultural policy of the eu as basic sectoral policies Theme 6. Industrial policy of the eu
Plan:
6.1. Necessity of common industrial policy realization
6.2. Legal bases and organizational elements of industrial policy of the EU
6.3. Basic directions and measures of industrial policy of the EU
6.4. The EU policy in different industries of economy
Keywords: industrial policy, directions, measures, legal frameworks, support of competition, direct measures, sectoral industrial policy.
Literature: 1, 3, 4, 5.
Question and task:
1. Reasons of common industrial policy realization.
2. Main principles of common industrial policy of the EU.
3. Organizational elements of industrial policy.
4. Directions of industrial policy.
5. Measures of industrial policy.
6. Policy of the EU in different sectors of industry.
7. European| Round Table|, ERT|
8. BusinessEurope|
9. Enterprise Strategy Group
10. REACH
11. CHANGE
12. European advice of chemical industry (CEFIC.
Case Studies:
Case 10 - European patent system
In 1997 the European Patent Office (EPO) gave a patent to Massachusetts General Hospital for its use of nitric oxide to treat bronchoconstriction, a method often used for “blue baby” syndrome. Three gas companies—America’s Air Products, France’s Air Liquide and Germany’s Westfalen Gas—appealed against the grant of the patent. Mass General and its Swedish licensee, AGA, then launched actions for infringement in the Netherlands, France and Germany. In 2000 a Dutch court said the patent was partially valid, in 2003 a French court said its validity was questionable and in the same year a German court judged it valid. Then in 2004 the EPO revoked the patent entirely.
Such cases infuriate companies in Europe. They want a single European patent to protect intellectual property across the region, and a single court in which to defend their rights. At the moment, inventors can apply to the EPO, with which all 27 members of the European Union and nine other European countries co-operate. But EPO patents, once granted, must be validated, translated and annually renewed in all those countries in which a firm wants protection. Litigation is country by country, and national courts can in effect overturn patents granted by the EPO, or uphold patents which have been invalidated by it. Firms can take advantage of this by filing directly with national patent offices.
Pic. 3. Patent costs, 2008, thousands USD on PPP.
According to a recent paper, “Lost property: The European patent system and why it doesn’t work”, by Bruno Van Pottelsberghe, a senior research fellow at Bruegel, a think tank, it can cost between four and ten times more to get a patent in Europe than in America, Japan, China or South Korea, depending on how many countries are involved (see chart). The bill is bloated by duplicate administrative fees and translation charges which add no value to the patent, says Mr Van Pottelsberghe, who was the EPO’s chief economist in 2005-07.
The burden falls most heavily on small to medium-sized firms. Overall, according to the European Commission, the lack of a unified patent system is one reason why Europe’s small and medium-sized technology firms fail to grow as quickly as those in America, Asia and elsewhere. One small firm, Sensaris, which makes wireless sensors to detect air pollution, has decided to make a filing under the international Patent Cooperation Treaty, which is a way of putting down a marker without the expense of a full patent application. Sensaris cannot afford the €30,000 ($43,000) or more it would cost to get patents for three or four countries in Europe, says Michael Setton, its founder. “We have decided not to pursue patents in Europe because the system makes it effectively impossible for us to defend them,” says Fernando Guerrero, the Spanish co-founder of Solid Quality Mentors, a multinational technical consulting firm. Foreign lawsuits, he says, are unpredictable and can be very expensive.
A single “Community” patent, applying in all 27 countries of the EU, says Mr Van Pottelsberghe, could bring down the cost of obtaining protection by 60%. With a single court, firms would face less legal uncertainty. Sweden, which assumed the EU’s six-month presidency on July 1st, is trying to forge political consensus. “The Swedes are putting extreme focus and energy into finally getting a proper European Community patent,” says Alison Brimelow, president of the EPO.
The obstacles are still high. Surrendering their veto over patents would be a substantial loss of sovereignty for the EU’s members. In some areas, such as genes, software and stem-cell research, the question of what qualifies for protection is controversial. Language is another big difficulty. Most countries still insist that any patent must be translated into their language to apply on their soil. In 2008 the burden was reduced somewhat by the London Agreement, under which countries can waive the right to have patents translated into their national language. But only 14 countries have agreed to do so. The EPO has only three official languages: English, French and German. Spain is particularly aggrieved at this.
The fuss over language may conceal other motives. Less innovative countries are unlikely to back a strong European patent, since their governments fear that companies which rely on imitation would lose market share to more inventive foreigners. National patent offices do not want to give up power and money. They, and the EPO itself, are worried that a unified process with a lower cost to companies would result in lower revenues. For the same reason, legal firms and translators have also fought against harmonisation.
But resistance may be starting to melt. “We have never been so close to having a Community patent,” says Thierry Sueur, head of intellectual property at Air Liquide in Paris. In the past politicians mostly left patent policy to specialists, since it seemed arcane and technical, but as intellectual property has grown in importance the flaws in Europe’s patent system have become more glaring.
The next five months will be crucial, because Spain, an opponent of a unified system, will hold the presidency of the EU next. In addition, the EPO will choose a new president in the next few months. Some candidates for the job are thought to oppose a Community patent and would be likely to hold back progress if elected—so a fight is on the cards.
Source: Smother of invention // The Economist. – 2009. – 23rd July.- [Electronic resource]. - Access mode: http://www.economist.com/node/14105584.
Questions:
1. Which powers do national courts in the EU countries have in the sphere of patent granting? Give examples? Does this situation satisfy EU companies?
2. List factors of inefficiency of European patent system?
3. Why European technology SME’s don’t grow as quickly as those in the USA?
4. Why does European patent cost much then in other countries?
5. Which preferences and difficulties could bring European Community Patent founding?
6. Who fight against harmonization of European patent system?
Dictionary:
infringement – нарушение, посягательство to revoke – отменять, аннулировать infuriate – разъяренный, взбешенный litigation – тяжба, судебный процесс to bloat - раздуваться |
burden – бремя, груз to pursue - заниматься gene - ген stem-cell – стволовые клетки fuss – возражение, протест
|
Case 11 - European Energy
Tragedy and farce have too often been the hallmarks of European efforts to improve energy security. Dependence on Russia, which supplied a third of its gas imports through Kremlin-controlled east-west pipelines, seemed to be rising inexorably and worryingly. Squabbling between Russia and Ukraine led to repeated supply cuts. The Russians exploited energy to divide and rule their Western neighbours. Big energy companies in countries such as Germany and Austria sought cosy relations with Russia’s state-controlled gas giant, Gazprom.
Pic. 4. Gas pipeline routes
The overlap between politics and profit was epitomised by Gerhard Schröder, a former German chancellor. Since 2005 he has been the front man for Nord Stream, the pipeline that is planned to run under the Baltic. Along with South Stream, a sister project across the Black Sea, Nord Stream would let Russia bypass troublesome transit countries, chiefly Ukraine. West European customers could benefit, but the plans alarm countries in the east that are at greater risk of Russian bullying.
Now this gloomy picture is brightening. For a start, Europe has diversified its sources of supply: cost and unreliability have led Gazprom to lose a third of its European market to imports from Norway, Qatar and Trinidad, says Mikhail Korchemkin of East European Gas Analysis, a consultancy. Second, one of the European Union’s efforts to curb Russia’s transit monopoly is gaining traction. In a signing ceremony in Ankara on July 13th, the Nabucco pipeline, which will connect Europe to gas-rich Central Asia via the Balkans, Turkey and the Caucasus, won formal backing from the main transit countries: Austria, Hungary, Romania, Bulgaria and Turkey, as well as from Germany.
This step reflects a €200m ($283m) dollop of EU money, plus some political shifts. Turkey had earlier bargained toughly (some said destructively). The EU’s quiet expression of interest earlier this year in White Stream, a rival project across the Black Sea, may have changed Turkish minds. And Nabucco has hired Joschka Fischer, a former German foreign minister, as a consultant.
Nabucco could carry some 30 billion cubic metres of gas a year. But that is only a fifth of what Russia exports to Europe; and it will not be finished until at least 2015. Moreover, the sources of that gas remain unclear. Azerbaijan has enough only for the project’s early stages, though it is exploiting new offshore gasfields. Iran would be a logical supplier, but is out of the question on political grounds. A promising newcomer is Iraq’s Kurdish region. In May a Western-backed consortium unveiled an $8 billion plan to extract gas there and sell it to Nabucco. This week Nouri al-Maliki, Iraq’s prime minister, said he could supply half the gas the pipeline needed.
But the biggest prize would be gas from Turkmenistan, a Central Asian dictatorship that claims to sit atop one of the world’s largest gas reserves. The Turkmen leadership is hesitant about annoying the Kremlin, which now buys all of the country’s exports to make up for Russia’s own flagging gas production. But an EU-backed negotiating consortium has made some progress in talks with Turkmenistan. President Gurbanguly Berdymukhammedov recently announced that his country had a surplus of natural gas “available to foreign customers, including Nabucco”.
That would, however, require a new pipeline under the Caspian Sea, which would not only be costly and slow but also subject to objections from Russia and Iran (which would like to offer a land-based route instead). Russia is the only serious naval power in the Caspian. It showed in last August’s war with Georgia that it is prepared to use military force to protect its interests in the neighbourhood.
An American delegation, including Barack Obama’s national security adviser on the region, Michael McFaul, has just been to Turkmenistan to stress the importance the West puts on making Nabucco a success. American lobbying proved crucial to the success of the Baku-Tbilisi-Ceyhan oil pipeline that runs from Azerbaijan to Turkey’s Mediterranean coast, which opened in 2005. Many thought that was a pipe dream in the beginning, but with strong political backing it came to acquire an aura of inevitability. Nabucco’s backers hope to repeat the BTC pipeline’s trick.
Other less ambitious pipelines are also moving ahead. ITGI, which aims to bring Azeri gas to Italy via Turkey and Greece, has just announced a deal to extend a spur north to Bulgaria, ending that country’s near-total reliance on Russian gas. Another EU-backed scheme, the Trans-Adriatic Pipeline, has signed up gas from Iran and expects to draw on Azerbaijan too.
Russia has not given up. Gazprom has just signed a $2.5 billion deal with Nigeria (it was named Nigaz, showing a refreshing ignorance of politically incorrect language). It is pressing on with the Opal pipeline to connect Nord Stream to an existing transit point on the German-Czech border. Germany, controversially, has given the scheme a 25-year monopoly. But other bits of the Kremlin’s energy diplomacy show patchy results. Attempts to build an international gas cartel have stalled. Plans for a push into liquefied natural gas look unrealistic. Most recently, a row with Turkmenistan has hit Russia’s gas imports.
Corruption, incompetence and state interference have long held back Russia’s gas industry. Production is falling. Russia has brought only one new gasfield on stream since the collapse of the Soviet Union and new reserves are in costly, distant regions. Even before the oil price fell (bringing down the gas price too), Gazprom had the highest costs and worst finances of any international gas company. With debts of over $40 billion, it will struggle to afford projects that make political sense, but cannot pay their way. That is how Nord Stream (cost up to €13 billion) and South Stream (€20 billion) increasingly look. Alan Riley, a British academic specialising in competition law, thinks both projects may also breach EU anti-monopoly rules.
That is a more serious threat as EU energy-market liberalisation takes hold. So far Germany, France and others have fought to protect national energy champions. But the European Commission wants more liberalisation and better interconnections. On July 8th it fined two energy giants, Germany’s E.ON and GDF Suez of France, €553m apiece for a market-sharing agreement involving Russian gas. It may yet look into whether Gazprom’s Opal monopoly and its contract bans on re-export of gas are legal. “The commission is trying to achieve through litigation what it couldn’t achieve through legislation,” says Pierre Noël, a French energy analyst at the European Council on Foreign Relations. Boring energy liberalisation may be a surer route to energy security than glamorous pipelines.
Source: He who pays for the pipelines calls the tune // The Economist. – 2009. – 16th July. - [Electronic resource]. - Access mode: http://www.economist.com/ node/14041672.
Questions:
1. Which factors do influence the energy dependence of the EU?
2. List efforts of the EU to increase energy security.
3. What’s the aim of the Nord stream building?
4. Which are the ways of diversification of gas supply sources for the EU?
5. What’s route of Nabucco pipeline building and which countries are participants of the project?
6. Emphasize possible dangerous of new pipelines building for economic development and geopolitical role of Ukraine?
7. Characterize current problems of Russian gas industry.
8. Consider consequences of the EU energy market liberalization.
Dictionary:
hallmark - признак inexorably - неумолимо to seek cosy relations – добиваться теплых отношений overlap - перекрывание to epitomise - резюмировать gloomy - мрачный |
to curb – держать в узде traction – шансы на успех dollop - кусок inevitability - неизбежность flagging - ослабленный naval - военно-морской |
Case 12 – Sweden role in the EU
Here are three Europeans, talking about the best way to help car workers in the recession. For the first, the state must use “all means necessary” to preserve key industries: ie, give carmakers billions of euros. In return, it is “quite normal” to ask them to halt lay-offs, to keep existing factories open and if possible to “bring production home” from lower-cost countries.
A second European says that governments should focus on ensuring individual workers are employable, not propping up uncompetitive firms. For him, the problem with the car industry lies in “the overproduction of cars that nobody wants to buy.” That leads him to a blunt conclusion: save the workers, not the factories that turn out such clunkers. In his words, “when a ship is sinking my main aim is to save the sailors, not the ship.”
That robust second view is echoed by our third European. It is natural for labour-intensive jobs to go to low-cost countries, he says. Higher-cost countries can make things only if they innovate, focus on high-end products and ensure they are the “best in class” worldwide. But if firms are not competitive they should not survive. “Nobody is helped by having people employed in companies that aren’t viable.”
The first European is Nicolas Sarkozy, the French president. The second is Sweden’s centre-right prime minister, Fredrik Reinfeldt, who recently refused to rescue a loss-making carmaker, Saab (though when a Swedish-led consortium agreed to buy Saab from General Motors, his government was ready to offer loan guarantees). And the third is Aleksandar Zuza of a Swedish trade union, IF Metall, which represents production workers at Saab. Speaking for his centre-left trade union, Mr Zuza grumbles that Mr Reinfeldt is too negative about Saab. GM starved the brand of investment, he adds, and Saab should be given a fighting chance under new owners. But if Saab is not competitive in a couple of years, he adds, “that will be that”. In other words, the Swedish left and right basically agree: and both are a lot more liberal than the (nominally centre-right) president of France.
For years Sweden has made lefties swoon. When Mr Reinfeldt came to power in 2006, the Social Democrats had run the country for 65 of the 74 previous years. Sweden has a huge public sector (in 2007 taxes and social-security contributions swallowed more than 48% of GDP), yet even the flintiest liberal has to admit that it is an exceedingly well-run, handsome place. Its fearsome levels of organisation and conformity are offset by a relaxed, outdoorsy culture, and the openness that goes with being a small, maritime country. If Zurich were crossed with Sydney, the result might be something like Stockholm.
Others say political labels are misleading. Sweden’s big state works because it is Swedish, not because it is big, says Johan Norberg, a liberal economist. The country has had an efficient bureaucracy for 200 years. The public sector expanded only in the 1950s, after a century of astonishing economic growth driven by free trade and free markets (from 1850 to 1950, average incomes multiplied eightfold, as a poor peasant society was transformed into one of the world’s richest countries).
Their own banking crisis of the 1990s combines with today’s credit crunch to persuade Swedes of the need for tougher cross-border financial regulation. But they do not want to see it imposed from on high. In the 1720s, when the Swedish king was abroad “making wars”, the government shored up national unity by taking big decisions by consensus, says Mats Odell, the financial-markets minister. EU decisions on financial regulation can, in theory, be taken by majority vote. And some countries would be happy to outvote Britain and impose rules that would rein in the City of London. But that is not Sweden’s plan, says Mr Odell: Swedes believe that consensus is the best way to take long-term decisions that all can live with.
Swedes often draw lessons from past success (this can make them sound smug). In climate-change talks, it will make them rather tough. Sweden has cut carbon emissions by a tenth since 1990, even as its economy grew by 50%, Mr Reinfeldt said this week. He calls his country “an interesting example” for others. When it comes to the Lisbon treaty, Swedes are wary of anything that smacks of EU bossiness, or a power-grab by big countries (though Mr Reinfeldt has also called Sweden the world’s smallest superpower). Swedish ministers are dubious about the new job of president of the European Council, preferring the idea of an “elected chairman” who can organise meetings of the 27 leaders.
Sweden is different in other ways, too. Its voters are more favourable to EU enlargement than almost all others. That is matched at government level: Sweden’s foreign minister, Carl Bildt, strongly backs EU membership for Turkey (he is also robust over Russia). A giant in a Europe of diplomatic pygmies, Mr Bildt would make a fine EU foreign-policy chief. Alas, his brilliance is matched by a reputation for arrogance (he is Swedish), so some countries may block him.
Source: Those exceptional Swedes // The Economist. – 2009. – 2nd July.- [Electronic resource]. - Access mode: http://www.economist.com/node/13941289.
Questions:
Whish are the main ways to rescue European automotive industry under recession conditions? Analyze advantages and disadvantages of each of them.
What is the past and the future of Saab?
What are the main peculiarities of the Swedish model of economy?
Why does Swedish socialism work in Sweden and doesn’t in other countries?
What is Swedish relation to environment?
Dictionary:
to halt lay-offs - остановить увольнения to proper up - поддерживать clunker - драндулет robust - здравый viable - жизнеспособный to grumble - ворчать swoon - обморок flintiest - самый суровый fearsome - внушающий страх outdoorsy - уличный |
misleading - вводящий в заблуждение eightfold - восьмикратный crunch - нехватка to persuade - убедить tougher - более жесткий smack – имеет признак, налет bossiness - властность dubious - сомнительный arrogance – высокомерие |