A Compass for the EU’s Future Competitiveness

by | 29. Jan 2025 - 14:16 | Politics

Competitive pressure from China and the U.S.: Brussels focuses on cutting bureaucracy and strengthening raw material partnerships.

With a Competitiveness Compass, the European Commission aims to steer the bloc toward economic and technological strength. The strategy, unveiled on Wednesday, focuses on three key areas: innovation, decarbonization, and security. The latter primarily addresses energy and raw material supply, which is to be secured through partnerships with other countries.

According to the Commission, these goals can be achieved in part by simplifying and reducing regulatory hurdles. Small and medium-sized enterprises (SMEs) could see a bureaucratic relief of up to 35 percent. The strategy also highlights the joint procurement platform for critical raw materials, an initiative first introduced in the Critical Raw Materials Act, which the Competitiveness Compass suggests could launch in the second or third quarter of this year.

The EU increasingly finds itself caught between the America First policies of former U.S. President Donald Trump and China’s generous incentives for domestic manufacturers. In response to significantly cheaper Chinese-made electric vehicles, Brussels is currently imposing protective tariffs. Similar measures are also being considered for the steel industry, as previously reported by Handelsblatt.

The newly presented strategy paper is also seen as a response to the Draghi Report. Former European Central Bank President Mario Draghi, commissioned by the European Commission to assess the bloc’s competitiveness, delivered a critical evaluation—particularly regarding the EU’s supply of critical raw materials.

The EU is lacking a comprehensive strategy covering all stages of the supply chain (from exploration to recycling) and, unlike its competitors, the mining and trading of commodities is largely left to private actors and the market

Mario Draghi: The future of European competitiveness – In-depth analysis and recommendations

Photo: corelens via Canva, montage rawmaterials.net