The competitiveness of the EU manufacturing industry is suffering due to a divided Single Market along with heavy regulations and high production costs. This challenging environment is made worse by strong global competition and ongoing labour shortages, which together create a landscape where many European manufacturers struggle to survive.
The mandate of the newly formed European Commission is very clear: outlining a strategy to regain Europe’s competitive edge while pursuing its role as global leader in the climate objectives.
With the new mandate, the sector strongly supports the following recommendations as in line with the ‘Draghi Report’:
Too often Member States act individually to make products more sustainable, undermining the entire efforts brought forward by the EU to become a global leader in sustainability. One reason for it is that EU legislation takes too long to develop. This leads to a fragmented legislative landscape, which disrupts the Single Market and increases costs for companies while generating confusion for consumers. On top of reaping common gains, this approach generates significant market distortions. A complex patchwork of national regulations increases compliance costs for businesses and discourages cross-border trade and investment. This fragmentation not only reduces the effectiveness of EU policies but also harms consumer interests and diminishes the overall EU's bargaining power on the global stage.
When countries take different routes on sustainability, it creates a confusing mix of national regulations for the same product, forcing companies to redesign the appliance for each market, resulting in higher costs for businesses and consumers. While these complications may seem minor, their implications affect the free movement of goods across borders.
In the ‘Letta Report’ on the future of the Single Market, the former Italian Prime Minister sets the scene for an urgent upscaling of Europe’s competitiveness. This entails establishing an integrated framework between the European and the national level. The markets must evolve towards a European dimension, surpassing national borders.
The new Commissioner for the Single Market, Teresa Ribera Rodríguez, announced a Single Market Barrier Prevention Act aimed at preventing the emergence of new barriers. The legislation would establish a more predictable regulatory environment for businesses, allowing companies to operate more efficiently across borders, reducing compliance costs, and facilitating smoother trade. This is a much-needed measure to rescue the Single Market and unlock Europe’s potential as a unified community, and it should be timely tabled to address all existing challenges.
The issue of fragmentation is further aggravated by the EU's own policies that undermine domestic industry. One example is the Carbon Border Adjustment Mechanism (CBAM), a tool proposed by the European Union to address carbon emissions associated with imported goods aiming to level the playing field between EU companies that are subject to strict carbon regulations and foreign producers who may not face the same environmental standards. However, the Mechanism only increases costs for European manufacturers failing to address the carbon footprint of finished products imported from elsewhere. This adds further pressure on the sector and creates an incentive for companies to relocate production outside of Europe.
Final products rely on a number of different and essential parts, from basic to more elaborate components. However, the global supply of these materials is often highly concentrated, exposing the EU to price fluctuations, supply chain disruptions, and potential geopolitical leverage. Which states a clear need to guarantee the supply of critical raw materials within the EU and with strategic partnerships, incorporating both a domestic and international dimension. The current geopolitical landscape, amid the most recent disruptions, further highlights the need for diversified supply chains, new and existing trade relationships, and investment in sustainable projects to ultimately increase critical raw material extraction and recycling in the Region and abroad.
Electricity prices in Europe are 2-3 times higher than those in the US, preventing industries and households from capturing the full benefits of clean energy in their bills. Particularly, EU industries that use energy intensively - like the home appliance industry - face higher investment costs than their competitors to meet decarbonisation targets. This price gap puts European businesses at a disadvantage and threatens their ability to compete in global markets.
The "Draghi Report" emphasises the need to ensure energy prices are competitive and market-reactive. Europe’s decarbonisation efforts present a significant opportunity for the Region to lead in new clean technologies and circularity solutions. However, the ability to capitalise on this opportunity hinges on aligning all policies with the EU's decarbonisation goals.
Europe set ambitious targets to quickly decarbonise and increase access to affordable and energy-efficient housing. It is really important that home appliances are part of these as key enablers of decarbonisation and socioeconomic elevators.
To foster a fair and competitive global marketplace, all companies, regardless of their origin, must adhere to the same high standards for environment and consumer protection, thus creating a level playing field for all businesses operating in the European market and globally.
The clean energy transition offers the opportunity to make Europe the world’s leading investment hub for clean tech innovation, provided the right conditions for market scale-up are in place. The home appliance sector alone supports over 1 million jobs in the Region, and by implementing measures to ensure fair competition, the EU can safeguard these critical jobs.
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