Annexes to COM(2023)168 - Long-term competitiveness of the EU: looking beyond 2030 - Main contents

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dossier	COM(2023)168 - Long-term competitiveness of the EU: looking beyond 2030.
document	COM(2023)168
date	March 16, 2023

agreements but also through other arrangements establishing cooperation with partners on issues of mutual interest. Global Gateway, the EU’s positive offer to emerging markets and developing economies to promote the twin transitions and human development, is key in this regard. Furthermore, the EU is pursuing agreements on digital trade rules, with a focus on partners in Asia, building, where applicable, on digital partnerships ⁴⁴ thereby promoting EU rights and values. The EU-India Trade and Technology Council is another example of how to strengthen our international partnerships with strategic partners. Critical raw materials are also an area where the EU will seek to expand its network of partnerships and cooperate in the framework of a future raw materials club bringing together consuming countries and resource-rich countries to foster sustainable investment.

The EU will also continue engaging ever more closely with the US, as a partner with shared strong common values. The EU and US are working to implement a new Transatlantic Initiative for Sustainable Trade to advance shared objectives of achieving a green, sustainable trade and support the transition to low-carbon and resilient economy, in a mutually supportive manner.⁴⁵ As agreed between President Biden and President von der Leyen on 10 March, the EU and US will deepen cooperation on diversifying critical mineral and battery supply chains and economic security.

In deploying the above objectives, the EU and the Member States cannot afford to be solely reactive but is putting in place a coordinated framework for economic security that addresses the risks in a targeted way, while safeguarding the benefits of open trade and digital cooperation. The EU will also make a strategic use of available autonomous tools such as the trade defence instruments (TDI), the Regulation on Foreign Subsidies, the International Procurement Instrument, or the proposed EU Anti-Coercion Instrument.

Reciprocal market access and removal of trade barriers (for both goods and services) will bring more opportunities for trade, investment, innovation and productivity growth.

To monitor this driver, the following KPI is proposed:

	KPI	Source	Target	Latest available data
16	Trade with the rest of the world (as a share of GDP)	Eurostat	Up	21.5% (2021) 20.2% (2020)

III. A growth enhancing regulatory framework

The quality of public administration and that of the regulatory framework are crucial for the Union’s competitiveness. The EU has become a high standard-setter in policy areas such as consumer protection, competition, environment, and workplace safety, and provides regulatory stability and certainty. When preparing new regulation, the Commission relies on one of the most advanced better regulation systems ranked top by the OECD. Yet, improvements are possible.

The new competitiveness check ensures that the impact assessments of legislative proposals present in an integrated manner the expected impacts of each proposal on cost and price competitiveness, international competitiveness and the capacity to innovate, and also on SME’s competitiveness. To complement it, the Commission will work on how to better assess the cumulative impacts of different policy measures at the EU level with a view to develop a methodology. Furthermore, the ‘one-in, one-out’ approach aims at avoiding unnecessary burdens, where administrative costs, such as reporting obligations, certification or labelling are offset in the same policy area. The forthcoming Annual Burden Survey will show first promising results in that respect.

Reporting obligations are necessary to properly monitor and enforce legislation, however they entail costs, particularly for SMEs. Further streamlining reporting obligations and reducing administrative burden is a Commission priority⁴⁶. To date, fitness checks ⁴⁷ have been conducted in several policy areas and have identified potential to simplify the requirements and reduce reporting costs. The Commission will make a fresh push to rationalize and simplify reporting requirements for companies and administrations with first proposals for each of the green, digital and economic thematic areas before the autumn. The aim should be to reduce such burdens by 25%, without undermining the related policy objectives. In light of the major legislative activity of this Commission mandate, this is an especially appropriate moment to intensify such work. Such measures have the potential not only to reduce red tape and simplify the regulatory environment but also to free up skilled resources, benefiting business competitiveness. The same can apply to other cross-cutting topics, such as simplifying/digitalising labelling rules.

Well-designed EU rules have the advantage of simplifying life for citizens and businesses, especially SMEs, including in areas where they replace the patchwork of 27 national frameworks with a single set of rules. The Commission will further develop a more innovation-friendly approach to regulation through greater use of regulatory sandboxes/testbeds which allow to test novel solutions in a controlled environment for a limited amount of time. The Commission has already proposed such sandboxes for artificial intelligence and the net-zero industries and will propose to do so in the pharmaceutical sector. Building on this, the Commission will actively consider an extension to other areas/sectors.

The Commission will also consider applying wherever possible regulatory models which incentivise ⁴⁸ rather than prescribe, and therefore reduce compliance costs while achieving the same results.

Competitiveness depends on renewal. The Commission will continue to regularly assess the EU legislation to see whether it remains fit for purpose. In areas subject to significant technological change, the Commission will explore making better use of sunset and review clauses in its legislative proposals to ensure regulation remains future-proof. Where timely adoption of key legislation is necessary to provide stability and predictability to market players and other stakeholders, the Commission will seek a clear political commitment from the European Parliament and the Council as co-legislators.

Once legislation is adopted, the Commission will continue to assist Member States in transposing EU law correctly, fully and on time. This dialogue will be pursued. Member States have an obligation to apply correctly what they have agreed as European legislators, including refraining from the still frequent addition of regulatory or administrative burden beyond of what is required and placing of unnecessary burdens on business and citizens when transposing EU directives into national law (so-called ‘gold-plating’). Many of the practical benefits of harmonisation in the Single Market can be lost if implementation widely varies across Member States. Transposition also needs to be timely, to minimise the risk of uncertainty as regards the state of the law, especially for business. In this respect, Member States, regional and local authorities are encouraged to carry out a review of current processes for the transposition of EU legislation.

A strong public administration is indispensable for the public sector to keep implementing EU policies. The Commission will outline several actions ⁴⁹ to deepen and enhance administrative cooperation, support authorities to improve the skillsets of civil servants, and facilitating the exchange of practices and staff to support the implementation of specific reforms, development of policy initiatives or the introduction of new management tools and approaches.

This KPI reflects the extent to which businesses perceive how easy it is to comply with government regulation and administrative requirements. An upward trend will reflect the extent to which EU and its Member States collectively can be successful in ensuring a legislative and administrative framework conducive to growth.

To monitor this driver, the following KPI is proposed:

	KPI	Source	Target	Latest available data
17	Ease of regulatory compliance	Single Market Scoreboard	Up	3.64 (2021) 3.33 (2018)

Conclusion

In the face of strong global competition and a new geopolitical context, competitiveness can never be taken for granted. It deserves political attention at the highest political level. The renewed attention to long term competitiveness is about the European Union taking charge of its attractiveness and standing in the world economy.

The EU is at a key moment for the next decade and it needs a joint push from businesses and policy makers to put Europe on the right path to the future. Businesses have long-term perspectives and need predictable and competitive framework conditions for their investments. This is what will decide where the future economic growth will take place.

This Communication highlights the main drivers for long term competitiveness. The drivers are interlinked and there is no single answer to our current challenges. In an ever-changing environment, these drivers will be measured on the basis of KPI, objectives, and monitoring frameworks that have already been developed in sectoral policies ⁵⁰, the Single Market Scoreboard, the Digital Decade Policy Programme, and the European Semester. The Commission intends to present the update on an annual basis in the Single Market and Competitiveness Scoreboard. They can thus provide a combined measure of the state of EU competitiveness for the March European Council as well as to the European Parliament, in order to inform and prompt discussion on any necessary policy measures. They will also help guide the Commission in its daily work and the co-legislators in finalising legislation that has an impact on Europe’s competitiveness. Member States’ commitment to reforms and aligned, strong messages to business backed up by the required investment and implementation will allow to build future competitiveness on Europe’s strength.

In the meantime, the Commission will actively screen its regulation, assess if it is fit for purpose and work towards a more innovation-friendly approach to regulation. A clear regulatory framework, support for key innovation, a skilled workforce as well as reduced reporting requirements where possible will enable a business environment for EU industry to grow in the long-term.

The European Council and the European Parliament are invited to endorse the priorities identified in this Communication and take stock of progress made on a regular basis.

Annex – KPIs to monitor the competitiveness of EU industry

No	KPI	Source	Description	Target	Latest value
*A Functioning Single Market*
1	Integration in the Single Market	Single Market Scoreboard ⁵¹	Trade flow in goods and services within the EU as a share of EU GDP.	Up	23.5% for goods (2021) 21.5% for goods (2020) 6.75% for services (2021) 6.5% for services (2020)
2	Conformity deficit	Single Market Scoreboard ⁵²	It measures the number of directives transposed for which infringement proceedings for incorrect transposition have been launched by the Commission	0.5%	1.3% (2021)
*Access to private capital and investment*
3	Net private investment as a share of GDP	Single Market Scoreboard ⁵³	Private investment is directly linked to the ease of access to private capital.	Up	3.2% (2021) 2.6% (2020) 4.4% (2019)
4	Venture capital investment	Single Market Scoreboard ⁵⁴	Progress in this field is a good indicator of progress in access to private capital in general. Recent progress, but low in comparison at international level.	Up	0.48% (2021) 0.03% (2018)
*Public investment and infrastructure*
5	Public investment as share of GDP	AMECO database ⁵⁵	Public investment plays a key role in developing and maintaining business supporting infrastructures like energy, transport or digital connectivity.	Up	3.2% (2022)
*Research and Innovation*
6	R&D intensity % GDP	Eurostat ⁵⁶	The total R&D expenditure (public and private).	>3% beyond 2030	2.26% (2021) 2.3% (2020) 2.22% (2019)
7	Number of patent applications ⁵⁷	Eurostat ⁵⁸	Patents reflect the capacity of an economy to exploit knowledge and indicate the competitiveness edge that can be obtained through innovation.	Up	67 713 (2021) 65 925 (2020) 66 510 (2019)
*Energy*
8	Share of energy from renewable sources	Eurostat ⁵⁹	Renewable energy generation (as proposed for the Renewable Energy Directive).	45% in 2030	21.77% (2021) 22.04% (2020) 19.89% (2019)
9	Electricity prices for non-household consumers ⁶⁰	Eurostat ⁶¹	Electricity price for industrial consumers gives a good indication of energy affordability.	Down and then steady	EUR 0.1604 per kWh (Semester 1 2022) EUR 0.0818 (Semester 1 2020)
*Circularity*
10	Circular material use rate	Eurostat ⁶²	The circular material use rate measures the share of material recovered and fed back into the economy in overall material use. Target from the Circular Economy Action Plan: Doubling compared to 2020.	23.4% by 2030	11.7%% (2021) 11.7% (2020)
*Digitalisation*
11	Digital intensity in SMEs	Eurostat ⁶³	Share of EU enterprises with at least a basic level of digital intensity. A basic level entails the use of at least four of twelve selected digital technologies (such as using any AI technology; having e-commerce sales account for at least 1% of total turnover; etc.) as defined in the Digital Decade.	90% by 2030	69% (2022)
12	Digital technologies adoption by companies	Eurostat ⁶⁴ ⁶⁵ ⁶⁶	Share of European enterprises that have taken up cloud computing services, big data and Artificial Intelligence . Target set in the Digital Decade.	75% by 2030	Cloud computing services 41% (2021) 23.9% (2018) Big data 14.2% (2020) Artificial Intelligence 7.9% (2021)
*Education and skills*
13	Adult participation in education and training every year (female and male)	Adult Education Survey/Labour Force Survey ⁶⁷	An increased participation in training will indicate good progress in the development of skills for sustainable competitiveness (target set in Porto Summit Targets, Social Pillar).	60% by 2030	37.4% (2016) ⁶⁸ Based on the adult education survey, which was carried out in the past once every 6 years.
14	Adult employment rate	Eurostat ⁶⁹	An increased participation in the labour market implicates less labour shortages, enhancing sustainable competitiveness (target set in Porto Summit Targets, Social Pillar).	78% by 2030	73% (2021)
15	ICT specialists (female and male)	Eurostat ⁷⁰ ⁷¹	This indicator, one of the targets of the Digital Decade, measures progress towards a well dimensioned workforce specialised in the development and deployment of digital technologies.	20 million by 2030	8.5 million ⁷² (2021) Percentage of women 19.1% (2021) 17.8% (2019)
*Trade and open strategic autonomy*
16	Trade with the rest of the world (as share of GDP)	Annual Single Market Report ⁷³	Trade flow in goods and services with the rest of the world as a share of EU GDP.	Up	21.5% (2021) 20.2% (2020)⁷⁴
*Regulatory burden*
17	Ease of regulatory compliance	Single Market Scoreboard ⁷⁵	Business perception by replying to the question: "In your country, how easy is it for companies to comply with government regulation and administrative requirements (e.g. permits, reporting, legislation)? (1 = Overly-complex; 7 = Extremely easy)" in the survey for the Global Competitiveness Index of the World Economic Forum.	Up	3.64 (2021) 3.33 (2018)

1 Own calculations on WB-WDI ( https://databank.worldbank.org/source/world-development-indicators)

2 DG Trade Statistical Guide - August 2022 (europa.eu)

3 These are the next-level automation, future of connectivity, distributed infrastructure, next-generation computing, applied AI, future of programming, trust architecture, bio revolution. The EU leads in the production and adoption of next-generation materials and in clean tech. Source: McKinsey securing-europes-competitiveness-addressing-its-technology-gap-september-2022.pdf (mckinsey.com)

4 COM(2019) 640 final

5 COM(2021) 118 final

6 OECD (2015). Data-driven innovation: big data for growth and well-being, OECD Publishing, Paris.

7 COM(2023) 62 final

8 Income inequality as measured by the Gini index is 30, compared to 41 in the US and 39.7 in China. The trends on overall income inequality are showing a steady decrease Social scoreboard indicators - European Pillar of Social Rights - Eurostat (europa.eu)

9 Legal obstacles in Member States to Single market rules, Policy Department for Economic, Scientific and Quality of Life Policies, Directorate-General for Internal Policies, European Parliament, November 2020

10 Communication: The Single Market at 30, COM(2023)162 final.

11 COM(2021) 713 final

12 Initiatives such as the VAT one-stop-shop for e-commerce, which applies since July 2021; the proposal for a European Single Access Point (ESAP) to improve public access to entities’ financial and sustainability information, under negotiation (COM(2021) 723 final) or the once-only technical system (OOTS) accessible through the EU’s Single Digital Gateway.

13 General government investment as % of total gross fixed capital formation. GDP and spending-Investment by sector – OECD Data.

14 If assessed based on flows (2021; Source: InvestEurope for the EU; the National Venture Capital Association for the US).

15 Eurogroup statement on the future of the Banking Union of 16 June 2022 - Consilium (europa.eu) Eurogroup statement on the future of the Banking Union of 16 June 2022 - Consilium (europa.eu)

16 COM/2020/591 final and COM/2020/592 final. For example, the Commission will propose an enabling framework for the potential issuance of a digital euro by the European Central Bank.

17 The Commission has already provided guidance on disclosure obligations, for instance in relation to Taxonomy, and will provide further guidance in relation to the Sustainable Finance Disclosure Regulation before mid-2023

18 Centaur or aspiring unicorns are designations for start-ups that have reached valuations of more than EUR 100 million. Unicorns are start-ups that reached a valuation of more than EUR 1 billion.

19 EU Space Strategy for Security and Defence JOIN(2023)9

20 COM(2023)161 final

21 Data from the Industrial R&D investment Scoreboard.

22 Science, research and innovation performance of the EU 2022.

23 Data from ESTAT.

24 Data from OECD.

25 For example, the productivity of companies investing in data-driven innovation and data analytics grows approximately 5-10% faster than that of companies not investing (OECD: Data driven innovation: big data for growth and well-being, 2015).

26 Energy prices, International Energy Agency (2022). In Q3 2022, electricity prices for industrial consumers were 192.59 USD/MWh compared to 94.22 USD/MWh in the US.

27 COM(2022) 230 final

28 COM(2023) 148 final and COM(2023) 147 final

29 Growth Within: A Circular Economy Vision For a Competitive Europe; McKinsey Centre for Business and Environment & Ellen Macarthur Foundation; June 2015

30 Circular economy - material flows - Statistics Explained (europa.eu); https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Circular_economy_-_material_flows

31 Data from Eurostat.

32 Data from Eurostat.

33 COM(2023)160.

34 COM(2020) 98 final . The Commission is engaging with stakeholders to define the priorities for defining such market-shaping rules which will be reviewed regularly to keep pace with technological evolution. Public consultation on New product priorities for Eco-design for Sustainable Products

35 ICT global market share by country 2022 | Statista

36 Data from Eurostat.

37 Thanks to the EuroHPC, the EU now counts 8 supercomputers in operation, 2 of which are among the top 10 most powerful supercomputers of the world.

38 Proposal for a COUNCIL REGULATION amending Regulation (EU) 2021/2085 establishing the Joint Undertakings under Horizon Europe, as regards the Chips Joint Undertaking. COM/2022/47 final.

39 Decision (EU) 2022/2481 of the European Parliament and of the Council of 14 December 2022 establishing the Digital Decade Policy Programme 2030, OJ L 323, 19.12.2022, p. 4–26.

40 The share of the population aged 25-34 who have successfully completed tertiary studies has increased from 32.2% in 2010 to 41.2% in 2021, while the overall share of early leavers from education and training fell in the EU by 3.5 percentage points between 2011 and 2021 to 9.7%. Source: Early leavers from education and training - Statistics Explained (europa.eu)

41 COM/2020/274 final

42 European Commission, European Competitiveness Report 2007.

43 COM(2023)165 final and COM(2023)160 final.

44 In this context, the EU will engage on digital trade rules with South Korea and Singapore, as well as seek cooperation on digital trade with ASEAN partners.

45 Following the announcement at the Ministerial Meeting of the EU-US Trade and Technology Council in December 2022.

46 For example: the Regulation (EU) 2018/1999 on the Governance of the Energy Union, which brought together energy and climate planning and simplified the monitoring of progress; the 2007 High-Level Group on Administrative Burden.

47 For example, the Fitness check of Reporting and Monitoring of EU Environmental Policy, SWD (2017) 230, which reviewed 180 reporting obligations in 60 pieces of legislation.

48 Through business or financial incentives.

49 European Administrative Space in the EU (ComPAct)

50The sustainable development framework, the digital economies and societies index, the social pillar, the innovation scoreboard and many more provide a more granular view on related developments in the EU.

51 Integration of goods and services| Single Market Scoreboard (europa.eu)

52 Transposition | Single Market Scoreboard (europa.eu)

53 Economic resilience | Single Market Scoreboard (europa.eu)

54 Access to finance | Single Market Scoreboard (europa.eu)

55 https://ec.europa.eu/economy_finance/ameco_dashboard

56 Database - Science, technology and innovation - Eurostat (europa.eu)

57 Patent applications to the European Patent Office by applicants' country of residence, default view in the Eurostat dataset

58 Statistics | Eurostat (europa.eu) Online data code: SDG_09_40

59 Statistics | Eurostat (europa.eu) Online data code : NRG_IND_REN

60 Band IC, consumption between 500 and 2000 MWh, default view in Eurostat dataset

61 Statistics | Eurostat (europa.eu) Online data code : NRG_PC_205

62 Statistics | Eurostat (europa.eu)

63 How digitalised are the EU’s enterprises? - Products Eurostat News - Eurostat (europa.eu)

64 Statistics | Eurostat (europa.eu) Online data code : ISOC_CICCE_USE. Size of the enterprise : 10 persons employed or more

65 Statistics | Eurostat (europa.eu) Online data code : ISOC_EB_BD. Size of the enterprise : 10 persons employed or more

66 Statistics | Eurostat (europa.eu) Online data code : ISOC_EB_AI. Size of the enterprise : 10 persons employed or more

67 This indicator will be implemented from 2022 onwards, with data available every two years

68 Circabc (europa.eu) DG EMPL data from the Adult Education Survey, excluding ‘guided on the job training’

69 Statistics | Eurostat (europa.eu) Employment and activity by sex and age - annual data. Online data code: LFSI_EMP_A.

70 Statistics | Eurostat (europa.eu) Employed ICT specialists, percentage of total employment. Online data code: ISOC_SKS_ITSPT

71 Statistics | Eurostat (europa.eu) Employed ICT specialists by sex. Online data code: ISOC_SKS_ITSPS

72 Estimates. Base for calculation: 189,7 M people employed in 2021 Employment - annual statistics - Statistics Explained (europa.eu)

73 ASMR 2023.pdf (europa.eu) Figure 1

74 World trade in goods and services - an overview - Statistics Explained (europa.eu)

75 Responsive administration and burden of regulation | Single Market Scoreboard (europa.eu)

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