David Pappie - Contribution to Workshop

FRANCE STRATÉGIE & OECD WORKSHOP ON NEW INDUSTRIAL POLICY TOOLS Paris, 17 October 2022

Contribution to Workshop on “New Industrial Policy Tools to Support European Economic Convergence” David Pappie Director of Top Sectors and Industrial Policy; Ministry of Economic Affairs and Climate, the Netherlands

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Introduction Many thanks to OECD and France Stratégie for organizing this event. It is an excellent time to have so many great minds and key players together to reflect on European industrial policy. I would like to share briefly some insights in the Dutch journey regarding industrial policy. And some ideas on how we should develop the European and international industrial policy.

The paradigm shift in the Netherlands regarding industrial policy In a market-oriented country as the Netherlands, industrial policy has had a bad name for decades.

Nowadays this is quite different. We’re “doing” industrial policy again. In the sense of directional industrial policy that is aimed at development of specific sectors and technologies. Dutch MPs now have the books of Mazzucato by their bedside.

Broader trends call for governments to take more control of the transitions to sustainability, as the markets alone will not deliver, and an awareness of vulnerability of global value chains.

A major signal in Dutch industrial policy strategy communication this year: target of 10-15% of GDP for industrial sector. R&D expenditure as part of GDP we aim to bring to 3%.

The Ukraine/energy crisis has recently added a new dimension to choosing: how far should any state support go and to what sectors? We are still working on this.

What we are doing Real industrial policy means we have come to terms with intervening in the structure of the economy. And with making choices.

Core elements of our strategic and green industrial policy are: •

The government invests EUR 20 bn in grants in five years in targeted R&D projects and strengthening the knowledge base. This done through the National Growth Fund. Large tickets: e.g. around EUR 500 mln each invested in quantum and photonics R&D.

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The (new) government has set aside EUR 3 bn for making tailor-made agreements with heavy industry companies to accelerate their transition to green technology. This applies to large emitters in industries such as steel and chemicals.

We maintain a “Dutch” approach, focused on cooperation with stakeholders. We do make choices as a government, but with much attention for bottom-up proposals, PPPs, transparency of decisions, and compliance with state aid rules.

We have become committed to European industrial policy. In the past we were reluctant. Only this Summer, NL invested EUR 1.3 bn in IPCEI hydrogen.

Questions and ideas We support the strategic autonomy ambitions of the EU. But we need to be realistic. The EU is projected to have less than 10% of world GDP in a few decades. We cannot become world champions in everything.

Our aim should be to deal strategically with interdependence, not try to end it. We need to strive for control points in some strategic value chains. The aim is mutual interdependence. So that we can safely depend

For discussion – the remarks in this text do not necessarily represent the official views of the Netherlands

|3 on others. The same holds for example for hydrogen. We foresee that the EU will need to import massive quantities. The aim is not autarky.

This approach we should translate into policy instruments: •

IPCEI is a major policy instrument. We support it and participate: hydrogen, microelectronics, cloud and health IPCEIs. Still, it also carries risks for the internal level playing field. Need to make it more transparent, less cumbersome, and use it with measure.

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We also need to look at structures to increase the cooperation with like-minded countries beyond the EU. The international energy agency could be a model. Why not work together on other strategic products as well as energy?

That said, as a EU we are still not matching China and U.S. public and private investments in cutting-edge technology. Even in the technologies that we prioritize.

Finally, we need more contributions of industrial policy scholars in the strategic autonomy debate. I am therefore particularly interested in the views of the academics present Today.

Thank you for your attention.

For discussion – the remarks in this text do not necessarily represent the official views of the Netherlands