French president Nicolas Sarkozy has proposed a European law similar to the “Buy American Act” which would require governments to favour European-made products in their procurement, and said that without advances in that area, France would start applying the rule unilaterally. This idea isn’t new and, amusingly enough, it has always come from the socialists. Even in the UK, it is the trade unions that are calling for some sort of protectionism to save British manufacturing. But is this the right way forward?
As I have mentioned many times on this blog, it’s going to be hard to persuade the Tories (and part of the Liberal Democrats) to consider such an approach as it goes against free market ideologies. However, politicians are taking the matter seriously and we will probably end up having a polarised debate between the likes of Mr Cable, who plan to develop ‘horizontal policies’ to support all businesses, and those who believe government support should be minimal or non-existent. I don’t think continental-style industrial policy would do well in this country, Britain has historically been a flexible and open economy.
However, open and flexible doesn’t mean naive. As Mr Cable recognised last week, public sector spending does shape markets and influence supply chains. According to a recent study by the European Commission, the value of US procurement offered to foreign bidders is EUR34 billion and EUR22 billion for Japan, whereas EUR312 billion of EU public procurement is open to bidders from member countries of the WTO. This looks utterly unbalanced and should be tackled – albeit it won’t be easy as the EU is made of different countries that are converging culturally but competing economically. How should the European Commission go about addressing this issue? Should we restrict public procurement access to non-EU countries (ie. buy European) or lobby the rest of the world to open up their markets further? Also, how are we going to deal with the various national industrial policies within Europe? I’m curious to see if we will get any hints from the budget next week.
As creative industries like design and IT are inextricably bound up with modern manufacturing, any thinking around these themes ought to be holistic in nature. Intellect will make its own contribution to the debate by offering decision-makers and influencers an understanding of how electronics has changed and what future lies in this strategically critical “horizontal” sector.