Draghi: "EU Faces Competitiveness Crisis... Annual New Investment of 1100 Trillion Needed"

[Image source=Yonhap News]

Former European Central Bank (ECB) President Mario Draghi emphasized on the 9th (local time) that the European Union's (EU) global competitiveness is facing an existential risk and urgently needs to transform its industrial strategy.

On the same day, Draghi officially presented the report titled "The Future of EU Competitiveness" in Brussels, Belgium, pointing out that new investments amounting to 750 billion to 800 billion euros (1,114 trillion to 1,188 trillion won) annually are required to compete with the United States and China. This corresponds to 4.4 to 4.7% of the EU's Gross Domestic Product (GDP).

Regarding the global expansion of protectionism, Draghi mentioned the need for a response. He stated, "In decarbonization and other areas, defensive trade measures may be accompanied to offset competition with companies receiving state support from outside the region."

Concerning the Carbon Border Adjustment Mechanism (CBAM), he pointed out the need for improvements, noting that companies outside the region might circumvent CBAM. CBAM is a system that calculates the estimated carbon emissions generated during the production process of six items, including steel, exported to the EU by companies outside the region and imposes a kind of tax. Currently, only a reporting obligation for carbon emissions is imposed during the transition period, and costs will be fully applied starting in 2026.

Draghi also called for the establishment of a new "EU Semiconductor Strategy." Proposals included joint support for the semiconductor sector through the EU budget, fast-track approval of new projects, and the establishment of an "EU Semiconductor Certification System" to promote joint and private bidding projects within the region. Strengthening EU-level semiconductor export control management and defending EU interests against third countries' export controls on semiconductor equipment and materials were also mentioned.

Draghi argued that to enhance competitiveness, comprehensive reforms must be carried out radically, including reforming the complex EU decision-making structure.

The report was prepared following an official request from Ursula von der Leyen, President of the European Commission, in her annual policy speech last September to study ways to strengthen competitiveness. Draghi is regarded as a leading financial and economic expert, known as "Super Mario" and the "Eurozone savior," for his bold large-scale monetary easing policies that helped overcome the Eurozone debt crisis during the European financial crisis (then 19 countries using the euro).

Some of the proposals made on this day are expected to be partially reflected in the policy formulation of the "von der Leyen 2nd term," which will commence after November.

This content was produced with the assistance of AI translation services.