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Forum

The New Industrial Strategy for Europe

When President Ursula von der Leyen took the reins of the European Commission in 2019, one of her first initiatives was to propose a new growth strategy centred on the idea of “competitive sustainability”. This was followed by the announcement of the new European Green Deal and then the adoption of an industrial strategy that would promote EU competitiveness. In April 2021, one year after the first Communication on the industrial policy, in a year dominated by the outbreak of the coronavirus pandemic, the European Commission published an update of the Communication. It reaffirmed its commitment to protecting the Single Market, promoting competitiveness and productivity and fostering resilience in European industry. But the document seems to fall short of the ambition set out in the first announcement. In order to contribute to the shaping of the final EU industrial strategy, the CEPS Task Force on the New Industrial Strategy for Europe attempts to lay out a few principles on how Europe could lead the way to a new industrial policy. This Forum provides an overview of a number of the Task Force’s recommendations that will help shape the new Industrial Strategy for Europe.

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The Great COVID-19 Divergence

The COVID-19 pandemic has led to the biggest global recession since the Second World War. Forecasts show the EU underperforming economically relative to the US and China during 2019-2023. Southern European countries have been particularly strongly affected. Some sectors have been hit harder than others. Inequality could rise. The pandemic may lead to lasting changes in the economy. Policymakers must act to prevent lasting divergence within the EU and scarring due to the fallout from the pandemic, write Grégory Claeys, Zsolt Darvas, Maria Demertzis and Guntram Wolff. The first priority is tackling the global health emergency. Second, the article warns against premature fiscal tightening but suggests additional short-term support to prevent scarring. Third, the article warns against protectionism and advocates for reforms that boost productivity growth further.

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Letter from America

U.S. Support for a WTO Waiver of COVID-19 Intellectual Property

The announcement that the U.S. would support the waiver of intellectual property protections on COVID-19 vaccines represents a reversal of the strong stance that the U.S. has taken on patents and other IP issues since at least the Reagan Administration. While U.S. support for a waiver is an important gesture toward global cooperation in a time of crisis, the waiver comes with as many challenges as it does opportunities. Jorge L. Contreras breaks down the reasons for the Biden Administration's support and explains the hurdles that still need to be addressed.

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Editorial

Europe’s Vaccine Paradox: From Supply to Demand Issues

The collective action on vaccine procurement in the EU has attracted much criticism, but not necessarily for the right reasons, write Annette Bongardt and Francisco Torres. While the EU's collaborative action to supply the member states has weathered storms and come out on track, issues have arisen on the demand side that have threatened an essential element in the overarching efficacy of EU institutions: trust.

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Debt Relief as a Last Resort for the Lender of Last Resort?

The Pandemic Emergency Purchase Programme, which is designed as a monetary policy instrument, is regarded by some as a violation of the prohibition of monetary financing. Arne Hansen and Dirk Meyer analyse an alternative strategy, namely debt relief by the European System of Central Banks through an EU debt agency. Such a scheme would be possible without amending the EU treaties and would avoid negative equity at the central banks. Under what circumstances would this approach be suitable and proportionate?

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