BRUSSELS — Exactly a year after European Commission chief Ursula von der Leyen made a grand promise to protect critical technology and research from unfriendly powers, the EU still hasn’t come to grips with how to deal with its main strategic rival: China.
That puzzle is far from being solved, an internal document seen by POLITICO shows.
The bloc is still collectively scratching its head as to how to oil its internal machinery to move initiatives forward that aim to protect European innovations — in particular in four leading-edge technologies: advanced semiconductors, artificial intelligence, quantum technology and biotech.
Von der Leyen’s Economic Security Strategy seeks to thwart attempts by countries like China or Russia to beg, borrow or steal proprietary technology. Beijing, in particular, has a track record of imitating and developing Western technology and going on to dominate cutting-edge industries — from renewable energy to battery-powered cars.
“More can be done to keep the momentum going and enhance the EU’s approach to Economic Security, in particular when it comes to increasing coherence and coordination,” reads the document, which was discussed by EU ambassadors at a meeting on June 19.
The Economic Security Strategy, unveiled by von der Leyen in an ambitious speech 12 months ago, set out an agenda that focuses on managing risks to the resilience of supply chains; to critical infrastructure; around technology security and leakage; and of economic dependency and coercion.
Under it, the four sensitive technologies would be subject to measures such as export controls and screening of outbound investments.
Yet a major update in January was long on scenario planning, and short on concrete steps, raising concerns that the initiative would peter out amid concerns in national capitals that the EU executive was overreaching.
Europe’s real problem is not defending its intellectual property, but that it lags the United States and China in innovation — especially in the fields of advanced semiconductors and AI — lobby groups warn.
“A defensive strategy won’t win. We must ensure that technology companies, across the whole supply chain, can be born, scale and stay in Europe, supported by partnerships with like-minded countries,” tech lobby group Digital Europe and consultancy firm Frontier Economics said in a study by published on Thursday.
Hungary pushes back
Von der Leyen’s efforts are bound to take another blow as Hungary, which is eager to build friendly ties with China, will soon take over the reins of the Council of the EU — the intergovernmental branch of the bloc — for a six-month term. Budapest has already stressed its deep skepticism toward the package overall.
The EU executive still faces resistance from member countries over who should ultimately call the shots and the additional red tape it might impose on businesses, according to the document, which lays out the progress made over the last six months under the Belgian EU Presidency.
To assuage those concerns, the European Commission in late May suggested further investigating security risks around the four priority technologies, according to an earlier internal note seen by POLITICO.
EU countries “agreed with the proposed ‘deep-dives,’” the June 19 document reads. And although this extra step is unlikely to speed up the rollout, it would then help inform which data EU capitals should collect from stakeholders, such as which transactions should be screened, and over what time period.
Countries are also raising the alarm over a lack of clear definitions as well as the “protection of sensitive information” that would need to be shared with the EU executive, the document adds.
Among the initiatives of the strategy, screening outbound investments is the most delicate, as it will essentially stop EU countries making advanced microchips or AI technologies in unreliable locations such as China.
The document states that several countries “raised the issue of the governance of the Economic Security Strategy” in closed-door meetings on outbound investments, as well as the lack of available data to track flows of outbound investments from European countries and the lack of a clear legal basis.
And while work has been assigned at the technical level within the Council of the EU for the rollout of the other initiatives under the strategy, the monitoring of outbound investments “requires further reflection.”
This story has been updated.