European Economic and Social Committee (EESC) Research Report: Pathways and Means for the EU to Achieve Genuine Strategic Autonomy in the Economic Sphere

Key Chapter Title List

1. Executive Summary
2. Introduction
3. The EU in a Global Context
4. Open Strategic Autonomy as a Concept
5. How Vulnerable is the EU Economy?
6. 1 EU Import Dependence: Ecosystem and Sectoral Approach
7. 2 Strategic Value Chains
8. 3 Access to Critical Raw Materials
9. Can the Euro Serve EU Strategic Autonomy?
10. Operationalizing Strategic Autonomy
11. EU Policy Landscape
12. Conclusions and Policy Considerations

Document Introduction

This report was commissioned by the Employers' Group of the European Economic and Social Committee (EESC) and completed by the Centre for European Policy Studies (CEPS) in 2023. The research aims to address the EU's urgent need to enhance its economic resilience and strategic autonomy in the context of the COVID-19 pandemic, the war in Ukraine, and intensified great power competition. The report focuses on the economic sphere, particularly issues related to trade, global value chains, and raw material access in industry and production processes. It seeks to clarify the concept of open strategic autonomy, assess EU vulnerabilities, and provide evidence-based analysis for policymaking.

The report first systematically reviews the evolution of the strategic autonomy concept from defense and security to the economic domain. It clarifies that the open strategic autonomy advocated by the EU is not about moving towards self-sufficiency or protectionism, but rather about enhancing the ability to defend its own interests and values, make autonomous decisions, and shape the external environment while maintaining openness and cooperation. Placing the EU within the macro context of Sino-US strategic competition, shifts in the form of globalization, and the dual green and digital transitions, the study points out that the trend of geopolitical-economic integration is increasing the risk of interdependence being weaponized, forcing the EU to re-examine its external dependencies.

To quantitatively assess EU economic vulnerability, the report employs a set of core dependency indicators. Combining these with the sensitive industrial ecosystems defined by the European Commission (such as digital, electronics, renewable energy, health, aerospace and defense), it conducts a detailed sectoral and product-level analysis of EU import dependency, supply concentration, and import substitutability. The research finds that while dependency appears manageable at the ecosystem level, significant dependencies on non-EU countries exist at the strategic sector and product levels, particularly in areas like computer, electronic, and optical product manufacturing. Furthermore, many critical supplies originate from countries classified as 'not free'. China, as a key EU trading partner, holds a dominant position in the supply of consumer electronics, strategic components (e.g., chips, permanent magnets), and various critical raw materials, constituting a prominent risk point in EU supply chains.

The report further examines the EU's exposure within global value chains, noting that the COVID-19 pandemic and the war in Ukraine have highlighted the fragility of complex production networks. Despite discussions on decoupling or de-risking, global value chains may become more entangled due to Western economies' efforts to reduce dependence on China, making indirect dependencies more difficult to identify. Regarding critical raw materials, the EU's dual transition is highly dependent on a range of strategic raw materials, and its supply chains are highly concentrated, with a particularly heavy reliance on China. The report assesses the potential and challenges for the EU to develop domestic resources (mining and recycling) and explores diversification strategies such as material substitution, improving resource efficiency, and securing supply through trade policies and international cooperation.

Additionally, the report explores the potential role of the euro in enhancing EU strategic autonomy. It points out that although the euro is the second-largest international currency, its potential is limited and largely depends on developments in non-monetary policy areas such as the Capital Markets Union and the Banking Union. The dominant role of the US dollar in international trade invoicing and payment systems, along with progress in the internationalization of the Renminbi, constrains the euro's ability to play a key role in the short term, even though a digital euro might contribute to enhancing the resilience of the retail payments market.

Finally, the report attempts to provide an operational decision-making framework for strategic autonomy. It emphasizes the need for comprehensive judgment based on two dimensions: the nature and degree of dependence on non-EU countries, and the evolution of the global trading system and geopolitical order. The report maps out existing EU policy tools and initiatives and pointedly notes that industrial policies pursuing strategic autonomy may create tension with the core principles of the single market based on rules and competition, and could even exacerbate development gaps among member states. This stems from the EU's lack of a truly unified and effective industrial policy.

Based on comprehensive analysis, the report presents three core policy messages for EU decision-makers: First, the commitment to openness must be upheld while reducing strategic external dependencies. Second, de-risking from China will be a complex and long-term process; complete decoupling in the short term is both costly and unrealistic. Third, to successfully pursue strategic autonomy, a thorough reassessment of EU industrial policy is necessary, exploring tools that go beyond single market principles, and seriously evaluating the industrial restructuring required to adapt to the green and digital transitions.