FIGARO-REG 2017 10 sectors

Highlights:

* The EU’s commitment to reduce its reliance on fossil fuels affects the employment of certain economic activities, such as the coal

based industries and other upstream activities in EU territories. * Future policy interventions to counter-balance the negative effects of decarbonisation on employment need to ensure appropriate

alternatives in those regions that can be most potentially affected by the coal transition, either directly or indirectly. * At national level, in 2017, there were 430,000 jobs that were directly or indirectly associated to coal production and coal-fired power

plants in the EU, of which 46% were located in Poland, followed by Czechia and Romania. * At regional level, the Silesian region in Poland hosted close to 90,000 jobs associated to coal based activities, followed by the

Romanian South-West Oltenia and other regions in Czechia (North-West). * Our results identify those regions potentially most affected by ceasing coal based activities in the EU, also taking into account

upstream employment effects in other regions and industries. * Our results could help the design of the upcoming “Industrial Decarbonisation Accelerator Act” aiming to decarbonise European

industry, informing policy measures that could ensure fossil fuel use reduction, and the creation of new job opportunities in the

territories negatively affected by the transition.

In her political guidelines, President Von der Leyen emphasised the significance of “Clean Trade and Investment Partnerships” to en-hance competitiveness and decrease reliance on other world economic regions, while rein-forcing trade defence mechanisms.

Within this policy context, this policy brief aims to help prioritising trade policy actions by un-ravelling the EU vulnerabilities and dependen-cies at three levels: EU, national and territorial, with a high industry detail.

This brief is focused on the possibility of a change in US trade defence policy towards China in light of the forthcoming US elections, which may affect EU exports to the US with high Chinese value added content.

At EU level, China accounted for around 18-27% of the foreign value added incorporated in the EU exports to US of motor vehicles, ma-chinery and equipment and computer and electronics.

At national level, Germany and France alone cumulated more than half of the total Chinese value added content in the EU exports to US whereas other smaller Eastern European countries, such as Estonia or Hungary, showed high relative dependence levels.

At regional level, Stuttgart and Upper Bavaria (Germany), Ile-de-France (France), North Bra-bant (Netherlands) and the Southern, and Eastern and Midland regions (Ireland) ac-counted for half of the total Chinese value added content in EU exports to US.

Our findings can help informing EU trade de-fensive measures and prepare upcoming pref-erential trade agreements and investment partnerships to be more effective in the re-gions and industries that would be more im-pacted by US trade policy shifts towards pe-nalising the entrance of goods and services with high Chinese value added content.

The EU automotive industry has important upstream linkages that affect EU regions in a different way, depending on their position into the global value chain of the automotive industry. Therefore, policy measures addressing the EU automotive industry need to take into consideration upstream regions and upstream industries that may not be characterised by a strong automotive industry but instead supply other regions with components or innovative designs for automotive production. By using the EU Automotive Regions Alliance as a cluster of strong automotive regions in the EU, this policy brief shows the relevance of upstream interregional linkages with other regions and industries across EU Member States. On average, one third of the value added generated in the automotive industry of the Alliance regions (e.g. in Eastern European regions) is due to upstream linkages of other regions outside the Alliance.

Upstream linkages of the automotive industry in the Alliance regions generate, on average, 20% of the total value added of the automotive industry of other regions outside the Alliance (e.g. Central Slovakia, Madrid and Cantabria). The uniqueness of this analysis is that it provides policymakers a deeper look into the EU territorial interdependencies of a specific industry (i.e. automotive) beyond the standard geographical country-wise definition.