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 Dependencies: 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. An Operational Definition of Strategic Autonomy
11. The 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 responds to 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 intensifying great power competition. The report focuses on the economic sphere, particularly issues related to trade, global value chains, and raw material access concerning industry and production processes. It aims 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, clarifying that the "Open Strategic Autonomy" advocated by the EU is not a move towards self-sufficiency or protectionism. Instead, it seeks to enhance the EU's capacity to defend its 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 globalization patterns, and the dual green and digital transitions, the study points out that the trend of geopolitical-economic convergence is risking the "weaponization" of interdependence, forcing the EU to re-examine its external dependencies.

To quantitatively assess EU economic vulnerability, the report employs a set of core dependency indicators. Combined 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 findings reveal that while dependency appears manageable at the ecosystem level, there is significant EU reliance on non-EU countries at the strategic sector and product levels, particularly in areas like "manufacture of computer, electronic and optical products." 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 of "decoupling" or "de-risking," global value chains may become more "entangled" due to Western economies' efforts to reduce dependence on China, making indirect dependencies harder 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 in developing domestic resources (mining and recycling) and explores diversification strategies such as material substitution, improving resource efficiency, and securing supply through trade policy and international cooperation.

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

Finally, the report attempts to provide an operational decision-making framework for "strategic autonomy," emphasizing 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 trade system and geopolitical order. The report maps existing EU policy tools and initiatives and pointedly notes that industrial policies pursuing strategic autonomy may create tension with the Single Market's core principles of rules and competition, potentially even exacerbating 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 to EU decision-makers: First, the commitment to openness must be upheld while reducing external strategic 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 structural adjustments required to adapt to the green and digital transitions.