Recent months have seen renewed debate about industrial policy in the European Union, particularly in relation to the public policies most likely to enhance the situation of the automobile sector.

Despite its traditional focus on competition policy, the European Union itself appears concerned to broaden its approach in relation to how it intervenes in industrial affairs. From this perspective, the CARS 21 initiative is a welcome and exemplary move.

CARS 21 (Competitive Automotive Regulatory System for the 21st Century) set out to examine how the different elements of European regulation that affect the industry could be developed and co-ordinated more coherently in order to favour the emergence of a competitive European automobile industry.

Eight areas of intervention by European policy makers were addressed, including intellectual property rights, taxation, the environment and road safety measures.

Having accepted that it was necessary to stop dealing with each of these issues separately, the Industry Directorate-General underlined the benefits to be gained from carefully managing the interrelated aspects of each. A more integrated approach was to be sought from all DGs in order to enhance the competitiveness of the European industry and to reduce the level of legal uncertainty faced by a number of different industry actors.

Intellectually, one can only welcome such an initiative. The intention to engage in in-depth analysis of questions such as 'what do European societies wish to obtain from this industry' and 'how does Europe intend to arm itself against the competition' is satisfying for GERPISA researchers. However, the report itself and, in particular, the conclusions drawn by the commission in its Impact Assessment Report of the 21 March 2007 are less convincing.While the right questions appear to be asked, there appears to be little urgency to reply to them. Wherever choices need to be made and political decisions taken, the Commission is silent and either postpones the decision or refers it to nations or firms.

There is, for example, a clear problem of incompatibility between the objective of improving the passive security of vehicles and that of reducing emissions. A genuine move to introduce affordable vehicles that are less damaging to the environment would require lifting the requirements on passive security that are leading to heavier and heavier cars. Clearly, a choice needs to be made.

Instead of recognising this and defending the decision taken, the Commission appears to consider that it is feasible to continue pursuing both objectives simultaneously and that the problems will be resolved by technical progress. This position exemplifies what is missing from European policy and, how far removed it is from the French saying that "governing means choosing" (gouverner, c'est choisir). The European Union may be able to deal with the on-going issues linked to the automobile sector but it does not appear capable of managing a policy to develop the European automobile industry.