New EU industrial strategy: Single Market is key to economic recovery

On Wednesday, 5 May, the European Commission put forward its revised industrial strategy, responding to the devastating impact of the COVID-19 crisis and the urgency to tackle the digital and green transitions. It outlines how the EU plans to strengthen the resilience and competitiveness of the Single Market in the global economy.

News
4 May 2021
New EU industrial strategy: Single Market is key to economic recovery

As the voice of large investors in the EU, the American Chamber of Commerce to the EU (AmCham EU) fully supports an approach focused on advancing the Single Market agenda. It remains the primary driver of foreign direct investment into the European economy. However, this strategy will only be successful if both the Commission and Member States can work together to overcome its fragmentation. Inconsistent implementation and lack of enforcement continue to prevent the Single Market from functioning properly.

As the EU looks toward economic recovery following the crisis, the focus should now turn toward the implementation of the national recovery and resilience plans. While more Member States still have to submit their plans, it is critical for the process to pick up speed and ensure timely access to the funds. Incentivising public and private investment in cutting-edge technologies is key to enabling sustainable recovery and long-term growth.

The strategy provides an outward-looking definition of the concept of ‘open strategic autonomy’. It underlines the importance of close alliances with like-minded partners, such as the United States, to address common issues. Both transatlantic and global cooperation will be critical to the success of the EU’s industrial strategy, in particular when it comes to defining the future rules and standards of the global economy. AmCham EU stands ready to contribute actively to these efforts.

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The reform of the Union Customs Code changes who is treated as the ‘importer’ when a non-EU company uses an indirect customs representative. That creates a problem under the EU VAT Directive, which links import VAT deduction to being identified as the importer or consignee. In practice, the non-EU company may no longer meet that requirement, while the customs representative may not qualify for the deduction either.

That could leave import VAT irrecoverable and create uncertainty for businesses using established import models. The Commission should ensure that the non-EU principal can still be identified in customs data for VAT purposes and fix the mismatch between the UCC and the VAT Directive.

Learn more about what changes are needed to keep import VAT deductibility workable under the new customs framework.

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Gold-plating in practice

"Gold-plating" of EU legislation has become a structural challenge for companies operating across the Single Market. While Member States are often permitted to introduce additional national measures when implementing EU law, these divergences frequently create fragmented compliance requirements, administrative burdens and increased costs for businesses.

Drawing on examples from AmCham EU member companies across digital policy, cybersecurity, data protection, telecommunications, environmental regulation, consumer protection, tax transparency and labour law, the paper shows how national additions to EU rules can result in parallel compliance systems, duplicate reporting obligations, country-specific product adaptations and barriers to cross-border operations.

The paper highlights four key findings:

  • Divergence between Member States is often a bigger cost driver than any single regulatory requirement.

  • Fragmentation extends beyond directive transposition and also arises through opening clauses, national guidance, administrative practices and regional measures.

  • Minimum-harmonisation legislation can still create significant Single Market fragmentation.

  • Gold-plating occurs at both national and sub-national levels.

The European Commission should address these issues through greater consistency in implementation, increased transparency around national additions, reduced duplication in reporting and registration requirements, stronger implementation dialogue and the use of Single Market enforcement tools where appropriate. The objective is not to remove legitimate national discretion, but to prevent unnecessary regulatory barriers within the Single Market.

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Europe in a new era of global competition

On Tuesday, 22 September, AmCham EU hosted Dragoș Tudorache, Member of the Cabinet of Executive Vice-President Stéphane Séjourné, European Commission, for a fireside chat. Moderated by Malte Lohan, CEO, AmCham EU, the conversation explored the growing role of economic security in Europe’s trade agenda and external relations. The exchange examined how this shift is shaping the EU’s engagement with trading partners and its position globally. Attention also turned to the choices facing Europe in a changing geo-strategic landscape, including how to reinforce resilience and strengthen competitiveness.

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