Position paper | Economic security risks to Dutch and European competitiveness – Parliamentary expert testimony

On December 11, 2024, HCSS strategic analyst Irina Patrahau provided a briefing for the Dutch House of Representatives’ Standing Committee on Economic Affairs on “Increasing security and reducing dependencies”. Patrahau, an expert in the field of critical raw materials, updated the Parliament members on how Europe should deal with promoting (economic) security and countering strategic dependencies on third countries.

The roundtable was held in response to Mario Draghi’s highly influential report, “The future of European competitiveness”, addressing European competitiveness and the future of the European Union. In preparation for her parliamentary expert testimony, Irina Patrahau wrote a position paper, “Economic security risks to Dutch and European competitiveness”.

It was only with the Russian invasion of Ukraine that Europe really recognised the consequences of the growing tensions, Patrahau writes. Now, the dependencies on critical raw materials and advanced technologies are threatening to put the EU in a similar position.

Such crises are likely to increase in frequency due to geopolitical tensions, so the EU’s core task is to ensure that the next crisis will not find it as unprepared as last time. Tensions are growing due to the ongoing war on the European continent and its potential spill-over into EU territory, conflict in the Middle East, a new US administration that is likely to aggravate global trade tensions, and increasing instability in the European neighbourhood. In response, the EU has been introducing new legislation and strategies since 2022, including the Chips Act, the Critical Raw Materials Act, and the European Defence Industrial Strategy.

The hurdle remains effective implementation. Patrahau offers some policy recommendations:

1. Push for the effective implementation of policies in a coordinated European way rather than the development of additional regulations. In the field of raw materials, clean tech and advanced digital products, the EU has been successful in developing strong policies over the last few years. Now the focus should be placed on implementation and European coordination.
2. Leverage energy and defence investments to establish de-risked supply chains for vital sectors. Procurement is a key instrument that can support the development of domestic industrial capabilities, promote responsible sourcing in other countries, and increase supply chain transparency. Sectors that do not experience the same level of investments but that also need secure supply chains, like healthcare, can reap the benefits.
3. Support an assessment of each member state’s comparative advantage and build on it. Every EU member has its own industrial legacy and capabilities. By critically assessing their comparative advantage, domestic supply chains can be more rapidly and cost-effectively established.

The full video of the session can be rewatched below.

The Committee on Economic Affairs mainly deals with the topics for which the Minister of Economic Affairs is primarily responsible. The topics range from macroeconomic policy, European economic policy and innovation policy to small and medium-sized enterprises (SMEs), consumer policy and postal services.