No more euro-champions? The interaction of EU industrial and trade policies

Trade liberalization makes markets more contestable and so opens opportunities for firms: it also exposes domestic firms to more severe competition. Governments come under conflicting pressures to ensure foreign market access whilst preventing 'unfair competition from abroad in the domestic market. Liberalization under both the single market and the WTO has placed greater emphasis on innovation policy as a mechanism to encourage firm adjustment and raise competitiveness. These policies tend to be 'horizontal, economy-wide attempts to enhance competitiveness. However, some recent calls for returns to national or European champions are a reminder of the attractiveness of sector-specific policies in the face of international competitive pressures.