Global value chains (GVCs) represent a foundational element of contemporary industrial organization and international competitiveness. For the European Union (EU), the ability to understand and strategically position itself within these networks is essential to advancing its core objectives of resilience, competitiveness, and strategic autonomy – principles now embedded in the EU’s new Competitiveness Compass.[1]

Unlike traditional trade, GVCs focus on the exchange of value-added (VA) for production purposes rather than the delivery of final goods. They outline the movement of intermediate inputs that traverse borders through a sequence of activities and tasks implemented in different economies, contributing to the creation of products that are, in effect, “made in the world.”

This newsletter presents selected empirical insights into the patterns of VA flows to and from the EU as a whole, with particular emphasis on the roles of the United States (US) and China as key trade partners and participants in EU value chains. The analysis draws on the GRinGVCs database[2], a novel dataset offering metrics and indicators that enable the mapping and monitoring of VA trade—the core dimension of GVCs—at both the sectoral level (2-digit NACE Rev.2 classification) and the country level, covering 76 global economies, including all 27 EU Member States.

To illustrate these dynamics, we present two graphs in Figure 1, which depict EU inward (import) and outward (export) VA flows for the years 1995, 2008, and 2020. These flows are depicted as shares of the overall VA imports/exports in each year of reference, and encompass both intra-EU and extra-EU production networks—the former reflecting trade within the Single Market, and the latter capturing linkages with the US and China. The graphs distinguish between simple activities, defined as direct trade transactions where VA crosses borders for production purposes only one time, and complex activities, which involve VA crossing borders multiple times through successive production stages. [3]

(a) EU imports of VA

(b) EU imports of VA

Figure 1: Value-added (VA) imports (panel a) and exports (panel b) from and to the EU in 1995, 2008, and 2020. Trade partners include the EU (Single Market trade), the USA and China. Shares correspond to overall VA imports/exports per mode (simple and complex) of each economy over the three reference years.

Insights for the EU: Internal Integration as a Structural Asset

The EU is characterized by a high degree of internal interdependence. Intra-EU flows of VA consistently account for 50–60% of total transactions, underscoring the Single Market’s role as a deeply integrated production space. Major economies such as Germany, France, and Italy function as pivotal nodes, while smaller member states are also strongly embedded in these networks. This dense web of interconnections enhances the Union’s resilience but also raises questions about the balance between internal reliance and external diversification. The trend evolution depicted from 1995 to 2020 suggests a gradual outward orientation (i.e., lower intra-EU shares), reflecting the EU’s ambition to strengthen its global footprint while preserving the Single Market as its foundation.

Insights for the US: Diversification and Limited EU Dependence

The United States maintains a diversified portfolio of production linkages. Approximately one quarter of US value added flows involve the EU, indicating a moderate but stable level of interdependence. Stronger linkages exist with Canada and Mexico, as well as with Japan and China. A modest decline in EU-related flows in 2020 is consistent with US policy efforts to reduce external dependencies and reinforce domestic production capacity. For the EU, this underlines the importance of positioning itself as a reliable partner while recognizing the limits of its role within US-centered production networks.

Insights for China: Regional Anchoring and Productive Autonomy

China’s integration with the EU remains comparatively limited, with less than 20% of VA flows linked to the EU. Instead, China’s production system is anchored in East Asia, with significant interdependencies involving Japan, Korea, and Taiwan. At the same time, China demonstrates a strong orientation toward domestic self-sufficiency, with a substantial share of value added produced and consumed internally. This dual strategy of regional integration and productive autonomy presents both opportunities and constraints for the EU in deepening its engagement with China.

The evidence highlights the EU’s distinctive position: a highly integrated internal market that provides resilience and scale, but one that must also adapt to an evolving global environment. These messages are also transmitted through the Commission’s strategic documents, where strategic autonomy and the role of the EU has been central to the overall discussion regarding the rejuvenation of the Union’s competitiveness. To safeguard competitiveness and reduce vulnerabilities, the EU should:

• Strengthen European value chains in critical sectors such as semiconductors, clean technologies, and health industries.
• Promote cross-border industrial alliances that leverage the Single Market’s scale while fostering innovation capacity.
• Advance diversification strategies to reduce over-reliance on any single external partner.

Strategic autonomy should be understood not as isolation, but as the capacity to act independently and effectively within a multipolar global economy. In this context, the EU’s role is pivotal as a leader in strategic and emerging value chains – both in competition and in cooperation with its major global partners. The Single Market remains the cornerstone of this ambition, providing the EU with the depth of integration and the scale necessary to materialize its global competitiveness aspirations.

[1] https://commission.europa.eu/topics/eu-competitiveness/competitiveness-compass_en

[2] The GRinGVCs database is a novel dataset developed within the framework of the project “GRinGVCs: Leveraging Global Value Chains for Innovation and Competitiveness – The Case of Greece”. The project was funded under Greece’s Recovery and Resilience Facility (RRF), as part of the “Greece 2.0” programme, through the Hellenic Foundation for Research and Innovation (HFRI/ΕΛΙΔΕΚ) (Project ID: HFRI-016667). It was implemented by the Laboratory of Industrial and Energy Economics (LIEE) at the National Technical University of Athens (NTUA), which serves as the Greek institutional member of the PromethEUs network. For more information and the database, see here.

[3] For example, in the case of EU complex exports to the US, VA originated from the EU has passed through multiple stages before reaching the US economy as a final production and consumption destination. On the other hand, EU complex imports from China imply that Chinese VA reached the EU as final destination after multiple preceding production stages.

A cautionary tale of how administrative inertia can derail public investment

Public infrastructure procurement reveals whether governments can convert ambition into results. Portugal’s stalled white-zones broadband tender, now in its third year without deployment, illustrates how well-intentioned programs can falter through institutional shortcomings rather than technical complexity.

A sound policy concept, on paper

In 2023, Portugal initiated a public tender to deploy fibre-optic infrastructure to over 400,000 underserved premises (TEK, 2023)[1]. The initiative targeted white zones, territories where market economics do not justify private investment without public subsidy, with an initial budget of €425 million. The funding sources combined EU structural funds with private sector co-investment from the winners of the tender, as first reported in November 2023 (Jornal de Negócios, 2023a)[2]. By December 2023, it was further indicated that the Government would complement the EU funds with national financing (XXXIII Government of Portugal, 2023)[3].

Despite Portugal’s strong overall fibre deployment, with 92.3% national coverage, rural areas lag significantly behind. As of mid-2023, only 68.7% of rural households had access to fibre-to-the-premises (FTTP), leaving nearly one-third of rural households without fibre connectivity (Omdia, 2024)[4]. This 23.6 percentage-point gap between urban and rural coverage underscored the need for public intervention to address market failure in low-density areas.

The policy rationale was sound: market failures in low-density areas justify public intervention to close connectivity gaps that feed regional inequality. The stated timeline envisioned 35 percent coverage by 2024-2025 and complete deployment by 2026-2027 (Dinheiro Vivo, 2023)[5].

When governance meets Brussels

In practice, the process stumbled early on. ANACOM published its white zones mapping in mid-2022, establishing the technical foundation for procurement (ANACOM, 2023)[6]. The tender process, launched by CCDR – Commission for Cohesion and Regional Development, immediately encountered obstacles during European Commission (EC) negotiations over state aid clearance (TEK, 2023)[7]. Minister Ana Abrunhosa described “almost a year of informal negotiations with the European Commission” and characterized the process as “an enormous bureaucratic burden” (RTP Notícias, 2023)[8]. The government revised launch targets from late 2022 to Q1 2023, which passed without tender publication (TEK, 2024)[9]. Only in November 2023 did the Council of Ministers approve the tender launch, which was followed by the official ceremony occurring in December 2023 (XXXIII Government of Portugal, 2023)[10].

Prime Minister António Costa described EC requirements as “an invitation to do nothing” while highlighting Portugal as first to complete premise-by-premise geocoding under the new regulatory framework (Jornal de Negócios, 2023b)[11]. According to the government’s official communication,

“António Costa sublinhou a dificuldade dos requisitos exigidos pela Comissão Europeia – nomeadamente a necessidade de referenciação da rede de fibra ótica casa a casa – , antes de destacar que Portugal foi o primeiro país da União Europeia a “conseguir realizar este trabalho”, pela mão do regulador do setor, a ANACOM.” (XXXIII Government of Portugal, 2023).[12]

[António Costa underlined the difficulty of the requirements demanded by the European Commission – namely the need for referencing of the fibre optic network house by house – , before highlighting that Portugal was the first country of the European Union to “manage to carry out this work”, through the sector’s regulator, ANACOM.]

Breakdown and drift

In 2024, the project faced major setbacks when errors in the tender documentation required corrections and the evaluation jury resigned (TEK, 2024)[13]. The government provided no official explanation for either fact (ECO, 2024)[14]. A replacement jury was appointed and, in July 2024, the expenditure of the white-zones tender was reduced, being reported as a public and private investment amounting to € 350 million. The new government described this as “reprogramming and rescheduling of expenditure” but offered no detailed explanation of whether this reflected scope reduction, specification changes, or funding-ratio adjustments (i online, 2024). [15]

By October 2024, three companies had submitted proposals (Público, 2024)[16]. A year later, no official adjudication had been announced, and no ground had been broken. The tender, in effect, entered administrative limbo.

What the failure reveals

The white-zones case exposes the absence of transparency: unexplained jury resignations, opaque budget adjustments and missing status updates erode accountability.

Portugal’s difficulty is not technological. The country has competent agencies, skilled engineers and adequate funds. What it lacks is a governance framework that insulates long-term projects from bureaucratic churn. Publishing procurement decisions in full would help identify the root causes of delays and administrative bottlenecks. And this transparency would enable testing of alternative delivery models to protect against administrative paralysis and ensure greater accountability.

Elsewhere, similar geographies tell a different story. Spain successfully rolled out subsidised rural broadband under comparable EU frameworks through its PEBA-NGA programme (European Commission, 2024)[17]. The programme was managed by the Secretary of State for Telecommunications, within the Ministry of Economic Affairs and Digital Transformation, achieving an increase in rural fibre-to-the-home coverage from only 11% in 2013 to 80% in 2023 (Lynthia, 2025[18]; Onivia and NAE, 2024[19]). Its success underscores that the obstacle in Portugal lies not in technology or funding, but in execution capacity.

After three years and €425 million committed (later revised to €350 million), without connecting a single household, the white-zones programme exposes a harsh truth: institutional dysfunction kills infrastructure projects faster than any funding shortfall or technical obstacle.

[1] TEK, 2023. Governo aprova lançamento do concurso público para fibra ótica que vai chegar a zonas brancas. https://tek.sapo.pt/noticias/telecomunicacoes/artigos/governo-aprova-lancamento-do-concurso-publico-para-fibra-otica-que-vai-chegar-a-zonas-brancas

[2] Jornal de Negócios, 2023a. Governo aprova concurso público internacional para instalar fibra ótica no interior. https://www.jornaldenegocios.pt/empresas/telecomunicacoes/detalhe/governo-aprova-concurso-publico-internacional-para-instalar-fibra-otica-no-interior

[3] XXXIII Government of Portugal, 2023. Está aberto o concurso para levar a fibra ótica a todo o país. https://www.portugal.gov.pt/pt/gc23/comunicacao/noticia?i=esta-aberto-o-concurso-para-levar-a-fibra-otica-a-todo-o-pais

[4] Omdia. (2024). Broadband Coverage in Europe 2023: Final Report. Report prepared for the European Commission. June 6, 2024.

[5] Dinheiro Vivo, 2023. Internet: concurso para a cobertura das ‘zonas brancas’ é anunciado e traz mais coesão social. https://dinheirovivo.dn.pt/internet-concurso-para-a-cobertura-das-zonas-brancas-e-anunciado-e-traz-mais-coesao-social-17488197.html

[6] ANACOM, 2023. Concurso para a cobertura de fibra ótica nas zonas brancas. https://anacom.pt/render.jsp?contentId=1751064

[7] TEK, 2023. Governo aprova lançamento do concurso público para fibra ótica que vai chegar a zonas brancas. https://tek.sapo.pt/noticias/telecomunicacoes/artigos/governo-aprova-lancamento-do-concurso-publico-para-fibra-otica-que-vai-chegar-a-zonas-brancas

[8] RTP Notícias, 2023. Concurso público internacional permitirá levar fibra ótica às ‘zonas brancas’. https://www.rtp.pt/noticias/economia/concurso-publico-internacional-permitira-levar-fibra-otica-as-zonas-brancas_n1519059

[9] TEK, 2024. Concurso das zonas brancas deve estar decidido até final do ano para levar Internet ao interior de Portugal https://tek.sapo.pt/noticias/telecomunicacoes/artigos/concurso-das-zonas-brancas-deve-estar-decidido-ate-final-do-ano-para-levar-internet-ao-interior-de-portugal

[10]XXXIII Government of Portugal, 2023. Está aberto o concurso para levar a fibra ótica a todo o país. https://www.portugal.gov.pt/pt/gc23/comunicacao/noticia?i=esta-aberto-o-concurso-para-levar-a-fibra-otica-a-todo-o-pais

[11] Jornal de Negócios, 2023b. Requisitos de Bruxelas para concurso das zonas brancas ‘são um convite a que nada se faça’, diz Costa. https://www.jornaldenegocios.pt/empresas/telecomunicacoes/detalhe/requisitos-de-bruxelas-para-concurso-das-zonas-brancas-sao-um-convite-a-que-nada-se-faca-diz-costa

[12] XXXIII Government of Portugal, 2023. Está aberto o concurso para levar a fibra ótica a todo o país. https://www.portugal.gov.pt/pt/gc23/comunicacao/noticia?i=esta-aberto-o-concurso-para-levar-a-fibra-otica-a-todo-o-pais

[13] Tek Notícias, 2024. Concurso das zonas brancas deve estar decidido até final do ano para levar Internet ao interior de Portugal. https://tek.sapo.pt/noticias/telecomunicacoes/artigos/concurso-das-zonas-brancas-deve-estar-decidido-ate-final-do-ano-para-levar-internet-ao-interior-de-portugal

[14] ECO, 2024. Renúncia do júri voltou a atrasar concurso para instalar fibra ótica no interior. https://eco.sapo.pt/2024/07/15/renuncia-do-juri-voltou-a-atrasar-concurso-para-instalar-fibra-otica-no-interior/

[15] i online, 2024. Governo aprova reprogramação da despesa do concurso para a cobertura das zonas sem internet. https://ionline.sapo.pt/2024/07/11/governo-aprova-reprogramacao-da-despesa-do-concurso-para-a-cobertura-das-zonas-sem-internet/

[16] Público, 2024. Espanhola Avatel disputa concurso de áreas brancas com Fastfiber e Dstelecom. https://www.publico.pt/2024/10/19/economia/noticia/espanhola-avatel-disputa-concurso-areas-brancas-fastfiber-dstelecom-2108421

[17] European Commission, 2024. Digital Connectivity in Spain. https://digital-strategy.ec.europa.eu/en/policies/digital-connectivity-spain

[18] Lyntia, 2025. PEBA-NGA Will Position Spain as the Country with the Most Extensive Fibre Optic Network in the Whole of Europe. https://www.lyntia.com/en/news/peba-nga-will-position-spain-as-the-country-with-the-most-extensive-fibre-optic-network-in-the-whole-of-europe/

[19] Onivia & NAE, 2024. Closing the Digital Gap: Spain’s FTTH Wholesale Market, https://onivia.net/wp-content/uploads/2024/10/221024-closing-the-digital-gap-onivia-nae.pdf

On 24 June 2025, the Institute of Public Policy – Lisbon (IPP), in cooperation with the PromethEUs network and with the support of Google, hosted a closed-door workshop entitled “Simplify to Compete: Rethinking EU Regulation for a Digital Future”. The event took place at ISEG – Lisbon School of Economics & Management and brought together a select group of European policymakers, researchers, and public policy experts to examine the role of regulatory simplification in fostering innovation, digital transformation, and economic competitiveness across the European Union.

This workshop forms part of an ongoing series of policy dialogues coordinated by PromethEUs—a network of Southern European think tanks dedicated to promoting digital transformation and EU integration from a competitiveness perspective. The Lisbon event preceded the formal launch of the associated policy report, which will be presented at the European Parliament in Brussels on 2 July 2025.

Framing the Debate: Why Simplification Matters

The workshop responded to a growing consensus within European institutions that regulatory complexity may be undermining the Union’s ability to respond effectively to fast-paced technological change, global competition, and strategic industrial challenges. As such, simplification is no longer viewed solely as an administrative goal, but as a strategic imperative tied to Europe’s competitiveness and digital sovereignty.

Opening remarks from the IPP and ISEG leadership framed the discussion around two central questions:

• How can the EU regulatory environment be made more coherent and responsive to digital innovation?
• What institutional, legal, and political tools can be leveraged to reduce fragmentation and promote investment?

Panel I – Presenting the Report: Four Pillars of Reform

The first panel of the workshop was dedicated to the presentation of the draft policy report, which comprises four thematic chapters:

1. Streamlining Digital Regulation in the EU

Stefano da Empoli (I-Com, Italy)examined recent efforts to simplify EU legislation, such as the “one-in, one-out” principle and omnibus simplification packages. He placed emphasis  on the need for regulatory interoperability across Member States and the risks of asymmetrical regulatory burdens between small and large firms and underlined that simplification must not be confused with deregulation, and that clarity, coherence, and adaptability are the true goals.

2. Lessons from Portugal’s SIMPLEX Programme

Steffen Hoernig (IPP and Nova SBE, Portugal) presented insights from Portugal’s acclaimed SIMPLEX programme, a long-standing administrative modernisation initiative. He highlighted five lessons that could inform future EU-wide initiatives, including the proposed “28th legal regime”:

• Avoid digitalising existing complexity;
• Align legal simplification with digital infrastructure;
• Engage stakeholders through bottom-up consultation;
• Ensure legal adaptability through feedback loops;
• Evaluate implementation and outcomes systematically.

SIMPLEX was showcased as a case of political continuity, effective coordination, and stakeholder engagement—critical elements in making regulatory reform sustainable.

3. Artificial Intelligence and Europe’s Digital Strategy

Darío García de Viedma (Royal Elcano Institute, Spain)  examined the multi-layered approach the EU has taken towards AI: from regulation (AI Act), to coordination (national plans), institutionalisation (European AI Office), and competitiveness (AI investment strategy). He diagnosed the “southern asymmetry” in venture capital investment across Europe, especially in countries such as Portugal, Greece, and Spain, and proposed measures to bridge the gap between public R&D support and private sector scale-up capacity.

4. Industrial Policy: Semiconductors and Quantum Technologies

Aggelos Tsakanikas (LIEE, Greece) discussed the strategic importance of securing European leadership in critical technologies, focusing on the EU Chips Act and quantum research frameworks. Challenges identified include supply chain dependencies, talent shortages, and slow implementation at industrial scale. He called for closer alignment between regulatory policy, the green transition, and innovation funding under the EU’s competitiveness agenda.

Panel II – Roundtable Discussion: Challenges and Opportunities

The second part of the workshop featured a moderated roundtable under the Chatham House Rule, allowing for a frank and constructive exchange of views. Participants addressed several key questions:

• Why have so many EU-level simplification initiatives failed to deliver substantial results?
• How can Member States contribute to a more harmonised but flexible regulatory space?
• What are the risks of widening inequalities between digitally advanced and lagging regions?
• How should the EU balance regulatory ambition with administrative feasibility?

Speakers stressed that overproduction of complex legislation, fragmented implementation, and lack of ex post evaluation continue to hamper effective simplification. Several interventions highlighted the need for political incentives that reward quality over quantity in the EU legislative process. Others advocated for stronger collaboration between the European Commission, Member States, and local administrations to co-design and test simplified regimes.

Portugal’s SIMPLEX was repeatedly cited as a rare example of political continuity across governments and an institutional culture of listening to citizens and businesses. Participants also acknowledged the limitations of one-size-fits-all approaches and called for flexible instruments, such as opt-in regimes, to accommodate the diversity of Member States.

Conclusion and Next Steps

The workshop closed with a strong sense of purpose and mutual understanding of the complexities involved in regulatory reform. There was broad agreement that simplification is not a purely legal or technical matter, but a deeply political and institutional process that requires long-term vision, coordination, and trust-building.

PromethEUs will continue its mission to inform the EU policy agenda through evidence-based dialogue, regional cooperation, and forward-looking proposals in the digital and competitiveness domains.