What to coordinate The EU faces many interconnected systemic challenges; while striving to increase its com­petitiveness in global markets, it is also facing geopolitical tensions, demographic shifts, so­cial and regional inequalities, and the need to deliver a green and just transition. Successful­ly addressing these challenges will only be possible if the EU acts together, with coordi­nated national industrial strategies that rein­force, rather than undermine, each other. Co­ordination can ensure coherence, avoid frag­mentation, and maximise collective strengths. This would require the coordination of three different dimensions: between policy objec­tives, between Member States, and between sectors. Coordination between policy objectives To ensure long-term competitiveness, the EU should not focus on price and cost competitive­ness, such as cutting costs or reducing wages. Research shows that focusing on technological competitiveness(competing on quality) rather than cost competitiveness(competing on costs) is much more effective in ensuring long-term prosperity. 15 Cost competitive­ness can only lead to a race to the bottom that would be unsus­tainable, counterproductive(as poor quality can carry reputational risk) and incompatible with delivering high standards of living for ­European workers. EU industries have traditionally been more successful in competing on quality rather than on prices 16 and should continue to build on this strength. By fostering quality differentia­tion, the EU can also achieve greater diversifica­tion of its production, 17 which helps make sup­ply chains more resilient. When coordinating on competitiveness in this context, multiple objectives must be pursued simultaneously. First, productivity and innova­tion are crucial for competing on quality. They enable firms to continuously improve products, processes and services, building competitive advantages and capturing market share away from lower-cost competitors. Second, advanc­ing the green transition is an important condi­tion and mutually reinforcing objective of the competitiveness agenda, as addressing envi­ronmental destruction represents both an exis­tential challenge and an opportunity for EU economies. 18 A successful green transition will give Europe a strong long-term competitive ad­vantage on the global playing field. Additional­ly, the EU’s goal of strategic autonomy is rele­vant as the EU can only be competitive when critical supply chains are secured and depend­encies reduced. The EU’s dependence on Rus­sian gas exemplified this challenge, and the importance of this objective was demonstrated 15  Dosi, G., Grazzi, M.,& Moschella, D.(2015). Technology and costs in international competitiveness: From countries and sectors to firms. ­ Research Policy 44(10), pp. 1795–1814. https://www.sciencedirect.com/science/article/abs/pii/S0048733315000888. 16  Varnavskii, V. G.(2025). International competitiveness of the European Union’s high-tech sector. Sovremennaâ Evropa, 3(131), 43–55. https://rjraap.com/0201-7083/article/view/689106. 17  Schetter, U.(2024). Quality differentiation, comparative advantage, and international specialisation across products. European Economic ­Review, 170, 104869. https://www.sciencedirect.com/science/article/pii/S0014292124001983. 18  EUCO 18/25. Note from the General Secretariat of the Council to the Delegations. European Council meeting(23 October 2025) – Conclusions. European Council. https://www.consilium.europa.eu/media/d2nhnqso/­20251023-european-council-conclusions-en.pdf. What to coordinate 7