All carrot no stick: the formation of the European Chips Act in an era of Open Strategic Autonomy

Abstract

In an increasingly hostile world, the European Union has started to adopt policies aimed at reducing dependencies on external actors under the doctrine of Open Strategic Autonomy. One such initiative is the European Chips Act (ECA), which seeks to strengthen the EU’s competitive position in the global semiconductor industry and ensure security of supply, without adopting any interventionist measures. This thesis draws on liberal intergovernmentalism and a systemic dimension based on neorealism’s element of polarity to introduce a novel causal mechanism to explain the ECA, while adopting a critical perspective on the ontological bias and positivist epistemological foundation of these theories. A qualitative analysis with a multi-method design explains the content, scope and formation of the ECA based on a shift in EU policy assumptions on economic interdependence, the influence of systemic competitive pressures, and relative power dynamics between member states. In addition, domestic interest groups are analysed as influential actors in the formation of national preferences, operating within a global context shaped by systemic competitive pressures. The findings explain why the ECA exclusively relies on incentive-based “carrot” policy measures rather than restrictive “stick” instruments, highlighting the interaction between systemic constraints, domestic interests and interstate bargaining in shaping the EU’s industrial policy.