Among the most vexing problems facing those concerned with the formation and implementation of industrial policy is deciding what it is, why it exists, and whether there ought to be more or less of it than exists at present. Any random collection of six economists is sure to produce at least a dozen different opinions on the subject, not least because many economists have trouble in reconciling their gut reaction that industrial policy should not exist with the obvious fact that it does. The vigorous debate that now rages between those who believe that industrial policy should and those that believe that it should not be consciously pursued by gov ernments is but a pale reflection of the true diversity of opinion that exists on the subject. Even amongst that group of economists who are enthusiastic about industrial policy, the range of specific policy proposals that have been put forth is enormous, and the debate within this group is no less active (and acrimonious) than that between the pros and antis. Following what is a clear, if unintended, character istic of many of the contributions to this debate, this paper is devoted to complicating ratherthan simpli fying the issues. In particular, the question that we shall explore is whether there might be a type of industrial policy which should be applied at a supra-national level. Although this question has been actively discussed in Europe since the signing of the Treaty of Rome (at least), the revival of free marketideologies, the looming menace of 1992 and recent discussions of European political union have all added a good deal of fuel to the fire. More than a few ambitious European politicians have launched initiatives that apparently usurp national policy prerogatives, and the response by many national governments has become increasingly angry and strident. Traditional liberalism struggled for years to define the boundaries of the state in terms of the