By Philip Blenkinsop, Kate Abnett and Michel Rose

BRUSSELS/PARIS (Reuters) -AI, biotech and affordable clean energy will be the focus of an EU drive to make the bloc globally competitive and ensure it keeps pace with rivals the United States and China, according to a draft European Commission paper seen by Reuters.

The European Union is under pressure from member countries like France to simplify regulations around doing business, and is also facing fresh challenges with the new administration of President Donald Trump.

Trump, who is promising to roll back U.S. corporate rules, weighed in on the debate over red tape at the annual Davos meeting of the world's business elite this week, urging the EU to reduce regulations. He is also threatening to impose new tariffs on EU exports to the United States.

The European Commission paper is a draft of proposals - a Competitiveness Compass - to be presented on Jan. 29. It outlines 29 planned measures and strategies over the next two years to raise productivity through innovation and to decarbonise its manufacturing.

"It is time to turn to action," the draft paper says. "Without an urgent shift in gear and approach, the EU's future as an economic powerhouse, an investment destination and a manufacturing centre is at stake."

Europe needs to be at the forefront of tech sectors that will matter in tomorrow's economy, such as AI, advanced materials, biotech, clean energy, robotics and space, the paper says. 

The paper echoes elements of a report last September by former European Central Bank chief Mario Draghi, which urged the bloc to coordinate industrial policy and massively invest to keep pace with the United States and China. 

The Commission is set to launch its Clean Industrial Deal at the end of February, with acts to cut sustainable reporting requirements of companies by 25% and to reduce energy prices that can be three times higher than those of the United States.

The EU executive will revise EU rules governing chemicals, promote AI factories and seek to tackle barriers to innovative startups building scale, the draft competitiveness paper says.

It will also encourage the EU's 27 members to coordinate their patchwork of industrial and support policies more, initially in areas such as energy grids, digital infrastructure, AI and manufacturing of critical medicines.

PUSH BY FRANCE FOR LESS RED TAPE 

The Commission paper coincides with a push by France to cut red tape at European Union level. Paris is calling for a "massive pause" in new EU regulations and delayed entry into force of rules requiring companies to report on their environmental footprints.

The French proposals, detailed in a document dated Jan. 20 and seen by Reuters, come amid a broader backlash among EU companies against new environmental rules passed over the past few years that they say are hurting their competitiveness against U.S. rivals.

In the French document, to be presented by Europe Minister Benjamin Haddad on Tuesday to fellow EU ministers, France proposed to delay indefinitely a new EU directive on corporate due diligence and to delay by two years the CSRD corporate sustainability reporting directive.

France is also pushing the EU to push back the implementation of so-called Basel bank capital rules by one year to 2027, to ensure a level playing field with Britain, which has already delayed the application to the start of 2027, according to the document.

The long list of French proposals, which includes tweaks to agricultural norms or even the legal definition of "waste", is part of what France has called a "simplification shock" designed to catch up with faster-growing U.S. and Chinese rivals.

"We are expecting strong measures in the first 100 days of the European Commission's president, who has made it a priority," French Finance Minister Eric Lombard told reporters on Thursday in a New Year address.

"We must focus on the bills that complicate the life of our companies and slow down their growth," he added. Germany is also keen to lighten the burden on European companies.

The French document was first reported by Politico.

(Reporting by Philip Blenkinsop, Kate Abnett and Michel RoseEditing by Frances Kerry)