[autom.vertaling] Frit Bolkestein: "De het concurrentievermogenacties van de EU spreken luider dan woorden" (en)

Address at VNO-NCW Symposium, Aalsmeer, 3rd November 2003

Mr. Chairman,

The Netherlands in company with other Member States, such as Germany, are finding out the hard way what it means to lose one's competitive edge in today's global economy. Painful measures can no longer be postponed. Belts need to be tightened. Social protection systems are turned again into safety nets where in some cases they had become hammocks.

As the great heavy-weight boxer Joe Louis once said to one of his opponents: "You can run but you cannot hide". So too, the EU cannot hide from the pressing reality that it must become a much more competitive economy and a much more rewarding place to do business in.

With the removal of capital controls and many other trade obstacles, companies are increasingly free to invest wherever they believe the conditions and the returns are best. Companies like General Motors constantly ask themselves: why should we continue to assemble cars within the EU if we can set up shop in low-cost Turkey from where we have free access to the Internal Market under the EU-Turkey Customs Union Agreement? Many of you will be making similar calculations when considering where to invest in future.

Many sectors of the economy are under this kind of pressure. In addition to manufacturing, there is increasing evidence of outflows of R&D spending and Information Technology to countries such as China and India. This is not only a challenge for the EU but also for the US, Canada and other highly developed economies.

Making Europe the best place in the world to do business in before this decade is out - the target our Heads of State and Government committed themselves to in Lisbon in 2000 - is one ambition we cannot afford to fail. It is the best - and probably only - guarantee for maintaining and improving our quality of life and social model, particularly against the background of an ageing population.

This is a key message - I think we should admit it openly that has not yet hit home with our citizens, who still often regard "competitiveness" and "social protection" as two contradictory goals, whereas they are two sides of the same coin.

What is worse and much harder to accept is that many of our political leaders also seem not yet to have made the connection. If they had, why is it that of the about 50 actions of the Lisbon agenda which should have been delivered by now, not even half have been adopted? Most of the backlog is in my area completing the Internal Market.

Make no mistake: we can forget about becoming the best economy if we squander one of our greatest assets the largest single market in the world.

The Internal Market has served Europe well since 1993 and even before. It has made European companies much stronger by exposing them to more competition and by freeing up markets and creating new opportunities. In the last ten years, it has directly contributed to the creation of more than 2.5 million new jobs, whilst adding about 900 billion euro to our GDP, or an extra 1.8% in annual growth.

But there is much more to be had. There are still many obstacles which prevent us from tapping the Internal Market's full potential. Why Member States devote their energies to finding reasons NOT to take the decisions that will remove these obstacles is one of the EU's great unsolved mysteries. As the Dutch saying goes: Why would anybody want to steal from his own wallet?

Action is now all the more urgent. Several of our important indicators concerning the functioning of the Internal Market are beginning to "flash red." The growth in intra-Community trade over the last few years has slowed to a snail's pace. Member States' economies are increasingly turning inwards. As a consequence, the process of price convergence, which was particularly strong after the removal of internal borders in 1993, has stalled since 1999 and has remained stalled despite the launch of the euro. Cross-border investment has also dropped dramatically over the last two years.

This is not good news for competitiveness. It is particularly unwelcome news for countries like The Netherlands whose economic recovery and future wealth creation depends on trading successfully within a large European market and attracting substantial inflows of foreign investment.

Some people say I complain too much. But I have every right to be grumpy when Ministers in the Competitiveness Council say with a straight face they want more research and innovation in Europe's Internal Market, while at the same time they drag their feet on the Community Patent. Or when they say they want a booming biotech sector in Europe, yet more than half of them have failed to implement the biotechnology directive, which is now more than two years overdue? Or when they say Europe needs more highly skilled people and much higher levels of geographical mobility, whilst blocking progress on the proposal to facilitate the recognition of professional qualifications? Or even when they say companies must be able to organise themselves efficiently on a European scale but at the same time will only agree to the take over bids proposal after it has been gutted?

Ladies and gentleman, as parents tell their children, you won't get any pudding if you don't eat your spinach.

In the meantime, the productivity gap with the United States has widened. And the Lisbon goals are further away than ever.

How can we reverse this? How can we boost competitiveness and get trade integration going again? There is a lot that Member States can and should do at their level, but there is also much shaping up to be done at the European level. I see a key role for the forthcoming Irish and Dutch Presidencies here.

• First, the Lisbon process itself has become too unwieldy. There is hardly a proposal nowadays that does not claim the Lisbon agenda as its raison-d'être. No wonder people lose focus when it seems we're trying to cover nearly everything under the sun.

  We need to concentrate in the immediate future on a smaller set of actions and priorities, mainly focused on competitiveness. We also need a much clearer indication of who should do what and when. It is like President John F. Kennedy saying in 1961 we are going to put a man on the moon by the end of the decade, having neither thought about a rocket and its launch, nor about the right trajectory to make sure it reaches its target. Achieving such an ambitious target as "Lisbon" cannot be left to improvisation.

• Second, we must not allow enlargement to become an excuse for further inaction. Enlargement means that the potential prize from a properly functioning Internal Market is even bigger. But achieving that properly functioning market won't get any easier. Negotiating measures in Council and Parliament with 25 Member States risks slowing matters down even further.

  There may also be a temptation in some of the accession countries - having achieved the coveted prize of EU membership after more than a decade of hard work - to rest on their laurels and slow down market reforms. But the worst thing one can do when running a marathon is to start walking. The new Member States will need to keep up the pace if they are to catch up with the rest of the EU.

• Third, the Commission needs to do a better job in setting out why certain actions are important and how they will make Europe more competitive. We have started to do more systematic impact assessments on forthcoming proposals, which will not only help us to separate the wheat from the chaff at an early stage, but will also give politicians the ammunition to convince local vested interests that their days are numbered.

  A better regulatory framework is absolutely essential if our companies are going to hold their ground in the face of global competition. But better regulation is an area where we have seen more heat being generated than light. There is something about regulation that makes it resemble a coral reef it builds up over time, as governments generally know how to add but not how to subtract. I recently came across some dusty European Council conclusions from about 10 years ago which emphasised the need for less and better regulation. They were almost word for word the same as the conclusions the European Council adopted on the same subject only a few months ago. It is not enough for the European Union to do better if Member States, who still produce the bulk of legislation, are not weeding their gardens at the same time.

• Fourth, the Council of Ministers, and the Competitiveness Council in particular need to stop talking about competitiveness and start doing something about it. If piles of paper and hours of debate made us more competitive, we would have met our Lisbon target a long time ago.

  The Council's main task is to take decisions. Measured against this straight-forward yardstick, the Competitiveness Council has not yet met expectations. Moreover, I find it disappointing that many Member States fail to see that reforms at the European level can actually reinforce the positive impact of reforms undertaken at national level. Some Ministers even seem to take the view that EU proposals are a distraction from national reforms.

  I would hope that the lack of dynamics of the Competitiveness Council can be changed before people write it off. Success breeds success. So the first thing the Council needs to do is to score a couple of goals. Personalities also matter. Unlike in the ECOFIN Council, Competitiveness Ministers have not yet developed the kind of personal relationships and mutual trust which facilitates decision taking.

• Fifth, there is a crucial role for business. Let me ask you a few questions. How many of you as business leaders are personally involved in the public affairs side of your companies? How many of you have entered political debates (e.g. by writing articles for newspapers)? How many of you are lobbying behind the scenes to get key proposals adopted? You need to be doing all these things.

  If reform is too sluggish in the EU, is it perhaps because Ministers do not feel under strong enough pressure to take the difficult decisions?

I am coming to my final point - that of effective and even-handed implementation of the rules. There is no point adopting decisions if they lie dead in the water because they are not implemented or enforced in practice. The Internal Market is a joint venture. We are all part owners who have a stake in its success. Nonetheless, too often Member States treat the Internal Market like a rental car, which you never need to wash or maintain.

What is the difference, as a matter of principle, between Germany and France running a near 4% budget deficit and both countries running a similar "transposition" deficit for critical Internal Market directives more than twice the limit set by the Heads of State and Government? In both cases, harm is being done to the economic interests of other Member States.

I, therefore, trust that Minister Laurens-Jan Brinkhorst at one of the next Council meetings will hold his German and French counterparts to account for failing to implement laws on time, much like Finance Minister Gerrit Zalm did in the ECOFIN Council on excessive budget deficits. It would of course be even more credible if The Netherlands improved its own implementation record (2.5%) which is not exactly brilliant either. I am sure they will want to do this well before they take over the Presidency.

Measures do not just have to be implemented correctly and on time. They must also be applied in practice and effectively enforced. Too often, Member States fail to do this. In the case of The Netherlands, for example, the Commission has had to launch important infringement proceedings for non-respect of public procurement rules.

The rising number of open infringement cases up from 700 in 1992 to over 1600 today gives us some clue as to the extent of the problem. But the open cases are just the tip of the iceberg. For each case which results in an infringement procedure, there are hundreds and probably thousands of others which do not. In many of these cases, frustrated traders just give up and go off to seek another market.

I cannot overstate the seriousness of this problem. The Internal Market is built on trust. Trust that everybody will play by the rules. With the EU increasing in size and diversity after enlargement, this trust will be placed under increasing strain. Fragmentation of the Internal Market - and with it a dwindling of the economic benefits it brings - is a real possibility. This is the reason why the Commission has proposed that Member States set up Internal Market bodies whose task would be to ensure that Member States act in the EU's interest and to give companies and citizens easy access to a solution when they've run into a problem.

Mr. Chairman, the Irish and Dutch Presidencies have their work cut out for them. They both bring their own specific experience to the table the Irish who have shown that one can build a modern competitive economy in less than a decade, and the Dutch who know only too well how quickly one can lose a competitive lead but are now poised to recover it again. In my view, they should focus on three priorities: clean out the backlog, remove onerous and badly conceived laws from the EU and national books, and make sure decisions are duly implemented by all. Their motto should be: actions speak louder than words. If they succeed, they will have put the EU competitiveness agenda back on track.

Thank you.