Under the chairmanship of Michael Glos, Federal Minister of Economics and Technology, the ministers of the EU member states with responsibility for the European internal market, Günter Verheugen, Vice-President of the European Commission, and EU Commissioner Neelie Kroes met in Würzburg for an Informal Competitiveness Council on 27 and 28 April 2007. The economics ministers of Norway, Iceland and Switzerland attended as guests, since these countries are linked to the internal market via the EEA Agreement or separate agreements.
Summary – "EU is competitive and economically attractive"
The general theme of the meeting was "The Single European Market in Global Competition". Discussion focused on the strategic and political reorientation of the internal market in order to meet the challenges of the process of globalisation effectively. Mr. Katsuhiro Nakagawa, Vice-President of the Board of the Toyota Motor Corporation, Mr. Thomas McCoy, Vicepresident of AMD, and Mr. Peter Sutherland, Chairman of BP and former Director-General of the WTO, presented the views of commerce or of individual companies. The discussion took place on the basis of Ernst & Young's "European Attractiveness Survey 2007".
In accordance with the remarks made by Mr. Nakagawa and Mr. McCoy, the delegations took the view that, in the 15 years of its existence, the EU's internal market has developed into an attractive location for investment and is already well-positioned in international competition at present. Not least, the fact that it is a market of 500 million consumers makes the EU attractive for foreign investors. This attractiveness is confirmed by the Ernst & Young study. On the basis of the survey of more than 800 companies, it finds that the EU remains the most attractive region of the world for 50 % of those surveyed, but that its attractiveness dropped by 10 percentage points between 2006 and 2007.
Strengthening the internal market and expanding the knowledge society as the key to success
The discussion also highlighted the fact that the EU needs to undertake further efforts to be able to keep pace with global competition in future and to put a halt to the decline in Europe's attractiveness. Since it will scarcely be able to compete with countries like India and China on labour costs in the medium-term, Europe needs to improve its position in other areas. The delegations shared the view of the business representatives and the findings of the European Attractiveness Survey 2007 that the following measures are of prime importance at national and/or Community level:
Further to this, it is important to expand the European knowledge society and its capacity for innovation by
In view of growing concerns about its energy supply, Europe needs to keep maintaining its leading role in the field of environmental technologies at a high level. Investors regard the field of environmental technologies as an opportunity for innovation and the creation of jobs in Europe. In addition, the participants underlined the particular importance of SMEs in providing the foundation for Europe's economic strength.
The globalisation challenge – the EU competing to attract investment
On the next day, the participants discussed the opportunities and risks of globalisation, following an introduction by Peter Sutherland. There was agreement that globalisation is an irreversible world-wide economic process which exerts a direct or indirect influence on all aspects of daily life, from social security to homeland security, energy supply, environment and health.
The ministers stressed that Europe can only cope with the challenges together. Its response cannot take the form of a fencing-off of markets. The "key" is rather to be found in a strong – and especially an economically strong – and dynamic EU. The aim of the EU must therefore continue to be the comprehensive strengthening of the competitiveness of European commerce. The ministers underlined their determination to press ahead with the realisation of the Lisbon Agenda and – following on from the previous day's discussion – to strengthen the single European market.
State aids in the context of competition between international business locations
The ministers subsequently engaged in a discussion with Ms. Neelie Kroes, the Commissioner responsible for competition policy, on the extent to which the European state aids regime can cope with the challenges of global competition. The state aids rules of the EU limit the granting of subsidies to companies within the Union; outside the Union, no comparable comprehensive restrictions apply. In certain cases, this can result in competitive disadvantages for the EU as an international business location. The ministers noted that other factors, such as infrastructure, labour costs or the availability of skilled labour, are the main determinants for a corporate decision on where to invest. However, if conditions are otherwise comparable, it may be that a higher level of state aid tips the balance for or against a particular location.
The delegations agreed that competition-distorting state aids must definitely be prevented in the global context in order to prevent international races to provide subsidies. They took the view that efforts to further develop appropriate standards must soon be intensified, primarily in the international context in the WTO framework and in the shape of bilateral free-trade agreements. However, some time may pass before the effective implementation of such standards.
The delegations therefore asked the Commission to review the present state aids policy of the EU with regard to the possibility to grant state aid in special cases of international competition. Some delegations stressed that, in particular, it is necessary to review whether the possibility to grant higher levels of state aid under the Community Framework for Research, Development and Innovation in the case of international competition (matching clause) should be extended to further areas. Further to this, the ministers asked the Commission to consider whether an expedited review procedure by the Commission is possible in the case of decisions on the location of investment involving international competition.
The globalisation process and the citizens
The ministers also stated that the progress on integration of the internal market has brought a wide variety of advantages for all citizens. These include not merely the immediately apparent advantages, such as the introduction of the euro, unrestricted possibilities to travel, a comprehensive range of goods and lower prices due to tougher competition. In particular, mention should also be made of the security which the internal market offers the citizens of the EU in the globalisation process, a process in which no member state could survive on its own today. The participants agreed that this aspect in particular must be emphasised in the dialogue with the citizens today.
Next steps
The delegations asked the European Commission to focus the new internal market strategy, which is expected in the second half of 2007, on a lasting positioning of the EU in the international competition to attract investment. In this context, forward-looking proposals for the problems cited above should in particular be made.
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