Speech McCreevy over voordelen van één interne markt (en)

SPEECH/06/594

Charlie McCreevy

European Commissioner for Internal Market and Services

The Benefits of the Single Market

Conference organised by ANO pro Evropu,

Prague, 13 October 2006

Good morning Ladies and Gentlemen:

Thank you very much for inviting me to join you here this morning.

There are three groups of people among whom I am always happiest: Business people, politicians, and sportsmen. In a sense I am a mix of all three myself although politics has occupied most of my life for the past thirty years.

But for me, as EU Commissioner for the Internal Market, I believe it is particularly important to spend a lot of my time visiting business people across the Member States. I recognise that the challenges they face and the conditions in which they have to operate can vary significantly from one Member State to another. This is inevitably so given the diversity that exists between Member States in terms of their stage of economic development, their political, fiscal and regulatory frameworks and the length of time they have been engaged with EU business and regulatory affairs.

For those of us charged with regulating business and for integrating European markets it is vital that we keep in touch with what is going on in the real world, that we listen to you about the challenges you face, the opportunities you want to exploit, the obstacles you sometimes encounter, and the framework within which you want to work.

I cannot stress too strongly the importance of engagement with Europe if you want to influence where Europe is going. In my experience, new Member States take time to fully engage – especially small new Member States when resources for lobbying are limited.

When the Czech Republic joined the EU just over two years ago it was a time when Europe faced some significant challenges. Enlargement - with 10 countries coming in at the same time - however welcome, posed an integration and absorption challenge in itself. Added to that were the serious difficulties being experienced by several of the EU's economically most powerful Member States. That made things more difficult still. When times get tough, the pressures to raise protectionist barriers intensify. This manifests itself not just in attitudes towards global trade but also towards the EU Internal Market. Member State governments come under increasing pressure from their citizens to resist the dismantling of the barriers to the free movement of people, capital and services across the Union. Yet, if we are all to realise the huge potential available within our market – shortly to consists of more than 500 million people - we must get those barriers down – for everybody.

The topic of free movement of people is I know one that is of particular interest to the Czech Republic. It does not fall within my direct area of responsibility but I will say this: I know that my country's own experience following EU entry helped shape our decision to become one of just three EU Member States to allow citizens from the new Member States to work there without restrictions. This was the right decision to take and Ireland – and the other Member States who followed that policy - have since greatly benefited from hosting millions of Eastern Europeans - including in Ireland alone nearly 10,000 from the Czech Republic.

We can all look around the world at those countries that have embraced immigrants and integrated them well into society, and recognise the enormous contribution they have made to driving economies forward. The United States is surely the best example. My own country has gained a great deal in the past ten years from the skills and experience brought back by returning emigrants - from Britain, the US, and many other parts of the world. Moreover without the inflow of new immigrants from Eastern Europe in more recent years I am not sure that we could have sustained our economic boom.

No doubt many of your emigrants to other Member States will return back home in due course : Able to share the experiences they have gained - and hopefully put the capital and savings they have accumulated to good use in the continued advancement of the Czech economy , as your country seeks to reap the full advantages of EU membership.

The flow of people between Member States is enriching culturally and economically as they take with them across Europe their energies and ideas, exchange best practices, and introduce new thinking and methods about the way things are best done. That can only serve to strengthen Europe as a whole for the future.

The way the Czech economy is now developing with a strong manufacturing base, good growth in services, and steadily improving economic fundamentals looks promising.

I know that you have some more work to do to manage your fiscal deficit down. But I am sure you all appreciate that the prize that comes from fiscal discipline to achieve convergence will be well worth the price.

I come from a Member State that went through painful fiscal adjustments back in the 80s and early 90s. But the decisions we made then, although politically unpopular at the time, laid the foundations for much of our subsequent economic success. They enabled us to get our interest rates down and then our taxes down, in turn making it more attractive for business to invest and create jobs, and for some of our brightest and best who once emigrated in despair to return to a country that was increasingly prosperous and increasingly attractive to work in.

I am delighted that the Czech Republic is adopting a low tax model. It will stand you in good stead and help attract continuing inward investment flows.

But I spoke last week in my own Member State about the potential risks of complacency about economic success. To underpin sustained success governments, citizens and businesses must be forever vigilant : Vigilance means not just recognising and protecting the keys to success but more especially recognising that over time new keys are needed because change is inevitable. The Master Key doesn't change: It’s the key marked "competitiveness". What does change for every country over time, however, are the sources of that competitiveness. Unless countries adapt to take account of those changing sources of competitiveness in a globalized world they will go into steady decline. Hence, the second most vital key to success is marked "Review, Renewal, Improvement". Potential sources of competitive advantage change over time as the global competitive landscape changes. Governments must adapt their policies to enable businesses and citizens adapt to those changes. If they don't, competitiveness itself will progressively erode and the economy will go into progressive decline. The third key is marked "Flexibility". We can't have labour laws that undermine the flexibility of employers to adapt to a changing competitive landscape. When people talk about the need for security for employees, I say that the best form of security is a job and the only long term route to more jobs is sustained competitiveness. And sustained competitiveness requires continuous change and flexibility in working practices, and up-skilling of human capital.

The key to prison is the key marked "protectionism". Any Member State who clings to that key is a Member State who is locking the door on the future – on new opportunities, new markets, higher living standards, lower prices, faster growth and more jobs.

That’s why I was determined to push forward with the services directive for Europe - to enable people to set up and do business more easily and more competitively across the Member States. That’s why I try to vigorously enforce our rules on free movement of capital to enable businesses expand and merge across Member States and organise themselves in the way they believe to be most economically efficient to compete on a global scale. That’s why too I want Europe's public procurement markets to open up further. I want it to become easier for businesses in the Czech Republic and in every other Member State to tender for government opportunities across borders and I want the most competitive bids to win. That approach doesn't just help Czech businesses develop across borders. It helps the Member States in which they are bidding too – to get the cost of government down, and therefore the burden of taxes for their citizens and businesses down. That in turn drives living standards, consumption, competitiveness, and investment up. In the context of public procurement, we have introduced electronic procurement to facilitate faster and more efficient processes for business as well as bringing forward a Remedies Directive to enable aggrieved tenderers to more easily and less expensively challenge contract awards when they perceive the tendering process has not met with the requirements of our existing EU Directives or with Treaty principles.

I know that the Czech Republic has been on the liberal side in the debate on the Services Directive. And so am I. I acknowledge that the original proposal was watered down more than many people would like. I could have dug in my heels and closed my ears to all of the objections to the previous proposal. However, some of the objections were well grounded in practicalities and required us to make amendments. Others were more political in nature. Politics is the art of the possible. I am a realist, a pragmatist, and a democrat. The Commission had a choice: To resist all the changes that were being proposed and see the measure defeated and delayed. Or to accept some of the changes and win sufficient support to enable a worthwhile set of proposals pass into law. It was a clear choice: Some worthwhile progress now with the prospect of building on it later. Or no progress now with very uncertain prospects for the future. I believe the Commission made the right choice – a choice that will deliver an outcome that will form a solid foundation on which to build for the future.

Assuming final approval of the current proposal we will have a balanced approach that will make it a lot easier for businesses to operate across borders.

Procedures and costs of setting up in other Member States will be fewer and lower. It will be possible to go through all of the procedures on-line. You will not have to establish in a country to operate there. Member States will be obliged to streamline their administrative procedures so that the information necessary for proper supervision can be exchanged more efficiently.

Services aside, a key to Europe sustaining its competitiveness lies in its ability to innovate. If we look across the global economy in which we have to compete it is very obvious that many of our competitors have more natural resources, and much lower costs of production. That’s why a knowledge based economy is so important – We must know more and we must innovate more if we are to stay ahead. To do that we must create a more innovation-friendly environment. In that context we have a number of initiatives in the pipeline. Let me give you an example of one issue within my portfolio that needs tackling- patents.

Earlier this year I launched a consultation of interested parties on future patent policy in Europe. That process showed that industry clearly supports the Commission's efforts to simplify the patent system in Europe and make it more effective. There are two issues – languages (or the cost of translation) and jurisdictional issues. Industry is not enamoured by the compromise reached by the Council in 2003 on the Community Patent in terms of the proposed solution in respect of language and the jurisdictional system because they don't achieve the cost reductions and the simplification of the system that industry wants. In parallel, there is a strong call for the improvement of the existing European patent system, established by the Munich Convention, by the successful conclusion of the European Patent Litigation Agreement on jurisdiction and by ratification of the London Agreement on the language regime. Before the end of this year I will be proposing that the Commission adopt a communication and action plan aimed at tackling the patent issues all in one approach. In particular, I want to tackle the jurisdictional issue so that we don’t have different courts in different countries delivering divergent interpretations on the same patented invention, so that we avoid businesses having to incur the expense involved in having effective patent protection across the Member States. We cannot aspire to being the most competitive economy in the world if we don't find workable solutions to patent application and protection.

In the area of financial services, we are currently putting in place the final pieces of the jigsaw that will I hope complete the Internal Market and enable business operate on a relatively seamless basis right across the EU. But it is not just about putting common rules in place. It is about ensuring that they are effectively transposed, implemented and enforced as well.

We have seen many attempts by Member States to stand in the way of free movement of capital across the Union. Such free movement is one of the basic freedoms contained in the Treaty and I intend to see that it is upheld, not just by enforcing existing rights but also by closing loopholes in the existing legislative framework that enable Member State regulators for example to block or unduly delay cross-border takeovers of financial services institutions on regulatory grounds that are not properly justified. That’s why I have indicated that I will be proposing legislative initiatives in the banking, insurance, and securities fields to introduce clear, transparent and consistent rules when assessing mergers and acquisitions in the financial sector. I want to leave no room for political interference or protectionism. There will be clear procedural rules and a closed list of criteria for the conduct of supervisory assessments of proposed acquisitions. And I will be proposing too specific deadlines and formal communication processes to ensure both efficiency and transparency throughout the process. This is not just about standing up for a principle. It is about standing up for a real benefit - the benefit that free capital movement provides by enabling industry to operate, merge, and restructure across Europe, to facilitate the delivery of efficiencies and scale economies that will deliver value for shareholders and lower costs to consumers. It is not a zero sum game.

It is not a case of one person's loss being another person's gain. A bigger, more integrated single market- by offering at one and the same time more scale economies, and more competition spurs innovation and productivity with the benefits shared between higher profits for companies, and lower costs for consumers. If company shareholders – in many cases pension funds – get higher returns, that in turn should deliver more savings and better pensions, while for consumers lower costs will deliver more purchasing power, more demand, and therefore more jobs. That's why competition and open markets are a win -win. Too often people see them as a lose-lose.

The Czech Republic has everything to play for. In our globalizing world where opportunities are vast, and where capital can flow freely it will be those Member States in Europe who are not burdened by excessive regulation and red tape, who make it easy for business not just to set up but to get a decent after-tax return on their capital, and who provide the framework for continuous education and innovation that will win out. The Czech Republic has made a great start within the EU and long may it continue. I know you are currently in the midst of some political uncertainty, but remember this: the fundamentals that drive economic success in the future will not change. There are huge opportunities for the people, government and businesses of the Czech Republic to grasp across Europe. Most of the framework is in place to allow open markets to function and for the Czech Republic to continue to compete and win. And by the end of the term of this Commission I hope and believe that further progress will be clearly evident.

Thank you for your attention.