Franco-‐German Industry Alliance: A call for growth and employment in Europe BDI and MEDEF proposals The world is changing rapidly. In a global economy, no individual European country is able to match or influence global changes by itself. Europe has the choice: we in Europe will be successful together – or we will sink into insignificance apart. BDI and MEDEF are convinced that Europe must build much more on its unique strength in cross-‐ border production in competitive value chains. The strong integration between the French and German industries leads to globally competitive products and generates growth and jobs in our countries and beyond. We will only succeed bilaterally and within Europe, if we transform current trends of economic and political divergence into a real process of convergence and prosperity. An essential prerequisite is that our two governments implement structural reforms and budgetary consolidation. The European Council on 26-‐27 June and the European Parliament’s study “Mapping the Cost of Non-‐ Europe, 2014-‐2019” have stressed key areas for growth and jobs in the next five years: a common European energy policy, a truly integrated single market, an ambitious trade policy, much more integration in the Euro area and more integrated financial markets. Only one week ahead of the election of the Commission President and the meeting of the European Council on 15 and 16 July respectively, we call on all EU institutions to come together to work on a growth-‐oriented programme and governance for the next European Commission. We, French and German industry together, are convinced that a positive growth agenda for Europe should involve a new structure for the Commission and a strictly limited number of key priorities. I-‐A fundamental change in the internal Commission governance We support the proposal to ensure greater coherence within the Commission. Policy areas should in future be concentrated in a limited number of Vice-‐Presidents. The other Commissioners should be ranked below them on the basis of speciality. Priority should be given to establishing a strong economic policy cluster which would have to embrace not least industrial and energy policy. The Commission must ensure that internal and external competiveness is taken into account in its proposals. Therefore, all new legislative proposals must be subject to ex-‐ante impact assessments with a special focus on systematic and transparent competitiveness proofing involving all relevant stakeholders at an early stage. 1 II-‐An ambitious work programme for convergence and prosperity For its 28 member states to reignite with growth and increase their job creation potential, the European Union needs to address effectively five key policy priorities: 1-‐ Promote convergence between industry, energy and climate policies! Ø Reaching 20 % of industrial GDP by 2020 should become one of the key targets at the EU level as announced in the Commission communication “A stronger European Industry for Growth and Recovery” from October 2012. Ø A common European energy policy needs to be elaborated that allows energy suppliers and industry to contribute to a competitive and sustainable industrial value chain, limit soaring energy prices and avoid competitive distortions within the EU. In this respect, it is particularly important to stabilize electricity and gas prices on the long run for energy-‐intensive industries. Ø Energy efficiency is one major pillar for achieving the energy transition as much as realizing security of supply. Efficiency gains have to be realized in sectors with the highest potential, such as the building and transport sector. New measures have to avoid double regulation for industries being already included through the ETS. The focus should be on single sectors and existing legislation. Ø Renewable energies must be developed and integrated gradually into regular markets. Ø R&D policies and funding should support the least mature technologies (upstream) and competitive industrial solutions (downstream), in particular in the field of energy efficiency where the most cost effective solutions have to be promoted. Ø The completion of the internal energy market -‐ with the implementation of the third energy package and the development of related infrastructures -‐ should be an absolute priority, in order to guarantee a reliable and uninterrupted electricity and gas supply. Ø We call for a new convergence of industrial, energy and climate policies for the period from 2020 to 2030, to rebalance the EU’s energy and climate policies by setting three priorities: sustainable development; internal and external competitiveness of European companies and security of energy supply. There should be a single GHG emissions reduction target, and the 40% reduction target, proposed by the EU Commission, should only be pursued subject to a satisfactory international agreement on a target in the context of the COP-‐21 that will take place in Paris in 2015. These targets should be consistent with the “call for a European industrial renaissance” issued together with the proposal for a 2030 energy and climate package, and the European target to reach 20% of industrial GDP by 2020. 2-‐ Create a truly integrated Single Market! Ø Trans-‐European infrastructure development is a necessary condition for companies and regions to seize the potential of the internal market. Ø EU funds should complement national public investment and focus on those parts of networks, which the private sector does not deliver. Ø European funding for a trans-‐European transport network (TEN-‐T) must target projects which eliminate bottlenecks and contribute to the single European economic and transport area. 2 Ø The Connecting Europe Facility should be directed particularly towards financing the new generation of networks. The implementation of the Digital Single Market is vital in this context. Uniform data protection rules are required in due time. A data protection regulation that strikes the right balance between the need to enable free flow of data and the need to enhance consumers’ trust is essential for the digital single market. Ø The Commission must tackle resolutely anti-‐competitive behaviours, through its competition policy, where such behaviours hamper innovation or deprive consumers of their benefits, damaging trust. Ø Liberalising public services including telecommunications, energy, public transportation, and other utilities is essential. Ø The EU should increase efforts to ensure proper implementation of measures already adopted, better enforcement and regular evaluation. 3-‐ Lead a global opening of markets! To focus trade policy on opening markets worldwide, the following elements need to be taken into account: Ø The Commission should pursue an assertive commercial policy aimed at opening up global markets for trade and investment. Ø On the multilateral level, the Bali package on trade facilitation should be implemented quickly and effectively. In addition, the WTO should continue to address other unresolved issues of the Doha round, such as the liberalisation of services and market access for industrial goods. Ø Other priority areas where action is needed to open up world trade include breaking down barriers to public procurement markets, and fighting against illicit and unfair subsidies and dumping practices (e.g. export subsidies). New investment rules must also be elaborated, as well as clear provisions for competition, and trade facilitation rules. Ø A consistent European strategy for bilateral free-‐trade agreements geared to the EU’s long-‐ term economic and political interests should be adopted. The EU should first conclude agreements -‐ dismantling both tariff and non-‐tariff barriers -‐ with its most important partners and growth regions. Ø Concluding the negotiations for a transatlantic trade and investment partnership (TTIP) must be a clear priority for the next Commission. A way to create growth and jobs, TTIP should provide for a comprehensive mutual opening of markets, including public procurement markets at both federal and state levels, and markets for financial services. Regulatory convergence is essential and to be achieved by removing non-‐tariff barriers. It is a must for SMEs that cannot overcome current regulatory divergence within the transatlantic market in many sectors. Customs procedures should be harmonised through TTIP and the EU and the US must seize this opportunity to further develop global rules and principles in areas of common interest. 3 4-‐ Promote structural reforms and budgetary consolidation in the Euro area! This target requires a determined action from the Commission on the following elements: Ø To strictly monitor the implementation of the country-‐specific recommendations in the European Semester. Ø To strictly implement the Stability and Growth Pact. The flexibility that is built in the existing Stability and Growth Pact should be used to support growth policies and budgetary consolidation. Ø To support the European Council’s decision for much deeper integration in the Euro area focusing on stronger euro area governance and stronger economic policy coordination as well as convergence and solidarity. At the same time we need to decentralize EU political decision-‐making wherever possible allowing Member States to take different paths of integration, especially Non-‐Euro Member-‐States. Ø To make proposals on moving towards greater tax harmonization. A Common Consolidated Corporate Tax Base should be put in place. Further moves towards tax harmonisation, especially across the Eurozone, can be made via the mechanism of enhanced cooperation. 5-‐ Review financial market regulation to ensure companies’ access to finance! To ensure companies’ access to finance, the following elements are key: Ø Access to finance for companies – especially SMEs –, in particular access to long-‐term financing must be facilitated. Ø The financial regulatory framework must be focussed on addressing systemic risks appropriately. Ø A comprehensive impact assessment of the cumulative effects of the various regulatory measures should be carried out. Ø An effective Banking Union is crucial to regain market confidence and making the banking system more stable and resilient. Ø The project of establishing a Financial Transaction Tax (FTT) in 11 countries of the Union should dropped, as soon as possible, as such a tax would have devastating effects on the financial markets and the conditions of access to finance and risk management within these 11 countries posing a serious threat to the economies concerned. Ø EIB’s lending activities should focus on supporting long-‐term investment that strengthens Europe’s economic recovery and global competitiveness. Ulrich Grillo President Pierre Gattaz President Bundesverband der Deutschen Industrie e.V. (BDI) Mouvement des Entreprises de France (MEDEF) 4