NEWS
RELEASE

I had hoped that this speech would be my first public engagement as the new European Commissioner for Trade.

I had forgotten what long experience has taught me: in politics, never take anything for granted!

So my views on trade will have to wait – some day you might even invite me again. Today I will talk more generally about Europe.

On Europe I have always been clear where I stand. Pro-Europe, pro-reform in Europe. The right position ten years ago. The essential policy for Europe today.

I believe the incoming Commission must have one guiding light: to be a strong, reforming Commission. There may be no obvious new “grand projet” for us to seize on. Nothing like 1992 and the Single Market; the launch of the Single Currency; or the eastern enlargement of Europe to 25 member states.

But there is, nonetheless, one compelling cause for the Commission to advance. That goes to the heart of Europe’s future and what we want to achieve. That is the essential precondition of re-cementing public confidence in the European Union.

This is the determined, unwavering pursuit of economic reform. Re-dynamising Europe’s old economic structures so as to achieve more efficient markets, a faster rate of innovation, higher productivity and growth, and therefore higher levels of employment for Europe’s citizens.


That is the task the incoming Barroso Commission in Brussels has set itself– to be the Growth and Jobs Commission, and to be clearly defined and remembered as such.

For at present, the prospect is of Europe’s relative economic decline in the world.

We therefore have to raise our game – to become cutting-edge innovators across the board - so that we remain a global economic leader.


Growth and Jobs must be our focus. Of course the Commission has important responsibilities in the social and environmental spheres. I attach weight to these. But how we act and what we do in these areas, I suggest, need to contribute to, not contradict, our commitment to growth and jobs.

Our actions should be mutually reinforcing. Social and environmental initiatives should and can offer win-wins.

For without this, we will not succeed in transforming Europe’s economic performance which is the condition, let’s remember, for everything else we want to achieve socially and environmentally.

For I want Europe to work, in all senses.

Not just because the bold vision of a united Europe at peace and prosperity across our whole Continent is as relevant for our times as it was for Winston Churchill’s.

But because, in the modern world, if we did not have something like the EU we would be struggling to invent it. On every continent, regional economic blocs are emerging. The economic power balance of the world is changing at breathtaking speed.

Think of the dramatic rise of China and India. Think of the potential of Brazil and South Africa.

Every European country, large and small –– has more strength by acting together than any of us would have acting apart or alone - whether in rules governing trade, investment or international finance.

Bereft of the EU, we would be denying Europe world influence in building a global regulatory framework that is coherent, sane and pro-competitive, focussed on outcomes not processes. And not only Europe’s influence but Britain’s leverage over that influence.

Who thinks, for example, that the Doha trade round would have a better chance of success or result in a better outcome for the developing world, if countries like Britain weren’t in there, actively supporting CAP reform and a strong EU position on market opening ?

Who thinks Europe’s economic leverage over the United States – in reducing tariff and regulatory barriers to trade and investment, or in fighting disputes on steel or Airbus for example - would be helped if we didn’t have an effective EU, and if we weren’t key decision makers in the EU ?


Europe is the biggest economic space in the world. It is the biggest trading bloc and Britain is part of it. We need to be in the strongest possible position to influence its direction and shape its policies.

Some people say - why can’t we in Britain have the benefits of Europe’s single market but without the entanglement of all that harmonising legislation, the Brussels bureaucracy and now the Constitution.? In other words, why can’t we be another Norway?

But for Britain “associate” membership of the European Economic Area would create business uncertainty and mean lost inward investment.

It would result in a rapid loss of pulling power and influence in Europe’s 470 million strong Single Market.

I would not want to return to this Conference at a future date and have to explain why, through our ‘associate’ membership, we could not influence this directive or that piece of legislation or that policy in the Single Market. All of which Norway has to accept without a vote - and pay a contribution to the Budget too.

We need a strong British voice batting for British interests. No way can we have that with ‘associate membership’ of a club that is run in the interests of its ‘full’ members.

But I recognise that in this hall, and in the wider British business community, there is not as much pro European fervour as perhaps ten or fifteen years ago.

In part this is an unwanted by-product of the Labour Government’s economic record.

In former times, successive British governments had so messed up the running of the economy that British business looked longingly to the Continent and particularly Germany, as an anchor and a model of partnership in place of our chaotic industrial relations.

Today, Britain seems to offer its own distinctive model of economic success.

I’m proud of the country’s economic achievement. But let’s have no exaggerated gloating.

The European economy has many virtues. Several member states combine stronger welfare states than our own and high employment with strong private sector R and D and enviable growth rates. Enlargement will be a spur to competitiveness across the whole EU. Even “core” Europe still retains powerful competitive strengths.

But as a model, it will be flawed as long as growth is anaemic and millions are condemned to unemployment and inactivity.

That’s why we do need more American-style dynamism in Europe but without emulating the raw divisions of America’s more polarised society. A fair, stable society provides the base for economic strength.

Last week, former Dutch premier, Wim Kok, presented a review of Europe’s Lisbon economic reform strategy.

Progress has been made. But the conclusion is pretty stark - and far from sparking retreat it galvanised heads of government at their summit.

The report says “From holding our own, Europe is now losing ground……Europe has no option but radically to improve its knowledge economy and underlying economic performance if it is to respond to the challenges of Asia and the US”.

Just consider these facts. Today the US accounts for 74% of the world’s top 300 IT companies and 46% of the top 300 firms ranked by R&D spending.

At the hi- tech end of business, with some notable exceptions and particular strengths in sectors like mobile telephony and civil aviation, Europe is being outsmarted and outgunned.

And in much of traditional manufacturing, we are facing formidable competitive challenges. China already accounts for 60% of world trade in textiles and leather; over 30% in radio, TV and communications apparatus and about a quarter of world trade in office machinery and computers. Unless we act to innovate and add value, we are living on borrowed time.

But let’s not make the mistake of the anti-Europeans and confuse criticism of some European policies with rejection of Europe.

We must never allow the case for reform in Europe to be presented as the case against Europe itself.

The European market is our home, domestic market. It is where 60% of our exports go and a major source of investment in Britain, worth 3 million jobs. It is where British business can become big in order to become bigger in the world.

The single market in goods and services promotes trade from which every Member State benefits. The euro, under Joaquim Almunia’s Commission purview, creates a monetary union of predictable, stable low interest rates and low inflation from which every member state benefits (including I might add those member states still outside).

That’s why Britain shouldn’t aim to diverge from Europe.

On the contrary, what we need is a new European convergence – British-style economic openness and market flexibility with continental-style investment in social and economic infrastructure, scientific research and development, and public services.

That’s the modern European model we should be espousing - economic dynamism with greater social cohesion and social justice, as we see best exemplified in such European countries as Finland, Sweden and Denmark.

I believe in a strong social agenda, like my colleague, Vladimir Spidla; but not overregulation that destroys jobs, benefits insiders at the expense of outsiders or discourages people, especially young people, from joining the payroll or condemns too many over 50s to idleness.

We need to modernise our welfare states not gut and dismantle them.

We need to make them more effective instruments for equipping people to cope with the harsh realities of economic change. Providing lifelong opportunites for every individual with rights and responsibilities properly combined, as an alternative to rigid social protection.

Last year’s Sapir report proposed the idea of “restructuring credits”, when workers are made redundant, in order to assist re-training and mobility.

I would suggest this kind of thinking is far better than any form of protectionism and needs to be taken seriously, not necessarily as a new European Budget item but as a common framework for life-time opportunity which Member States should adopt.

Economic reform depends, above all, on the actions of member states. We need political solutions, not process solutions.

National governments need to draw up realistic and thorough implementation plans. In France, the Camdessus report pointed the way. A single minister should be responsible for co-ordinating the Lisbon agenda within each member state.

The Commission is not a nanny. But it should pro-actively engage member states at political level. Commissioners should offer to appear before national parliaments to encourage national implementation.

We need to sell this drive for Growth and Jobs as convincingly as Jacques Delors did with the 1992 programme for the Single Market.

And what does this mean for the new Commission’s economic priorities ?

My belief is that the first priority should be to reinvigorate the drive for open markets.

Big firms need open trade and pro-active competition policies to stimulate innovation and keep them on their toes, as my colleague Neelie Kroes believes.

The Commission should tackle robustly abuses of market dominance. Europe needs to facilitate new entry to markets by dynamic growing firms. If market forces produce European champions, so much the better.

Second, I support pushing forward with the new Services Directive, to be the responsibility of Charlie McCreevy.

Services have a growing share of all European economies, but a small share in cross-border trade.

Action on this Directive will at long last tackle costly red tape in the services sector.

Of course this will touch some vested interests. Europe must not pursue harmonisation for its own sake. But we should not hesitate to act on realistic economic analysis of where the gains from freeing up cross-border service provision are likely to be substantial.

Third, and more widely, the new Commission should act on regulation.

New rules may well be justifiable but only when they genuinely – and proportionately – serve public policy objectives which cannot be achieved in a different way.

The political climate exists for something radical to be done.

There is growing awareness of some of the counterproductive effects legislation can have and the need to watch out for these effects as the legislative process wends its tortuous way through the Commission, parliamentary and Council stages.

In the new Commission I hope all new legislative proposals will be subject to a searching Growth and Jobs test.

I would hope to see urgent studies of the impact of existing EU regulation on competitiveness in all key sectors, leading to simplification of the “acquis”.

The new Commission has an important role in promoting a more favourable regulatory climate for innovation, especially for the emerging industries of the future, like biotechnology and nanotechnology.

If we turn our back on science and its exploitation, while others forge ahead, we condemn ourselves to slow economic death.

Of course, we have to assess risks. But we will never develop successful companies in these sectors unless Europe, as a whole, is seen to provide a favourable political climate for research, development and product innovation.

Taking a political lead on a rational approach to science should, in my view, be a priority for the new Commission.

A bigger European research budget is welcome but cannot be the only answer to Europe’s research and innovation deficit.

We need to find ways of levering in much more private sector R&D. But, as my colleague Janez Potocnik wants, the EU could do far more to act as a catalyst for the creation of European centres of excellence and to promote academic networking and researcher mobility within the EU to counteract the prevailing pull across the Atlantic.

The problem with the Lisbon agenda is not its range. The overarching concept is sound: complementary policies working together to address Europe’s lagging economic performance.


 stable “macro” conditions for growth with supply side investment and reform;

 open markets with public investment;

 better regulation with an active employment policy; and

 the promotion of enterprise with modernisation of the European social model and welfare state.

We are not going to advance further with the traditional checklists of desirable reforms that Europe’s leaders symbolically sign up for at every Spring European Council.

Heads of Government in all Member States, including the most ardent advocates of economic reform in Europe, must make the Lisbon agenda an explicit feature of their domestic reform agendas.

However, the Commission needs to show economic leadership itself and re-establish its own credibility in this area. In Gunter Verheugen, the Commission has an excellent agent of change.

The enlargement to 25 is complete. The Constitutional Treaty is signed. The new Commission and its President should make the EU’s internal agenda of economic and regulatory reform their primary focus, and a successful Doha trade and development round will contribute to this.

I know these are President Barroso’s top priorities. But reform is a team game.

That is why he and his excellent group of commissioners are keen to get on with the job at the earliest possible opportunity.

Hopefully this will now not be long. For us, the waiting needs to end. The action needs to start.

Thank you very much. ENDS