Mr Verhofstadt believes that in parallel with the national action plans, proposed by the Commission in its mid-term review, there should be a European strategy: "Relying exclusively on national action plans can create social and fiscal dumping because you have competition between action plans."
The Belgian prime minister has doubts about the effectiveness of the open method of coordination as regards the Lisbon goals. He says that the open method works "only once a year" when there is an annual report which is open to political pressure. "Simply best practices and the open method of coordination is not enough," according to Mr Verhofstadt. Hence his plea for a European strategy with a real method. He cites as examples other big EU projects such as the euro which had the Stability and Growth Pact as its main engine.
'Naming and shaming', as proposed in the Kok report on the Lisbon mid-term review is not the right method either in the eyes of Guy Verhofstadt. He would prefer to see the Commission in the lead and being able to test member states' measures to implement the Lisbon process. "With national action plans only, the role of the Commission [...] is questionable."
The main element of the Belgian memorandum is the setting of a code of convergence, with minimum and maximum values as regards certain economic and social essentials. When asked on which data these values would apply, Mr Verhofstadt gave the examples of the flexibility of the labour market or the fiscal pressure on private companies. The code of convergence would leave member states a lot of room for manoeuvre to define their own policies, contrary to the philosophy behind the Stability and Growth Pact which was more rigorous, according to the Belgian prime minister.
Another element of Verhofstadt's memorandum is the shift from direct taxation on production to indirect taxes on consumption. The prime minister sees this as a "possible answer to the enormous balance deficit with countries like China". By taxing all products (also the ones imported into the EU from China, the US or Japan), the EU's competitors would be "participating in financing the global social model in Europe". Asked about the possible redistributive negative effects of indirect taxation, the premier pointed to studies which show that these effects have been overestimated.
Asked about the ratification of the Constitution in the member states, Mr Verhofstadt did not want to consider any plan-B in the event that a big country such as Poland or France say 'no'. He hoped the EU-25 would ratify.
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