Instead of letting governments picking ‘champions’, the EU should strengthen the single market, invest more in innovation and “assertively” pursue fair and equal trade policies, argue Dutch ministers Eric Wiebes, Sigrid Kaag and Mona Keijzer.
Eric Wiebes is Minister of Economic Affairs and Climate Policy; Sigrid Kaag is Minister for Foreign Trade and Development Cooperation; and Mona Keijzer is the State Secretary for Economic Affairs and Climate Policy for the Netherlands
The single market is our greatest asset – we should leverage it.
Openness, cooperation and audacity have brought the European Union and its member states unmatched prosperity. But over the last decade the global economic landscape has changed, and we are now confronted with rising competition. To ensure our future economic success the European Union must step up its game.
Rapid digitalisation, the transition to a sustainable world economy and a changing global playing field are all raising questions about the EU’s competitiveness. Strong European companies are essential for future growth. These so-called ‘champions’ generate prosperity and employment, foster the innovation needed to meet the challenges of tomorrow, and form the core of competitive clusters with innovative SMEs and startups. Here, European cooperation is more important than ever. While some have called for governments to start picking champions, we are calling for an alternative route to success. True champions are created and maintained by strong competition, a strengthened single market, intensive R&D and open markets on a level playing field. And it’s precisely in these areas that the EU can do more.
Strength starts at home
Leveraging the European Union’s market power globally starts with our home base: the single market. After all, how can you raise a fist if your feet are slipping?
To ensure solid ground beneath our feet, the EU must eliminate the flaws holding back our single market. We need to apply and enforce EU rules better and come up with a tailored approach to tackling the barriers that remain. Secondly, we need strong and politically independent enforcement of competition rules in order to create competitive firms and low prices for consumers. We should modernise and strengthen competition rules to better deal with the power of global digital platforms. We also need to make capital markets more accessible, so that European companies with global potential can more easily obtain financing to scale up. The single market is our trump card; strengthening it will reinforce the very foundation of our success.
Dare to invest in the future
It is essential to avoid further delays in boosting public and private investment in innovation. Every programme in the next Multiannual Financial Framework should give higher priority to R&D and innovation – but we mustn’t stop there. A focused and offensive innovation policy is needed. Societal challenges, the Sustainable Development Goals, and the Paris Agreement all demand action. We need to use technology as a force for good. This means investing in strategic value chains like sustainable energy, food supplies, security (including cybersecurity) and healthcare. At the same time, key enabling technologies, like photonics, robotics, artificial intelligence and quantum computing, will be fundamental for the future economy. Projects in these fields are of common European interest and so should benefit from targeted joint investment plans. These funds should be made accessible to all European companies, including small and medium-sized enterprises: bigger is not always better. European SMEs, especially startups and scale-ups, are just as important as multinationals to European competitiveness. With this in mind, we must not forget to invest in human capital.
Protect open markets
Internationally, the European Union benefits from an open and rules-based global trade and investment system. But current rules are no longer sufficient, and agreed rules are not always respected. European companies have to compete with companies from third countries that receive direct or indirect state aid, giving them an unfair advantage in trade, public procurement and direct investment. As the world’s largest economy, the European Union can put a stop to such inequitable practices. Adopting protectionist tactics is not the answer. If anything needs protecting, it’s the achievements of over 60 years of European market integration.
Instead, we must insist that third countries operating on the European market abide by our rules. We must explore ways of giving the European Commission enforcement powers when the playing field is distorted. We should consider adapting the state aid and competition framework to prevent businesses from third countries who benefit from direct or indirect state aid distorting competition. Within the World Trade Organization, the European Union must push for new rules on industrial subsidies to ensure fairness. Special and differential treatment of countries has to be assessed on a case-by-case basis and be rooted in clear evidence. What’s more, the European Union must apply its reformed trade defence instruments to counter dumping or trade-distorting subsidies when necessary, taking into account the interests of European producers and consumers.
Finally, the EU should show leadership in promoting responsible business conduct, which could well be companies’ biggest contribution to the Sustainable Development Goals.
Ultimately it is up to the European Union and its member states to create favourable conditions for European world champions to emerge. We need to solidify the foundations of the single market, dare to invest in innovation, and assertively pursue fair and equal trade policies. If we remain open, work together, and resolve to exert our market strength, we will ensure the European Union’s scoring ability for many years to come.