European Competitiveness in a Global Context by Niall FitzGerald

Addressing the CBI dinner in Brussels on Tuesday May 27, Unilever chairman Niall FitzGerald identified three major challenges on which Europe must make significant progress if it is to continue "punching its weight on the world stage". 

• delivering on the competitiveness agenda agreed by Europe’s leaders in Lisbon over 3 years ago in March 2000.
• providing transatlantic leadership in the trade round whose success is so critical to global economic growth, the defence of prosperity and the attack on poverty.
• agreeing a firm base of governance structures to ensure effective decision-making within Europe and thus enhance competitiveness. 

Unless Europe can deliver on these, he warned, on current trends it is likely that within 20–30 years Europe will rank well behind the USA and China in the world power stakes.

In summary:

Delivering Competitiveness: "As the Lisbon agenda enters its fourth year, efforts are starting to pay off…but much more needs to be done. There is no time or room for complacency."

Europe needs more flexible labour markets and more sustainable pension systems; agreement on meaningful CAP reform in time for the Cancun Ministerial meeting; removal of red tape that holds back new products and technologies; and a stop to the brain-drain from Europe to other parts of the world.

"Unilever, and business generally, fully supports the target to increase R&D investment to approximately 3% of GDP by 2010 from the current level of 1.9%. However, without a dramatic reappraisal of Europe’s approach to innovation this will not be achieved. And that re-appraisal includes improving the status and working environment for scientists, increasing public spending on R&D to encourage more innovative public-private partnerships, and putting much greater emphasis on a regulatory process which helps rather than hinders innovative products coming to market quickly."

Providing Transatlantic leadership: Making a success of the Doha Development agenda is of great importance to every citizen on the planet.

If we are to re-invigorate the global economy it can only be done sustainably if we stimulate developing economies through easier and relevant access to developed economies. So what needs to be done most urgently?

First, we need the commitment of the two key players in the trading system — the EU and the US — to liberalise. This means doing away with the ‘special and differentil treatment’ that they have given themselves in agriculture and textiles for more than 50 years.

Second, we must work to ensure that the TRIPS and access to medicines are resolved.

Thirdly, we must liberalise the vast majority of service sectors, including the movement of natural persons.

The objective is to stop and reverse the drift towards protectionism. And we can only do this if we are prepared to make the global governance system for trade liberalisation work.

EU Governance: "Europeans at large must stop living with the cosy illusion that the debate on governance is of interest only to academics and bureaucrats."

Governance is immensely important to business, because it will determine Europe’s ability to deliver on the competitiveness agenda. More transparent and more effective decision-making is vital to deliver the Lisbon targets in an enlarged Union. It is also critical to meet the challenge of intensified competition in international markets.

FitzGerald calls for:

• simplified and more transparent decision-making;
• extending Qualified Majority Voting (QMV) to all areas related to cross-border business transactions (including certain elements of corporate taxation);
• a more effective (and perhaps smaller) Commission, and
• a more rational structure for Councils of Ministers and the European Council. 

It is indeed worrying that the Convention has thus far been unable to propose an appropriate structure for the European Council to ensure that it can exert continuity, true vision and leadership, without undermining the position of the Commission President.

Improved competitiveness by accelerated implementation of the Lisbon agenda; enhanced governance complements flowing from the Convention; and continuing trade liberalisation through the Doha Round should be the single-minded agenda on which we focus our energy and emotion. We owe it to our fellow citizens.

Britain’s Entry into Euro: Next week, a collective decision — or so we are told — will be taken as to whether the economic tests have been met and the time is right to recommend Britain’s entry into the single currency.

A decision to delay further will satisfy no-one. The British people will be cynical. Our European partners will feel let down. And British business will be unforgiving.

Of course, none of us knows for sure what will be said on June 9. But I do hope — and I fully expect — that at the very least, the Government will provide a clear timetable and a specific action plan for achieving economic convergence prior to joining the single currency.

Click here for the full speech.