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Wednesday, 8 June 2005 - Strasbourg OJ edition

22. Strengthening European competitiveness

  President. The next item is the debate on the report by Dominique Vlasto, on behalf of the Committee on Industry, Research and Energy, on strengthening European competitiveness: the effects of industrial change on policy and the role of SMEs [2004/2154(INI)] (A6-0148/2005)


  Dominique Vlasto (PPE-DE), rapporteur. (FR) Mr President, the report I am presenting to you this evening confirms the return of an ambition, the ambition of an industrial policy for an enlarged Europe. It was both necessary and essential. We need to go further, however. The time is short so far as industrial policy is concerned and we need to go faster and move from ambition to action.

Last week I was in Shanghai with the delegation from the city of Marseille. Industry is the backbone of China’s development. Innovation and new technologies are the vehicles of that industry’s development, and economic growth there is ongoing. In a word, the dynamism of that society is enough to make you dizzy. Of course, I do not want a Chinese-style development model for the European Union; but I would like our Europe to have the means to hold its own against the economic giants of the United States, China, India and others.

Above all, our challenge must therefore be to be competitive through innovation and by investing in research, know-how and knowledge. The Commission and Vice-President Verheugen are making a lot of proposals along these lines. What we are looking for now is for these proposals to be made political reality, and it is in this light that this report and its contents should be considered.

First of all, we think a policy should set itself objectives that lend it significance, like the development of a sound European industrial base, increasing employment, especially for young people, and the emergence of European industrial champions able to act as standard bearers for the ‘Made in Europe’ brand. European industrial policy must also, however, be aimed at all enterprises and become a full part of the Lisbon strategy. The Commission is focusing on a sectoral approach: we are pleased about that because it is essential that part of industrial policy should take account of the distinctive nature of each sector in the way it is implemented. An effective policy must also take account of the nature of enterprises, however, because only 1% of European enterprises are large groups, while there are millions of other small and medium-sized enterprises that make up Europe’s industrial fabric. The Commission must make a real effort to take small enterprises into account.

The second dimension that must not be overlooked is the territorial dimension. Industry acts as a magnet for other economic activities, making its location a key factor in the development of many regions. The Structural Funds must therefore support industrial development while at the same time acting as instruments to assist the reconversion of areas suffering from industrial relocation. We must bring a specific response to this problem of relocations, assess the sectors at risk, anticipate relocations and help to regenerate the regions affected. We must also take account of the existing differences between the 25 countries of the European Union.

Finally, we believe that every policy must be based on a clear and effective method, and that is particularly true, Mr Verheugen, of your commitment to better lawmaking. We are looking for a way of simplifying legislation that takes account of the cumulative effects of legislation on individual sectors. We are hoping for a method of studying the impact of proposed legislation that will take account of SMEs and, in particular, use precise criteria to evaluate the responses made to Commission consultations. I would add that Parliament and the Council also have their parts to play and that they should be actively involved in the better lawmaking objective.

As you can no doubt see, Mr Verheugen, our expectations are high. For many instruments of industrial policy, they depend in part on the outcome of the negotiations on the financial perspectives; they also depend on our ability to make use of the instruments we already have, such as competition policy, education, the allocation of State aids or commercial policy. I hope our Parliament’s contribution will help this challenge to be taken up.


  Günther Verheugen, Vice-President of the Commission. (DE) Mr President, ladies and gentlemen, the report that we are debating this evening is completely in line with the Commission's beliefs and with the policy that we are pursuing and I am therefore exceptionally grateful for the support of the European Parliament.

First of all, we needed to make sure in Europe that industrial policy in general is seen once more as a political task. We had to clarify that we in Europe cannot manage without a strong, efficient industrial base and that it is a mistake to believe that we can live from services alone. This has already been achieved.

Secondly, we need to ensure that European industry retains its long-term edge in increasingly fierce, and increasingly global, competition. That is the main thrust of the new growth and employment strategy which the Commission has tabled and which Parliament adopted by a large majority. What we are trying to do here, above all, is to improve our innovative skills. European industry can survive worldwide and generate growth and jobs only if 'made in Europe' indicates a top-of-the-range product. We cannot compete through lower social standards, lower environmental standards or lower wages; we need to compete through efficiency, quality and technological progress.

Thirdly, we must analyse very carefully where our industry has structural problems. I shall shortly be submitting a communication containing a precise analysis of the industrial sectors in Europe and explaining what individual steps are needed in order to improve the competitive chances of European industry. Everyone can see that the automobile industry and the chemical industry do not have the same problems, any more than do the textile industry and the tooling industry.

I am very grateful to the rapporteur for emphasising the problem of small and medium-sized enterprises, which I regard as the focal point of our efforts; there are 25 million of them, and the European economy thrives on their flexibility and capacity for innovation. We should always bear in mind that new jobs in Europe are created in this sector and in this sector alone.

The advances in productivity made by European industry mean that, in years to come, no new jobs will be created in industry. Jobs are only being created by small and medium-sized enterprises, which is why we must help them to overcome their structural problems. That means access to risk capital, access to knowledge and skills and innovation and an improved business environment, basically in the form of red tape for small and medium-sized enterprises.

The density of regulations that we have achieved in numerous sectors in Europe is quite simply too much for small and medium-sized enterprises. That is why I am making an announcement today that is also directed at the European Parliament. This Commission takes the 'better lawmaking' project very seriously. This does not only mean that we shall improve the quality of lawmaking, it also means that we shall say no much more often in future.

We shall say no to demands from the ranks of the Member States for regulations which are not necessary and I shall also say no if demands come from the European Parliament – and this is, unfortunately, often the case – for regulation which we do not need and the same Parliament then criticises the Commission because it over-regulates. You are going to see a new Commission here. We shall say ‘no’ where over-regulation is being set in motion and we shall see how the European public reacts. I wait with anticipation and I am counting on your assistance.

Healthy self-regulation in the field of lawmaking is what the citizens of Europe expect of us at the moment. It is also what our economy needs in order to improve its chances of growth and its investment potential.


  Romana Jordan Cizelj, on behalf of the PPE-DE Group. – (SL) Compared to large enterprises, small and medium-sized enterprises (SME) have special requirements for competitive development, so they need to be given special attention when policies are being formulated. Industrial policy should be no exception, since industrial development based on knowledge is not limited to large enterprises. Greater financial resources for research, for instance, still do not guarantee a greater number of innovations, and this is why we need the enterprising spirit embodied in SME’s.

Small and medium-sized enterprises are not merely the driving force of economic growth. We must be aware that they also represent an opportunity for the European Union in the political sense. They also carry a political charge, since the rejection of the Constitutional Treaty in France and the Netherlands is, amongst other things, a consequence of the fact that the people of Europe do not feel the direct effects of the workings and decisions of European institutions.

Something similar is also true of SME’s, which lack their own resources to exploit the advantages offered by the European Union. In the report, therefore, as the European Parliament we are giving particular support to institutional measures that will strengthen the innovative capacity of SME’s. We are in favour of the European Union giving priority to mutually linked processes such as research, education and the elimination of administrative barriers, which present particular obstacles to small and medium-sized enterprises in exploiting the opportunities offered by the EU.

Commissioner, in formulating the report we collaborated very enthusiastically with Members from the new Member States. Indeed we are aware that industrial policy may serve as an opportunity both for the geographically larger old Member States, which have the conditions for the development of industrial heavyweights, and for the new Member States, which can with their dynamic sectors of innovative SME’s represent the basis for high economic growth and for raising European competitiveness in the long term.


  Joan Calabuig Rull, on behalf of the PSE Group. (ES) Mr President, Commissioner, several assessments suggest that uncertainty, particularly with regard to employment and social protection, has been a significant reason why many citizens have rejected the Constitutional Treaty in France and in the Netherlands.

After many years during which the words ‘industrial policy’ had disappeared, today they are making a reappearance, and we should all be pleased about this because it is by promoting a solid industrial sector that the citizens will be able to find better paid and more stable jobs. That is the way to contribute to increasing confidence in the European project.

The Commission’s Communication proposes an integrated approach, which includes the simplification and harmonisation of legislation in order to consolidate the internal market, and supports R+D and the need to promote its transfer to companies. But that harmonisation should also include a fiscal dimension.

The European industrial fabric is made up of diverse sectors, ranging from the aerospace industry to the textile industry, and they require specific responses. Sectoral analyses will help to facilitate greater cooperation between industry, the Commission and the Member States, which could create new opportunities.

Small and medium-sized businesses make up 90% of European industry and they require special attention in terms of their access to funding and transfer of research. Relocation is, on occasions, an inevitable reality and we must anticipate those changes.

To that end, we must create a dialogue that includes the administration and the social and economic actors and that takes account of the available research and innovation instruments. And, of course, an adjustment fund will be essential in order to accompany restructurings.

I would like to end by congratulating the Commission, because it has proposed the appropriate instruments for increasing European competitiveness and has done so within the framework of the Lisbon Strategy. But if we want the citizens to see the Union’s policies as an instrument for making progress and not as a threat, we must maintain the balance between the three pillars of that strategy, that is to say, the economic, the social and the environmental pillars.


  Marcin Libicki, on behalf of the UEN Group (PL) Mr President, I very much enjoyed listening to all that Mrs Vlasto and Commissioner Verheugen had to say. I cannot comment on what has been said in this Chamber today, however, as I feel obliged to comment on what is written in the report. Unfortunately, I have to say that it does nothing whatsoever to advocate healthy competition, which is the cornerstone of a free economy. Instead, it is riddled through and through with interventionist ideology.

Paragraph 1 reads as follows, ‘[The European Parliament] welcomes the Commission’s decision to make industrial policy a priority of the EU agenda’. I would ask the House to remember that there is no such thing as priorities in a free economy. Society’s needs dictate everything that is necessary in such an economy, and the free market tells us what those needs are. To discuss priorities for the economy would be to neglect the economy as a whole.

To quote paragraph 2, ‘[The European Parliament supports] the promotion of a proactive industrial policy’. With all due respect, if it needs to be said that any aspect of the economy should be proactive, then I have to say that we have taken a very wrong turning indeed. After all, this would imply that we already regard freedom as a non-essential feature of the economy, and yet a free economy is the foundation for success.

Paragraph 5 says, and I quote, ‘social dialogue should help to identify the best-performing sectors’. I would remind the House that deciding whether something is performing well, or whether those running businesses are adhering rather too diligently to healthy free-market principles, is no job for social dialogue.

Moving on to paragraph 6, ‘[The European Parliament] would like to see women encouraged to train for industrial careers’. Ladies and gentlemen, this is a gross corruption of feminist ideals. There is no point in encouraging women to train for industrial careers, since they will find jobs in whichever sector they wish. I see no reason why women should have to work with pneumatic drills.

Paragraph 12 reads as follows, ‘industrial policy should lead to balanced development, by maintaining social cohesion’. I would remind the House that this is the wrong path to take if we wish to achieve competitiveness and success. One hundred and thirty years ago, the then British Prime Minister said that the job of economists was to prevent the government from harming the economy. At the time Britain was the fastest developing country in the world.

I am far from hopeful that the European Commission will follow my advice, but I would call on it to take my comments into consideration, if nothing else.


  Leopold Józef Rutowicz (NI).   (PL) Mr President, ladies and gentlemen, I should like to emphasise that the refrain of ‘enhancing European competitiveness’ has been repeated ad nauseam for many years. It is time to make it clear that achieving a global economy is an extremely challenging goal, but an absolutely essential one. This leads us to a number of conclusions, the most important of which is that precise and detailed implementation plans and timetables must be drawn up for all issues raised and measures taken.

In view of the limited funding available, it is important to establish which goals and priorities should be focused on, for example the development of small and medium-sized enterprises in the global economy, whilst at the same time safeguarding environmental protection and job security. Particular priority should be given to science and research programmes and training measures in the field of new technologies and new generations of products and services, as well as to productivity, potential savings and access to research for small and medium-sized enterprises.


  Ján Hudacký (PPE-DE). (SK) I would firstly like to thank the rapporteur for her excellent work on this well-balanced report. The Lisbon Strategy clearly identifies the need to improve the competitiveness of European industry as a priority for the European Union. I should like to remind the Commissioner, however, that we must also consider the following aspects in order to meet these objectives.

Firstly, unnecessary administration and red tape within the European Union must be eliminated. European institutions must reduce and simplify legislation governing businesses operating in the industrial sector, especially small and medium-sized enterprises. National legislation should play the key role, while the European Union’s industrial policy should be limited only to necessary coordination and harmonisation.

Secondly, emphasis must be given to supporting and encouraging small and medium-sized businesses in the industrial sector. The SME sector has provided clear evidence of its flexibility, and the latter is the key prerequisite for attaining a necessary and sustainable degree of competitiveness, both in Europe and on the global market. This is why I cannot entirely agree with the policy of supporting ‘national champions’. This approach of supporting the creation of a small number of large dominant companies would obviously tie up significant funding from the EU budget, and would probably violate the principles of healthy competition, without there being any guarantee of it having a positive impact on the competitiveness of such companies.

Thirdly, small and medium-sized companies in the industrial sector need new incentives for further technological development, research and innovation. The planned programmes, such as the Seventh Framework Programme, the Competitiveness and Innovation Framework Programme and others, must, however, be much more accessible to small and medium-sized enterprises than has been the case to date. More structural funds must also be allocated to less-developed regions and the new Member States, in order to enable them to build adequate technical infrastructures with a view to improving the industrial base in these regions.


  Adam Gierek (PSE).   (PL) Mr President, Commissioner, the Vlasto report contains mature and balanced deliberations that mark a new stage in the debate on Europe’s industrial policy, which is currently in crisis. At the same time, citizens are expressing irrational fears and frustrations, for example in the referenda in France and the Netherlands.

Outsourcing has become a fact of life. Even though ostensible economic justifications are put forward for this phenomenon, there can be no question that it is harmful to society. Whenever we discuss outsourcing, however, we must remember that this term covers a variety of practices, including both outsourcing within the EU, which brings advantages in terms of positive synergy, and outsourcing outside the EU, which brings nothing but disadvantages.

What the EU needs is a homogeneous market in products and services that is highly competitive in global terms and highly innovative. Two types of mechanisms exist for enhancing competitiveness. The first are simple mechanisms that limit the benefits of the so-called European social model, and the second are complex mechanisms based on intellectual and social capital that serve as a foundation for organisational, technological, technical and market innovation.

Europe should follow the examples of Japan and late-1960s Europe by relocalising, or in other words by bringing modern production activities and capital back to the common European market. Such relocalisation is urgently needed in order to protect intellectual property, to help Europe regain its lead in the field of know-how, to create jobs and to enhance the competitiveness of European capital.

All these things are possible, but they are dependent on Europe extricating itself from stagnation and bringing about GDP growth of at least several percentage points. A number of instruments exist that would undoubtedly encourage relocalisation. Contrary to the views of those for whom the proverbial Polish plumber and bricklayer mean nothing but fear and frustration, these include the full liberalisation of commercial services, as advocated by the Polish socialists. They also include the establishment of industrial clusters around centres of innovation and the introduction of the principle that all government purchases should be ‘made in Europe’. An EU directive would need to be drafted on this last point.


  Małgorzata Handzlik (PPE-DE).   (PL) Mr President, ladies and gentlemen, I should like to thank Mrs Vlasto for this report. It is one of some importance for me, as I myself ran a business in the small and medium-sized enterprise sector for many years. The experience I gained in this field means that I can take a practical approach to European competitiveness and the SME sector.

It is my belief that the European economy is in urgent need of genuine competition and of developing a better understanding of economic issues amongst the citizens of Europe. The first of these tasks was enshrined in the Lisbon strategy among the EU’s key objectives, one of the aims of which was to eliminate economic differences between the old and the new Member States. Businesses from the new Member States, and in particular the SME sectors in these countries, which are both flexible and capable of adapting to changing conditions, offer significant potential for economic development in Europe. A number of conditions have to be met before this potential can be tapped, however. These include doing away with existing obstacles to the internal market, of which there are currently around 90, the creation of an environment that is more conducive to SME start-ups and the linking of wages to labour productivity and efficiency.

I believe that employment levels will rise if we create a climate that is conducive to the development of the SME sector, and if we simplify regulations and adopt new ones. Liberalisation of the market in services will serve as a further catalyst for economic development in Europe, and also represents a source of new jobs. Furthermore, I believe that public understanding of economic issues must be improved. People will only stop fearing change and see that change is necessary for improved quality of life if they can understand the economic mechanisms that impact on their lives.

Developing a knowledge-based economy is the only means of enhancing the competitiveness of the European economy. This means investment in research, development and business-based innovation, as SME development will only be achieved on the back of such investment. There is therefore a need for education and training systems that reflect the needs of the labour market, and for the idea of life-long learning to gain public acceptance.

This report may well be a key factor in the development of the European economy and genuine free competition. I will therefore vote in favour of it, and I would suggest that the SME sector be acknowledged as the driving force behind the economy.


  Pier Antonio Panzeri (PSE). (IT) Mr President, Commissioner, ladies and gentlemen, what we are discussing takes on particular importance at a time like this, when a large part of Europe is in a situation of economic and social difficulties. Those difficulties are undermining the European Union’s competitiveness, and highlight a gap in productivity compared with the United States and Japan, low levels of investment and research and development, low levels of innovation, particularly as regards high technology, and the delocation of research activities. All of this needs to be addressed. Over and again, we have said that it needs to be done by relaunching the Lisbon Strategy, but that Strategy will continue to fade away if we do not invest seriously and forcefully in industrial policy.

I must say, Commissioner, that the Competitiveness and Innovation Framework Programme is still below expectations. It seems to be a summary of what already exists, whilst what we need are significant innovations. This evening we heard that you will present a new communication: we hope that it contains the required innovations. Choices need to be made in the context of general economic policy, completing the internal market and the reform policies on government administration, and the taxation system and infrastructures. Aside from that, however, a governance plan needs to be worked on, in order to enable all of the existing institutional levels to interact in cooperation with one another. There needs to be awareness of the necessity of investing in sectoral policies and in horizontal policies in order to promote small and medium-sized enterprises, which form a substantial part of the European Union.

Finally, the so-called virtuous circles – universities, industrial districts and research laboratories – need to be built and enlarged. I am talking about innovation ‘incubators’, which are vital to industrial policy. In short, we need to change up a gear – as soon as possible – if we want the European Union to become the more competitive and dynamic area that we have outlined as an objective for some time.


  Werner Langen (PPE-DE).(DE) Mr President, the rapporteur, Mrs Vlasto, achieved very broad agreement in the Committee on Industry, Research and Energy. She has illuminated every corner, but this report – like so many things that we adopt here – lacks the spark that is needed to ignite a new industrial policy. I should like to say how much I agree with Mr Libicki: the regulatory framework still needs scrutinising, which is why this report, to my regret, will be unable to have the effect that it really needs.

Mr Verheugen said that, as part of the better lawmaking project, the Commission will, in future, say ‘no’ more often, specifically to Parliament and the Member States. He forgot to mention the Commission itself. You could make a start there, by going through those proposals that have not been implemented for fifteen years, by implementing competitiveness in consumer protection and environmental protection within the Commission itself. These are starting points enough and, in my opinion, every European measure, as the President of the Commission once suggested, should pass three tests: the cost test, the competitiveness test and the subsidiarity test. On this point, I agree with Mr Hudacký, who said that there should be no regulation in areas for which the nation states have jurisdiction.

The question before us is how Europe decides between competing and cutting itself off. Does increased competitive pressure act as a fitness programme for Europe's economy or has the old Europe long been economically sidelined? The challenges are huge. It is my belief that the core of Europe is too full for international competition and is therefore opting to cut itself off and be sidelined. That is where we must start. Europe is under competitive pressure from above and from below. On the one hand, we are too expensive and, on the other hand, we are not productive enough in order to be able to afford the high costs. That will only be improved by the new incoming national economies. The new Member States are bringing us this competition. That is the important gift of enlargement: more competition and hence a proper industrial policy. This is what we urgently need, not more new European programmes that get us nowhere and ultimately obscure the regulatory framework.


  John Attard-Montalto (PSE). Mr President, I am a believer in three things: the European economy, European industry and the ability of European industry to be competitive.

Unfortunately, however, we often applaud the notion of competitivity, while supporting initiatives which erode that very competitivity. For instance, the Commissioner has rightly indicated that we sometimes tend to be over-regulated and this adds to bureaucracy and to the cost of production. Sometimes we are not aware that we are eroding competitivity by our own ideas and legislation. Recently, we lowered the limit in the Working Time Directive. This is obviously something which is paradoxical to competitivity.

Sometimes we talk about investments in technological innovation and we are dependent on private-public partnership. That is the way the argument is put forward. Europe is not an ideal model for private-public partnership. We try to restrict research on the basis of vague moral issues.

Finally, as well as encouraging further investment in innovation and research, there is a trend against patents. We must realise that we have to choose our priorities.



  Othmar Karas (PPE-DE).(DE) Mr President, Commissioner, ladies and gentlemen, I should like first to welcome this refreshing acknowledgment in competition policy and in the debate on industrial policy of the significance of small and medium-sized enterprises to jobs and the competitiveness of the European Union. This acknowledgment in today's debate also shows that every attempt to play industrial policy off against SME policy is wrong, harmful and contradicts reality. We need industrial flagships if we are to be competitive in the world and we need clusters of SMEs and industrial flagships in order that SMEs may derive competitive impetus from the competitiveness of industry.

While I agree with you when you say ‘no’ to more regulation, we must at the same time say ‘no’ to the tendency towards more nationalisation, ‘no’ to the tendency towards anti-efficiency, ‘no’ to the tendency towards despondency, ‘no’ to populism, ‘no’ to amending legislation, ‘no’ to anti-industrialism and ‘yes’ to more efficiency, ‘yes’ to the internal market, ‘yes’ to the four freedoms, which Werner Langen touched on. Enlargement strengthens the internal market. The internal market strengthens competitiveness. That also means yes to the Services Directive. But that also means a stronger commitment to tax policy. That means a stronger commitment in the financial perspectives to research, education, growth and employment and to new companies.

For me, this naturally means that we must encourage the best so that we can be there for the weak. Mediocrity must be driven out of Europe. The new type of nationalisation in mind must be driven out of our policy. The apportioning of blame between state and Europe must be driven out in order to allow this competitiveness, this innovation, this research, this will to achieve more through efficiency. I trust here that deeds will follow today's debate and the announcements made, because that is the only way to achieve new dynamism in the European Union.


  President. The debate is closed.

The vote will take place tomorrow at 12 noon.

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