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The Lisbon Agenda - harnessing globalisation for a stronger Europe
speech presented at Bond University Queensland
12 March 2008
by Bruno JULIEN, Ambassador, Head of European Commission Delegation 
Ladies and Gentleman, distinguished guests
Recent months have reminded us of how the phenomenon of globalisation touches our everyday lives. Every day, we see evidence that our jobs, our energy supplies, our health, the quality of life of our daily lives are influenced by the global dimension. The turbulence in the financial markets has shown once again that the health of many of our economies is inextricably linked to global developments.
Importantly, the European Union is far from being a passive bystander in this globalised world. It commands a presence on the world stage that cannot be ignored. Why is this so? Because:
 And the list does not end there. Europe's capital markets are now more globally competitive because of the growing attractiveness of the euro as a world reserve currency. In this regard, I note that roughly 45% of the Reserve Bank of Australia's international reserves is held in euro - the same proportion as for the US dollar.
It comes as no surprise, therefore, that globalisation is at the very top of Europe's policy agenda. Getting the policy response right to the challenge of globalisation is critical to Europe's future - and to the future of the world economy.
Today I will speak to you about how Europe is responding to the challenges of economic globalisation and ultimately harnessing these challenges to achieve a stronger Europe .
Central to any discussion of Europe and globalisation is what is known as the Lisbon Strategy that acts as a lever for reform. The Lisbon Strategy is Europe's overarching policy response to the challenges and opportunities posed by globalisation in the areas of growth and employment. Our response to globalisation is broader than this, but the Lisbon Strategy represents Europe's most comprehensive policy response to the economic components of globalisation in particular.
In talking to you about the Lisbon Strategy, I will also highlight to you how there are many synergies between Europe's policy agenda and that of Australia's new Commonwealth government, underlining the fact that we all face common challenges - as well as common opportunities - in a world of globalisation.
History of Lisbon Strategy
So what is the Lisbon Strategy? It is a distinctively integrated European response - stimulating Europeans to make the most of globalisation, while also recognising the legitimate concerns of those facing change.
The Lisbon Strategy is based on the notion that if the EU makes the right economic reforms now, it can secure a prosperous, fair and environmentally sustainable future. It combines several policy instruments in a coordinated way - from research to social policy to competition law.
It is intended to ensure that our economies are well positioned to take advantage of the opportunities offered by globalisation. It can also put Europe in a strong position to cope with the evitable demographic changes of more older people and fewer young people of working age in our societies.
The Lisbon Strategy commenced at the start of the millennium, in 2000, when European leaders met to discuss a new pathway for Europe in the future - a pathway that would respond to the opportunities as well as the challenges posed by globalisation.
The Strategy was aimed at making Europe a more competitive, dynamic, knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion.
 At their historic summit in 2000, European leaders decided on three key pillars of the new strategy:
- preparing the transition to a knowledge-based economy and society by better policies for the information society and R&D, as well as by stepping up the process of structural reform for competitiveness and innovation and by completing the internal market;
- modernising the European social model, investing in people and combating social exclusion; and
- sustaining the healthy economic outlook and favourable growth prospects by applying an appropriate macro-economic policy mix.
The 2000 Summit, therefore, set Europe on the course towards maximising the gains from globalisation. However, from 2000 until 2005, there were mixed results in the implementation in the Strategy. Following a mid-term review of progress, European leaders decided to re-launch the Lisbon Strategy in 2005, with a streamlined and simplified set of goals.
In 2006, at the Spring European Council, four "priority areas" were agreed to drive Lisbon forward with even greater dynamism.
- These 4 areas are: research and innovation;
- a better business environment;
- greater employability;
- and energy and climate change.
 They have given the Strategy a much sharper focus. Of course, they are also closely inter-related. We will never become a knowledge-based, low-carbon economy without a highly skilled and 'employable' workforce, as well as more research and greater innovation.
Let me now spend a few brief moments outlining to you what initiatives Europe has introduced in these four priority areas, as agreed by the 2006 European Council. In outlining these initiatives, I will also draw out some powerful synergies between Europe's policy agenda and that of Australia's own newly elected government.
The four priority areas
Turning to the first priority area - research and innovation. Europe's policy initiatives in this area are broad, reflecting the complexity of the policy outcomes we are seeking to achieve. They can be grouped into the following key themes: improving pan-European infrastructure; promoting European innovation; promoting the take-up of information and communication technologies; and enhancing research and development.
In relation to infrastructure, the EU recognises that high quality infrastructure is a critical facilitator of building a knowledge economy.
The EU is committed to developing networks in transport, energy and telecommunications, in order to reduce costs and enlarge markets.
In 2004, the EU decided to invest €600bn into Trans-European Network projects, which is expected to increase GDP by 0.3% and create up to one million jobs. The EU recognises the role of enhanced infrastructure in enhancing competitiveness, trade and mobility - in a very similar vein to which the Australian government has signalled that one of its central priorities will be to adopt a strategic approach to tackling infrastructure bottlenecks that are seen to undermine productivity in key sectors of the Australian economy.
In relation to innovation, the EU is committed to creating better framework conditions for innovation and greater investment in research and development by improving the transformation of research findings into innovative products and services and ensuring appropriate knowledge sharing between all partners.
The EU has committed to achieving a target that R&D spending should reach 3% of GDP by 2010.
Encouraging innovation and the growth of the knowledge economy by research and innovation capacities, including new information and communication technologies, are at the centre of the European Union's efforts to promote faster growth and more jobs. In this area, too, we share many similar objectives with Australia , with Australia 's Innovation Minister, Kim Carr, announcing a number of new policy initiatives to boost research and development. Minister Carr visited the European Commission headquarters in Brussels just last week to discuss synergies between Australian and EU policy approaches in this area.
Importantly, the EU and Australia have had longstanding cooperation in this field, with 110 joint research projects under the umbrella of the EU's Framework Programmes from 2002-2006, worth some €970 million - roughly equivalent to $A1.6 billion. In the next phase of the Framework Programmes, known as FP7, the Commission has announced a budget of 50.5 billion euros - roughly equivalent to $A85 billion - to fund European research activities over the next 7 years.
Let me now turn the second key priority area under the re-launched Lisbon Strategy - fostering a better business environment in Europe.
To achieve this objective, we have developed discrete policy goals across a range of areas, including strengthening the European single market; strengthening competition law to ensure all companies operate on a level playing field; better integrating the European financial services sector; cutting red tape for business; and creating a better environment for Small to Medium Enterprises (which constitute 99% of all European enterprises, and two-thirds of total employment). Many of these objectives are also shared by the new Australian government in its integrated approach to trade and industry policy, with cutting red tape and creating the right environment for Australian SMEs both signalled as special priorities by senior Australian Ministers.
The third priority area I will speak about today is investing in people and greater employability.
 Globalisation is beneficial for growth and employment, but the change it brings requires rapid responses from enterprises and workers. Europe must create more and better jobs, to manage change and new social risks. It must reduce segmented labour markets and precarious jobs, and promote sustained integration and accumulation of skills.
At the 2006 Spring Council, European leaders committed to a number of targeted actions, including: encouraging and helping people to find paid employment; better focus measures for those with low skills and low pay, in particular those on the margins of the labour market; and reduce early school leaving to 10% and to ensure that at least 85% of 22 year olds should have completed upper secondary education. Many of these broad objectives are shared by Australia in launching its "education revolution", which recognises the critical importance of high quality education to nation-building, as well as in its measures to boost skills in the Australian community.
And finally, let us turn to the last - but by no means the least - priority area of energy and climate change.
 I am sure you will agree with me that the issue of climate change is a global phenomenon by definition. The European Commission is proud to have proposed, as recently as last month, a package of measures on energy and climate change which could be considered historic. It is not only the most important European action plan for the 21st century, but the most comprehensive and ambitious project in the world to combat global warming.
The measures included strengthening Europe 's emission trading system - the largest, multi-country emissions trading system in the world - by expanding its scope to include more greenhouse gases and all major industrial emitters. Europe has also committed to reducing greenhouse gas emissions by 20% by 2020 - and is prepared to reduce them still further, to 30%, if there is an international agreement on climate change where other countries also commit to this target.
The Commission also proposed detailed measures to enable Member States to collectively meet the EU wide target of 20% energy consumption from renewable sources by 2020 (a target that had previously been agreed in 2007).
The new Australian government has also signalled its strong commitment to tackling the global problem of climate change. It has committed to a range of measures which have close parallels with European initiatives in this area, including the introduction of a multi-sector emissions trading scheme; and a commitment to renewable energy; and a long-term target for emission reductions of reduction 60% by 2050. Importantly, both Australian and European leaders have pointed out the climate change represents opportunities as well as risks - opportunities for new economic sectors to flourish in the areas such carbon abatement and low-carbon products and technologies. These synergies between Australia and Europe could very well represent a new frontier in our close bilateral relationship, and provide yet further scope for deepening and broadening our bilateral and multilateral cooperation - a good example of which was our close collaboration at the recent UNFCCC meeting in Bali in December 2007.
Implementation
So hopefully you now have a much clearer idea of what Europe 's Lisbon Strategy is all about. But, one may ask, it is one thing to have a strategy in place to respond to globalisation. It is another to have a strategy that actually works.
In actual fact, there is clear evidence to show that the results of the re-launched Strategy are now starting to bear fruit.
 Despite current concerns in the world economy, Europe 's performance has improved: almost 6.5 million extra jobs have been created in EU-27 in the last two years and 8 million are expected to be created over the period 2007-2009. Also, unemployment is expected to fall to under 7%, the lowest since the mid 1980s. For the first time in a decade, strong increases in employment have gone hand in hand with robust productivity growth. Lisbon reforms have undoubtedly reinforced the growth potential of the EU economy.
Other indicators pointing to the EU already benefiting from the Lisbon process is improved economic growth, which was 3.0% for the EU27 in 2006 and is expected to be 2% in 2008 - substantially above the preceding years and far from a recession, despite the current turbulence in the financial markets. The resilience of the European economy is also due in part to the strength of the euro and the discipline associated with the single currency which complements the Lisbon strategy.
Also the EU27 budget deficits have been significantly reduced, from 2.5% of GDP in 2005 to a forecast 1.1% in 2007. EU27 public debt has declined from 62.7% in 2005 to just below 60% in 2007.
All Member States have now set a national R&D investment target. If all of these targets are met, the EU will reach an R&D level of 2.6% of GDP in 2010 (up from 1.9% in 2005). This would be a significant improvement even if the key EU target of 3% (with the private sector contributing 2%) were only reached later.
The data clearly show, therefore, that Europe has taken full advantage of economic globalisation: over the past decade, the rapid spread of technology, growing trade opportunities, lower barriers to investment and policy reforms have generated more cross-border trade and investment, lower inflation and interest rates, higher incomes and more jobs, with modest increases in real wages, and GDP growth. In this respect, it is worth noting that Europe counts among its members 7 of the 10 most competitive nations in the world, and 9 of the 10 most "economically globalised" nations in the world.
But there is more to be done
Notwithstanding these recent successes, much work remains to be done in implementing the Lisbon strategy and thereby allowing Europe to achieve its goals.
 As recently as December last year, a review was conducted to assess progress in implementing the Lisbon strategy. The report commended the EU and its Member States on the significant successes I have just mentioned, while also noting that task in implementing the Lisbon Strategy is far from finished.
Member States and the Union must press ahead with reform. This is the best way to make our economies more resilient in the face of an uncertain economic outlook. There is no room for complacency.
Indeed, the EU is not standing still in its work to further refine and implement the Strategy. We are currently preparing for the launch of the next three-year cycle, where we will update the Strategy in the light of lessons learned and new circumstances. There must be a greater focus on the social dimension: more investment in education and training for all ages is the best weapon against inequality and social exclusion. In particular:
- More needs to be done to ensure the EU meets its 3% of GDP target for R&D expenditure;
- More needs to be done to reduce budgetary deficits and debt levels;
- More needs to be done to reduce administrative burdens and improve the business environment, especially for SMEs;
- More needs to be done to reduce labour markets segmentation, to ensure education systems give young people the skills they and employers need and to improve worker mobility;
- More needs to be done to increase investment in information and communication technologies and in their use to enhance productivity.
The way forward - boosting the strategy in the next cycle
To address these challenges, a series of new actions were proposed in the report in each of the four priority areas. The Commission will therefore ask EU leaders to agree to these at the forthcoming Spring European Council starting tomorrow (13-14 March).
 As far as the business environment is concerned, the Report calls for an integrated policy approach through a European Small Business Act, to foster the development and growth of the millions of SMEs which create nine out of ten new jobs.
On research and innovation, the Report proposes steps towards the "fifth freedom" - the free movement of knowledge - through the creation of a genuine European Research Area and an integrated patent jurisdiction with a single affordable patent. It calls on Member States to draw up national broadband strategies and set national targets for high-speed internet usage aiming at a 30% connection rate of the EU population and connection of all schools by 2010.
On investing in people and modernising labour markets, the Report calls on Member States to draw up action plans and set targets to substantially reduce early-school leaving and improve basic reading skills.
On energy and climate change, the Report emphasizes the importance of completing the internal market for energy and calls on Member States to set mandatory energy reduction targets for government buildings and systematically include energy efficiency as the one of the award criteria for public procurement.
The Report also reinforces the external dimension, combining openness with the legitimate defence of the European interest. Dialogue with third countries will be strengthened and streamlined, with a clearer focus on globalisation issues of mutual interest such as market access, regulatory convergence, migration and climate change. In future the Commission will adopt a single annual report on market access, identifying countries and sectors where significant barriers remain.
So as you can see, the renewed Lisbon Strategy for Growth and Jobs will be at the heart and centre of tomorrow's European Council , which is expected to endorse the beginning of its new cycle. It will provide further momentum for Europe's journey to becoming an ever more integrated, ever more prosperous Union in a globalised economy.
Conclusion
Ladies and gentlemen,
I have spoken to you today about how Europe views the phenomenon of globalisation, and how it is responding to this phenomenon.
I hope that I have conveyed to you the fact that this response is continually evolving.
As we continue to implement reforms designed under the Lisbon Strategy, we are constantly seeking to build on these successes to create an even stronger, more effective platform to respond to globalisation. I hope you can also see there are considerable commonalities and synergies between what is happening in Europe and what the Australian government is trying to achieve.
 The planned visit of Australian Prime Minister Kevin Rudd to the European Commission in early April provides a unique opportunity to explore these synergies in more detail, and to explore new frontiers of cooperation between the EU and Australia.
From the Commission's viewpoint, globalisation is not something that is imposed on us which is beyond our control. It is instead a future of opportunities which we should seize and shape without fear, not as reluctant passengers, but firmly in the driving seat.
I hope that I have shown in my remarks today just how Europe has jumped into that driving seat with enthusiasm and energy. How it is setting the direction for its future - using the Lisbon Strategy to illuminate the path. And how, using that Strategy, it is steering a course towards an ever more prosperous, ever more integrated Europe into the future.
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