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Commissioner Charlie McCreevy
AUCKLAND CHAMBER OF COMMERCE
30 October 2009
"The EU Single Market"
Ladies and gentlemen, it is a great pleasure and an honour to be the first European Commissioner to address your Chamber of Commerce.
For this, I would like to thank the hard workers at the Auckland Chamber, especially Cameron Gordon and Rebecca Seymour-East, for putting it together. My thanks to the ( New Zealand ) Ministry of Foreign Affairs and Trade too, for their role in the organisation of the wider visit.
I would also like to acknowledge my European colleagues here today - Monique Surges, President of the New Zealand Europe Business Council and Yann Teboul, Chairman of the French New Zealand Business Council.
There is nothing I like better than to be among entrepreneurs, innovators and risk takers. You are the people with your finger on the pulse of the economy, and at the same time an eye on the bigger picture. For that reason, I have always been a firm believer that policy makers - whether in Brussels or anywhere else - should have more opportunities to mix with business people.
As some of you will know, my role over the past five years has been to oversee the EU's Internal Market. I serve in a team of 27 European Commissioners, who together make up one of the Institutions of the European Union. The role of the Commission in the EU system is to push forward the common EU interest at the day-to-day level. It also brings forward proposals which the European Parliament and the 27 governments can then vote and decide on.
What I would like to do today is share some of my thoughts with you about the general importance of the single market for economic development in the EU, and speak briefly about some of the challenges facing us today, in particular in the field of financial services.
But first of all, it is perhaps useful to ask ourselves: what does the EU's single market do for companies? At its most basic level, the single market project is about the removal of obstacles to entrepreneurs. What barriers? All barriers that prevent the free movement of goods, persons, services and capital. That means that if you want to travel, to trade in goods or services, to establish a business, or simply to transfer money to another Member States, you should be faced with no barriers whatsoever. This is particularly important for instance, for companies coming from smaller Member States. Accompanying these "four freedoms", as we call them, are other basic principles of the single market - such as the principle of non discrimination, the principle that you should be given the same treatment as nationals when you do business in another Member State, or the principle that state aid should be minimised, and even then only granted under very strict conditions. And finally the principle of respect for EU competition rules. Any actions by the Member States that threaten these freedoms and principles carry huge economic costs.
But of course, the implications of all these single market rules go very wide indeed. It gives businesses access to a very large market which should encourage them to invest more because the returns are likely to be greater. And at the same time, it subjects them to much tougher competition, effectively forcing them to shape up and become more efficient. In this regard, the single market has proved to be a very efficient driver of change towards more productive, more sustainable and more competitive economies.
The Single Market is also there as a platform for European companies to become more competitive on the wider stage. This was perhaps not so much the focus when the original 1992 project was being formulated back in the mid 1980s. However, the world of the 21st century has become much more interdependent, and the EU must seize the moment to open a new era for what we in Brussels like to call "Global Europe". In other words, the internal market cannot and must not be a purely inward looking phenomenon, but open to competition at global level within the frameworks established by the WTO.
No doubt some of you here today are exporters. I feel confident saying that most of your exporting began to Australia or is only to Australia - it is after all, the destination of about 20% of all New Zealand exports. As you move closer towards a Single Economic Market with Australia , you might like to look at our experiences with the Single Market in Europe to give an indication of its benefits.
And perhaps there are others who already do business in the EU Single Market. The principles of openness and free movement also apply of course to companies from non-EU countries which are established in Europe . In terms of practical information on the single market, I know that Ambassador David Daly and his team in the EU delegation down in Wellington are there to help and assist you with any queries you might have on how to make the Single Market work for you.
That brings me to the next theme I wanted to touch on, which is this. The single market is not a perfect single market, at least not yet anyway! It has many unfinished elements to it, could be improved in certain respects, and like any vehicle, requires regular servicing. Amongst the challenges I see facing the single market, the future of services is clearly one of them. No different to here in New Zealand , we know that services are the backbone of our economy and the source of potential new growth. Innovation is also a challenge, as our capacity in this field will be vital to economic recovery and job creation.
Today of course, economic recovery is a priority for all Europeans, as it is for all New Zealanders, though I am glad to see at least that you seem to now be coming out of recession. The 27 EU Member States are trying to boost their flagging economies so that they can maintain existing living standards and continue to pay for their social security, pensions, healthcare and education systems. Over the past year, I and many others believe that the single market has served as an invaluable cushion for Europe in addressing this crisis.
It is precisely the financial crisis that has perhaps been the biggest challenge of all facing the single market over the past year or so. The global crisis which hit the financial sector in 2008 brought into sharp focus in Europe the weaknesses of our arrangements to guarantee adequate protection for depositors, policy-holders and investors, as well as financial stability generally in the EU. Overall the response at the level of Member States was unfortunately characterised by decisions which were ad hoc and mainly informed by national interests. Some Member States took unilateral decisions which had the potential of undermining the soundness of other Member States' financial institutions.
However, as everything is interrelated in a single market, and the actions taken by one State have implications in other Member States, it was just not possible for the Commission to stand idly by as all of this unfolded. The EU therefore acted quickly to defend the Single Market.
For example, we facilitated the agreement of a framework for intervention in the financial sector. We also took a number of other measures: such as increasing the protection levels for bank deposits, adapting accounting standards and proposing a reinforcement of capital requirements rules for financial institutions . We also brought forward recommendations in the field of executive remuneration in the financial services sector. In parallel, a high level group on financial supervision was set up to reflect on wider reform of the supervisory architecture. On foot of this, we launched a comprehensive review of the EU regulatory and supervisory framework for financial services.
In order to remedy the shortcomings of this system, the Commission has recently adopted a package of measures to create a European system of financial supervision, which will deal both with micro-prudential and macro-prudential supervision. Systemic risks will be detected at an early stage, and warnings addressed to the relevant destinee, to prevent any risk of a systemic failure in the EU in the future.
Before concluding, I would like to return for a moment to the international context, where there is clearly a big agenda facing Europe 's single market. To the West, there is the US which remains a formidable economic powerhouse. And to the East, Europe is coming under growing pressure from low-cost economies, such as India and China and also Russia , which are no longer satisfied to supply the world with textiles, tapestries and toys, but are progressively moving into higher value-added activities, including the services sector.
All of these and many other factors at international level impact to a significant degree on the EU's single market. But while there is ever increased competition, the EU nonetheless remains the largest exporter and the second largest importer of merchandise in the world. The EU is also the world's first trading power in services, and the major source, and host, of foreign direct investment.
But to keep playing in the first division at international level, it is all about promoting real engagement. And that is why, at the bilateral EU-New Zealand level, I am very pleased to see that Prime Minister Key and Commission President Barroso agreed back in February to explore the potential of upgrading relations between us. Let us not forget that ours is a very important bilateral trading relationship, amounting to over €9 billion, some 19% of New Zealand 's total trade. It is no secret that the EU sees New Zealand as an important partner, and one which shares common values and interests. That is why we have grounds to be optimistic on the exploratory talks between our two administrations on a possible new comprehensive international agreement.
Let me finish. By any standards, the single market has been a big success for Europe . One might even say, the EU's greatest achievement so far. In addition to being a very efficient driver of change towards more sustainable and competitive economies, it has acted a buffer in facing the recession of the past year. And finally, and this is the main message I would like to give you today, the single market is there to provide many opportunities to improve the competitiveness of business. And this includes being "open for business" with firms coming from New Zealand.
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