Ladies and Gentlemen,
I am very happy to be given the opportunity to address this conference today, and I wish to express my gratitude to the organisers for inviting me.
Globalisation, Labour and the New Economy, the subjects of this conference, are very important issues at the beginning of the 21st century. The way we will deal with them will impact greatly on the future prosperity of Europe.
The term „Globalisation“ stands for the growing interconnection of national economies. This is achieved through the increase of international trade and of cross boarder exchange of labour, capital and knowledge.
The terms „Globalisation“ and „New Economy“ may be new, but the development which these terms describe are not recent at all. Quite to the contrary.
We Europeans can be proud to claim that we are the protagonists of globalisation, because the integration of national economies was one of the main objectives of the European Economic Community when it was founded 45 years ago. This integration culminated in the realization of the internal market and a single currency. The integration process has been a tremendous success. It has provided unprecedented stability for its citizens and continuously growing wealth.
As a consequence of its success, the European Economic Community served as a model for other regions in the world like North America, South America or Asia where NAFTA, MERCOSUR and ASEAN are trying to imitate the European integration process.
The fall of the „iron curtain“ and the end of communism gave an additional boost to globalisation as more and more countries entered the world of market economies and free trade. Another trend has given an additional, almost explosive impulse to globalisation: The spread of modern technologies, in particular in transport and communication. These technologies allow us to trade worldwide at low costs and at an incredible speed.
Globalisation offers us great opportunities. We can achieve continuos growth of the world economy by profiting from the well known effects of the division of labour and specialisation. Each country concentrates on the production of those goods and services where it is at its best. Scarce resources are thus put to their most effective use. In addition, globalisation creates bigger markets, an increase in demand and in sales. We only have to look into a supermarket to witness one of the effects of globalisation.
Of course, I don’t want to paint a picture today which is too rosy. There have been developments which went into the wrong direction and the opponents of globalisation have been very vocal in expressing their views on these developments. A disparity of incomes continues to exist between the industrial countries in the north and the less developed countries in the south. A perceived return to ‚Manchester Capitalism‘ is criticized or the lack of solidarity between rich and poor people.
Ladies and Gentlemen,
the attacks of September 11th were not only directed against the United States. They were also directed against the open societies of the west, against free trade and the world economic order. The terrorists failed , but this does not mean that we don’t have to react.
Quite to the contrary. We have to see to it that we keep globalisation on track and that we exert our influence in such a way that global trends benefit all continents and all people.
For Europe this means that we have to further engage in the creation of a favorable framework for globalisation, and we have to position the European Union as good as possible in global competition.
After September 11th it is very important that all countries which are dedicated to the principles of democracy, liberty and justice and to a market economy increase their cooperation in their fight against terrorism. In addition, we have to see to it that the EU exerts its influence in structuring of the international finance and trade architecture.The success in the World Trade Organization demonstrates the European Union’s enormous potential. Our position will grow stronger when the European Union will have also become more influential as a political actor on the world scene. We will then no longer speak with fifteen different voices, but with a single one.
I claim that the recipe of the European Union’s founding fathers to create an economically strong Europe with its single market will be the right one in the future as well. In this context, the enlargement of the European Union is of utmost importance. The number of consumers will increase as will the strength of our economy. Enlargement already today has led to an increase in economic growth not only in the accession countries, but also in the EU as a whole. In Germany alone , the opening of these new markets to the east secured 70.000 jobs.
With a view to better positioning the EU in global competition let me highlight a few concrete areas where I think that the European Union and its member states have to maintain or strengthen their activities in order to better position the EU in global competition.
We have to undertake everything to increase employment. To reach this goal the qualification of the work force has to be improved. We have to invest in education. Human knowledge nowadays constitutes the most important factor in our economies. The rapidity of innovation and communication that calls for life-long learning requires the state to provide the infrastructure for life-long learning. At the same time we have to improve mobility and flexibility of our labour markets. Each year, only 0,4% of the EU population, i.e. just 1,5 Million persons change into another country of the EU. In the US, the rate of mobility between the individual states, is six times higher. Also, state regulation of the labour market is still too intensive and too expensive. In many countries of the EU, the state quota of GNP remains around 50%. This is far too much. It means high taxes, which make our economies rather unattractive for investments and new employment. There is more homework: We have to consequently continue in Brussels and Strasbourg to liberalise the remaining regulated markets within the internal market: Services, energy, open skies and public procurement are the most important fields where there is an enormous potential for more competition and economic growth. A better position of the EU in global competition and sustained economic growth will also enable the European Union and its member states to strengthen the social dimension of their market economies, to exercise „solidarity“ with those people who are economically weak. As I said, the „New Economy“does not have to mean a return to „Manchester Capitalism“.
Ladies and gentlemen,
the recipes which I outlined as means to cope with globalisation and to be able to remain competitive in the so called „New Economy“ are not that new. This is because the basic challenges haven’t changed. What has changed is the speed of these changes. And this leads me to another issue:
European integration has facilitated the longest period of growth and stability in the recent history of the European continent and our national economies becoming more and more interdependent. Enlargement will further add to the economic and political strength of Europe. At the same time we encounter certain difficulties in terms of the relationship between the EU and its citizens. Globalisation and Europeanisation are phenomena that have led to an unease in many quarters, especially since Maastricht. A fear – by some – to lose out economically, or to lose the connection to the nation which used to be a major source of identity in the past. This is an alarming trend. European citizens have begun to fear for their identity in a globalising world with the result that right wing extremists tend to gain importance in many member states. Therefore our objective must be to ensure that globalisation does not lead to a loss of identity for European citizens. The work of the Convention on the future of Europe which has become operational a few weeks ago aims to devise strategies to make the European Union more transparent and address the perceived deficit with regard to legitimacy and accountability.
We are looking forward to the proposals of the Convention. I expect that they will clearly allocate competences to the different levels of governance – from the regions to the EU – so as to make powers and competences more easily understandable for the citizens.They will thus counter the perception of the globalisation sceptics that Europe is a byzantine, unaccountable power structure.They will also, by clarifying and delimiting competences, work against the fear of being lost in a giant bureaurcratic system and so to lose identity. Rather, it is this approach that will enable the European Union to devise the policies necessary to foster employment and prosperity and hence make globalisation work for the citizens while strengthening their connection to the European political dimension.
I believe that the Convention, which encourages open public debate, will express its support to the concept of subsidiarity, that is, the allocation of powers to the lowest effective level. Subsidiarity should be understood in both ways: Regulation that is best dealt with at the European level will be given to the EU, at the same time a maximum of competences should be secured for the national and regional levels of government, so as to keep decision-making as close to the citizen as possible.
Once this new enumeration of powers has been established, Europe should have strong institutions which are capable of acting decisively. At the same time its nations and regions will also be certain as to their competences. This way employment can be created and growth spurred by a cooperation of these diverse actors, which have the knowledge required to have a real impact.
Ladies and gentlemen,
it was the European Parliament which pushed for the participation in the Convention of representatives from candidate countries. As a result of their history many candidate states have developed a distrust of centralised institutions and of regulation. Establishing a clear allocation of competences will alleviate such fears and enable them and the present member states to share in the economic and political success of the European project. It will extent the zone of prosperity and stability that was build in the European Union to the countries of central and eastern Europe. Globalisation will best be made to work in the interest of the prosperity of our citizens if institutions at the different levels, within their proper competences, cooperate to channel and influence the trends of globalisation.
Ladies and Gentlemen,
the terms Globalisation and New Economy for some represent the hope for a better future – for others they represent a dangerous threat. I think, we have to demystify these terms and approach them rationally. There are enormous opportunities ahead, which we have to exploit, but there are also undeniable dangers, which we have to avoid.
To obtain a clearer picture, a brought and open discussion of all relevant issues is needed.
In this light I wish you a stimulating and thought provoking conference.