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IEP Lunch Debate with Dr. Joachim WUERMELING: “From Internal Market to Economic Patriotism?”

left to right: Dr. Barbara Lippert , Dr. Mathias Jopp (both IEP), Dr. Joachim Wuermeling, Katja Neumann (both Economics Ministry).

The European internal market has become the “centre­piece” of European integration but is in some ways still an incom­plete project of the Union, explainedDr. Joachim WUERMELING, State Secretary in the German Federal Ministry for Economics and Technology. Because the success of European integration depends decisively on the increase in the standard of living through the common market, attention must again be dedicated to the original goal of a reali­sation of the four basic freedoms (free movement of goods, persons, capital and services). During a time in which the member states are confronted with poor economic data and the strong fear of global­i­sation among their popula­tions, a complete reali­sation of the European internal market will only become more difficult. Thus, the EU member states, today more than ever, must react to new internal and external challenges and adapt and shape the single European market accord­ingly. In the end, strategic national goal-setting and economic growth, the fight against unemployment and the security of economic compet­i­tiveness are all closely connected to the European internal market, Wuermeling emhasised.

From the German perspective, the European internal market is a success story. Still, the many positive aspects are too little appre­ciated, and the perceived dangers rather than the real dangers of the internal market are frequently pointed out. Here, Wuermeling identified achieve­ments such as the creation of 2.5 million new jobs Europe-wide, which since 1992 are a direct result of the completion of the internal market. Furthermore, through the European internal market, German exports have doubled in the last 10 years. Partic­u­larly the Eastern Enlargement brought for Germany a surge in its exports. In the first quarter of 2006 alone, trade in goods with these countries grew by 27 percent according to the Federal Statis­tical Office. Moreover, the further liber­al­i­sation of national markets means cost reduc­tions for enter­prises and consumers, Wuermeling explained. This has resulted in benefits for the consumer in the form of price cuts in the areas of telecom­mu­ni­cation and radio providers, spurred by increased compe­tition. Similar cuts in the future are also being pursued in the provision of gas and energy. Medium-sized firms also experience signif­icant economic advan­tages from transna­tional trade. However, among these economic actors “hidden economic patri­otism” has shown itself to be especially destructive. The prevention of the free movement of persons, services and goods, as well as the existence of often compli­cated appli­cation processes, makes it consid­erably more difficult for small- and medium-sized firms to do business across borders. The German federal government will seek to broach these and other issues during their EU Council Presi­dency next year. A “Paper on Internal Market Strategy” is currently being prepared for exactly that purpose, says Wuermeling.

While estab­lishing the goal of a common market in the 1980s and 1990s hardly experi­enced any criticism at the time, the context today for its further devel­opment is much more difficult. Wuermeling lamented the fact that internal market policy is currently under­stood mainly as overreg­u­lation and that the member states are increas­ingly leaning toward protec­tionism and the “sweet poison” of so-called “economic patri­otism”. One of the tasks of the federal government is therefore to promote better legis­lation and a stream­lined bureau­cracy and to prevent national inter­vention in mergers as much as possible. In addition, the creation of European “champions” is a positive and necessary long-term conse­quence of the European internal market.

Wuermeling explained that the European internal market is strength­ening compe­tition between enter­prises within the Union and is thus optimally preparing them for global compe­tition. This dynamism could represent a common European answer to global­i­sation. Accord­ingly, Wuermeling viewed a stronger appre­ci­ation for global markets in the further devel­opment of the European internal market as decisive. The common market could continue to be an attractive location for foreign investment if bureau­cratic burdens for European companies are dismantled and all regula­tions, such as the European subsidy right, are recon­sidered in terms of their global suitability to promoting competition.

In his concluding words, Wuermeling empha­sised that the European internal market does not require complete harmon­i­sation, neither in the areas of environ­mental and consumer protection nor in the areas of tax regula­tions and social policy. The diversity of national stipu­la­tions and the related European-wide compet­itive environment is very much desired and is the “trump card” of the common market.


By: Gesa-Stefanie Kuhle