In the novel “A Christmas Carol” by Charles Dickens it is noted that “there is nothing in the world so irresistibly contagious as laughter and good humour.” With the new European Commission having taken up office in the run up to the festive season there is however a distinct lack of good cheer in Brussels and across the continent generally.
The Draghi report on the future of European competitiveness laid bare the failings and shortfalls of the European Union when it comes to innovation, competitiveness and the EU economy as a whole. Europe is slipping behind and the right policies are not being adopted to address the decline.
Openness over protectionism
The European Union needs to ditch its growing protectionism – in the shape of its strategic autonomy doctrine – and instead revert to the promotion, facilitation and commitment to a rules-based multilateral trading system. Europe needs to realise that there is never a right way to do a wrong thing and copying the missteps of other nations should be avoided. Closed borders, tariffs and quotas harm all economies – those of European Union member states included – as businesses and consumers lose out.
Similarly, the fondness of the European Commission to use environmental and sustainability policy and regulation to prevent trade is a rising and worrying trend which needs to be reversed. The EU needs to seek deals with global partners and co-create global agreements in a spirit of partnership, rather than by diktat.
The need to take trade seriously
When it comes to trade more broadly, “Fortress Europe” should be replaced by an open trading bloc that stands against damaging trade wars. As such, it is vital that the European Commission reaches out to the incoming Trump administration in a positive and constructive way. The latent – and in many cases blatant – aversion to the 45th and 47th U.S. President needs to be addressed immediately.
Trade in goods and services between the European Union and the United States amounts to 1.3 trillion euros, underscoring the critical importance of the transatlantic relationship to the EU and U.S. economies. This robust level of trade and investment serves as the backbone for numerous industries, while the strategic partnership between these two economic powerhouses remains a cornerstone of the peace, prosperity, and progress that have characterized transatlantic relations for the past eight decades.
Despite the threats of tariffs and trade wars, EU officials need to keep a level head and not fight fire with fire. Rather they should be looking at ways to import more of the goods and services – from energy in the form of LNG to defense equipment and raw materials – that they need from the United States. President Trump is a businessman at heart and famously wrote a book entitled “The Art of the Deal:” Europeans should be capitalising on this and looking to hammer out an agreement on trade.
Too much regulation: the EU’s perennial anchor
In addition to the external dimension, the European Union still has too many rules and regulations which are strangling business, and SMEs in particular. While the U.S. may have the mercurial energy and talents of Elon Musk and Vivek Ramaswamy primed to boost efficiency and cut red tape, the EU has tasked the dour Latvian apparatchik Valdis Dombrovskis – in his third term as a European Commissioner – to look at productivity and simplification. The difference in ambition is sadly obvious for all to see.
Similarly, the internal market for goods and services is crucial to the EU and should be protected and expanded over time. As highlighted in the Letta report on the Future of the Single Market, the four freedoms – labour, capital, goods and services – underpin the raison d’être of the EU and represent one of its biggest successes.
Furthermore, completing a true Digital Single Market in Europe is essential: it will drive economic development, facilitate job creation and support SMEs. The approach here needs to be market-driven, technology neutral and supportive of interoperability. EU figures state that completing the Single Market would trigger economic gains totalling up to 1.1 trillion euros per year (almost 9 percent of EU GDP). It would also create at least 7.5 million jobs by 2030.
In Charles Dickens’ classic story, Ebenezer Scrooge is given a second chance to right the wrongs of the past and create a very different – and more positive and enlightened – future. The new European Commission must take the same approach and give the ghost of Christmas yet to come some reasons to smile.
