A globalised world asks for work to be interconnected across nations

A glance at the BDI’s new representative office in Brussels

Network for free trade – Why the BDI is needed in Brussels
We benefit every day from the achievements of the European Union, often without noticing it. Indeed, it was the Union that first laid the foundations for our high standard of living. How? By enabling transnational production and trade. Today, the exchange continues to grow, and with it the prosperity of Member States and their citizens. However, the path towards free trade is increasingly disputed. A lobby group representing the interests of freedom and competitiveness is hence more necessary now than ever. This is what the BDI is advocating in Brussels.

European integration is no “project” for the BDI – it’s an urgent necessity if we are to be a global region standing alongside the United States and China. Germany, home to only 1 per cent of the global population, can do little alone in a world growing increasingly close-knit. Only as an integral part of a European single market with 500 million consumers does Germany have a strong voice in global politics.

The European Union provides the largest single market in the world, laying the foundations for a prosperous economy. On this basis, the division of labour within Europe has developed in a fashion totally unlike anywhere else. The European single market is the heart of prosperity in Europe. In the last two decades alone the value of all goods traded in the EU has tripled.

Today, the home market of German industry is Europe. Germany’s successes on the world markets are based on a strong production network stretching beyond national borders and industries. Regulations applying to German industry are mainly set at the European level. 60 per cent of new legislation in Germany have their origin in Brussels: the crucial political decisions are taken at the EU level, involving Germany as one of 28 Member States in the Council.

Interview with Dr Stefan Mair – “Globalisation is not a one-way street.”

The German economy has benefited from a globalised world. However, its success comes with great responsibility that both local industry and international politics have to accept. – Dr Stefan Mair, Member of the BDI Executive Board.

Interview
A community of open markets

Nonetheless, doubts are growing about European cooperation. We are reminded that free trade and internationalisation are not an inevitable development. The danger of nationalism and isolation has not been averted. The TTIP discussion shows this quite plainly, as does the debate about a shared approach to migration.

The first and most important task of the BDI was and is to promote free trade and European integration. Our work in Brussels is justified by the conviction that these are the basis of a prosperous life.

This is not always an easy task. It is beyond dispute that prosperity results from production and trade, and that politics, if it wants to improve people’s lives, must foster conditions for economic exchange. However, politics sometimes loses focus on the creation of these underlying economic conditions. Its “business model” is that of problem solving. Yet politics can scarcely win points with voters for the implementation of a functioning market – its utility only emerges in the long-term. The BDI makes persuasive arguments here to ensure that the long-term perspective isn’t ignored, either by politicians or by voters.

How do we do it? Amongst other things, in dialogue with the EU institutions, where the better argument is given precedence, and in close consultation with our partners, pooling our forces.

United forces in Brussels

As early as 1958, the year in which the Treaty of Rome entered into force, establishing the European Economic Community, the BDI opened an office in Brussels as one of the first trade associations. Today, along with its members, companies and European partners, the BDI is involved in EU legislation in the areas of energy, climate, digitalisation, trade, environment, innovation, transport, economy, finance, competition, taxes, security, raw materials and corporate law, amongst others. The BDI and the Confederation of German Employers‘ Associations (BDA) maintain together in Brussels a common office: BDI/BDA The German Business Representation.

Only together with its European partners can the BDI guarantee political majorities for growth-friendly EU politics. Within a Union of 28 Member States in the Council and with 750 Members in the European Parliament, this is a daily challenge. Collaboration with other national industrial associations and the European industrial umbrella organisation BUSINESSEUROPE is hence very important. “The BUSINESSEUROPE family, to which the BDI is a very strong and active member, exists for the same reason that the European Union exists: together, we are stronger,” says Markus J. Beyrer, the Director General of BUSINESSEUROPE. “Nowadays, each and every one alone is too weak at EU – let alone at global – level, therefore, we act together in the interest of European companies to create growth and jobs for a stronger European Union.”

What does this collaboration with BUSINESSEUROPE look like? “We get together to find common positions on a wide array of topics that matter to European companies,” according to Beyrer. “The EU has created a rulebook of now almost 100,000 pages. Many of these rules have to be applied by companies of all sizes. Our experts evaluate proposals and suggest improvements or compromises.” The process of finding common positions isn’t always easy. “Obviously, as in any family, we sometimes have long, intense and interesting discussions. But once a decision or position has been taken, we all stick to it.” This is very important since “the market of interest representation in Brussels is a crowded place. If we want to remain the number one voice of business at EU level, we need to agree on strong, meaningful and smart positions.”

The BDI in Brussels

The BDI began its representative work in Brussels in 1958. Much has happened since then. The community has grown, both geographically and economically – in an unprecedented fashion. To foster this development even further the BDI is renewing its presence in Brussels: since February 2016 it has a new office in the Belgian capital. 20 BDI personnel are stationed in the Rue Marie de Bourgogne, strategically close to the EU’s main decision-makers – the European Parliament, the Council and the European Commission are only a few minutes away. To accomplish even more together, the newly created “House of German Business – Industries and Employers” gathers 29 notable trade associations and enterprises under a single roof. The goal is to pool interests and strengthen networking – for example, at the more than 50 BDI events organised every year.

Increasing its presence in the Belgian capital is part of the BDI’s international strategy. Not only the site in Brussels, but also the representative office shared with the DIHK in Washington is being expanded – and an office was set up in Beijing. Establishing and expanding international networks, creating and fostering partnerships and participating in international structures and forums is the BDI’s answer to the rise of globalisation. Without strong international representation the voice of the most important industrial sector in Europe would be missing. This would certainly increase the risk that the de-industrialisation process in Europe, which contributed to the continent’s vulnerability in past years, would pick up pace once again. In the past, many policies and regulations passed by European institutions were to the detriment of industry. This has to be rebalanced.

New growth in the European Union

The European Parliament has set clear priorities for growth during the present legislative period (2014-2019), which it summarises in its study „Mapping the Cost of Non-Europe, 2014–19”.

The Parliament has identified a manageable number of political tasks that are decisive for the progress of the European Union. The European Council and the European Commission have agreed on similar political guidelines. This is a new achievement within the EU’s institutional structure. We welcome it wholeheartedly.

Our conviction is that we need a European Union that is integrated, renews itself and stands as a world leader. Energy, climate and environmental politics ought to be connected to an EU-wide consolidation of the industrial base. The adopted strategy of integration and structural renewal within Europe must be continued.

We engage emphatically with this strategy, bringing with us facts and convictions. What follows is a summary of our positions on the most important topics:
1
Digital Single Market

The European Digital Single Market must be driven forward with ambition. In particular, digital business models depend on a large market due to network effects. With more than 500 million inhabitants, Europe reaches a market size which can more than keep up with Asia and the U.S. A functioning Digital Single Market can lead to additional gross value creation of € 1.25 trillion for European industry over the next ten years.

Modern broadband networks are the basis for innovative digital services. Rollout across the continent must be driven forward with ambition. The regulatory framework must give investment incentives. The European Commission’s investment plan can provide important support in this regard.

Trust in data protection and IT security is essential for the success of connected business models. A high level of IT security and constant further development of data protection legislation are therefore crucial. This is also confi rmed by the report commissioned by BDI from Noerr LLP on legislative challenges in the digitalised economy.

International norms and global standards should be driven forward. For a seamless information flow in an “Internet of everything”, interoperability and integration of technologies are central. With the digitisation of the economy, a new flexible working world will also emerge. Education, vocational and job-related training will have to adjust to changed requirements and in particular promote IT skills.

2
European Union Emissions Trading System (EU ETS)

Reform of EU ETS must give balanced consideration to climate, industrial and employment policy aspects. For cost-efficient climate protection, companies need fair framework conditions and long-term planning certainty. Growth must not be punished. On the contrary, the EU wants to increase the share of industry in GDP back to the level of 20 % with its “Mission Growth”. For this, companies which are exposed to international competition must be effectively and durably protected against carbon leakage.

It is necessary to increase the industry cap (emission ceiling) if there is to be any chance at all of achieving the EU Mission Growth.

Benchmarks must be technologically feasible. A flat-rate reduction in the benchmarks should be rejected since the corresponding efficiency improvements are not possible across the board. The carbon price increases that can be expected will also drive electricity prices higher, hence there must continue to be effective electricity price compensation for our industries.

The most CO2-efficient installations must not have to bear any additional and unilateral ETS-related burdens. More effective carbon and job leakage protection is absolutely essential also after 2020 as long as competitors are not exposed to comparable burdens.

3
Circular economy

The European Commission has presented a package of measures with which it seeks to strengthen the concept of the circular economy. Alongside prevention and better recovery of waste, raw materials should be used more efficiently, recycling of products improved and the marketing of secondary raw materials increased.

German industry supports the circular economy. It can contribute to a sustainable and secure supply of raw materials through a life - cycle assessment. Industrial companies themselves have optimised raw materials use in many areas. A good circular economy policy calls for a measured approach so that industry remains globally competitive and can drive resource efficiency and environmental protection forward through its products.

Industry champions safe, affordable, efficient and high quality waste management. When European waste legislation is reviewed, it is necessary to give priority to uniform implementation and application of existing law in EU Member States.

4
Transatlantic Trade and Investment Partnership (TTIP)

The conclusion of comprehensive TTIP negotiations must continue to be a central EU priority. TTIP will provide a stimulus for growth and jobs across the entire EU. With ambitious rules for trade, investments and sustainability, TTIP can be an agenda setter for the next phase of globalisation. Therefore, the political commitment must now be increased and the negotiations must be intensified. If TTIP were to fail, the EU’s ability to shape the rules of globalisation would suffer massively.

Negotiate with ambition: A strong TTIP covers the dismantling of customs duties, access to U.S. procurement markets, intensive regulatory cooperation and a modern investment protection regime. In particular, industrial SME will have considerably better access to the U.S. market through such an agreement.

Provide fact-based information, increase trust: Public trust in TTIP has unfortunately been shaken through one-sided and sometimes false statements. German business wants to provide fact-based information about TTIP, to continue the dialogue with citizens and in this way increase trust in free trade and globalisation.

Help shape globalisation: The development of trade rules in TTIP will also strengthen the world trade system. This includes an ambitious sustainability chapter as well as clear rules for competition and the protection of intellectual property. In addition, TTIP should be designed in such a way that third countries can also benefit from the trade-creating effects of the agreement.

5
Economic and Monetary Union

European Economic and Monetary Union (EMU) has insufficient mechanisms for stabilising the economic development of the Member States. The European Parliament estimates that non-integrated capital markets and negative fiscal policy contagion effects cost the overall economy € 28 billion a year.

Integration in the Eurozone should be markedly deepened in areas which strengthen the EMU stability and competitiveness. Structural reforms on labour and capital markets are in first position on the list of priorities. Simultaneously, they help the Member States to converge.

Consolidation of national budgets is indispensable to restore the ability of the Member States to manoeuvre. The European Semester must be applied determinedly and the country-specific recommendations must be implemented consistently. Macroeconomic imbalances should be addressed with determination. Strengthening the Single Market and above all deepening labour and capital markets are central to increase the European Union’s crisis resistance. The Capital Markets Union and Energy Union as well as the Digital Single Market are steps in the right direction.

In the long term, EMU needs stronger fiscal integration which follows clear rules and does not reduce incentives for structural reforms.

The transfer of competencies from a national to a European level, which has been observed for decades, alongside progressive globalisation, increases the importance of interest groups in Brussels. The BDI will continue to advocate fervently a strong and competitive Union. We promise.