A strong Europe needs a strong industrial sector to promote competitiveness, create jobs, and ensure a high quality of life. However, this strong Europe is beset by severe difficulties. The EU currently has to face a variety of challenges and at the same time defend itself against the growing group of Eurosceptics. Cohesion between the EU Member States is crumbling. The euro area crisis is not alone in having taken a heavy toll on the EU. And the possibility of British withdrawal jeopardizes the community itself. Moreover, the refugee crisis has shown how hard it is for Europe to preserve the principle of mutual solidarity. Yet without the EU, without open borders between the partners and without joint efforts, industry will also suffer – in all the Member States.
The European Union enables and simplifies the networking of knowledge and technology. For example, German industry collaborates across borders with companies and partners from other EU countries in order to manufacture competitively and to join forces in research and innovation. The internationality of industrial production also creates jobs and migration prospects which would no longer exist if Europe’s internal borders were no longer open. This would prolong production times, making services and products more expensive, and significantly harming the competitiveness of the industrial sector as a result. But it’s not just international cooperation and exports which are put at risk by the current situation. In some sectors, the entire production capacity of German industry hinges on free access to resources. Since not all these resources are available in Germany in sufficient quantity, free trade is essential for German industry to function.
As we can see, German industry needs a strong Europe, as this is the only way to create the structural environment necessary to ensure that innovation and competitiveness remain stable enough to compete with the other players on the world market. However, the EU is equally dependent on a strong industrial sector. Combating unemployment and climate change, and maintaining production in the EU are challenges which Europe cannot meet without a strong industrial sector.
To stabilize the situation in the EU and to set the course for the future, timely measures must be taken:
1. Maintaining open borders to preserve and strengthen the European Single Market
The free movement of workers and the Schengen Agreement were important steps towards a common Europe with a strong economy. It has become much easier for skilled workers from EU countries to offer their knowledge and skills in other Member States – from which the German economy has benefited in recent years. Furthermore, open borders allow trade to proceed rapidly. Speediness, an essential component of competitiveness in the era of globalization, is impossible to maintain if lengthy border controls impede the transfer of goods. This also applies to the cooperation connecting many European industrial companies and which will be a crucial growth engine in the coming years.
2. Optimizing and aligning infrastructure throughout the EU
The future will belong to those who can provide knowledge and innovation – and do so increasingly rapidly. To enable industry to exploit its potential in this sector, extremely active collaborations and joint projects have already been set up between companies from different EU countries, and businesses make use of the specializations of different European locations. However, the effectiveness of European production and knowledge networks is often limited by the lack of infrastructure investments and the differences in infrastructure from one country to the next. This concerns for instance transport routes and systems, the digital infrastructure, and energy generation and consumption.
3. Promoting focused immigration from third countries
The competitiveness and innovative capacity of industrial companies will in future depend on their employees’ expertise more than ever before. Given the demographic development in most EU countries, however, it is already evident that the skilled workers urgently needed will also have to be recruited from non-EU countries. A structural framework which allows these workers to immigrate into the EU as smoothly as possible must therefore be promptly and comprehensively promoted and developed.
4. Forging ahead with negotiations on international free trade agreements
German industry sets standards in the export of goods and services. Even so, international trade with many countries is still hampered by barriers such as high tariffs and lengthy import procedures. Removing these barriers is the object of a strong European foreign trade policy. It is therefore vitally important that the EU continues to make every effort to sign far-reaching free trade agreements with the world’s major nations.
5. Strengthening economic and monetary union
Internal trade within the European Union can only function if the EU continues to ensure stable economic and monetary union. Trading in a single currency is an enormous advantage for industry in the European Single Market. Only with a strong economic and fiscal policy focussing on structural reforms, balanced national budgets and investment can the European economy continue to compete on the world market.
Dr. Heiko Willems
Head of Department BDI/BDA The German Business Representation
+32 2 792 10 02
+32 2 792 10 27