The European Commission has decided to start the mandate with a package of "simplifying" measures, which could well slide towards an accelerated deregulation in which the socialists will not participate. Thus, we open the mandate with a debate dominated by the right, whose underlying agenda, at least clearly in the case of the Far right (Patriots) and Conservatives (ECR), perhaps more nuanced in case of the Christian Democrats (EPP), is to dismantle the regulatory advances linked to the European Green Deal.
This "simplifying" agenda is not restricted only to matters related to the Green Deal, but we observe the same tension in financial prudential regulation, in relation to the protection of civil rights linked to the digital environment, and to almost any community regulation that the right can relate to high "administrative costs". That is, without yet entering into the strategy of massive "deregulation" announced by the Trump administration, the objectives of simplification can effortlessly slide, at least in Parliament, towards a deregulation, which has little to do with the competitiveness of the European economy and much with cultural and ideological wars.
The socialists and even the greens, although critical of these first measures of the Commission in the field of "simplification", have shown ourselves open to seek an agreement between the pro-European forces to clear as soon as possible a debate that threatens, moreover, with serious problems of legal security. Without questioning the need for a certain simplification in some norms approved in the past legislature, the Commission's proposals open the way to a deregulation agenda that also can only contribute, if the EPP does not tie itself to the pro-European consensus, to a fragmentation of the European forces. A path initiated, by the way, in the process of forming the College of Commissioners.
On the other hand, the Commission also starts its mandate with a forceful industrial agenda. It is good that it is so, giving continuity to the proposals contained in the Draghi report. Open strategic autonomy has become a top priority in the Union, and the Commission, hand in hand with the different affected sectors, has initiated a path that should guide the work in this mandate.
However, here some questions open up that the Commission has so far failed to clear.
The first and most relevant of them is the absence of a genuine concern for the vitality of the single market. We hardly find anything in its Work Programme in legislative matters on the subject and neither is a feeling of urgency on this matter perceived in the public positions of the Commission.
Secondly, all industrial policy needs an instrument of public financing. And here, again, the bulk of the effort, almost exclusively, is left in the hands of the Member States, for which the rules of State aid must be revised, a particularly sensitive issue if one wishes to advance and not retreat in the consolidation of the single market.
Moreover, the Commission's recent proposal to accelerate European defence in the face of the critical situation in Ukraine and the withdrawal of US support following the arrival of the Trump Administration, requires more than applying the escape clause of the new fiscal rules. In turn, the strategic European projects, the desires for integration of energy or transport networks, and so many others need community financing, for the moment, outside the framework of debate and proposals of the Commission.
Thirdly, that new industrial policy, and also following the recommendations of the Draghi report, could include a revision of the regulations of business mergers, another very delicate matter given the corporate appetite to facilitate mergers, but in the framework of national markets, since the fragmentation of the single market makes potential pan-European operations unattractive. Again, we should put the focus on the single market.
Last autumn, the IMF in its Regional Economic Outlook for Europe presented estimates of the "implicit tariffs" that still persists within the single market. Although the Union has equipped itself with a single market, as the Letta report also identifies, there are still very relevant sectors for the European economy where administrative and regulatory barriers of all kinds remain that prevent exploiting the efficiencies of a market with more than 450 million citizens with one of the highest per person incomes in the world.
Likewise, the problems of compliance with current community rules aimed at consolidating markets continue to be very relevant. Many Member States still do not apply directives and regulations as they should, contributing to fragmenting the single market, and they do not find the forceful and necessary response from the Commission.
Thus, the IMF estimated that these shadow tariffs represented 44% in the price of goods, excluding agricultural products from the analysis where the barriers could be even higher, and 110% in the case of services. These figures are of such calibre that it is astonishing that the Commission has not already poured all its activity into legislative initiatives and cooperation strategies between Member States to eliminate them.
It is difficult to assimilate that we do not correctly frame the political debate on 'administrative costs' in that framework that clearly demands more attention. Quite the opposite. When the Commission proposes to soften such burdens, it focuses its attention on community regulations, encouraging right-wing forces to compete in a deregulatory race that, moreover, would not produce a significant improvement in our productivity.
That’s why the Union needs a new Single Act, not through a revision of the treaty as Jacques Delors promoted, but through a legislative agenda focused on consolidating the single market.
However, strategies already initiated in such direction, such as the banking union or the capital markets union, both essential, by the way, to redouble investment in Europe, languish in the offices of the Commission, the Council and also in Parliament, in this last case, in the face of the cooperation of the People's Party with the rest of the right from which nothing can be expected in terms of deepening the European project.
Moreover, that demand for a new Single Act would, in turn, be key in the renewal of industrial policy. Without consolidating the markets for goods and services, it will be difficult for European reindustrialisation to succeed. An ambitious strategy focused on the single market, as Draghi and Letta defend, would facilitate the emergence of European champions, and the strengthening of collective investment instruments would allow support for these industrial projects without risks of raising the already fragmented single market.
In this sense, and in the special case of defence, any increase in spending required by the circumstances will do little to improve European defence if the fragmentation we observe today is maintained. We will not be able to improve security in Europe given the calamitous national segmentation of our armies and our military industrial fabrics.
Our objectives will only find a response in a renewed pro-European consensus that, in economic terms, focuses on advancing on a single market. The Commission has not yet managed to condense an agenda focused on removing internal tariffs in the Union, an urgency that is even more pressing in the face of the tariff war to which Trump leads us. Industrial policy will not succeed, either, without more and better single market.
And the financing of the Draghi plan requires a banking and capital union that we are not managing to get off the ground in the face of the classic blockages in the Council, the absence of pulse in the Commission, and the cooperation of the People's Party with Eurosceptic, Euro-hostile or anti-European forces. Moreover, community public financing, following the example of NextGenerationEU, is imperative.
In short, to increase the competitiveness, productivity, strategic autonomy and security of the Union, there is only one path that should strengthen the pro-European consensus:
For a new Single Act!
Jonás Fernández is the S&D group coordinator for economic and monetary affairs in the European Parliament