Brussels, 02/07/2007 (Agence Europe) - Speaking on Saturday at a colloquium held by the Nouvelle République political club (of which French Agriculture Minister Michel Barnier is the president), Competition Commissioner Neelie Kroes highlighted the practical and ideological importance of the principles of competition in the European Economic Area. (EEA). “Fair and undistorted competition in an enlarged and free market works to the benefit of us all,” she said in a barely concealed riposte to the recent criticism from French President Nicolas Sarkozy. Ms Kroes, therefore, undertook to “clarify precisely what competition has done for Europe's citizens”.
European competition policy does not pursue the abstract concept of “free competition”; rather it acknowledges that “better functioning markets provide citizens with better goods and better services, at better prices”. Using the recent cases against beer and lift cartels (see EUROPE 9362 and 9371) as examples, Ms Kroes demonstrated the negative impact for consumers and the economy as a whole of illegal price fixing and other restrictions on free competition. This, however, did not mean that she was against “national champions”, but they must demonstrate their worth on a free market without harming the interests of consumers.
She also highlighted how much France had benefited from globalisation. “Europe need not fear globalisation,” she said, figures at the ready, pointing out that France ranks among the European leaders in attracting inward foreign investment and in terms of outward investment. According to Ms Kroes, the challenges of globalisation must not be met with artificial protection of industries, but by adjusting the economy, which can, if necessary, be given state support. “Wrong answers” would be, above all, protectionism, which “almost inevitably leads to a downward spiral of retaliation”, and “matching aid”, which is not just “ineffective” but also erodes European cohesion policy and thrusts member states into “devastating subsidy races,” she said. She hammered home her message that “we cannot 'out-subsidise' the world. We should not even try”. “Right answers”, however, consist of creating the right framework for business in Europe, developing a “global level playing field” and keeping European markets open.
With regard to state assistance, Ms Kroes has approved investment in education, research and development, and the promotion of security of employment allied with greater flexibility: flexicurity. She also spoke of Commission projects on the reform of state aid, the new R&D and innovation framework as examples of positive state assistance which does not unduly distort competition. It was this dynamism that would see an open Europe benefit from globalisation, she said, before adding that protectionism which “is purely defensive” would be about as much help as the Maginot line was in 1939.
Openness and competition: Mandelson also responds to Sarkozy
In a speech the same day at the Paris Chamber of Commerce and Industry, her Trade colleague Peter Mandelson also counter-attacked after the suppression of the term (at France's request) “free and undistorted competition” from the future Union treaty during the last European Council on 21-22 June. Paris had managed to get an agreement on competition not being mentioned as one of the Union's principles in the interinstitutional agreement. The commissioner for trade stated: “Competition should indeed not be some sort of dogma or religion. But nor is it a dirty word”. He stressed that “competition has helped make Europe rich and France one of the most productive economies in Europe. Competition is how we keep our markets efficient and dynamic; keep prices low for consumers and maintain innovation”.
Mandelson also replied to the criticism made about his free trade positions on trade policy and his “naiveté” during the WTO negotiations. He insisted: “We must reject the notion that the only politics of globalisation is to retreat or hide. We can do neither, as I believe the French government realises”. He pointed out that its rating as the biggest exporter in the world demonstrates how the Union has benefited from the opening up of the world markets. Mr Mandelson is aware that the fast pace of change provoked by globalisation has created insecurity in Europe, and that in order to respond to it they need to reform the social welfare systems, taxation, the labour market and promote innovation. On the other hand he warned against the risks of creating a fortress Europe through trade barriers. “The response to a fortress Europe is a fortress US, or a fortress China or India. We need reciprocal openness: not reciprocal barriers”, he concluded. (cd/eh)