Distinction between European and global market. Last week, this column focused on the institutional entanglements restricting the EU. This week, it will be looking at the current political and economic climate. A certain number of questions are provoking both concern and fear: the danger of a return to protectionism as a response to the crisis, the impression (unjustified, in my opinion) that Germany is distancing itself from Europe, developments affecting relations with China and Russia and ties with Africa. These different problems are too often seen from an essentially national point of view, which distorts their real meaning. They should be approached from a European point of view.
Let's take the alarm bells sounding over protectionist temptation. A clear distinction needs to be made between the single European market (where trade is governed by clear and detailed rules subject to Commission monitoring) and the global market, which requires additional guidelines and more effective respect for and accountability to rules that sometimes only exist in theory alone.
Inside the EU, positions that smack of a protectionist after-taste are not just inappropriate and untimely - they are, above all, economically worthless. In addition to the illegal implications of import restrictions, it is obvious that any measure taken by one country will provoke a counter-measure in others. So-called defence of a national product is pointless in a single market. How does a country like France envisage protectionist measures when one in four workers are employed in exports? The result would be the dole queue for a quarter of the country's labour force. Asked about what the priority for national products meant (which received a lot of support in Spanish opinion polls), Alejandro Jara, Deputy Director General at the WTO, replied: “If other countries did the same, such as promoting national tourism, for example, the Spanish tourism sector would be worse off”. Mr Zapatero, was in fact quite precise about the fact that although he wanted to introduce a Spanish factor into consumer behaviour, there was no question of protectionist measures but rather, freedom of consumer choice. In a common market, the very notion of a national product is often misplaced, given the extremely high level of multinational manufacturing of individual component parts due to a specialisation that is generally beneficial to European consumers.
Inopportune exchange of ideas at highest level. The previous observation made is also valid for the global problem of where to set up production plants. The indirect exchange of ideas at the end of last week between the president of France and the Czech prime minister is both unfortunate and untimely. On Thursday, Nicolas Sarkozy declared on television that “if we give money to the automobile industries for restructuring, we don't want to learn that this has gone towards setting up a new factory in the Czech Republic or elsewhere”. On Friday Mirek Topolanek, in his capacity as both the Czech prime minister and the president of the European Council, gave his reply. In the press release, he explicitly criticised Mr Sarkozy's declaration as a defence of national interests incompatible with the rules and principles of the common market (see following pages). Mr Sarkozy should have, of course, avoided mentioning the Czech Republic (there are quite a number of third countries where relocations are taking place in either dubious conditions or without obtaining free access to goods in exchange) and Mr Topolanek should have avoided reading too much into the sentence criticised. Mr Sarkozy did not in fact affirm that French companies should not produce cars for the French market elsewhere but said that if they did, they should not benefit from public aid.
A debate to rekindle. Companies relocating to other countries is one of the most controversial subjects due to the impact and reactions created among the public. I believe that a distinction between the EU's internal operations and those directed towards third countries is just as essential as for the trade in goods. In Ireland, the transfer of Dell computers for manufacture in Poland has created some sharp reactions. It is an operation similar to those that previously facilitated the huge growth levels experienced in Ireland. I believe we need to get back to the reflections made by Jacques Delors who harshly criticised tax competition in the EU and said that competition had to be made between companies and not member states against each other! In his Mémoires, Delors called for the approximation of corporation tax. This is a debate that needs rekindling if we want to avoid protectionist temptation.
(F.R./transl.rh)