Speech commissairis McCreevy over rol Ierse economie in Europa (en)

SPEECH/06/363

Charlie McCREEVY

European Commissioner for Internal Market and Services

The Island Economy in a European Context

InterTrade Event

Newry, 9 June 2006

Ladies and Gentlemen,

It is a great pleasure to be here, and I would like to thank InterTrade Ireland and the Commission's office in Belfast for making today's event possible.

Ireland, like the rest of the Europe, is facing new challenges. The world in which we live is changing at a pace none of us has seen before. The economies that drove our prosperity in the past are now struggling. The emerging economies of the world - India and China in particular - are powering ahead. We all have to adjust to these new realities.

I know from my job as Commissioner for the Internal Market that for many in Europe this is a very unwelcome message. In countries that have enjoyed decades of unprecedented comfort, change is seen as a negative, to be avoided and resisted until the very last moment. The irony is, of course, that last-minute change is the most painful type of all.

Others, however, are ready and open. The new Member States, in particular, see in the Union a chance to make the most of their newly won sovereignty. They see what others have achieved with the opportunities the EU offers, including how we in Ireland have grown, and they are hungry for the same chances.

Yes, at the moment they are losing a great many of their people to emigration, a story we in Ireland know only too well. But they can see the long-term advantages and are eager to make the most of them.

Ireland, too, has shown itself ready to face the future. In the past two decades it has changed beyond recognition. Economically, socially and politically it is a very different place. Nowhere is this more obvious than here in Newry. The people of Down and Armagh have always been enterprising, but, like the rest of the border region, the circumstances of history have conspired to hold them back. It is only in the context of the peace process, and especially under the Good Friday Agreement, that they have begun to reveal their full potential.

But enthusiasm and positivity is not enough to carry us forward. We need to be strategic in our approach. Ireland and Europe need to examine our strengths and weaknesses carefully and honestly, and to make the right policy choices now if we are to enjoy prosperity into the future.

At the European level, we in the Barroso Commission have made the search for jobs and growth in Europe our top priority. When we took up office, at the end of 2004, the Lisbon agenda - the bid to boost European competitiveness launched in 2000 - had run into the sand. Its kindest critics acknowledged that its results were, at best, mixed. It seemed to us that there were too many targets. As former Dutch Prime Minister, Wim Kok, put it, because everyone was responsible, nobody was and nothing got done.

Therefore, last year we decided to boil this agenda for reform and change down to its bare essentials. What were the key challenges - the main objectives?

The Union agreed that knowledge and innovation are the twin engines of sustainable growth. Europe cannot compete at the bottom end of the market. Only our capacity for creativity will give us the edge. That means investing in education, research, skills. It means creating the type of culture that takes good ideas and turns them into jobs.

It should be a real cause of concern to us that European universities are almost invisible in the world's league tables. We should be seriously worried that Europe is spending a great deal less than our competitors on research and development. This is not just a problem for today. What we do not sow now, we cannot reap tomorrow.

Europe is playing its part, but given the balance of responsibilities, Member States and private enterprise need to be doing more.

We also need to make Europe an attractive place in which to invest and work.

Neither the Commission nor Governments can create sustainable jobs. Only business can do that. As policy-makers, our job is to get the environment right. Sadly, this has not been our strength. Europe has not always been good at striking the right balance right between freedom and regulation, between security and flexibility. Our hand has sometimes been too heavy.

This Commission has made better regulation a central plank of its work. We won't legislate or regulate unless nothing else will do. When we do, we listen carefully to those who will have to deal with the consequences.

A properly functioning internal market is also key. The EU promises the free movement of goods, services, labour and capital. But this has not always been delivered. We are making steady progress towards getting a new Directive on Services onto the books, though, as many of you will be aware, this has been a struggle.

I will also continue to resist firmly any moves towards protectionism. In the face of increased internal and external competition, some Member States have moved to erect barriers in the name of `economic patriotism', though in my view, nothing is more likely to wreck a national economy. It is also unfair to European partners and an affront to the very basic principles of the Union.

I will tackle any Member State that goes down this road, including in taking them all the way to court if necessary. Not only because it is against the rules, but because it is wrong-headed. It is defeatist. It says Europe can't compete. Can't do business without rigging the game. And I simply don't believe that is true.

Investing in knowledge. Opening markets. Resisting back-sliding. These are important. But so too is encouraging Member States to make the necessary reforms, however politically painful these might be.

Europe's population is aging. There are fewer young people and we are living longer. It should be obvious to everyone what this means in practice. Fewer of us working, more of us living on pensions. We have to plan properly for this. Some Member States are on the right track. Others need serious encouragement to get their public finances in shape.

Within the EU, major economic decisions remain the responsibility of Member States. Only they can decide to do what needs to be done. That is why, when we relaunched the Lisbon process last year, we asked each Member State to submit a national programme setting out what steps they intended taking.

In making their submissions, the Irish and British Governments chose to include a common contribution on how deepening North/South cooperation can help them to achieve their Lisbon goals.

The process that led to the Good Friday Agreement was based on the idea that peace and prosperity were mutually reinforcing. Without peace, it would be impossible to create prosperity. Without increased prosperity peace would be difficult to sustain.

John Hume, a great European as well as a great Irishman, was not alone in seeing that working together helps people overcome differences. Indeed, he saw the European Union as the best example in history of this.

The period since 1998 has been one of growth for both parts of the island, North as well as South. It has also been a period in which cross-border cooperation has taken up a more central role. As I have said, both Governments chose to highlight it in their Lisbon submissions.

Both parts of the island face their own different challenges.

The North has suffered more acutely from the decline in traditional manufacturing. It has an unusually high dependence on the public-sector, accounting for 61% of GDP and one third of all jobs. It has a poor record in new business start-ups.

The South too cannot afford to be complacent. It has to work to remain competitive. It needs to strengthen infrastructure and to build its research and development capacity.

But in addressing these challenges, there are obvious benefits in working together, where it makes sense to do so. In this, I pay tribute to the excellent work of InterTrade Ireland and to its pragmatic approach.

The two governments have identified a number of areas in common. The need to stay competitive in the face of globalisation. The need to grow employment and to increase productivity. The need to innovate and to invest in research and development. They see scope in the human dimension. In the need to enable people to acquire the skills needed for a modern dynamic knowledge economy. To promote enterprise and entrepreneurship. To create a positive climate for business and to remove the barriers to mobility.

These seem to me to be the right priorities, and the extent to which the challenges for Ireland and for Europe are the same is striking. The creation of an all-island approach to the economy is a sub-set of creating a fully functioning internal market. Every step-up in scale, every advance towards openness, every barrier removed, creates opportunity and grows potential.

I know that the two Governments are undertaking a comprehensive study aimed at identifying those areas in which cooperation will deliver greatest benefits. I greatly look forward to seeing its results.

I am also pleased to see that this strengthened cooperation is taking place in a climate of greater trust and confidence.

In Europe, as in Ireland, the push for economic integration has sometimes been regarded as a Trojan horse concealing other, more controversial, political agendas. This is no longer the case. In today's Europe, nobody credible speaks of a federal super-state. The common view, and one which I strongly share, is that economic integration is a worthy project in its own right - 25 sovereign Member States can achieve more working together than they can on their own.

In a globalised world, this is more obvious than ever.

Similarly, the Good Friday Agreement has provided a secure political context in which economic cooperation on the island can be advanced for its own sake, and to the advantage of all, irrespective of political aspirations.

As a democrat, I think that it is best if policy is taken forward by the representatives nearest the people, and through institutions most suited to meeting their needs. That is why I, and my colleagues in the European Commission, strongly support the efforts of the two Governments and of the political parties to restore the Northern Ireland Executive, and to ensure the proper functioning of the institutions created under the Good Friday Agreement.

There can be no doubt that InterTrade Ireland, under its wise leadership, has been doing great work. But the context has not been ideal and I have little doubt that its contribution would be enormously strengthened by the direct involvement of local Ministers in a restored North/South Ministerial Conference.

Ladies and Gentlemen

Ireland and Europe face the same challenge - remaining competitive and attractive in a globalised world. This is a task both for Governments and for business. Innovation is not just for the private sector, we all need to find better ways to get things done.

At European level, we are working to deliver reform. Increasingly, competition will come not from each other, but from beyond our borders. If we are to keep up, we need to make the most of what we have. This means ensuring that the internal market is working fully and delivering results. It means making sound policy choices that will serve us well in the future. It means shaping and not simply being shaped by global developments. Driving change and reaping its rewards.

I want to see the Member States of the European Union developing a European reflex. Member States cannot act as if they exist in a vacuum. We depend on each other and making the wrong policy choices damages us all.

Similarly, the joined-up thinking of the Irish and British Governments makes sense.

To take but one example, between now and 2015 over €100 billion will be spent on infrastructural development on the island. The case for spending this money wisely - planning together and avoiding useless duplication of effort - is overwhelming.

Finally, people are always asking me to make comparisons - between my new and my old jobs, between Ireland and the rest of Europe, between old and new Member States. I generally try to dodge the question. As Commissioner, I have to represent the whole of the Union and giving the wrong answer can land me in deep trouble.

But I can say that in Europe, as in the wider world, there are those who embrace globalisation as a wonderful opportunity rich with potential, and those who see it only as a threat. I am firmly in the camp of the optimists.

I recently visited China for the first time in many years. Like almost everyone else who has been there, I was amazed by what I saw. Yes, the country faces huge challenges - rapid development has placed enormous strain on its environment, and its cities are growing at a pace that is hard to grasp. It too has demographic problems, and there is every danger that its people will grow old before they grow rich.

But the energy and the positive approach of its people are infectious. China, one of the world's oldest trading nations, is, once again, engaged and looking outwards.

Europe has a great deal to gain from this. Our trade is already significant and is set to grow. Throughout human history, open markets and free trade have spread wealth and prosperity more widely. Why should they not do so now?

Standing here today in Newry, a town that has been described as the economic pivot between North and South, I feel the same energy and can-do attitude. The scale may be different but the mood is every bit as refreshing and energising.

I thank InterTrade Ireland once again, for inviting me to come and I welcome any questions you might have.