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Email this citationCIAO DATE: 11/04
Germany's Presidency of the EU and the Start of the Euro
Dagmar Boving
Head of North and South American Affairs at the German Association of Chambers of Industry and Commerce
Occasional Paper Series No. 31
April 13, 1999
I. Germanys Presidency and the Beginning of the Euro
A. Introduction
Ladies and Gentlemen thank you for giving me the chance to be here. I appreciate the wonderful opportunity to discuss the German Presidency with you tonight. When Professor Kaufmann first asked me to give this lecture in early December last year, things seemed quite different in Europe. And to be honest, since then, the introduction of this lecture could have been re-written daily.
Europe is struggling for its future: 1) The War in Kosovo can still be called a conflict; 2) There has been a reassignment of the entire Commission following accusations of mismanagement and fraud; 3) Due to events in Kosovo and the Commissions reassignment, AGENDA 2000, with its target to reconstruct the financial set up of the Community prior to the Berlin Summit (originally planned as the AGENDA 2000 Summit), played a different rolethat of setting up complex budget reforms; 4) And last but not least, the German Presidency is graced with a totally new government (because, for the first time in decades, none of the ruling parties have been in government before). Its leaders, therefore, are still struggling for their political identification, and one of the main figures resigned a few days before the EU Commission. Ladies and Gentlemen, this is the scenario in Europe.
It is most important for the European Community is to regain influence and trust among its population. Thus, more transparency and subsidiary is unavoidable, and an open discussion about issues like financing and common security questions is required, as well.
Introducing the euro, the common money, on January 1st was a milestone in history. Considering the fact the euro was born during a recession, it had to struggle right from the start for its existence.
The independence of the European Central Bank in Frankfurt is, in this context, one of our most important concerns. Therefore, no one is unhappy about the reassignment of the former German Minister of Finance, Mr. Lafontaine.
I would like to leave my introductory remarks as such. I understand that you are familiar with the European institutions so, I would like to give you an overview about the main targets for 1999. They are: 1) the European Community; 2) the German governments presidency; and 3) considering the fact that our Association represents more than 3 million German companies, The Associations of German Chambers of Industry and Commerce.
B. History
During its history, the European Union has always tried to compete with the challenges facing it. One of these challenges is that of globalization, bringing growing interdependence, global circulation of information, and the emergence of a worldwide market for trade and production. The speed of these changes and their far-reaching impact offers enormous potential but also raises social and economic problems that particularly affect the weakest and the least mobile groups. Concerted regulatory efforts will have to be made in offer to limit the negative effects of this phenomenon. A second challenge is that of international stability typified by financial crises (with serious political and social repercussions), the resistance of ethnic and territorial conflicts, and violations of democracy and human rights. The growth in organized crime and international drug-smuggling rings is also contributing to this instability.
Technological and demographic changes are two other major challenges. Technological progress is an essential factor for competitiveness and employment, but it must, nevertheless, be accompanied by action on training and work organization. Demography, on the other hand, brings both internal and external challenges. At the European level, the aging of the population is already affecting welfare systems and, globally, the combination of population growth and development difficulties is creating greater migratory pressures.
The increase in needs that must be satisfied--- growing industrialization, food hazards, and the rapid degradation of the natural environment--- require a strategy of sustainable development involving the definition and implementation of balanced resource management. This entire process began when a few far-sighted people envisioned a new Europe.
Let me just mention a few milestones:
C. Steps to Union
9 May 1950: Robert Schuman proposed the idea of the European Coal and Steel Community (ECSC), later established by the Treaty of Paris (April 1951). Schumans declaration was inspired by Jean Monnets idea of building Europe step by step like a builder working on a house. Six states laid the foundation for the ECSC: Belgium, France, Germany, Italy, Luxembourg, and The Netherlands. We should keep this idea in mind with regards to Agenda 2000.
25 March 1957: The six founding states created the European Economic Community (EEC) and the European Atomic Energy Community (Euratom) through the Treaty of Rome (1957). The European Parliament then numbered 142 members delegated by their national parliaments.
January 1973: The Europe of the Six became the Europe of the Nine with the accession of Denmark, Ireland and the United Kingdom. The European Parliament increased in size to 198 members.
December 1991: At Maastricht, the European Council negotiated the Treaty on European Union which was signed in February 1992. It conferred important new powers on the European Parliament, including co decision-making on legislation.
1 November 1993: After ratification by the Member States, the Treaty on European Union came into being.
1 January1999: The introduction of the euro in eleven member states took place.
I. The Institutions of the European Union
A. European Commission (and Goals for 1999)
The European Commission operates at the very heart of the European Union. Its role as the source of policy initiatives is unique. Yet, this role is not always clearly understood. The Commission has used its right of initiative to transform the framework provided by the Unions founding treaties into todays integration structures. The benefits for citizens and companies throughout the Union have been considerable: more freedom to travel and trade, more prosperity, and much less red tape.
It works in close partnership with the other European institutions and with the governments of the Member States. Although the Commission makes proposals, all the major decisions on important legislation are made by the ministers of the Member States in the Council of the European Union after taking into account the advice of (or, in some cases, in co-decision with) the democratically elected European Parliament. The 20 members of the Commission are drawn from the 15 European Union countries, but each one swears an oath of independence, distancing him or herself from partisan influence from any source. This is the idea. However, as the last few weeks have shown, its not always a reality.
The goal of the new president, designee Romano Prodi, is to ensure that governments no longer send political lightweights to Brussels for domestic political reasons. He also appeals for the presidents right to send back lame ducks. A brave remark.
The Commissions job is to ensure that the European Union can attain its goal of an ever-closer union of its peoples. A principal task is to ensure that goods, services, capital and persons can move freely throughout the territory of the Union. It must see to it, too, that the benefits of integration are balanced between countries and regions, between business and consumers, and between different categories of citizens. In some areas like competition, agriculture and trade policy, the Commission has considerable autonomy to take decisions without submitting proposals to the Council of Ministers, either because of its specific powers under the Treaty or by delegated authority from the Council. The Commissions main priorities for 1999 fall within this framework of consolidation of the present and preparation for the future.
For more than ten years, the Commission has been using a new method to give the necessity impetus to European integration. The pace has been set by general decisions covering all Community policies that have then actually been implemented over the course of several years. This method was use with Agenda 2000. The Commission considers it essential that all the measures of Agenda 2000 be adopted in Spring 1999. These measures are interdependent and form an indivisible whole. The Commission is concerned with reforming the ECUs policies, defining the future financial framework, and preparing for enlargement. Without those policies, it will be difficult to respond effectively to the challenges of enlargement.
However, as it said when it presented Agenda 2000, the Commission believes that the debate on institutional reform must be carried forward in 1999. Particularly in regards to the composition of the Commission, the re-weighting of votes in the Council, and a new extension of qualified-majority voting reforms which must be in place in time for the next enlargement.
The Treaty of Amsterdam represents an important step in the reform of the institutions. Once it is ratified in 1999, the Commission will ensure that the extended codecision procedure as there are: free movement of persons, social policy, public health, employment, fight against fraud, customs cooperation, and the extended use of qualified majority voting in the Council are applied effectively. The Commission believes that this reform needs to go further in order to deal effectively with the institutional challenges posed by enlargement. Once the Union has enlarged beyond a certain point, it will not be able to function without adapting the existing rules and mechanisms. In particular, a new balance will have to be found in the weighting of votes in the Council, the use of qualified majority voting will have to be extended, and the composition of the Commission will have to be reviewed. The Commission will, therefore, support initiatives presented in 1999 which call for a new intergovernmental conference to be convened.
The success of economic and monetary union will involve further European integration as well as increased convergence of economic and employment policies backed by better coordination of tax policies. The coordination of tax policies is a key element of a single market. The priorities for 1999 will concern work on the implementation of the new VAT system. In the customs field, the Commission will focus its attention on the fight against fraud and improving the flow and security of trade.
With increasing globalization, the euro will hopefully give Europe a new place in international relations, bringing with it the need for greater coherence in the European Unions foreign policy. This need for coherence has already been partially met in the provisions for the Treaty of Amsterdam on the common foreign and security policy which should be rapidly implemented. The Commission will seek to promote the Unions capacity to act as a more visible, unified and coherent, and hence stronger, entity on the international scene.
B. Putting Agenda 2000 into Effect in 1999
The adoption of proposals for structural funds reform, the conclusion of a new inter-institutional agreement, and the establishment of the financial perspective for 2000-2006 will open the way to the new programming period for the European Unions structural action. These stages must be completed in the first half of 1999 so that the next intervention period can commence and the cohesion effort can continue smoothly. Nineteen-ninety nine will be a transitional year between the current agricultural policy and the introduction of the planned reforms. As far as the budget is concerned, agricultural expenditure in 1999 will be maintained at the 1998 level, reflecting the stabilizing effects of the 1992 CAP reform and the improvement of the procedures and methods for forecasting actual requirements.
This year, the stress will be on improving the quality of food products in response to consumer demands. A series of initiatives in the veterinary and phytosanitary field are also planned in order to increase the level of protection and control, and to simplify the existing legislation. Furthermore, the debate on the Unions forestry strategy launched at the end of 1998 should lead to practical initiatives in 1999. The Commission will also prepare for the international agricultural negotiations in the next World Trade Organization round which should start in 2000. Once the Agenda 2000 measures are adopted, they will form a solid basis for the Community in these negotiations.
1. Preparing for Enlargement
Continuing to strengthen links with the associated countries and preparing for accession is one of the Commissions top political priorities for 1999. This process will involve ever closer cooperation on the pre-accession strategy not just by providing assistance and implementing accession partnerships, but also through association of the applicant countries with Community programmes and the work of certain Community agencies and bodies under arrangements still to be determined.
Accession negations with the first group of countries, currently five central and eastern European countries (Slovenia, the Czech Republic, Poland, Hungary, Estonia, and Cyprus--- perhaps six including Slovakia) will be conducted on the basis of the detailed assessment of the acquis.
2. Employment
The Commission will further continue its efforts to develop cooperation between the Member States on combating unemployment in order to intensify the exchange of good practice and information and also to develop observation, analysis, and research work on employment. Implementing the Initiative for Employment will be the top budget priority in internal affairs for 1999.
3. Environmental Protection
The inclusion of sustainable development in the Treaty of Amsterdam, and the conclusions of the Cardiff European Council on the strategy for incorporating environmental aspects into all Community policies, provide a framework for tackling environmental challenges more effectively and improving the quality of life. The Commission intends to facilitate this process as much as possible. In 1999, the Commission will present an overall evaluation of the implementation of the fifth environment action programme. This evaluation will include guidelines on the revision of environmental policy objectives and priorities. The Commission will also take an active part in monitoring the conclusions of the Kyoto Conference on climate change in order to maintain Europes influence and leadership in this key area.
The Council of the European Union, usually known as the Council of Ministers, has no equivalence anywhere in the world. Here, the Member States legislate for the Union, set its political objectives, coordinate their national policies, and resolve differences between themselves and with other institutions.
I. Objectives and Priories of the German Presidency in the Council of the European Union
A. Political Objectives
In the first half of 1999, the Federal Republic of Germany has taken over the Presidency of the European Union at a time when strategic decision and developments are expected which will shape and determine the process of European integration well into the next century.
The serious employment problem in most European Union member states is seen to be the focus of each and every policy. Consequently, the German Presidencys principal concern is to combat unemployment at the European level. What is needed is a European employment pact and a policy of ecological modernization. The framework conditions of a European policy during the German Presidency are, therefore, many and various:
The start of the German Presidency coincides with the launch of the common European currency, which will add a new dimension to European integration.
Discussions on the reform and further development of Community policies and finances within the Agenda 2000 framework will reach a critical stage.
The accession negotiations (which have already stared with six applicant countries) and the enhanced pre-accession process (with the applicants which are not yet in negotiations) must be pursued with determination.
During its presidency of the Council of the European Union, Germany will also be holding the Presidencies of Schengen, the Western European Union (WEU) and the G8. The Federal Republic of Germany thus has huge international responsibilities in the first half of 1999.
Finally, the elections to the European Parliament will be taking place during the German Presidency in June.
The German Presidency is particularly committed to these goals. The Presidencys agenda will involve:
more jobs for a Europe facing worldwide competition,
internal consolidation and further development of the Union, and
strengthening and developing the European Unions profile in its relations with other countries.
The German Presidency will do its utmost to pursue these goals.
Europe will not stand a chance in the competitive situation of the future multipolar world unless the Union and its Member States join forces in a convincing manner. We need a European Union capable of acting and shouldering its responsibilities. Its citizens will accept the Union only if it is able to solve the Europe-wide unemployment problem. The German Presidency will work determinedly to advance the European integration process and develop the European Union further into a social and environmental union as well as a political one. Only then will it be possible to being the European Union closer to the citizen. The German Presidencys objective is to bring Europe nearer to the people and to demonstrate to them the advantages that Europe has for us all.
The Amsterdam Treaty will probably enter into force during the German Presidency. After the Single European Act, the completion of the internal market and the Treaty of Maastricht, Amsterdam represents a further milestone in strengthening the cohesion of the European Union. The rights of the European Parliament are substantially increased under the Amsterdam Treaty. Once the Treaty enters into force, the German Presidency will continue its confident cooperation with the European Parliament on the basis of the new provisions. This should be even more important considering the reassignment of the last European Commission.
1. Internal Consolidation and Development of the Union
The German Presidency will make every effort to have the reforms in Agenda 2000 areas adopted before the end of its term of office. If this is to be achieved, political agreement must be reached on the entire package:
Establishing the new medium-term financial framework for the European Union for the period 2000 to 2006.
Reform of the structural policy,
Fundamental reform of the common agricultural policy. This item had been discussed in the Berlin Summit and made little effort.
In the German Presidencys view, it will be possible to achieve a solution within the framework for a comprehensive balancing of interests and overall compromise involving all member States and all sectors only if we ensure that Agenda 2000 continues to be treated as a package.
Realizing these goals should give the European Union the internal stability and the means it needs to be able to fulfil its tasks in the next century even with an extended membership. The German Presidency will tackle these issues head-on and will endeavor to promote decisions. In this context, the European Union needs long lasting solutions where the principles of budgetary discipline, solidarity, and equitable burden sharing play a full part.
2. Strengthening and Developing the European Unions Profile in its Relations with Other Countries
During Germanys Presidency on the Council, important policy decisions will have to be made regarding the form and development the European Unions external relations during the 21st century.
For over 40 years now the European Community, followed by the European Union, has been experiencing an era of peace and prosperity. The historic changes since 1989 provide an opportunity to extend these benefits to a wider Europe through the enlargement of the European Union, to accelerate and complete the process of reconciliation, and ensure peace, stability and prosperity for the entire continent. With the enlargement of the European Union, the Community acquis is passed on to the new Member States; they are accepted into a Community where the rule of law prevails, and there is a guarantor of a stable state of peace and good neighborly relations in Europe.
To overcome the many challenging regional crises, the German Presidency is relying on close transatlantic cooperation based on mutual confidence. The European Unions relations and cooperation with the USA and Canada on the basis of the Transatlantic Declaration should be deepened. Here, the initiative for the creation of a new Transatlantic partnership is central. Where the German Presidency is concerned, particular importance attaches to fulfilling the measures included in the Action Programme of the Transatlantic Economic Partnership. Refining and developing Euro-American relations are preconditions for a policy that will face up to the new global challenges by peaceful means.
The presidencies of the Western European Union (WEU) and the European Union will be in the same hands for the first time in the first half of 1999. The Treaty of Amsterdam commits the European Union to drawing up arrangements for enhanced cooperation with the WEU within a year from the Treatys enactment.
B. Priorities for Individual Policy Areas in the German Presidencys Programme
1. Location: Europe framework conditions for growth, employment and convergence
Economic and Monetary Policy
The first day of the German Presidency was the start of the third stage of economic and monetary union. It began on January 1st, 1999 with the adoption by the Council of Ministers for Economic and Financial Affairs of irrevocable conversion rates between participating currencies and the euro. If economic and monetary union is to be accepted, it is essential that strong, lasting growth in employment is obtained in the Member States as a result of price stability, solid public finances, macro-economically appropriate wage development and goods, labour and capital markets which operate efficiently. What is needed here is the dove tailing strategies of supply and demand policies, supported by more intensive macroeconomic and structural coordination for economic and financial policies. This will increase efficiency and open up the potential for growth.
Developing and Consolidating the Internal Market
In the internal market context, the follow-up to the internal market action plan (the implementation phase of which expired on December 31, 1998 and, in the same context, the adoption of further acts to complete the legal framework), will be the focus of the German Presidencys work. It will concentrate on improving the framework conditions for undertakings in the European internal market in the areas of company law and intellectual property. Developing and consolidating the internal market must be backed up by measures to effectively combat unfair or damaging tax competition, including the creation of minimum standards for the taxation of interest on savings.
Structural Policy
To ensure a seamless continuation of structural promotion after the year 2000, it is necessary to adopt the EC Structural Fund Regulations and the Cohesion Fund Regulation by April 1999 at the latest, given the cooperation required by the European Parliament in the context of the whole Agenda 2000 package.
Information Society, Telecommunications, Postal Services
In view of the fact that, since the last German Presidency, the necessary change of direction has been achieved to allow the European telecommunications sector to be liberalized, the political preconditions must now be prepared for future arrangements converging the telecommunications, and radio broadcasting services. In addition, further liberalization of the postal sector should be encouraged. An important task will be to make progress with drawing up and establishing at international levels reliable framework conditions for electronic commerce within the community, eg. as regards digital signature ad liability.
Consumer Protection
Basing itself on the Commissions proposed three-year consumeraction plan, the German Presidency will work within the Council to step up discussions on the further steering of Community policy in such a way as to promote consumer interests and ensure a high level of consumer protection. Notwithstanding the increasing importance of work on environmental protection and health and consumer protection, we must not forget the protection of the consumers economic interests. That is particularly relevant where serious market changes are concerned such as globalization and the use of electronic methods of distribution, and the speedy development of new provision of services and financial products. The German Presidency will accordingly endeavor to give particular impetus to the initiatives already under way in this area (e.g. the proposal for a directive on the distant selling of financial services).
Agriculture Policy
In the Agenda 2000 framework, the Common Agricultural Policy is to be fundamentally reformed. European agriculture is to become more competitive and more environmentally friendly. At the same time, lasting solutions have to be found for problems arising in the context of WTO negotiations. More of the means made available for the Common Agricultural Policy should be earmarked for ecological and employment-policy goals. In view of Member States efforts to achieve stability and budgetary consolidation in the context of the introduction of the euro, expenditure on the Common Agricultural Policy should be curtailed over time. The imminent new arrangements must lead to more equity in Member States contributions, particularly by reforms on the expenditure side.
I. The European Unions Role in the World
During the German Presidency, important policy-decisions will be taken that will shape and develop the European Unions external relations in the 21st century.
A. European Union Relations with Third Countries and International Organizations
The German Presidency will devote considerable attention to developing and consolidating its existing relations with third countries and international organizations. It is particularly important that the European Union consolidate its comprehensive cooperation with the US and Canada on the basis of the Transatlantic Declarations. The April 1999 NATO summit in Washington on the occasion of NATOs 50th anniversary will take place during the German Presidency. An important element of the cooperation will be the practical information of a transatlantic partnership. Together with the USA, the European Union should be in the vanguard of a world of free trade, the rule of law, democracy, and human rights. It is essential that Europe and America stand shoulder-to-shoulder if regional crises are to be resolved. The importance of this is reflected in the Kosovo-conflict.
B. Enlargement of the European Union and Accession Process, European Conference
It is the German Presidencys aim to give fresh impetus to deepening and widening the European Union. In the context of the accession negotiations, it will be the Presidencys task to direct the European Unions internal discussions aimed at determining the negotiating positions and to conduct the negotiations with the candidates. The German Presidency hopes to achieve initial success in the negotiations so as to impart dynamism to the negotiations as a whole. At the same time, it will concern itself with bringing the applicant countries into closer alignment with the EU acquis in the individual areas of policy. It is possible that, before the German Presidency ends, the accession partnerships with the ten countries of Central and Eastern Europe will have to be reviewed. The German Presidency is determined to contribute to the economic and democratic stabilization of the countries of Central and Eastern Europe by means of an effective pre-accesstion strategy and supportive solidarity. The decisions on the financial volume of the pre-accession aid will be taken in the framework of Agenda 2000.
I. Requirements of the Association of Chambers of Industry and Commerce (DIHT)
A. Agenda 2000
The enlargement of the European Union is a historic chance. This chance requires a rebuilding of the European Union institutions. The applicants have to achieve the aquis communitaire and should not expect any exceptions.
B. Structural Policy
Considering the structural promotion after the year 2000, the German business community requires subsidiary as a main principle to ensure that regional and national ideals are kept up.
C. Common Agricultural Policy
We require a more market-oriented policy. It has been ensured that even agricultural products have to be market-minded and have a market price. The essential transferpayments for farmers have to be restricted and limited. The Berlin Summit did not give an answer to the EU-agricultural problems. Half-minded reductions on supplementaries are not enough.
Considering the euro and the European Central bank, our main concern is the absolute independence of the European Central Bank in regard to the member states.
Considering the employment policy of the European Community, we seek not only a stronger harmonization but also the means to produce higher qualifications and more flexibility among the workers. To make Europe more attractive for foreign investment, we have to find solutions considering the reduction of taxes. A harmonization of a European-wide VAT is unavoidable.
With regard to international trade, we require a start of negotiation as well for the agricultural sector as for services in the next WTO-round.
When it comes to external trade promotion, we consider this to be of national interest rather than a European task. The result is that so-called Eurocentros are in competition with national trade promotion.
Let me just add a few remarks on the Transatlantic Partnership. The US is our most important trading partner. European Banana-policy has led us into a dangerous situation. The ones suffering from this situation are small and medium sized companies whose trading becomes difficult with the enacting of sanctions.
Ladies and Gentlemen. Europe is said to be founded by a wonderful process: it was kidnapped by the God Zeus who fell in love with her and did not want to be disturbed. Thus he carried her ---hidden in a bull---to the European coast. She had the vision to create the continent of Europe. This princess has now turned into an old lady, but her is still adventurous and needs new visions. Thank you.
