EU boosts reform to enhance competitiveness

The European Union (EU) is undergoing significant reforms to enhance its competitiveness amidst intensifying global competition.

EU boosts reform to enhance competitiveness

Following discussions on countering US tariff policies under President Donald Trump, French President Emmanuel Macron and German Chancellor Olaf Scholz emphasised the need to consolidate a unified, strong, and sovereign Europe.

At a recent meeting of the EU's Economic and Financial Affairs Council (ECOFIN), held in Brussels under Poland's presidency– the rotating presidency of the Council of the European Union, EU Ministers of Economy and Finance focused on breakthrough solutions to improve the bloc's competitiveness.

Speaking to the press, Polish Finance Minister Andrzej Domanski highlighted that to maintain its status as a “global economic power”, the EU must take decisive actions, such as reducing energy costs, simplifying administrative procedures for businesses, and attracting private investment. Strengthening defence capabilities was also identified as a top priority to protect European interests.

At the meeting, the ministers agreed on measures to “refresh” the administrative system of the EU by simplifying business processes, alleviating administrative burdens, and expediting the approval of new regulations.

The EU aims to reduce reporting requirements by at least 25% by mid-2025, to foster a more favourable environment for businesses and innovation.

ECOFIN also adopted recommendations regarding the medium-term fiscal-structural plans of 21 member states to ensure financial stability.

Belgium, France, Italy, Malta, Poland, Slovakia, and Romania, are facing excessive budget deficits, and a detailed roadmap with deadlines was established to address these concerns.

In addition to these measures, significant progress has been made in areas such as anti-money laundering efforts, establishing a common health data space, and reforming financial systems.

These decisions reflect the EU's commitment to creating a dynamic single market that supports businesses and protects citizens' interests.

As of late 2024, EU leaders adopted the Budapest Declaration on the new European competitiveness deal, outlining strategic frameworks for enhancing the bloc's position through reforms.

A key priority is ensuring a fully functioning common market to maximise its potential as a driver of innovation, investment, growth, connectivity, and economic resilience.

The urgency of achieving these goals has increased with the new US administration's commitment to implement tariffs against other nations.

EU Trade Commissioner Valdis Dombrovskis stated that the EU is ready to defend its interests, recalling the EU’s past responses to US tariffs on steel and aluminium during Trump's first term by imposing tariffs on US imports ranging from Harley-Davidson motorbikes to bourbon whiskey.

Dombrovskis emphasised the strategic partnership between the EU and the US, advocating for cooperation amid current geopolitical instability. He warned that trade conflicts would have economic repercussions for all parties involved, including the US.

He criticised the new US administration's decision to withdraw from the OECD minimum 15% global tax on the profits of big multinational corporations as contrary to international agreements.

The European Commission plans to open dialogue with the US government to seek common solutions.

In their January 22 meeting in Paris, French President Emmanuel Macron and German Chancellor Olaf Scholz agreed on actions for a resilient Europe in light of potential challenges posed by the White House.

The two leaders also discussed the steel, automobile and chemical industries — all of which could be hit by US tariffs — and said they were vital for the EU's economy.

With US President Donald Trump threatening to impose tariffs and taxes on trade partners, German Chancellor Olaf Scholz vowed to “defend free trade as the basis of EU’s prosperity”, warning that isolation comes at the expense of prosperity.

Just before Trump's inauguration, the EU announced the conclusion of negotiations on a modernised Global Agreement with Mexico and resumed talks for a free trade agreement with Malaysia.

As Trump returns to office, it is imperative for the EU to focus on reforms, diversify trade partners, and implement immediate necessary actions to enhance competitiveness and maintain its position in the global market.

NDO