Whilst the European Union currently represents only 7 per cent of the world population, it accounts for 25 per cent of the world economy, and for more than 50 per cent of global, social and environmental expenditure.
With these statistics in mind, Eurochambres President Christoph Leitl claims that Europe needs to “wake up”. “What I mean by this is that many people have lost confidence in the European project,” Mr Leitl elaborates. “Nationalism, egoism and populism, are widely spread in Europe, as opposed to unity and solidarity. There are fears concerning globalisation, technological innovation and migration.”
Amidst such uncertain times, President Leitl’s plan for his tenure instils confidence. “The next European elections and the outcome of the Brexit negotiations will be decisive for the future of Europe. In this context, my mandate is focused on giving the economy a strong voice in these challenging times,” he says, “working with the EU institutions to make businesses more competitive and successful, and to make Europe more open, with free trade agreements with all parts of the world.” A hurdle in the way of a ‘more open’ Europe is the varied national regulatory regimes. As highlighted in the Declaration of Entrepreneurial Rights, which is issued by Eurochambres and outlines courses of action that should be taken between 2019 and 2024, the ‘current patchwork’ of national regulatory regimes is a cause for concern.
In this regard, Mr Leitl has no doubt that further harmonisation of national laws is the way forward. “If we want consumers to be able to enjoy the same high-quality products across Europe, we need to create a level-playing field,” he says, pointing to the field of consumer protection as a commendable example. “If the conditions are the same everywhere, then businesses know what to expect in other member states and consumers also know what rights they have when purchasing from a foreign trader. This is beneficial for all parties and provides for a stable framework.”
However, protectionist policies remain a concern, making the feat all the more challenging. In fact, according to the European Commission’s latest Trade Barriers Report, there were 396 active trade and investment barriers in place at the end of 2017, a number which Mr Leitl acknowledges as a “historical record”. “The figure confirms yet again that a continued rise in protectionism affects EU exporters,” he explains.
Moreover, although the G20 – an international forum that brings together the world’s 20 leading industrialised and emerging economies – last year discussed the harm which protectionism causes to the global economy, Mr Leitl fears that not much has changed since. “Despite the fact that pledges by G20 leaders to reject protectionism were once again repeated at the last G20 Summit in Hamburg, the nine countries with the highest number of trade barriers still in place, are all G20 economies. At the same time, the multilateral trading system is under the greatest strain in recent history, with its dispute settlement system being in acute danger of becoming dysfunctional in 2019 if World Trade Organisation (WTO) members don’t manage to unblock the situation,” he argues.
“Nonetheless, with the strong support of Eurochambres, the current Commission is on track to become the most successful in terms of negotiated trade deals, removing tariff and nontariff barriers for European companies in key markets such as Japan, Mexico, Vietnam and Singapore, to name a few,” he points out. “Equally, the Market Access Partnership is proving an effective tool for our businesses in removing trade irritants all over the world in a concerted action with the Commission and industry, including the Eurochambres and member states.”
He claims, however, that what is being done is not enough. “More efforts will be required by us to defend multilateralism and rules-based trade, and we must remain vigilant and ready to combat new trade irritants whenever they appear.”
With multilateralism in mind, the subject diverts to Brexit; the concerns it is currently generating, and the expectations of companies as an outcome of this process. “Brexit is of course most worrying for those businesses that have direct or indirect commercial relations with the UK,” he asserts.
“Among these are many small businesses, and they remain confused about the timing and parameters of the process. But I remain confident that both sides will manage to reach an agreement and avoid a hugely damaging and disruptive situation,” he says, adding however that “the uncertainty would not end there, as future relations will then need to be negotiated, but avoiding a no-deal Brexit is the priority for now.”
A no-deal Brexit would mean that the United Kingdom and Europe would not have been able to come to an agreement on the United Kingdom’s withdrawal, the results of which are ambiguous, and would signify a weak political relationship between the two. “At the same time, our members are united on the need to preserve the integrity of the single market. Meanwhile, Chambers across much of the EU27 are providing advice and support to businesses on how to adapt to Brexit,” he says; “hoping for the best, while preparing for the worst.”
Although Brexit takes the spotlight for the main economic issues currently being dealt with within the European Union, other significant, perhaps more overlooked issues, nonetheless, remain a cause for concern. One of these issues is the shortage of skilled staff within the EU, which Mr Leitl labels as a “pressing issue.” During the European Parliament of Enterprises held at the beginning of October, 84 per cent of entrepreneurs from all over Europe, including Maltese entrepreneurs, claimed that it is harder to find staff with the right skills today than it was five years ago.
“This confirms an extremely worrying trend that prompted me to warn EU leaders that the EU is sleepwalking into a skills crisis,” he says. Concerned about the situation, Mr Leitl called a Skills Summit of EU leaders and stakeholders in order to determine short-, medium- and long-term actions with the aim of addressing the issue. Some of these actions include supporting small- and medium-sized enterprises (SMEs) with the integration of migrants and refugees, better skills forecasting techniques, and upgrading the provision of apprenticeship schemes. However, despite all this, he points out that responsibility for education and training “largely remains at national or even sub-national level, so the EU has very few policy tools to ensure that such measures are delivered well and coherently. This, in my view, requires reflection,” he says.
The integration of migrants and refugees is not only significant to prevent a skills crisis from ensuing but also to avoid a social crisis from occurring within member states. Echoing the words of European Parliament President Antonio Tajani, Mr Leitl reiterates “without work, there is no dignity.”
“Even upon their safe arrival in the EU, there remains the risk that this humanitarian crisis becomes a social crisis if the economy is not ensured. We need to put into place mechanisms that will enable refugees to secure employment,” he says. He points to SMEs as the main source of job creation within the EU, explaining that it is for this reason that it makes sense to support the enterprises “in the complex and resource-intensive process of integrating refugees in their workforce.” A way to go about tackling this issue, Mr Leitl proposes, is by establishing an SME integration grant using unspent European Social Funds.
“I’m convinced that the benefits of such a scheme, not just in terms of integration, but also in addressing increasing skills shortages, would significantly outweigh the costs,” he says. “So, this humanitarian crisis is also a socio-economic opportunity.”
Helping out SMEs when it comes to migrant integration in the workforce, however, is only one aspect of creating an environment which is healthy enough for enterprises to flourish. Mr Leitl mentions other potential contributory factors, namely having a clear understanding of the post-Brexit situation and implementing clear regulatory and administrative rules within the EU relating to aspects such as VAT regulations, insolvency and securing finance and market access for the scalability of companies and investments alike. Such an environment, the Eurochambres President hopes, would actualise the objective of the association, to, together with the European Commission, European Parliament and member states, “ensure that Europe is the best place in the world to run a business and to do business.”
This interview originally appeared in Business Agenda