As the European Union embarks on a new legislative cycle, there is an opportunity to further strengthen the foundations for Europe’s long-term sustainable advancement.
Over these past three decades, the EU’s single market has championed and successfully introduced the free movement of goods, people, services, and capital. This has translated into great benefits through the elimination of both tariff and non-tariff barriers, along with extensive deregulation.
The key to the EU remaining competitive in terms of attracting investment and driving innovation lies in the clarity, predictability and coherence of regulations that strengthen, deepen and broaden the single market. Clearly, the EU cannot afford to lose its significant role as a pioneer in cutting back excessive regulation.
The EU is allowed to harmonise national regulations throughout Europe when they are deemed to hinder the proper functioning of the single market. There are instances when harmonisation measures prescribe regulations on a high level as uniformly as possible throughout Europe. This, however, does not always result in cutting back national regulation, but merely serves to standardise, which even if having its benefits, brings about an element of over-regulation.
Europe has all the ingredients of success, yet it is struggling to keep up with global competition. While the EU is on a mission to decarbonise, digitise and reindustrialise, there is simultaneously a growingly contrasting notion that many subscribe to, in that “America innovates, China replicates and Europe regulates”.
Faced with this dilemma, what remains clear is the need for Europe to recalibrate its strategic focus on its competitiveness. We need to develop a more enabling business environment, giving more tangible intent in driving Europe’s competitiveness, avoiding policies that simply end up missing in action.
In view of the significant environmental and climate change concerns, the EU’s sustainability ambitions are increasingly under regulatory development and scrutiny. As much as this has its benefits, cementing some of the related standards on an EU level will not be sustainable in the face of worldwide competition.
Many are overlooking the fact that sustainability is not just about being environmentally and socially responsible, but also about being economically sound, and this can best be secured if it is built on global long-term competitive sustainability.
Higher environmental standards can still be achieved, but we need a smarter policy mix to sustainability, giving equal clarity to both destination and journey. There is no one without the other.
Setting ambitious goals within defined timelines is certainly something we should all aspire and work for; however, their attainment cannot be truly achieved if we do not keep in mind the contrasts between the ideal and real world.
Placing these contrasts into some context, the EU remains a catalyst for free trade and fair competition; nonetheless, it is sometimes compelled to impose anti-dumping duties on non-EU products to ensure a level playing field.
Many subscribe to that ‘America innovates, China replicates and Europe regulates’- Norman Aquilina
The paradox is that the promotion of global collaboration is sometimes confronted by conflicting arguments on economic security and strategic autonomy. This is resulting in economic powers drifting apart, in contrast to what was previously referred to as the ‘global village’ to what is now being termed as ‘global decoupling’.
All this is not to say that regulation is an obstacle to thriving economies, indeed it is a vital part. Nonetheless, just as much as the EU needs to ensure any necessary regulation is well put in place, equally, there is a need to reduce bureaucratic burdens.
We need regulatory and administrative frameworks which are more responsive to business needs and suited for competitiveness and growth. All this further complements both the European Commission’s competitiveness check, along with its ‘one-in, one-out’ principle in terms of legislation, even if this is seen by many as a tool for less, not better regulation.
Businesses are not necessarily expecting the EU to lower the bar; however, there is an expectation of applying the correct chronology. More regulation does not lead to fair competition; it is more competition that is well-regulated, which leads to fairer competition. So, the emphasis needs to be on promoting a more competitive environment.
While we certainly need to address all the challenges and opportunities around us, such as those related to the widely recognised twin green and digital transition, we cannot simply do so by continuously proposing new legislation.
The EU policymakers must provide regulation certainty and ensure that new legislation is not only truly essential but also well-studied and built upon the necessary competitiveness impact assessments.
The June 2024 European Parliament elections are an opportunity to refresh and further strengthen the linkages between the EU institutions and businesses across Europe. One that will hopefully lead to better legislation and less regulation. This linkage is fundamental if we truly want a more competitive and resilient Europe.
The incoming College of Commissioners and newly elected members of the European Parliament will be defining the next EU legislative agenda together with all 27 member states.
This political transition presents an opportunity to steer the EU towards greater policy stability and sustainable progress, while helping businesses to thrive.
Placing this new legislative cycle within a local context, it is an opportunity for us to embrace and contribute, because even if all these issues may seem distant, if not outright oblivious to many, the outcome of this political transition is of great relevance in better defining and ultimately determining the future path towards more sustainable economic growth and social progress across the EU. This is an opportunity that we all should neither underestimate nor allow to go amiss.
Norman Aquilina is group chief executive of Simonds Farsons Cisk plc and council member of The Malta Chamber of Commerce, Enterprise and Industry.