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Pascal Lamy: Europe’s Agenda After Expansion

What are the main economic challenges that lie ahead for the EU-25?

April 30, 2004

What are the main economic challenges that lie ahead for the EU-25?

The May 1, 2004 EU enlargement will add economic weight to the union. But while many will stress the historic meaning of the expansion, Pascal Lamy — the EU’s trade commissioner — is already focused on the challenges ahead. In this Globalist Interview, Mr. Lamy explains what the EU needs to do to become a truly global power.

How much will actually change when the 10 new countries accede to the EU on May 1, 2004?

“The 1st of May will not be a ‘big bang’ in terms of integration between the old and new member states. In fact, over the last 15 years, we have already achieved a remarkably high level of interdependence between our economies.”

What will be one of the first issues to tackle for the EU-25?

“We urgently need to address Europe’s twin deficits — in growth and competitiveness.”

How specifically can Europe change its competitive fortunes?

“What is needed now is less vertically integrated firms, greater mobility within and across firms, more training and retraining, greater availability of external finance, in particular equity finance — and more investment in both higher education and in research and development.”

How will Europe achieve this goal?

“With the European economy in decline, we need to ensure that projects with a cross-border impact materialize. Real European value-added can be achieved by pooling research efforts, by building crucial trans-European infrastructure.”

Can Europeans maintain their way of life?

“Faster growth is paramount for the sustainability of the European model. Sustainability is under threat from rapid developments in demography, technology and globalization — all of which increase the demand for social protection and security.”

What global responsibilities does Europe have?

“We need to assure the ability of a united Europe to regulate globalization — and establish a basis for a new North-South partnership.”

What does that take?

“Europe needs to grow not only in size — but also in dynamism. Weight is necessary in today’s globalized world. But energy is even more important.”

Where do you see open questions about the EU’s global role?

“The EU-25 will obviously be a big elephant in the global economy. But how do we translate size into influence? How can we ensure that this bigger EU will be a shaping factor of globalization? Because with size comes responsibility. What does it take to enable Europe to exercise this responsibility — both vis-à-vis its own citizens and vis-à-vis our economic partners outside the EU?”

Where does the EU economy fall short?

“While macroeconomic stability has considerably improved — and a strong emphasis on regional convergence and solidarity has been preserved — the EU economic system has failed to deliver a satisfactory growth performance.”

Have previous EU summits promised too much?

“As is sometimes the case in politics, we have oversold expectations. We have underinvested in results.”

Yet, why can Europe still serve as an example for the benefits of globalization?

“Through the experience of the internal market, we are experiencing in Europe an effective laboratory for harnessing globalization.”

This Globalist Interview is based on Mr. Lamy’s speech “EU-25 in the Global Economy”, held on April 21, 2004, in Hannover, Germany. For the full text of Mr. Lamy’s speech, click here.