Mediaroom

With president Trump touring Japan, then further aggravating trade relations with China and Mexico and tweeting support for a hard Brexit, only meagre attention has been paid internationally to the outcomes and implications of the recent European elections. Headlines abroad read, at best, something like ‘European Parliament to be more fragmented’ and that is not a tiding of strength to most measures.

Yet, being stern and impactful is what ‘Europe’ should concern itself with, urgently, in an increasingly uncertain world: focusing on its strengths, renewing commitment to the virtues which made the Union successful, making sure the EU can act politically again, fast, losing as little time and momentum as possible.

Speaking to industry association leaders from the major continents in Japan in recent days, global trade relations, increasing US protectionism and China’s changing of the book of rules were top of the agenda. Businesses are most concerned with the impact of the US-China standoff, as even the tiniest of developments immediately impact their operations. But automotive companies are heavily invested, too, in the USA and Mexico: the conclusion of the USMCA (replacing the NAFTA agreement) was eagerly anticipated, and the newly announced tariffs on imports from Mexico will hurt.

Supply chains are globally integrated, laid-out to achieve maximum efficiency in an highly competitive, capital intensive, innovation-focused business. With much reason, tariff restrictions as much as non-tariff barriers are a main point of focus for industry associations like CLEPA.

The unpredictable and aggressive stance of the US government towards longstanding allies and its most important trading partners, the departure from rules-based trade for reasons – national security threats, immigration policy – that only recently seemed fully out of scope, combined with China’s decisively strategic approach to industrial policy, forging market share and expansion within and beyond its borders backed by state subsidies and state-owned enterprise, is sending shockwaves through the business community.

Adequate response is required. But what does that mean? The EU could keep itself busy for months with further navel gazing fuelled by Brexit and other ‘internal’ issues. Indeed, the increased fragmentation of the political landscape as illustrated by recent national as well as the European elections, does not bode well. And further important elections are on the horizon in a number of member states.

In the European Parliament where the two traditional political families lost their joint majority, it may become much more difficult to form coalitions. This is not an entirely new trend, already in past Parliaments, alliances were increasingly found along non-traditional lines, more topic-based than on political lines, but complexity increases.

The forming of the new College of European Commissioners may prove more challenging than before, with countries evaluating whether to send candidates from the more ‘radical’ spectrum to Brussels, potentially triggering a prolonged confirmation debate in the European Parliament which will hold individual hearings of Commissioner candidates, but can only endorse (or reject) the College as a block.

In fluid times like these, a clear view of what is needed is more in demand than ever. EU governments would give a positive signal by agreeing quickly about the top jobs up for distribution, in particular the presidencies of the Commission, Council, European Parliament, and the European Central Bank, as well as the EU High Representative for Foreign Affairs.

For industry, clarity of vision includes most and for all a commitment to strengthening the EU as a location for competitive businesses and sustainable manufacturing. This requires a reliable legal and policy framework and, in the case of the automotive sector, a supportive context for transport and mobility in particular: think infrastructure for connectivity and renewable energy. Policy makers and industry together must reinforce education and training to provide the skills needed for the industry of tomorrow. And Europe should step up its coordinated funding efforts for research and innovation which support strategic objectives of sustainability, security and digitalisation.

The EU must also hold its course with regard to trade policy, as negotiation mandates remain valid and the current Commission can act credibly implementing standing policies without giving major new impulses. Europe should seize any opportunity to assert its commitment to an open, rules based international system for trade and competition, vetting foreign intervention based on state support, combatting violation of rules on intellectual property and continue pushing for harmonisation of technical standards in pursuit of globally smart, efficient and sustainable economies. Such may not be suitable for a head-turning tweet, but the message will come across nevertheless.

Sigrid de Vries, CLEPA Secretary General