© European Union 2016 - European Parliament



Brexit, upcoming elections, an uncertain future: The EU is in a deep crisis, but is a union of states that needs to be maintained - just not necessarily the way it is now. While Jean-Claude Juncker presents his visions of a re-invented EU, VDMA also has suggestions for reform in Europe. An analysis.

By Holger Kunze and Eike Radszuhn

© European Union 2016 - European ParliamentOn March 1, Jean-Claude Juncker presented five options for how to reform the biggest market of the mechanical engineering industry. "There is no better time than now to discuss the future of Europe", said the President of the European Commission in a speech in the European Parliament. With the Brexit decision still very present and the continuing trend towards Euroscepticism, the EU is in a deep if not existential crisis. If the European community is meant to survive, it has to re-invent itself. Or, as Juncker put it: "We have to tell the people what Europe can do for them - and what Europe cannot do."

To offer more than words, the Luxembourger also presented the Commission's "White Paper on the Future of Europe": 32 pages of ideas of how to make the EU work again. The core of the composition are five concrete (and partly extreme) ideas about what a future European Union might look like. Juncker made clear that he personally would not support all of the proposals. But since they are all technically possible, Europe would have to choose between:

  • Jean-Claude Juncker<br>© European Union 2016 - European ParliamentContinuing - the remaining 27 member states keep the EU as it exists today.
  • Nothing but the Single Market - the EU will be reduced to an economic community.
  • Those who want more do more - those willing states work together more closely in specific areas such as defense or social policy.
  • Doing less but more efficiently - the EU detects key policy areas to concentrate on and leaves the rest to the member states.
  • Doing much more together - more decisions will be taken on a European level with more power and resources.

Brussels is usually a place where decision making takes time, especially for the big decisions. But now, the schedule for reforming the EU is quite ambitious. On March 25, member states met in Rome to celebrate the 60th anniversary of the Rome treaty, the foundations of today's European Union, to discuss how to develop the EU further. At the least, a general decision on how to proceed (or how not to proceed) is - as it seems - a matter of months than of years.

For the mechanical engineering industry, the process and outcome of this debate on the future of the EU is highly relevant. Exports and cross border cooperation are very important for this sector. Many companies do not consider their respective home country as their domestic market, but Europe as a whole. For German mechanical engineering companies, for instance, sales to other EU countries account for roughly the equivalent revenues as business in Germany. If the EU should change how and how far there will be collaboration between member states, it will inevitably have an effect on this industry.

VDMA's own EU paper

It is hard to evaluate which of Juncker's five visions would provide the best outcome for mechanical engineering companies - maybe it's a mixture of a few of the ideas, maybe there is even a sixth option. However, it is important that the demands of the industry are heard in the debate. Therefore, VDMA has published its own paper on reform in Europe, titled "Ensuring the future of the EU".

Thilo Brodtmann<br>© VDMAAmongst others, VDMA is calling for two key points that any EU reform must include: the democratization of the European Union and a clear allocation of responsibilities between the European institutions and the member states. "The mechanical engineering industry needs a strong EU, but is against a European superstate", says VDMA chief executive Thilo Brodtmann. "Ultimately, people will only embrace a European Union that they understand."

Today, the decision making on a European level is often blocked by individual member states, leaving the EU incapable of decisive action when confronted with challenges. In VDMA's view, more democracy could solve this problem. There should be a majority decision making process in the European council for all areas of politics, which would mean as a consequence the abolition of the veto for member states. In addition to this, the European Parliament should play a stronger role: it needs to act as an effective control of the European Commission and needs to be given the right to propose legislation.

Secondly, the division of labor between the EU and its member states is often unclear, both for experts and for citizens. A good example is the European trade policy, where the protest from a small region in Belgium jeopardized the free trade agreement with Canada last year. A verdict by the European Court of Justice was even necessary to interpret who is responsible for what parts of today's European trade agenda. In VDMA's view, the EU should be granted sole competence for all matters that can only be addressed effectively at European level. On the other hand, the EU should respect the subsidiarity principle and therefore not interfere in national matters through the backdoor.

The time is now

The export industry in particular has greatly benefited from European-wide collaboration over the past few decades: achievements such as the Customs Union, the Single Market, the Schengen Agreement and European trade agreements with third countries are key requirements for the competitiveness of European companies. In the future, the mechanical engineering industry will also need decision making on European level. This is why VDMA calls for a Europe-wide debate on the future of the European Union with the goal to make the EU effective and decisive again.
"Over the past few years, the EU and its member states have not been able to provide an efficient solution to key problems. But there is no reasonable alternative to European cooperation", says VDMA Executive Director Brodtmann. In a globalized world, countries are too small to defend their interests exclusively on their own. "Europe needs to stand together to assert its interests against centers of economic power such as the USA or China. It is therefore high time for a profound reform of the EU."

Indeed, circumstances make a reform of the EU not only urgent, but also difficult. The Brexit negotiations are starting, the (to some extent) EU-sceptic Netherlands are forming a new government, and elections are coming up in France, Germany and possibly in Italy. However, in VDMA's view, the ultimate goal must be a true reform of the EU, not finding a way to muddle through the current crisis. EU Commission President Juncker has put it into his own, lofty words: "We will go on. We have to go on. Now it’s time to be pioneers."

Further Information

VDMA European Office | EU-paper: "White Paper on the Future of Europe" | VDMA-paper "Ensuring the future of the EU"

Holger Kunze, Director VDMA European Office.
Eike Radszuhn, VDMA European Office.