Meeting the New Challenges for the Single Market Juan Delgado 29 November 2007

Bruegel –  A European think tank –Created in 2004, started operations in 2005 –Based in Brussels –Supported by Members = EU Governments + International Companies –Independent, nonpartisan, research-based, policy-oriented (focus on economic policy) –Outward-looking perspective: a global perspective on European issues, a European perspective on global issues  Bruegel’s aim –"contribute to the quality of economic policymaking in Europe through open, fact-based and policy-relevant research, analysis and discussion"

16 State Members Austria Belgium Cyprus Denmark Finland France Germany Hungary Ireland Italy Luxembourg Netherlands Poland Slovenia Spain UK 83 % of EU Population 92 % of EU GDP + open to all others!

28 Corporate Members

Challenges of the Internal Market 1.Competition, market entry and EXIT 2.Globalisation 3.Innovation-driven economy 4.Services economy

1. Competition, market entry and EXIT  Enhance competition  Facilitate market entry  And if things go wrong…….

1. Competition, market entry and EXIT  Enhance competition –Antitrust and merger policies –Liberalisation policies  Facilitate market entry –Emphasis in domestic reforms –Remove economic-based restrictions  And if things go wrong……. –Simplify exit regulation –State aid policies not aimed to protect ailing industries

2. Globalisation  Delocalisation of production processes  Globalisation of capital markets

2. Globalisation: Delocalised production processes The Travels of a T-Shirt in the Global Economy, by Pietra Rivoli

2. Globalisation: Delocalised production processes  Offshoring and outsourcing –New patterns of trade –New industry geography  Suffering from globalisation or taking advantage of it?

Globalisation: Do EU firms meet the challenge? Source: The Happy Few: The internationalisation of European firms. By T. Mayer and G.I.P. Ottaviano. Bruegel Blueprint 3/2007 Exports are concentrated in very few hands

Source: The Happy Few: The internationalisation of European firms. By T. Mayer and G.I.P. Ottaviano. Bruegel Blueprint 3/2007 The situation has not evolved in the last few years Globalisation: Do EU firms meet the challenge?

Belgian FDI-makers are more productive than Belgian exporters Source: The Happy Few: The internationalisation of European firms. By T. Mayer and G.I.P. Ottaviano. Bruegel Blueprint 3/2007 Globalisation: Do EU firms meet the challenge? Exporters are more productive than domestic firms and FDI-makers even more productive

3. Innovation-driven economy 1.Productivity growth is driven by innovation 2.Innovation policies  Competition and innovation  Intellectual property and patent policies

4. Services economy Services directive is a good start but…… how do we implement it? Services is not a “sector” One-size suit does not fit all services and all countries

5. Services: Benefits from trade All services are not equally tradable nor have the same economic importance. Regulation should focus on domestic reforms or reforms “at the border” depending on the nature of the service. Source: Bruegel

Concluding remarks  Prioritising: First, screening and then monitoring –Searching for market imperfections with large direct/indirect impact  Taylor-made solutions (in addition to general rules) –Barriers to entry/trade are increasingly sector/country specific  Implementing general rules: Implementation toolkits –What are the tests a regulation should pass to comply with the internal market rules?  Make markets work rather than regulate market outcomes/structures –Sustainable solutions instead of temporary solutions  “Internal market policies” not isolated from other policies –What are the tests other policies should pass to comply with the internal market rules?

Thank You For Your Attention Juan Delgado , Rue de la Charité 33, B-1210 Brussels