EUROPEAN

The European Single Market and its Barriers

The European Single Market is at the heart of the European project – it leads to economic growth and prosperity for every one of us. European citizens benefit from a wide choice of services and products, as well as job opportunities. European businesses benefit from a large domestic market, stimulating trade, and improved efficiency.

However, we at BGA believe that the European Single Market has a lot of potential for improvement and we are putting our efforts into improving the trading opportunities on the single market for our members. This includes the identification of trade barriers or overly bureaucratic problems for traders. We also see it as a problem, when Member States breech agreed upon single market rules or create obstacles in their national law with the aim of protecting their national market.

In our work we put a special emphasis in supporting small and medium sized businesses, which account for 99% of all businesses in Europe. SMEs are the economic and social backbone of the European Union and must be treated accordingly. The companies do not have the means to comply with different sets of rules in every European country and are penalized by administrative burdens and complexity. We make it our priority, to help SMEs in their daily business, by providing the best political background and increasing awareness of their needs. We urge our members, to alert us of troubles and barriers that they might face in their everyday work life, in order to bring these to the attention of the European institutions with the goal of eliminating the problem.

Due Diligence Legislation

Small and medium-sizes businesses would be especially harmed by the current debates regarding a due diligence legislation – on both the German and the European level. A regulation that would require SMEs to control their entire supply chain would be impossible to fulfill.

We further see the danger of a spill-over effect, when bigger companies pass their compliance obligations on to smaller companies. Due to the bigger bargaining power in comparison to SMEs, this could lead to an additional burden for many small companies. We are currently trying to make the European Commission as well as the European Parliament aware of this issue and prevent a legislation that would allow such practices.

Against Nationalism and Protectionism

The worldwide trend of nationalism and protectionism is something that we are working against together with our European partners. We are aware, that the German economy can only flourish and grow in the union with our European partners. In a more and more interconnected world, the European Union needs to speak with a single, united voice.

We at BGA are saddened by the decision of Great Britain to leave the European Union. The British, with their liberal and pragmatic market-based economic decisions will be missed. Brexit will be a tough hit for the EU, both economically as well as politically – however, thanks to security measures taken, the worst might be avoided. A hard Brexit, with no free trade agreement, is still an option and has to be averted at all costs. We are preparing our members for the upcoming changes and their future trade with Great Britain through a variety of seminars and in depth discussions with different experts. Furthermore, BGA is a key partner in the Brexit Task Force established by the German Ministry of Foreign Affairs and the German Ministry of Economic affairs.

Direct Access to EU institutions

In addition to the Berlin headquarter, BGA also has an official office in Brussels to assure the direct contact to the European institutions and different stakeholders. Our Coordinator of EU Policy, Laura Mack, is representing BGA in meetings and debates happening in Brussels and Berlin. For any inquiry on the BGA position on EU subjects, suggestions or questions, feel free to contact our office in Brussels or Berlin.

Furthermore, BGA is a member of two European associations:

  • EuroCommerce, which represents national federations and companies in the retail, wholesale and international trade sector from 31 European countries. Further information can be found here: https://www.eurocommerce.eu/
  • CITHA (European Confederation of International Trading Houses Associations), an NGO registered in Brussels with members from 9 different European countries. Further information can be found here:
  • http://citha.eu/

 

A Historic Deal

On July 21st, under the German presidency, EU leaders agreed on a historic comprehensive package of over 1.8 billion euros to counter the effects of the global COVID-19 pandemic. Combining the multiannual financial framework (MFF) and an unprecedented recovery effort under the name of “Next Generation EU”, the goal is to rebuild the economic and social structures in the European Union and ensure further investment in green and digital transitions.

The recovery effort “Next Generation EU” is an important step, to strengthen the European Union as a whole and to decrease inequality between its member states. The deal is a compromise between different interests that have been brought to the table – it shows, that the member states have understood the gravity of the situation and are willing to work together quickly and productively.  It’s especially noteworthy, that the financial help will be paid out only in accordance with certain guidelines set, such as respect for rule of law as well as a clear investment and reform plan regarding green and digital transitions. This is an important incentive and a step in the right direction. The crisis has shown once again, that the European Union has to act unified in the eye of international and global threats. It’s only in unity, that we will come out stronger and more resilient.

Outlook on International Trade and Economics

On September 3rd, the German Minister of Economic Affairs and Energy, Peter Altmaier, gave a speech to the members of the Committee of the European Parliament on International Trade (INTA), in which he laid out the trade related focus of the German Presidency of the Council of the European Union.

The Federal Ministry for Economic Affairs and Energy has set four priorities for the German Council Presidency, including leading European businesses back to strength, keeping markets open as well as creating a level playing field, strengthening the digital sovereignty of the EU and shaping the structural change of the European Green Deal.

It is of high importance, that the European Single Market is restored fully and immediately, to secure the economic and social stability in Europe. Only by doing so, the competitiveness of the European market will be maintained and further improved. Globalization allows for larger markets, more competition and prosperity. Welfare, stability of international relations and worldwide peace are intertwined with trade. Therefore, the focus for the coming months should lie on making businesses and markets more resilient to a future crisis. 

The EU after Brexit

Another cornerstone of the German Presidency of the Council of the European Union will be the future relationship with the United Kingdom after Brexit.

Since the UK did not make use of the possibility to extend the transition period beyond 31 December 2020, the negotiations will have to be concluded in the autumn of 2020 if an agreement is to be ratified as necessary by the end of the year. In other words, the critical phase of the negotiations will come during Germany’s Presidency of the Council of the EU. The UK will leave the EU’s Single Market by the end of 2020 and trade will be conducted under World Trade Organization (WTO) terms – unless a new trade agreement can be finalized in the upcoming weeks and months. The next round of Brexit negotiations will start on September 7th, there are just days left to agree on a future trade treaty between the EU and the UK. The citizens and businesses in Germany and all of the other European member states must prepare for the consequences of the end of the transition period, irrespective of whether an agreement on the future partnership is reached with the UK before then or not. However, the hope for an organized exit of the United Kingdom still prevails – it is the only way to ensure the stability of the economic market and spare the economy from potential chaos.

European Green Deal

The EU has the goal to be climate-neutral by 2050 – this is why it developed a new strategy for sustainable growth, the European Green Deal. To pave the way, the EU plans to implement a legally binding European climate protection law in order to send out a strong signal to the EU partners and to its own member states.

It is good that the Commission has recognized that environmental law urgently needs to be revised. Different standards in the member states are blocking a single market. European-wide regulations should also be harmonized. To implement the Green Deal, the EU plans to mobilize at least one trillion euros for sustainable investments via the EU’s budget. Furthermore, at least 260 billion euros of additional investment will need to be raised each year, according to the European Commission – from both the private and public sectors.

On September 17th, the 2030 Climate Target Plan was presented. The Commission proposes to cut greenhouse gas emissions by at least 55% by 2030. By next summer, the entire EU climate legislation is to be revised and adapted to the new targets. The BGA supports the goals of the Green Deal. Sustainability and environmental protection have long played a major role for companies in wholesale and foreign trade. This begins with the reduction of emissions during transport and storage, technical development of products, efficient control processes in the companies and modern waste management based on high environmental protection standards. We welcome the fact that the EU Commission is keen to harmonize environmental standards throughout the EU, as only these standards can do justice to the practice of wholesale and foreign trade.

The European Green Deal should be built upon the existing legislation, recognize the value of voluntary initiatives, and:

  • Enable  diversity  of  action:  the  wholesale sector needs  to respond  to  a wide variety of consumer demand, and policies under the Green Deal must reflect that diversity of choices made by consumers every day;
  • Ensure   consistency in   national   and   EU legislation: new   and previous   regulatory requirements should not contradict or hamper each other’s effectiveness;
  • Involve  everyone:  cooperation  among  stakeholders, according  to  the  involvement and influence of  each  actor  in  the  supply  chain  will  be  essential  to  making  a  success  of  the Green Deal.
     

However, it is essential that businesses are involved in the implementation of the ideas and are given sufficient time to adapt to the new regulations. In addition, import restrictions on products that do not meet the EU's high environmental standards or CO2 border adjustment tariffs must not lead to trade barriers and protectionism. Climate and environmental protection remains a global task, just as international trade does not stop at internal borders. It is important that business is involved in this process and that there is a relationship based on partnership rather than sanctions. In addition, it is clearly important to implement the planned climate protection measures. It is important that there are no new and excessive reporting and documentation requirements for companies. In addition, the economy must not be penalized for the lack of innovative products - instead, the focus should be on research and development of low-carbon technologies. Therefore, the Commission's proposal to give more support to and expand development and research is very welcome!

It is to be hoped that the EU's approach will indeed lead to international standards and that the majority of industrialized countries will follow suit. Furthermore, we hope that the ambitious program will lead to a boost in innovation. The announcements of extensive consultations and cooperation with industry suggest that the Commission is interested in a genuine dialog.

Brexit

On June 23rd 2016, the United Kingdom voted to leave the European Union. With the British exit the second largest national economy is leaving the union.

In accordance with the Withdrawal Agreement, it is now officially a third country to the EU and hence no longer participates in EU decision-making. The EU and the UK have however, jointly agreed on a transition period, which will last until 31 December 2020. During the transition period nothing changes for citizens, consumers, businesses, investors, students and researchers in both the EU and the United Kingdom and EU law continues to apply in the United Kingdom. There is no impact on customs or taxation during the transition period. However, even if the European Union and the United Kingdom conclude a highly ambitious partnership covering all areas agreed in the Political Declaration by the end of 2020, UK’s departure will have serious consequences for public administrations, businesses and citizens as of 1 January 2021. These changes are unavoidable and stakeholders must prepare for them. 

The British, with their liberal and pragmatic market-based economic decisions will be missed. Brexit will be a tough hit for the EU, both economically as well as politically – however, thanks to security measures taken, the worst might be avoided. A hard Brexit, with no free trade agreement, is still an option and has to be averted at all costs.

Laura Mack
Coordination of EU Policy
tel: +32 27 336900
e-mail: laura.mack(at)BGA.de

Dipl.-Vw. Gregor Wolf, M.A.
Member of the Executive Board,
Head of foreign trade department
tel: +49 (0)30 59 00 99 565
e-mail: Gregor.Wolf(at)bga.de

 

The foreign trade ration has more than doubled in the last 25 years to

 

70%