Both are vital to eliminate distortions in the internal market and improve the global competitiveness of European businesses. Concrete proposals from the Commission and timely implementation by member states are now of the essence.
However, the communication on cross-border loss relief foresees that losses can be offset against profits only if the losses are incurred by a subsidiary, and the profits are generated by the parent company. While this can provide a solution in many cases, a targeted measure providing a comprehensive remedy must also encompass a profit and loss offset between subsidiaries in different countries, as well as the offset of a loss in the parent company against the profit of a subsidiary located in another member state.
UNICE would like to recall that, while a well-conceived, targeted measure can provide relief in many cases, a comprehensive solution which would also eliminate transfer pricing problems and reduce compliance costs for European business requires an optional common consolidated corporate tax base. This will deliver major benefits for the internal market, and for growth and employment in Europe.

The first one concerns the new guidance on application of section 404 of the Sarbanes-Oxley act which provides that internal controls should be led by the management rather than by auditors.
The second one relates to the new rules on deregistration of listed companies which no longer take as criteria the number of investors but the trading volume.
Both proposals show that the SEC is responsive to the concerns of European business, which we have underlined on many occasions.
Ernest-Antoine Seillicre, President of UNICE said: “This is good news. Both proposals show that the SEC has been adequately responsive to EU businesses, which have had to face very burdensome and costly rules when listed on a US stock exchange.”

He made his presentation around three issues of central importance to UNICE: fully exploiting the acquis communautaire, meeting the challenges of globalisation and contributing to the future of Europe.

1. FULLY EXPLOITING THE ACQUIS COMMUNAUTAIRE :
A. INTEGRATE THE EUROPEAN MARKET

The integration of the European market creating one single market for people, goods, services and capital is essential. It creates synergies companies need, it offers a larger choice to customers, it is an appropriate answer in a global world competition. It has created approximately 2.5 million jobs over the last 15 years. However, if Europe wants to move ahead of the global competition, we now need to move up a gear, and create a market in which companies can move as freely as, for example, in the different states of the US. It is therefore that we were so anxious to create a single market for services. Looking at the efficiency of the services sector in the US, it becomes clear that huge productivity gains can still be make in European services. We have now a proposal for a service directive that is far from perfect, but it is also now up to us to make the best of it with an efficient implementation in each Member State.

B. FIGHT NATIONAL PROTECTIONISM
The fight against national protectionism is part of the internal market strategy. I think it is important to underline this, especially because we have seen some attempts from larger countries to protect their companies against mergers and acquisitions coming from outside. The concept of “national champions” is not the answer, nor is the intervention of governments in business mergers. It is up to stakeholders – taking into account the interest of the company – to take that kind of decision. It is also in this context that I would like to touch on the WTO negotiations. For our countries the failure of the negotiations is unacceptable. We are an open economy; we export a lot all over the world. With around 20% share in global imports and exports Europe’s economy participates in the world development and, moreover, its own future prosperity depends on it. We are therefore in favour of a multilateral approach, but one that really opens the markets for goods and services. It can not be accepted that agricultural problems dominate trade issues. It cannot be accepted that important emerging economies don’t want to open more their market access. We still do hope that the Doha Round can be finalised on acceptable conditions. It is generally accepted that a successful outcome of this Round would increase EU exports by 2.5%. But already now we have urged the Commission to start the examination of a bilateral approach and negotiate free trade agreements with some countries or regions.

C. TAKE ADVANTAGE OF THE OPPORTUNITIES OF ENLARGEMENT
The enlargement to the 10 new member states has been positive for the economy. There are still currently more exports from West to East than the opposite. There were more jobs created in the West from the increase of exports, than losses as a result of delocalisation of activities. Therefore, we are convinced that enlargement is a win-win situation. It has and will continue to bring benefits to all Member States if we manage it properly and do not allow our strategic choices to be guided by short-term thinking or unfounded fears.

2. MEETING THE CHALLENGES OF GLOBALISATION
A. IMPLEMENT THE REFORMS FOR GROWTH AND JOBS
In March 2000 in Lisbon, heads of state and governments have defined a very ambitious but very accurate 10-year strategy based essentially on the improvement of Europe’s competitiveness. We know that after the mid-term, we are very far from the goals set in Portugal.
The gap with our competitor countries has even widened since then. Over the last five years, growth in the Euro area was 1.3% against 2.6% in the US. Moreover, the so-called “emerging” economies are overtaking us: in 2005, the size of China’s GDP had reached the size of the Eurozone’s. Even a refocused strategy as it was done by the Barroso Commission in 2005, can only be successful if the member states themselves decide to proceed to the necessary structural reforms. Some have done it due to the difficult circumstances they had to face, such as Finland for instance, which went through a turnaround after the collapse of the Soviet Union in the early nineties. Now this country is considered as one of the most competitive in the world. As the business community, we should therefore urge all the national governments, from the member states as well as from the associate countries to act and adapt their policies in order to be able to face the global competition, the technological challenges and the ageing demography. This is exactly the message that I passed on to Chancellor Merkel who will chair the Presidency of the European Union in the coming six months when I met her last 4 December.

B.REFORM THE SOCIAL SYSTEMS TO MAKE THEM SUSTAINABLE
We need not debate whether there is more than one social model in Europe, what is important to accept also for the business leaders is that, when there is economic growth, when productivity improves, part of it must be used to create more solidarity and to support the social welfare. But today the sustainability of the social systems is at stake. Given the rapid ageing of Europe’s population, it has been calculated that government debt in the EU15, which is currently at 45%, would explode to 180%, if nothing was changed. Each member state, each European country must tackle this challenge on its own. But a delay in one country has consequences for the others. Because it is also proven that sound macroeconomic policies foster growth rather than the opposite.

3. CONTRIBUTING TO THE FUTURE OF EUROPE
A.GOVERN THE EU EFFICIENTLY
I. ECONOMIC GOVERNANCE
Monetary union, alongside the internal market, are two great achievements of European integration for the business community. But we haven’t seen all the benefits yet. The euro area growth performance is disappointing and there are growing competitiveness divergences across countries sharing the single currency. From our perspective, the message is clear: the economic governance of monetary union has to improve, along the next four priorities:
1. Strengthen the commitment to consolidate public finances in a recovery phase. This is particularly important in monetary union because it is probably the most effective way to prevent persistent periods of overheating and overcooling at the country level
2. Eurogroup must also take responsibility for structural reform surveillance, reflecting the strong policy interactions that exist in monetary union
3. Improve the quality of the dialogue between the different policy stakeholders, in the full respect of the ECB’s independence.
4. Strengthen the external representation of the euro area so that its contribution to global policy challenges is commensurate with its economic weight.

II. INSTITUTIONAL GOVERNANCE

The governance of the EU has been shaken by the negative referenda in France and in the Netherlands. The challenge today is to solve the EU institutional problems arising with 25 members today, 27 and more tomorrow. We all know that this is not the first time the EU is going through difficult times but it is probably one of the worst. Even if we have survived the empty chair days, the eurosclerosis years, budgetary crisis and the Commission resignation, the current situation is unprecedented since the European project has lost the backing of a large portion of EU citizens and companies. The crisis comes at a time when the EU is confronted with enormous challenges linked to demographic ageing, technological change and globalisation. The most difficult thing now is to recover European citizens’ and companies’ confidence in the European Union project.
UNICE Council of Presidents adopted last 1st December in our bi-annual meeting in Helsinki, a UNICE declaration on the Future of Europe. We want with this paper to influence the German Presidency in view of the preparation of the political declaration that will be issued on the occasion on the 50th anniversary of the Treaty of Rome. You can argue that it is not up to business leaders to find the political solutions, which is true, but it is our duty to call for these solutions urgently. As I already mentioned in my presentation on the UNICE priorities, Europe is confronted with a series of challenges that require concrete actions. In a context of increasing globalisation and fast technologies changes, it is necessary that Europe focuses it actions to restore its competitiveness vis-r-vis other regions of the world which are undergoing tremendous developments. This is why business demands actions to reinvigorate the European Union. A European Union that is capable of swift and decisive action, when is required. A European Union that is more capable of coordinating national initiatives. A European Union that can disseminate best practices in one Member State to other Me mber States. A European Union that takes action to achieve the objectives of tomorrow. European Business supports a strong European Union capable of actions and able to deliver on reforms. But clearer objectives must be set, stronger focus on priorities must be ensured, and political will and support for these reforms must be more strongly shown. By doing this we can make a success of a redynamised Europe.

It is more than a decade since the European Union and its southern Mediterranean neighbours set themselves the ambitious objectives of the Barcelona Process. Today it is a fact that we are far away from the objectives established in 1995, notably due to the political instability of the region. As a businessman, representing here the interests of the Euro-Mediterranean business community, I am convinced that the achievement of the Barcelona Process is now more important than ever especially in order to tackle the challenges and opportunities of globalisation. Its success will be the answer for those who doubt the need to have a true partnership between the European Union and the South Mediterranean countries. The Euro-Mediterranean business community asks to be fully associated. We are all disappointed because Economic modernisation and growth has not taken off in the South Mediterranean countries as expected and European investment in the region remains at a low level, in comparison with other emerging regions. To reduce unemployment, to facilitate trade and to attain a desirable GDP growth rate more effort should be put in attracting foreign direct investment. In this framework, UNICE is for a thorough re-think of Europe’s approach to economic reform. We cannot deny that large amounts of money have been pumped into the Mediterranean region mainly in the cause of economic reforms, but the results fall below expectations. It is true that part of the problem is the political and social situation the region is facing.
It may be time for a renewal of the economic objectives and the areas to focus are attention. We would like to see an improvement in the business climate that will enable firms to invest, create jobs and expand. It is also certain that the South Mediterranean countries have primary responsibility in this area. Although they have achieved some progress in improving the business climate more efforts are needed. Just to give an example: Cutting red tape, eliminating unnecessary legislation speeding up the permitting process will have direct positive consequences to economic growth and employment. At UNICE we are very pleased with the endorsement of the Euro-Mediterranean Charter for Enterprise in Casserta during the Italian EU presidency. The charter should help improve the business environment and the investment climate. However, we want attention to focus on clear and affordable targets such as easier access to finance with particular attention to SMEs, less obstructive taxation, concrete translation of commitments to entrepreneurship education; improvement of labour force skills and therefore encouragement of vocational training. In the recent Ministerial Conference on Industry in Rhodes, it was acknowledged that in order to increase enterprise competitiveness and job creation we need to support innovation. The business community on both sides of the Mediterranean is willing to identify and present concrete areas for every specific country, a plan to accelarate progress. We are eager to do our homework but we need your support in order to have tangible results and implemented reforms. It is time to move from words to actions. I now turn to UNICE’s view on the Euro-Mediterranean Free-Trade Area, as it was confirmed by the Barcelona and the 10th anniversary Summit in November 2005. The objective of the Euro-Mediterranean Partnership must now be pursued through implementation of the ambitious trade roadmap that we welcome and support. UNICE firmly believes that all policy-makers, social partners and civil society must come together to accelerate the process forward. It is our opinion that to attain the objective of the free-trade area, south-south economic integration is a fundamental first step. The poor level of economic integration in the region prevents these countries from taking advantage of greater economic efficiency in their production units, improving internal market demand, economic growth and employment. In other words market integration will boost productive specialisation in each economy in the region, allowing greater economies of scale and easier access to other markets. Additional efforts are needed for the effective implementation of the Agadir Agreement - which could be a good instrument to facilitate the expansion of trade in the region. Talking about the importance of the liberalisation of Euro-Mediterranean trade, UNICE considers the failure of the WTO Doha Development Agenda negotiations unacceptable. Therefore we look forward to an early re-start of the dialogue. The consequences of the failure are substantial for all regions of the world, and also for the Mediterranean region. UNICE believes that the European Neighbourhood Policy (ENP) should complement and reinforce the Barcelona process. The financial instrument related to the ENP must support the development needs of the region and they should also aim to strengthen business organisations by providing with appropriate additional financing. I would not like to finalise my intervention without a word on the role of the Members of the European Parliament and the Members of the Euro-Mediterranean Parliamentary Assembly. UNICE is convinced of the importance of the role that you, as representatives of the European and south Mediterranean citizens, are playing and can play. We would like to be fully associated with your work. We can help you identify the real problems and hurdles regarding achievement of the Euro-Mediterranean Partnership. We understand that policy-makers have to take the decisions. Business organisations can be an extremely useful instrument as they are ready to cooperate with you in better development of the measures needed in every country to move the Euro-Mediterranean Partnership forward. UMCE and UNICE are in a privileged position to interpret the needs of companies and convey this message to you. Thank you for giving me the opportunity to be with you today and I hope that there will be similar initiatives in the future.

He expected that a resolution of the blocked Constitutional Treaty would be presented to the June Summit, and passed on to the Portuguese to finalise. Major challenges would also be faced on enlargement to Turkey, and energy relations with Russia. There were links between the energy and climate change dossiers, but the schedule for analysis and debate prior to the Spring Summit was extremely tight. The Presidency would oversee national discussion of the emission trading scheme and work on national action plans to counter greenhouse gases. Peter Witt hoped for significant movement in better regulation, with standard impact assessments, and an independent monitoring body. It was appreciated that German priorities coincided so clearly with UNICE’s own concerns for business in 2007.

The European business community, represented by UNICE, has high expectations of the German EU presidency. As Europe’s biggest economy and number-one trading partner of most EU Member States, Germany can lead the way on many of today’s most pressing policy issues.

The current recovery in Europe in general and in Germany in particular offers a window of opportunity and must be used to its full extent for structural reforms. We expect Germany to take a lead role in the European growth and jobs strategy. The business world continues to be deeply worried about the difficult political situation in which the EU is trapped. UNICE has repeatedly stressed that in an ever more globalised world European business needs the EU to be capable of swift and decisive actions. We therefore appeal to use the momentum of the 50th anniversary of the Treaty of Rome to solve the EU’s institutional problems and adapt its decision-making process to increased membership. The supply and cost of energy are vital competitive factors for European industry. It is therefore key to establish an open and competitive energy market. The German Presidency should play a leading role in ensuring that the EU speaks with one voice on external energy policy issues. This includes the energy dialogue with Russia.
There is also a strong need to immediately establish more formal cooperation between the Competitiveness, Environment and Energy Councils on EU climate change policy. The implementation of the Kyoto Protocol is posing risks for the international competitiveness of European companies. The EU should also not set for itself unilateral post-2012 climate change objectives, but intensify its climate change diplomacy in particular in the context of the G8, and adjust its policy approaches if needed to secure an international post-2012 agreement.
The better regulation exercise must receive a boost from the German Presidency. European business continues to support the Commission’s initiatives but so far European companies, in particular SMEs, have felt no real relief on the ground. UNICE urges the Spring European Council to formally endorse the target to reduce administrative costs by 25% in five years. Moreover, European companies believe that improving the process for impact assessment is essential to ensure that new legislation is in the interest of society as a whole. Europe’s economic and social objectives are interlinked. UNICE therefore insists that an integrated approach is adopted to develop one single tool for assessing the impact of future EU legislation.
Europe is confronted today with a series of challenges that require concrete actions. In a context of increasing globalisation, fast technological changes and demographic ageing, it is necessary that Europe is capable of swift and decisive actions. To move forward, Europe must solve its institutional problems and adapt its decision-making process to its current membership. Taking appropriate actions to improve the efficiency and transparency of the EU institutions, while preserving the Community method, must be a priority of the EU. The Commission must remain strong, independent and the guardian of the Treaties. It must retain the right of initiative to propose actions to the Council and Parliament in the interest of the whole Community. The stability of the EU Presidency must be reinforced. The credibility of Europe in Foreign Affairs requires a stronger voice of European Foreign Affairs policy vis-r-vis the rest of the world.
ECONOMIC SITUATION Following years of disappointment, the performance of the European economy is exceeding expectations this year. UNICE estimates that real GDP growth for the whole of 2006 will reach 2.9% for the EU and 2.5% for the euro area - the best outcome in more than six years. Two positive developments are clearly noticed: the dynamism of investment growth, which is expected to reach close to 5% in the EU this year, and employment, with more than two million additional jobs created in 2006. The current economic recovery offers a unique chance to move ahead and build up consensus around the reforms needed to ensure more self-sustained and balanced growth over the years ahead. We cannot afford to repeat the mistakes of the past and delay necessary measures as soon as the economy is doing better. Therefore UNICE calls for: - Member States to take advantage of the upturn to improve decisively their long-term fiscal positions and take comprehensive actions to reform social systems; - Wage-setters to ensure that wage developments are consistent with productivity trends and responsive to the aim of restoring competitiveness where it has deteriorated in recent years; - Member States and EU institutions to take resolute steps in labour, product and capital market reforms to escape an unnecessary trade-off between increasing employment rates and sustaining high productivity growth.

GROWTH AND JOBS: SPRING EUROPEAN COUNCIL 8-9 MARCH 2007

We expect the Spring European Council on 8 March to make an honest assessment of reform progress in Member States. The “Progress Reports” on the National Reform Programmes are seen as a positive contribution to the reform strategy by a majority of UNICE national business federations, which we recently polled on the growth and jobs strategy. However, a majority of them also judge the actual progress in national reforms over the last year as too slow given the increasing international competitive pressures and Europe’s ageing population.
UNICE asks the German Presidency to keep a sense of urgency in the reform process and to pay particular attention to the following elements of the growth and jobs strategy:
SMES AND ENTREPRENEURSHIP
SMEs are the driving force for growth, job creation and innovation. In order to foster SME growth and create a more business-friendly environment, emphasis needs to be put on the following: - development of coordinated EU policies to foster SME growth and entrepreneurship, and coherent implementation of the “think small first principle” when devising new policies and EU legislation; - easier access to (innovation) finance; - less obstructive taxation; - addressing the problem of succession in SMEs; - fostering entrepreneurial spirit at the level of schools and universities; - creation of a European Private Company Statute; - better enforcement of intellectual property rights and fight against counterfeiting, as well as establishment of a user-friendly and cost-effective EU patent system.
INTERNAL MARKET
The Internal Market is a cornerstone of Europe’s prosperity. However, it is an unfinished project and is challenged by looming national protectionism. Urgent action is needed on four fronts:
1. Completion: Internal Market must be further integrated and existing barriers removed. National transposition and implementation of Internal Market rules must be improved. There are still important missing links in many sectors, for instance in services, transport, financial services and telecommunication, as well as concerning the protection of intellectual property.
2. Efficiency: we need better and simpler Internal Market rules, including systematic stakeholder consultation and impact assessment, and a stronger emphasis on the external dimension of the Internal Market. In order to reinforce the impact assessment and ensure that new legislation does not come into conflict with the principles of the Internal Market, an “Internal Market Compatibility Test” should be applied, both at EU and at Member-State level.
3. Enforcement: concrete action is needed to improve the functioning of the mutual recognition principle, to ensure homogeneous market surveillance, coherence of national regulatory agencies’ rulings and effective non-judicial problem-solving mechanisms, such as SOLVIT which are of particular importance for SMEs. Enforcement is deficient in areas such as free movement of goods, public procurement, telecommunications and energy.
4. Awareness: the achievements of the Internal Market pass largely unnoticed by the public and many advantages are taken for granted. They should be a central element in the communication of Europe in order to bridge the gap between the EU and its citizens and counterbalance the existing trend to identify Europe and the Internal Market with losses of jobs, relocations, globalisation, etc.

BETTER REGULATION
UNICE encourages the German Presidency to strongly emphasise the importance of implementing the better regulation agenda and achieve concrete results whilst at the same time pursuing a broad programme with new initiatives to enhance the effectiveness of the project.
Progress in the area of simplification is far too slow and there is a considerable risk that new burdens could be added during the legislative process. It is crucial that the Council and Parliament improve inter-institutional working methods to ascertain that simplification proposals are dealt with quickly and really reduce burdens for business. The Council and Parliament should also make further progress with respect to the systematic carrying out of impact assessments on their amendments to Commission proposals. And, lastly, UNICE strongly supports the ambitious idea to strive for a 25% reduction of administrative costs by 2012. This would be another important next step in the process of rendering Community legislation cost-effective. UNICE hopes that the Spring European Council can endorse a 25% reduction target whilst setting appropriate intermediate targets to ensure that continuing progress is made towards achieving this important goal.
STRENGTHEN THE LINK BETWEEN RESEARCH AND INNOVATION Strengthening Europe’s innovative capacity is heavily dependent on investment in education, investment in R&D and facilitating all forms of technological and non-technological innovation. Strengthen the link between research and innovation is key given the continued existence of the so-called \'European paradox\' whereby the quality and quantity of European public research is by and large excellent, however the results of this research are not making the transition from research to innovation and commercially viable products and services. Creating a favourable climate for innovation requires a broad range of policies at EU, national and local levels. It includes: - An efficiently functioning, open internal market for goods, services, finance and people; - Better regulation aimed at removing obstacles to innovation; - A strong research and technology base, including more EU-level cooperation as well as increased R&D funding at EU and national levels; - A high quality of education and training at all levels; - An environment that is favourable of and encouraging for private-public partnerships (PPPs), in particular between universities and enterprises; - A workable, competitive Intellectual Property Rights regime to protect and reward investments in R&D; - A well functioning supply of risk financing, in particular for SMEs; - Environmental policies that enhance innovation without threatening competitiveness.
ENERGY POLICY FOR EUROPE The key to a secure and competitive energy supply is establishment of an open and competitive Internal Market. The EU model for regulation of national gas and electricity markets needs to be improved, notably with a view to rendering the unbundling of production and transport more effective, and to making national regulatory authorities more independent of political power, which is necessary to create the predictable environment which operators need to make the large-scale investments required to underpin European growth. It has become clear that Member States are no longer individually capable of managing an economically efficient transition to a less carbon-intensive society. In line with the conclusions of the 2006 Spring European Summit, it is urgently necessary to define an Energy Policy for Europe (EPE) in order to facilitate national efforts to this end. The 2007 Spring Summit should adopt an ambitious prioritised action plan for energy, broadly reflecting a market economy philosophy. Designing the EPE will need to aknowledge that governments retain some responsibilities for determination of the conditions governing exploitation of their energy resources and the structure of their supply. However, the opening of energy markets makes it imperative to have more transparency in national decisions concerning energy policy on issues that will affect the common energy market. The German Presidency should play a leading role in ensuring that the EU speaks with one voice on external energy policy issues including the energy dialogue with Russia. The EU must have a clear and common lines with Russia concerning energy issues. Transparency and reciprocity based on market principles as well as predictability to secure long-term investment will have to play a major part in any negotiations. This plan should contain initiatives designed to bring about closer coordination of Member States’ positions in international forums and vis-r-vis non-EU energy suppliers.
CLIMATE CHANGE POLICY An environmentally and economically efficient response to the global warming challenge can only be based on a truly global and innovative cooperation strategy. The EU should not set for itself unilateral post-2012 climate change objectives, but intensify its climate change diplomacy in particular in the context of the G8, and adjust its policy approaches if needed to secure an international post-2012 agreement which protects the competitiveness of European industry. The fact that the Kyoto Protocol is being implemented by the EU but not by some of Europe’s trading partners already poses risks for the international competitiveness of European companies, which need to be addressed right now. There is a strong need to establish stronger and more formal cooperation between the Competitiveness, Environment and Energy Councils on climate change policy.

EUROPEAN SOCIAL POLICY

WORKING TIME DIRECTIVE
The reluctance of the German Presidency to work on this dossier after the failure of numerous attempts to find a compromise on a new Working Time Directive should be reconsidered. Amending the directive to solve the problems created by European jurisprudence on on-call time is urgent.
DIRECTIVE ON PENSIONS PORTABILITY
Discussions in Council and in the European Parliament will continue during the German Presidency on the directive on pensions portability. UNICE fully supports the objective of facilitating the mobility of workers in Europe. However, encouraging the development of supplementary pensions to live up to the challenge of demographic ageing is also essential. UNICE believes that the approach proposed by the Commission will increase the cost of supplementary pensions throughout Europe without addressing the real obstacles to cross-border mobility in the field of pensions: double taxation. The Commission proposal would not create a “win-win” but a “lose-lose” situation by discouraging employers from developping supplementary pensions for their workers. UNICE counts on the support of the German Presidency which shares these concerns to radically modify the proposal.
THE ALLIANCE FOR THE FAMILY
The German Presidency has announced its willingness to promote an “alliance for the familiy” at EU level. Its aims are to foster research on family policies in the different Member States and to promote a systematic approach to all aspects impacting on families such as time management, work-life balance, child care facilities etc. UNICE believes that policies promoting work-life balance can be useful to improve labour market participation of women and in the current context of demographic ageing. Employers fully agree that further efforts are needed to alleviate through concrete actions the remaining obstacles to reconciliation such as the insufficient availability of childcare facilities, the promotion of flexible forms of work etc. Successful policies require a partnership between employees, employers and the state. European social partners engaged in 2005 in a cooperation process on gender equality, which covers those aspects and will be happy to reflect with the Presidency on synergies between Member States’ activities and the social partners’ action programme.
EDUCATION POLICY
Around 150 million EU citizens have not achieved a basic level of secondary education and only 20% of the EU working-age population attain tertiary education. Europe needs to increase both educational attainment levels and improve access to lifelong learning. Together with the need to invest more, a stronger effort needs to be made to increase the effectiveness of spending.
Many Member States seem to be trapped in a negative trade-off between more inclusive labour markets and high productivity growth. To overcome this situation, Europe needs to support Member States in their efforts to: - Ensure that individuals acquire the necessary basic skills before leaving education systems; - Facilitate companies’ investment in skills development; - Encourage individuals to take responsibility for upgrading their competences throughout their working lives; - Ensure that educational or training outcomes match the needs of enterprises in order to improve the match of labour supply and demand.

EUROPE AS A GLOBAL PARTNER
RESUMPTION OF WTO DDA NEGOTIATIONS
As the world’s leading exporter, the EU must push for the immediate resumption of the WTO Doha round of negotiations. The breakdown of the negotiations will have serious implications for European business – which is seeking an ambitious trade liberalisation deal between industrialised and emerging countries. The risk of a rising protectionist backlash must be dealt with by pursuing multilateral cooperation on trade. Business is extremely disappointed that the WTO negotiators did not abide by the G8 St. Petersburg Summit commitment to overcome differences over agriculture. UNICE urges the German Presidency to engage with the US Presidential Administration – at the highest level – to resolve the agricultural issue and to get the US back to the negotiating table in Geneva. European business will do what it takes to mobilise American business in support of such an initiative. We also recognise that it is not just about the US. Others – particularly the emerging economies – must play their part too in securing a successful conclusion of the round. UNICE is seeking ambitious liberalisation of industrial tariffs and services sectors as well as stronger rules to deal with non-tariff barriers, customs reforms and better WTO anti-dumping rules in the DDA. It also supports duty-free access to industrialised markets for the world’s poorest countries and effective aid-for-trade policies so that weak developing countries can benefit more from trade liberalisation.
RUSSIA: A BOLD BUSINESS VISION FOR A COMMON ECONOMIC AREA
The EU and Russia face many challenges on the road to a truly strategic partnership. UNICE and its Russian counterpart – the Russian Union of Industrialists and Entrepreneurs (RSPP) have outlined a bold vision on how to move the economic pillar of this partnership forward based on three key milestones. First, Russia and the WTO must redouble their efforts to conclude accession negotiations to enable Russia to become a key partner in the multilateral trading system. Second, the EU and Russia must prepare the ground for a future economic area by implementing the roadmaps for the Common Economic and Energy Space agreed in May 2005. Third, the EU and Russia must replace the obsolete Partnership & Cooperation Agreement of 1997 with a Strategic Partnership Agreement with a significant economic component leading to a Common Economic Area that would promote the free movement of goods and services, capital and people, knowledge and technology. UNICE and the RSPP are fully prepared to support such an initiative. UNICE counts on the German Presidency to keep the EU engaged in negotiations with our Russian economic partners to pursue this bold vision for future economic cooperation.
CHINA: BETTER AND FAIRER ACCESS
China has become the world’s third largest exporter in 2005 – surpassing Japan and almost attaining US export levels. The EU must therefore pursue an improved trade and investment strategy to ensure better and fairer access to China’s goods, services, investment and public procurement markets. UNICE sees the negotiations of an EU-China Partnership and Cooperation Agreement, which should be based on economic criteria and full reciprocity, as an opportunity to deliver concrete results on the main issues covered by the new strategy proposed by the EU Commission. To ensure its full implementation, better coordination with EU Member States in China is key. UNICE shares the Commission assessment that the conditions are not fulfilled for granting Market Economy Status (MES) to China. The German Presidency should play a leading role in ensuring that the EU speaks with one voice on EU-China trade relations to effectively deal with trade and investment frictions and to promote a more harmonious and balanced relationship.

CORPORATE TAXATION – COMMON CONSOLIDATED CORPORATE TAX BASE
Agreement on a single corporate tax base is vital for Europe’s companies1. Many cross-border business opportunities are not seized because companies are deterred by the compliance costs of dealing with different tax administrations. While targeted measures can be efficient in tackling individual problems, a common base will provide a comprehensive solution to the majority of cross-border tax obstacles, such as problems related to transfer pricing and to insufficient possibilities for consolidating profits and losses across borders. In this way, situations of discrimination between national and foreign companies as well as of double taxation can be avoided.
1 The CBI, the Confederation of British Industry, remains fully committed to Member-State fiscal sovereignty but is participating in the Commission\'s discussions on EU CCCTB and will review its stance in the light of the outcome of those discussions.
The new tax base needs to be a globally competitive “product.” To this end:
- Member States must ensure that the new tax base will modernise and simplify the tax base and that it will not just be seen as a revenue-raising (broadening the tax base) exercise.
- There must in no way be a link between the common tax base and a possible tax rate harmonisation, neither in the form of a minimum rate, a corridor, or any other form. - The tax base must be optional
– companies should be able to continue to operate within the national rules if they wish - and open to all types of companies. - Consolidation and harmonisation must be introduced simultaneously and not consecutively, as it is consolidation which makes the common tax base effective.

The position of Swiss business

The Swiss business federation (economiesuisse) strongly supports the federal law on assistance to Eastern Europe and is running an active campaign. Except of two right wing parties, all other political parties are in favour of the contribution.
Located in the very heart of the European continent, Switzerland is a highly integrated neighbour of the EU. Although Switzerland is not a member of the EU, its de facto economic integration is in some areas more developed than that between some EU member states. In terms of trade but also with reference to security concerns or to the shared values, the partnership between the Swiss Confederation and the EU is very important. As an expression of a close partnership of solidarity, Switzerland contributes in various ways to the efforts of the EU to promote security, stability and prosperity on this continent. Since the end of the cold war Switzerland has committed itself to the development of democracy and the economic transition of Eastern Europe and the former Soviet Union. In a Memorandum of Understanding with the EU the Swiss government declared its intuition to contribute to the developments of the ten new EU member states and to help reduce economic and social inequalities within the Union. The Swiss Parliament adopted the concerning "federal law on assistance to Eastern Europe" in March 2006 by a large majority.
Referendum of right wing parties

Since two right-wing parties of Switzerland were against this financial contribution, they called a referendum on the respective federal law. Every federal law adopted by the Swiss parliament can be object of a referendum by collecting 50'000 signatures. The opponents are criticising the modalities the contribution would be financed and the political debate is focussed on rather technical questions. The referendum vote takes place on 26 November 2006.
If the Swiss citizens approve the law on assistance for the new EU member states, the contribution of 640 Mio EUR will be disbursed over the next ten years. The federal government will conclude bilateral framework agreements with the individual partner states. The money will flow directly into projects of the involved countries without passing by the EU-funds. Main concerns of these projects will be security, stability and reform, infrastructure and environment, private-sector development, as well as human and social development.
The contribution as a part of a good neighbourship policy
The bilateral relations with the EU is supported by the majority of the Swiss people. They see the bilateral approach between the EU and Switzerland as the best way to pursue their country's interest. For the EU being by far the largest trading partner of Switzerland, the bilateral agreements concluded in the last decade simplified and intensified the cooperation between the two partners. The contribution to the EU cohesion can be seen as part of the negotiations about the second corpus of bilateral agreements between Switzerland and the EU and as an expression of the mutual wish for the continuation of a close bilateral partnership between the EU and Switzerland.

The competence to modernise labour law rests primarily with national players. This is the reason why UNICE strongly opposes suggestions of an EU-wide definition of "worker".
Modernising labour law must be part of the flexicurity debate. Therefore it should be based on a sound analysis and not oppose flexibility and security. Flexibility on the labour market is the only way to create more jobs in the European Union.
The Green Paper issued by the Commission does not sufficiently underline that selfemployment is key for the development of the entrepreneurial mindset we so badly miss in Europe. UNICE will issue a more detailed reaction at a later date and will actively promote labour market reforms in Member States. Ernest-Antoine Seillicre, President of UNICE: "Efforts have been made to make the Green Paper more balanced. However, the text is still too focused on how to preserve existing employment instead of looking for ways to facilitate the creation of more new jobs through increased labour market flexibility".

But at the same time, Spain also encapsulates the many challenges that Europe as a whole is currently facing. First of all, despite a steep downward trend, high structural unemployment has not been resolved. Second, Spain is struggling to improve productivity, which is stalling despite strong economic growth. Third, and this is of course related, Spain has lost important competitiveness ground against its main trading partners and its current account deficit is reaching alarming levels. So, I would say that it is not only convergence of living standards that we are observing between Spain and the EU, but also of policy priorities. Let me elaborate in particular on productivity and competitiveness. As with Spain, Europe is stuck in a weak productivity growth regime, while we can argue that opportunities have rarely been so abundant. In fact, we see in other parts of the world what fast globalisation and technological progress can bring in terms of productivity advances.
In Europe, the picture is much less encouraging. Despite the current recovery, UNICE estimates that labour productivity per hour worked will remain at around 1.5% this year and next, in line with the poor average performance of the last decade. This is a major factor hampering growth prospects and our capacity to face the challenges ahead, including of course demographic ageing. What is our problem? In a few words, Europe continues to have the institutions and policies of a "catching-up" economy inherited from 60s and 70s, when its growth was driven by accumulating capital and by imitating or adapting technologies developed elsewhere (the US or Japan). But Europe is now at the world's "technology frontier", and its growth relies more and more on its capacity to cross this frontier and to adapt to fast economic changes. This is what Europe is still not very good at and where it should concentrate its efforts. There are four areas of improvement that are particularly crucial to build up a Europe of innovation: competition, technological infrastructures, education and flexible labour markets.

1. Competition
The importance of the regulatory environment in either hindering or fostering innovation cannot be denied. The productivity growth advantage experienced by the United States and the best performing EU countries shows in this regard how low barriers to competition and entrepreneurship can stimulate investment, innovation and the dissemination of new technologies (Nicoletti and Scarpetta - OECD (2005)). Recent economic research also demonstrates that the cost of insufficient competition and over-regulation increases as an economy, or an industry, moves closer to the technology frontier (Philippe Aghion - Harvard University (2006)). What does that tell us about the future direction of EU policies? First, that it is crucial to put the internal market back at the centre of the policy agenda, and to make competition a reality, particularly in the field of services, energy and capital markets. Second, that we need effective implementation of better regulation initiatives at both EU and national level, bearing in mind that SMEs are the backbone of Europe's innovation potential and also the first victims of over-regulation. But progress on simplification of EU regulations and impact assessments is far from satisfactory, despite all the Commission's laudable intentions.
2. Technological infrastructures
Europe must actively develop a strong research and technology base. The EU currently spends 1.9% of its GDP on R&D expenditure and 2.6% on Information and Communication Technologies (ICT). This does not compare favourably with figures in the US, of 2.7% for R&D and 3.8% for ICT respectively. Among the reasons why the EU lags behind, we can mention the fragmentation of research activities, an ineffective link between the public and private sector, and the lack of an efficient intellectual property system. We need to reconsider and promote the concept of public-private partnership in innovation. This should include partnership in setting the agenda for education, research and other innovation-supporting measures.
The European Technology Platforms (ETPs) and Joint Technology Initiatives (JTIs) to be set up under the Seventh Research Framework Programme are both examples of public-private partnerships with great potential. Regarding the proposed European Institute of Technology (EIT), business wants it to be an effective lever to bring together research, innovation and education, but it is important that its financing does not come at the expense of other EU research or lifelong learning programmes, and that a strong link with the private sector can be established. A strong intellectual property system would also be a major contribution to reinforce Europe's R&D and innovation. UNICE is strongly in favour of having a Community patent, and we stress the need to have a system that is both user-friendly and based on a reliable legal system.
3. Education, education, education
An essential and mandatory pillar to foster productivity in a knowledge-based economy is the development and management of human capital. Europe needs to increase both educational attainment levels and improve access to lifelong learning. Together with the need to invest more, a stronger effort needs to be made to increase the effectiveness of spending. Key priorities are to:
ensure that individuals acquire the necessary basic skills;
invest more in higher education; facilitate companies investment in human capital;
ensure that education and training match the needs of companies;
encourage individuals to take responsibility for upgrading their competences;
4. Flexicurity
Innovation also comes with modern work processes and there is undoubtedly a link to be made between the flexicurity debate and the European productivity challenge. Many European decision-makers are conscious that outdated and unnecessarily rigid labour regulations hamper businesses development and curb productivity growth. Most people agree that high labour taxation and lack of mobility increase the adjustment costs associated with globalisation and technological innovations. Many even acknowledge, at least in theory, that hours worked per person employed have declined dangerously in the face of demographic ageing. However, when it comes to drawing the consequences of this analysis and deciding on reforms, things are much less consensual. Fears and resistance, especially in some big EU countries, are considerably slowing down necessary measures. There is not enough awareness that time is running out and that the longer they are delayed, the more difficult and painful reforms will become.
The flexicurity approach requires comprehensive national strategies including in particular:
flexible labour laws with smart rules on protection against dismissals;
effective active labour market policies, which presupposes that the necessary budgetary margins have been created,
employment-friendly social protection systems balancing rights and obligations.
Europe can, and must, have both employment and productivity growth in the future if it wants to sustain its social model in an ageing society. But let's not delude ourselves: this will not come without reforms. The exact nature of these reforms have to be decided at national level, but the European Union also has an important role to play by ensuring that governments live up to their promises, and that there is overall coherence between EU and national policies under the growth and jobs strategy.
Conclusion: Competitiveness and sustainable development.
A generally accepted definition of sustainable development is "development that meets the needs of the present without compromising the ability of future generations to meet their own needs" (United Nations). A society which strives for sustainable development must therefore pay attention to three dimensions: economic, social and environmental sustainability. It is clear that the last two are conditional on the first. A case in point is the current debate on climate change. The biggest emitter of greenhouse gases, the US, and the country with the biggest growth rate in greenhouse gas emissions, China, are not taking part in the Kyoto process. Europe cannot play it alone. Unilateral measures will not solve global environmental issues, while they can certainly hurt the position of European industries in global competition. The way towards true sustainable development will come through European climate change diplomacy which succeeds in finding a global strategy, including all major players. Only then will Europe's leadership have a noticeable impact on global environmental protection, and only then will Europe be able to enjoy the competitiveness advantages of its strong eco-innovation industries.

Business recommends that: • The EU and Africa should cooperate multilaterally on peace and development including: United Nations development, food and health activities. Restarting the WTO Doha Development Agenda Negotiations. • The EU and African Union should hold regular high level political dialogue to address trade and development challenges. • The Business Forum should become an annual event to foster mutually beneficial trade and investment between the two regions. Three working groups developed more detailed proposals on trade, interconnectivity and governance. I. Trade – Economic Partnership Agreements (EPAs) Working Group EPA negotiations between the EU and four African sub-regions should promote a pro-active process of growth and development with a view to creating more dynamic regional markets and enhancing the ability of Africa to attract investment. However, to take advantage of the opportunities that EPAs will provide, a number of key challenges must be addressed. 1. Business Consultation Business is firmly convinced that cooperative dialogue at the national, sub-regional, and regional (EU-Africa) level is essential to make the EPA negotiations a success. Business should be consulted on cross-cutting issues (such as trade facilitation, standards, public procurement, Public-Private-Partnerships, EU-African Fiscal Policy), to reach consensus on appropriate preparatory timeframes and clearly defined implementation roadmaps to establish predictability for investors and companies. The EU-Africa Business Forum can serve to facilitate private sector input into the EPA negotiations as well as WTO negotiations but transparent dialogue should also be established at other levels. The EU and African governments should encourage greater participation of the private sector in trade policy negotiations (WTO/EPAs) at all levels. Specifically, business recommends that: • The Commission conduct an inventory of the business dialogues on EPA negotiations which exist at the national, s ub-regional and regional levels in Africa in order to improve the information flow to the private sector.
2. Market access To overcome the problems of small, fragmented markets, the development of intra-regional trade in the four African sub-regions will be essential to expand their market size and stimulate regional competition. To increase export opportunities for African companies, the EU should open its market to all goods exported by EPA partners and commit to a reduction in non-tariff barriers as of the date of implementation. African EPA partners should be given sufficient time to implement goods liberalisation in a manner that strengthens their competitiveness. Therefore, the liberalisation of the most sensitive products – including those linked to subsistence production – by African countries should be appropriately sequenced. Although goods liberalisation is vital for competitiveness, business is concerned about the slow pace of regional integration in some EPA sub-regions. Moreover, business recognises that trade between the EPA sub-regions (e.g. between West Africa & Central Africa) should also be facilitated. Finally, there are concerns over non-tariff barriers to the EU market which prevent African companies from taking advantage of trade opportunities. Specifically business recommends that, • The EU and Africa should focus on accelerating intra-African trade liberalisation as a first step to increasing competitiveness. As a second step, African countries should progressively liberalise to EU trade to lower input costs and strengthen manufacturing competitiveness. • The EU and Africa must closely examine the issue of non-tariff barriers – including standards, rules of origin – to ensure that African companies can export to the EU market. • African sub-regions/countries require national laboratories to conduct standard testing and certification. Similarly, the role of non-state actors in standards/certification must be considered.
3. Investment promotion By expanding the size and increasing the openness and predictability of African markets, EPA negotiations can tackle one of the main causes of underdevelopment in Africa – under-investment. Business is concerned about the coordination and timing of trade (EPA) and capacity building (EU development assistance programmes) negotiations to ensure that African countries will be able to strengthen their competitiveness while liberalising trade. In particular, business feels that the SME sector remains under-developed. Specifically, business recommends: • A commitment to EPA rules for national treatment, non discrimination and incentives/disincentives for investment and bilateral dispute settlement • Closer coordination of trade negotiations and development assistance in relation to the EPAs – with a particular focus on the capacity building needs of the SME sector.
4. Trade Facilitation Improving trade facilitation will contribute to growth if African countries continue to focus on an integrated and coherent approach. Trade facilitation should be designated a priority issue in the EPA negotiations. Key issues to be addressed include: transparency of procedures and regulations; transit; harmonisation of trade procedures; customs cooperation; minimisation/elimination of fees and charges; legal recourse for appeal of customs decisions; establishment of a single window; accelerated and simplified procedures for clearance of goods. However, business is also concerned about the practical realisation of EPA customs reforms: in particular to reinforce the case for fair government revenue, regional customs cooperation and good governance of customs. Specifically business recommends that: • Assurances should be given that the private sector will not face unreasonable increased tax burdens as a result of customs reform. • The EU and African sub-regions should clearly address the issue of revenue-sharing and avoidance of potentially lost revenues. • To improve governance, more transparency and cooperation between customs authorities and business is needed.
5. Trade in Services African countries and regions need sound policies to develop trade in services. Liberalisation should occur where African countries can strengthen their competitiveness. Specifically, business recommends: • The improvement of services related to "export infrastructure" such as transportation costs, export financing, etc
6. Development of cooperation policies Development cooperation is an important aspect of the EPA process which must be targeted to the specific needs of each African region and/or country. The overall objective of development policy should be to develop vibrant, open markets and, where necessary, to facilitate regional integration. Business recommends that the EU and Africa should: • Adapt development funding to the regional logic of the Economic Partnership Agreements and to ensure coordination between trade and development assistance negotiations. • Promote good governance by strengthening legal regimes and promoting best practice. • Invest in infrastructure networks through development assistance and PPP. • Promote training and human resource development in combination with concrete measures for job creation. This should include investment in training on professional, financial, health and environmental issues and the development of sound basic education and health policies. • Promote pro-competitive policies and regulations to foster an investment enabling environment. • Develop programmes to improve competitiveness, restructure and upgrade the capacities of African business – in particular SMEs - and representative business organisations. • Give more focus to the appropriate financing instruments and technical assistance to promote and support SMEs.

II. GOVERNANCE AND CORPORATE SOCIAL RESPONSIBILITY WORKING GROUP The Forum welcomes the European Union's Governance Initiative, which provides for the establishment of a European consensus on governance within the framework of EU development policy; supports the African Peer Review Mechanism (APRM); and the establishment of a coherent set of means with which the EU will support governance reforms on the basis of a dialogue with partners and incentives for reform.
The Forum considers that well-governed states, and strong, transparent, accountable, responsive and efficient institutions, and a conducive legal environment are imperative for the attraction of investment for sustained, equitable and broad based growth. Specifically, business recommends that the EU and Africa should work together to: • Reduce bureaucratic red-tape, adopt better regulation, and create fairer, more effective and better functioning judicial systems in Africa. • Ensure direct consultation of the private sector on country governance profiles in the EU Governance initiative. • Create an African business network to promote, disseminate and exchange best practices on governance and CSR and to promote a better understanding of corporate responsibility initiatives in Africa among the wider public. • Examine ways to improve the fight against government corruption and promote and support business-led partnerships with governments to reduce corruption. • Call on African governments to develop and implement guidelines on state-owned enterprises based on good practices – e.g. OECD guidelines.

III. Interconnectivity Working Group Access to infrastructure is a major factor for a successful development policy. The business community strongly welcomes a renewed recognition by the international development community and, in particular, by the European Commission, of the key role that infrastructure investments play notably in achieving the U.N. Millennium Development Goals. Economic policies, strong property rights, liberalised markets, and limited restrictions on entry and ownership, are also conducive to attracting investment, economic growth and poverty reduction. The business community stresses the need for developing coherent policies, with a clear prioritization of investment needs. Key challenges and recommendations are:
1. Global Competition Many state-owned companies from outside the EU or Africa have more flexibility and are heavily subsidised when accessing markets which distorts fair competition. Specifically business recommends that the: • European Commission form an Africa task force to address the strategic, policy, trade and infra challenges related to creating a level playing field with competitors from other regions. Key areas to focus on include: export financing, export credit insurance, public procurement.
2. Regulatory There are difficulties with public private partnerships due to entry of public players into the market and non-discrimination for public procurement between publicly-owned and private entities. Regulators, in some cases, need additional capacity. Specifically business recommends that: • The European Commission support the liberalisation and regionalisation of infrastructure and e-communication legislation including spectrum planning and management. Best practice regulatory projects like UEMOA/ECOWAS/WATRA/ITU should also be extended to other regions. • Information on African legislation and call for tenders should be more widely transparent and available for European companies.
3. SMEs – Microfinance There are many challenges for SME companies to enter markets. Extending microfinance and small business finance and addressing capacity challenges with microfinance lenders could improve the situation. In various fields of procurement, such as road transport maintenance, there is a lack of long-term contracts which makes SME participation more difficult. Specifically business recommends that the European Commission: a. Work with private banks and the European Investment Bank to promote microfinance systems and small business credit and guarantee systems for local African countries. b. Facilitate telecoms clearing houses on the continent and work with industry to extend prepaid business models to other technology and infrastructure businesses. c. Promote a business model for infrastructure maintenance as a means to encourage SME development.
4. Improving IPR – Intellectual Property Rights (Patents, Copyrights, Trademarks), enforcement and anti-counterfeiting Capacity is lagging in fighting piracy and counterfeiting both in skills and resources. This is preventing the development of an indigenous software and creative industry. Ensuring affordable access to medications to deal with HIV-AIDS and other health crises is an essential issue in Africa. The amendment to the WTO TRIPs Agreement relative to access to essential medicines was a key first step to addressing this issue. Specifically, business recommends: a. Build capacity to improve the protection of IPR. b. Ensure fair access to intellectual property, for example support voluntary licensing of anti-retroviral medicines for HIV-AIDS.
5. Public Procurement/Prioritisation of Infrastructures Cost to business to operate due to infra inefficiencies. Projects need a regional dimension to ensure economies of scale. Prioritisation is needed between infra projects (energy, transport, water and ICT). Infra projects are very interdependent so need to ensure there is no fragmentation of approach. Projects are financed by hard currency loans whilst they pay back in local currency creating risks. Projects often overlook maintenance. Specifically, business recommends that a. To ensure a holistic and regional approach, the Commission could map political regional integration to the infrastructure development maps within the AUC/NEPAD Infrastructure Action Plan to encourage regional economic communities to take ownership. b. The Commission should consult the EU-Africa Business Forum on the consortium list of lead projects (NEPAD/ADB/AU) prior to engaging in feasibility studies which are needed to determine, cost, delivery, scale, delivery time and the economic impact of projects. The Forum will prioritize and give input on the cost to business for weak infrastructure and supports transparency of project coordination with other donors. To pre-qualify for Commission funding, companies should respect environment, social, financial standards within the EU acquis communautaire. c. Efforts are needed to ensure that risk is covered by local donors for the hedging of local currencies. d. Complementary ICT infrastructure is needed to ensure affordable and reliable access mobile and satellite access in the short-term and terrestrial services for the long-term.e. Maintain the "project approach" for infrastructure development and reinforce the EC's infrastructure management capabilities with resources from the private sector and adopt robust project delivery mechanisms. f. Improve the technical and environmental quality of projects g. Improve the procurement process for infrastructure works.
6. Capacity Building – Individual & Organisation Capacity building is important to ensure that business – especially SMEs – can work efficiently with donors and local governments in developing interconnectivity in Africa. Specifically, business recommends that the Commission: a. Provide more capacity building for civil servants working in the fields of policies and procurement; specifically standardisation, procurement competition, IPR, telecom, spectrum and infrastructure. b. Build capacity to improve the protection of IPR. c. Support capacity building for SMEs, specifically SME knowledge and skills transfer to local SMEs.

Conclusion: Business dialogue as a catalyst for sustainable development The EU-Africa Business Forum has discussed the relevant policies and activities (trade, development aid, regional economic integration, national/local governance, corporate responsibility) which can contribute to making Africa an attractive region for investment and development. However, these policies and activities will only make a difference on the ground if there is a way to ensure better coherence and more local ownership of the need for change and reform. A change in attitude towards development by governmental authorities and agencies – as well as business - is just as important as policy reform to achieve truly sustainable development. Co-operative dialogue between business and government/regional organisations on the ground; and between business and development assistance donors on the strategic direction of trade, aid, regional integration and governance policies can make a real difference in terms of making policies effective and sustainable. Business can play a key role in catalysing the various actions and policies into a pro-development direction by recommending changes and improvements that will truly facilitate private sector development – and hence development itself. A commitment to real dialogue with business will also be a testament to the goodwill of countries that claim they are reforming by actually responding to business needs on the ground. Our Forum is convinced that a much closer dialogue with business will prove to be an invaluable asset for Africa which will contribute to establishing more effective economic policies, to improving the benefits of development aid, to strengthening public and private sector governance and ultimately, to sustainable development. We therefore urge our respective governments to further develop and strengthen government-business cooperation and dialogue at all levels.

UNICE expects real benefits derived from the freedom of establishment but regrets the reduced scope of the directive and the legal uncertainty of certain provisions on crossborder provision of services.
Now up to the Member States to transpose and implement it correctly, avoiding delays and respecting the spirit of the text and the two fundamental freedoms of establishment and service provision that are enshrined therein. The Commission should actively assist them and, more importantly, monitor transposition and implementation. UNICE and its national members will closely follow and contribute in this process. Philippe de Buck, Secretary General of UNICE: "After a complicated adoption, it is now up to national governments to transpose the directive in such a way that it is a success and makes a real contribution to the Internal Market and the European economy. We must not forget that service activities represent 70% of the EU economy, a key sector for growth and jobs"

Trade Policy must also deliver more results for European companies and for the European economy by strengthening the international competitiveness of our industrial and services base to ensure that we can create good jobs for Europeans.
President Seillicre also called on the Commission to continue to press the case for the Doha Round and to come to an agreement with the US on the difficult agricultural issue. He clarified UNICE's position on bilateral free-trade negotiations, reiterating the need for 100% liberalisation of industrial products, full services liberalisation and the coverage of important issues such as investment and IPR. Finally, President Seillicre underscored the importance of completing the single market and adopting better regulations to strengthen the international competitiveness of the EU's industrial and services base.

National governments, backed by an effective Stability and Growth Pact, must make the most of the current recovery to improve their long-term budgetary positions, allowing a mutually reinforcing process of fiscal consolidation and economic growth.
The gradual withdrawal of monetary accommodation by the ECB is deemed appropriate in order to anchor inflation expectations in a more robust domestic economic environment. However, a mixed outlook for 2007 and the persistence of global imbalances and their related risks of substantial euro appreciation should prompt caution in the speed of interest rate normalisation.
In any event, the best contribution to more sustained growth in Europe, but also to an orderly unwinding of global imbalances, is to step up efforts on product, labour and capital market reforms. Priority action is needed to increase adaptability, and to promote our capacity to innovate and develop human capital under changing market conditions. This calls for the removal of barriers to entrepreneurship, for a coherent innovation policy and for the modernisation of labour market structures and social systems. The ongoing screening of national reform progress by the Commission and Council will be crucial to show a real resolve to fill the reform gap.

Beyond the dampening impact on consumer spending of the 3% VAT hike in Germany, more fundamental factors continue to put a cap on domestic demand prospects in Europe. In particular, UNICE does not yet see convincing evidence of an entrenched revival in productivity growth, while such an improvement is essential to foster a stronger and a more self-sustaining pick-up over the medium term. This, together with continued uncertainty about the future of health care and pension systems, is having a negative bearing on expectations, leading to high precautionary savings and cautious spending decisions today.
In parallel, the external environment is expected to become somewhat less supportive in 2007, although still dynamic by historical standards. But Europe's continued loss of export market shares and strong import growth mean that net trade cannot be expected to make a positive contribution next year, despite a global economy still growing twice as fast as the EU. Downside risks to the global outlook have also risen in recent months, not least because of the stalemate in WTO trade negotiations in a context of global current account imbalances and weakening growth in the US.
Regarding inflation, it is expected to remain on average broadly unchanged in 2007, reaching 2.3% in the EU and 2.2% in the euro area, as the reduced impact of high energy prices will be mostly offset by the rise in German VAT. In its forecasts, UNICE assumes continued moderate wage growth and limited pass-through of past oil price hikes, two important conditions for a protracted improvement in labour market and domestic demand conditions.

The upward revision stems from positive surprises from both the external environment and domestic economic conditions. First of all, the global economy continues to grow this year at an astounding pace of around 5%, which will support export growth in the context of relatively stable exchange rates.
Second, sound corporate profitability and improving labour market conditions create an environment conducive to a strengthening and broadening of domestic demand. Investment is expected to be particularly dynamic this year, growing by close to 5% in the EU. Moreover, according to our survey, capital spending will be increasingly geared towards the extension of production and innovation capacity. Companies are also intensifying the pace of employment creation, which should lead to more than two million additional jobs in 2006, the best performance since 2000. This will consolidate the downward trend in unemployment and support a recovery in private consumption through improved confidence and higher income growth.

BUSINESSES CALL FOR A BOOST TO EUROPE
1. Implement the reforms for growth and jobs - Strengthen the link between research and innovation - Pursue a broad programme on better regulation - Fight against public deficits
2. Integrate the European market - Achieve efficient European network industries, especially in energy - Apply the mutual recognition principle for all relevant markets - Adopt a services directive which will effectively foster growth and jobs
3. Govern the EU efficiently - Solve the EU institutional problems arising with 25 and more Member States
4. Fight national protectionism - Take strong action in favour of the respect to the Internal Market law - Ensure a level-playing field on world markets in the current WTO negotiations
5. Take advantage of the opportunities of enlargement - Lift existing restrictions on labour market access for new Member States - Use the regional and cohesion policy to encourage economic development throughout the EU, especially in the new Member States 6. Reform European social systems to make them sustainable - Improve people's employment opportunities - Adapt social systems to an ageing population - Give the necessary space for the social dialogue.

UNICE'S COMMENTS ON ENERGY
UNICE fully supports the decision of the 2006 March Spring European Summit to develop an Energy Policy for Europe (EPE). This European energy policy should coordinate and optimise actions targeting the following three objectives:
1. Enable consumers to have wide access to a spectrum of energy sources which: • is as diversified as possible in terms of both geography and technology, with a view to ensuring a high level of energy supply security • reflects the need to reduce the carbon intensity of energy supply.
2. Establish dynamic competition (within and between sectors) between sources of energy, enabling consumers to benefit from the most competitive prices possible.
3. Address the environmental impact of energy production and use through policies reflecting a sustainable development vision. UNICE accepts that governments retain some responsibilities for determination of the conditions governing exploitation of their energy resources and the structure of their supply. However, the opening of energy markets makes it imperative to have more transparency on national decisions concerning energy policy on issues that will affect the common energy market. Where market mechanisms have been left to function efficiently, they long ago proved their worth in terms of: - quantitative development of resources; - diversification of resources; - maintenance of production costs and selling prices at the lowest possible level.
It is therefore essential that the European Union and the member states of the European Economic Area, each in its fields of competence, ensure that appropriate basic conditions are established to allow the market to play this role of engine. At secondary level, it is up to the public authorities to carry out certain actions to complement/amplify the results produced by market forces.
The following points set out the issues on which companies call for a strengthening of European cooperation.
1. Strengthen competition in electricity and gas markets
While initial positive steps have been made towards liberalisation, progress towards creation of a truly open internal market for gas and electricity is insufficient.The Commission should develop initiatives which ensure: - that existing legislative texts are applied by Member States, not only to the letter but also in spirit. In particular, effective implementation of current EU legislation is essential in the area of unbundling of production and transport of gas and electricity.
Furthermore, it is essential that national energy regulators be independent (from Governmental authority) and endowed with sufficient powers to effectively enforce competition rules at national level.
More and better coordination among national regulators would also be a positive step forward;
- that obstacles to investments in cross-border connections and smooth day-to-day operation of cross-border trade are dealt with effectively;
- that new market players are stimulated to enter the gas and electricity market.
It is important to improve the predictability of electricity and gas prices in the medium- and long-term for energy-intensive consumers. This would be best achieved by developing liquid and transparent forward markets. Long-term contracts between producers and users, provided that the terms are not anti-competitive, could offer a means of providing a greater level of price predictability, while encouraging necessary investment in generation capacity and gas storage and import infrastructure. The broad view of users on this is that entering into long-term contracts should not become a prerequisite for enjoying security of supply.
2. Develop a more active external policy in the area of energy T
The EU should coordinate as much as possible the European Member states' positions in international forums and vis-r-vis non-EU energy suppliers. It is essential that the EU pursues the principles of market liberalisation and investor security in supplier countries and that energy questions have a greater presence on the agenda for trade negotiations between Europe and its economic partners. UNICE attaches great importance to the development of new partnerships between the EU and energy producing countries.
In this context, the EU should consider which initiatives it could take (itself or in the framework of international fora) with a view to facilitating the exploitation of the energy resources of the High North (Barents Sea). The European Commission should secure ratification of the Energy Charter by Russia and rapidly conclude negotiations of the Energy Charter Transit Protocol with Central and Eastern Europe, the CIS, Russia, Turkey, Japan and Australia. UNICE also supports proposals to replace the EU-Russia Partnership and Cooperation Agreement with a full free trade arrangement that covers a broad range of issues including cross border energy trade and investment.
3. Competitiveness and environmental issues
It is essential that the transition to a less carbon intensive society is made in a way that preserves the international competitiveness of European industry, which the Commission rightly describes as the "cornerstone of EU strategy for sustainable development". Genuine global cooperation involving all countries and regions of the world for tackling climate change is indispensable. It is essential that Europe's contribution to climate protection is deployed in such a global framework and makes wide use of the instruments for international cooperation which already exist like the Clean Development Mechanism (CDM).
4. Supply of low-carbon or zero-carbon energies
Support for research and innovation constitutes the most effective long-term approach for promoting development of energy technologies with low carbon intensity. Opportunities for technological cooperation between Norway and the EU should be actively exploited, in particular given the important programs developed by Norway in the area of carbon sequestration and storage. The work done in the coming years on this area in Norway can be of significant importance for Europe. Current national support schemes to the production or the consumption of renewable energies lead to high costs and dysfunctional power markets. With a view to remedying such problems, a Community-wide and cost-efficient market-based support framework for the use of renewables in electricity generation should be established.
5. Nuclear energy
Nuclear energy is among the solutions available for meeting both economic challenges (security and competitiveness of electricity supply) and environmental challenges (reduction of greenhouse gas emissions). In this context, it is important that national debates on energy policy evaluate the nuclear option on the basis of objective and well documented elements.
6. Energy efficiency
There is potential for further energy efficiency improvement in the industrial sector, but as energy forms core part of input costs, most energy-intensive sectors have already made exemplary improvements. Further efficiency gains in energy-intensive sectors will come at significantly greater cost. The key channel for promoting energy efficiency in industry is a sound climate for business investment. This consideration should strongly inspire public strategies in the area of energy efficiency. Support of existing energy service companies (ESCO\'s) and promotion of establishment of new ESCO\'s is important. Significant potential for energy efficiency improvement remains in the household/residential and commercial sectors; it is essential to harness this potential.
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As part of the European social dialogue work programme 2006-2008, the European social partners are discussing key labour market challenges with a view to arriving at a common analysis. UNICE has analysed the underlying causes of Europe's incapacity to generate enough growth and employment to meet the Lisbon objectives and how to remedy the situation. I would like to share our findings with you today.
In 2006, growth in the European Union has improved. However, with a GDP increase of 2.75 % at the top of the economic cycle, when China, India and the US respectively reach 9%, 7% and 3.5%, our results are mediocre. We can do much better if we remove obstacles preventing companies from innovating and employing people under fast-changing conditions. Structural reforms on both product and labour markets must be implemented vigorously to remove bottlenecks to economic growth and job creation. Higher labour force participation and reduced unemployment have made a positive but modest contribution to real GDP growth since the mid-1990s. However, these achievements have been partly offset by poor productivity performance. Europe seems trapped in a negative trade-off between employment and productivity growth.
As a businessman, I have directly experienced the inadequate functioning of labour markets, which plays a crucial role in the difficulties that European jobseekers are facing. A lot of European decision-makers are conscious that outdated and unnecessarily rigid labour regulations hamper businesses development and curb productivity growth. Most people agree that high labour taxation and lack of mobility increase the adjustment costs associated with globalisation and technological innovations. Many even acknowledge, theoretically, that hours worked per person employed have declined dangerously in the face of demographic ageing.
However, when it comes to drawing the consequences of this analysis and deciding on reforms things are much less consensual. Fears and resistance, especially in some big EU countries, are considerably slowing down necessary measures. There is not enough awareness that time is running out and that the longer they are delayed, the more difficult and painful reforms will become. Until 2015, rising employment rates could offset the decline in working-age population but after that both the size of the working-age population and the number of persons employed will be on a downward trend. We must act now if we want to avoid seeing public debt rising to 200% of GDP as predicted in the recent Commission communication on sustainability of public finances.
Another difficulty is the distorted picture that is sometimes given of national reforms when comparing experiences at the European level. The way in which the flexicurity approach is described is a good example of that. It is usually simplified into three components:
1) active labour market policies +
2) generous welfare systems + 3) highly developed collective bargaining. The other side of the coin, namely 1) flexible labour law + 2) duty of the unemployed to participate in activation programmes + 3) sound budgetary policies to create the margins for investing in active labour market policies are simply swept under the carpet.
The experience of some Member States shows that there are ways to have both more inclusive labour markets and strong productivity growth. The key to success lies in six policy priorities:
- improving the business environment to foster innovation and job creation;
- turning job security into employment security;
- containing labour costs to increase the demand for labour;
- designing tax and benefit systems to improve work incentives and increase labour supply;
- ensuring a better match of labour demand and supply through lifelong learning and increased geographical and professional mobility;
- creating inclusive labour markets integrating disadvantaged groups.
The flexicurity approach requires comprehensive national strategies with the right mix of economic and social measures to foster job creation and help people to maximise their chances on the labour market. This means
- flexible labour law with smart rules on protection against dismissals and a variety of employment contracts to answer different needs of companies and workers together with a strong commitment to fight undeclared work,
- putting into place effective active labour market policies, which presupposes that the necessary budgetary margins have been created to allow such an investment, and
- having an employment-friendly social protection system and in particular an unemployment insurance which links rights and obligations for the unemployed as opposed to giving unconditional passive income support.
Boosting productivity and employment growth is essential to ensure the sustainability of our social model. Firm and forward-looking action is needed to correct structural weaknesses on Europe's labour markets. Decisions on concrete measures have to be taken at national level. However, the European Union also has an important role to play The emphasis at EU level should be on stronger surveillance of reforms undertaken by the Member States, and ensuring overall consistency of EU policies under the European growth and jobs strategy. In this context, we look forward to the reporting on the implementation of the National Reform Programmes.
Employers do not believe in the generalisation of national "models" across Europe but we are convinced that the European Social Partners would make a real difference if they were able to make a joint description of the key components of a genuine flexicurity approach. We therefore very much hope that on-going discussions with ETUC will succeed and that we will be able to present its results at the next tripartite social summit in March 2007.

Innovation is a broad issue and as such a broad range of policies at the EU, the national and local levels have to be tuned to support it. A favourable policy framework for innovation includes, amongst others: • An efficiently functioning, open internal market for goods, services, finance and people;
• Better regulation aimed at removing obstacles to innovation;
• A strong research and technology base, including more EU-level cooperation as well as increased R&D funding at EU and national levels;
• A high quality of education and training at all levels; • An environment that is favourable of and encouraging for private-publicpartnerships (PPPs), in particular between universities and enterprises;
• A workable, competitive IPR regime to protect and reward investments in R&D;
• A well functioning supply of risk financing, in particular for SMEs, and;
• Environmental policies that enhance innovation without threatening competitiveness.
One of the reasons the EU lags behind on innovation is the fragmentation of resources, activities and markets in Europe. To overcome this gap the EU needs to take decisive steps towards a much more open relationship between the public and private sectors.
We need to reconsider and promote the concept of public-private partnership in innovation. This should include partnership in setting the agenda for education, research and other innovation supporting measures as well as running and financing these measures.
The European Technology Platforms (ETPs) and Joint Technology Initiatives (JTIs) to be set up under the Seventh Research Framework Programme, are both examples of public-private partnerships with great potential for successful collaboration and achievement of critical mass. With a view to sharing risk in striving for European strategic leadership, it is right to expect public sector commitment at the EU, the national and the regional level matching the financial commitments the business community has already made.
The proposed European Institute of Technology (EIT) in UNICE's view needs to concentrate on achieving excellence and a more effective combination of the three sides of the knowledge triangle: research, innovation and education. The EIT, its structure, management and topical focus should not under any circumstances be politically motivated or directed. UNICE supports the principle of an involvement of the private sector in the organisation and the setting of the strategy of the Institute. Its financial contribution will depend of the nature and the implementation of the research agenda. A connection should be ensured with the European Technological Platforms and with a joint technological initiative. We stick by our long stated view that financial resources allocated to the research or life long learning Framework Programmes and other innovation supportive initiatives should not be used to finance the establishment of an EIT.
A clearly defined and consistent policy to protect intellectual property is vital for Europe's innovation and competitiveness. It is necessary to further improve the current European patent system in terms of costs and legal certainty. High costs make access to the patent system complex and unappealing, particularly for SMEs. The rapid ratification of the London Agreement is key to addressing this question. Progress on the adoption of the European Patent Litigation Agreement (EPLA) is also essential.
While we support the Community Patent, in principle, as a truly unitary instrument for the EU, the common political approach of March 2003 cannot constitute the basis for creating a Community Patent that can fully meet the needs of users for quality, costeffectiveness and legal certainty. The use of English-only regarding the language regime for the Community Patent is the most cost-effective solution.
In conclusion I would like to restate our view that concrete action and political commitment at the European but also the national level is a prerequisite if Europe is to harness its innovation potential. UNICE will in due course present an extended paper addressing the issue of innovation more comprehensively.
I hope that you will find these comments useful and helpful in Friday's discussions.

Yours sincerely,
Ernest-Antoine Seillicr

Our success is based on the single market, provided it works efficiently, and on a trade policy that is open and forward-looking. Our businesses need both, because there is no turning away from globalisation. We have to adapt to this new environment and seize the chances when they arise. The "Global Europe competing in the world" strategy presented recently by Commissioner Mandelson must build on these strengths and tackle new barriers such as intellectual property rights enforcement and access to raw materials. Many companies do precisely that. They make the effort, take risks and achieve results. We draw strength from a larger market because we believe that Europe is the answer to globalisation. For us, Europe is not the problem, it is the solution.
I take pride in our achievements. I am privileged to represent European business as President of UNICE, the Confederation of European Business, and to speak on behalf of over 20 million companies which believe strongly in Europe.
I am also proud to point out that European companies are successful and at the same time operate under unique social and environmental conditions. Compared with the rest of the world, Europe provides its citizens with the highest standards of care. As business, we fully agree with this social culture. Our members make major financial contributions to this sense of community through social security payments, complementary pension schemes and human resources policies for their employees and have to be productive enough to ensure their competitiveness when carrying this heavy social and environmental responsibility.
Now, the environment. Can anyone in this room identify who has done more than the European Union to tackle pollution? I would suggest that the answer is No. European companies continuously review their processes and products. They invest large amounts in R&D in the search for ever cleaner products that respect the environment and meet the increasing demands of today's society, implementing growing national and European regulations. As industry, we fully recognise that what we do must not make life difficult or dangerous for our children, their children and future generations. So we feel, as companies, that we do our best as Europeans to contribute to our continent's success in economic, social and environment terms – we feel and we are good European citizens.
Now, I would like to address the question: Does Europe – its institutions, governments and policies – care about companies? And what does business think about Europe?
The business community has a unanimous belief: Europe is sleepwalking through a major crisis. It may be out of sight and out of mind to many people, but we believe that what could happen is crucial. It will affect the very premises which underpin the European Union. If the political forces of Europe are not able to resolve this crisis, we believe that moves towards further European integration could be eventually rejected and, step by step, its economic "acquis" threatened.
So, we ask for the solutions to this crisis in three main areas:
1. Governance of the EU
2. Implementation of reforms for growth and jobs
3. Enforcement of the internal market
1. Governance of the EU
The European Union has become a heavy and complex vehicle that is seen as running out of fuel. Just when the entire world is being buoyed up by healthy economic growth, the European Union has to take the necessary initiatives to reaffirm its mission as a continental organisation.
The governance of the EU has been badly shaken by the negative votes in last year's referenda in France and the Netherlands. The challenge now facing us is to solve the institutional problems of a Union that today has 25 members and tomorrow 27.
The difficulty in taking decisions coincides with enormous challenges linked to demographic ageing, technological change and globalisation. The toughest task now is to rebuild the confidence of our citizens and companies in the whole European project.
It is not for business leaders to find political solutions, but we have a duty to call for them. They are urgently needed now. We will actively push our governments all over Europe to get us out of this unacceptable governance confusion and to establish a decent way to govern our continent.
2. Implementation of reforms for growth and jobs
We are still a long way from the goals EU leaders set out in Lisbon six years ago. The gap with our competitor countries has even widened since then. Over the last five years, growth in the euro area has been 1.3%. In the US, it has been exactly double – 2.6%. Even so-called "emerging" economies are catching up!
Today the very sustainability of our social systems is at stake. The rapid ageing of Europe's population means that government debt would explode if reforms are not introduced. Each member state must tackle this challenge on its own. Keeping in mind that business is part of the European social culture: when productivity improves and leads to more growth, part of this wealth is used to support social welfare.
In two days time, European political leaders will be meeting in Finland and talk about flexicurity.
The current debate on flexicurity is at the centre of the growth and jobs strategy. If we want to ensure the sustainability of social Europe, we must have a better understanding of why some countries generate more growth and more jobs than others. We need to examine how they manage to create a virtuous circle between the reform of labour law, active employment policy and sustainable social protection. They have removed over-prescriptive rules on protection against dismissals, implemented efficient active labour market measures and linked income support for the unemployed to acceptance of training or job offers.
The EU should tackle the revision of the working time directive and the future green paper on labour law with that approach in mind.
Here, I would like to say to you, President Barroso, as well as to national leaders in Europe: In business, when you have a plan, you invest the necessary resources and go for it. Is this happening for growth and jobs to the extent we need? We, in business do not think so. And if it goes on like that, you will see the European business community less and less involved in developing Europe and more and more in the rest of the world. And nobody would like that!
3. Enforcement of the internal market
The Internal Market is not working as well as it should and its potential remains unfulfilled. I would like to give examples where it is failing and action is badly needed:
Services: The proposed services directive is only a first step and much remains to be done. We were expecting more. We hope that national transposition and implementation will not delay the urgent elimination of national barriers in this essential field for growth and jobs.
Intellectual property: Europe is still waiting for an improved patent system which is cost-effective and offers legal certainty. An affordable Community patent is particularly important for companies.
Enforcement and better regulation: It is pointless having rules if they create regulatory confusion and if they are not properly enforced. The Commission and Members States must step up their efforts to improve compliance, especially as regards the mutual recognition principle.
Energy: This issue is at the heart of the European debate. We need now a European policy that takes care of security, competition and security of supplies of energy.
The good news is that the Commission has announced it will review all internal market policy. We look forward to this and are confident it will be a serious exercise. Let's do it and let's do it well.
* * *
As business people, we need to improve the partnership between business and the EU institutions.
For this, President Barroso, let me turn to you once more. Not only to praise you (some even think that I do it too much…) and to acknowledge that, yes, your job is difficult. But I would also like to pass on the following messages: Yes you have a major role: you lead a major institution, the Commission. It has a central and key role in building Europe. You are, and will need to be, strong before all those trying to avoid the necessary task ahead. You must resist any attempt to downgrade Europe's ambitions. You will have our support for this.
Yes you know the six guidelines of the business community:
1. Implement the reforms for growth and jobs
2. Integrate the European market
3. Govern the EU efficiently
4. Fight national protectionism inside and outside Europe
5. Take the opportunity of enlargement
6. Reform social systems, to make them sustainable.
We must work closely together to implement them. Yes we trust that the Commission, the European Parliament and the European Council. Acting together, will make it possible for the European business community to say that: if business is for Europe, Europe understands that business is at the heart of Europe's ambition - success and future as a key actor in tomorrow's globalised world.

Folker Franz, UNICE Senior Adviser for the European growth and jobs strategy, underlined the importance of reforms to make Europe more innovative and competitive, and urged MEPs in particular to adopt a services directive which supports competition within the EU, as well as a chemicals legislation package (REACH) that does not overburden European industry, in particular SMEs.

The objective of the European framework agreement on telework, signed in July 2002, was to define a general framework to facilitate the use of telework in enterprises in a way that meets the needs of both workers and employers. Starting from 4.5 million employees in 2002, there is evidence that telework has developed over the years, and is spreading faster in certain sectors and among certain groups of workers. Teleworkers are estimated to represent from 8% of the working population in the Netherlands and the UK to just above 2% in the Czech Republic and Hungary. The social partners in EU Member States, EEA and candidate countries implemented the agreement by transposing the European text into their respective industrial relations systems through social partner agreements, collective agreements, national legislation, guides and codes of good practice. Employers and trade unions have jointly chosen the implementation tools according to custom and practice in their own country.
The report analyses the initiatives that have enabled the European agreement to be implemented. It illustrates the commitment of the social partners at European, national, sectoral and company levels to back up agreements reached in the European social dialogue. It also shows that the EU social dialogue is a source for the development of innovative social dialogue practices across Europe. "The report clearly shows that the social partners across Europe can successfully get to grips with the important issue of telework. The different experiences throughout Europe also underline that there is a need to clarify certain questions, given the fact that this is the first autonomous framework agreement to be implemented by the social partners themselves. These issues will be taken up in the framework of the European social partners\' work programme 2006-2008," declared ETUC General Secretary Mr John Monks.
"The report demonstrates the wealth of initiatives taken across Europe to implement the EU agreement on telework. It is a very encouraging result showing companies' interest in this flexible form of work," said UNICE Secretary General Mr Philippe de Buck. "The report proves the vitality of social dialogue at national level. It also shows that small companies equally take advantage of telework as one of the various flexible forms of work. We hope it will help to increase the use of telework in many sectors of the European economy," added UEAPME Secretary General Mr Hans-Werner Müller. "The report shows ownership of the telework agreement by national social partners. This is the key precondition for the success of autonomous social dialogue. Moreover, the variety of tools available in terms of implementation was the catalyst for increasing the use of telework in some public services and administrations where this form of work was not so widespread before 2002," concluded CEEP Secretary General Mr Rainer Plassmann." concluded CEEP Secretary General, Mr Rainer Plassmann.

COHESION POLICY HAS CONTRIBUTED TO ECONOMIC INTEGRATION BUT THERE IS STILL MUCH TO DO
• Cohesion policy was enshrined in the Treaties with the adoption of the Single European Act in 1986 and it has contributed to successful economic integration as the European Union has progressively enlarged. • Take for example the case of Ireland. This country joined in 1973, its GDP being 64% of the average of the Union. Now, its GDP is one of the highest. Expressing the EU average as a 100, Irish GDP per capita is 138. This clearly shows that the effects of membership, attraction of foreign direct investment and a correctly focused regional policy can help to enhance growth and employment.
• The latest Progress Report on Cohesion shows that economic convergence is indeed taking place, but it also clearly reports that there is still much to do: On the one hand, new member states grow faster but the size of the income gap suggests that convergence is still a long-term perspective, on the other hand, 24 million new jobs are needed to reach the Lisbon employment target of 70%.
• In order to make the growth and jobs strategy a reality we need "the regionalisation of Lisbon" where local actors have more responsibility in cohesion policy: Member states and regional authorities should clearly commit to concentrate resources from the Structural Funds for infrastructure, entrepreneurship, innovation and human capital.
• Coherent investments in these areas will surely increase the attractiveness of the regions, hence stimulating the interest of companies to invest and create jobs and secure the long-term future of the area • Last December, the European Council decided that member states for the period 2007-2013 should earmark a large proportion of the funding for cohesion policy to competitiveness.
• It is of the outmost importance that member states and regions turn this commitment into a reality without delay. The budget review in 2008 will probably scrutinise the performance of regional policy and will demand results. • We are concerned about the implementation of these commitments. Member states already showed some reluctance when they agreed to broaden the list of expenditure eligible for earmarking on an ad hoc basis. And we fear that, in the name of territorial cohesion, regional authorities will sidestep appropriate concentration of resources on research, innovation, networks and training.
ATTRACTING PRIVATE INVESTMENT
• In a context of limited budgets, if we want to push forward the Lisbon strategy, the Structural Funds and the Cohesion Fund should be used to leverage up investment to a much higher scale than is envisaged by public policy-makers. • In order to attract more private investment, DG REGIO has recently joined forces with the European Investment Bank to develop a capacity, JASPER (Joint Assistance in Supporting Projects in European Regions) to provide technical advice to local authorities to prepare large projects establishing PPPs.
• Joining forces with the EIB is indeed very useful. However, we find two shortcomings to this new capacity. First: it is only for large projects, which could leave many other smaller projects out of the reach of this assistance. On the other hand, how are local authorities going to search assistance to the EIB is they don't want to engage in a PPP? • We believe that more could be done in terms of training officers involved in reviewing projects applying for EU aid and in spreadin g good practice. The creation of a PPPs platform will certainly help in this respect.
A VISION AT THE EU LEVEL

• Europe should be looking for ways of speeding up investment in infrastructure and of promoting efficient public services; private money could be plentiful for those investments.
• The issue is: how to create a climate conducive to more PPPs?
• What it takes is a bit of joined-up thinking by the EU institutions and a common and coherent vision of what should be done to attract more private investment. In the Commission, for example, only DG REGIO, INTERNAL MARKET and TREN have some experience with PPPs.
• Many still do not realise that PPPs are a very important instrument to use private knowledge and capacity in the development of Europe.

The framework agreement on telework is the first ever to be implemented by the social partners in their respective countries, using the procedures defined in article 139(2) of the Treaty. The report highlights the wide variety of measures adopted by the social partners during the implementation period. The objective of the European framework agreement on telework, signed in July 2002, was to define a general framework to facilitate the use of telework in enterprises in a way that meets the needs of both workers and employers. Starting from 4.5 million employees in 2002, there is evidence that telework has developed over the years, and is spreading faster in certain sectors and among certain groups of workers. Teleworkers are estimated to represent from 8% of the working population in the Netherlands and the UK to just above 2% in the Czech Republic and Hungary. The social partners in EU Member States, EEA and candidate countries implemented the agreement by transposing the European text into their respective industrial relations systems through social partner agreements, collective agreements, national legislation, guides and codes of good practice. Employers and trade unions have jointly chosen the implementation tools according to custom and practice in their own country. The report analyses the initiatives that have enabled the European agreement to be implemented. It illustrates the commitment of the social partners at European, national, sectoral and company levels to back up agreements reached in the European social dialogue. It also shows that the EU social dialogue is a source for the development of innovative social dialogue practices across Europe.
"The report clearly shows that the social partners across Europe can successfully get to grips with the important issue of telework. The different experiences throughout Europe also underline that there is a need to clarify certain questions, given the fact that this is the first autonomous framework agreement to be implemented by the social partners themsel ves. These issues will be taken up in the framework of the European social partners\' work programme 2006-2008," declared ETUC General Secretary Mr John Monks.
"The report demonstrates the wealth of initiatives taken across Europe to implement the EU agreement on telework. It is a very encouraging result showing companies' interest in this flexible form of work," said UNICE Secretary General Mr Philippe de Buck. "The report proves the vitality of social dialogue at national level. It also shows that small companies equally take advantage of telework as one of the various flexible forms of work. We hope it will help to increase the use of telework in many sectors of the European economy," added UEAPME Secretary General Mr Hans-Werner Müller. "The report shows ownership of the telework agreement by national social partners. This is the key precondition for the success of autonomous social dialogue. Moreover, the variety of tools available in terms of implementation was the catalyst for increasing the use of telework in some public services and administrations where this form of work was not so widespread before 2002," concluded CEEP Secretary General Mr Rainer Plassmann." concluded CEEP Secretary General, Mr Rainer Plassmann.

Mr. Somavia said both developing and industrialized countries face decent work challenges, adding "despite four years of very respectable growth worldwide, we are not really eating into the global decent work deficit. We need to tackle head on this disconnect between economic and employment growth".
While the global GDP grew by more than 4 per cent, the global unemployment rate of 6.3 per cent has remained unchanged over the past two years, says a background report prepared for the meeting.
What's more, this jobless growth is only the tip of the iceberg. According to the report, the number of working poor living on less than 2US$ per day, per person is eight times higher than the number of persons who are openly unemployed.
Among other challenges facing the global labour market Mr. Somavia cited the increase in unregistered informal work, an expected increase of 430 million new entrants to the global labour force in the next 10 years and an increase in unemployed youth. Over 13 per cent of the 630 million youth labour force are unemployed – two to four times higher than for adult workers.
Referring to international labour migration, Mr. Somavia noted that it had its origin in the lack of jobs at home. Better growth and more jobs in developing countries would allow for a more rational and less emotional management of the "migrant question" in developed countries.
The ILO Director-General also emphasized the need for "convergent, fair and balanced policies and adjustment strategies in a fast changing world of work". Adjustment should be fair to everybody - governments, workers, enterprises and consumers. "This is a key aspect of the social dimension of globalization", he said.
According to Mr. Somavia, both, coordinated international action as well as strong national policies are required to address these issues. The ILO Director-General underlined the vital leadership role of G8 countries in providing the technical and financial support to realize decent work objectives as a foundation for poverty reduction and development.

The framework agreement on telework is the first ever to be implemented by the social partners in their respective countries, using the procedures defined in article 139(2) of the Treaty. The report highlights the wide variety of measures adopted by the social partners during the implementation period. The objective of the European framework agreement on telework, signed in July 2002, was to define a general framework to facilitate the use of telework in enterprises in a way that meets the needs of both workers and employers. Starting from 4.5 million employees in 2002, there is evidence that telework has developed over the years, and is spreading faster in certain sectors and among certain groups of workers. Teleworkers are estimated to represent from 8% of the working population in the Netherlands and the UK to just above 2% in the Czech Republic and Hungary. The social partners in EU Member States, EEA and candidate countries implemented the agreement by transposing the European text into their respective industrial relations systems through social partner agreements, collective agreements, national legislation, guides and codes of good practice. Employers and trade unions have jointly chosen the implementation tools according to custom and practice in their own country. The report analyses the initiatives that have enabled the European agreement to be implemented. It illustrates the commitment of the social partners at European, national, sectoral and company levels to back up agreements reached in the European social dialogue. It also shows that the EU social dialogue is a source for the development of innovative social dialogue practices across Europe. "The report clearly shows that the social partners across Europe can successfully get to grips with the important issue of telework. The different experiences throughout Europe also underline that there is a need to clarify certain questions, given the fact that this is the first autonomous framework agreement to be implemented by the social partners themselves. These issues will be taken up in the framework of the European social partners\' work programme 2006-2008," declared ETUC General Secretary Mr John Monks.
"The report demonstrates the wealth of initiatives taken across Europe to implement the EU agreement on telework. It is a very encouraging result showing companies' interest in this flexible form of work," said UNICE Secretary General Mr Philippe de Buck. "The report proves the vitality of social dialogue at national level. It also shows that small companies equally take advantage of telework as one of the various flexible forms of work. We hope it will help to increase the use of telework in many sectors of the European economy," added UEAPME Secretary General Mr Hans-Werner Müller. "The report shows ownership of the telework agreement by national social partners. This is the key precondition for the success of autonomous social dialogue. Moreover, the variety of tools available in terms of implementation was the catalyst for increasing the use of telework in some public services and administrations where this form of work was not so widespread before 2002," concluded CEEP ! Secretary General Mr Rainer Plassmann." concluded CEEP Secretary General, Mr Rainer Plassmann.

In an interview with Spain\'s El Mundo, the polish president had said \"It [euro entry] should be a subject submitted to a referendum, which would take place at the end of my legislature, which ends in 2010\" adding \"and I speak of the referendum, not of the introduction of the euro.\" He added that ditching the Polish zloty would be \"a limitation of the sovereignty [of Poland]\" and stated that \"the euro is still an experiment and it will be necessary to observe if it works well...its introduction can cause inflation and lower the standard of life.\"
Mr Kaczynski\'s ruling Law and Justice Party came to power last September, abandoning the previous government\'s plans to adopt the euro in 2010 but promising Brussels it will meet fiscal criteria to join the single currency by 2009.
The president - a moderate eurosceptic who distrusts free market economics - said the previous government had followed the commission\'s lead without being clear whether the single currency would be a success or not.
Poland\'s position is similar to Sweden\'s, which is also obliged to join the euro under its EU treaty, but which held a negative referendum on the subject in 2003 and has stayed out of the eurozone since joining the EU in 1995.
According to the unofficial commission reaction, a vote on joining the single currency puts at risk Warsaw\'s EU accession treaty obligations. Poland doesn\'t have a choice, when it comes to the euro. The adoption of the single currency is an obligation under the accession treaty.

Today, the Environment Committee of the European Parliament (EP) has voted on REACH in the second reading, confirming broadly the Parliament's first reading on the most critical issues, disregarding the Council Common position. To achieve REACH adoption, both EP and Council have to agree on some crucial issues.
Today's adopted amendments on authorisation and substitution create serious problems for industry. A mandatory substitution principle, even if the risk is proved to be adequately controlled, adds pointless red tape and puts industrial processes at risk with no environmental or health benefits. Moreover, the Environment Committee approach could lead to a ban on certain substances even though there are clear socio-economic benefits outweighting the risks and no alternative available.
Ernest-Antoine Seilličre, President of UNICE: "The outcome in the Parliament's Environment Committee is disappointing as it does not take into account the Council's proposals towards a workable and smart approach based on the concept of adequate control of risk. The European Parliament, Council and Commission must continue their efforts to achieve a cost-effective and workable REACH before the plenary."

Zagreb offers simply adjust the EU\'s current Nice Treaty, which is designed for the functioning of the EU institutions only for 27 members. According to croatian officials negotiations are proceeding well and the country enjoys broad support among the member states for entry into the EU. That\'s why they consider it primarily a technical issue and much less a political one.
Zagreb\'s stance comes as a direct challenge to the position of the European Commission. Mr Barroso earlier this month said that Croatia can only enter the EU when the union reaches agreement on a full new treaty.

Until now, the crucial role of trade and investment and its impact on EU competitiveness and structural change has been the missing link in the EU's Growth and Jobs strategy. With its new Trade and Competitiveness strategy – "Global Europe: Competing in the world", the EU will be able to tackle the key challenges for European business in international trade including: 1. A renewed commitment to get the WTO Doha negotiations back on track to rapidly conclude an ambitious agreement. 2. A much stronger focus on economic growth opportunities to launch new bilateral or regional free-trade negotiations with high growth markets such as ASEAN or Russia. 3. A coherent market access strategy to remove the increasing number of non-tariff barriers that hamper the competitiveness of European business. 4. A more resolute strategy to resolve bilateral trade and investment frictions with China. In addition, European business welcomes the Trade Commissioner's commitment to address inconsistencies in EU policies that undermine the global competitiveness of European companies or industries. The Confederation of European Business – UNICE – will work hard to ensure that the EU follows through on this strategy by rapidly implementing its recommendations. "One year ago at the EU Market Access Symposium, I asked Trade Commissioner Peter Mandelson to focus EU Trade Policy much more on a reform agenda to strengthen the international competitiveness of European business. With the new Trade & Competitiveness strategy to be launched today, Commissioner Mandelson will help Europe tackle the major challenge of the 21st century: competition from the rising emerging trade powers of Asia and South America. The new strategy's strong focus on competitiveness, growth and jobs is the right approach for growth and jobs in Europe." said UNICE President Ernest-Antoine Seilličre.

The meeting allowed EU and Japanese business to discuss recent economic and political developments and how to give new impetus to bilateral economic relations. As the voice of business of two of the largest economies in the world, UNICE and Nippon Keidanren also addressed global issues such as environment, energy or the WTO. The DDA negotiations remain a priority and the negotiations should be resumed as soon as possible.

They should continue work on enforcement of their legal and economic reforms at the local and national levels. Romania and Bulgaria already have strong economic links with the European Union: 72% (Romania) and 59% (Bulgaria) of all imports come from the European Union, whereas 71% (Romania) and 57% (Bulgaria) of all exports go to the 25 member states. However, key challenges for the successful accession of Romania and Bulgaria remain: • Strengthening the rule of law • Modernising customs and border procedures • Ensuring the full application of EU product standards Improving the rule of law and enforcing EU standards will be the most efficient tools to mitigate these issues and make doing business safer in both countries. The respect of internal market issues – free movement of persons, goods, capitals, and services – is the cornerstone of a well functioning EU market. "Safeguard clauses" should only be used to address failures to respect the acquis communautaire. These should only be applied on a case-by-case basis and for short periods. UNICE, together with its member federations, will closely monitor any recourse to "safeguard clauses" after accession to ensure that they are lifted when the countries meet EU criteria. Commenting on today's reports, UNICE President Ernest-Antoine Seillicre said: "Today's decision is a positive result for the great efforts Bulgaria and Romania have undertaken to meet the EU accession criteria. Enlargement to a European Union of 27 member states also poses a number of challenges for the EU regarding its institutional structure: a Union of almost 500 million inhabitants makes it more urgent to review its institutional decision-making procedure. Adequate solutions have to be found to give Europe the means to meet those challenges successfully. This will be positive for the new countries as well as for the EU itself."

All our federations, including the Confederation of Danish Industries, work together to achieve growth and competitiveness in Europe, while at the same time promoting prosperity and development for European enterprises.
With the support of my fellow colleagues, UNICE is calling for a boost to Europe promoting a new strategy of communication based on 6 policy priorities which we think are the answers to the stagnate of the European economy:
1. Implement the reform for growth and jobs,
2. Integrate the European market,
3. Govern the EU efficiently,
4. Fight national protectionism,
5. Take advantage of the opportunities of enlargement and
6. Reform European social systems to make them sustainable.
Let me take one by one for some more comments:
1 – Implement the reforms for growth and jobs: As you know, in March 2000 in Lisbon, heads of state and governments have defined a very ambitious but very accurate 10-year strategy based essentially on the improvement of Europe's competitiveness. We know that after the mid-term, we are very far from the goals set in Portugal. The gap with our competitor countries has even widened since then. Over the last five years, growth in the Euro area was 1.3% against 2.6% in the US. Moreover, the so-called "emerging" economies are overtaking us: in 2005, the size of China's GDP had reached the size of the Eurozone's. Barroso's Commission has refocused the Lisbon Strategy to concentrate it on growth and jobs. This was what UNICE was asking for when we published our "Business vision for Europe – growth, jobs and prosperity for our future" in 2004. But even a refocused strategy can only be successful if the member states themselves decide to proceed to the necessary structural reforms. Some have done it due to the difficult circumstances they had to face, such as Finland for instance, which went through a turnaround after the collapse of the Soviet Union in the early nineties. Now this country is considered as one of the most competitive in the world. But when I met for the first time with the Prime Minister of Finland, Mr Vanhanen – and current President of the European Council – beginning of July, he mentioned he needs for his country to pursue the effort of reforms. As the business community, we should therefore urge all the national governments, from the member states as well as from the associate countries to act and adapt their policies in order to be able to face the global competition, the technological challenges and the ageing demography. I feel encouraged when Chancellor Angela Merkel who will be next President of the Council declared very recently that "the biggest lie of all would be to say that (Germany) needs no, or only very limited, changes". "Change is necessary" she said "because the world is changing".
2 – Integrate the European market The integration of the European market creating one single market for people, goods, services and capital is essential. It creates synergies companies need, it offers a larger choice to customers, it is an appropriate answer in a global world competition. It has created approximately 2.5 million jobs over the last 15 years. However, if Europe wants to move ahead of the global competition, we now need to move up a gear, and create a market in which companies can move as freely as, for example, in the different states of the US. It is therefore that we were so anxious to create a single market for services. Looking at the efficiency of the services sector in the US, it becomes clear that huge productivity gains can still be make in European services. This is certainly easy to understand in a country such as Denmark. We have now a proposal for a service directive that is far from perfect, but it is also now up to us to make the best of it.
3 – Govern the EU efficiently The governance of the EU has been shaken by the negative referenda last year in France and in the Netherlands. The challenge today is to solve the EU institutional problems arising with 25 members today, 27 and more tomorrow. We all know that this is not the first time the EU is going through difficult times but it is probably one of the worst. Even if we have survived the empty chair days, the eurosclerosis years, budgetary crisis and the Commission resignation, the current situation is unprecedented since the European project has lost the backing of a large portion of EU citizens and companies. The crisis comes at a time when the EU is confronted with enormous challenges linked to demographic ageing, technological change and globalisation. The most difficult thing now is to recover European citizens' and companies' confidence in the European Union project. It is not up to business leaders to find the political solutions, but it is our duty to call for these solutions urgently.
4 – Fight national protectionism The fight against national protectionism is part of the internal market strategy. I think it is important to underline this, especially because we have seen some attempts from larger countries to protect their companies against mergers and acquisitions coming from outside. The concept of "national champions" is not the answer, nor is the intervention of governments in business mergers. It is up to stakeholders – taking into account the interest of the company – to take that kind of decision. It is also in this context that I would like to touch on the WTO negotiations. For our countries the failure of the negotiations is unacceptable. We are an open economy; we export a lot all over the world. With around 20% share in global imports and exports Europe's economy participates in the world development and, moreover, its own future prosperity depends on it. We are therefore in favour of a multilateral approach, but one that really opens the markets for goods and services. It cannot be accepted that agricultural problems dominate trade issues. It cannot be accepted that important emerging economies don't want to open more their market access. We still do hope that the Doha Round can be finalised on acceptable conditions. It is generally accepted that a successful outcome of this Round would increase EU exports by 2.5%. But already now we have urged the Commission to start the examination of a bilateral approach and negotiate free trade agreements with some countries or regions.
5 – Take advantage of the opportunities of enlargement The enlargement to the 10 new member states has been positive for the economy, also the Danish one. There are still currently more exports from West to East than the opposite. There were more jobs created in the West from the increase of exports, than losses as a result of delocalisation of activities. Therefore, we are convinced that enlargement is a win-win situation. It has and will continue to bring benefits to all Member States if we manage it properly and do not allow our strategic choices to be guided by short-term thinking or unfounded fears. This is also the conclusion of a DI report published in April 2006: enlargement has paved the way for more jobs in Europe.
6 – Reform European social systems to make them sustainable Finally the sixth priority is the reform of the social systems. We need not debate whether there is more than one social model in Europe, what is important to accept also for the business leaders is that, when there is economic growth, when productivity improves, part of it must be used to create more solidarity and to support the social welfare. But today the sustainability of the social systems is at stake. Given the rapid ageing of Europe's population, it has been calculated that government debt in the EU15, which is currently at 45%, would explode to 180%, if nothing was changed. Each member state, each European country must tackle this challenge on its own. But a delay in one country has consequences for the others. Because it is also proven that sound macroeconomic policies foster growth rather than the opposite.
OVERALL THEMES: THE GOVERNANCE OF THE EU Let me dedicate a few minutes to enter into the core of the Governance of the European Union. As I already mentioned, the crisis of confidence that Europe is going through is deep-seated and that its consequences could be broader than the constitution issue and could stand in the way of progress on important reforms that are urgently needed. At a time when the entire world is being buoyed up by healthy economic growth, the European Union needs initiatives to reaffirm the mission of a pan-continental organisation. The convergence of problems that the Union is being confronted – lack of political leadership at EU and national level, a gap opens between public opinion and the European project, the unsustainability of some social systems – have direct consequences in European companies' competitiveness. The EU is not adapting fast enough to globalisation and economic growth is lagging behind that of most other economic powers in the world
When I go around I feel that business leaders balance between two attitudes:
1) one possible response is that of complete indifference. After all, companies demonstrate on a daily basis their capacity to conquer markets, adjust to change and succeed in a globalising economy.
2) The second possible response is genuine impatience. We are all convinced that progressive European integration has had major effects on growth and jobs in Europe, and that we can only win by moving forward in the constitutional debate.
As a first step, we, European business, urge Member States to ensure that there is better dialogue between citizens and government on EU goals and projects and needed reforms. Governments should engage in national campaigns on the added value of Europe and the benefits for all. Better communication on controversial topics such as the services directive, the challenges of globalisation, and the need for social and economic reforms is key to understand the European project but they should not be mixed with the Constitutional debate as it was in the past. We are sure that it is in the interest of business for Europe to be properly governed. It is for governments to decide how to do this and get us out of the governance confusion we are in. This should be done on the basis of the shortest possible timetable.
Why in the interest of business? Let be clear: - in order to be able to take the necessary decisions to make Europe competitive in the globalised world for growth and jobs; - in order to build Europe as a strong and able actor, vis-r-vis the United-States, Japan as well as China, India, Brazil, and Russia, in particular for the issues of international trade, energy and climate change. - in order to guarantee and strengthen the economic acquis communautaire: the internal market, the euro, the common trade policy; - in order to promote innovation, education and modernisation of social systems, to make them sustainable. We want to convince European and national policy makers of that and we have invited them to join us in our largest annual demonstration – the UNICE Day – to take place in Brussels on 17 October. I will personally ask President Barroso if Europe cares about companies. I am not expecting only a positive answer that I am sure I will have; I am expecting a strong commitment with concrete actions and imaginative ideas.
THEMES RELATED TO THE LABOUR FORCE CHALLENGE I would like to finalise my intervention with a reference to one of the areas where Europe needs a strong commitment with concrete actions: labour market policy. Over the last decade, potential output growth has been on a declining trend in Europe. This contrasts sharply with the performance of other developed economies. The Chinese economy will grow by some 9% this year, India by 7% and the US by 3.5% while the European Union, at the top of the economic cycle, will hardly manage 2%.
Our poor performance is due to obstacles preventing companies from adapting,innovating and employing people under fast-changing conditions. Structural reforms on both product and labour markets must be implemented vigorously to remove bottlenecks to economic growth. Higher labour force participation and reduced unemployment made a positive but modest contribution to real GDP growth since the mid-1990s. Moreover, these achievements were partly off-set by poor productivity performance. Denmark is considered a good pupil in the European class and you could be tempted to rejoice at your good results and let the rest of Europe struggle with its home-made difficulties. However, this would be the wrong attitude.
UNICE fully shares DI's conviction that one cannot be a winning nation in a loosing region. Moreover, success is never guaranteed for ever in the fast changing global economy and Denmark, like other EU countries, is faced with labour shortages creating bottlenecks for its economic growth in the short-term. There is widespread awareness, in Brussels, that inadequate functioning of national labour markets plays a crucial role in the difficulties that the European economy is currently facing.
A lot of European decision-makers are conscious that outdated and unnecessarily rigid labour regulations hamper businesses and curb productivity growth. Most people agree that high labour taxation and lack of mobility increase the adjustment costs associated with globalisation and technological innovations. Many even acknowledge, theoretically, that hours worked per person employed decline dangerously in the face of demographic ageing. Unfortunately, things are much less consensual when it comes to drawing the consequences of this analysis and deciding on reforms in the Member States. Fears in public opinion and trade union resistance, especially in some big EU countries, are considerably slowing down necessary measures. There is not enough awareness that time is running out and that the longer they are delayed, the more difficult and painful reforms will become. Until 2015, rising employment rates could offset the decline in working-age population but after that both the size of the working-age population and the number of persons employed will be on a downward trend. Another difficulty is the distorted picture that is often given of national reforms when comparing experiences at the European level.
The way in which the Danish flexicurity approach is described in Brussels is a good example of that. It is usually caricatured into three components:
1) active labour market policies +
2) generous welfare systems +
3) highly developed collective bargaining. The other side of the coin, namely no general labour code (and therefore no law on dismissals, working time and minimum pay) + duty of the unemployed to participate in activation programmes + sound budgetary policies to create the margins for expensive active labour market policies are simply swept under the carpet.
To increase the awareness of what are the real ingredients of successful national policies for growth and employment and help creating a stronger consensus on the solutions to Europe's problems, UNICE is currently discussing with the European Trade Union Confederation Europe's key labour market challenges with the aim of making a joint analysis backed by both sides. Arriving at a real consensus of the European social partners that it is more important to create new jobs than to protect old ones and that we should focus on how to make it attractive and easy to hire workers rather than making it difficult or expensive to dismiss workers, as you did in Denmark, would be a real progress. In addition to agreeing with European trade unions that flexibility is in the interest of both employers and workers, employers also must convince EU institutions to act consistently when devising EU policy measures. For example, promoting flexicurity makes little sense if, at the same time, the EU legislator interferes with the social partners' freedom to negotiate on working time in the Member States on the occasion of the revision of the working time directive. Similarly, highlighting the importance of tackling the challenges of demographic ageing while maintaining a purely fictitious zero-immigration policy is self-defeating as it deprives Europe of the ability to manage the entry of third country nationals in the light of recruitment difficulties. Last but not least, accepting delaying the single market for services for fear of being overwhelmed by mythical Polish plumbers at the age of information technology by watering down the services directive is a strategic mistake.
TO CONCLUDE A lot of work needs to be done to bring Europe out of its present crisis and there is no time for complacency. UNICE will continue to press governments to: - demonstrate more political leadership at EU level, - adapt the EU governance system to the new geographical limits of the European Union, - implement necessary national reforms for growth and jobs, - complete the Internal Market, in particular for services, - resist protectionist temptations, - make European social systems sustainable; UNICE also intends to step up our efforts to convince public opinion through actions taken in the European social dialogue and direct campaigns undertaken with our member federations. We count on the help and support of Danish Industry to convince in Denmark and elsewhere that "Operation Europe" is both desirable and possible.

Horizontal legislation would be totally counterproductive. Bearing in mind the great diversity of these services, it would be unworkable. It would also be unnecessary, given the major progress made in the field of SGI over the last ten years, not to mention highly damaging for economic and social development. Protectionist influences would be reactivated and obstacles to competition and private entrepreneurial dynamism reintroduced. The successful system of subsidiarity in place at present should not be burdened by new European rules at a time when there is a general commitment for simplification of EU legislation and a more targeted decision-making.

He spoke on a forum panel entitled \"Neo-Protectionism: 21st Century Challenge for the WTO\" – organised by UNICE in cooperation with the APEC Business Advisory Council. Mr Quick characterised the suspension of the Doha Round as the most obvious example of resurgent protectionist tendencies linked to blinkered notions of what countries need in order to develop. He also addressed the issues of non-tariff barriers such as export taxes, the need for greater differentiation between developing countries according to real economic criteria and the problems posed by negotiations on environmental goods. UNICE also held side meetings with key WTO members and secretariat officials to press for a prompt resumption of the DDA.

Whereas the population of the Northern shore is ageing rapidly, the Southern shore shows signs of great demographic dynamism, with a demand for investment and consumption which can only intensify if the Euro-Mediterranean partnership delivers all the economic effects linked to the regional process. The Five-Year Work Programme, adopted in November 2005 on the ocassion of the 10th anniversary of the Barcelona Process and endorsed by the 2005 December European Council, and the European Neighbourhood Policy are the right instruments to further develop relations between the two sides of the basin. The challenge now is implementation without delay of the set of actions agreed and with the full involvement of the Euro-Mediterranean business community.
THE ROLE OF BUSINESS ORGANISATIONS
UNICE and UMCE, which represent the Euro-Mediterranean business community are convinced that business organisations play a key role in addressing the challenges of globalisation. Business organisations are the main facilitators of fruitful cooperation between public authorities and private sector. They are also in a privileged position to interpret the needs of companies. UMCE, the Union of Mediterranean Confederation of Enterprises, is a concrete example of the effective and efficient work of business organisations in the Mediterranean countries, and represents the industrial interests of the twelve partner countries. UMCE plays an important role at both national and Euro-Mediterranean level, and it leads the way for deeper Euro-Mediterranean integration. To improve the business environment in the South Mediterranean countries, UNICE and UMCE support the implementation of the Euro-Mediterranean Charter for Enterprises since its adoption in 2004. This document provides a comprehensive framework of the development of policies for the improvement of business competitiveness and support for the development of the private sector in the region. We would like the Mediterranean partner countries to continue their efforts to implement the Charter and to focus their attention on clear and specific targets, in particular: - Easier access to finance with particular attention to SMEs; - Reducing administrative burdens and unnecesary red tape; - Less obstructive taxation; - Concrete translation of commitments to entrepreneurship education; - Encourage continuous vocational training and improvement of labour force skills.
EUROPEAN NEIGHBOURHOOD POLICY: A GOOD INSTRUMENT FOR EURO-MEDITERRANEAN COOPERATION
The European Neigbourhood Policy sets out a new framework for relations with the EU and its new neighbours which we believe will have positive resutls, notably in a period when all countries around the world are facing the challenges of globalisation. Nevertheless, the Euro-Mediterranean business community believes that the Barcelona Process should complement and reinforce the European Neighbourhood Policy. Although ten years after its launch the Barcelona Process has not fully delivered its objectives, some progress has been made such as the progressive establishment of a network of bilateral Association Agreements which provide for free trade in industrial goods. The Euro-Mediterranean business community expects more achievements of the Barcelona Process implementation of the Euro-Mediterranean Partnership Five-Year Work Programme ratified in November 2005. The Neighbourhood Action Plans can improve the economic and growth potential of Mediterranean countries. Business organisations which are the main economic drivers to improve the business environment and strenghten industrial cooperation in the region should be fully integrated in this process in each country. The financial instruments related to the European Neighbourhood Policy must support the development needs of the region and they should also aim to strengthen business organisations with appropiate financing. UNICE and UMCE call for more
financial support, closer Euro-Mediterranean cooperation through twinning projects and facilitation of technology transfer. UNICE and UMCE also welcome the activities of the EIB's Facility for the Euro-Mediterranean Investment Partnership (FEMIP) and the priority given to private sector development and SMEs in the South Mediterranean region. Business supports a reinforcement of FEMIP towards a Euro-Mediterranean Investment Bank with particular emphasis on flexibility, innovative financial products and risk-capital.
FOREIGN DIRECT INVESTMENT AS A DRIVER TO ADDRESS THE CHALLENGE OF GLOBALISATION
The shortfall in investment, notably foreign direct investments (FDI), constitutes one of the main obstacles to the acceleration of economic development in Mediterranean countries and to completion of the Euro-Mediterranean Free-Trade Area by 2010. FDI is a main factor which enables the Mediterranean countries to reduce unemployment, to facilitate trade and to attain a desirable GDP growth rate. It is unfortunate that the Euro-Mediterranean partnership has not delivered in terms of attracting enough FDI to the region and European direct investments go to other emerging regions as a result. Even if European FDI in the Mediterranean partners countries is increasing with 1.7% of the total in 2003, it is still low in comparison with other regions in the rest of the world such as the South East Asia 3.7% or South America 5.09%. Attracting investments is a key element for the practical establishment of the Euro-Mediterranean Free-Trade area in 2010. It is therefore essential to consider the possible means and instruments to improve the situation. More actions are needed by the Mediterranean partner countries themselves to further Euro-Mediterranean integration and to attain the objective of the free-trade area by 2010. South-South economic integration is a fundamental first step in this direction and the Euro-Mediterranean business community asks for effective implementation of the Agadir Agreement without any delay. UNICE and UMCE welcome the Ministerial Declaration adopted in Morocco in March 2006 on the launch of Euro-Mediterranean negotiations on the liberalisation of trade in services between the EU and Egypt, Israel, Jordan, Lebanon, Morocco, the Palestinian Authority and Tunisia. This liberalisation will help attract investments to the region, thus fostering economic growth and development. We are confident the same progress is possible with the rest of the South Mediterranean countries. UNICE-UMCE joint declaration
Futhermore, UNICE and UMCE agree on the importance of the liberalisation of Euro-Mediterranean trade. In this respect UNICE and UMCE consider the failure of the Doha Development Agenda (DDA) negotiations unacceptable. The consequences of this failure are substantial for all regions in the world, especially the Mediterranean region. In order to create a rapid solution to the deadlock of the negotiations, the whole negotiating process should be reviewed rapidly.

UNICE expressed its deep disappointment at the suspension of the Doha Development Agenda negotiations and the need to continue efforts to reach an ambitious conclusion of the Round. UNICE also emphasised the need for real new market access for European business through an EU-Mercosur free-trade agreement but registered its disappointment with progress in those talks to date.

The meeting was a valuable opportunity for EU business to get a detailed analysis of on-the-ground conditions for European companies operating in China in sectors such as chemicals, automotive or financial services. European companies in China are generally profitable and optimistic about their future in that country. However, there are still numerous trade and investment barriers in China, including government regulation/transparency and IPR enforcement.

We are kindly inviting you to Light Engineering 2006 Investment Cooperation Meeting held in Mauritius on 14-17 February 2006. The aim of the the event is to bring together European and African businessmen in the light engineering sector and to promote the establishment of flourishing business relation between these partners.