Entrepreneurial freedom must not be undermined – EURACTIV.com

The EU’s Internal Market is unique. It has become an indispensable part of companies’ everyday lives. Whether it’s a matter of procuring important parts for their own production, visiting a customer in a neighbouring European country, or handling payment transactions with suppliers: Without the EU Single Market, the business of a European mechanical engineering company would look much more complicated.

Karl Haeusgen is President of the Mechanical Engineering Association VDMA which represents around 3500 German and European companies in the mechanical engineering industry. It stands for innovation, export orientation and medium-sized businesses.

What happens when the Single Market suddenly stops functioning was vividly illustrated by the Covid crisis. After the uncoordinated border closures, the assembly lines in many industrial companies stood still because components from other EU member states no longer arrived at the factories. Such challenges show that a functioning Single Market can never be finished but must regularly be renewed.

Interference in company decisions is a no-go

As a convinced European, I am pleased that the EU Commission is taking the importance of the Single Market into account and draws lessons from the past two and a half years. I fully support keeping borders open in times of crisis. Ensuring the posting of workers is essential, especially for export-oriented industries such as mechanical engineering.

However, the SMEI proposal also contains parts that go in a completely wrong direction. In times of crisis, the Commission wants to dictate to companies which orders have priority, or decide what is of strategic importance. It can recommend that EU member states take measures to guarantee the availability of crisis-relevant goods and services. And the Commission threatens fines if companies do not adhere to these priorities.

This kind of crisis policy is interventionism and goes too far. It is almost never appropriate for politics to intervene in corporate processes and decisions. This holds true in normal times, but is just as true in times of crisis. Companies need the freedom to make their own decisions, especially during crises where speed and agility can make or break their existence. Production, logistics, and distribution of goods should, as much as possible, be left to economic actors which, in principle, can act more efficiently and react faster than governments.

Mechanical engineering is a globally networked industry, consisting primarily of small and medium-sized, family-run companies that are true export champions. The success of our industry depends on our reliability to deliver. Policy proposals must not interfere with this. That would do lasting damage to our companies in Europe and curb the effectiveness of entrepreneurial action.

Protection of the Single Market is a delicate task

So how can we protect the internal market in times of crisis? That is no easy task. It is clear that tact is required. Once again, policymakers need to strike a balance and allow industry to assume  responsibility. At the same time, the roles and powers of companies on the one side and the European Union and the member states on the other should be clearly defined.

The fact that the State intervenes more strongly in crisis situations than in normal times is justifiable and necessary. It is also clear that in times of crisis, we in Europe will be dependent on internationally functioning supply chains. The EU should therefore be very cautious with government-imposed supply restrictions. The EU and its member states should focus on defining the right framework conditions which includes, for example, opening markets of third countries through an ambitious and open EU trade and investment policy. EU trade agreements will open up markets of third countries or regions and create a level-playing field.

It is important that the rules of the internal market are developed further so that it does not lose its power. And it is certainly worth investing energy in a European Single Market. After all, the Single Market has ensured economic prosperity in Europe for almost 30 years.