Antonio Tajani: Europe must change the new generation’s prospects, it must become competitive and attract industrial investments

Reneta Nikolova

Mr. Tajani, how is Europe’s economy performing currently in terms of industry? Where is the place of the construction industry? Can we see a way out of the crisis?
In 2013, economic and fiscal policies within the EU started to produce some positive effects on our economy. Overall spreads are coming down. The most vulnerable countries are paying less to borrow and are now doing more to reform their economies. Industrial output is increasing, including in Bulgaria. Market trust is returning. Stock markets are performing well. The business outlook is steadily improving. Consumer confidence is rising.
However, we still need to be vigilant and not overestimate these initial results. On the basis of the figures and evolution we currently calculate, we have good reasons to keep up our efforts. We owe it to those for whom the recovery is not yet within reach, to those who cannot yet take advantage of positive developments. We owe it to our 26 million unemployed, especially to the young people.
As far as construction activity in Europe is concerned, it seems that the consequences of the financial crisis and its impact on the real economy continue to place strain on the recovery of the construction sector. In some countries, planned investments have been put on hold due to the sovereign-debt crisis. This situation of austerity in several countries has strongly weakened the still fragile business and consumer confidence.
Moreover, the credit crunch is persisting and late payments – in particular from public authorities – represent a major problem for the survival of construction companies, a high number of which have gone bankrupt because of them. These unfavorable circumstances have increased competition between companies in the EU’s Internal Market. However, the correct implementation by EU countries of the Directive on late payments has the potential to solve this issue.
Construction employment is also impacted by these factors. Companies are experiencing even greater difficulty in retaining their workforce, including skilled workers. In 2012, the level of employment in overall EU construction activity is estimated to have amounted to about 14.6 million workers, which represents a 3.1% decrease compared to the previous year.
Total construction output is forecast to decrease further by 2.6% in 2013, as a result of decreases in all construction segments, except in renovation and maintenance. The situation is not expected to improve before 2014.

In the year prior to the upcoming elections for European Parliament, what balance can you achieve? What was the most important thing that you could have do during your term in office but for which you did not have time to do?
The most important result of the work I have carried out in recent years is definitely putting industry back on the political agenda as an essential factor to boost jobs and growth. The manufacturing sector is responsible for 80% of innovation and three quarters of exports and it has also a major impact on employment, including as a job creator in the service sector linked to products. For this reason Europe started to consider investment as a main issue. In addition, Europe has finally started to acknowledge the need for a more industry friendly environment and the need for policies which are consistent with our industrial objective to increase the share of manufacturing sector in the EU’s GDP from the current 15.1% to 20% by 2020. It’s a revolution that I hope will bear the fruit of a more globally competitive Europe. We also carried out many concrete actions, in particular for SMEs. For example: initiatives involving the sharp increase in provisions for access to credit, the implementation of the Directive on late payments, the repayment of public administration debts and the exemption from new Basel III criteria for loans up to 1.5 million to SMEs. We also stressed the importance of the relations between enterprises and public administration. Only by facilitating access to markets we will be able to profit from the great potential that the 23 million European SMEs have, in particular in terms of new job creation. During my mandate I also made one of my dreams become true, with the launch of the first satellites of the Galileo constellation and the first services available starting in 2014, plus the financing of a large EU space infrastructure, the earth observation system, named Copernicus.
To facilitate access to markets for our companies, in addition to promoting a more ingenious industrial policy, we have organized Missions for growth in Latin America, USA, North Africa, Russia and China, accompanied by delegations from European SMEs and industries. Next steps are Israel, Burma, Vietnam and Thailand. These are just some examples of concrete demonstrations of the added value of EU actions to end the crisis.

One of the great successes, to which you also contributed, is the directive on payments to business, is there an effect of its application?
The Directive on combating late payment in commercial transactions had to be transposed into EU countries’ national law by 16 March 2013. Bulgaria already transposed it on 8 March 2013. My services are currently analysing these national transposition measures, including the Bulgarian ones, in order to check if they have correctly transposed the Directive. It is hence too early to assess the qualitative and quantitative impact of the Directive on the Bulgarian market and in the rest of the EU.

Public procurement is one of the most problematic areas according to business, and in Bulgaria it is a generator of corruption. What will the new European directive change so that to make tenders more transparent and accessible?
The new directives have various provisions aimed at fighting corruption and making tenders more transparent.
 Conflicts of interest, providing undue advantages and preliminary market consultations are often the source of illegal benefit to certain tenderers. Now these notions are well defined and the Member States are required to take action to avoid such situations.
 Illegal modification of contracts are a very common mean to change the conditions of a tender in a non-transparent way and distort competition. Now the rules for contract modification will be codified in a clear manner.
 In addition, there are new provisions on monitoring specific violations of the directive, addressing systemic problems and reporting on those activities.
Regarding the EU’s job-creating SMEs (see answer to next question) EU public procurement rules already allow for practices that favor SMEs without discriminating against bigger companies. The contracting authorities can for example divide bigger contracts into lots, thus making the contract’s value and scope more accessible to SMEs. What is more, with the current reform of the EU public procurement rules the Commission proposes to reinforce and make more explicit certain existing SME-friendly measures. And thus the Commission proposes:
 self-declarations instead of full documentary evidence at the first step of the selection;
 a cap on required minimum turnover linked to the contract’s value;
 have contracting authorities either subdivide contracts into lots, or explain why they haven’t done it.
However, what we need more than a legislative change is a cultural change among the contracting authorities. Both EU and national rules that make it easier for SMEs to enter the public contracts market are already in place! The Commission encourages the EU member states to fully exploit the means available. In 2008 the Commission compiled the “European Code of Best Practices Facilitating Access by SMEs to Public Procurement Contracts”. It gives guidance on how to ease SMEs access to public contracts under the existing legal framework and highlights national rules and best practices in this respect.
What is more, SMEs can contact their local Enterprise Europe Network’s partner and get advice on the EU public procurement rules and how to bid for public contracts in another EU country

Small and medium enterprises are most affected by the economic crisis. They often do not have access to public procurement because of discriminatory conditions set in tenders. What is the European Commission’s policy in support of small and medium businesses?
I am fully aware of the crucial importance of SMEs for the European economy. The more than 20 million SMEs in the EU are a key driver for economic growth, innovation, employment and social integration. SMEs represent 99% of businesses, and account for 67% of total employment and 58% of gross value added.
The European Commission aims to promote successful entrepreneurship and improve the business environment for SMEs, to allow them to realise their full potential in today’s global economy. Our actions are set out in the Small Business Act – a set of 10 principles which should guide the design and implementation of policies.
Let me give you some concrete examples:
1. The Commission adopted the Late Payments Directive and launched an information campaign to inform SMEs about their new rights. The Late Payments Directive entered into force this year. It requires public authorities to pay for the goods and services that they purchase within 30 days. In that way the directive gives SMEs the vital support they need in these difficult times.
2. To respond to challenges of the crisis the Commission and EU Member States have been creating a more business-friendly environment for SMEs. The Commission’s priority of the reduction of administrative burdens is made visible across Europe through the introduction of one-stop shops, the implementation of e-government facilities, the shortening of business start-up time and and the consistent efforts to change the attitude of administrative authorities to become more responsive and customer-oriented.
3. As regards access to finance, by the end of 2012 the Competitiveness and Innovation Framework Programme (CIP) supported more than 240 000 SMEs with a loan volume exceeding €14.2 billion, and has provided more than €2.3 billion in equity investments to over 300 innovative and high-growth companies.
4. Furthermore, I played a role in setting up the network of SME Envoys. The network accelerated the implementation of the SBA and provided a powerful voice for the SME community across the EU. The Bulgarian SME Envoy, Mr Evgeni Angelov, is there to help small businesses with their specific requests.
5. Last but not least, the Enterprise Europe Network is a key instrument in assisting SMEs in running their business. Bringing together close to 600 business support organisations from more than 50 countries, the network helps small companies seize the unparalleled business opportunities in the EU Single Market. More than 3 000 experienced staff provide practical answers to specific questions.
You have been personally engaged in the so called “Missions for growth”. Can you explain what they are, their objectives and the most important results you have had?
Since 2011, I have carried out many Missions for growth in Latin America, United States, Russia and China, to name just a few. I will continue this year with Israel, Vietnam, Myanmar and Thailand. These missions make an important contribution to the EU’s industrial cooperation in general and, more specifically, to the internationalization of SMEs, as they directly help small and medium enterprises to get in touch with the authorities in their respective markets, as well as potential business partners. During these missions we meet high-level authorities and politicians and we sign agreements that form the basis for enhanced cooperation in various fields such as industrial cooperation, SME policy, tourism, cooperation in space and raw materials
We have mobilised, by September 2013, 400 companies from 23 Member States. It is expected that after the October and November 2013 Missions this number will reach approximately 500 companies from 26 Member States. We have signed more than 60 Letters of Intent with non-EU countries. It is expected that after the October and November Missions we will reach 70 such agreements.

You have highlighted the importance of raw materials and the danger of the excessive volatility of prices on commodity markets. What do you think you will be able to do on this file before the end of the mandate of the Barroso Commission?
Fair access to raw materials at stable and predictable prices is crucial for a strong and sustainable European industrial base, an essential building block of the EU’s growth and competitiveness. Innovation also plays an important role.
I launched a European Innovation Partnership (EIP) for Raw Materials in February 2013, bringing together EU countries, companies, researchers and NGOs. It aims to find new solutions to the technological and regulatory challenges facing the EU raw materials sectors at all stages of the value chain (exploration, extraction, processing, recycling and substitution).
The Strategic Implementation Plan (SIP) of the Partnership is about to be adopted on 25 September 2013. It sets the innovation agenda for raw materials for the next six years. Together with our partners we have identified a number of concrete actions, such as R&D activities and activities to improve the framework conditions of raw materials’ production in Europe.
We will then call all interested stakeholders to commit to implementing the actions contained in the SIP. The Commission will do its part by committing to implement actions which fall under its responsibility. These will be detailed in a Communication in 2014.
Industrial innovation will also be supported through increased funding under the forthcoming Horizon 2020 research programme for the period 2014-2020. Part of this funding will be dedicated to raw materials.
As regards excessive price volatility, the Commission has been actively engaged in improving the functioning of the derivatives and physical commodities markets, in line with the work of the G20.
Commodity derivatives, along with all other derivative asset classes, are subject to the Regulation on OTC derivatives, central counterparties and trade repositories (commonly known under the acronym EMIR), which seeks to address the systemic risks and opacity of OTC derivatives and to improve the integrity and transparency of commodity derivatives markets.
The Commission has also adopted two further proposals – the Market Abuse Directive (MAD) and the Markets in Financial Instruments Directive (MiFID) on 20 October 2011.
The trilogues on MiFID are expected to be completed before the end of this year. MiFID will increase transparency of derivatives trading and will also introduce a system of position reporting by types of traders. Crucially, MiFID will introduce targeted powers regarding position management and position limits. These will stop excessive speculation, and thereby stop derivatives markets from causing excessive price volatility in commodity markets.
Finally, the new Market Abuse Regulation will clearly prohibit manipulation of commodity markets through the derivatives markets and vice versa. Now that the EU legislators have reached an agreement on this proposal, the role of the Commission is to help ensure that it is correctly implemented in all 28 EU states.

What are the damages that counterfeiting causes to the European economy? Please specify, if possible, numbers and which areas are most affected. Tell us more about your public awareness campaign to counter this problem.
The European sectors most affected by counterfeit goods are those of pharmaceuticals, food, beverage, automotive, electrical appliances, cosmetics, fashion, music and toys. The global volume of trade in fake goods stands at over €200 billion euro per year – a similar magnitude to the market for illegal drugs. Between 2010 and 2011, the volume of fake articles detained by European customs grew by 11%. Fashion and high-end personal products encompass 54% of the total value of detained goods. Almost one third of the articles detained by EU customs in 2011 were found to be potentially dangerous to the health and safety of consumers, almost double the proportion in 2010. Postal transport is the most common means used to ship fake goods ordered on-line. It was the method used in 63% of cases detected in 2011, followed by air transport (22%) and express courier transport (7%).
Dealers in imitations harm the European economy as they damage legitimate business and starve innovation. Innovative new products come from research and development. Europe relies on producing innovative, high-value and attractive goods to remain competitive; we rely on innovation to tackle the problems of modern society. If businesses cannot recoup their investment, they will not invest.
Fake goods compete unfairly with genuine products: brand images and trademarks built up over many years are looted and undermined; companies lose sales, business declines and jobs are lost. The impact on jobs is particularly severe for fashion and high-end products, such as textiles, garments, leather ware, shoes, watches and jewellery. These represent over half the total value of imitation goods detained by customs. Illegal operators and traders don’t pay taxes, these missing revenues have to be made up for by higher taxes on all citizens.
I launched an EU-wide information campaign in December 2012 to increase awareness among European citizens of the negative effects of fake goods. Our objectives are to raise consumer awareness about the dangers of counterfeit goods as well as to promote closer cooperation between the European Commission, national authorities and trade associations to stop the production and circulation of counterfeit goods.
From 2013, authorities in Member States have stronger powers to take non-compliant and dangerous products off the market immediately. Unsafe fake products will get caught in the net and kept away from consumers. To raise the effectiveness of this across the EU, the Commission has set out a plan which involves greater resource sharing, better IT tools, tougher and more targeted external controls at the Union borders, as well as harsher penalties.

You will participate in a forum in Sofia organized by the Bulgarian Construction Chamber, which is a member of the European Construction Industry Federation. What will be your key message to the industry?
First of all, that I am aware of the critical situation in the sector. The Commission is seeking ways to re-launch it, as has been demonstrated in the Communication and Action Plan on Construction 2020. My work is to make the voice of the industry heard within the framework of our Industrial policy which President Barroso intends to present to the European Council in 2014.
I would insist on the importance to seize energy performance as a means to stimulate housing sector renovation, including deep renovation and stimulate demand, particularly sensitive in Bulgaria where high energy prices for house heating resulted in political unrest in the winter of 2012-2013 and lead to general elections. A deep renovation of the EU building stock could provide an answer to Europe’s economic woes by triggering the creation of up to 2 million jobs along with cost savings and energy security. The cost of renovation is a real investment that, in the long run, will provide financial return via a reduction of energy consumption and, possibly, the self-production of energy. Less consumption will also mean a reduction in energy imports, and a reduction in the pollutant and CO2 emissions. This win-win situation is a fundamental element of the industrial revolution that I support with the European policy instruments for which I am responsible. Of course, the problem will be to fund the launch of this virtuous circle. The European Union clearly wants to contribute to it with the European Structural and Investments Funds that will be available for the period 2014-2020.
Finally, I would also like to emphasise the importance of infrastructure projects such as railroad and highways, ports, but also logistics hubs, to preserve the international competitiveness of Bulgaria as an international trade hub. Here too, the European Structural and Investment Funds planned for the period 2014-2020 will be available to support housing improvement activities and infrastructure projects.

In the eve of the new programming period 2014-2020 what is your vision for the future development of the Union? What are the main challenges that it has to face? Where should EU funds be focused primarily?
If Europe wants to change the new generation’s prospects and create jobs and growth, it must become competitive and attract industrial investments. For this we need change.
The initial weak signs of growth are not enough. For adequate growth, we must boost domestic demand and balance fiscal consolidation with reforms and targeted investments.
I believe, for example, in the large-scale use of project bonds, to attract public and private investment to the large infrastructure plans which are essential to complete the integration of the internal market. Advanced digital networks, modern transport and logistics systems, and adequate energy networks, are a prerequisite for a competitive industry with competitive costs of services and energy. It is also essential to continue to invest in space. The economic impacts derived from the initial physical infrastructure of EU, Galileo and Copernicus, are estimated at more than €130 billion.
We need an economic governance that not only looks at macro but also, in priority, at micro measures, with an agenda of reforms to be carried out as soon as possible. The new EU governance will not really be complete until we have tools to resolve some structural tangles, and return to a more favourable situation for industry, using an Industry Compact to integrate and balance the tax system.
In this context, we need a central bank that also looks after employment concerns, modelled on the FED. Draghi’s action has been exemplary and essential for the stability of the euro.
As outlined by the four EU presidents the banking union should be accomplished, as the first stage of the path towards fiscal, economic and political union. Such a union is essential not only to avoid rescues at taxpayer expense, but also to create a more integrated European credit market that facilitates the financing of businesses.
To open the door to a more political Europe – which I hope will one day lead to a United States of Europe – we must, therefore, work for a more integrated defence policy. I hope that this issue, along with the construction of a more effective economic governance and a European bank concerned with unemployment, appears among those of the next European elections.

You are a former journalist, and in 2011 you received the International journalism award “Argil: European man” for the “Communicating Europe” section in memory of Franz Herman-Bruener, first General Director of OLAF. How do you assess the place and role of media in the fight against corruption and fraud that is also a great obstacle to growth and to the development of SMEs?
Corruption is a serious hindrance to a country’s social, economic and political development and also impedes the economic growth which is one of the main missions of DG ENTR. Corruption is perceived as one of the major obstacles that SMEs face in their business environments.
When I first looked at the problem of counterfeiting, together with my colleague Internal Market Commissioner Michel Barnier, I was shocked by the scale of the activity and the extent of the damage it does to individuals and society. For many people, the image of counterfeiting is the cheap imitation of fashion products, the market stall selling cheap polo shirts or handbags. They do not see criminal activity, but only a cheap bargain. This has to change.
To combat corruption and counterfeiting, we need to change public attitudes: it is a criminal activity that harms not only the economy but also individuals, directly and indirectly.
The press can play a central role in bringing these messages to the attention of the public and highlighting the harm done by counterfeiting. The fight against corruption and the fight against counterfeiting are two aspects of the struggle for a decent, moral and just society.

In 2013 you have received the French “Legion d’Honor” and the Grand Cross of the Order of Civil Merit from Spain. Now you have been nominated by the Bulgarian Club Journalists against Corruption as honorary member. With what spirit you have received this new recognition to you work?
I’m proud and honoured by this honorary membership. My fellow members of Journalists against Corruption club – as I am now proud to call them – can help me bring this message to the people: counterfeiting is not a victimless crime. It is as corrupt as any other criminal activity. I extend a warm hand of friendship to the journalists of the anti-corruption club as they stand beside us in our “EU Stop fakes” campaign.