EU Commission Expands Power: Logic & Competitiveness Reshape? | Int'l Insight
With the new European Commission (hereinafter referred to as "the Commission") taking office, the European Union (EU) is set to welcome a new female head of competition affairs, heralding a new era of regulatory deals in Brussels.
Spanish Minister for Ecological Transition Teresa Ribera has been nominated as the Executive Vice-President responsible for competition and other affairs.
She has pledged that the EU's merger rules will "continuously evolve" to help European businesses expand and compete with global rivals.
In a recent interview, she stated that she will adopt a "gradual" reform approach to remove barriers to innovation and enhance the EU's competitiveness against the United States and China.
Notably, the former President of the European Central Bank (ECB), Mario Draghi, recently released a report titled "The Future Competitiveness of Europe," which sparked widespread discussion in Europe.
The core content of the report suggests that the EU needs to increase its additional investment by at least €750 billion to €800 billion annually.
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Draghi stated that compared to the major global economies like China and the US, the current EU economy lacks competitiveness and warned that if changes are not made in time, the EU will fall into a "slow agony."
However, there has been an ongoing debate between the EU and its member states about whether the EU should expand its powers or limit them.
Over the past five years, it can be observed that "the Commission's power has actually grown larger."
Professor Cui Hongjian from the School of Regional and Global Governance at Beijing Foreign Studies University and Director of the EU and Regional Development Research Center, said in an interview with First Financial Daily that over the past five years, with the dramatic changes in the EU's external environment, there has been a trend of "decentralization" within the EU to some extent.
"And in this context, they do indeed need a strong EU institution to some extent," Cui explained.
He hopes to cultivate "European Champions."
In recent years, the EU has been lacking an ambitious agenda to kickstart its long-stagnant productivity growth.
Over the past two decades, the European economy has grown slower than that of the United States.
Zhao Yongsheng, a researcher at the Institute of International Trade and Economic Cooperation at the University of International Business and Economics and a doctoral supervisor at the Sorbonne University in Paris, told First Financial Daily that the biggest problem for the EU and its member states is their inability to respond to new economic challenges, unable to introduce strong measures, and can only adopt defensive policies.
For example, in France, some French business people who are familiar with him are unhappy with the protectionist policies introduced domestically in the field of new energy vehicles, but they are also helpless.
A think-tank person visiting Brussels told the reporter that the most eye-catching and "hot" thing in the Brussels policy circle now is Draghi's report, also directly called the "Draghi Report."
Draghi's proposal to increase investment by €800 billion annually, accounting for 4.7% of the EU's Gross Domestic Product (GDP), is more than double the scale of the Marshall Plan.
Currently, as the new Commission team is about to be established, everyone is discussing the possibility of the EU increasing investment in the future.
Ribera currently refuses to disclose her own assessment results, but she said in an interview, "It is very clear that the amount of money needed to accelerate the transformation is very important, and we had better not make mistakes."
She said that the EU should be committed to motivating the "industrial ecosystem" around products (such as automobile manufacturing) to attract investment and better allocate the limited funds in the region to achieve a smooth green transformation.
She also said that the EU's regulatory approach to mergers may undergo controversial changes, and companies referred to as "European Champions" by some leaders will also emerge.
"There is a scale issue at the international level...
I think it may be necessary to improve it."
Ribera said that when considering how to expand the scale of European industry, she is in favor of using cross-border opportunities.
"We need to be more innovative in the way we establish a well-functioning European single market, where not only national and local interests can find a place, but also national and local interests can be aligned with European interests.
This will be one of the challenges: how can we establish this European understanding."
Draghi said that if Europe's fragmented stock exchanges, clearinghouses, and national securities laws are merged, Europe can release a deep, liquid financing pool of hundreds of billions of euros for investment and corporate growth.
Draghi suggested in the report to centralize market supervision, integrate capital markets, develop new common funding pools, unify and simplify industrial, competition, and trade regulations, and at the same time, more broadly promote closer cooperation in energy, innovation, and national security.
Draghi's suggestions provide a new term framework for the newly re-elected Commission President Ursula von der Leyen.
However, this may also mean that the Commission will further expand its powers, and compared to five years ago, the EU's external and internal environment has changed significantly.
For example, in many issues in the past, the "French-German" core could handle it, but now it is not possible, such as in security issues, there are obvious differences between France and Germany.
Cui Hongjian told First Financial Daily that the ability of major European countries to control the situation is declining.
"The current situation in Europe not only reflects their anxiety mentality but also reflects changes in their internal ways of getting along."
He said to the reporter that in the current context, it can be seen that five years ago, all parties had proposed that the Commission's power was too big, which would lead to more bureaucracy, but the trend over the past five years has been the opposite.
Over the past five years, the Commission's power has actually grown larger, because there is a contradiction between its subjective wishes and what actually happened.
Cui Hongjian explained that as an EU institution, the Commission has strong administrative efficiency, and the entire EU is in a state of constant crisis, which requires crisis management, so in the end, the Commission continues to expand its powers.
It can be seen that among the nominees for the Vice-President of the Commission, von der Leyen has handed over the most important positions related to growth in her team to candidates from Spain, Italy, and France.
Cui Hongjian said that the EU is now in this situation, which is related to the need for a redistribution process in globalization today.
"In the past, France and Germany could have the final say because all member states hoped that as long as France and Germany cooperated, they could get more benefits, because one is the economic engine and the other is the political guide.
If they can cooperate well, other EU member states can continue to benefit."
He explained that in the past two years, Germany's economy has been declining, and in fact, member states have started to calculate another account, that is, in the future, they may not be able to benefit from this model of cooperation between France and Germany.
Cui Hongjian analyzed that in the situation where the role of major European countries is declining, member states do indeed need a strong EU institution, and what is more noteworthy is that the major European countries are now emphasizing the so-called EU framework to some extent.
"Because the current situation for France and Germany is that they also have a certain degree of confidence decline, because they themselves are also emphasizing that even if they are major European countries like France and Germany, they are not considered major countries in the world."
He said, "So they can only unite.
Further transfer power to EU institutions."
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