Building on Europe's strengths

Building on Europe’s strengths Recommendations for action in the years ahead

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Content

Content Foreword ......................................................................................5 Drive integration forward, strengthen capacity for action .......................................................................................7 Bring Treaty of Lisbon into force rapidly ................................8 Move ahead judiciously with EU enlargement .....................9 Give priority to competitiveness ..........................................11 Intensify the drive for better regulation ................................12 Modernise the EU budget.........................................................13 Adapt the Lisbon strategy to meet future needs ..................14 Implement EU industry policy in a targeted way ................15 Promote entrepreneurship and SMEs ..................................16 Make more progress with education and research .......17 Promote transparency, transfer possibilities and mobility in education ...............................................................18 Continue the Bologna process ................................................19 Deepen the European research area .................................... 20 EIT – excellence in research, education and innovation 21 Prepare the new research framework programme ............ 22 Achieve the Barcelona objectives for research ................... 23 Complete the EU internal market/strengthen the euro ...................................................................................... 25 Complete the EU internal market ......................................... 26 Regulate fi nancial markets in a responsible manner ........ 27 Extend the euro zone ............................................................... 28 Adapt company law .................................................................. 29 Harmonise corporation tax .................................................... 30 Safeguard VAT revenues ......................................................... 31 Avoid class action in antitrust law and consumer protection .................................................................................. 32 Simplify consumer legislation without new burdens on companies ............................................................................ 33 Ensure legal certainty for defence and security procurement............................................................................... 34

Shape labour market and social policy for the future .. 35 Flexicurity: create security through flexibility ................... 36 Breathe life into employment strategy ................................ 37 »Green jobs«: realise the employment potential of environment and climate policy ....................................... 38 Make the European globalisation fund more effective .... 39 Further improve compatibility of work and private life .. 40 Further strengthen the social dialogue ................................41 Use open method of coordination ........................................ 42 Further strengthen diversity in the economy ..................... 43 CSR: pursue the success story ................................................ 44 Frame labour law in a way that promotes employment ............................................................................. 45 Inject more flexibility into working time ............................. 46 Avoid over-regulation of occupational pensions ................47 Place information and consultation for employees in a workable framework ............................................................. 48 Verify the need for new anti-discrimination rules ............ 49 Design practical health and safety rules ............................. 50 Guarantee worker mobility in the internal market .........51 Facilitate cross-border deployment of employees in other European countries ...................................................... 52 Allow work-related immigration from non-EU countries ..................................................................... 53 Ensure free movement – work against segregation tendencies ................................................................................... 54 Prevent protectionism under the cloak of worker protection .................................................................... 55

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Content

Underpin modern mobility and infrastructure/ strengthen the information society .................................. 57 Use PPP/concessions................................................................ 58 Interconnect the trans-European transport network more closely .............................................................. 59 Network transport operations intelligently/promote telematics and traffic management systems ....................... 60 Shape air transport more efficiently .................................... 61 Improve rail transport performance .................................... 62 Further modernise maritime transport ............................... 63 Drive the information society forward ................................ 64 Orient telecommunications regulation on growth ........... 65 Strengthen trust and security in the digital world ............ 66

Secure a sustainable supply of energy and raw materials ................................................................... 75 Create a European internal energy market ........................ 76 Secure the energy supply for the long term ........................ 77 Expand renewable energies ................................................... 78 Safeguard the functioning of international raw materials markets ............................................................. 79 Ensure access to raw materials in Germany and Europe ................................................................................ 80 Improve the availability of secondary raw materials ....... 81

Shape climate and environmental protection in a measured way ................................................................... 67 Give concrete form to emission trading rules .................... 68 Promote environment-friendly mobility ............................. 69 Ensure environmental protection and tax competitiveness ........................................................................ 70 Organise environment-oriented procurement transparently ............................................................................. 71 Regulate products coherently ................................................ 72 Place proportionate requirements on industrial installations ............................................................................... 73 Tighten and harmonise European chemicals law ..............74

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Strengthen the external dimension ................................... 83 Global trade liberalisation ...................................................... 84 Bilateral free-trade agreements ............................................. 85 Create coherence on issues linked to the social dimension of globalisation .......................................... 86 EU-Asia relations ...................................................................... 87 EU-Russia relations .................................................................. 88 EU-USA relations/transatlantic economic integration.... 89 EU-Mercosur relations ............................................................ 90 European neighbourhood: EU-Mediterranean relations 91 European neighbourhood: the eastern dimension ............ 92 EU development policy ............................................................ 93

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Foreword

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Foreword In times of serious fi nancial and economic crisis, a united Europe has even more reason to reflect on its foundations and its achievements. These are and result from the shared values based on democracy and human rights, the principles of the social market economy and free, undistorted competition.

For companies, not least in Germany, the large EU internal market without national frontiers is a source of reliable and competitively priced supplies, a crucial sales market, an important location of investments as well as a stable basis for global activities. For consumers, the internal market offers a wide range of goods and services of high quality at an attractive price.

Germany is closely intertwined with its EU partners: 59.5 % of our imports and 64.7 % of our exports are traded with our EU partner countries. At a figure of 447.5 billion euros, around 55 % of all German foreign investments are deployed in the EU. The European internal market underpins growth and income as well as around 5 million jobs in Germany.

Europe works to the benefit of businesses, workers and consumers. That should not end at the EU’s borders. The goal must be to open markets around the world from a strong European base, to put in place transparent rules as well as to promote economic and social development. Where free trade holds sway, people are the winners. Germany is the best example of this. The internationally competitive products and services supplied by German companies make us the world’s export champion. They make a decisive contribution to the performance of our social market economy. They are the reason why we can maintain and even increase our share on world markets despite increasing competition from Asia and other emerging regions of the world. That is a success for Germany, for the German economy in Europe. It would be unimaginable without an open and competitive European Union capable of action.

The past teaches us that trade barriers or subsidies to industries that are no longer competitive, along with attempts by the state to run businesses, block the route to the future. Such state intervention tends to exacerbate a crisis rather than shorten it, reduces prosperity, and destroys more jobs in the long term than it saves in the short term.

There are good reasons to have confidence that Europe can overcome the current economic and fi nancial crisis. Europe can recover its full economic strength, which is also the indispensable basis for social balance. To that end, we must reflect on essentials: a functioning internal market, a common currency with balanced budgets, an internationally attractive legal framework, global free trade as well as freedom for its business people and citizens to take responsible initiatives. That is what must be at the heart of concerns in Brussels and Berlin in the coming years. That is foundation and achievement at the same time.

Prof. Dr.-Ing. Hans-Peter Keitel President Federation of German Industries (BDI)

Dr. sc. techn. Dieter Hundt President BDA | Confederation of German Employers’ Associations

Drive integration forward, strengthen capacity for action Recommendations for action in the years ahead

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Bring Treaty of Lisbon into force rapidly

Bring Treaty of Lisbon into force rapidly What is at stake?

What needs to be done?

In December 2007 heads of state and government solemnly signed the »Treaty of Lisbon« on EU reform. Since then, 23 member states have fully ratified the treaty. In Germany, the Federal Constitutional Court is currently deliberating on several complaints. The German president has not yet lodged the ratification document. The same applies for Poland. The Czech Republic has not yet ratified.

Following a fi rst rejection by voters in 2008, Ireland plans to hold a second referendum this coming autumn.

· The Treaty of Lisbon must now enter into force rapidly.

Where are we now?

Thanks to a series of modifications, the Treaty of Lisbon improves the capacity for action of a European Union which has now grown to 27 member states. These include a better demarcation of competences between the European Union and the member states, e.g. through the introduction of competence categories and a right for national parliaments to lodge complaints. In addition, the Council of Ministers will in future decide more often on the principle of majority voting. Despite criticism of many details, these are all compelling reasons for the Treaty of Lisbon to enter into force rapidly. It improves the European Union’s capacity for action decisively and thereby creates a more reliable framework for the further development of businesses in the EU internal market.

· The EU should focus on meeting the current challenges, such as enhancing competitiveness and climate protection. · Individual member states must not be able to prevent the EU from safeguarding its long-term capacity for action by agreeing treaty amendments. That would stand the point of the integration process on its head.

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Move ahead judiciously with EU enlargement

Move ahead judiciously with EU enlargement What is at stake?

What needs to be done?

The European Commission is pursuing an appropriately differentiated strategy based on »consolidation«, »conditionality« and »communication« with a view to enabling EU enlargement taking account of its absorption capacity.

· »Enhanced monitoring« for Bulgaria and Romania should be kept in place. The European Commission should press for complete implementation of all undertakings entered into.

Where are we now?

The 2004 EU accessions have been implemented on the ground in political, economic and administrative terms subject to agreed transitional arrangements (free movement of workers, environment, energy, transport, etc.).

Bulgaria and Romania acceded to the EU on 1 January 2007 with application of previously agreed safeguard clauses. Complete implementation of all undertakings is still a long way off.

Turkey and Croatia have been negotiating EU accession since October 2005. The talks are at an early stage.

The western Balkan countries have a clear prospect of EU membership based on their individual progress. The European Commission rightly paints a very differentiated picture of the situation in the region.

· The European enlargement strategy should be moved forward judiciously. Technical timetables which only reflect political expectations rather than solid progress in the negotiations and implementation of undertakings in the countries concerned should be avoided. · The current accession negotiations should continue on the basis of the principles and processes agreed in the negotiating mandates.

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Give priority to competitiveness Recommendations for action in the years ahead

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Intensify the drive for better regulation

Intensify the drive for better regulation What is at stake?

What needs to be done?

Better regulation and a comprehensive and ongoing dismantling of red tape at national and European level are indispensable in order to strengthen the conditions for companies. What they need is a simple, coherent and stable legal framework in order to be able to prosper on increasingly global markets.

· Early involvement of businesses in impact assessment and estimation of administrative costs.

Better regulation / less red tape is one of the EU’s political priorities. The purpose of the »Action programme for reducing administrative burdens« published in 2007 is to measure the costs of bureaucracy caused by EU legislative acts and to cut them by 25 % by 2012. To that end, the European Commission has set up a »High Level Group« (HLG) of independent stakeholders whose task is to reduce administrative burdens in the EU caused by legal provisions. Furthermore, it has initiated measures to simplify current legal provisions and to enhance impact assessment in the legislative procedure.

· Rapid and consistent implementation of the HLG’s proposals as well as examination of other areas of regulation for excessive administrative burdens.

Where are we now?

The EU’s ambitious plans are beginning to produce tangible results. According to figures from the European Commission, the measures taken have reduced the acquis communautaire by around 10 % through simplification and codification. Altogether, more than 30 billion euros can be saved. Nevertheless, there are still unnecessary delays in measurement and reduction of administrative burdens in many areas. Also crucial is the extent to which the HLG’s proposals are actually implemented. Rapid implementation coupled with a widening of the HLG’s powers would send an important signal regarding the seriousness of efforts.

· Ongoing monitoring of progress in reduction of administrative burdens through the setting of interim targets and progress reports.

· Possibilities for Europe-wide legal protection should not be weakened, such as the envisaged increase in the EC threshold values for awarding public contracts would entail.

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Modernise the EU budget

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Modernise the EU budget What is at stake?

What needs to be done?

The budget is a central policy instrument of the EU. In light of growing challenges, the EU budget needs to be thoroughly modernised. The decisive lever for more transparency and fairness in the fi nancing mechanism should be sought above all in a comprehensive reform on the expenditure side. Areas ripe for reform are structural policy and in particular agricultural policy.

· The current budget volume is appropriate. An increase in the budget to more than 1 % of EU gross national income is not necessary. · The EU budget should be oriented towards adding perceptible value in terms of growth, employment and competitiveness via a restructuring and concentration of resources. Research/development/innovation and education/training should receive particular attention.

Where are we now?

European Commission, European Parliament and Council have rightly agreed to hold a far-reaching debate on reform of the EU budget. The essential aim for a modern EU budget continues to be that principles for revenues and expenditures as well as targeted resource allocation must be enshrined in the EU fi nancial perspectives for 2014 and subsequent years.

· Efficiency reserves in structural policy should be used to the full. Higher co-financing rates can contribute to more efficient deployment of EU structural funds, since free-rider effects would be avoided and the individual responsibility of regions/member states would be promoted. · A transparent and simple correction mechanism should ensure that no EU member state has to make disproportionate net contributions. · Introduction of a European tax is unnecessary.

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Adapt the Lisbon strategy to meet future needs

Adapt the Lisbon strategy to meet future needs What is at stake?

What needs to be done?

The overall goal of the »strategy for growth and jobs« agreed in March 2000 in Lisbon was to develop the EU into the most competitive and dynamic knowledge-based economic region in the world by 2010. To that end, an »open method of coordination« between member states was agreed which is closely flanked by the European Commission. Following a sobering mid-term review, the EU spring summit in 2005 decided to simplify and reorient the strategy. In addition, »integrated guidelines« and »national progress reports« were introduced. A continuation of the Lisbon strategy beyond 2010 is currently being discussed in the European Council.

· It is essential to continue a strategy for growth and jobs after 2010.

Where are we now?

One objective of the Lisbon strategy is to increase expenditure on research and development across Europe to 3 % of GDP by 2010. Nevertheless, the quota has not been met since 2000. Only a few countries such as Finland and Sweden have achieved the 3 % target. The objective of a 70 % employment rate by 2010 also looks as if it will not be achieved, especially against the background of the current economic and fi nancial crisis. Proposals from the European Commission such as the revision of the emission trading directive or the anti-discrimination directive harm the competitiveness of companies and thwart the objectives of the Lisbon strategy. Transposition deficits must be reduced with determination.

· Member states and EU institutions alike have a duty to promote competitiveness, in particular through innovation. It is the task of the European Commission to formulate its legislative proposals accordingly. Member states need to carry through structural reforms more rapidly and with a greater sense of purpose. · Efficiency and simplicity of the post-2010 strategy must be considerably improved: procedures need to be simplified, national reporting obligations need to be reduced.

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Implement EU industry policy in a targeted way

Implement EU industry policy in a targeted way What is at stake?

What needs to be done?

German industry accounts for 26.8 % of the gross value creation of all European industry. A policy that puts in place the right framework conditions at European level for a productive and internationally competitive industry is of the greatest interest for Germany. A sensible industry policy does not involve the state becoming active in businesses itself or subsidising uncompetitive sectors. In order to promote growth and jobs, it is more important to create attractive framework conditions for innovation and production.

· The European Commission and European Parliament should make greater efforts to develop an industryfriendly EU economic policy based on market economy principles.

Where are we now?

The European Commission, in close liaison with industry, has developed very promising sector-specific initiatives including Electra (electrical and electronics industry), Engine Europe (mechanical engineering), Cars 21 (automotive industry) or the »High Level Group on the competitiveness of the chemical industry«. These initiatives enjoy industry’s full support. Unfortunately, the results of these sector-specific initiatives – and of the »High Level Group on competitiveness, energy and environment« – have so far received only limited or no consideration in concrete legislative procedures. Despite paying tribute to greater competitiveness (»Lisbon strategy«), the European Commission is pushing ahead with numerous legislative initiatives which contradict this aim. Revision of the emission trading directive, the regulation on CO2 and cars, revision of the EU waste equipment regulation, the anti-discrimination directive as well as the European Commission’s initiatives for introduction of collective redress are so many examples which will have unnecessary or disproportionate consequences for the competitiveness of EU industry. The role of the European Parliament has remained ambivalent: some of the European Commission’s initiatives have been made more stringent, some have been modified to take greater account of competitiveness.

· The aim should be to have a stronger coherence between economic policy, on the one hand, and an ambitious environment and climate policy, on the other hand. · EU regulation, in particular in the areas of environmental, climate, consumer and social protection, should not contain new and unnecessary or disproportionate burdens on businesses. · The Lisbon strategy, the »better regulation« initiative together with results of sectoral initiatives and high level groups must be taken into greater account in concrete legislative proposals.

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Promote entrepreneurship and SMEs

Promote entrepreneurship and SMEs What is at stake?

What needs to be done?

The European level plays an ever greater role for industrial SMEs. The legal climate for companies is increasingly determined by the EU. REACH regulation, anti-discrimination directives or services directive are just a few examples of the direct influence that European rules have on the competitive environment of SMEs.

· EU and member states must apply the »think small first« approach consistently and over the long term.

SME representatives at EU level (SME envoy and chamber of commerce) need to be strengthened. · Implementation of the SBA in EU and member states must be monitored and rendered comparable through incorporation in the Lisbon strategy.

Where are we now?

With the institution of »SME envoys«, »chamber of commerce«, »business policy group« and the »SME advisory committee«, the European Commission wants to encourage policy-makers to think through situations from the angle of SMEs in all their fields of activity. In the »Small Business Act« (SBA), EU and member states undertake to implement »think small fi rst« as the guiding principle of all legislation at European and national level. This could fi nally help to translate this approach from theory into practice. The SME test defi ned in the SBA is an important instrument which should now be applied consistently with transparent and efficient involvement of companies and their representatives.

· SME aspects should be taken into consideration particularly in the new climate policy, energy and raw materials policy, in labour and social legislation as well as in consumer policy. · EU and member states must continue their efforts to reduce bureaucracy and administrative costs; in particular, effective impact assessment for new EU legislation taking particular account of SMEs (»SME test«) is important. · The EU should facilitate the cross-border activities of small and medium enterprises, e.g. through introduction of a legal statute for a »European private company«.

Make more progress with education and research Recommendations for action in the years ahead

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Promote transparency, transfer possibilities and mobility in education

Promote transparency, transfer possibilities and mobility in education What is at stake?

What needs to be done?

Priorities for European education policy are improved transparency and transfer possibilities in education systems as well as an increase in mobility. An important instrument for this is the European Qualifications Framework (EQF). Qualifications from all areas of education should in future be classified – on a voluntary basis – in the eight levels of EQF. The basis for classification is not constituted by input factors such as place, duration or intensity of learning, but exclusively on the level of acquired skills (outcome). This means that it is also possible to classify and recognise qualifications acquired informally or non-formally – a central element for businesses. In vocational training, EQF is set to be complemented by the European credit point system in vocational education and training (ECVET) which will facilitate recognition of full or partial qualifications acquired in the various education systems. A European quality assurance reference framework (EQARF) for vocational training is supposed to put in place uniform quality standards in very heterogeneous European vocational training systems.

· Implementation of EQF is the task of member states.

EQF can only function if the outcome approach is pursued consistently, i.e. qualifications are classified exclusively on the basis of acquired skills. The EU can accompany this process and give advice.

Where are we now?

Under an EU recommendation, the member states are invited to link their education systems to EQF by 2010 and to ensure that every qualification diploma comprises a reference to the corresponding EQF level by 2012. To do this, most member states are developing national qualification frameworks. The proposals for a European credit point system in vocational education and training and for development of a European quality assurance reference framework still have to be approved in the Council of Education Ministers. Implementation of ECVET is still unclear and questionable particularly with respect to the award of credit points. The workability is currently being tested in European projects. Problematic is the absence of compatibility with ECTS, the credit point system for universities.

· The long-term goal for implementation and further development of ECVET must be to achieve compatibility with ECTS in order to allow transfers between the systems. · For implementation of EQARF, it is of decisive importance to recognise that different vocational training systems require different quality instruments and that a uniform system is not possible, only common principles. It is essential to avoid creating additional bureaucracy, which could discourage SMEs – important players in German vocational training – from offering training.

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Continue the Bologna process

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Continue the Bologna process What is at stake?

What needs to be done?

Creation of a European higher education area, as agreed with signature of the »Bologna declaration« in 1999, is an important step for improving the quality of higher education in Europe. The Bologna process pursues three main objectives: promotion of mobility, of international competitiveness and of employability. The introduction of graded study cycles promotes a targeted and streamlined study, guarantees the international comparability of diplomas and at the same time leaves sufficient leeway for individual higher education institutions to build their profi les.

· Against the background of demographic change, over the next decade a larger share of an age cohort will attend a higher education institution than in the past.

New target groups for higher education and further education need to be identified.

Where are we now?

2010 was originally set as the target year for the Bologna process. However, by now it is clear that this will only be a staging post to be followed by others. At European level, an intensive discussion started in 2008 on the issue of how the Bologna process should develop after 2010. In the relevant committees, there is agreement that there are still deficits in implementation of the Bologna structures, which require further work. Priorities here are the issues of mobility, learning outcome orientation and qualification framework.

· This must entail a clear opening of higher education institutions also for people with vocational qualifications with no entitlement to a higher education place.

Genuine opening of access to higher education for people with vocational qualifications will be achieved if a vocational training is sufficient as a formal condition and further selection is left in the hands of higher education institutions. In this connection, crediting vocational skills for higher education courses is an important instrument. An important aim continues to be improvement of student employability and a strengthening of course relevance on the labour market. This calls for intensive cooperation between higher education institutions and businesses, which should be further extended in the future. In this area, companies offer their assistance and their commitment in all areas. · The positive assessment of the Bologna process in countries outside Europe should be used more than in the past for active promotion of Europe as a location for study and research, and for the recruitment of international students.

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Deepen the European research area

Deepen the European research area What is at stake?

What needs to be done?

The European research area (ERA) is a core element of the Lisbon strategy. ERA is supposed to facilitate the free movement of researchers, and to achieve effective exchange of knowledge as well as optimisation of European, national and regional research programmes. Another objective is to build a strong network of researchers worldwide.

· ERA should be organised as an internal market for education and research, in order to encourage excellence in competition. European Commission and member states must do everything to leave research institutions their autonomy. This presupposes competitive financing, also where public resources are involved. · If financing is organised in competition, institutions can also be given complete staffing and pay autonomy.

Where are we now?

In its key figures report 2008 on research, technology and competitiveness, the European Commission explains that networking of actors and programmes in ERA is making progress. With the »Ljubljana process« decided by the Council in early 2008, deficits in selected areas are to be made good. Better social security rules, competition-based and cross-border recruitment, portability of fi nancing, employment and working conditions as well as education are intended to further promote researcher mobility. Large European research infrastructures should be given a Community legislative framework. Recommendations from the European Commission on how to deal with intellectual property in the case of knowledge transfer activities as well as a code of practice for universities and other public research institutions are on the table and should facilitate cooperation between academia and business. For joint programme planning, the Council has called on member states to determine themes and procedures.

· Germany has introduced the research premium to strengthen cooperation between companies and research institutions. EU member states should follow this example. The research premium for cross-border projects should be paid by the EU. · In the case of a combination with teaching tasks (universities), public resources should be awarded to students via »education vouchers« which they can transfer to the university of their choice. It must be possible to exchange the vouchers at any European university.

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths EIT – excellence in research, education and innovation

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EIT – excellence in research, education and innovation What is at stake?

What needs to be done?

The »European Institute for Innovation and Technology« (EIT) serves to demonstrate excellence in science, technology and education, and to strengthen Europe’s innovation capacity. Excellent workers will be won for scientific education, research and innovation. EIT should cooperate with companies across Europe on development and deployment of knowledge and research.

· The EU has to place EIT on a secure financial footing with additional budget resources, in order to encourage the participation of private investors.

Where are we now?

· The bureaucratic effort involved in submitting applications for and organising the work of KICs should be kept to a minimum in order to facilitate potential partnerships.

With the decision to establish EIT, the choice of Budapest as administrative headquarters and nomination of the governing board, the legal conditions for the construction of EIT have been in place since July 2008. In early 2009 the governing board is preparing the fi rst tender notices for creation of »Knowledge and Innovation Communities« (KIC), bringing together universities, research institutions and companies in the thematic areas of climate change mitigation, sustainable energy provision and future information and communication society. In early 2010 the selected KICs will start their work, in which non-EU research partners can also participate. The European Commission makes 25 % of the necessary fi nancial resources available. The other 75 % will come from the 7th EU research framework programme, the EU CIP framework programme, the EU structural fund as well as private resources from companies, foundations, venture capitalists, investment banks or member states. The EIT governing board is due to present a »Strategic Innovation Agenda« (SIA) to the European Commission by 30 June 2011.

· The political independence of EIT should be ensured so that the choice of themes under the Strategic Innovation Agenda and the work of the KICs can be aligned on innovation needs on the market.

· Only the best (five to ten) innovation-oriented networks of European universities, research institutions and companies should be distinguished as KICs with the label »EIT«. The possibility of promotion and relegation should generate a European Innovation Champions League.

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Prepare the new research framework programme

Prepare the new research framework programme What is at stake?

What needs to be done?

The EU promotes research, development and innovation with multiannual »research framework programmes« (RFP) in order to increase Europe’s innovation capacity and competitiveness. The current 7th research framework programme runs until 2013 with a support volume of around 50 billion euros. For the subsequent period, a new 8th RFP is to be prepared on the basis of current experience.

· The EU must deploy more resources for research, development and innovation if the Barcelona objective – 3 % of GDP spent on research and development – is to be achieved.

Where are we now?

Industry currently inputs its themes into the tender calls issued under the technology programmes in the 7th research framework programme via the »European technology platforms« (ETP). In addition, six »joint technology initiatives« (JTI) have so far been developed as publicprivate partnerships, which also comprise research resources from other EU programmes and national budgets.

A robust mid-term review will be drawn up halfway through the programming period in 2010.

· On the basis of a mid-term review of the 7th research framework programme, themes and promotion incentives for the follow-on programme should be designed.

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Achieve the Barcelona objectives for research

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Achieve the Barcelona objectives for research What is at stake?

What needs to be done?

With the Lisbon strategy, the EU is pursing the goal of making Europe the most dynamic knowledge-based region in the world. A concrete element for the growth strategy is the EU’s target of increasing expenditure on research and development (R&D) to 3 % of GDP by 2010. One third should come from the state, two thirds from companies.

· As an important EU member state, Germany must support the 3 % target to the best of its ability.

Where are we now?

Recent interim reports on science, technology and competitiveness show that progress on R&D investments in the EU and on realisation of the »European research area« between 2000 and 2006 was still too little. The number of researchers active in Europe is increasing and the EU has become more attractive for foreign researchers and for private R&D investments. Yet, despite higher research investments in many member states and better efficiency in their research systems, the EU is still a long way from reaching the target of 3 % of GDP invested in R&D. R&D intensity (R&D expenditure as a percentage of GDP) in EU-27 has stagnated at 1.84 %. A continuing low level of R&D investments by companies and an industrial landscape marked by a smaller high-tech sector than in the USA are holding back progress in the EU. The 3 % target is also a long way off in Germany. In 2007 the share of R&D in GDP was 2.54 %, with 1.77 % provided by the business sector

· Proposals from the European Commission and German research ministry on introduction of tax incentives for R&D promotion should be implemented.

Measures to that end should include: inclusion of companies of all sizes without distinction, no upper limit, no disadvantage to the target project promotion with a higher level of promotion and higher application and reporting requirements, as well as direct tax-deductibility of expenditure.

Complete the EU internal market/strengthen the euro Recommendations for action in the years ahead

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Complete the EU internal market

Complete the EU internal market What is at stake?

What needs to be done?

Completion of the EU internal market is a long-haul task.

It is still ongoing, even more than 20 years after the »Single European Act« and 50 years after signature of the treaties of Rome. A fully functioning EU market is of particularly great importance for the German economy. Germany trades 59.5 % of its imports and 64.7 % of its exports with our EU partner countries. At a figure of 447.5 billion euros, around 55 % of all German foreign investments are deployed in the EU. The European internal market underpins growth and income as well as around 5 million jobs in Germany. For many German companies, the EU internal market without national frontiers is a source of reliable and competitively priced supplies, a crucial sales market, an important location of investments as well as a stable basis for global activities.

· EU and member states are still encouraged to create a simple, coherent and stable regulatory environment. It should impose as few burdens on companies as possible, and promote business activity rather than hemming it in.

Where are we now?

A smoothly functioning EU internal market is rightly recognised as a contribution to the growth and jobs strategy. The European Commission is undoubtedly pursuing the goal of implementing the four fundamental freedoms (goods, persons, services and capital) through legislation and hence also strengthening Europe’s international competitiveness. Another positive element is the effort to bring about »better regulation«, in particular the aim of reducing the cost of bureaucracy by 25 % by 2012. A critical element is the tendency in Brussels to pursue consumer, environment and social projects through ever more regulation.

· EU law should be transposed promptly and without national »gold-plating«. · The services directive should be implemented within the deadline, and EU and member states should be encouraged to carry through far-reaching liberalisation in the booming services sector. · Community strategies for completion of the internal market are not enough on their own. The member states also continue to have a duty, inter alia to open markets further with application of appropriate verification mechanisms.

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Regulate financial markets in a responsible manner

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Regulate financial markets in a responsible manner What is at stake?

What needs to be done?

The most recent developments on international fi nancial markets are dramatic. The fi nancial market crisis has serious consequences for the economy. In order to restore and secure long-term stability in the system, there needs to be a better balance between market efficiency, competitiveness and risk prevention. A new regulatory framework must change the incentives system on fi nancial markets to the extent that the current situation is corrected and undesirable developments are prevented in future. The aim should be to identify international/global solutions wherever possible.

· Current own capital rules for banks should be brought into line with increased risks. The procyclical nature of the existing supervision regime needs to be reduced.

Coordination of financial supervision must be intensified across Europe and worldwide.

Where are we now?

· More transparency and more quality on the ratings market are essential. To this end, internationally uniform or at least comparable authorisation and supervision procedures are needed to monitor the activities of rating agencies. In particular, it is important to prevent any conflict of interests within agencies.

The EU extraordinary summit on 22 February 2009 marked out a common line for improving the fi nancial system. The European Commission has presented proposals for central projects, for instance on authorisation and supervision of rating agencies, on tightening up own capital rules for banks as well as on more strongly coordinated European fi nancial supervision. A consultation of market participants has been carried out on regulation of hedge funds.

· A particular role in supervision of financial markets should be played by the International Monetary Fund.

In order to come to grips better with tensions on, international financial markets in future, there needs to be an efficient and global »early warning system« on financial markets.

· Financial investors must organise their business more transparently. It would be desirable to create an international credit register which gives clarity as to the indebtedness of financial investors. In addition, effective measures against a »stalking« of investors by issuers as well as timely disclosure of short selling are necessary.

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Extend the euro zone

Extend the euro zone What is at stake?

What needs to be done?

The euro zone currently has 16 members. The common currency is proving to be a stabilising factor in the fi nancial market and economic crisis. At the same time, however, national efforts to consolidate state fi nances are flagging. Trade imbalances in the euro zone are increasing, as is pressure on the European Central Bank.

· The flexibility provided for in the stability and growth pact should be fully exploited. The underlying idea of determined budget consolidation must not be given up. The consolidation route must be maintained through the economic cycle and the current economic and financial crisis.

Where are we now?

Ten years of the euro – a success story from which Germany has benefited to a particular extent. The stability of the euro internally and externally is an important condition for growth and jobs. Introduction of the euro in more EU states would allow the advantages of the common market to come to the fore even more clearly. With the disappearance of currency diversity and the associated adjustment requirements would make it possible to exploit globalisation possibilities even better. Whether and to what extent this will be the case depends in a decisive measure on the willingness of participants to accept the framework conditions and rules of the game in full. Increasingly, the rules of the »stability and growth pact« and the independence of ECB are felt to be disruptive or are questioned.

· All attempts to hollow out the independence of the European Central Bank directly or under cover must be firmly resisted. An independent central bank offers a guarantee for a stability-oriented monetary policy. · Complete compliance with the nominal convergence criteria, measured against inflation, interest rates and public debt, must continue to be a strict condition for access to the monetary union and the euro. They are a necessary but by no means sufficient condition for the stability of the monetary union. · The high trade imbalances in the euro zone must be reduced with determination. They are also an expression of different levels of competitiveness in the context of fixed monetary relations. They conceal the danger of an increase in protectionism.

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Adapt company law

Adapt company law What is at stake?

What needs to be done?

The internal market should guarantee entrepreneurial freedom without national barriers. For its completion, the instruments contained in existing company law need to be supplemented. The European private company (SPE) is an important element for this, along with the still pending directive on transfer of seat. SPE should make it possible to found companies with the same legal form in several member states. It will take its place alongside national legal forms such as GmbH, SARL or BV. For company start-ups as well as SMEs and larger corporate groups, SPE offers considerable potential for simplification as compared with existing instruments.

· Work on SPE should be completed rapidly.

Where are we now?

At the urging of the European Parliament, in mid-2008 the European Commission presented a draft regulation which entered into the legislative process in early 2009. The text essentially covers practical requirements. It looks unlikely that SPE will be available by 1 July 2010 as originally envisaged by the European Commission. Whereas the European Parliament adopted the mergers directive in the last legislative period and set some simplifying measures in train, by contrast a directive on transfer of seat still has to be presented.

· The German government should take a constructive stance on SPE as a whole. · The European Commission should also present a directive for transfer of seat. · Further changes to company law should consistently expand the scope for entrepreneurial action and dismantle remaining burdens.

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Harmonise corporation tax

Harmonise corporation tax What is at stake?

What needs to be done?

Parallel national tax systems can lead to distortion of competition and impediments to cross-border activities due to double taxation or no taxation. Hence, the tax framework for cross-border transactions should be harmonised or at least coordinated. The European Commission has already adopted several directives in the area of direct taxation, including a directive on the treatment of cross-border interest and royalties between associated companies (2003/49/ EC). Furthermore, the introduction of a common consolidated corporate tax base (CCCTB) is planned for groups that operate across borders. This should specify all the necessary technical rules for uniform profit determination as well as for a subsequent consolidation and allocation of the tax base.

· In essence, national tax rules concerning cross-border business transactions between companies should be further harmonised or coordinated in order to make the internal market more competitive.

Where are we now?

A draft revision of the interest and royalties directive is on the Council’s table. The European public limited company (SE) and the European cooperative (SCE) should be integrated in the directive. Moreover, there is a clause stipulating that advantages should only be applicable if the interest and royalty revenues are actually taxed in the member state where they are collected. A planned report by the European Commission is also expected to contain improvement proposals. The text of the directive on the introduction of a common consolidated corporate tax base (CCCTB) has been completed by the European Commission, but its adoption has been deferred until all member states have ratified the treaty of Lisbon. Publication cannot be expected before the end of 2009.

· The Council should rapidly reach agreement on the draft directive which has already been presented. · In order to improve cross-border payments of interest and royalties, a revision of the interest and royalties directive is overdue. The share ownership rate should be reduced to 10 % and indirect holdings should also be eligible. · Introduction of CCCTB seems to be advantageous for all economic stakeholders and should therefore be kept in focus.

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Safeguard VAT revenues

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Safeguard VAT revenues What is at stake?

What needs to be done?

At the end of 2008 the European Commission presented a coordinated strategy for combating VAT fraud. This concentrates on »conventional« measures and embraces in the fi rst instance short-term measures which are to be proposed in detail in three packages of measures. The existing system has proved its worth to a large extent. For that reason, the European Commission’s approach which seeks to improve the Council Directive on the common system of VAT (2006/112/EC) on a selective basis through conventional measures is welcome. All measures should especially target prevention of fraud cases and not impose burdens on companies.

· The most effective means of combating fraud is not to be found in a far-reaching change to the system defined in the directive 2006/112/EC, but in selective improvements to this directive through conventional measures.

Where are we now?

The European Commission has already published a few concrete directive amendment proposals. Most proposals are selective improvements to the VAT system. However, some modifications must give rise to concern. Thus, the introduction of joint and several liability for declaration errors in the framework of intra-Community deliveries constitutes a considerable risk for companies. In particular, the plan to make the supplier liable for the VAT in the destination member state also in the case of simple declaration errors deserves criticism. This seems to jeopardise the principle of proportionality and legal certainty for companies.

· A comprehensive overhaul of the VAT system (e.g. through introduction of a general reverse charge system) should be rejected. · Consideration should also be given to non-legislative possibilities to combat fraud, e.g. improved cooperation between financial administrations and taxpayers. · The use of dynamic progress in the area of information technology as well as electronic tax inspections should be further analysed. · Companies should not be burdened with additional obligations and/or risks.

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Avoid class action in antitrust law and consumer protection

Avoid class action in antitrust law and consumer protection What is at stake?

What needs to be done?

Thought is being given at European level to strengthening the civil law aspects of antitrust liability law in order to compensate for damage caused by cartels. To this end, there is a green paper and, since April 2008, a white paper. »DG Competition« is pursuing the goal of creating greater incentives for damages claims and building up »private enforcement« as a second pillar alongside prosecution of cartels by the authorities. Collective enforcement of law (class actions) is to be strengthened and the burden of proof is to be facilitated for plaintiffs. Parallel developments are under way in »DG Health and Consumer Protection«. At the end of 2008 it published a green paper on consumer collective redress, in which it also discusses the introduction of representative action, group action or a test case mechanism for effective collective redress in courts.

· Due to existing uncertainties, the European Commission still has to prove unambiguously the legal basis for far-reaching changes in member states’ civil law and civil procedural law.

Where are we now?

It is to be feared that the introduction of collective redress will become an open door for abusive rules and practices.

The US legal system offers an illustration here. Even with extremely high damages payments, very little fi nds its way to the victims. A large portion of the money goes to pay lawyers’ fees and administration of payment procedures.

Europe-wide harmonisation of collective redress instruments is not necessary either for consumer complaints or for antitrust law.

· It is the task of national damages legislation and codes of procedure to stipulate the conditions needed for compensation of damage including the arrangements for enforcement. In the case of deficits, these should be addressed at the initiative of the Member States, as has happened in Germany. · The danger of excessive compensation, e.g. through punitive damages and exaggerated consumer protection rights should be avoided. · In the end, procedural law must maintain the balance between effective legal protection and appropriate defence. It should not lead to inappropriate disadvantages for a given party.

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Simplify consumer legislation without new burdens on companies

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Simplify consumer legislation without new burdens on companies What is at stake?

What needs to be done?

The existing consumer protection directives on contract law lack a uniform terminology. They enable member states to create more consumer protection in the same area. The draft directive on consumer rights seeks to merge the issues of sale of consumer goods, unfair contract terms, distance selling and door-to-door selling. The proposal sets out twenty defi nitions from »consumer« through »trader«, »business premises« and »professional diligence« to »ancillary contract«. It creates new information obligations, guarantee rules and a binding list of unfair contract terms. However, full harmonisation should rule out further national consumer protection in the same area.

· The EU should make the existing directives workable in practice through full harmonisation, but not create a higher level of consumer protection.

Where are we now?

Simplification of EU consumer contract law with defi nitions for »consumer« and »trader« as well as a uniform withdrawal rights creates more clarity and legal certainty.

Rules for repair, replacement return and price reduction in product defect law in line with the applicable sale of consumer goods directive are useful. All other additions on representation, rescission and damages overburden national civil law and make it more difficult to apply. Rules on collective redress do not belong in a draft directive on contract law. Parliaments are responsible for legislating civil law. Additions to a binding list of banned clauses should not be made by a European Commission committee.

· Binding lists of bans for consumer contracts as well as European damages actions should be deleted. They interfere in the overall architecture of civil law systems and make it more difficult to draft and implement contracts. If general representation, rescission and damages provisions for individual areas of consumer law are amended, the application of national law will be more difficult. · Initiatives to introduce collective redress through the planned directive should be rejected. They demolish the framework of EU law and are inappropriate. · Civil law is a matter for parliaments. Additions to a binding list of banned contract terms must not be decided in a comitology procedure.

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Ensure legal certainty for defence and security procurement

Ensure legal certainty for defence and security procurement What is at stake?

What needs to be done?

In early 2009 the EU Parliament approved the EU defence package. It encompasses a sector-specific directive for certain sensitive procurement operations in the areas of defence and security. After it became clear that many member states were circumventing the general public procurement directives in the case of defence and security contracts and hence impeding the internal market, the new directive puts in place a special set of rules. It sets out to do greater justice to the specific requirements of this particularly sensitive market segment, inter alia with provisions on how to deal with confidential data and security of supply. Furthermore the defence package comprises a directive on intra-EU transfers of defence products which seeks to adapt and simplify export conditions for these products in the EU. The package also comprises an accompanying communication from the European Commission.

· The two new directives should be implemented in due time.

Where are we now?

The new procurement directive provides for effective legal remedies in the case of infringement of EU law, as is the case for awards in the civil sector. This is important to guarantee unimpeded market access in other EU member states. It is welcome that the scope of the new directive also covers non-military procurement in the area of homeland security, whereby exceptions are also possible for specifically sensitive awards, e.g. in the secret service. It is also positive that the new procurement directive expressly addresses the important item of recognition of »self-cleaning«. Companies which are convicted abroad, for instance, must be able to regain their reliability by demonstrating an effective »self-cleaning«. Unfortunate are provisions on the award of subcontracts which generate a disproportionate amount of red tape. Finally it is of crucial importance to combat »offset transactions« which are stipulated as a condition for the award of a contract and often damage competition.

· Attention must be paid to ensure that the exemption provisions in the new procurement directive are not applied excessively in member states which have hitherto walled off their markets in practice. · The battle against »offset« continues to be particularly important. The European Commission’s communication rightly points out that this exemption provision should be applied restrictively. · The provisions on award of subcontracts are problematic and should therefore be implemented very restrictively. · The European Commission should safeguard that the procedure of self-cleaning is recognised throughout the EU.

Shape labour market and social policy for the future Recommendations for action in the years ahead

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Flexicurity: create security through flexibility

Flexicurity: create security through flexibility What is at stake?

What needs to be done?

Given the increasingly global nature of competition and in particular against the background of the economic and fi nancial crisis, employment security cannot be realised in the fi rst instance merely through protection of existing work relationships, but above all through framework conditions which are consistently oriented on integration in the world of work and career progression through training. The point of flexicurity is that it gives people security through more and new employment opportunities.

· Flexicurity must receive broad relevance for European and national social policy through »flexicurity mainstreaming«. Social policy should consistently and resolutely set a course in the direction of »integration« as the top priority.

Where are we now?

In its June 2007 flexicurity communication (COM(2007) 359 fi nal), the European Commission followed the flexicurity approach and specified the concept in eight common principles. These were adopted by the European Council in December 2007 and should now be implemented in the framework of the Lisbon strategy. In addition, the European Commission put in place a High Level Group of experts, including German business representatives, which presented a report on implementation of flexicurity strategies in December 2008.

· The European Commission should monitor implementation of the flexicurity principles by the member states and expressly issue reminders as and when necessary. · For its part, the European Commission should itself contribute to implementation of the flexicurity concept through a clear orientation of the European social fund in the form of a vocational qualification fund geared to the practical situation in companies. Above all, the EU should not thwart implementation of the flexicurity concept through its own initiatives. On the contrary, the existing social acquis communautaire should be tested for its employment-friendliness and adapted if necessary. · The report by the High Level Group of experts on flexicurity should not remain an isolated exercise. The European Commission should regularly report on implementation of the flexicurity concept at European and national level, with the involvement of social partners.

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Breathe life into employment strategy

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Breathe life into employment strategy What is at stake?

What needs to be done?

The EU coordinates labour market policies in the member states via the European employment strategy (EES). Member states undertake at EU level to implement common employment policy guidelines and to report on this implementation every year. Since 2005, EES has been integrated in the steering mechanism of the newly oriented Lisbon strategy. The task of the EU is to support and to flank reform of labour markets, which is the responsibility of the member states in the fi rst instance.

· Integration in the world of work and career progression through training should be the central approach in EES. To that end, the flexicurity concept should be consistently implemented in the framework of EES. The European Commission should highlight implementation deficits much more clearly than in the past.

Where are we now?

EES has provided an important impetus for reform of national labour markets. It has created the framework for a deeper exchange of experience and contributed to greater transparency in the assessment of labour market reform thanks to the setting of benchmarks. However, a fundamental problem is deficient implementation by member states of their self-commitments entered into at European level. The European Commission has often been too reticent in its comments on publication of implementation deficits. In addition, it has itself thwarted the objectives of EES – contributing to sustainable employment growth – through other initiatives.

· The member states should take their self-commitments entered into at European level much more seriously. The economic and financial crisis means that modernisation of labour markets must be pushed forward. The social partners should be better involved in this process. · The European social fund – the EU’s main instrument for implementation of EES – should be aligned more efficiently in realisation of the Lisbon objectives in light of limited financial resources, and should return to its core tasks of preventing and combating unemployment. · EES should continue to be integrated in the Lisbon strategy’s steering mechanism also after 2010. Only through a merging of the economic and social policy guidelines can trade-offs be avoided and coherence ensured

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths »Green jobs«: realise the employment potential of environment and climate policy

»Green jobs«: realise the employment potential of environment and climate policy What is at stake?

What needs to be done?

Climate change and its implications are pushing the issue of »green jobs – employment and environmental protection« up the agenda. Nevertheless, the theme of »green jobs« still leaves many questions open. It is difficult to distinguish the employment areas currently lumped together under the heading of »green jobs« from traditional economic sectors. Furthermore, environmental protection takes place largely at the level of products and production processes. But the employment policy effect of productand process-related environmental protection is very difficult to classify. In addition, the environment industry depends on the products and innovations of »traditional« industry.

· The need for worldwide environmental protection efforts must be regarded as an opportunity, not only for a small group of workers in the so-called environment industry but also for climate-friendly services and products generally. In addition, a new, holistic understanding of green jobs should be developed which releases the concept from an artificially demarcated environment area and instead is oriented on the three sustainability pillars of economically, ecologically and socially responsible action.

Where are we now?

The current debate on green jobs is confusing and too narrow, since it focuses one-sidedly on a very small section of the economy and disregards the major links between the various economic sectors. This narrow vision does not help to come to grips with the employment policy challenges of climate change or to create work and prosperity for a growing world population. At the same time, the debate forgets that environmental protection is not a new country for German companies but a reality that they have lived with for decades. German business has assumed its responsibility for environmental protection effectively and efficiently for many years. Hitherto this has not been sufficiently recognised in the debate on green jobs

· Predictable and investment-friendly framework conditions are necessary so that innovative companies can make optimal use of the opportunities for environmentfriendly services and products. Innovation is the key to meeting the challenge of generating prosperity and growth and at the same time preserving the living environment.

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Make the European globalisation fund more effective

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Make the European globalisation fund more effective What is at stake?

What needs to be done?

The European Commission wants to redesign the European fund for adaptation to globalisation (EGF) as a general instrument for intervention in connection with the economic and fi nancial crisis. To date the objective of EGF has been limited to making it easier for workers who have lost their jobs because of far-reaching changes in the structure of world trade to return to the world of gainful employment. The European Commission proposes (for a limited period until end-2010) an extension of the scope of EGF in order to allow the fund also to support workers who have been made redundant as a result of the global fi nancial and economic crisis. In addition, the criteria for intervention would be relaxed, the EU co-fi nancing rate increased and the period of eligibility for EGF resources extended. Lastly, the European Commission has announced that it wants to review the resources allocated to EGF, bearing in mind the widening of its scope.

· The proposed massive extension and orientation of EGF as a general instrument for intervention in connection with the economic and financial crisis should be rejected, since it is not possible to use the financial and economic crisis as a criterion for support in practice.

Where are we now?

EGF has been very controversial since its inception.

German business has repeatedly pointed out that »globalisation« is not a sound criterion for support and that it is not possible to apply the award criteria reasonably in practice, that EGF runs counter to the principle of subsidiarity and that there has been no early and thorough evaluation of EGF has been carried out. The fi rst EGF annual report published in July 2008 confi rmed these criticisms.

· Instead, there is an urgent need to build rapidly a transparent evaluation system in order to be able to assess the real effect of EGF and identify areas for improvement. The social partners should be closely involved in the evaluation. · An increase in EGF’s resources is not a good idea and unnecessary. Labour market policy is in the first instance a national task and should therefore remain in the hands of the member states.

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Further improve compatibility of work and private life

Further improve compatibility of work and private life What is at stake?

What needs to be done?

In order to come to grips with demographic change, in October 2008 the European Commission presented a package of extensive initiatives for better reconciliation of work and family life. The most important part of this package is the proposal for revision of the maternal leave directive. For the European Commission, the aim is to improve security and health protection, give mothers better possibilities to recover from confi nement as well as to simplify possibilities for a return to the labour market. Furthermore, the European social partners have opened negotiations in the framework of the European social dialogue on revision of the parental leave directive. Lastly, regarding care facilities for pre-school children, the European Commission has established that, measured against the Barcelona objectives set by the EU, the offer of childcare places is still insufficient to allow parents to take employment.

· A period of 14 weeks is sufficient to protect the health of mothers. However, if maternal leave were to be increased to 18 weeks, it should be possible to credit paid parental leave to maternal leave.

Where are we now?

The European Commission’s aim of improving the compatibility of work and private life is right. However, the proposed revision of the maternal leave directive is the wrong route, since this seeks only to protect the health of mothers. This is already adequately achieved with the current 14-week period which must not be increased to 18 weeks.

Rather, the objective should be to modernise parental leave so that family and work can be coordinated more smoothly. To that end, the social partners are working in the framework of the social dialogue on the revision of the parental leave directive. In this forum, real problems are addressed, practical solutions are identified, unnecessary costs are avoided and, in particular, diverse national practices are respected. In this context, a further extension of the childcare infrastructure is of fundamental importance.

· An extension of the childcare infrastructure – in particular with all-day nurseries – should continue to have priority. Also necessary is improved training and qualification of nursery nurses, so that they can help individual children better. This also includes the development of pre-school curricula.

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Further strengthen the social dialogue

Further strengthen the social dialogue What is at stake?

What needs to be done?

The European social dialogue is a central pillar of European social policy and is fi rmly enshrined in the EC treaty. Through their work in the social dialogue, the European social partners actively shape European social policy and help to ensure that it is practical and tailored to circumstances. The successful work of the horizontal social dialogue and the numerous work programmes in the various sectoral dialogues are an expression of well functioning reform partnerships. In addition, with the social dialogue the social partners make an essential contribution to making citizens familiar with the EU and its policies and underpin European cohesion.

· The successful work of the social partners should prompt the European Commission to present fewer regulatory initiatives and to give greater weight to the autonomous work of the social partners when selecting social policy instruments.

Where are we now?

The social dialogue is a success story. With their work, the social partners have contributed to implementation of the Lisbon strategy and at the same time strengthened the social dimension of European integration. In their 20092010 work programme, the European social partners have also undertaken to contribute to the implementation of the Lisbon strategy. Themes include further work on the flexicurity concept and the consequences of climate change for employment.

In the sectoral social dialogue, the number of sectoral committees has increased markedly in recent years. In the meantime, the results of the sectoral social dialogue relate to more than 70 million workers. It has developed into an important instrument within European social policy.

· Tendencies to water down or circumvent the consultation process enshrined in the EC treaty, e.g. through broadly based internet consultations targeting civil society generally, must be firmly countered. · Whether or not a social dialogue is a success depends on the evaluation of the social partners involved. In this regard, they have discretion to choose the right instrument from the entire range available. This forms part of social partner autonomy and should be more clearly respected by other players in the EU’s institutional architecture.

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Use open method of coordination

Use open method of coordination What is at stake?

What needs to be done?

The open method of coordination (OMC) is an instrument of the member states which allows member states which face similar problems in a wide range of areas of economic, employment and social policy to exchange information and experience among themselves on a voluntary basis.

The aim of OMC is to achieve common goals through exchange of experience and benchmarks and at the same time to do justice to the individual specificities of the member states. A decisive factor is the selection of indicators, since systems in the member states differ widely.

· Against the background that the European Commission is applying OMC in areas in which it has no competences, application of this method must under no circumstances lead to an extension of the EU’s regulatory competences through the backdoor.

Where are we now?

During the negotiations on the treaty of Lisbon, the German government with the support of German business managed to clarify in a declaration in the treaty that inclusion of the »open method of coordination« in the treaty does not entail any transfer of competences in favour of the European Commission. According to the treaty of Lisbon, OMC should in future be applied in the area of social policy but also in the areas of health, industry and research.

The European Commission will establish guidelines and indicators in close cooperation with the Member States in order to implement the exchange of proves practices and put in place the necessary elements for regular monitoring and evaluation. The European Parliament is fully consulted.

· It is important that common points of orientation ensure the sustainable affordability of social protection systems, and help to bring down non-wage labour costs and to provide workers with worthwhile work. · The introduction/definition of quantitative objectives in the area of social protection must continue to be the preserve of the member states. The idea that groups of member states facing similar challenges and problems should work together and develop common principles as with flexicurity is a move in the right direction.

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Further strengthen diversity in the economy

Further strengthen diversity in the economy What is at stake?

What needs to be done?

Demographic change and globalisation are decisive drivers for the increasing importance of diversity management in companies. Consciously addressing and actively assessing the value of diversity in teams can increase the success of a business in many respects. Companies in Europe are expanding their activities in the area of diversity management. For that reason, consideration is being given at European level to putting the concept on a broader base, e.g. through establishment of a common European charter for promotion of diversity in organisations.

· The European Commission should flank the voluntary commitment of companies by promoting fora at national and European level and underscoring the economic and holistic character of diversity management.

Diversity, including cultural diversity, only generates competitive advantages for companies if issues which are relevant for businesses are taken sufficiently into account.

Where are we now?

The individual responsibility of companies has led to numerous activities in this area. In December 2006 the business initiative »charter for diversity« started in Germany.

It now has more than 500 signatories. Business supports a widening of the charter and the idea underlying it in companies, also against the background of involving the specific competences with a migration background (as a partial aspect) more closely in company processes. In addition, business supported the campaign »diversity as an opportunity« to promote the cultural diversity of integration officers in Germany through various activities and hence draw wider attention to the theme.

· The aim is not diversity at any price and only diversity, but should be associated with concrete objectives such as improvement of innovative capacity, a strengthening of the employer image or a better way of appealing to customers. · A European charter for diversity established by the European Commission is not a good idea bearing in mind the different approaches in the member states.

Such initiatives should also be taken by companies themselves as needed.

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths CSR: pursue the success story

CSR: pursue the success story What is at stake?

What needs to be done?

Corporate social responsibility (CSR) describes the commitment of companies in society which they deploy voluntarily over and above their statutory obligations.

Globalisation has brought CSR into focus worldwide. Acceptance of social responsibility is nothing new: companies have been engaging in society through their business activities for as long as there have been companies. The social responsibility deployed by a company is dependent on the specifics of the business, the sector and markets in which the company operates. The complexity and diversity of CSR therefore precludes regulation, standardisation and certification.

· It is important to maintain the diversity of CSR. Companies need possibilities for action which put them in a position to develop and implement the best CSR approaches. Attempts to force CSR into a straitjacket through regulation and standardisation would jeopardise the great success of CSR.

Where are we now?

· CSR is best promoted through a broad exchange of experience. With the dissemination of good practice examples, various possibilities can be identified for deploying social and environmental responsibility. In this way, companies are supported without bureaucracy in their creativity and their search for best solutions.

CSR has been an important theme at European level for years. In the fi nal report of the European multi-stakeholder forum on CSR, all relevant stakeholders confi rmed the voluntary character of CSR in June 2004. In 2006 the European Commission jointly with business created a European CSR alliance. The CSR alliance pursues a practical and company-related approach. It aims to establish partnership, exchange of experience, dialogue, transparency and credibility. The CSR alliance is a complete success. In the last three years countless projects, events and initiatives have been implemented across Europe in the framework of the CSR alliance, promoting CSR and smoothing the path for new partnerships.

· CSR should be freed from exaggerated expectations.

The role that companies can play in solving society’s problems is limited. Companies can complement efforts by policy-makers towards societal development and social progress through their commitment, but cannot take on their responsibility.

Frame labour law in a way that promotes employment Recommendations for action in the years ahead

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Inject more flexibility into working time

Inject more flexibility into working time What is at stake?

What needs to be done?

The working time directive lays down the maximum number of hours that a worker should work and prescribes minimum rest periods, in order to protect health and safety at work. As a reaction to judgements from the European Court of Justice on the treatment of on-call duty, in 2004 the European Commission initiated a revision of the working time directive. The Commission proposal, a revised version of which takes account of the European Parliament’s proposals in fi rst reading, makes provision in particular that the inactive parts of on-call duty no longer count as working time. Nevertheless, at the same time the so-called opt-out clause allowing derogation from weekly maximum working time would be restricted.

· In the conciliation procedure, the opt-out clause allowing derogation from weekly maximum working time should be maintained, as provided for in the common position. Otherwise, flexible working time models, which are valued by employers and workers and which have proved their worth on the ground in companies, would be perceptibly restricted. The current economic situation and the widely applied modern working time models to avoid deep personnel measures in particular show how important flexible working times are.

Where are we now?

Last year the Council reached the political agreement long called for by German business, following a long period of wrangling. The common position takes up the central requests of German business. In this position, the inactive parts of on-call duty no longer count as working time. The opt-out clause is maintained with no time limit. Despite this reasonable compromise, the European Parliament had decided considerable amendments in second reading, which clearly contradict the common position. As the Council failed to accept these amendments a conciliation procedure will start in March 2009.

· In addition, for the inactive periods of on-call duty, it should at least be possible to differentiate between levels of workload. By way of example, the need for such differentiation can be seen in factory fire brigades whose on-call duty is marked by long rest periods, by contrast with on-call duty by doctors. · If the proposal for a directive fails to garner agreement in the conciliation procedure, a new initiative by the European Commission should concentrate on reversing the problematic jurisprudence of the European Court of Justice on on-call duty. However, the European Commission should distance itself from rules which reduce the current room for flexibility in the organisation of working time.

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Avoid over-regulation of occupational pensions

Avoid over-regulation of occupational pensions What is at stake?

What needs to be done?

In October 2007 the European Commission presented a revised version of its original proposal for a directive on portability of supplementary pensions. The revised proposal for a directive also sets general minimum standards for occupational pension provision which would make occupational pension schemes – including existing ones – considerably more expensive. German business believes that the following provisions would have particularly serious consequences:

· The benefits paid out from voluntary occupational pension schemes are built up over many decades and therefore need a stable legal framework. If the EU interferes retrospectively in voluntary pension provision with rules that push up costs, the necessary confidence will be undermined and voluntary social commitment will be disrupted. Many companies would then stand back from occupational pension provision, and this at a time when it is urgently necessary to build up funded pension provision given the demographic burdens on statutory pension insurance systems.

• Extension of the scope to include pension promises given in the past • Shortening of vesting periods for occupational pension schemes to one year (currently five years in Germany), with the additional stipulation that this can be no longer than five years for under-25s • Reduction of the minimum age for vesting of pension entitlements to 21 years (currently 25 years in Germany)

Where are we now?

The German government has constructively addressed the massive objections of German business and during its Council presidency in 2007 presented a compromise proposal which would at least have minimised the damage for occupational pension provision. However, this proposal fell on a veto by the Netherlands. Not least at the urging of German business, the German government has vehemently resisted further attempts to reach an agreement in the Council which would be detrimental to occupational pension provision in Germany.

· Against this background, it would be consistent if the European Commission were to withdraw its draft directive with no replacement. This would head off considerable damage to voluntary occupational pension provision and prevent over-regulation of occupational pensions. · The Council should support this process. The failed discussions to date show that an agreement on general minimum standards for supplementary pensions is not possible due to the large national differences.

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Place information and consultation for employees in a workable framework

Place information and consultation for employees in a workable framework What is at stake?

What needs to be done?

As part of efforts to extend the European internal market with a »social component«, measures have now also been adopted at EU level which relate to the right of workers or their representatives to information and consultation.

These include in particular the 1994 directive on European works councils (EWC directive) which relates to information and consultation at European level in undertakings with a cross-border dimension. For the national level, this was supplemented in 2002 by the »directive establishing a general framework for informing and consulting employees in the European Community«. The new version of the EWC directive launched by the European Commission in July 2008 was adopted in December 2008 through political agreement between Council and European Parliament. To the regret of German employers, in spring 2008 the European Trade Union Confederation (ETUC) rejected the offer from BUSINESSEUROPE to negotiate the content of the revised directive in the social dialogue.

· After formal adoption of the EWC directive, it must be ensured that implementation in the member states is coordinated. Under no circumstances should implementation at national level lead to additional bureaucracy in companies as a result of »gold-plating«.

Where are we now?

Thanks to the constructive approach taken by employers throughout the process of revising the EWC directive, it has been possible to maintain the successful fundamental concept whereby preference is given to solutions tailored to the needs of individual companies. The European legislator was persuaded not to use the revision to impose new bureaucracy in companies which would only have unnecessarily narrowed the scope for company-based solutions.

The European works council remains in the hands of employees and is not dominated by European social partner organisations. In addition, the continued existence of existing EWC agreements is protected. This practical result can be traced not least to the fact that ETUC came back on board and the European social partners were able to submit joint proposals for amendments to the Commission proposal, which found great resonance in Council and European Parliament.

· Demands from the European Parliament for revision of the »directive establishing a general framework for informing and consulting employees in the European Community« and for harmonisation of systems for information and consultation of workers should be clearly rejected. Against the background of large national differences, it is precisely not the purpose of the directive to harmonise existing national rules.

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Verify the need for new anti-discrimination rules

49

Verify the need for new anti-discrimination rules What is at stake?

What needs to be done?

In addition to the five existing equal treatment directives, on 2 July 2008 the European Commission presented a proposal for a further equal treatment directive based on article 13 EC treaty. This means that the Council decides unanimously and that the European Parliament only submits its position. The goal of the proposal is application of the principle of equal treatment irrespective of religion or belief, disability, age or sexual orientation outside the labour market. Despite an extensive arsenal of existing rules in the German general equal treatment law (AGG), this proposal for a directive would generate a considerable need for modifications since it adds elements not present in the German law.

· The European Commission contradicts the »better regulation« initiative with its proposal. The new rules give rise to new bureaucratic documentation requirements.

Suppliers of goods and services would in reality be obliged to produce systematic and comprehensive documentation and to archive its own reasoning regarding the choice of contractual partners. In this connection, the reversal of the burden of proof has already proved to be the biggest problem for application of the existing equal treatment directives.

Where are we now?

The German government, which can stop the draft proposal with its veto in the Council, shares the massive objections of German business, which it has set out repeatedly in public in the context of presentation of this draft directive. At the meeting of the relevant Council of Ministers in October 2008, family minister von der Leyen expressed substantial criticism on behalf of the German government and questioned the need for yet another anti-discrimination directive. She received support in particular from the Czech Republic, which has already announced that it will not actively pursue this issue during its EU Council presidency in the fi rst half of 2009.

· Instead of being extended, the existing directives need to be clarified. Only in this way can existing errors be corrected. Implementation of the existing antidiscrimination directives in AGG cost German companies 1.73 billion euros in the first year alone, and has led to massive legal uncertainty. · German business firmly supports the German government in its efforts to prevent the additional antidiscrimination directive proposed by the European Commission. · In the position it is currently preparing, the European Parliament should refrain from proposals for a further tightening-up of the Commission proposal.

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Design practical health and safety rules

Design practical health and safety rules What is at stake?

What needs to be done?

Since the single European act in 1987, a series of health and safety directives have been adopted. Health and safety at work is now one of the most highly regulated areas of European social policy.

· It is necessary to thin the regulatory jungle, in order to do justice to the Lisbon goal of »better and smarter regulation«.

Where are we now?

Health and safety at work makes an effective contribution to further improving safety and health protection at work, to ensuring and enhancing workers’ ability and willingness to work effectively and hence also to contribute to the competitiveness of businesses. Differing circumstances and the ongoing innovation process in companies call for a flexible set of instruments for health and safety at work.

Measures should be geared to the real needs of companies.

Through the social partners’ agreement on work-related stress and its implementation, a very wide range of activities by national social partners have been launched, with a strong impact regarding prevention of negative consequences. This great efficiency has been achieved from the efforts of the social partners. At the same time, a directive leading to more bureaucracy has been avoided. Consistent representation of justified reservations from various business sectors have led to the content of the EU directive on electromagnetic fields being fundamentally reviewed prior to implementation in national law.

· The EU directive on visual display screens should be limited to genuinely important content relevant to today’s situation. · Plans for a separate EU directive on work-related musculo-skeletal disorders should be set aside, since the existing legal framework is sufficient. · The existing European legal framework is sufficient to protect workers against health risks from tobacco smoke at the work place. For that reason, the envisaged introduction of further statutory rules to protect workers from tobacco smoke should be halted. · In the framework of the current revision of the EU directive on electromagnetic fields, rules which are acceptable for all sectors and activities should be identified.

It must be strictly ensured that a realistic and scientifically based assessment of potential health risks is used as a yardstick.

Guarantee worker mobility in the internal market Recommendations for action in the years ahead

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Facilitate cross-border deployment of employees in other European countries

Facilitate cross-border deployment of employees in other European countries What is at stake?

What needs to be done?

Managers and experts are increasingly deployed internationally at a range of locations. Posting workers abroad causes a variety of problems, especially in the area of social insurance (inter alia with respect to continued eligibility to German social insurance) which stand in the way of worker mobility. In addition, the administrative effort involved in deploying workers abroad is very large. This not only generates considerable costs but also slows down necessary decisions.

· Regulation 1408/71 exhibits shortcomings which urgently need to be addressed. In particular, it must be possible to shape the rules allowing an exemption from social insurance in the host country more flexibly. The current limit of two years with extension possibilities up to five years is too rigid for an increasingly cohesive European labour market.

Where are we now?

An example of such problems is the procedure in the Czech Republic where the administration suddenly stopped authorising applications for the grant or extension of exceptions in accordance with article 17 of regulation 1408/71.

Yet this regulation was supposed to contribute to creation of a list of common rules and principles to be respected by all national authorities, social insurance institutions and courts.

· The bureaucratic effort involved in posting workers abroad could be reduced through the creation of a »one-stop shop« (a single point of contact for all issues linked to posting) as well as identical forms, rules and periods in all member states. In addition, employees and companies should be able to require a decision from the responsible authorities within a fixed, short period in order to avoid uncertainties about status regarding insurance cover. · Alternatively, a status for mobile workers which allows them to be exempt from national social insurance requirements could be envisaged.

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Allow work-related immigration from non-EU countries

53

Allow work-related immigration from non-EU countries What is at stake?

What needs to be done?

The development of a common immigration policy has gained importance and dynamism at European level in recent years. As announced in the 2005 strategic plan for legal immigration, the European Commission has presented various proposals for individual directives. The blue card directive for immigration of highly skilled workers and the framework directive containing rules for a combined residence and work permit and for a common set of rights now only need to be formally adopted by the Council. The European Commission has announced three further proposals for directives relating to seasonal workers, intracorporate transferees and paid trainees for March 2009.

· Since there is no single EU labour market, and needs and optimal integration conditions can still only be assessed at national level, rules at EU level in the area of immigration in the member states must leave adequate leeway for adaptation to national specificities. Rules are only acceptable in the areas where the European legislator has a real competence to regulate. · It is indispensable that further work on the shaping of legal immigration at European level continues to follow the principle that regulation of access of third-country nationals to the domestic labour market and determination of the number of migrants to be granted permits is a matter for the member state in question.

Where are we now?

The goal pursued by the blue card directive of making Europe more attractive for highly skilled workers from non-European countries is right and can be an important component in international competition for the best brains and to combat current and future skills shortages in Europe. Particularly welcome is the fact that a national labour market and qualification-oriented immigration management system will continue to be possible alongside the blue card directive – as requested by business.

· The announced sectoral directives should take account of the different traditions in the member states.

Rigid European requirements should be avoided in particular where flexible adjustment to changing needs in individual member states, regions or sectors is necessary. · Companies should always have sufficient discretion for individual and customised solutions. This is particularly the case for establishment of a uniform European legal framework for intra-corporate transferees. From the German angle, improvements are needed in this area. If the debate on the directives provides an impetus in this direction, that would be welcome.

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Ensure free movement – work against segregation tendencies

Ensure free movement – work against segregation tendencies What is at stake?

What needs to be done?

Free movement is one of the fundamental freedoms in Europe and constitutes an essential component underlying the European internal market. In recent years eleven of the old EU member states have opened their borders to citizens from the central and eastern European countries (EU-8) which acceded to the European Union in 2004.

However, in the wake of the fi nancial crisis, tendencies to segregate labour markets can now be observed in individual states.

· It is still the case that the transitional arrangements for free movement of workers should not be extended generally and comprehensively after 2009. This does not rule out targeted sectoral or regional limitations. · Burgeoning protectionism must be firmly resisted.

Otherwise Europe risks once more becoming a patchwork of small states. This would not save any jobs, but would seriously threaten and reduce prosperity in Europe. There is no reason for segregation, not even given the particular current difficulties.

Where are we now?

The question of establishing complete free movement of workers for the citizens of all member states of the European Union falls within the competence of the member states. The German government has announced that it wants to maintain the transitional arrangements. German business regrets this, even if it recognises that the German government has at least come some way towards meeting the requests of German business and has very widely opened the labour market for academics from the new EU member states from 2009.

· The very wide-ranging legislation on minimum social standards across the entire EU ensures that free movement does not create social distortions. Further rules in the area of social policy are misplaced if they make it more difficult for companies to create employment.

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Prevent protectionism under the cloak of worker protection

55

Prevent protectionism under the cloak of worker protection What is at stake?

What needs to be done?

A central provision of the posting of workers directive relates to protection under labour law of workers posted to another EU member state to provide cross-border services within the EU. To that end, article 3 of the directive specifies that posted workers must enjoy equal treatment in terms of certain aspects of working conditions as employees in the country of posting insofar as these aspects are covered by statutory or administrative provisions or by generally binding collective agreements in the host country. In this way, the directive ensures that employees working for their employer in another EU member state do not work under worse conditions than comparable workers in the host country. At the same time, however, the directive serves to eliminate obstacles to the free movement of persons and services.

· The very wide-ranging legislation on minimum social standards across the entire EU ensures that free movement does not create social distortions.

Where are we now?

German business agrees with the function of the posting of workers directive in terms of ensuring a minimum level of protection for posted workers. By contrast, it is precisely not the objective of the directive to harmonise working and employment conditions in the EU. Under no circumstances should the directive be wrongly applied to bring in protectionist measures to the detriment of full free movement within the EU, under the cover of worker protection. In the Laval, Rüffert and European Commission/ Luxembourg cases, the European Court of Justice confi rms: the list of working conditions in article 3 of the directive should be regarded as complete. German business agrees with this fi nding. It means that the standard set in the directive is a maximum; more far-reaching provisions are only possible in the exceptional cases provided for in the directive.

· The European Commission and the member states should remove deficiencies in the transposition, implementation and enforcement of the posting of workers directive. Closer cooperation between the member states, national authorities and the European Commission on exchange of good practices and regarding monitoring instruments can contribute to this aim. · In 2009 the European social partners with the support of the European Commission will analyse the judgements of the European Court of Justice in the Viking, Laval, Rüffert and European Commission / Luxembourg cases closely to assess the de jure and de facto consequences for workers in Europe.

Underpin modern mobility and infrastructure/ strengthen the information society Recommendations for action in the years ahead

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Use PPP/concessions

Use PPP/concessions What is at stake?

What needs to be done?

Public-private partnerships (PPP) and concessions are modern instruments for performing public missions – especially in times of scarce budget resources. In order to exploit the full potential, appropriate and flexible framework conditions are needed, also at EU level. The European Commission’s communication on »institutionalised public-private partnerships« (IPPP) focuses on cooperation between the public and the private sector, with creation of mixed undertakings which implement public contracts or concessions. The communication relates above all to questions linked to the establishment of an IPPP, selection of the private partner and changes as the partnership progresses. German business supports the view that no new legislation is needed at EU level but that tools for interpretation of the current EU legal framework are the right instrument to inject the necessary clarity.

With the communication, the European Commission also meets the central call made in the European Parliament’s Weiler report for clarification of issues faced in practice.

· In the interest of effective promotion of PPP projects, there should be stronger exchange of practice on best practice in the area of PPP models.

Where are we now?

The European Commission’s communication on IPPP is welcome. Any more far-reaching legislative initiatives at European level which could confuse the system of the European public procurement directives adopted in 2004 and which have proved their worth should be fi rmly rejected. Also welcome is the European Commission’s decision not to go ahead with the concessions directive originally envisaged, after careful consideration.

· Legislative initiatives on PPP and concessions at EU level should be rejected. · Any attempt to bring about an unacceptable extension of so-called in-house contracts in effect under the cloak of »clarifications« on PPP and concessions should be firmly rejected. This would lead to a hollowing-out of fair competition and would impede the necessary transparency.

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Interconnect the trans-European transport network more closely

59

Interconnect the trans-European transport network more closely What is at stake?

What needs to be done?

The trans-European transport network (TEN-T) is supposed to form the basis for seamless functioning of the European internal market. The aim is to create the transport infrastructures necessary for implementation of the Lisbon strategy for growth and jobs. Since the TENT-T guidelines were formulated in 1996, around 400 billion euros, including almost one third from Community resources, has been invested in the overall network and the total of 30 priority TEN-T projects.

· The review of EU TEN-T policy now under way is a good step, should be carried out carefully and concluded rapidly.

Where are we now?

Although essential progress has been made in realisation of the trans-European transport network, sometimes considerable delays have occurred with many of the priority projects. Further efforts for complete implementation of the original plans are necessary. In early February 2009 the European Commission initiated a review and further development of TEN-T policy with a green paper.

· EU efforts must concentrate in particular on creation of high quality transport corridors. These are decisive for efficient management of cross-border transport operations. In this context, freight transport must be given special attention. · Realisation of intelligent traffic systems for efficient use of infrastructures should be accelerated in the framework of TEN-T policy. Optimisation of air traffic management and creation of a single European sky are indispensable to increase efficiency, capacity and safety as well as to reduce the environmental impact. · Furthermore, non-financial instruments need to be further strengthened, for instance initiatives for coordination of national infrastructure plans and cross-border projects.

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Network transport operations intelligently/ promote telematics and traffic management systems

Network transport operations intelligently/ promote telematics and traffic management systems What is at stake?

What needs to be done?

On 16 December 2008 the European Commission presented an action plan for introduction of intelligent traffic systems (ITS) in Europe. This comprises a communication and a directive on ITS in road transport. The communication brings together projects and new initiatives in six areas for action (in particular use of transport data, safety, networking and European coordination). With the directive, the European Commission wants to set out the framework for coordinated development and introduction of interoperable ITS solutions in road transport as well as their specification for member states. Common European initiatives to avoid congestion, improve infrastructure use and manage traffic as well as increase traffic safety could be realised more rapidly on this basis.

· The fundamental commitment of EU and member states to coordinated and accelerated deployment of ITS as a central objective should be strengthened.

Where are we now?

The European Commission’s initiative is essentially welcome. Transport telematics and traffic management systems can make essential contributions to efficient and environment-friendly mobility. The conditions for this are interoperable, compatible and comprehensive service offers. It is pleasing that the current plan, unlike earlier versions, no longer makes reference to a number of cost drivers (digital tachograph, extension of eurovignettes directive). Implementation of the directive on interoperability of toll systems is part of the action plan and can be accelerated through it.

· The European Commission should underpin the listed projects and areas for action with concrete objectives, measures (including impact assessment) and financing plans. The focus must be on technical themes and their implementation. · The action plan must place greater focus on the development of solid business models based on the interests of users. · The German government should create the legal framework for introduction across Germany of the necessary infrastructures (e.g. car-to-x communication, roadside infrastructures, ecall) and work at European level for standardisation.

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Shape air transport more efficiently

Shape air transport more efficiently What is at stake?

What needs to be done?

With the creation of a Single European Sky (SES), the current inefficient and costly fragmentation of air traffic management in European airspace will be a thing of the past. This fragmentation of competences for air safety services along national frontiers leads to unnecessary route extensions, sub-optimal traffic flows and an environmentally harmful squandering of kerosene. The four Single European Sky regulations adopted in 2004 (known as »SES-I package«) set out in particular to create a single institutional and legal framework for SES, put in place »functional airspace blocks« (FABs) and ensure that performance of air traffic control services is kept separate from its regulation and supervision.

· Optimisation of air traffic management in European airspace is indispensable to increase efficiency, capacity and safety as well as to reduce environmental impact and must have priority.

Where are we now?

Application of the SES-I legal provisions has not so far led to the hoped-for results in important areas. A Single European Sky is still not a reality. For that reason, the European Commission has presented an »SES-II package« which seeks to build on the SES-I package in relation to performance and environmental sustainability and to make parts more operational. Key elements are the introduction of functional airspace blocks by 2012 as well as rules for binding performance targets. The SES-II package is expected to be adopted in mid-2009.

· Implementation of SES is the EU’s central transport and environment policy project for air transport and should be implemented rapidly. With its realisation, CO2 emissions caused by air traffic could be reduced by 12 % and up to 16 million tonnes of carbon could be saved p.a. In addition, realisation of SES would generate cost savings measured in billions of euros for the air transport sector and its customers. · The creation of functional airspace blocks now being auctioned in Europe is welcome as an important step towards overcoming the fragmentation of European airspace and must be completed by 2012 at the latest. · The tightening of SES-I through the SES-II package is necessary given the unsatisfactory results to date. It should be decided and implemented rapidly.

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Improve rail transport performance

Improve rail transport performance What is at stake?

What needs to be done?

The railway package I to III aim to establish a single European railway transport market with transparent and fair competition conditions for undertakings in the rail sector. The fi rst and second railway package were intended to bring about non-discriminatory access to infrastructures and to open the European market for rail freight transport. Areas not yet addressed in the area of European rail transport were dealt with in the third railway package.

Liberalisation of the European rail market has ushered in a positive development in rail transport in recent years.

· There continue to be some considerable differences between member states in terms of implementation of the railway packages on liberalisation and harmonisation of the railway transport market in Europe despite the successes booked to date.

Where are we now?

The third railway package was adopted after several years of negotiations. It comprises regulations on strengthening competition in public passenger transport services and on rights and responsibilities of passengers as well as directives on opening cross-border rail passenger transport and on the European train driving licence. The directive on simpler and more rapid authorisation of rail vehicles (»cross-acceptance«) is a welcome development.

· Harmonised market liberalisation for transparent and non-discriminatory competition in rail transport should therefore be driven forward in all EU member states. · Of particular importance is the interoperability of technical systems. Harmonised standards are necessary to reduce costs for industry and rail undertakings. Pending technical specifications on interoperability (TSI), the aim should be to bring about far-reaching harmonisation of procedures for mutual recognition. · The creation of an interoperable European rail traffic management system (ERTMS) occupies a key position for cross-border rail transport in Europe. Realisation of the European train control system (ETCS) should move ahead in the short term, in particular in the priority corridors for rail freight transport.

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Further modernise maritime transport

63

Further modernise maritime transport What is at stake?

What needs to be done?

Starting with the »Green Paper on a Future Maritime Policy for the European Union« in 2006, in October 2007 the European Commission presented the idea of an integrated European maritime policy in a »Blue Book« and an action plan. In January 2009 it developed this idea further into a comprehensive strategy for European maritime transport policy by 2018 given concrete form in a detailed action plan. The aim is to establish a European maritime transport space without barriers. This is intended to promote safer, cleaner and more efficient maritime transport which will in turn strengthen the competitiveness of European maritime transport, sustainable growth as well as employment in Europe’s maritime industries.

· Establishment of a European maritime transport space without barriers should be pushed forward as a priority. The proposed strategy and the action plan for European maritime policy until 2018 comprise positive initiatives for removing the existing obstacles. · 80 % of world trade uses maritime transport. Preserving and increasing the competitiveness of European maritime transport is of central importance for the EU in particular, as the world’s largest exporter and second-largest importer. The legislative measures announced in the action plan for simplification of customs procedures and other notification formalities in short-sea transport should therefore be decided and implemented rapidly.

Where are we now?

EU-wide realisation of the essentially correct idea of an integrated European maritime policy is moving forward only at a very slow pace despite a few promising initiatives. For instance, EU-wide implementation of the welcome concept of »motorways of the sea« is progressing very hesitantly in part because the procedures laid down by the European Commission for promotion of such projects in the framework of the TEN tender procedure has proved to be too bureaucratic. Rapid realisation of a European maritime transport space without barriers will serve to increase efficiency, sustainability and security in maritime transport.

In particular, it can help to cut the environmental impact of freight transport through a shift from road to sea and hence also to reduce freight costs.

· Simplified procedures and more transparency are urgently needed for implementation of the »motorways of the sea« concept.

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Drive the information society forward

Drive the information society forward What is at stake?

What needs to be done?

The information society is an expression of a far-reaching change in the economy and society through information and communication technologies (ICT). As key technologies in an increasingly knowledge-based society, ICT are among the most important drivers for economic growth and the creation of new jobs. Today already, more than half of industrial production in Germany and more than 80 % of exports depend on the use of modern ICT systems.

Highly modern IT infrastructures and broadband internet enable innovative ICT services capable of strong growth in the health, education and transport sectors as well as in public administration. The competitiveness of German and European industry will depend on the extent to which products can be produced more efficiently and to a higher level of quality using IT-supported processes than in other parts of the world.

· ICT should be a component of the post-Lisbon strategy

Where are we now?

At European level very promising initiatives have been created. The strategy for a European information society by 2010 »i2010«) set out the right objectives for the transition to the information era. However, centralising and bureaucratic elements (e.g. telecom review) are making plans lose considerable impetus at European level. The German government needs to take a stronger position in this area in order to counter wrong developments.

· All EU citizens should be integrated in the information society through broadband access to and improved acceptance of ICT services · The objectives of the European programme »i2000« (European information society 2010) should be taken up, consistently implemented and developed further into a »i2015« strategy · IT infrastructure (networking, broadband) and ICT services should be strengthened, especially in the education, healthcare, public administration and energy sectors. · EU processes and communication should be optimised through modern, IT-supported applications (»EU as pioneer«)

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Orient telecommunications regulation on growth

65

Orient telecommunications regulation on growth What is at stake?

What needs to be done?

A condition for the information society is the availability of and access to communication infrastructure. With appropriate regulation, it can be ensured that an appropriate balance is struck between the interest of network owners in the highest possible return and the interest of users and network operators in the lowest possible utilisation costs.

The extension of highly modern broadband infrastructure is today a central goal of industry policy. With that in mind, the regulatory framework must create effective incentives for investments.

· Intervention in the telecoms market, in particular in the area of mobile telephony regulation, should be avoided to the benefit of developing competition.

Where are we now?

The European Commission followed the right approaches in the revision of the European telecommunications directives, in particular regarding liberalisation of radio frequencies for broadband utilisation. However, the overall result exhibits centralising and bureaucratic tendencies which lead to an excessive role for the European Commission, disregard the principle of subsidiarity and pose risks for the communications market. The treatment of investments in broadband networks is completely ignored. The European Parliament and the Council as well as the German government have corrected this course in part so that an acceptable compromise looks likely.

· The aim should to have comprehensive broadband coverage, which benefits consumers and businesses alike. Incentives for investments in extension of the broadband infrastructure should therefore take centre stage. · Regulation should be examined regularly to see whether it is still necessary. The aim of a return to general antitrust law for competitively organised markets should be given stronger attention.

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Strengthen trust and security in the digital world

Strengthen trust and security in the digital world What is at stake?

What needs to be done?

Digitisation and automation of central areas in society and economy lead to new opportunities and challenges.

Dependence on secure information and communication technologies (ICT) has increased considerably. This applies in view of protection of personal data. It also applies for business-relevant information and for technologies to protect against attacks, misuse and errors in such areas as the transport, health and public administration sectors.

New measures from policy-makers are necessary.

· Industry develops successful solutions for secure information and communication technologies. Policymakers should take up these solutions more strongly, and design and implement an effective security architecture jointly with industry.

Where are we now?

The fundamental challenges of the »digital world« are described broadly in the right terms at European level and by the German government. However, there is still no overview of risks in the digital society or of appropriate defence measures. What are needed are internationally coordinated procedures and standards as well as objective information. It should continue to be borne in mind that policy-makers must not publicly reject innovative product ideas over-hastily during their development with a reference to data protection concerns.

· Given international risks through digital misuse and attack (cyber-espionage), it is up to policy-makers to find appropriate, internationally coordinated responses. · The EU must help to provide information on real and supposed risks, and remove unjustified scepticism about ICT among citizens. · Security and data protection should not be a pretext for disproportionate restrictions on innovative IT applications. This applies, for instance, for RFID technology or applications in telemedicine.

Shape climate and environmental protection in a measured way Recommendations for action in the years ahead

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Give concrete form to emission trading rules

Give concrete form to emission trading rules What is at stake?

What needs to be done?

With 26 %, Germany has the highest share of industry in EU gross value creation and is also therefore particularly affected by the revision of the EU emission trading scheme directive. German business is critical of the planned introduction of auctioning as a general principle for allocation, since free allocation does not jeopardise the reduction target. In itself, auctioning does not lead to a reduction in greenhouse gases. Rather, it deprives those involved of resources for investments in improving their installations.

German industry does not question climate protection but makes its constructive contribution and is already a pioneer with a high competence for fi nding solutions.

· German and European industry should not be burdened with new costs

Where are we now?

· Realistic benchmarks and activity data need to be defined for the sectors and subsectors. Distortions between and within sectoral must be avoided

The consequences of European decisions on EU ETS for the industries in question cannot yet be assessed in early 2009, too many questions are still open. The EU decisions taken in December 2008 do not create the urgently needed investment certainty. The exemptions from auctioning in the electricity sector for some EU member states leads to distortions of competition. The criteria for assessing ETSrelated additional costs for industrial sectors are not yet manageable. The problem of international distortions of competition has not been solved. A fundamental condition for a level playing field is that other industrialised countries make comparable efforts to reduce emissions. As soon as a result of the Copenhagen negotiations in December is available, it must be clarified whether further industrialised countries have committed to comparable emission reductions and economically more advanced developing countries have committed to an appropriate contribution.

Only then should a decision be taken on increasing the EU reduction target to 30 %.

· The manufacturing industry affected by ETS must receive 100 % free allocations in order to avoid carbon leakage · The quantitative carbon leakage criteria should be specified rapidly · A satisfactory solution must be found rapidly for compensation of the indirect effects for energy-intensive industries

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Promote environment-friendly mobility

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Promote environment-friendly mobility What is at stake?

What needs to be done?

On 8 July 2008 the European Commission presented the package of measures on »Greening transport«. At the centre of the proposal is internalisation of so-called »external costs«. To that end, the EU road costs directive will be amended to impose supplements to HGV tolls in order to take account of the external costs of air pollution, noise and congestion in road freight transport. In rail freight transport, the fleet of freight wagons is to be fitted with low-noise braking systems in order to halve noise nuisance by 2014. Further proposals for air transport as well as inland waterways and maritime transport are in preparation.

· Business is committed to the objective and its responsibility to reduce the negative impact of modern mobility. There has already been remarkable success in achieving environment-friendly, low-emission, low-noise and secure mobility. This includes noise and emissions-dependent airport charges and the emission-dependent toll on heavy-goods vehicles.

Where are we now?

The proposed internalisation of external costs will increase costs even for environment-friendly transport operations and will generate distortions of competition between transport modes. By contrast, a reduction in the negative impact of transport can be expected indirectly at best. During the French presidency in 2008 it was not possible for the Council to reach a common position on the package of measures. The European Parliament aims to reach a decision for March 2009.

· Possible additional instruments must add clear value in terms of effectiveness and offer cost efficiency, promote innovative technologies and strengthen the competitiveness of the European economy. · German business is generally critical of the proposed internalisation strategy. Furthermore, a unilateral or staggered charging of external costs applicable to only one transport mode should be rejected. · A strategy for environment-friendly mobility must ensure transparency and fair competition conditions for all transport modes. Existing transport-specific taxes and levies should be taken into consideration. The European Commission rightly pursues the principle of »co-modality«. Every transport mode should be able to further develop its strengths and efficiency advantages in a fair competition environment and optimally networked transport systems.

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Building on Europe’s strengths Ensure environmental protection and tax competitiveness

Ensure environmental protection and tax competitiveness What is at stake?

What needs to be done?

Thought is increasingly being given also in the EU to the use of tax instruments to promote environmental protection. For instance, the energy tax directive (2003/96/EC) is set to be revised. Introduction of further tax measures such as application of reduced VAT rates to environmentfriendly / energy-efficient products and services is also being considered.

· A breakdown of the minimum tax rate into energy and environment aspects should be rejected, since this could lead to an additional »emission tax«. Additional tax burdens would result in competition disadvantages.

Where are we now?

In January 2009 the European Commission published two studies on this theme. Adoption of a »green tax package« into which the results of the studies will flow is planned for April 2009. The package is likely to comprise a communication on use of taxes for environment policy purposes, a draft amendment of the energy tax directive and a proposal for a directive on the application of reduced VAT rates to environment-friendly / energy-efficient products and services. In particular regarding revision of the energy tax directive, discussions are under way on a split of the minimum tax rate currently applicable into an energy and an environment component.

· A tax system which distinguishes between taxation of electrical current and the use of energy products as heating fuel or motor fuel on the one hand and tax free use of energy products as dual uses or non-fuel uses i.e. as raw material on the other is sound and deserves support from the angles of environment and competition. The system should be maintained. · The current specific exemptions for particular processes and procedures as well as general tax relief provisions (reduced tax rate, tax cap) must remain in place in order to ensure the competitiveness of energyintensive industries. · Introduction of reduced VAT rates for green products and services should be rejected. The VAT system must not be made more complicated.

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Organise environment-oriented procurement transparently

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Organise environment-oriented procurement transparently What is at stake?

What needs to be done?

The European Commission has presented an »Action plan for sustainable production and consumption and a sustainable industrial policy« as well as a communication on green public procurement, abbreviated to »GPP«.

At the heart of the action plan the Commission proposes a »dynamic framework« to improve the energy efficiency and environmental performance of products. Among other things, it provides for further development of product labelling in the framework of a revised energy labelling directive. What is relevant for the procurement sector is above all the intention of prescribing a binding minimum level of energy efficiency for public procurement of products from a threshold of 15,000 euros through establishment of minimum labelling categories. In the communication the European Commission names the objective of around 50 % of all procurement awards being »green« by 2010. The European Commission also refers to »training toolkits« for GPP. These toolkits are being prepared for eighteen particularly environment-relevant product groups.

· In all further initiatives on GPP there needs to be improved coordination with the main stakeholders, i.e. public authorities and business.

Where are we now?

The European Commission’s action plan and communication encompass a very extensive package with wide-ranging individual initiatives. Efforts to enhance environment-oriented procurement in a manner which is transparent across the EU are basically welcome. Nevertheless, coordination of the numerous documents – some commissioned from external bodies – seems insufficient.

German Business calls for improved involvement of the main stakeholders in the issue of green public procurement, i.e. public authorities and business.

· To prevent distortions of competition, the environmental orientation should be clearly related to the product being procured. · Regarding environmental labelling, it must be clear that the supplier can prove the environmental characteristics of the product other than by merely affixing an ecolabel. · The proposed threshold value of 15,000 euros to be set as binding for minimum product labelling categories in public contracts differs from the general EC thresholds. Further complication of the legal framework should be avoided.

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Building on Europe’s strengths Regulate products coherently

Regulate products coherently What is at stake?

What needs to be done?

The European Commission’s action plan on »Sustainable consumption and production (SCP)« proposes to extend the framework directive on improvement of ecodesign of energy-using products to include »energy-related« product groups. The European Parliament and the Council want to move even farther in this direction by extending the scope to all products. In addition, the directives on award of the European environmental symbol (euro flower) as well as the directive on energy-use labelling are set to be revised or adapted to take account of the extended scope of the ecodesign directive.

· The framework concept of the ecodesign directive seems right, despite the absence of experience on its workability for the product groups selected to date.

Where are we now?

The SCP action plan gives concrete form to the initiative for an integrated product policy (IPP) which the European Commission has been pursuing since 2001. The aim was to reduce the environmental impact of products and services throughout their lifecycle. The IPP initiative made it clear with the help of studies and pilot projects that there is shared responsibility between producers and consumers. However, with the adoption of the ecodesign directive for energy-using products in 2005 the route of voluntary participation was abandoned and the design of products is now covered by European legislation. Doubts must remain as to whether this will actually lead to more climate- and environment-friendly products. Rather, a massive intervention in companies’ design and innovation competence can be perceived.

· A general extension of the ecodesign directive is not the appropriate way to improve the ecodesign of the product groups covered so far overall. Instead, double regulation is to be feared, e.g. in the area of chemicals policy (REACH). But the product areas of food, cars and buildings are also already highly regulated. · The ongoing implementation of the directive on ecodesign of energy-using products should not be impaired, since it has already involved a great deal of effort for the industries affected. However, the establishment of environmental standards must not lead in the foreseeable future to important product groups no longer being available with no substitute to replace them.

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Place proportionate requirements on industrial installations

Place proportionate requirements on industrial installations What is at stake?

What needs to be done?

The directive on integrated pollution prevention and control (IPPC directive) regulates the authorisation of industrial installations. Operators of industrial installations have to apply for a permit. The permit requirements should be oriented on »best available techniques« (BAT).

These techniques are described in non-binding »BAT reference documents« (BREFs) which are drawn up jointly by industry representatives and European Commission.

Separate from this, under a proposal on the soil protection framework directive EU member states would be obliged to clean up locations with contaminated soil, examine established areas for historical contamination, prepare a clean-up strategy and report regularly on measures and successes in the area of soil protection.

· The recast of the IPPC directive can make a positive contribution to removing distortions of competition. Nevertheless, additional provisions on soil and groundwater protection are superfluous. The monitoring rules lead to a great deal of bureaucracy and should be deleted.

Where are we now?

In a recast IPPC directive, one element is that BREFs would become legally binding. That creates problems, since the BREFs also contain emission limits. These values usually reflect the average emissions for the described technology in an ideal business. If BREFs become legally binding, these values will apply as limit values. This leads to unreasonable results, because limit values also have to be measured, for instance, when an installation is warming up or running down or under fluctuating production conditions. As an alternative concept, the European Parliament’s Environment Committees had adopted the »European safety net« which avoids the difficulties outlined above. The soil protection proposal also makes provision for additional costly and unnecessary reporting obligations for industry. Furthermore, the sale of land will be made considerably more difficult through introduction of the soil status report. This runs counter to efforts to restrict land use. Brownfield sites are no longer sold and new installations are built on Greenfield sites. It is difficult to understand why there are almost identical rules for both soil protection and in the recast of the IPPC directive.

· Installation authorisation law should essentially be implemented in a harmonised manner at European level. · The German government’s decision to reject the soil protection framework directive deserves support.

There must be considerable doubts about the need for the directive in view of the principle of subsidiarity alone.

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Building on Europe’s strengths Tighten and harmonise European chemicals law

Tighten and harmonise European chemicals law What is at stake?

What needs to be done?

The aim of the EU REACH regulation was to tighten and harmonise European law on chemical substances. This also includes central regulation of permits and restrictions on chemicals based on uniform and transparent criteria.

· The tightening and harmonisation of European chemicals legislation finally needs to be addressed seriously.

Chemicals rules must be set using uniform criteria and consistently at one place as provided for under REACH. Only in this way can companies have more legal certainty on chemicals issues as an essential condition for a strengthening of competitiveness.

Where are we now?

Irrespective of the goals of the REACH regulation, chemical rules through to application bans continue to be applied under several specific legislative acts. Prominent examples are the directive limiting the use of certain hazardous substances in electrical and electronic equipment (RoHS), the toys directive (key elements: plasticisers, phthalates) or the current revision of the biocide directive with its own permitting procedure in each member state.

This situation does nothing to strengthen the European economic area.

· The European Commission’s proposal for the RoHS directive contributes to a fragmentation of environmental law. The chemicals foreseen for the RoHS directive are already completely covered by the REACH candidate list. Superfluous double regulation with no advantages for the environment should be rejected. · For the area of electrical and electronic equipment, substance restrictions should be regulated exclusively under REACH and not under the RoHS directive.

Similarly, other special rules in this area should be withdrawn as rapidly as possible.

Secure a sustainable supply of energy and raw materials Recommendations for action in the years ahead

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Create a European internal energy market

Create a European internal energy market What is at stake?

What needs to be done?

Hitherto there is no EU internal market for the griddependent energies electricity and gas. The different market structures, a high degree of market concentration and insufficient interconnection capacities make it difficult to integrate the European market. There are increasingly attempts to let energy markets grow together through regional integration, e. g. through the Pentalateral Energy Forum’s initiative on electricity market coupling, started in 2007.

· The option of a stronger legal unbundling should be incorporated in the internal market directives for electricity and gas. Only in this way will EU member states with different market structures retain the necessary discretion for implementation of effective separation of energy generation and network management.

Where are we now?

In order to accelerate the creation of a European electricity and gas market and to breathe competition into both sectors, in autumn 2007 the European Commission presented the third internal energy market package. This makes provision for a strengthening of national regulators, a European regulatory authority, closer cooperation between transmission system operators and further unbundling of vertically integrated energy holdings. The package is expected to be adopted by June 2009 in second reading. The necessary degree of unbundling continues to be a source of hot controversy. The European Commission and the European Parliament are in favour of strict ownership unbundling of energy generation and network operation.

The Commission proposal contains the alternative of a complete transfer of network management to an independent system operator. In October 2008 the Council decided to accept a third option whereby the transmission network can remain in the ownership of the holding company if independence of network management in terms of personnel and organisation is ensured. So far it has not proved possible for an agreement to be reached between Council and European Parliament.

· The energy sector needs investments more than the average sector and the extension of cross-border energy infrastructures is particularly urgent. The energy sector is primarily responsible for investments. It is the responsibility of the legislator to create reliable framework conditions. · As a necessary interim step on the way to a common EU internal market, regional cooperation arrangements should be actively supported and developed.

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Secure the energy supply for the long term

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Secure the energy supply for the long term What is at stake?

What needs to be done?

The EU covers more than half of its energy consumption through imports, and the trend is upwards. The European Commission forecasts that in 2030 the EU will have to import 84 % of its oil needs and 93 % of natural gas. Alongside the growing import dependence, the concentration of a small number of supplier countries in often politically unstable regions is regarded with increasing concern. A growing global energy demand calls for a sustainable and clear strategy for diversification of energy sources as well as greater use of domestic energy sources.

· Aspects of security of energy supply should be given greater consideration in energy and climate policy decisions.

Where are we now?

The European Commission’s Second Strategic Energy Report (SER II) rightly sets the priority as security of supply.

It therefore addresses the third component of the energy policy triangle (together with competitiveness and environmental sustainability). SER II is presented as an action plan through which the European Commission above all wants to accelerate infrastructure projects and achieve a diversification of energy sources and transport routes.

In addition, it aims to bring more transparency about oil stocks, an extension of gas stocks as well as regional crisis and solidarity mechanisms. In external energy policy, stronger coordination between EU and Member States is envisaged, to allow Europe to act with greater resolve.

· A secure energy supply at affordable prices can only be ensured with a broad energy mix including fossil and renewable energy resources as well as nuclear energy. Policy-makers and business should work together for greater acceptance in society of the need for indispensable infrastructure projects. · It is a priority task of business to adapt energy networks to a growing energy demand and new challenges. The legislator must create the right framework conditions such as planning certainty for companies and simplified planning and authorisation procedures. · Climate policy-makers put great hopes in carbon capture and storage technologies (CCS). In December 2008 the European legislator reached agreement on a framework directive for geological CO2 storage. This needs to be supplemented in 2009 with a clear national legal framework to bring CCS technologies to the point of market maturity by 2020 if possible.

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Building on Europe’s strengths Expand renewable energies

Expand renewable energies What is at stake?

What needs to be done?

By 2020 one fi fth of EU-wide energy consumption has to be covered from renewable sources. This represents a tripling of the current share over the next eleven years. In order to bring forward the use of renewable energies costefficiently, expansion potential needs to be exploited at Europe’s economically and geographically advantageous locations. At the present time, renewable energies are often dependent on fi nancial support in order to be able to hold their own in the market. Public support in the form of start-up fi nance is justified to integrate renewable energies in the EU electricity and heat market which is open to competition.

· Harmonisation of national support systems is desirable to avoid distortions of competition within the EU. The European Commission is due to assess the effect of the different support systems in the progress report planned for 2014 and to make an early start on examining the feasability of harmonising support criterias across Europe after 2020.

Where are we now?

In December 2008 Council and European Parliament agreed on a revision of the directive on the promotion of renewable energies in order to put in place a framework for implementation of the EU’s overall target. The revision specifies the binding targets for expansion of renewable energies to be met by each EU member state. The target to be reached by Germany for 2020 is 18 %. Instruments for reaching national targets are left to the discretion of member states, no provision is made for EU-wide harmonisation of support criteria. As a result, there will continue to be a wide range of national support systems for the foreseeable future; associated distortions of competition will be further intensified by the intended expansion of renewable energies. The directive gives the member states the possibility to combine their targets and support systems or to achieve their national shares through joint projects. However, the introduction of market instruments is missing.

· The German EEG is proving effective and stimulating for development of the market for renewable energies. However, it is not cost-efficient and places an excessive burden on consumers. In the absence of a corresponding impetus from the EU, the German government should expose new installations for electricity capture from renewable energy sources to stronger efficiency pressure as part of the next EEG revision. · The financing of expansion of renewable energy sources should be essentially competition-neutral and not passed on one-sidedly to electricity consumers. Until this is the case, EEG’s hardship clause should be extended to energy-intensive SMEs, possibly in the framework of a graduated model.

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Safeguard the functioning of international raw materials markets

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Safeguard the functioning of international raw materials markets What is at stake?

What needs to be done?

The EU is highly dependent on imports of the raw materials it needs for its industry. This is true for oil and gas in the same way as it is for non-energy raw materials, especially metals. European industry’s supply of raw materials is massively impaired due to systematic distortions of trade and competition distortion on the part of a large number of countries. According to the European Commission, in the case of trade in raw materials alone there are more than 450 export restrictions covering more than 400 raw materials. As a result of the fi nancial crisis, additional tradedistorting and protectionist measures can be observed.

· The European Commission should speedily deploy the planned »raw material diplomacy« and act in a coordinated way against trade distortions affecting raw materials in the framework of its external, commercial and development policy. · Infringements of existing WTO rules linked to trade in raw materials should be brought before WTO and dispute settlement procedures opened against the countries in question. Available policy instruments should be consistently used to stop trade distortions affecting raw materials, including the Generalised System of Preferences (GSP).

Where are we now?

The European Commission meanwhile attaches great importance to acting against distortions of trade and competition distortions affecting raw materials. In the WTO accession negotiations with Ukraine, it has won the promise of a complete dismantling of the country’s export restrictions with conclusion of a free-trade agreement. In addition, it wants to address trade distortions affecting raw materials in the framework of a »raw material diplomacy« which links elements of its external, commercial and development policy. The German government has promised to make trade distortions affecting raw materials a component of the bilateral dialogue with the relevant countries.

· European Commission and German government must pursue the initiative for an extension of WTO rules to include a ban on export restrictions and win support from other countries for a change to the WTO rules. · The German government must continue to work consistently for a dismantling of trade and competition distortions affecting raw materials in bilateral discussions with the relevant countries.

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Building on Europe’s strengths Ensure access to raw materials in Germany and Europe

Ensure access to raw materials in Germany and Europe What is at stake?

What needs to be done?

Extraction of raw materials in Germay and Europe is substantially restrained due to designations of protected areas and assignments for other uses. The basis in particular is groundwater, nature and landscape protection (e.g. in the framework of »Natura 2000«). In order to avoid bottlenecks in the supply of domestic raw materials and to prevent a further increase in the EU’s import dependence, access to available raw material deposits must be ensured on a long-term basis.

· In addition to preparing clarifying guidelines, the European Commission must carry out an adjustment of the Nature 2000 directives. It should be ensured that the relevant areas are reviewed at regular intervals and that there is an assessment which looks at ecological, economic and social interests on an equal footing. · The Faune-Flora-Habitat (FFH) and birds directives should be amended in such a way that they also take account of social and economic interests in line with the principle of sustainable development.

Where are we now?

The European Commission recognises that implementation of provisions on groundwater, nature and landscape protection lead to confl icts with industry’s interest in extracting raw materials. It is therefore currently working jointly with member states on guidelines for industry and authorities which clarify how raw material extraction can take place in and near Natura 2000 areas. The German government has promised to examine with industry and regional authorities the possibilities for improving the framework conditions for extraction of raw materials.

· The German government should set up a spatial development plan in which criteria for designations of raw material deposits which can be derived from the raw materials section of the spatial development plan are specified. These can be derived from the raw material percept of the spatial development act. One component of the plan should be that raw materials deposits are designated independent of the raw materials demand.

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Improve the availability of secondary raw materials

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Improve the availability of secondary raw materials What is at stake?

What needs to be done?

Secondary raw materials, gained from waste, are an important pillar of raw material supply to industry in Germany and Europe. They help to reduce import dependence, sometimes to a considerable extent. Since 2003 there have been drastic price rises on raw materials markets and the availability of raw materials has not always been assured. Both of these points relate to primary raw materials and secondary raw materials alike. The goal of European and national policy-makers must continue to be ensuring and further improving the framework conditions for a secure supply of primary and secondary raw materials. To this end, there needs to be a clear legal basis for the use of secondary raw materials. In addition, existing rules should be implemented consistently in order to prevent the illegal exports of waste and secondary raw materials from the EU.

· The new waste framework directive must be implemented consistently at European and national level.

Where are we now?

The legal conditions for the use of secondary raw materials have been regulated for the fi rst time with the European Commission’s proposal for a revision of the European waste framework directive. This has made an important contribution to increased availability. Nevertheless, there are considerable enforcement deficits with regard to controlling compliance with the European Waste Shipment Regulation for exports, in particular through the illegal declaration of waste as usable goods. The European Commission plans an information campaign and wants to propose effective procedures for monitoring waste exports.

The German government has said that it will work at European level towards industry’s wish for binding guidelines for differentiation between wastes and used goods.

· The European Commission should make existing guidelines on the distinction between waste and used products for electrical equipment binding and develop binding guidelines for other waste flows. · The German government should examine the possibilities for the implementation of binding guidelines on the distinction of waste from non-waste at the international level with the other contracting parties to the Basel convention. · The German government should strengthen the personnel resources of national export authorities and work with the European Commission to ensure that export authorities in other member states are also strengthened. The shared goal should be to effectively curb in the number of secondary raw materials exported illegaly.

Strengthen the external dimension Recommendations for action in the years ahead

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Global trade liberalisation

Global trade liberalisation What is at stake?

What needs to be done?

Access to global sales and procurement markets as well as worldwide implementation of free and transparent trade rules are of central importance for export-oriented German and European industry. Successful conclusion of the WTO negotiations on the Doha Development Agenda would be an important step for free world trade and against latent protectionism.

· The aim must be a successful conclusion of the current WTO round. That would send an important signal for combating the global economic and financial crisis, counter protectionist tendencies and dismantle trade barriers on a permanent basis.

Where are we now?

The ongoing Doha round started in 2001 has fi rst priority in EU and German trade policy. But it is already clear that sights will have to considerably lowered as compared with the original liberalisation objectives due to the »development policy« approach. Important themes such as public procurement and foreign investments have already been taken off the negotiating agenda. At the same time, industrial countries are expected to make wide-ranging concessions to developing and emerging countries. Conclusion of the negotiations was pencilled in for 2005 and most recently end-2008. At the present time it is not clear whether an agreement will be reached in 2009.

· What is needed is an ambitious, balanced and comprehensive agreement. All industrial sectors must be given substantially more market access in emerging countries. For that reason, the flexibilities granted to developing countries must be limited, the anti-concentration clause strengthened and China obliged to accept shorter implementation periods. · Additional global market access should be achieved in the framework of the Doha round through certain sectoral agreements (e.g. chemicals and mechanical engineering) without there having to be more far-reaching concessions to the detriment of industrialised countries in the modalities. · After conclusion of the Doha round, all participants should strengthen the World Trade Organisation, for instance through more efficient decision-making processes, stronger prioritisation and regular ministerial meetings. · In the framework of G8, G20 and other international groupings, protectionist reactions to the current economic and financial crisis should be resisted.

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths Bilateral free-trade agreements

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Bilateral free-trade agreements What is at stake?

What needs to be done?

Bilateral free-trade agreements (FTAs) are becoming increasingly important as an important complement to efforts to achieve multilateral trade liberalisation in WTO. Since non-European competitors with important growth markets have already agreed FTAs, on its side the EU should push FTA negotiations forward. Only in this way can competitive disadvantages be addressed, e.g. those that arise if European companies have to pay comparatively high import duties whereas competitors such as the USA or Japan enjoy preferential market access thanks to free-trade agreements (FTAs).

· The key objective of any FTA negotiations should be a »WTO-plus standard«. This includes complete dismantling of customs duties for all industrial goods, complete elimination of non-tariff barriers to trade, seamlessly implemented protection of intellectual property as well as effective rules for dispute settlement. · Further objectives should be opening of international trade in services, liberalisation of direct investments, effective trade policy safeguard instruments, a further opening of procurement markets and a structuring of agreements which means that they are also useful for smaller companies.

Where are we now?

Asia: In April 2007 the European Commission was asked to initiate negotiations on free-trade agreements with South Korea, India and ASEAN. The negotiations with South Korea are the most advanced, the negotiations with India are making only slow progress. Negotiations with the ASEAN countries have so far been held back by political issues.

Gulf States: the EU’s negotiations with the Gulf Cooperation Council (GCC) are comparatively well advanced, even if conclusion was not achieved in 2008. Agreement is still lacking above all on the regulation of export duties and double pricing.

Latin America: there has not yet been a breakthrough in the negotiations with Mercosur. Whereas the Mercosur countries expect facilitations in the form of lower duties and extended EU import quotas in the area of agriculture, the EU is demanding concessions for industrial goods, in the area of services and for public procurement. The EU has been negotiating with Central America for about a year and good progress has been made. After a breakdown in negotiations with the Andean countries, the EU is now negotiating with Peru, Colombia and Ecuador on a plurilateral agreement.

Ukraine: the negotiations have made some progress, but the original goal of conclusion in 2009 will probably not be met. Important chapters such as customs duties or dispute settlement mechanisms have still not been opened.

· On the basis of a close dialogue between business and European Commission/German government, it should be ensured that German interests are adequately taken into account.

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Building on Europe’s strengths Create coherence on issues linked to the social dimension of globalisation

Create coherence on issues linked to the social dimension of globalisation What is at stake?

What needs to be done?

The fi nancial crisis has given the debate on the social dimension of globalisation fresh impetus. The main issue is the impact that the global economic crisis is having on employment and social protection of people everywhere around the world, and what contribution the EU can make to ensure that as many people as possible are in regular employment and enjoy social protection. In this connection, it is also a matter of meeting the United Nations’ millennium development goals.

· In the debate on the social dimension of globalisation, the concept of decent work should be kept sufficiently wide that its implementation takes account of the diversity of economic and social realities in the world.

In its external policy strategy for social policy, the European Commission draws heavily on ILO’s decent work agenda in which productive and freely chosen work, labour law, social protection and social dialogue are at the centre of efforts. Just as with the Lisbon strategy, a global and coherent process which brings together the economic, employment, social and environment policy objectives is needed to achieve these objectives.

Where are we now?

With its communication »The European interest: succeeding in the age of globalisation«, the European Commission has pointed out the right and necessary steps for positioning Europe in global competition in such a way that external policy objectives are also met. This mirrors a corresponding internal policy which has the internal market, a dynamic environment for companies and employability at its heart. Only on this basis will the EU succeed in meeting its objectives also externally – not least with respect to social development. In addition, cooperation with international organisations such as ILO or UNDP is useful and necessary for reaching an internally coherent policy for social development, and should be intensified.

· The conditions for Europe’s successful positioning in a global economy set out by the European Commission itself should be driven forward energetically, precisely in light of the financial and economic crisis. This includes optimal use of the internal market, a labour-market oriented immigration policy, a sustainable energy policy, ensuring financial stability and an open global trade system. · The goal of EU policy should be that open markets lead to investments and job creation in the poorer regions of the world. That is the best way to promote the social dimension of globalisation.

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths EU-Asia relations

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EU-Asia relations What is at stake?

What needs to be done?

Fast-growing and populous countries such as China and India are increasing the economic importance of Asia.

The economic turbulence that also struck the Asian countries at the end of 2008 has dimmed growth prospects only in the medium term: high demand for investment (construction boom, expansion of transport and energy infrastructure), a growing middle-class with money to spend on consumer products as well as the increasing need to anchor the principle of sustainability in local companies in emerging countries offer great market potential for European companies. Asian countries are harnessing a comprehensive network of free-trade agreements (FTAs) to promote trade with partners around the world. The EU must bind Asian countries more strongly into climate protection.

· Expansion of face-to-face dialogue with all Asian countries.

Where are we now?

Trade and investment relations with Asia are increasingly being given priority. Already started or close to conclusion are the free-trade negotiations with India or South Korean.

The ASEAN countries should follow. In China, the framework conditions for an innovation-friendly location through protection of intellectual property and voluntary technology transfer still need to be perceptibly improved.

With high-tech countries such as Japan, Korea or Singapore, cooperation in the area of research and development has scope to be expanded.

· Dismantling of tariff and non-tariff trade barriers in Asia, consideration of all industry interests when FTA negotiations are concluded with South Korea, progress towards regulatory convergence (norms and standards). · Equal market access for German investors, in particular opening of sectors in which foreign investors have only limited access. This also includes equal treatment of EU subsidiaries in Asia in local public tender calls. · A widening of the international community working responsibly for sustainability, in particular involvement of central players such as China and India in the areas of climate protection, open raw materials markets, protection of intellectual property, »Heiligendamm process«. · No differentiation of Asian partner countries into those which share European values (e.g. Japan, India) and those with values deficits (e.g. China). · Expansion of innovation cooperation with high-tech countries such as Japan, Singapore, Taiwan and South Korea.

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths EU-Russia relations

EU-Russia relations What is at stake?

What needs to be done?

A new partnership and cooperation agreement (PCA) between EU and Russia should supersede the old PCA which expired in 2007 but which has been extended by tacit agreement. The most important objectives for business are removal of obstacles to trade and investment as well as establishment of a free-trade area between EU and Russia.

The issue of energy security also plays an important role.

· Russia needs to modernise its economy with knowhow and technology from the EU. In addition, it is dependent on revenues from trade in raw materials. A PCA could place the supply of energy and other export relations on a more stable footing for the EU and Germany.

Where are we now?

On 26 May 2008 and after long disputes, EU foreign ministers agreed a negotiating mandate for the European Commission for a new partnership and cooperation agreement with Russia. The negotiations opened in June 2008, but were temporarily suspended due to the Georgia confl ict.

The Russian side would like a short document on which agreement can be reached rapidly. Sectoral agreements could follow.

· Accession of Russia to WTO cannot be expected in the foreseeable future. Hopes are pinned on the PCA which could enable rapid economic facilitations. Conclusion in 2009 would be an important signal. The major objective should continue to be creation of a Russian-European free-trade area. · In the short term it is necessary above all to harmonise customs legislation and certification standards.

Double certification and double taxation should be avoided. · Elimination or radical simplification of the visa regime between Russia and the Schengen area could give economic relations a fresh impetus. The Russian proposals for abolition of visas should be taken up constructively.

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths EU-USA relations / transatlantic economic integration

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EU-USA relations / transatlantic economic integration What is at stake?

What needs to be done?

Dismantling of non-tariff trade barriers has been advocated for many years by German business, which is pushing for rapid implementation of the EU-US framework agreement in the framework of the transatlantic economic council (TEC). The goal is creation of a barrier-free transatlantic market.

· Trade and security (100 % scanning), stronger cooperation on energy and climate (in particular energy efficiency and emission trading), protection of intellectual property (IPR), recognition of Supplier`s Declaration of Conformity (SDoC) by the USA should be positioned as priority themes.

Where are we now?

In its three meeting to date, TEC has pointed the way for implementation of the transatlantic framework agreement. For German business, important progress has been made in important areas such as mutual recognition of accounting standards (IFRS and US-GAAP), the roadmap for mutual recognition of customs security programmes (AEO and C-TPAT) in 2009, progress on harmonisation of patent law, adoption of a joint declaration on removal of barriers to investment in the transatlantic market and progress on imports of EU electrical equipment into the USA. TEC has agreed that the issues of energy and climate should be placed on the agenda. The framework agreement concluded at the EU-USA summit in 2007 and the results of the three TEC meetings are important steps in the right direction of a barrier-free transatlantic market. TEC is now an important institution in transatlantic economic relations.

· Policy-makers on both sides of the Atlantic should maintain the political momentum. The new US Administration and the new European Commission in 2009 must continue to feel committed to the TEC process.

To that end, high-ranking members of the new US Administration and of the European Commission should be nominated to chair TEC. · The German government should continue to flank the transatlantic process actively and to advocate vis-à-vis the new US Administration and the relevant EU Council presidency. · In order for the initiative to be an ultimate success, TEC should also draw on the support of parliaments.

The aim should be to have a closer involvement of the European Parliament and the US Congress.

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths EU-Mercosur relations

EU-Mercosur relations What is at stake?

What needs to be done?

Mercosur is one of the world’s emerging economic regions, with Brazil in the leading position. In the internal market around 270 million people generate around 2.3 trillion US dollars. Since the end of 1999 the EU has been negotiating with the South American Economic Community on an association agreement which is also intended to comprise a comprehensive free-trade agreement. In autumn 2004 the negotiations were suspended due to failure to reach agreement on central elements of trade relations. While the Mercosur countries accuse the EU of agricultural protectionism and expect facilitations in the form of lower customs duties and wider EU import quotas, the EUJ wants concessions on industrial goods, in the area of services and on public procurement.

· Negotiations between Mercosur and EU should be resumed rapidly. Concrete progress can be made independent of the status of the WTO Doha round.

Where are we now?

Since the breakdown of the negotiations between Mercosur and EU in autumn 2004, talks have been conducted at technical level. The faltering WTO Doha round is also impeding continuation of negotiations. Added to this, tensions within Mercosur are making it difficult for the economic area to reach a common position.

· Alongside removal of tariff and non-tariff trade barriers for European industrial products, access to public procurement in particular should be opened in Mercosur countries. · Irrespective of how the negotiations progress, an action plan should be developed which is workable for both sides and which aims at more transparency, predictability and simplification of trade relations. · The strategic partnership entered into by EU and Brazil in December 2008 is no substitute for an agreement.

Rather, the partnership should make a contribution to making a success of the negotiations.

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths European neighbourhood: EU-Mediterranean relations

European neighbourhood: EU-Mediterranean relations What is at stake?

What needs to be done?

At a summit for the Mediterranean in June 2008, it was decided to develop the partnership »Barcelona process: union for the Mediterranean«. The new partnership, which has now been officially abbreviated to »Union for the Mediterranean« (UfM), is intended to breathe new life into the Barcelona process which has existed since 1995. Participants are the 27 EU member states, 15 South Mediterranean neighbours plus Mauretania and Jordan.

Along with the goal of creating a free-trade area, concrete projects include expansion of solar energy and infrastructure in the southern partner countries.

· Efficient governance and sober allocation of resources are indispensable for the success of UfM. A clear division of tasks between general secretariat and the »senior officials« as central decision-makers must be ensured. All staffing decisions should be taken rapidly in the general secretariat so that there is complete capacity for work to go ahead. · The private sector should be closely involved in initiatives and projects at an early stage. Business-relevant initiatives should be communicated transparently from planning through to tender award in order for interested companies to be able to participate.

Where are we now?

In November 2008 political guidelines and the fi rst institutional arrangements for the partnership were put in place.

There is a co-presidency with a northern and a southern partner. The general secretariat, the operational arm of UfM, has its headquarters in Barcelona and comprises a secretary general and five deputies. Staffi ng decisions still have to be taken. The Arab League can take part in all meetings as a guest, but has not vote. Envisaged projects are already announced in the June 2008 summit declaration. Practical implementation and fi nancing continue to be unclear.

· The modalities for project financing need to be specified in the near future. · The Mediterranean region offers great economic potential. Despite the primarily project-oriented approach, UfM should also target an improvement of business framework conditions as well as intra- and inter-regional integration.

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths European neighbourhood: the eastern dimension

European neighbourhood: the eastern dimension What is at stake?

What needs to be done?

The European neighbourhood policy (ENP) sets out to prevent dividing lines between the EU – including accession and candidate countries – and neighbouring countries in the East and South, and to facilitate trade beyond the EU’s external borders. ENP explicitly creates no automatic link with an EU accession.

· Dividing lines between ENP target countries of the former Soviet Union and Russia should be avoided.

Where are we now?

For ENP, it continues to be useful to set out a strategic framework, but to take account of national specificities for implementation as well as to promote contacts with the beneficiary countries. Efforts to give priority to cooperation on environment, climate and energy policy are assessed positively.

Through the »Union for the Mediterranean« and the envisaged »Eastern partnership«, ENP has been given a new regional impetus. For instance, six lighthouse projects are planned for the cooperation with states of the former Soviet union (Belarus, Ukraine, Moldova, Georgia, Azerbaijan, Armenia). These range from improvement of border controls and protection against catastrophes through promotion programmes for SMEs to a coordinated energy policy. To this end, the fi nancial framework will be increased from 450 million euros to 785 million euros in 2013.

· It is necessary to implement free-trade areas between the EU and its neighbours as well as facilitations or complete elimination of visa requirements. Both points have rightly been under negotiation with Ukraine since September 2008 in the framework of the association agreement. · The EU should give the beneficiary countries clear incentives for structural reforms, including improvement of administrative structures and deregulation and privatisation of the economy. · The security of Europe’s energy supply and modernisation of the corresponding transmission systems should be moved forward. In this regard, great importance accrues to the transit countries Belarus, Ukraine and Georgia, as well as to Azerbaijan as a supplier country.

BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

Building on Europe’s strengths EU development policy

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EU development policy What is at stake?

What needs to be done?

Taken together, European Commission and EU-27 are by far the largest provider of official development assistance (ODA). With 62 billion US dollars (2007), they account for around 60 % of global ODA. In the framework of the ODA incremental plan, EU member states have committed to further substantial increases. By 2015, an ODA quota of 0.7 % of Community gross national income should be reached.

· Partner countries should be given greater support for the creation of business-friendly framework conditions. The reduction of transaction costs for business initiatives should become a central task of development cooperation, also under development aspects.

In particular in areas which are of vital importance for business, good governance must be sufficiently recognisable. Cross-border investment and trade obstacles should be removed; regional integration processes should be actively promoted.

Where are we now?

Despite serious reform efforts, development policies of European Commission and member states are still poorly coordinated with each other. The possibilities for publicprivate partnerships (PPP) are only progressively being opened through measures linked to Community development cooperation.

· Investments in development-relevant infrastructure should be made in equal cooperation between business and state players. To this end, existing PPP approaches and instruments should be expanded and innovative co-financing forms should be promoted, e.g. for energy supply, transport, communication, health, education, climate protection or energy efficiency. · Companies must have fair access to contracts financed with development money. Tender procedures should be transparent and as harmonised as possible – also in partner countries. · Qualitative aspects (e.g. costs over the entire lifecycle, suitability of the offered technical solution, corporate responsibility and feasibility) as well as proof of technical skills and creditworthiness should be taken into consideration for all tendering contractors in a harmonised pre-qualification procedure. · The dialog between policy-makers and business must be put on a permanent footing and intensified, for instance through high-level meetings and joint working groups.

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BDI – Federation of German Industries BDA – Confederation of German Employers’ Associations

BDA | Confederation of German Employers‘ Associations BDA is the leading organisation dealing with social policy on behalf of German business as a whole. It represents the interests of small, medium-sized and large companies in all sectors (industry, services, fi nancial sector, handicrafts, etc.) in all issues linked to social and collective bargaining vis-à-vis policy-makers, trade unions and the general public. It is the voice of business for and provides a comprehensive range of services to its members. At national and international level, it develops workable and sustainable concepts, and provides its members with up-to-date and competent information and advice.

BDA represents the interests of one million businesses which employ 20 million workers and are linked to BDA through their voluntary membership of 6,500 employer confederations. These employer confederations are organised in the 56 national sectoral organisations and 14 regional associations which are direct members of BDA. The confederations are organised sectorally and regionally.

Internet: www.arbeitgeber.de E-mail: europa@arbeitgeber.de

Building on Europe’s strengths

Federation of German Industries (BDI) The Federation of German Industries (BDI) is the central organisation of German industry and industry-related service providers. It speaks for 36 industry associations and represents more than 100,000 companies that employ more than 8 million persons.

BDI’s headquarters, with 150 employees, are located in Berlin. BDI maintains offices in Brussels, London, Washington and Tokyo, and stays in close contact with the member associations of the European umbrella organisation, BUSINESSEUROPE – and also with our partners around the world. BDI adheres to the guiding principles of the market economy and competition, and supports the shaping of German and European economic policy by providing a clear direction.

The BDI is the voice of German industry vis-à-vis the Federal Government, the Bundestag, the Federal Council, the parties and the Ministries. It represents German industry’s interests in dealings with the European Commission, the European Parliament and international organisations such as WTO, OECD, World Bank, United Nations and the IWF. Internet: www.bdi.eu E-Mail: europapolitik@bdi.eu

Imprint ISSN 0407-8977 Status: March 2009 BDI publications No. 424 BDA publications No. IX/025/09 Editor

Federation of German Industries (BDI) Breite Straße 29 D-10178 Berlin T.: +49 30 2028-0 www.bdi.eu BDA | Confederation of German Employers’ Associations Breite Straße 29 D-10178 Berlin T.: +49 30 2033-0 www.arbeitgeber.de Publisher

Industrie-Förderung Gesellschaft mbH Editorial

BDI – Department of European Policy BDA – Department of European and International Affairs Editorial Deadline

4 March 2009 Photos

EU-Commission www.photocase.de (akileb, mpmedia) Graphics and Layout

Concept: Factor Design Realisation: DCM Druck Center Meckenheim GmbH www.druckcenter.de