Two reports calling for an EU wake up

In September 2023, the European Council of the European union tasked Enrico Letta, Italy’s former Prime Minister, with preparing an in-depth report on the single market. The long-awaited report published in April 2024 is making a powerful political and economic case for single market deepening and broadening. Mr Letta explains why the single market is critical to tackle the big problems of our times: boosting investment to finance Europe’s many needs through a “savings and investments union”; lowering the costs of decarbonisation; strengthening Europe’s ability to defend itself; and making it easier for European companies to grow and achieve scale. The single market is critical not just to give Europe’s citizens better choices, but to strengthen Europe in the world. But competitiveness as well as resilience must also be priorities for the next EU Commission and Parliament.

“(…) It is time to craft a new compass to guide the Single Market in this complex international scenario. Powerful forces of change – spanning demographics, technology, economics, and international relations – necessitate innovative and effective political responses. Given the ongoing crises and conflicts, action has become urgent, particularly as the window of opportunity to intervene and relaunch the European economy risks closing in the near future. ” says Enrico Letta

Regarding the maritime sector, Mr Letta underlines that European ports remain critical infrastructure, serving as gateways to the Single Market. However, the EU maritime industry is unable to fully benefit from the Single Market in short sea shipping because maritime traffic between EU countries remains international traffic. Indeed, Customs procedures remain applicable to goods circulating between EU countries, and burdensome non-harmonised reporting are still required at each port call.

Mr Letta advocates a thorough evaluation of new environmental requirements, such as the integration of maritime transport into the EU Emissions Trading System (ETS) and the Carbon Border Adjustment Mechanism (CBAM) because it is critical for the EU to prevent such measures inadvertently cause a modal shift back to road transport or towards non-EU ports with lower environmental standards.

Another awaited report from former Italian prime minister Mario Draghi (to be submitted to the EU Commission next month) is expected to also call for an EU wake up regarding EU competitiveness.

In his recent acceptance speech upon receiving the Charles V European Award in Spain, Mr Draghi focused on how the EU could catch up with the US. In Europe, economic growth has been sluggish in most member states, with inflation cutting into stagnating income.

According to Mr Draghi, the productivity gap between the EU and the US is down to the tech sector and is set to widen with the development of artificial intelligence, currently dominated by American companies. It is time to act and swiftly.

It is reassuring to notice that competitiveness is at the heart of the recommendations in both above mentioned reports. EU’s exposition to fierce competition from neighbouring third countries’ industries and companies should also be systematically considered when adopting legislation for the internal market.
Source: FEPORT