Past event

Europe's reform agenda debated between Polish ministries and British industry

Katja Hall, CBI deputy director-general, visited the BPCC's headquarters this month for a meeting with three senior Polish government officials and representatives of some of the UK's largest investors in Poland.

The Confederation of British Industry, Britain's leading employers' organisation, is visiting key European capitals to discuss British business’s EU reform agenda with representatives of business and government. Having visited Berlin and Rome so far, the CBI visited Warsaw for meetings with the Polish government, Polish businesses and UK investors.

At the round-table event held at the British Polish Business Centre on 1 July, Ms Hall outlined the views of British business regarding the EU. With a membership of 190,000 companies (directly or indirectly as members of trade associations and employers' organisations), the CBI speaks for firms employing a third of the UK's private workforce. Ms Hall said that May's elections to the European Parliament should serve as a wake-up call for the EU – “there is a need for change and the status quo just won't do.” British business wants Britain to stay in Europe, with 80% of firms large and small polled expressing their preference for continued British EU membership. Firms that exported were more firmly in favour.

Ms Hall said that trade with the EU was essential to the economic success of the UK: “It's not a case of either/or; the UK must increase its exports to both the EU and to high-growth markets further afield. There is great scope for British business to do more in the CEE region.” She said that British business strongly supported the single market including the freedom of movement of workers. EU membership benefits each UK household to the tune of £3,000 per year. But the EU was not perfect – there were not enough jobs, not enough growth. The EU must be driven by reform, aimed at making it more competitive. The CBI has identified four pillars of Europe's global competitiveness:

  • An outward-looking EU – DG Trade should focus on completing the Transatlantic Trade and Investment Partnership (TTIP), and similar trade deals with high-growth economies
  • An open and competitive EU – the 2006 Services Directive needs to be fully implemented, a digital single market created. There should be more subsidiarity (regulations made at and for the appropriate level of government), more impact assessments of regulation.
  • Institutional balances between the Euro-ins and the Euro-outs – safeguards for the 'outs', safeguarding the single market of the 28
  • Clustering the portofolios of the directorates-general, with a focus on growth, and not on 'lifestyle' Directives.

Karolina Ostrzyniewska, director of the Department of the Committee for European Affairs of the Ministry of Foreign Affairs, agreed with the CBI's four pillars, but expressed a more cautious note on the subject of EU treaty change. The Polish government supported the candidacy of Jean-Claude Juncker, and regretted lack of consensus, Poland, she said, was advocating three issues for Europe:

  • Security in foreign relations and energy security
  • Linkage of the jobs and growth agenda with the need for enhanced competitiveness
  • Completion of the internal market, so that it can be fully exploited in all its dimensions, with Four Freedoms – in particular in services and movement of people.

Ms Ostrzyniewska also mentioned the eurozone, saying that “Poland is not so much an 'out' as a 'pre-in' – we are keeping the door ajar politically.”

Małgorzata Wenerska-Craps, director of the European affairs department at the Ministry of the Economy, explained that Poland, with its strong industrial base, weathered the global recession much better than countries like the UK which were seen as service economies. As a result, EU industrial policy should be regulated by member states rather than centrally. She said that internal market regulations, whether they are intended to protect the environment or safeguard health, should only be introduced after rigorous impact assessment that calculates the costs of compliance on the industrial sectors that they impact. “Do we need the legislation?” Ms Wenerska-Craps praised the EU's REFIT (Regulatory Fitness and Performance Programme) – “one in, two out, hesitating as to what brought benefit, and what was bad.”

She cited the REACH Directive, “disliked as a burden on industry. In 2007, only Poland and Ireland were against it. The tendency of EU institutions is to tighten rules not to get rid of restrictions – the worst kinds of instruments”, said Ms Wenerska-Craps. She said of the new Delegated Acts which could change EU law within three to five months: “Predictability disappears.” Turning to the experience of Polish companies who have invested in the UK “They are very happy – there's nothing to complain about in the UK. Together we must fight discriminatory instruments and non-tariff barriers.”

Patryk Łoszewski, director of the EU Department at the Ministry of Finance said that the key to stability of Poland's public finances throughout the crisis was its strong commitment to the EU deficit and debt criteria. “Excessive deficit will be eliminated by 2015,” he said. “We need to keep the expenditure side of budget under control.”

Speaking of Poland's plans to adopt the euro, Mr Łoszewski said: “We keep attached to the strategy and we want to prepare well – and learn from mistakes made by others.” He made three points:

  • A strong economy is needed to benefit from eurozone membership
  • Poland needs to be competitive
  • Poland must adapt its own conditions to perform within the eurozone.

Joining the eurozone remains Poland's ultimate goal, he said. Mr Łoszewski also spoke about the prospects for a banking union, where Poland has participated in the negotiations to create the single supervisory mechanism. He said that the results of Poland's asset quality review will come out in the autumn, and Poland will fight to safeguard the interests of the 'outs' once it becomes a full member of the eurozone.

Turning to taxation, Mr Łoszewski said that common coordination was needed, by looking at each other's country, with specific recommendations worked out by all members. An action plan focused on tax compliance and tax administration that is more company-friendly would benefit from the processes at EU level. He said that structural changes within the Ministry of Finance had resulted in a more pro-client approach, with individual departments concerned with long-term stability, with less regulation and more coordination.

He said that the debate at beginning of Italian presidency was about the balance between austerity and growth, searching for new growth factors and the need to fulfil existing areas of the EU's internal market.

Ian Fox, deputy head of the Policy Delivery Group at the British Embassy in Warsaw said that David Cameron had drawn a line under the Juncker debate and was now concerned with moving forward. Although growth in the UK and Poland was strong, across the eurozone it remained feeble with high youth unemployment across Europe leading to the risk of a missed generation. The CBI and the UK Government are close on a lot of issues, he said, and the Polish and UK Governments are also close on a lot of issues as members of a like-minded group on growth and competitiveness. These include the need to complete a single digital and services market, complete negotiations on TTIP and trade deals with Japan and Canada – which together would add €165 billion to the EU economy. There should be a sector-based approach to completing the single market in services, focused on construction, professional services and digital cross-border trade. Innovation needs be boosted, as the EU lags behind the US, Japan, South Korea, even China, said Mr Fox. He also mentioned the REFIT programme and the need to reduce the burden of EU regulation. A PM-inspired EU business task force had looked at issues such as country-of-origin labelling, shale gas, traineeships, environmental impact assessments, clinical trials, access to justice in environmental Directive cases and the subs