Opinion of the Economic and Social Committee on the 'Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions on the competitiveness of European enterprises in the face of globalisation - How it can be encouraged'
Date: 1999-09-23
Institutions: European Economic and Social Committee
Subjects: European undertaking, competition, competitiveness, world economy

17.11.1999

EN

Official Journal of the European Communities

C 329/49

Opinion of the Economic and Social Committee on the ‘Communication from the Commission
to the Council, the European Parliament, the Economic and Social Committee and the Committee
of the Regions on the competitiveness of European enterprises in the face of globalisation
— How it can be encouraged’

(1999/C 329/12)

On 22 January 1999 the Commission decided to consult the Economic and Social Committee, under
Article 198 of the Treaty establishing the European Community, on the above-mentioned communication.

The Section for the Single Market, Production and Consumption, which was responsible for preparing
the Committee’s work on the subject, adopted its opinion on 22 July 1999. The rapporteur was
Mr Morgan.

At its 366th plenary session (meeting of 23 September 1999), the Economic and Social Committee
adopted the following opinion by 92 votes, 23 against and with 21 abstentions.

1.

Introduction

In its reflection document, the Commission has made
1.1.
no attempt to classify in any systematic way the European
enterprises to which the Communication refers. For the
purposes of its opinion the Committee proposes the following
classification:

A. Large enterprises:

A1 nationalised enterprises;

A2 Europe-domiciled public companies;

A3 Non-Europe-domiciled but Europe-located public

companies.

B. Small and medium enterprises:

B1 publicly quoted on stock markets;

B2 privately owned;

B3 venture capital supported.

1.2.
The purpose of the Communication is to examine how
to meet the challenges which Europe faces in order to benefit
from globalisation. This requires consideration of the capacity
of each of the enterprise classes detailed above to compete in
the global economy so as to contribute to GDP growth and
employment creation in the EU.
the
Communication that,
in order to possess this capability,
enterprises will have to adapt and that, in parallel, there must
be a political response both from the EU and from Member
States.

is the thesis of

It

1.4.
There are a number of favourable references to the US
economic model in the Communication. The central issue of
this Opinion is how to achieve US-type outcomes within the
structures and regulations of the European social model. In
particular there is a cultural challenge to encourage risk taking
within the welfare state without jeopardising the welfare state
itself.

1.5.
Globalisation means that producers world-wide can
enter all markets, and low-cost countries gain a comparative
advantage in basic and repetitive industries. The evolutionary
forces set in train require that the first world develop leadership
in high tech, high added value industries which exploit skilled
human resources. This will also be disruptive; lower technology
industries are likely to fail and this in turn will put pressure on
any rigidities and inflexibility in the economy. Europe’s
ability to meet these challenges is a recurrent theme of the
Commission’s Communication and this Opinion. It will also
depend on the success of the Commission in negotiating a
new world order for international trade and improving the
operation of international capital markets.

1.6.
Competitiveness requires that an enterprise can add
value to factors of production and win customers in open
markets. The role of government is to ensure that the legislative
environment is supportive, and that business and payroll taxes
are not punitive. The overall effect must be that (a) the interests
of all stakeholders are protected and (b)
jobs are both
safeguarded and created.

2. European Enterprises and Market Capitalism

2.1. Large enterprises

As in all ESC Opinions, this Opinion is faithful to the
1.3.
goals of the European social model — health, education, social
security and employment — on which the skills and welfare
of EU citizens depend. However, concerns about
the
implementation of the model are raised in this Opinion:
specifically funding social provision via payroll taxes rather
than income taxes, and the nature of the regulations which
protect employment security.

2.1.1.
Until recently, many of Europe’s larger enterprises
have been nationalised monopolies, which meant that Europe
did not engage in certain sectors of the global economy. Key
sectors of the European economy have been fragmented across
fifteen countries by country boundaries. The development of
the Single Market in the EU has removed many of these
constraints.

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2.1.2.
Liberalisation of market sectors and privatisation of
enterprises in the last decade have begun to correct the
situation, yet much still needs to be done:

2.1.6.
The ESC supports the view that companies estab-
lished in Europe, wherever domiciled, are ‘European’ enter-
prises.

a)

b)

c)

d)

the Communication refers to the failure of the European
defence industry to consolidate. But, unlike the US defence
industry, European defence M&A (Mergers & Acquisitions)
has been inhibited by nationalisation and government
interference, often via its golden share;

the Communication makes much of the networked world,
but the excessive delay in liberalising and privatising the
telecom sector has left Europe with prices so high as to
discourage public use of the Internet;

the development and commercial exploitation of TENs
(Trans-European Networks) is still liable to be held back by
nationalised monopolies in the power and rail industries;

the former nationalised industries and the formerly regu-
lated industry sectors are in many cases central to the
provision of a cost-competitive, high quality enterprise
infrastructure in Europe. The realisation of this infrastruc-
ture, started in the last decade, is far from complete, and
penalises the competitiveness of EU enterprises generally.

2.1.3.
Liberalisation of industry sectors such as telecoms
and broadcasting has at last stimulated the emergence of many
new, fast-growing and successful high-technology enterprises.
The continued emergence and growth of new enterprises in
such areas as information society technologies, biotechnology
and renewable energy technology require further prudent
moves towards deregulation and protection from the abuse of
dominance.

2.1.4. With the exception of the UK, the market capitalis-
ation in other EU stock markets is surprisingly small. In
part this is because some large enterprises remain partly
government owned but, in addition, very many large Europe-
domiciled companies are in private hands and not quoted on
any stock exchange. Of course, private ownership has many
advantages, especially for the owners. The disadvantage is that
it limits access to international capital. It is therefore a potential
brake on the global aspirations of competitive European
companies. The necessary political response to this situation is
to ensure that tax regimes do not inhibit the sale and flotation
of private companies. The flotation of private companies
also has the advantage for stakeholders of increasing the
transparency of management operations.

2.1.5.
In many European countries, equity holdings lack
transparency as a result of complex cross-shareholdings, often
involving the banks. Therefore there has been relatively little
pressure from shareholders for improvements in management
performance.

2.1.7.
As companies develop a global dimension, they also
develop the capability to create or destroy jobs in Europe.
Many jobs have been exported from EU countries in the last
decade. Such companies will increasingly compare the relative
attraction of Europe as a location for productive activity with
other locations around the globe.

2.1.8.
Inward investment contributes largely to EU employ-
ment and GDP, and the enterprises involved are naturally
concerned about the relative competitiveness of their subsidi-
aries located in the EU. As globalisation becomes universal,
and the same group of companies, wherever domiciled (Euro-
pe, Asia, USA, …) become omnipresent, the actual domicile
of such companies becomes increasingly less important.
Companies gear their investment decisions according to the
attractiveness of locations in different countries and regions
worldwide.

2.1.9.
Amongst the key considerations for a ‘business-
friendly’ location are labour force skills, employment costs,
taxation, physical infrastructure and the legal framework. Well
functioning social dialogue, social harmony, work motivation
and local markets are also important. These are the issues on
which politicians should focus. The challenge for EU locations
is to maintain a balance between the superiority of
its
workforce skills, the quality of the infrastructure and the
environment on the one hand and the costs of doing business
on the other. (see points 1.4 to 1.6).

2.2. Small and medium-sized enterprises

Nearly all enterprises fall into the small and medium category.
There are actually very few large enterprises. Most SMEs quoted
on a stock exchange will be of medium size, with nearer
200 employees than 20. For the purposes of this analysis they
should be grouped with the large enterprises.

SMEs in private hands in countries like Germany and
2.2.1.
Italy have been the backbone of their economies. Traditionally
they have been financed by family capital, not risk capital. As
the generations change, many such companies are seeking
outside capital and ownership. Again, it is important that such
developments are not inhibited. It is of course important that
capital
is channelled into productive investment, and not
purely speculation.

2.2.2. Within the Communication there is much discussion
of venture capital — especially the US version — and the part

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it can play in the formation and growth of SMEs (1). US venture
capitalism offers high risks and high rewards all round — for
venture capitalists, entrepreneurs and employees. Entrepre-
neurs and their employees enjoy stock options over a pro-
portion of the company’s capital way beyond the institutional
norms of Western Europe. It is a feature of the system that
ventures can just as well fail as succeed. This does not disqualify
an entrepreneur from trying again. The role of NASDAQ (2) is
to let the venture capitalists sell out to shareholders as soon as
the venture is sufficiently advanced to be saleable, so that the
venture capital can then be recycled into new ventures.

— national systems of public recognition should embrace

entrepreneurs who create significant employment;

— entrepreneurs in high-tech industries are becoming global

role models: EU countries should foster theirs;

— we do need to expose students to the entrepreneurial
culture and to make business management education an
important component of university education;

2.2.3.
European ventures can be sold to the public on a
number of national exchanges and there is also access to
EASDAQ (3) and NASDAQ. The European public is very
receptive to this type of investment, so venture capital exits
are assured. The infrastructure of European capital markets still
lacks critical mass so entrepreneurs have difficulty accessing
capital. There is also a relative shortage of European high-tech
ventures. It is in the absence of these that venture capital has
to resort to refinancing family companies and supporting the
restructuring of European companies via management buy
outs (MBOs) (4).

As a manifestation of ‘man’s’ creative ability and in
2.2.4.
the context of a high level of unemployment, the creation
of an enterprise with the associated jobs should be given
considerable social recognition. This is unfortunately not
always the case. Accordingly, there is ‘brain-drain’ of many
potential entrepreneurs out of the EU. To correct this situation,
the Committee supports many of the ideas included in the
Communication:

— risk-taking does need to be encouraged;

— the stigma attached to honest business failure should
be lessened by establishing appropriate regulations for
bankruptcy and insolvency (although this might be difficult
to achieve);

— the taxation system applied to small companies and the

burden of payroll taxes should be reviewed;

— universities need to be entrepreneurial in the exploitation

of their technologies;

— enterprise parks for technology transfer have great poten-
tial and should be attached to the major technological
universities.

In addition to the entrepreneurial ‘drain’, the USA
2.2.5.
also acts as a magnet
to technologists attracted by the
employment opportunities. Presumably the response to this
trend is to make technological employment and personal
advancement as attractive in the EU.

The Communication is rightly concerned about the
2.2.6.
encouragement of high-tech start-ups with a potential to grow,
compete globally, and create jobs. It is vital to ensure an
adequate supply of students to scientific and engineering
disciplines, and then to teach them in an entrepreneurial
environment. Competitions and prizes should be used to focus
science students on innovation and exploitation. Single small
companies which cannot get
from the
Fifth Framework Programme without collaboration with third
parties need support
from their national governments.
financial support should be available to new
Additional
technology ventures, both in the form of direct grants and tax
write-offs for R&D. The system for protecting intellectual
property must also be improved, particularly to help entre-
preneurs in high-tech fields.

financial support

— the capital gains tax regime should not penalise entrepre-
neurs or employees who become rich through company
ownership or stock options;

— rates of death duties and inheritance taxes should be
reviewed in order to ensure the survival of family enter-
prises;

2.2.7.
Stimulating the supply side via technological entre-
preneurship is not, of course, sufficient to solve the problem
that Europe lags behind the USA in high-tech start-ups. There
is also a demand issue, whether for information society
technologies, biotechnology or energy technology. To some
extent public authorities can create this demand, but the
attitudes of business and the general public are also critical.

(1) See ‘Proposal for a Council Directive on measures of financial
assistance for innovative and job-creating SMEs — the growth
and employment initiative’, OJ C 157, 25.5.1998, p. 65.

(2) NASDAQ = National Association of Securities Dealers Automated

Quotation.

(3) EASDAQ = European Association of Securities Dealers Automated

Quotation.

(4) OJ C 235, 27.7.1998, p. 13.

2.2.8.
All over Europe, entrepreneurs are angry about the
burden of regulation and red tape. At its inception the firm
will have only one or two managers. They will be fully engaged
in establishing the company and creating the markets which
will support employment. A reduction is therefore needed in
the red tape which hinders start ups and makes it difficult for
new firms to survive. In some countries the response from the
authorities is deplorable, whether for authorisation to start a
business, or to keep it running.

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3. Specific Observations on the Communication Text

c) Cultural identity and audiovisual business: a challenge and

an opportunity.

3.1. Section I — Trends — the phenomenon of globalisation

for improvement in organisation.

d) Science and technology policy: insufficient effort and room

The Committee broadly accepts the trends analysis included in
the Communication, to which the following additions should
be made:

3.1.1.
The Communication highlights the importance of
those industries which are ‘outstripping traditional sectors in
growth, capitalisation and exportability’. Companies in these
industries have few assets except human capital. After a decade
in which job creation in the USA has been equated in Europe
only with ‘Mac’-jobs, the Communication reveals the real
impact: ‘Between 1995 and 1996 the information technology
and electronics industries added 250 000 jobs to the American
economy. Two million jobs are generated annually from the
software industry, which accounts for more than 44 000
companies’. The challenge for Europe is to create the business
culture in which such firms can flourish here.

3.1.2.
The Communication discusses Europe’s capacity to
compete in these new industries; although this must indeed be
regarded as a challenge, it will not be easy. The knowledge
industries and E-commerce in the USA are, after all, developing
in an archetypal free market. That market is fulfilling its classic
role as a process of ‘discovery’ to find out what sells and what
does not, what works and what does not, what succeeds and
what fails. Hence some venture companies succeed, but many
more fail. Many that succeed go on to export their success.
Even if not exporting, the unified US market is far easier for a
start-up company to exploit than the fragmented European
market.

involved can start again. Hence,

3.1.3.
It is not clear from the Communication how the
Commission believes that Europe should compete and how
aspects of the US model can be adopted without accepting the
liberal philosophy which underlies it. If a company in the US
the process of
fails, all
‘discovery’ extends to the entrepreneur, who can keep trying,
as well as to the employees, who can keep re-forming the
enterprise. It is not, however, possible simply to transfer the
US model to Europe. In the EU, a balance must be achieved
between creating the necessary business culture while main-
taining economic and social cohesion.

3.2. Section II — The position of European enterprises

3.2.1.
elements for diagnosis:

The Communication

proposes

the

following

a) Competitiveness: the need for new definitions.

b) The position of industry: traditional rather than high-

growth.

e)

Inefficient patent and licence trading system.

f) Alliances, mergers and acquisitions in advanced fields: a

degree of inhibition.

g) Europe has not developed risk-taking sufficiently.

While the Committee accepts much of this diagnosis, there are
a number of points to make, as follows:

3.2.2. T h e l i m i t e d u s e o f

i n f o r m a t i o n t e c h -

n o l o g y

3.2.2.1.
An important contributory factor is the high cost
of telecommunications. A more fundamental concern is the
nature of the changes which are needed within the enterprise
if the full benefits of IT are to be realised. These involve
organisation structure, job content, working practices etc. It is
clear to the Committee that promotion of the use of IT
depends to a large extent on the quality of management and
the investment climate. Moreover, there is a need to examine
whether EU legislation is sufficiently geared to such reorgan-
isation of employment. Here, too, we need to create a balance,
as outlined in the above paragraphs. The need to ensure proper
living and working conditions in the EU is, however, beyond
dispute.

The successful use of

information technology
3.2.2.2.
requires a high level of individual IT skills. In part this is an
issue for the quantity and quality of IT professionals available
to companies in the EU market. In this context the career
opportunities for women are under-developed. In addition to
level of user skills in both
professional skills, the general
management and the workforce is a most important issue for
the competitiveness of European companies. Increased IT skills
and understanding need to be acquired by individuals with
ambition and provided by companies which wish to compete.

3.2.3. T h e d e l a y e d g l o b a l i s a t i o n o f b u s i n e s s

s e r v i c e s

3.2.3.1.
The Communication states that Europe lags behind
the USA in business services, but does not explain why. The
reason for this is that capital markets have been slow to
develop in Europe. As a result, services related to IPOs (Initial
Public Offerings), M&A (mergers and acquisitions), corporate
reporting and other public company activities are underdevel-
oped. Hence, this sector is dominated by foreign investment
banks, law firms, brokers, accountants, auditors and financial
PR firms. There is a related shortfall of European firms in
financial services because pension provision has
personal

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historically been nationalised in most Member States and stock
markets are underdeveloped as a repository for personal
savings.

d) Redirecting public aid to enterprises towards intangible

investment.

3.2.3.2.
The other dimension of service-business develop-
ment is outsourcing; this is the process by which enterprises
concentrate on their core functions and contract-out peripheral
service functions. Independent service firms are created in this
process for activities as diverse as logistics, building operations,
catering,
In
information technology, public relations, etc.
Europe this form of specialisation started somewhat later.

3.2.3.3.
The Communication says that ‘action to exploit
the employment potential of the services sector forms an
important element of the European employment strategy’. The
EU and the Member States could help this process by creating
the requisite general conditions. This can include encouraging
public authorities to contract out the service component of
their employment. This could also improve the quality of
service provided to both the authorities and the public.

e) Developing human capital.

f)

Increasing mobility for individuals.

g) Further harnessing the competitive advantages offered by

the single market.

h) Ensuring efficient competition, which would allow the
innovative nature of markets to be taken into

global
account.

i) Continuing the successful efforts in liberalising public

utilities.

j)

Promoting the establishment of a global framework for
competition.

k) Monitoring enforcement of the rules.

3.2.4. S c i e n c e a n d t e c h n o l o g y p o l i c y

l) Defending European positions: greater vigilance, preparing

negotiations, working together.

The data given in the Communication is not adequate to
explain the differences in R&D expenditure between the USA,
the EU and Japan. R&D relates to industry sectors in which
enterprises are active. The key issues are the relative amounts
spent at sector level and the number of enterprises per sector.
In this way we could at least determine whether comparative
enterprise R&D is deficient — e.g. Rolls Royce versus General
Electric, Volkswagen versus Ford, Philips versus Sony, or Glaxo
versus Merck. If Europe is deficient in R&D in high-tech
industries, this is, in part, because Europe suffers from a deficit
of enterprises in those sectors. In general, European enterprises
are not entering the new industries, nor are enough new
companies being formed. There are, of course, exceptions like
SAP and Nokia [see also 3.3.5 (g)].

3.3. Section III — Pointers to a new industrial policy

The opening paragraph of this section of the Communication
reads as follows:

‘The analysis of world trends and of Europe’s position
highlights the need to adapt its industrial policy, notably
to spread the enterprise culture and encourage risk-taking
and to promote the emergence of innovative companies
able and willing to conquer the world market.’

3.3.1.

This is to be achieved by the following actions:

a) Adapting the systems for acquiring skills and fostering the

spirit of enterprise.

b)

Improving the system for research, take-up of results.

c) Facilitating risk-taking.

m) Working towards close coordination at world level.

n) Placing greater responsibility in industry.

o) Promoting the interests of consumers and users.

3.3.2.
The measures (j) to (o) fall within the general heading
of ‘promoting a global consensus and level playing-field’.
These actions, taken together, describe a proactive role for the
EU in WTO and other global trade negotiations which has the
full support of the Committee. Clearly the EU has an important
role to play in establishing a new world order. In order to do
so, it must be careful to retain its moral authority, particularly
since the European social model is at stake. Recent disagree-
ments with the WTO, where rulings about bananas and beef
have been rejected, could compromise the position of the EU
in future disputes where the EU itself might wish to rely on
WTO rulings against third parties.

3.3.2.1.
EU enterprises would be more competitive on the
global market if comparable conditions of competition, in
particular labour-law standards, also applied in other parts of
the world. In the forthcoming WTO negotiations, the EU
should particularly press for improvements in labour-law
standards throughout the world, on the basis of the work
carried out by the ILO.

The social partners should seek to encourage
3.3.2.2.
acceptance of the European model via contacts with related
organisations in other parts of the world.

Our trading partners will, of course, be concerned
3.3.2.3.
that in some cases we may be attempting to transfer some of
the overhead costs of our economic and social model to them.
In order to ensure the competitiveness of European enterprises,
the Commission will have to consider for relief any extra cost
burden on European business which cannot be transferred in
this way. However, the first priority must be to promote the
social standard of the European model.

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Concerning point (b), research,

3.3.3.
three actions are
proposed. The Committee is fully supportive of these. The
Committee has given an Opinion on the Fifth Framework
Programme (1). The success of the pilot I-TEC investment
initiative is encouraging and the Committee looks forward to
its extension under the Fifth Framework Programme. The need
to improve the patent system is recognised and the Committee
looks forward to the Commission’s planned initiatives.

3.3.4.
dations regarding the development of human capital (e).

The ESC fully supports the Commission’s recommen-

c) Agreed accounting standards would be a great benefit.
Cross-border M&A activity is significantly hindered by
uncertainty about the value of target companies.

d) Coordination of tax systems is a two-edged sword. Overall
rates of tax on business and employment vary widely. It is
possible that harmonisation could involve higher taxes in
certain countries, which would hit the competitiveness of
enterprises. Any reform needs to be carefully considered
from the points of view of competitiveness and employ-
ment.

3.3.4.1.
The EU needs to give priority to training and
developing people (see point 1.5 of the opinion) in order to
enable technology to be developed and exploited and in order
to safeguard quality and high added value. Special attention
should also be paid in this context to encouraging entrepreneu-
rial spirit.

e) Adaptation of the regulatory framework for the infor-
mation society could be of great benefit. Some of the issues
were explored in the ‘Convergence’ Green Paper last
year (2). The European Council has asked the Commission
to work on the framework conditions for the information
society, and the ESC is most anxious to review any ensuing
proposals.

To be competitive, human resources must form an
3.3.4.2.
enterprise, led by an entrepreneur. However skilled, a work
force needs leadership to achieve its full potential. Customers
create jobs, entrepreneurs create customers, society must
create entrepreneurs. Within the development of human
capital, encouragement of the entrepreneurial spirit must have
a high priority.

f) The advent of the euro has very positive aspects, creating
universal capital markets with real depth and liquidity for
equities and bonds. However, the right general conditions
will have to be established for these markets to operate
properly. In due course, transparent euro pricing will give
a big boost to competitiveness in the Internal Market.

The entrepreneurial culture needs to start

in
3.3.4.3.
schools, and with our attitudes to jobs for school children. EU
students do not generally receive training in enterprise and
entrepreneurship and to appreciate the role of business in
society. There are, however, some exceptions, where business
sponsored training programmes in ‘entrepreneurship’ have
become increasingly common in secondary schools and are
apparently very successful.

The ESC believes that the Commission should
3.3.4.4.
take active measures to spread knowledge of benchmarking
examples, to encourage its extension to further countries
in various ways, and to emulate training programmes in
entrepreneurship which have been tried out successfully in
different places in the ordinary basic school system — such as
‘Young Enterprise’
in France
and ‘Ung Företagsamhet’ in Sweden. European Social Fund
financing could be appropriate for such initiatives.

‘Jeune Entreprise’

in the UK,

3.3.5.
Concerning point (g) (Further harnessing of competi-
tive advantages offered by the single market), the Committee
agrees with the statement that ‘the single market gives firms in
the Union a competitive advantage’.

a) European standardisation is a real strength. GSM is a case

in point.

b) A European company statute will be welcomed by com-
panies operating in multiple countries of the Union.

g) Nevertheless, the Committee believes that there is scope
for more institutional and industrial policy integration in
such areas as national support to R&D and defence and
infrastructure procurement.

3.3.6.
Point (h) relates to competition and the Committee
endorses the statement that ‘enterprises that evolve in a highly
competitive environment in their market of origin are better
equipped to confront globalisation’. The Communication
points out that the geographical delineation of the market may
now be global. This is borne out by mergers such as those
between BP and Amoco and between Daimler and Chrysler.
However, we should not forget that competitiveness is very
often based on geographic clusters of companies supported
by relevant ancillary businesses. Competition policy should
therefore seek to encourage and maintain a highly competitive
environment for EU companies in their market of origin.
The Committee endorses the Communication’s statement on
dominance. Barriers to entry must be prevented except and
until a new product or service is established. Due regard must,
nevertheless, be had for anti-trust legislation, and maximum
attention paid to protection from market dominating firms.

3.3.7. With regard to point n) — Placing greater responsi-
bility on industry for competitiveness, the Committee thinks
that not only enterprises but also the associations representing
both large enterprises and SMEs must be involved. They
should therefore seek to establish relationships with equivalent
associations on a global basis.

(1) OJ C 355, 21.11.1997, p. 38.

(2) Opinion of 29.4.1998, OJ C 214, 10.7.1998, p. 79.

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4. Conclusion

The Committee welcomes the Communication from
4.1.
the Commission. It is in full agreement with the analysis
quoted in point 3.3 and with many of the actions proposed.

4.2.

The conclusion of the Communication states:

‘New forms of competition are emerging under the press-
ure of globalisation geared more towards the mastering of
technologies, access to global markets, speed of action,
innovation and intangible investment. Europe, reinforced
by the euro, must harness the potential of these economic
changes to unleash the strength of its entrepreneurs and
In inter-
build up fresh momentum for employment.
in particular
national fora it must promote its values,
the integration of markets, cultural
identity and social
protection.’

4.3.
The Committee is asked to participate in the debate
with the Commission, the Council, the Parliament and the
Committee of the Regions as to how these objectives may be
achieved. In order to begin the debate the Committee poses
the following questions:

If all

4.3.1.
foreign domiciled enterprises operating in
Europe are classified as ‘European’, what are the implications
for industrial policy?

4.3.2.
To what extent is the late development of capital
markets in continental Europe still holding back the partici-

Brussels, 23 September 1999.

pation of European enterprises in global markets and global
M&A activity?

4.3.3.
How can the EU and Member States help current
and former nationalised enterprises to participate in the
rationalisation of European enterprises into competitive com-
binations with global scale? How can the impact of such
restructuring on all stakeholders be mitigated?

4.3.4.
compatible with the norms of social market economy?

Can Europe develop a form of venture capital

4.3.5. What steps can be taken to develop the European
market demand for high-tech products and services, so that
there is demand pull as well as technological push?

4.3.6. What steps should the EU take to promote its values,
particularly the social market model, in international fora?
What are the alternatives if it fails, or is only partly successful?

4.3.7.
In total, are the actions outlined in Section III of the
Communication really sufficient to facilitate the spread of a
new enterprise culture, encourage risk-taking and promote the
innovative companies able and willing to
emergence of
conquer world markets? Can the industrial framework and
business culture be adapted while economic and social
cohesion is preserved? At stake is the ability of Europe to
create enterprises which can compete effectively in the
21st century.

The President

of the Economic and Social Committee

Beatrice RANGONI MACHIAVELLI

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Official Journal of the European Communities

17.11.1999

APPENDIX

to the Opinion of the Economic and Social Committee

The following amendments, which obtained more than one quarter of the votes cast, were rejected during the
discussions.

Point 3.2.3.3

Delete the last two sentences of this point and replace them by the following:

‘There is a considerable demand — matched by corresponding employment potential — in the field of labour-intensive
personal services, in particular.’

Reasons

Outsourcing, per se, no longer guarantees quality service. Given the high level of unemployment, we should not be
seeking to outsource existing jobs but rather to find new scope for employment. The economic strength of a state —
and thus also its degree of competitiveness — lies in its very ability to cover the demand for goods and services.

Result of the vote

For: 61, against: 67, abstentions: 7.

Point 3.3.2.3

Delete.

Reason

This point makes no sense economically. It confuses microeconomic and macroeconomic conditions.

Result of the vote

For: 64, against: 66, abstentions: 9.

Point 3.3.4.2

Delete.

Result of the vote

For: 58, against: 68, abstentions: 12.

The following section opinion texts, which obtained more than one quarter of the votes cast in favour of their
retention, were rejected in favour of amendments adopted by the assembly.

Point 1.6

‘Competitiveness requires that an enterprise can add value to factors of production to win customers in open markets
at prices which allow taxes to be paid, investments to be made and shareholder value to be achieved. In this way, the
interests of all stakeholders can be secured and employment protected and expanded. The role of government is to
ensure that the legislative environment is supportive, and that business and payroll taxes are not punitive. In the EU,
governments also provide social security to mitigate the impact on employees of company failures in a competitive
and globalised environment.’

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Official Journal of the European Communities

C 329/57

Result of the vote

For: 79, against: 62, abstentions: 3.

Point 2.2.4 — Third indent

‘taxes on small companies should be reduced and simplified, and the burden of payroll taxes should be reviewed;’

Result of the vote

For: 69, against: 67, abstentions: 2.

Point 2.2.4 — Fifth indent

‘reduced rates of death duties and inheritance taxes should be adapted to allow companies or their value to be kept
in families;’

Result of the vote

For: 73, against: 66, abstentions: 3.

Point 3.1.3

‘It is not clear from the Communication how the Commission believes that Europe should compete and how aspects
of the US model can be adopted without accepting the liberal philosophy which underlies it. It is particularly easy to
form companies in the USA. There are few restrictions on employment, working hours, etc. A real “enterprise” can
be formed by an entrepreneur and his team of employees. If a company fails, all involved can start again. Hence, the
process of “discovery” extends to the entrepreneur, who can keep trying, as well as to the employees, who can keep
re-forming the enterprise. In the EU, a balance must be achieved between creating the necessary business culture
while maintaining economic and social cohesion.’

Result of the vote

For: 76, against: 62, abstentions: 4.