Opinion of the Economic and Social Committee on "World Economic Changes: New Economic Challenges for the European Union"
Date: 2001-11-28
Institutions: European Economic and Social Committee
Subjects: European Union, economic policy, world economy

21.2.2002

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Official Journal of the European Communities

C 48/79

In the meantime, the ESC supports both of the proposed
mechanisms to be used in pursuing tax policy objectives (1):

— a more pro-active, well-focused and even-handed use of

infringement proceedings in the tax field;

(1) Ibid, point 5, 2nd paragraph, last bullet point.

— an increased use of non-legislative solutions and the

mechanism of enhanced co-operation.

Brussels, 28 November 2001.

The President

of the Economic and Social Committee

Göke FRERICHS

Opinion of the Economic and Social Committee on ‘World Economic Changes: New Economic
Challenges for the European Union’

(2002/C 48/19)

At its plenary session of 28-29 November 2001 the Economic and Social Committee, acting under the
third paragraph of Rule 23 of its Rules of Procedure, decided to draw up an Opinion on ‘World Economic
Changes: New Economic Challenges for the European Union’.

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was
responsible for preparing the Committee’s work on the subject, adopted its opinion on 12 November
2001. The rapporteur was Mrs Konitzer.

At its 386th plenary session of 28 and 29 November 2001, (meeting of 28 November), the Economic
and Social Committee adopted the following opinion with 46 votes in favour and three abstentions.

1. Background

and capital and to significant progress in promoting the
macroeconomic conditions for growth and employment made
since the last recession, and particularly in the run-up to
economic and monetary union (2).

1.1.
In 2000 the economic trend in the EU was more
favourable than for more than a decade. GDP growth was just
below 3 1/2 %. Employment rose strongly (1,7 %), so that by
comparison with the previous year unemployment fell by a
full percentage point to 8,3 % of the active population. Thus,
following a peak of 11,1 % (1994), the level prevailing before
the 1992/93 recession had effectively once again been reached.
Despite high oil prices inflation was only a little over 2 % and
the external economic balance seemed assured.

However, hopes that

1.3.
this favourable trend would
continue uninterrupted for a number of years, which was
necessary to solve the EU’s employment problem, were dashed
in the course of 2001.

This favourable trend could be ascribed both to
1.2.
ongoing structural policy efforts to improve the operation of
the markets for goods and services as well as those for labour

(2) See also: OJ C 139, 11.5.2001, p. 51 (ECO/041), OJ C 139,
11.5.2001, p. 60 (ECO/042), OJ C 139, 11.5.2001, p. 72
(ECO/046), OJ C 139, 11.5.2001, p. 79 (ECO/054), OJ C 221,
7.8.2001, p. 177 (ECO/065).

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1.4.
In fact it became clear in the autumn of 2001 that
GDP growth in the EU would stall in the third quarter or even
be negative, and that economic growth for the year as a whole
would be well below 2 % (1). That also meant
the
unemployment rate would not fall any further and might even
rise again in 2001 and 2002.

that

1.5.
The causes of this negative trend lie mainly outside the
Community; their scale and the extent of the EU’s dependence
on world economic trends were underestimated. The following
main factors should be highlighted: reduced purchasing power
in the EU as a result of higher oil prices (compounded by the
dollar exchange rate) and sharply rising food prices in the
short term, falling export demand as a result of the sharp
economic slowdown in the USA and synchronised worldwide
economic downturns. The attacks of 11 September 2001
accentuate these effects not only through their direct impact
in the USA and worldwide (airlines, tourism, insurance, higher
spending on security), but also as a result of their negative
impact on the confidence of firms and consumers, which
could deteriorate further as a result of unpredictable events in
connection with the campaign against terrorism.

1.6.
It is crucial for the European economies that they now
overcome as quickly as possible this phase of weakness,
accompanied by a loss of confidence, and embark on the road
towards higher long-term growth, the objective set by the
European Council in the strategy agreed in Lisbon in spring
2000.

Nor does it mean calling into question structural policy efforts
and the basic orientation of macroeconomic policy towards
price stability and the maintenance of the basic economic
equilibria. The aim, rather, is to establish:

— how the macroeconomic policy mix can best be adapted

to the new situation and

— whether the procedures for coordinating economic policy
worldwide and within the EU and the euro area can be
improved with a view to achieving the optimum policy
mix.

3. A macroeconomic policy mix better suited to the

new situation

3.1.
In the current situation the most important thing is to
boost domestic and international demand against a back-
ground of growing spare capacity, without however generating
price and cost inflation and without calling into question the
essential medium-term consolidation of public-sector budgets
needed to ensure sustainable growth (and thus full employ-
ment). It is important that the economic policy approach be
based on a clear analysis of the world economy and of the
situation of the European economy and of the monetary
union, and that the approach should be credible in terms of its
orientation and scale, so that the confidence of consumers and
firms in future economic development can be rapidly re-
established.

2. Opportunities and limits of economic policy

The scope available to each individual area of macro-
3.2.
economic policy (monetary policy, public finances and wage
policy) is rather limited.

The factors described above are in principle only
2.1.
temporary and do not negate the basic progress made in the
1990s in putting the European economy back on a sound
footing. But clearly the achievement of
full
into the
employment has once again receded somewhat
distance.

the goal of

3.2.1. Monetary policy can be relaxed in order to support
general economic policy (Article 105(1) of the EC Treaty) if
inflationary expectations fall. This has to some extent already
happened, with some degree of international coordination.
What further steps may become necessary depends to a high
degree on an assessment of the conduct of fiscal and wages
policy.

2.2. We need to ask, therefore, how economic policy can
help us come to grips more rapidly with the current difficulties.
Asking this question does not mean harbouring the illusion
that economic policy can fully compensate for every external
shock or that growth and employment can be created by fiat.

(1) The European Commission’s new forecasts will be published on

21 November 2001

The hard-won medium-term credibility of

3.2.2.
fiscal
policy must not be compromised. This is important, inter alia,
with a view to the trend of long-term interest rates and a
balanced relationship between saving and investment in the
process of medium-term economic growth which is essential
for the achievement of the goal of full employment. Complying
with this condition does not, however, rule out the possibility
that in the current situation, which doubtless varies from one
country to another, the automatic stabilisers can make a
certain contribution to stabilising the economic trend in the
Community and particularly in the monetary union. This

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contribution could to a certain extent be complemented by
higher infrastructure investment (possibly by means of public-
private partnership) and reductions in levies, both of which
must however be compatible with the goal of medium-term
growth. There is, however, another obstacle to the contribution
of fiscal policy to the overall economic policy mix in the
Community and the monetary union: for well thought-out
reasons fiscal policy, unlike monetary policy, is not centralised
in the Community and monetary union, but remains a matter
for national governments. The contribution of fiscal policy to
the monetary union’s policy mix involves the Community
interest, however, which, the ESC feels, is not being made
sufficiently clear in the current situation.

1987 stock market crash, overheating 1988/1989, mistakes
in the financing of German reunification), and that the policy
mix was inadequately adapted, or adapted too late, during
the economic slowdowns of 1995/1996 (Mexican crisis,
insufficiently credible fiscal policies in a number of Member
States, currency turbulence) and 1999 (Asian and Russian
crises). In the USA, on the other hand, monetary and fiscal
policy was adjusted and is being adjusted more rapidly and
better to the prevailing situation. This is one of the main
reasons why during the 1990s economic growth in the EU
lagged well behind that of the USA.

3.2.3.
The scope available to the social partners’ wages
policy in the framework of the overall policy mix is also
limited.
In accordance with procedures which vary from
one country and one sector to another the social partners
simultaneously decide on overall economic cost and wage
trends. This has a decisive effect on overall economic competi-
tiveness and profitability and on the trend of consumer
demand. Despite the establishment of a macroeconomic
dialogue (Cologne process) insufficient account is taken of the
impact of this factor on the macroeconomic policy mix of the
Community and the monetary union. There is a need both for
better organisation of the macroeconomic dialogue at Council
level and for clearer articulation of the Community interest.

3.3.
The relaxed macroeconomic policy mix which is
needed in the Community and the monetary union in order
to tackle current economic weakness requires both clearer
articulation of the Community interest and a reasonable
measure of reciprocal confidence in the predictability and
rational conduct of the monetary, fiscal and wages policy
players. This raises important questions relating to the nature
and effectiveness of the coordination of economic policy.

4. Nature and effectiveness of the coordination of econ-
omic policy in the Community and the monetary
union

4.2.
In view of the renewed worldwide economic slowdown
efforts should be made to avoid, as far as possible, the mistakes
of the past. The realisation of monetary union and the resulting
internal currency turbulence are certainly
elimination of
helpful in this regard. And yet distinct shortcomings persist,
despite the many procedures and bodies, particularly in the
following areas:

(a) The analysis and forecasting of economic trends geared
to the needs of the monetary union and public discussion
of the economic policy options arising as a result for the
Community and the monetary union leave room for
improvement.

(b) The role of the European Commission in drawing up
comprehensive proposals for economic policy in general
and the macroeconomic policy mix in particular, which
are determined not by national or sectional interests or
ideologies but purely by the Community interest with a
view to the optimum economic trend in the monetary
union, must be strengthened. This applies in particular to
the contribution of
fiscal and wages policy to the
macroeconomic policy mix, with due respect for the
sovereignty of the Member States and the autonomy of
the social partners.

4.1.
Despite progress in restoring the health of the Com-
munity economy and despite the many coordination pro-
cedures and processes, some of them bureaucratic, the Com-
munity has a basic problem in laying down the appropriate
macroeconomic policy mix and adapting this to changing
internal and external conditions. It can be demonstrated that
the 1992/1993 recession was to a great extent the result of
errors in drawing up the policy mix (misassessment of the

(c) The dialogue between the policy mix actors should be
better institutionalised and made more transparent. This
applies both to the regular meetings of the Presidents of
the ECB and the Eurogroup and the responsible member
of the Commission, and to the macroeconomic dialogue,
which also leaves room for improvement. In both groups
the role of the Commission representative should be
strengthened as representative of the Community interest.
The European Economic and Social Committee is able to
make a substantial contribution to the macroeconomic
dialogue and should be appropriately consulted.

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5. The next steps

The European Economic and Social Committee considers that:

(a)

over the next few weeks the Commission should submit
specific proposals, going beyond the declaration of the
Ghent European Council, as to how the economic policy
and macroeconomic policy mix of the Community and
the monetary union should be adapted to the changed
world economic situation; this should make it clear what
contribution is expected from individual players;

Brussels, 28 November 2001.

(b) discussion in the Council and in public of the Communi-
cation from the Commission of 7 February 2001 on
Strengthening economic policy coordination within the
euro area (1) should resume to ensure that pragmatic but
effective improvements are made in this area as soon as
possible;
in the near future a discussion should take place of ways
of increasing the effectiveness of the provisions of the
Treaties relating to economic policy and the articulation
of the Community economic interest in the process of
adapting the Treaties with a view to enlargement.

(c)

(1) COM(2001) 82 final.

The President

of the Economic and Social Committee

Göke FRERICHS

Opinion of the Economic and Social Committee on the ‘Draft Commission Notice on immunity
from fines and reduction of fines in cartel cases’

(2002/C 48/20)

On 18 October 2001, the Economic and Social Committee, acting under Rule 23(2) of its Rules of
Procedure, decided to draw up an opinion on the ‘Draft Commission Notice on immunity from fines and
reduction of fines in cartel cases’.

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 21 November 2001. The rapporteur was
Mr Sepi.

At its 386th plenary session (meeting of 29 November 2001), the Economic and Social Committee
adopted the following opinion by 52 votes to 6, with 10 abstentions.

1.

Introduction

establishing the facts surrounding what remains the most
serious infringement of competition rules.

The Committee has examined the draft notice on
1.1.
immunity from fines and the reduction of fines for undertak-
ings that disclose secret cartels between undertakings that
infringe competition rules.

1.2.
in 1996 (1),

This notice, which replaces the previous notice adopted
is intended to improve efficiency in terms of

2. Summary of the notice

(1) OJ C 207, 18.7.1996, p. 4.

The Commission is convinced that by limiting compe-
2.1.
tition, secret cartels between undertakings effectively push
prices up, restrict choice and have a detrimental effect on