Protection of the internal market is a delicate task

By Karl Haeusgen
Karl Haeusgen is President of the German Mechanical Engineering Industry Association.

The EU internal market is unique and has become an indispensable part of companies’ everyday lives. Whether it is a matter of procuring important parts for their own production, visiting a customer in a neighboring European country, or handling payment transactions with suppliers: Without the EU single market, the business of a European mechanical engineering company would look much more complicated.

What happens when the single market suddenly stops functioning was vividly illustrated by the Covid crisis. After the uncoordinated border closures, the assembly lines in many industrial companies stood still because relevant parts from other EU member states no longer arrived at the factories. Such challenges show that a functioning single market is never a done deal but rather a constant work in progress.

Interference in corporate decisions is a no-go

As a convinced European, I am delighted that the EU Commission is taking account of the importance of the single market and is now drawing lessons from the past two and a half years. Keeping borders open in times of crisis is something I fully support. Ensuring the posting of workers in the event of a crisis is essential, especially for export-oriented industries such as mechanical and plant engineering.

But unfortunately, the SMEI proposal also contains parts that go in a completely wrong direction. In times of crisis, the Commission wants to dictate to companies which orders have priority for which customer and which application or decide what is of strategic importance. It can recommend that EU member states take measures to guarantee the availability of crisis-relevant goods and services. And it threatens fines in certain cases if companies do not adhere to the externally determined priorities.

This kind of crisis policy is interventionism and definitely goes too far. It is almost never appropriate for politics to intervene in entrepreneurial processes and decisions. This is true in normal times but just as true in times of crisis. Companies need the freedom to make their own decisions, especially in crises where speed and agility can make or break their existence. Mechanical and plant engineering is a globally networked industry, consisting primarily of small and medium-sized, family-run companies that are true export champions. The success of our industry depends not least on our delivery reliability. Politicians must not interfere with this. That would do lasting damage to our companies in Europe and put the brakes on the effectiveness of entrepreneurial action.

Balancing act in times of crisis

So how do you protect the single market in times of crisis? That is no easy task. It is clear that a gentle touch is required here. Once again, policymakers must strike a balance here and allow industry to assume its own responsibility. At the same time, the roles and powers of companies and the European Union and the member states in times of crisis should be clearly delineated and defined. The fact that the state intervenes more strongly in crisis situations than in normal times is justifiable and necessary. It is also clear that in times of crisis, we in Europe, in particular, will be dependent on internationally functioning supply chains. The EU should therefore be very cautious with government-imposed supply restrictions.

It is important that the rules of the single market are developed further so that it does not lose its power. And it is certainly worth investing energy in a European common market. After all, it is the single market that has ensured economic prosperity in Europe for almost 30 years.

Karl Haeusgen is Chairman of the Supervisory Board of the family-owned company HAWE Hydraulik SE and President of the German Mechanical Engineering Industry Association (VDMA). The VDMA represents around 3,500 German and European companies in the mechanical engineering industry.

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