The EU's Strengths Are Now More Important Than Ever

2016 was not a good year for the European Union. In June, the people of the United Kingdom, the country with the second-highest GDP in Europe, voted to leave the EU. 2017 brings elections in the Netherlands, France and Germany, while an election in Italy is also likely. These elections will offer yet another platform for EU- and euro-sceptic parties to spread their message. Protectionism, as propagated by newly elected US President Donald Trump, represents the greatest danger to the world's economy in 2017.

The benefits of globalisation have been recorded many times over; no country would have ever been elevated from the status of a "developing nation" if it had not opened up to the world economy. Our standard of living can only be maintained through open borders. The advantages of globalisation have not, however, been distributed equally. There are many who have lost out to globalisation. Nonetheless, economic studies have identified technological changes – and not open markets, as is often claimed – as the most influential factor when it comes to changes in labour markets and the inequality of income.

"The most important parts of competition supervision are happening in Brussels"

Open markets and their benefits are one of Europe's greatest accomplishments. One important aspect that tends to get less attention in public discussion is the EU's role as guarantor for consistent conditions and equal rules for all competitors.

The most important elements of competition supervision are happening in Brussels while the national supervisory boards also co-ordinate with one another to be as consistent as possible. Firms should be competing over customers, not the laxest regulations. Steps are being taken to allow public tenders to go out across the EU in order to create equal starting conditions. Even if this doesn't come off, the aspiration is a fair and honest one. The best supplier – not the national supplier – should be in with a chance. State aid control, which focusses on national subsidies, is having a strong disciplining effect. The possibility of subsidy races playing out between countries as they once did is now severely limited. The EU is creating significant stimuli for fair market conditions across Europe in the rail, postal, telecommunications and energy sectors. It is down to Brussels that one day it might be possible to travel to London via the Channel Tunnel with Deutsche Bahn.

The EU Commission creates fair market conditions

The EU Commission, however, not only acts as referee between the various European nations; it also advocates for the adherence to these rules beyond Europe's borders. It is surely better to take Google to court in Brussels for abusing its dominant market position rather than through 28 different national competition authorities. The EU has also initiated several legal proceedings against China through the World Trade Organisation for trade practices which distort competition. It is a good thing for these and further legal proceedings to come from an economic zone with a total GDP of more than 14 trillion euros. Even Germany, the largest economy in Europe with a GDP of around 3 trillion euros, would be in a far weaker position when asserting its interests.

The world economy can expect nothing good to come from Donald Trump's protectionist plans. This makes it all the more important for the EU Commission to not only create fair starting conditions within Europe, but also to work towards a level playing field with other economic blocs of countries.

This piece initially appeared on 2 February 2017 in the "Börsen-Zeitung".