By Chris Jones - 21st February 2006
The road to protectionism will take the EU “in the wrong direction”, European internal market commissioner Charlie McCreevy has warned.
The Irish EU free-market watchdog cautioned that efforts to protect European businesses or workers would only lead to “tit-for-tat” moves from Europe’s trading partners.
“It sends the wrong message about investment in the EU,” he said, at the launch of the latest version of the internal market scoreboard, which measures national governments’ compliance with EU rules.
McCreevy was referring to two recent cases in where the European commission is considering taking action against national governments for ‘protectionist’ measures.
Poland has refused to endorse the takeover of German bank HVB by Italy’s UniCredit because of concerns that the deal would have a negative impact on the Polish banking sector.
The two companies want to merge their Pekao and BPH units in Poland, which Poland believes will create a dominant market player.
The commission approved the takeover in October, and Poland has no right to appeal against the decision.
France and Luxembourg, meanwhile, are preparing a “poison pill” defence of steel maker Arcelor, for which India’s Mittal group has made a hostile bid.
The two countries are preparing to pass legislation that would make it harder and less interesting for Mittal to buy Arcelor.
McCreevy said that while the poison pill defence was not strictly against EU takeover rules, it was definitely “contrary to the spirit of rules on the free movement of capital”.
He added that he was awaiting a reply from the French government justifying its actions.
Poland has already sent its reply, but McCreevy said that it was “not satisfactory” and that the commission was considering opening infringement procedures against Warsaw.
But in more general terms, Brussels is praising a good performance from member states in implementing and applying existing EU internal market laws.
The commission’s latest assessment shows that governments are getting better at transposing EU rules into national legislation.
At the end of 2005, the percentage of EU internal market rules that had not been transposed was just 1.6 per cent, the lowest ever level and just shy of a 1.5 per cent target.
Seventeen countries have, however, already reached that target, led by Lithuania, although the Czech Republic, Italy and Portugal still have some way to go.
Despite the poor Czech performance, the new member states perform better than the old, with an average deficit of 1.2 per cent.
McCreevy said this was probably because they “wanted to look like good EU members” and recognised the benefits of a single market after years of Soviet-era market manipulation.
But member states perform less well when it comes to applying the law and McCreevy said that Italy was the worst offender, facing 157 infringement procedures for incorrectly applying EU law, followed by Spain with 115 and France with 113.
“Transposing the law is only half the job, it has to be properly applied,” said McCreevy.
“But only five member states [France, Belgium, Austria, Ireland and the Netherlands] have managed to reduce the number of infringements against, and that is disappointing.”
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