BusinessEurope Headlines No. 2019-38
“The new Commission started their work this week and I think with President Ursula von der Leyen we have a very dynamic, pro-European and strategic leader heading this team. Last week’s strong vote in the European Parliament has been an important push to let this Commission start their work strengthened”. This was a message of Director General Markus J. Beyrer at the first Trilateral Business Forum of BusinessEurope members, the national business associations from Italy (Confindustria), Germany (BDI) and France (MEDEF) which took place on 4-5 December in Rome. “Three weeks ago, we presented our priority paper that we based on three pillars: Prosperity, People and Planet. This is the basis of our program for 2019-2024: if we want people and planet to thrive, economic prosperity is essential, and we have to be united in tackling the many issues on our table”, said Beyrer.
Contacts: Jasmin Ploner
How to unleash SMEs potential to export
By Daniele Olivieri, Senior Advisor for Entrepreneurship and SMEs
However, when talking about SMEs exporting, we should not forget that their international activities do not only concern direct exports of goods. On top of over hundreds of thousands of SMEs exporting goods and, increasingly, services, many more SMEs play a key role for the economy by supplying intermediate goods to typically larger firms – domestic or foreign-owned – which then export. Global value chains (GVCs) have indeed become a dominant feature of the world economy and provide strong opportunities for SMEs. Thanks to GVCs, SMEs can enhance their productivity and scale up, and specialise in specific segments of production and sophisticated products, rather than having to master all processes required to produce finished goods. GVCs accelerate innovation, facilitate spill-overs of technology and know-how. Also, GVCs help reducing the cost of entering a new market, by reducing or eliminating the fixed costs of exporting or adopting costly emerging technologies or legal overheads, which typically weighs more heavily on SMEs than on larger firms.
Despite these opportunities, SMEs are still facing some key challenges. For example, the speed and scale of global interactions, the emergence of new players and new political developments bringing dangerous protectionist trends have changed the nature of GVCs. And in a world dominated by GVCs, the cost of protection can be higher than generally understood. To give one example, tariffs are cumulative when intermediate inputs are traded across borders multiple times. Moreover, SMEs face some challenges typically related to their nature, such as less knowledge-based capital and accumulated technology, making it harder for them to invest in costly digital solutions, multiple filings, regulatory and technical differences across countries, local intellectual property enforcement.
Given this premise, the key question to answer is: how can we enhance the role of SMEs within GVCs in a changing world?
A range of internal and external factors influence SMEs’ ability to participate in global markets. From an overall perspective, to support SMEs in GVCs, politicians and policy-makers at EU and national level should do what is in their power to tackle the protectionist trends and maintain a flourishing economy. Greater international cooperation is crucial, if we want to identify global solutions to global challenges.
The EU trade policy must support the full range of economic activities through which Europeans create and sell value. That includes both the manufacturing of components and final products, which are vital as well as services, design and marketing, assembly, distribution, and maintenance. At the same time, trade policy must be supported by domestic structural reforms and flanking policies including less red tape, research and innovation, improved access to finance and more investment in infrastructure. This is essential to further strengthen the Union’s capacity to take advantage of open markets.
Some further ideas on how to support SMEs in GVCs emerged during a workshop focusing on the role of SMEs within GVCs, organised by BusinessEurope during the 2019 SME Assembly in Helsinki, featuring the participation of two entrepreneurs in the field of goods and services, among whom the Chair of BusinessEurope’s Entrepreneurship and SME Committee, Anna-Lena Bohm, as well as representatives from the European Commission and a renowned policy research think tank dedicated to trade policy. The dialogue between public authorities, large companies and SMEs is crucial and should aim to provide the right expertise abroad in order to support trade promotion and to promote the development of existing business ecosystems with SME participation, and the creation of new ecosystems. One key point discussed was the potential contribution of GVCs to sustainability and creation of a good balance between economic, environmental and social objectives. Being part of GVCs in which large companies promote sustainable trade helps SMEs embrace sustainability. In this regard, the EU should continue its efforts on how to better encourage and promote the implementation of sustainability provisions in free trade agreements. At last, reducing barriers to entrepreneurship in services sectors and tapping the potential of digitalisation and free data flow were defined as means to cut administrative and trade costs down and support broader participation of SMEs in GVCs.
In conclusion, public support should use all instruments at disposal to ensure the effectiveness of trade policy allowing to promote access to markets, modern rules and sustainable trade. Companies, especially SMEs, have an important role to play and want to reap the opportunities generated by trade and GVCs. SMEs have an excellent potential to grow, create jobs and stimulate innovation, but their export capacity must be further enhanced and better supported.
Contact: Daniele Olivieri
The importance of value-added taxes (VAT) to the European economy cannot be underestimated. The European Commission estimates that over €1 trillion of VAT was collected in the EU in 2017 – equivalent to 7% of the EU’s total GDP, a share that has been growing for over a decade - or nearly one fifth of the EU’s total tax revenue. Read how VAT rules can be improved for companies, especially SMEs in our new brochure.
Contact: Pieter Baert
Industry strategies for climate ambition: national perspectives and next steps
10 December | 18:00-19:30
IETA Pavilion, Side Event Room
Industry associations from Europe, Brazil and Indonesia will showcase their experiences and ideas on effective cooperation with their national governments on climate policy. Speakers include: Holger Lösch, Deputy Director General of Federation of German Industries (BDI) and Yvon Slingenberg, Director at DG Climate Action, European Commission. More info
Industrial decarbonisation: Key examples from EU business
12 December | 12:30-14:00
EU side events pavilion, room Brussels
Companies from around Europe will pitch the cutting-edge technologies and processes they are developing for deep greenhouse gas emissions reductions in heavy industry, mining and refining. Speakers include: Olivier Imbault, Senior Vice President, Air Liquide, and Volkmar Pflug, Chief Energy Economist, Siemens. More info
Contact: Leon de Graaf
Contact: Luisa Santos
Contact: Carolina Vigo
Contact: Benedikt Wiedenhofer
Contact: Leon de Graaf
study ahead of the debate. Platforms cannot be considered traditional infrastructures due to their various applications in practice and the fact that they are not essential to compete in the market. They are also accountable under various frameworks, such as: Competition law, the GDPR and the incoming Platform to Business Regulation, to name a few. Grant explained that while a debate on the platform economy is necessary in terms of competition, particularly the data sharing debate, overall, we must not punish businesses simply for being successful and as a result big. What matters is how they use that power. The debate also surrounded social elements and the conditions of platform workers with many questions from the audience about how far social protection can go to aid independent workers. These topics will be high on the agenda of the new Commission to make Europe fit for the digital age.
Contact: Patrick Grant
Contact: Eleonora Catella
Contact: Daniele Olivieri
Contact: Rebekah Smith
Roadmap on Carcinogens which prolongs its existence until 2022. Started in 2016, the Roadmap promotes good practices and solutions to protect workers’ health against exposure to carcinogens substances. By signing this covenant, BusinessEurope reiterated its commitment to ensure healthy workplaces and good working conditions for all EU workers.
Contact: Jessie Fernandes
- 2-13 December: United Nations Framework Convention on Climate Change - COP25 in Madrid
- 12 December: UK general elections
- 12-13 December: European Council