Referat Economic, monetary and industrial committee - general conditions for firms and enterprises

ECONOMIC, MONETARY AND INDUSTRIAL COMMITTEE

I. General conditions for firms and enterprises

1. What is the economic and monetary union?

In concluding the Treaty on European Union the Heads of State or Government took the historic decision to introduce the ecu as the single European currency before the end of the decade. This finishes the European economic and monetary union.

In this union the currencies of the Member States are tied to one another at the same exchange rate. There can be no more devaluations or revaluations of individual currencies. Because of this enterprises are able to reap the benefits of the large internal markets. The frontier- free single market established at the start of 1993 is part of economic union. Competition between companies must be guaranteed by a strict competition policy.

2. The benefits of economic and monetary union:

An economic and monetary union will mean a saving on currency conversion costs. The prospects for economic growth and thus for employment and prosperity will be better. In general prices will be more stable. If the ecu - like the US dollar and the yen - becomes an important international currency, banks and other enterprises will be able to conduct a large proportion of their international business in the European currency. The economic and monetary union has been a goal of the Community since the 1969 Hague Summit.

3. The main elements of economic and monetary union:

Priority for a stable currency

Europe's future currency will be stable.

Price stability is the main aim of monetary policy. The economic policies of the Member States must therefore be closely coordinated.

II. The large internal market

Commerce and industry have supported the internal market from the beginning. Because of the increasing interweaving of the worldwide industry there was a lack of a large market in Europe, a market as big as in America or in Japan.

1. Competitiveness

Enterprises in Europe have consolidated because they want to be successful in the internal market but also in the world's market. Small and large firms have lot of possibilities to do so.

If there's a domination of the market by single enterprises or cartels the interests of smaller firms and consumers can be affected. Due to this the union has published a prescribing as far as economic associations are concerned. All associations that may have a negative influence on the market can be supervised. Responsible for this is the European commission.

2. The internal market concerning small and medium enterprises:

Large enterprises know how to be successful in the internal market, this means advantages for themselves and also for the consumers. Smaller firms have some problems concerning the adaptation. That's why the European commission helps such enterprises with their efforts to be successful.

The Community creates structures informing small and medium enterprises about their possibilities and chances so that they can be initiative. The European Union also supports the cooperation between small and medium firms. This helps them to succeed in doing their business and to face the competition in Europe. Therefore the Union has created institutions for economic advisory service. Such institutions cooperate closely with medium enterprises. The guidlines of the European Union are based on European norms. Representatives of medium firms should be participate in creating the models of  these norms. Smaller firms should be represented by chambers of commerce, advisory services or other associations.

There are also plans to make it easier for smaller firms to get official assignments. Today small and medium enterprises don't have the same conditions than larger ones and they're also too weak to succeed in catching important assignments.

There's also an association that represents the economic interests of Europe. This contains lots of advantages for medium enterprises. Because of this enterprises and firms have the chance to create associations with partners that are situated in the Member States. There is no need of capital and the firms joining this association for economic interests have the right to remain independent.

3. Now: Should small and medium enterprises be protected?

If large firms grow too fast and become too strong so that they control the whole market, this could have a negative influence on the market itself and on the consumers because there is no more variety and freedom of choice.

Often small and medium enterprises are too weak to stay independent as single enterprises because they don't have enough economic power to be successful. In such a case it is helpful to coordinate with another firm that is in a similar situation. This brings advantages for both.

Smaller enterprises do often only use their own country's market because there are lots of risks if you want to sell your products in another country as a small firm. That's because of the rivalry with other firms in this country. So it would be better for a small or medium enterprise to find a powerful partner abroad so that the firm has better chances to be successful in another market.

Large firms do get more official assignments. It's really difficult for smaller enterprises to catch such assignments. From this point of view it would be recommendable to create large association with other firms of same economic size.

For large enterprises it may be easier to keep the prices low than for smaller ones. Due to this large enterprises survive easier and small and medium firms have to fight for their existence. This is a fact that

supports the opinion that these firms should be protected by the European Union. Otherwise there will be, as I said before, no more economic variety.

If small and medium enterprises don't exist any more there may be a lack of jobs. In Europe there are very many unemployed people. This would mean an increase of the unemployment rate.

For poor countries it might be a good possibility to improve the economy by cooperating with powerful enterprises in rich countries like France or Germany. So they'd have the chance to use the large internal market.