EU Trade Commissioner Peter Mandelson has today told an audience in Warsaw Poland that the EU must face up to the challenge of economic reform and "take the difficult first steps down the path to sustainable prosperity or we face inevitable decline". Mandelson argued that the case for reform in Europe had been given new urgency by the increasing integration of the global economy and Europe’s Eastward enlargement.
Faced with new competition, old European structures and practices need to undergo change. He argued that governments must defend the benefits of change rather than indulge public anxiety: "fear of the Polish plumber and of the Chinese textile worker are essentially two sides of the same psychological coin" he argued.
On tackling fear of change and embracing its challenges: "People know that globalisation brings more choice and cheaper goods but they also fear the changes it implies. In parts of our continent, the fear of the Polish plumber and of the Chinese textile worker are essentially two sides of the same psychological coin… Both globalisation and enlargement – which is globalisation in our backyard – increase the pressure for Europe to face up to change. Either we chose openness and take the difficult first steps down the path to sustainable prosperity or we face inevitable decline".
On the need for governments to embrace reform and to invest more in the knowledge and skills needed to maintain and extend Europe’s competitive lead: "Europe needs to reach for greater innovation, more flexibility in our labour markets, stronger investment in skills and education and a continuous shift towards higher value goods and services. We need to reach out to those affected by economic change to help with adjustment before they in turn reach out for the simplistic, anti-foreigner, political solutions of protectionism".
On the fears of EU enlargement, and the evidence of the benefits enlargement has brought: "Two years after our most recent expansion, the evidence in favour of enlargement is clearly starting to speak for itself. A wave of investment, not a wave of economic migrants. A race to the top in Europe rather than social dumping. New markets not black markets".
On Europe’s openness and Russia and Ukraine: "Openness in Europe has had a powerful effect in drawing in and shaping the values of its neighbours… Europe will achieve nothing by megaphone diplomacy with Russia. Nor should we expect to preach and be listened to. But Europe’s growing market and values of openness will remain a powerful incentive for continued change in Russia so long as we preserve them. We will be in no position to lecture Russia about openness if we are hiding behind national protectionism… Partnership must be built on non-discrimination, transparency and mutual benefit".