Hearing of Mr Liikanen Hearing of the Commissioner-Designate, Mr Liikanen, before the European Parliament Committee on Industry, External Trade, Research and Energy. IN THE CHAIR: MR WESTENDORP Y CABEZA Chairman of the Committee on Industry, External Trade, Research and Energy (The Chairman opened the hearing, explaining the purpose of it to the members present. He described the procedure to be followed and gave the floor to the Commissioner-Designate so that he could make his opening statement.) Liikanen, Commissioner-designate. (EN) I can perhaps be even shorter than that because this is not the moment for my speeches but the hearing where you put the questions and I reply. But there are some questions of principle. First of all, I want to start by congratulating you on your appointment as chairman of this important committee and expressing my congratulations to all the committee members on their election to the European Parliament and on their appointment to this important committee. If one asks a European today, what is the biggest problem of contemporary Europe, the answer is most often unemployment. It is clear that Europe s unemployment rate is far above any acceptable level. Let us not overlook the simple fact that unemployment in Europe is double that in the United States and Japan. This is intolerable. Why are we lagging behind? There are many reasons. One of them is the lack of a dynamic enterprise culture. We do not have enough new small enterprises. We have too few young people willing to become entrepreneurs. We have an excessive administrative burden especially in starting a new enterprise. We lack a risk-capital market for high-growth, high-tech companies and we have fallen behind in Internet services, software production and electronic commerce. What can we do to reverse the trend? In brief, we need to create a new European enterprise culture and turn Europe into a genuine information society. We do not have much time. Over the next five years we must make a profound turn for the better. Otherwise we have lost the game and fallen permanently behind. Let me just raise three points. Firstly, on the information society. For me a genuine European information society must be by definition inclusive, not exclusive. It must be cohesive, not discriminatory. It must not undermine but promote the fundamental values of European society. Today the computer hardware, and even more so the software, industry is dominated by US-owned firms. This industry, which barely existed two decades ago, now accounts for four of the world s top ten companies. But there are also some great success stories in Europe. In mobile telecommunications Europe is the leader, not least because of the pan-european standards and liberalisation of the European telecommunications market. These success stories show that we have a chance if we seize the opportunity. We must encourage European enterprises to use the Internet and electronic commerce. We need a European risk capital market which invests heavily in Internet and software start-up companies. We need measures and legislation to protect individuals, especially children, but we do not need legislation which hampers technological development. Educational systems of member countries must carry their responsibility. We need training in information technology from primary schools to universities, from children to pensioners, from businessmen to disabled citizens.
Secondly, on small enterprises. Small and medium-sized enterprises are the real engine of job creation in today s Europe. In Europe small enterprises account for more than two thirds of total employment. Therefore, in terms of net employment creation, we need to think small, think enterprise. Take for example risk capital. Europe must improve access to finance for SMEs. Its task is essentially for the private sector and Member States, but Commission action is necessary and complementary. Or take red tape. The average cost of setting up an enterprise in Europe is EUR 1600, while it is EUR 500 in the United States and the average time is 11 weeks in the EU, while it is one and a half weeks in the United States. There have been important programmes such as SLIM and BEST for simplifying legislation. Now it is time to put the measures into practice. Thirdly, on building a European enterprise culture, here the question how is certainly as important as what. In other words strong substance must be accompanied by a skilful strategy. The Commission must pursue a constructive dialogue with the Member States and with the enterprises themselves. A necessary, although not sufficient, precondition is an upgrading of enterprise policy in the Commission. This is reflected in the creation of the new directorategeneral for enterprise. My intention is to strengthen our policy-making capacity with regard to all enterprises, industry and service alike. Many policies in other portfolios have a direct impact on competitiveness and enterprises. Coordination of these policies is crucial and must be done on a regular basis in the Commission. Finally, the information society and enterprise policy are now combined in one portfolio. This portfolio is a great responsibility. I want, subject to the approval of the European Parliament, to assume this responsibility in close cooperation with this committee. Your committee has an essential role in achieving success by legislation, by new suggestions and by advice. I look forward to working with you in a permanent and open dialogue. Thank you. Van Velzen (PPE). (NL) Mr Commissioner-designate, convergence is an extremely important factor in the information society. As you know, the debate got under way but then rather petered out. What, then, are your strategic priorities for pursuing convergence? What do you intend to do to guide the debate among the Member States, with a view to attaining consensus? Can you give some examples of the approach you mean to adopt? Above all, bearing in mind your experience in your previous post as Commissioner, what lessons have you learnt regarding the course the Commission s administration should take to ensure a satisfactory debate among the Member States on convergence? What do you intend to do differently in comparison with what you have done in the past five years as regards the Commission s approach? Liikanen. (EN) I think one of the lessons which is very important is that we must concentrate on the essential priorities which have a real European value added. If we go wild and concentrate on doing too many things we get nowhere. Where is the area where there is a real European value added? It is found especially in the information society, telecommunications, as a part of that convergence spectrum and so forth. What I want here is the Commission to keep the initiative this autumn. There has been a commitment to review the old telecommunications legislation. It has been well prepared, there have been Green Papers, there have been opinions of the Council, there have been opinions of the Parliament, which is a good basis. But now we must turn, step by step, to decisions and in order to keep the initiative the new Commission must quickly present the 1999 review of the legislation in October. That will be the big priority for the whole area of the information society and then from that basis we must be ready to present our proposals in due time next year. 2
We must also bear in mind that it is a very challenging exercise because, as you mentioned, convergence is the new issue of today. Our problem is how to create a legal framework which will still be up to date in 2005 and 2006. Normally we create legislation for the problems of today, but now we need to do it for a situation which is perhaps five or six years away. Even if legislation enters into force in 2003, it will still have to be valid in 2005 and 2006. The key problem is how to balance two issues. Firstly, how can we guarantee that it will be technologyled, so that our proposal will not hamper technological development, but on the other hand, how can we guarantee that there will be a solid legal basis for European citizens and companies to act? To combine these two things will be a delicate and difficult exercise, but my conclusion would be simpler legislation, fewer legal acts than today and a flexible framework which can work for the future. But for a management exercise, the key lesson is to concentrate on the essential. If we come late to the management of financial programmes, there my message is also to concentrate on the issues which have clear European value added, which have critical mass and which we can manage effectively. Van Velzen (PPE). (NL) Mr Commissioner-designate, you have indicated what the dilemmas are, but what mainly interests me at the moment is what you intend to do to break the logjam in the debate and attain consensus among the Member States. Reviewing legislation is fine, but I presume that you will need to do more than that to display your leadership in this field. Can you give examples? Liikanen. (EN) I think the Commission s key power is the right of initiative. This right of initiative must be properly handled. In this area, for which I have not been responsible before, we have major successes in the liberalisation of the telecommunications market. All these paths must be followed, we must go further towards liberalisation. And that is very important: we keep going, we do not give in. Whatever pressure comes from member countries, we keep liberalisation on track. Secondly, of course, it is important that our whole approach takes carefully into account those consultations we have now had on the key papers on the convergence spectrum and that we give a credible, forward looking and courageous reply to the key questions. I understand that Mr van Velzen, who has been working in this field in this committee for a long time, would like to have detailed replies for every issue, but for my part I ask you to be patient for two months. If I am confirmed, I will do this report in October, I will take it to the Commission in October. I will be ready to present it to you then, so that the telecommunications Council can discuss it in November and why not also the summit in Helsinki in December? McNally (PSE). (EN) Last year the Wall Street Journal carried an extremely critical article claiming that the European Union had wasted $ 2 billion on IT projects. The claims were serious, that there was no coordination and that the same projects were receiving funds from different EU programmes. The Committee on Research was greatly concerned and set up a committee of investigation. The allegations turned out to be largely unfounded, but I want to ask you: how will you prevent similar incidents in the future and how will you support the European Parliament in carrying out its duty, included in the rules of this committee, to monitor expenditure in the programmes for which it is responsible? Liikanen. (EN) This question combines my present, and perhaps future, responsibilities. I have been responsible for the budget in Parliament, in the Commission and also before Parliament and as some people know, like Mr Rübig, who has been on the Committee on Budgetary Control, I have been there defending almost all the cases, whether they belong to me or not. That is not an 3
accountable practice. I think the only way to have accountability before Parliament is for every commissioner who has an expenditure programme to explain the expenditure, its quality and its regularity before his own committee. It is also extremely important that every committee gives a lot of attention to the quality of spending. Then of course if there are problems, the Committee on Budgetary Control has its task in the Parliament, but making commissioners directly responsible for their own spending is the only way of ensuring that within the Commission they have this kind of sense of responsibility. I am sure that here Mr Prodi s decision to place the commissioners in the same building as their departments is helpful - not always very popular - but helpful. Also it is important that in Parliament a special committee follows expenditure. The second point, which may be painful, but which is helpful, is that the Court of Auditors is now presenting a new type of declaration of assurance. They do it sector by sector. So far it has been fairly global and there have not been many details per sector, but now they are doing it in November so that there will be one assessment of agriculture, a second of structural funds and a third of internal policies. As you know, that is 60% research. Whatever remarks there are, whether we like them not, we should not react by attempting to justify everything. If there are things which have gone badly, we must correct them. Sometimes criticism may be unjustified as perhaps in this article. Then we must also defend our position. But let us take the pain of listening to criticism and then the pain of trying to do it better. As to the running of the programmes, I think it is very important that we try to go for simple type contracts. Too many complicated contracts are not only difficult for clients, but they are very difficult to control. Also, even though that is also sometimes difficult, the critical size of the average project should perhaps be a little higher in future so that they can be run properly. Your committee should also ask me to come to discuss the expenditure side, not only the policy side. McNally (PSE). (EN) I find that a satisfactory and reassuring answer. Thors (ELDR). (SV) Mr Commissioner-designate, as we know, the previous Commission had administrative reforms on its agenda, for example MAP 2000 and SEM 2000, but unfortunately, in spite of this, poor administration and certain cases of fraud led to the fall of the Commission, so that it is now only a caretaker Commission. What went wrong in your reform work? What ought perhaps to have been done differently, and what are the main obstacles to reform apart from that which you mentioned in your reply to Mrs McNally? On a lighter note, bearing in mind that you are an experienced marathon runner, what is the difference between running a marathon and reforming the Commission? Liikanen. (EN) What went wrong? This is something that I am sure I and many others have tried to analyse carefully. There has been a recent evaluation report on the SEM 2000 exercise. We sent it out for external evaluation and their conclusions are interesting and something which the Commission must take into account. One of the conclusions was that there was no clear responsibility for the reform. I did something in my area, Anita Gradin had her part, the others their part. If there is no clear responsibility there is no credibility. That was the one problem. The Prodi Commission has drawn the necessary conclusions and there will be responsibility when the Commission takes up its task. The second problem that occurred - and that was my misjudgment - was that I thought that taking a decision in the Commission is enough. But this is not the case. The key question here is: how are the commissioners responsible for administration? It is not possible for commissioners and their staff to start to interfere in every detail. But what we should do differently now is that 4
when the Commission accepts the reform programme, every commissioner should give a commitment for his own departments, in fixing the targets for the mission statement and controlling the implementation. This is something that we must do differently. There are also other issues, but time is running short. I would just like to say that perhaps I had thought that the staff organisations would be more willing to accept reform. Our problem was that very often the organisations thought it quite impossible to introduce an external opinion or external experience, but we may come back to that later. Thors (ELDR). (SV) You have mentioned mission statements. You also mentioned them in your written reply to us. What should such mission statements contain in future? I believe, moreover, that confidence needs to be built up. But how can confidence be built up for the reforms which are needed? Liikanen. (EN) My understanding of the mission statement is that it should, firstly, translate the political priorities of the Commission for every commissioner and every department. We fix the objectives for the year, and we then fix the objectives for the department and how they should implement them. Whenever possible we also try to define the performance criteria, and you can form your judgment on this basis. What I would like is not heavy control organisations but light bureaucracy, direct responsibility, openness, but then performance assessment. That should be part of this mission statement and its follow-up. When reform is decided, the mission statement would translate this into tasks, and performance assessment would check whether they had been completed. Schröder, Ilka (Greens/ALE). (DE) As Commissioner, will you prevent the concept of the information society being abused for surveillance purposes, as for example in the case of the EU proposal on Enfopol, which is similar to the British-American Echelon system? Will you oppose the trend towards developing telecommunications systems with built-in protocols precisely for such surveillance purposes? Liikanen. (EN) I recently read some newspaper articles on that area. I am not a great expert, but sometimes it seems to me that the European and American approach to these issues is different. It is extremely important for us, of course, as was noted in the debate in Parliament last spring, that the values of European society are retained in the new system and that we do not accept the built-in interception systems in our telecommunication area. That is very important. The use of surveillance devices is not within the competence of the Commission. It is a matter of national legislation and a third-pillar area, but very careful consideration is required. We may perhaps come to the other side of the coin later in this discussion, that is, the Internet and harmful content there, where we obviously need some restrictions. So a balance must be struck between defending basic citizens rights on the one hand and, on the other, doing something about harmful content, which is not normally easy to achieve. I do not have detailed knowledge of the surveillance issue but we must be careful that we do not allow something to be covertly introduced into our systems which we cannot control ourselves. Schröder, Ilka (Greens/ALE). (DE) I consider this a very important subject because democracy is seriously endangered by the further development of Enfopol, for instance, and also, in the field of the Internet, by electronic signatures. It seems to me that this is a very important topic for you, and I am somewhat surprised that you have nothing more to say about it apart from what you have read in the newspapers. 5
Liikanen. (EN) I sometimes try to compliment the media, so it should not be misinterpreted. I said that I fully agree that it is an extremely sensitive area. There can be a problem that when we are technologically led we can get rather too enthusiastic about technology and forget the basic legal issues that need to be addressed. The other danger is that if we concentrate too much on legal constraints, we risk dampening technology development. So how do we find a balance where we allow technological development while guaranteeing the basic rights of society? This is the key issue. As I said, I will come back to that, but it is a key political issue which comes under the third pillar. If my nomination is confirmed, my directorate-general, DG XIII, will be responsible for technical advice. Even though I did my best in August, there are areas where my knowledge is still limited, so that in the area of technical surveillance I will need to work more with the department and its experts. Seppänen (GUE/NGL). (FI) Mr Chairman, Mr Commissioner-designate, I acknowledge your pioneering work towards the reform of the Commission s administration. There are also issues which are not administrative but moral and ethical. Last Sunday, together with the Prime Minister of Finland, you attended a Formula 1 race and enjoyed the hospitality of a Finnish alcohol company and, evidently, of McLaren. We know that Mr Prodi is a keen supporter of the Ferrari team. What ethical and moral rules do you intend to abide by in your work in situations where you enjoy the hospitality of a company whose operations are being investigated by the Commission on account of a possible breach of competition rules? Liikanen. (FI) Thank you for that question. These ethnical and moral issues are very important. First of all I would stress that I was not there as a guest of the organisation whose activities the Commission is investigating. That was a deliberate decision on my part. Nor have I in any other case received hospitality from any company which is currently in dispute with the Commission. My principle with regard to hospitality is that I always pay my own travelling expenses for journeys abroad, but that it is acceptable to attend events concerts, operas and sometimes motor races as a guest, provided, as I say, that I pay for the travel involved, thereby minimising any dependence. The fact that Mr Seppänen knows that I was there, and that my presence was widely reported in the Finnish press, shows that it was done quite openly. I admit that each of us has his own leisure interests. Mr Prodi is very interested in Ferrari, I am mainly interested in Finnish drivers who enjoy success at world level, but this is a leisure interest and is in no way linked to my duties. I have pursued it as a private individual and intend to do so in future too. Of course, Mario Monti s position is much more difficult, as he is responsible for competition, and this matter will fall within his remit. A similar decision would be far more complicated for him. But I agree that a Member of the Commission must always act in such a way that he can explain everything openly. Hospitality must be accepted in such a manner that it does not affect one s decision-making. Seppänen (GUE/NGL). (FI) Mr Commissioner-designate, I trust that the same principles apply to the Prime Minister of Finland. But what, then, of dynamic development in the European Union? There are certain obstacles to competition in the fields of industry and energy. In many countries, State subsidies are paid to enterprises which operate undynamically: I am thinking particularly of the German coal industry, for instance. Do you envisage that it will be possible for a similar policy on subsidies to continue under the new Commission, and do you in principle consider it right to use subsidies to support uncompetitive enterprises? Liikanen. (FI) Allow me first to say a few words about the Prime Minister of Finland, as he also represents the State which holds the Presidency of the European Union. In a good many countries prime ministers are expected to attend sporting events in which their nationals enjoy 6
success, and sometimes even those in which they do not. I would say that this is an accepted practice in Finland too. I have observed that it happens in other countries as well. When I went to France to attend the football finals, the President and Prime Minister were there too, and this was considered perfectly right and proper. As regards policy on subsidies in general, I can say that my principle is quite clear. We should try to reduce and abolish all State subsidies. A sound European economy depends on competition, effective internal-market rules and competitiveness, including at international level. This is the direction in which we should proceed across the board. Some past decisions on subsidies remain in force which ought gradually to be phased out. If enterprises are to be supported, the money should be used to promote research and product development, in other words geared to the future rather than being provided as a permanent operating subsidy. I hope that the new Commission will adhere to this line. Montfort (UEN). (FR) I would like to broaden the question of small and medium sized enterprises to cover the craft industry. As it stands, according to Commission Communication 95/502 on the craft industry and small enterprises which were described as "keys to growth and employment in Europe", micro and craft-sector enterprises provide between 60% and 80% of new jobs. They represent 90% of European enterprises. What level of importance do you intend to give to micro and craft sector-enterprises? Also, what steps do you intend to take to encourage the activity and expansion of these enterprises and to improve their organisation? Liikanen. (FR) Obviously, I do not believe that the Commission can run enterprises. What is important is that we accept the approach I set out in my introduction and that we recognise that the future of Europe and the future of employment depend upon the future of small enterprises. It is evident that most new jobs are created by small enterprises, micro-enterprises and also, to some extent, craft-sector enterprises. What can we do? What we can do is to try to work with the Member States to simplify the legislation in order to lessen the administrative and legislative burden upon these enterprises. The programme accepted by the previous Commission, BEST, includes five or six different measures. During the summer, a network was set up between the Commission and senior officials in the Member States to find ways of implementing measures of administrative and legislative simplification in the Member States. I believe this is the main issue and it is an across-the-board issue for all enterprises. We also have pilot projects in the sphere of micro-enterprises and craft-sector enterprises. We may be able to continue some of them but it is evident that there is more to be gained in this field by new approaches and new pilot-experiments. The most important thing, however, is to create a framework in all European countries to allow all micro and craft enterprises to develop their activities and create new jobs more effectively. Raschhofer (NI). (DE) Mr Commissioner, I have the following question: during the hearing you have already spoken about administrative reform, and you also mentioned it in your written replies. However, there are not only technical, organisational, structural problems and issues to be resolved here: ultimately, political issues need to be defined and responsibilities determined. Although I have been listening very carefully, I have not so far been able to ascertain your position. How would you personally define your political responsibility for managing your Directorate-General? Yesterday I listened to Mr Fischler, and he said during his hearing that he felt personally responsible for those people whom he had appointed to his private office or selected as close associates. However, he could not accept political responsibility for the Directorate-General as such. This is a very concrete question. Please give me a concrete answer. 7
Secondly, you have said, like your colleagues, that you will resign if Mr Prodi asks you to. As a Member of the European Parliament I would be interested to know whether you would do likewise if called upon to do so by the European Parliament. Liikanen. (EN) I will answer the last question first. The question of individual responsibility is a fundamental one. The European Commission is a college which is also a fundamental point in the Treaty. I am ready to combine these two issues but, as a member of the college, I leave the final word to the President. Of course, if Parliament rejects my actions, this would put me in a difficult situation. I would, of course, talk to the President, but it would be for Mr Prodi to take a decision. As to the director-general and his responsibility, I did not hear what Mr Fischler said, but I do not fully liberate myself from responsibility. If we agree on a mission statement and performance criteria and the director-general does not deliver, it will be a problem, but I will never come to you concerning management issues and say that it was not me, it was my director-general. I will take responsibility and I will try to deliver. On some legal issues, for instance disciplinary proceedings which come under the judiciary, I cannot interfere as the judiciary is independent. But in management I will take responsibility and I will try to find a solution with my directorgeneral. Perhaps this is not always easy, but there must be a solution. Belder (EDD). (NL) Mr Commissioner-designate, I have just heard you say that you attach great importance to moral issues. That emboldens me to put the following question. In your reply to Question 36 you say that not all aspects of the protection of minors can be dealt with through self-regulation. What aspects did you have in mind? Do you not think that this statement also applies to other aspects of the Internet, such as damaging information and pornography? Might it not be better to introduce greater regulation of these matters, precisely because they have ethical implications? Liikanen. (EN) This is a very important moral issue for everybody responsible for the younger generation. I have spent a lot of time this summer trying to find out the real merit of modern instruments to control, filter or rate harmful information. What can we really control effectively? So far the Commission has done two things. Firstly, there is an action plan against harmful content, through which we support various actions. We support a kind of telephone system where people can report on what is happening and so on. There is also a Council recommendation which deals with the protection of human dignity and of minors. That is also important. But the key issue for the future, to my mind, is that self regulation is important. What we need is a system of filtering and of rating. Efforts still need to be made to create the proper software, because the Internet came before filtering and rating, so technologically we are late. What can we do about filtering and rating? We can prevent the information getting through, which gives the parents an option. As far as legislation is concerned, this varies from country to country. In Germany it is very strict on racial issues. In the United Kingdom it is very strict on terrorism. Of course, national legislation can hamper transmission of the Internet service providers, the networks in their country. The problem is that if it turns up on the network elsewhere, there will have to be international discussions to find a way to sort out the problem. There will be a conference in two weeks time on that particular issue. I am ready to work on this issue during the years to come. However, the state of play today is that we now have two basic approaches in the Commission: 8
we must invest in filtering and rating; we must work together with Member States and try to encourage more international dialogue on the issue. I must say, however, that the American approach is rather different from the European one, but we should not think that we can solve every issue by legislation. Brunetta (PPE). (IT) Mr Liikanen, in point 15 of your replies to the questionnaire sent to you by this committee, you referred to the Commission s initiatives in the context of the process which began with the Cardiff meeting in 1998 relating to structural reform of markets and to the competitiveness of businesses. You particularly stressed the importance of adopting measures to promote flexibility as a way of making business more efficient. At present Europe faces the substantial problem of flexibility in one particular market perhaps the most important of all markets namely the labour market, both outside and inside businesses. In the light of the divergent national approaches to it notably the 35-hour week in France, the quite different approach adopted in Spain, with deregulation, while in Italy the debate continues what position will you and the Commission adopt? Liikanen. (EN) I admit that that is a very important question and one on which the position of Member States varies enormously. I am not a particular admirer of the American system, except in some technological areas where they are very advanced. I remember one trip when I travelled from New York to Helsinki. It was raining cats and dogs in New York and there were young people selling umbrellas everywhere in the streets. I arrived in Helsinki. It was still raining cats and dogs. I tried to find an umbrella. I had to go to the fourth floor of a department store. I must say that this kind of approach to supply and demand is rather harmful. If we want to create jobs in Europe we must devise solutions where supply and demand can meet and where, when people have a chance to buy services, there will be supply. This requires flexibility. When a company has a lot of orders for the coming three months and then nothing for the next two months, I would propose to the company to try to reach an agreement with employees so that when demand is high they will work longer days, but then are prepared to work fewer hours at other times. I think it is very important to adopt this kind of approach to flexibility, whereby employees and employers share the position that goods should be produced in such a way that they are competitive and can be sold. If you ask me to adopt a position on flexibility which cuts away all the basic rights of employees, I cannot agree. Of course, in European society it is very important that we have social dialogue where we can negotiate and find solutions: flexibility so that parties discuss and agree is the most important solution. However, I fundamentally agree that if we want to create new jobs we need to create them where the demand is. The work must be where the demand is found. Otherwise one can work on Monday when clients are working but be away on Saturday when everybody is ready to buy. Brunetta (PPE). (IT) Thank you. Just one further comment: markets are by definition regulated. Markets are not a locus of deregulation. A market can exist only by virtue of the fact that there are rules. If there are no rules, there are no markets. To speak of a deregulated market is a contradiction in terms. If markets are true markets, they are governed by rules. The problem is whether the rules are good or bad, efficient or inefficient. I hope that your attitude and that of the Commission will be one of promoting efficient rules, not markets without rules. Liikanen. (EN) I fully agree with you. Let us look at a particularly strong example. Many bigbang economists in America thought that once the big bang had occurred in Russia everything 9
would quickly improve. What happened? The big bang occurred. The Communist party lost power. The whole society collapsed. There was no rule of law and no administration. There cannot be a market economy if there is no functioning legal system. There cannot be a banking system if there are no banking surveillance laws. We need to have both of those conditions. A market economy requires a functioning administration and the rule of law - a functioning society. Paasilinna (PSE). (FI) Mr Chairman, Mr Commissioner-designate, it is true that employment is the greatest problem. I am glad you raised this at the outset, but although new jobs are being created thanks to information technology, it is sometimes the case that more jobs disappear than are created. At the same time, the new jobs are very unevenly distributed within society, most of them going to skilled workers and the young. How, in your view, should the Union tackle this twofold problem, which is dividing our increasingly integrated Europe from within? Secondly, content production could create jobs. We are lagging far behind the United States with regard to content production. What practical measures should be adopted to improve the position and competitiveness of content production? Liikanen. (FI) These are two very important questions. To take your first point, the fact that rationalisation is concentrated in traditional industries while many of the new jobs are being created in the field of content services, software, and going to young and skilled workers, is a real problem. I recently met a minister from Oulu. Oulu is a town which has many new technology businesses but also much old industry which is simultaneously undergoing restructuring, and these two things do not cancel each other out. The overall figures look good, but if a middle-aged worker someone my age, say loses his job, there are no real opportunities for him. To be frank, there is no easy remedy for this, but it is extremely important that there should be no let-up in efforts to retrain the work force. It is vital that businesses should train their staff and broaden their basic knowledge, because this will make it possible for them to find jobs elsewhere even in this situation. A person who gets to know the information society late in life cannot become an expert on it, but if he gains a familiarity with the sector s basic tools, he can nonetheless become employable again. We must keep hammering away at retraining, and the older sections of the work force must be included in this, as they are becoming divided. The information society must not be a divisive factor in society. This would be not only unjust but also economically damaging. In content production, software production, it is essential to broaden education and training so that young people, from primary school to university, acquire the tools of the information society, that we promote the setting-up of new businesses, that we create opportunities for small businesses to obtain venture capital, and that we eliminate the red tape which often hampers small businesses. There are possibilities in this field, and it is necessary to invest in it: in my opinion this will be one of the major challenges facing Europe in the next five years. Paasilinna (PSE). (FI) Thank you for that reply. However, what tends to happen at the moment is that a lot of well-paid elite jobs are created, where the work is interesting, while everyone else say 80% of the total - forms a deprived, excluded mass. Could a remedy be found in the third sector or by introducing a new tax system, for example a Tobin tax on professional currency speculation in conjunction with cuts in taxes on labour? Liikanen. (FI) When I was Minister of Finance, I was always happy if somebody invented a new tax, but in my current capacity I am a good deal more cautious about this kind of thing. As regards the third sector, I believe that it offers increasing opportunities in Europe. However, one 10
reason why the third sector is not as big in Europe as it is in the United States is the level of taxation. In the United States, where income tax is low, every self-respecting citizen is expected to make donations to charity to show that he is doing his bit. Here on the other hand, income tax is higher and most services are paid for by means of income-tax revenue, which means that people s margins are narrower. Even so, I agree that there will be new opportunities in this sector in future. There are many possibilities for the social economy, foundations and NGOs in this context, and they should be seized boldly and openly. As far as the division of the Commission s work into portfolios is concerned, this issue is now partly being transferred to the Commissioner for social affairs. We ought to consider jointly with her what can be done in this regard. The European Policy Centre, a think-tank in Brussels, has just produced an interesting report on job opportunities in the third sector, and I consider that, even though there are differences because of the high level of taxation, those opportunities which we do have ought to be put to better use. Valdivielso de Cué (PPE). (ES) I would like to ask the Commissioner about an issue relating to competitiveness. I come from northern Spain, where we have competitiveness problems, particularly in the shipbuilding and steel sectors. How can we maintain competitiveness, as the Commissioner suggests, in industrial sectors such as those I have mentioned when we are facing competition from non-eu European countries and, for instance, south-east Asia? Liikanen. (EN) Some parts of this question also concern my written reply. I think, of course, that it is very important that our enterprises are competitive, that their costs are limited and that they can use all of the modern technology necessary to compete with competitors. In the future we need more horizontal and perhaps fewer vertical measures. If the global environment for competitiveness is positive, this gives a basic starting point. As to competition from Central and Eastern Europe and from Asia, we are currently negotiating with countries from Central and Eastern Europe on membership. One of the sensitive areas in the negotiations is the restructuring of their steel industries. The precondition for countries to join the Union is that they accept the acquis communautaires. We must assist and encourage these countries to carry out the basic reconstructing that allows them to accept internal market rules. It is very clear that if there were unfair competition from those areas, it would not help the atmosphere in your country in favour of enlargement. In other parts of the world, there is antidumping legislation, which allows for possibilities when the case is clear and well founded. Those possibilities must of course be used properly. Valdivielso de Cué (PPE). (ES) First of all, I would like to say to the Commissioner that I received the written replies just six minutes ago. Out of politeness, I preferred to listen to him rather than read them. Second, the Commissioner referred in his introduction to the lack of a culture in relation to unemployment, which is partly due to the lack of an enterprise culture. I would like to say to the Commissioner that, while I am convinced that EU officials are of outstanding quality, there are many services provided by the European Union and its institutions which could be provided by highly-qualified external firms, without having to integrate all these aspects into the European 11
civil service. This is just a comment I thought important in relation to industry and competitiveness. Mann, Erika (PSE). (DE) Mr Liikanen, as we know, you have a very difficult portfolio, and you have drawn a very critical picture of the economic situation, particularly in the modern sectors of the European Union. What will be your practical criteria for the success of your work? Will you surrender certain fields, or propose this to Parliament, if you believe that they will not be successful or if you find that they have not met with success? Do you, in addition, need more staff to do your work? I suspect that you will indeed need more in connection with the forthcoming WTO negotiations. Furthermore, how will you ensure equality of opportunity between women and men in your department? What is the present situation, and what are your practical plans in this field? Liikanen. (EN) On the first question: if I fail am I ready to give the sector away? Through my experience in the Commission during the last five years I have learned that if you fail nobody wants to receive your sector. So I had better try to put things right and to run things well. If I am confirmed I will probably be given the enterprise portfolio. We do not have an enterprise department in the Commission. We have industry, DG III, with more than 100 people, then we have a small DG for small and medium-sized enterprises, tourism and so on, about 200 people. But there is no coherent enterprise department, which includes industry and services alike. Now the Commission has decided that Mr Liikanen gets the portfolio and he must use economies of scale. So I should liberate officials for the use of the other priorities. I am the only one who is mentioned. So all of the others are winning. I have taken on the challenge, and I will try to do my best. Of course, when you put two DGs together you must be able to free resources, reduce overlaps, you can have economies of scale, and so on. You can have electronic commerce in one DG, there is no need to have two separate units. On WTO negotiations, I know from my present portfolio that the resources we need there are high, and the EU compared to America has been too weakly staffed. This concerns DG I which is the external trade department, and also the legal service, which is also very important. The Commission this year has tried to reinforce those resources, but I am sure that when you come to interview Pascal Lamy this will be addressed. On equality between men and women, this Commission has failed in some areas, but there is one area of which I am proud. That is the field of female appointments. When we came in January 1995, we had five female A2s and one female A1. When this Commission leaves, as I hope, in September, there will be 19 female A2s and two female A1s (there were three, but one decided to come to work for the European Parliament). As regards heads of unit, we have also improved things, but it has been rather a slow process, because to have more women in the leading jobs means that there are more women recruited from the base. We have recently had a general competition, in which I hope that there will be a more or less 50/50 balance between men and women. When Sweden and Finland joined there were 50% women and 50% men, which has made an impact. However, we need to recruit more women from the base to enable them to have good careers. I will implement gender mainstreaming on the day I arrive. The A1 and A2 situation in my area is not as promising as in other areas of the house. None of the 19 A2s whom I mentioned is working in the services for which I will be responsible. And I know you will return to this question. So I will accept accountability for it. 12
Mann, Erika (PSE). (DE) The Commission tends to have ideas of its own on the subject of success. I am not completely satisfied with either the written or the oral replies to this question. I myself believe that when one is responsible for a Directorate-General and for a portfolio one should draw up criteria, that one should define one s objectives in particular fields and take the line that if they do not lead to success, one will abandon the fields concerned. By way of example let us take the enormous criticisms which have been levelled at certain areas of research policy. You yourself say that we are not world leaders in new technologies. The question is: what should we do? Or should we give up our policy on this? Is it perhaps not proving a success? Liikanen. (EN) I am sorry, I misunderstood the question. I thought you asked if I was ready to give my sectors to another commissioner if I fail. Am I ready to cut off the activity of the Commission? Yes. I must say that here the Commission should be much stronger in the future, much stronger vis-à-vis the Council and sometimes also vis-à-vis the European Parliament. Sometimes you get tasks on which you cannot deliver. You are given a million dollars to abolish hunger in the world, but you know that you cannot do it. Responsible executives should say: I m sorry, this project cannot be run, it has no value-added, and we do not have the staff. Here we must be stronger. I hope that in Parliament there will be some understanding also that even though it may be the favourite subject for half a dozen parliamentarians particularly in the Committee on Budgets if we cannot run it effectively let us not create activities which are clearly future fraud cases. If we do not have a clear plan, clear programme, clear financial management rules and sufficient staff, it would be wasted in the end. Very often this is where fraud occurs. We should really concentrate on the issues where there is real value added. For instance, in my area I looked at innovation policy, on which we all agree. There are about 18 different projects in that area, and we all know that if you have 18 priorities you are not certain if you have any. So we must cut down the number of priorities, because you cannot effectively run a European Union of 370 million people if there are so many priorities that you do not remember them yourself. So we must concentrate more on the issues where there is clear value added. We must also be very disciplined in having external evaluation. If the evaluation reveals that something did not go well, we cut it off. In the SME area for instance, the evaluation of the SME programme says: concerted action with Member States is very good high value added. So we keep it. Then they say the BEST programme for simplification of the legislation of Member States is very good okay we keep it. But then they say pilot projects: too many, badly run. Normally what we do then is attempt to justify it. We say no, you are wrong but let us accept it and cut them away. So there is a built-in tendency for everybody to justify his actions. But the external evaluations say that there is no value added, it is badly run. So let us be brutal, let us cut it out. Evaluation is there the key issue. Of course, I am ready to show you some examples when we get there. It means we concentrate more on the essentials, when we take away small actions with no solid value added. Langen (PPE). (DE) There are many new Members here, and I should like to start by asking you a personal question concerning your previous field of responsibility. Do you really consider it possible to be a member of the new Commission even though as Commissioner for the budget you still have not received a discharge for the previous Commission in respect of 1996? Could you explain to the new Members whether you bear any individual, personal responsibility for this? I should like to take up two questions which you have already spoken about here. Firstly, you have said that subsidies should be avoided wherever possible. How do you intend to achieve this 13