GERMAN VIEW
The EU trades draw closer to each other
What applies to Germany and its trades can
also be seen across th rest of Europe. In the European Union area, SMEs, including trade
firms, provide 66% of all jobs and therefore an important economic factor for a Europe
that is growing together. Political interests in SMEs and trades have grown strongly
everywhere in the EU. In the recent years there has been a growing realization that these
companies are absolutely indispensable for the EU states' national economies, for
employment, and for social and economic cohesion.
To ensure that the EU will continue to
benefit from its Mittelstand, informing SMEs about the opportunities the European Single
Market offers is an important field of the European Commission's policy on these
businesses. The firms' negative views on the inscrutability of cross-border laws and
decrees, as well as excessive red tape, often stand in the way on inter-European business
in the trades sector. Besides Brussels' comprehensive informing of trades people on the
pan-European potentials open to them, a discussion on improving policy framework
conditions for the trades sector is being stepped up both within Germany and on the EU
side in general.
The European Conference for Trades and Small
Businesses, the third of which took place in Milan in 1997, is also the basis for the
European Commission's strategy and policy on the trades sector and the SMEs at large.
High-ranking delegates in Milan discussed improvement measures for the firms, whose
implementation can already be noticed or is being tackled. Representatives of the
Commission, national governments, employers and employees, experts, major business players
and trades people from across the EU and a number of countries in the Mediterranean and
Asian regions guarantee the conference's high caliber. Individual EU countries present
their best practices in their strategies and policies as models from which other member
states can learn. From example, Germany's Meisterbrief is a personal certification
instrument, which is increasingly attracting interest and inquiries worldwide. Its
strengths, the unique combination of professional and entrepreneurial training, were
recommended by a group of EC experts as a best practice worth following.
The Commissions' paramount goal is to point
out to Eu heads of state and government leaders that the trades firms and SMEs in general
are key to overcoming the unemployment crisis. But that requires increasing the
transparency of the total offer to the companies, tightening it if necessary and thus
strengthening the overall acceptance of the promotion.
At the EU level, special mention should be
made of the cooperation exchanges or markets, the Europartenariate, as and instrument to
promote cross-border activities. Since 1988 they have been implemented twice yearly in a
host promotion region. Th events, which are aimed at the development of the host region
and promoting business contacts, were financed latterly out of the Eus third multi-annual
program for SMEs, 1997-2000, and its regional fund. Unlike trade fairs, the event give
SMEs in all branches the opportunity to present themselves and contacts without having to
pay exhibition stand fees and other costs. The Europartnariat Brandenburg in
Potsdam-Babelsberg in 1999 was a very successful gathering, which attracted about 15,000
visitors. In addition, EU-wide information and support networks such as the Commissions'
Euro Info Centers, EICs, and Innovation Relay Centers, IRCs, also help promote cross
border business activities. Among other services, they give SMEs information on Single
Market regulations and promotion opportunities and exchange experiences and information
with each other. This enables them to multiply their information capacities. In the EU and
associated countries, such as EU entry candidate countries and those in the Mediterranean
region, there are about 300 EIC contact points, of which 34 are located in Germany alone.
This means every SME can find a contact a person in its home region. The EC plans to
continue these activities as part of the new EU multi-annual program for the companies
beginning this year.
The primary task of the German Federal Office
for Foreign Trade Information, bfa, is to provide specific market and product information
to German companies inquiring about foreign markets. German diplomatic missions around the
world supplement the services of foreign chambers of commerce by reporting and advising
the companies on the political, economic and legal framework conditions of 'host'
countries.
In addition, the German Federal government
promotes exports of goods and services to 'difficult' foreign markets by offering
companies Hermes export credit guarantees. These cover claims stemming from an export
contract with a foreign customer against business and political risks, and in particular
ensure equal opportunities for German exporters in international competition.
Eye on the Economy:
Promoting Reform After the Crisis
While the effects of the Asian financial
crisis persist, the sense of urgency for reform that swept much of the region in 1998
dissipated as regional economies stabilized and some growth returned through 2000.
Although the heavy costs of the crisis have not been forgotten, and none of the most
seriously affected countries have recovered entirely, three factors have shifted the focus
away from reform and toward more cautious economic consolidation.
First, modest growth throughout the
region (and robust growth in Korea)0 has dampened demand for deep economic reforms.
Second, aversion to the costs of reform has had similar effect. For example, the high toll
that corporate restructuring takes on both management and labor creates a powerful
alliance against reform. Finally, political imperatives have undercut the pursuit of
needed reforms.
As a result, many serious structural
impediments to broad based, long term growths in Asia remain. Unstructured corporate debt
prevents many firms from borrowing, and the huge non-performing loan burdens in much of
Asia preclude significant new lending. Business practices that fall below international
standards for transparency, and adequate legal protections for lenders and investors
continue to slow the return of the capital. In most of Asia, economic recovery remains
slow and fragile, with the poor and vulnerable typically paying the greatest toll for
economic stagnation.
Local Governance: Many
significant constraints to growth in Asia result from policies that either are poorly
conceived or serve narrow interests. In 2000, the Asia Foundation supported research and
dialogues on the trade-offs of economic reform. Because reforms often result in real and
immediate transition costs, such as the loss of jobs from the closure of un-competitive
firms, activities that foster a better understanding of the broad, long-term benefits of
economic liberalization also strengthen the position of the domestic adocates for reform.
In Bangladesh, the focus was on trade and smuggling, competitiveness, and regional energy
needs. In the Philippines, attention focused on analysis of an executive order, eventually
rescinded in late 2000, to use a noncompetitive process to award a port-management
contract that raised concerns about possible conflicts-of-interest in government
contracting. In China, the Foundation programs explored how regulatory reform can
encourage the flow of venture capital.
Creating a Conducive Environment for
Small Businesses: One of the unanticipated consequences of the regional economic
crisis is a resurgence of interest in developing a dynamic small and medium sized business
sector. Once neglected by government industrial development strategies that favored large
companies and state owned enterprises, these small and medium businesses have recently
received attention from governments and donors alike, of ten under the assumption that
that these smaller enterprises are weak and need outside help. But the economic crisis
revealed this sector to be surprisingly resilient amidst the turmoil-one better served by
a less hostile regulatory environment than by the more frequently offered subsidized
credit or training. To this end, the Foundation facilitates relationships among small
businesses and between business groups and local governments, which help to stimulate a
business environment in which competitive smaller businesses can thrive. This approach was
developed in Indonesia, where the Foundation continues to support the organization of 14
regional business associations that now regularly participate in policy discussions at
various levels of government.
In 2000, the Foundation expanded its support
for regulatory reform in a number of countries. In Cambodia, it worked with the Mekong
Project Development Facility to support Enterprise Development Cambodia, an organization
that fosters the development of private associations of rice millers and brick and tile
manufacturers. In Nepal, the Foundation supported two cross-border meetings to explore how
to improve small business trade with India. Reform program activities directed at
small-and medium sized businesses also took place in B'desh, China, Indonesia and Sri
Lanka.
Supporting Regional Reform: The
Foundation also supports regional mechanisms, such as the Asia-Pacific Economic Forum,
which help to boost international cooperation and stimulate domestic reforms. In addition
to supporting the meeting of ECOTECH, an APEC working group that helped focus attention on
the importance of human resource development as an element of economic growth strategies,
the Foundation participated in the 26 th Pacific Trade and Development, PAFTAD,
Conference, held in Korea. Regional institutions serve a variety of functions. These
include their "lightning rod" role in drawing attention to global economic
problems, and providing developing countries a chance to articulate how important
competition and growth are for alleviating poverty.
Text courtesy: TAF, Kathmandu office. |
