Power & Politics Hub

This is the final article on this blog in the series on Mario Draghi’s report on European competitiveness. This is also the second article concerning horizontal policy proposals, and it will focus on strengthening governance in order to boost competitiveness.

On page 307, Draghi starts by stating that reinvigorating the EU’s competitiveness calls for reflection on the institutional set-up and functioning of the EU. The report consistently stated that no Member States can adequately tackle competitiveness challenges, hence now, more than ever, the EU represents an opportunity for its Member States. In various sectors, however, the EU’s complicated governance system can negatively affect the efficiency and effectiveness of collective action, compared to the USA or China. Contemporary challenges, in Draghi’s view,  require collective reflection on where the EU can have greatest added value through collective action, and how to act in these areas in the most efficient and effective way. Examples include ensuring a secure, decarbonised and affordable energy supply under a true Energy Union, or boosting digitalisation and the development, deployment and adoption of advanced digital technologies in the EU – in particular, AI. 

Draghi notes that the Commission’s legislative activity has been excessively growing, also due to passive scrutiny of the subsidiarity principle, which sets the boundaries of its right of initiative. The institution with the main right of initiative, the European Commission, justifies each of its legislative proposals in light of the principle of subsidiarity. However, there is evidence that compliance with the principle of subsidiarity is not always actively scrutinised, for instance by national parliaments. Thus, an EU-wide inquiry should be launched to analyse the reasons behind national parliaments’ passive exercise of their scrutiny of the subsidiarity principle. Building on its conclusions, initiatives should be taken to reinforce the role of national parliaments and Member States in upholding the principle of subsidiarity. 

Draghi proposes to modify the European Semester to only focus on fiscal policy surveillance, while the coordination of all other policies relevant to the EU’s competitiveness would be merged into a new Competitiveness Coordination Framework. The Competitiveness Coordination Framework would only address EU-level strategic priorities – ‘EU Competitiveness Priorities’ – formulated and adopted by the European Council. These priorities would be defined at the beginning of each European political cycle in a European Council debate and adopted in European Council conclusions. The Competitiveness Coordi- nation Framework would minimise the number of reports required from Member States’ administrations and foster genuine EU-wide coordination of policies that matter the most for the future of Europe’s competitiveness. The Competitiveness Coordination Framework would be organised in ‘EU Competitiveness Action Plans’ by areas and these plans would be made public. The Commission and relevant EU agencies would review progress made annually to assess the use of the financial incentives disbursed up front, and report back to the European Parliament and the Council (as budgetary authorities). Every year, at a European Council meeting, the ‘EU Competitiveness Priorities’ would be assessed against the latest political and market developments, so that the means defined for their implementation could be adjusted if needed – first and foremost, the implementation of the EU budget under its annual procedure. 

A key institutional reform which Draghi proposes is an extended use of qualified majority voting (QMV) in the EU Council. Council votes subject to QMV should be extended to more areas, or even generalised. So far, many efforts to deepen European integration between Member States have been hindered by unanimity voting in the Council of the European Union. This has been the case, in particular, in policy areas including taxation, justice and home affairs, as well as employment and social policies. All possibilities offered by the EU Treaties should be exploited to extend QMV. The so-called ‘passerelle’ clause could be leveraged to generalise voting by qualified majority in all policy areas in the Council. This step would require an upfront agreement, subject to unanimity at the level of the European Council and would have a positive impact on the pace at which key legislative initiatives are adopted at the EU level.

Draghi also proposes the use of Artificial Intelligence (AI) to reduce the administrative and compliance burden. The use of digital tools, most notably AI (and especially large language models) can lead to rapidly analysing large volumes of legal documents and identifying areas of consolidation, simplification and removal of overlaps and inconsistencies. National permitting procedures, for example, should also be fully digitalised according to Draghi, as well as made interoperable and coordinated at EU level, so that related costs are reduced and entrepreneurship is boosted. Environmental impact assessments, for example, could be reviewed by introducing a time limit across the EU for national administrations to respond in a digital format. Once this period has expired, Draghi thinks companies should be allowed to proceed with their projects under the condition that operators would be responsible for restoring the status quo in case of a final negative assessment.