GERMANY: The German Chancellor, Mr Gerhard Schröder, has called for the measurement of corporate taxes to be harmonised to aid the European Union's competitiveness drive, writes Derek Scally in Berlin
Mr Schröder and the French President, Mr Jacques Chirac, also called for a "redefinition of the Stability Pact" after it emerged yesterday that both countries will breach euro zone guidelines again in 2005.
"For a competitive and attractive Europe we need a domestic market which is as far as possible not influenced by taxes," said Mr Schröder in a newspaper article yesterday in which he outlined a seven-point plan to drive on the Lisbon Agenda to increase the competitiveness of the European economy.
Berlin has made no secret of its displeasure at corporate taxes in Ireland and new EU member-states that are as low as zero per cent, compared to the German level of 39 per cent.
Mr Schröder's call for a standardised method of measuring corporate taxes is seen by many EU governments as a first step towards tax harmonisation.
Mr Schröder's seven-point plan was central to yesterday's mini-summit in Berlin with the French President, Mr Jacques Chirac, the fourth such meeting of government ministers since Franco-German relations sank to an all-time low four years ago.
The two leaders hugged each other for the waiting cameras and announced several measures to bring the two countries closer together. One plan will see the creation of a Franco-German history book to be used as the basis of common history lessons in both countries.
While discussions were going on, Berlin officials shrugged off yesterday's European Commission forecast that Germany will breach the euro zone's 3 per cent deficit ceiling in 2005 for the fifth time.
"They have their forecasts and we have ours," said one official.
Both sides promised to work "as closely as possible in issues of economic and European industrial policy".
The two leaders said they planned to recruit other member-states to their idea of loosening the Stability Pact to allow governments more room to invest in research and development.
Besides economic matters, both leaders made clear that Berlin and Paris would vote for the commencement of accession talks with Turkey at December's EU summit.
"We are negotiating with the clear goal of accession," said Mr Schröder. Mr Chirac, who faces huge political and popular opposition at home to talks with Turkey, said his "greatest wish" would be an offer for Turkey to join the EU after the end of negotiations, in around 15 years.
On Monday the outgoing Commission President, Mr Romano Prodi, said attempts to make Europe more competitive had been "a big failure".
Mr Schröder's tone was more optimistic in an article published in three European business newspapers yesterday. He drew an overall positive balance at the halfway mark of the Lisbon Agenda, which aims to make the EU economy the most competitive in the world by 2010. But he urged European leaders to renew their efforts as "nothing less than the preservation of th European social model is at stake".
Mr Schröder cited as early Lisbon successes the increased investment in research and development and the liberalisation of the telecommunications market, which he said had "resulted in innovation, dynamism and employment".
He called for electricity markets to be opened by 2007, a regulator for European finance markets, and greater standardisation of payments methods across the EU. Several of the points provided backing for existing Commission proposals, such as the creation of common contract law and European guidelines for the services sector, in which 70 per cent of EU citizens work, which would create estimated savings of €50 billion.