Trump's election adds urgency to EU competitiveness push

The European Union's goal of boosting competitiveness to catch up with rivals the United States and China has gained fresh urgency after Donald Trump's election win, Mario Draghi has said, as doubts increase that the bloc is up to the task.

Mr Trump warned before his US presidential victory that the 27-nation bloc will have to "pay a big price" for not buying enough American exports and has threatened 10% tariffs on all US imports.

Mr Draghi, a former European Central Bank chief, was speaking at an EU summit before presenting his report on EU competitiveness to EU leaders.

"The sense of urgency today is greater than it was a week ago," he told reporters.

He spoke about the US election, but could have said the same about the European Union itself after the collapse of the German government on Wednesday.

Given French President Emmanuel Macron's domestic problems, the Franco-German engine normally driving the EU is weakened if not broken.

The European Union is falling behind rivals in the green and digital transition due to factors including limited innovation, red tape, high energy prices and dependence on China for critical raw materials.

EU leaders signed off on the "Budapest Declaration", a long to-do list with deadlines for a deeper single market, more capital for investments and a unified energy market.

European Commission chief Ursula von der Leyen said her new EU executive would outline plans in its first 100 days to help industry reach carbon neutrality by 2050 and make proposals to broaden the EU single market by June.

Mr Draghi has said the bloc needs additional investment of €750-800 billion per year, but frugal EU countries have already taken issue with the idea that some of this should come from joint EU assets.

He said the most urgent thing to do was not joint funding, but to tackle fragmentation of the single market and of capital markets.

However discussions on a Capital Markets Union (CMU) have dragged on for a decade because of entrenched national interests, different business cultures and regulations in EU members.

Current ECB chief Christine Lagarde said the bloc must move urgently to create a unified system to steer private savings to innovative firms at scale and consider "new methodologies" to achieve this, officials briefed on the discussions said.

It is just the sort of issue a Franco-German consensus could drive to the finish line, but the two are at odds over a French idea to allow a small group of countries to press ahead.

Belgian Prime Minister Alexander De Croo said the EU needed to pull together ahead of Mr Trump's return to the White House, explain to him the impact of a tariff war and discuss the economic behaviour of their common competitor China.

Earlier Taoiseach Simon Harris, who attended the summit before returning to Dublin to call the General election, said he is opposed to the EU issuing common debt bonds for defence spending.

He said: "Ireland has very significant concerns in relation to common bonds, not just for the policy reasons … but also the fact that there are so many projects that Europe now needs to fund.

"Every conversation I go to at the European Council now is about new things that Europe must spend money on - really important things, digital transition, [the] climate and competitiveness agenda, addressing infrastructural deficits, defence and security.

"There needs to be a much broader conversation about what the financial framework of the European Union looks like for the time ahead."

Mr Draghi has suggested that some joint investment in key projects - including defence procurement - could be funded through common debt.

The Taoiseach said: "Our position on military neutrality is well understood. Ireland supports [Ukraine] where it can. It doesn't support [Ukraine] in relation to weapons or military activity. And the Ukrainian government understands that clearly."

Mr Harris said the overall message from yesterday’s summit of EU and European leaders was that while US policy would change under president-elect Trump, the EU had to set its own agenda, especially on the issue of Ukraine.

There was now clarity from the United States on its policy direction, he said.

"What does Europe wish to do? There is a real sense of the importance of strategic autonomy, the importance of controlling what we can control here in Europe. No other part of the world owes us a living. As President [Emmanuel] Macron said yesterday, you expect the President of the United States to stand up for US interests. It's important now that European leaders do all we can to stand up for European interests

"There was a very resolute view from around the table, one which I share, that the European Union must stand with Ukraine. It must stand with Ukraine for as long as it takes.

"The US had its election and it made its decision. But that doesn't change European values…around the importance of the UN Charter, the importance of territorial integrity."

Mr Harris said the world was a "a very, very dangerous moment" regarding the Middle East.

He said: "I worry about this interregnum period now and how [Israeli Prime Minister Benjamin] Netanyahu responds to that.

"President-elect Trump is a person who professes his support for peace. I think it is so important that the world speaks with one voice in terms of calling out the humanitarian crisis, the loss of civilian life.

"I know President-elect Trump references the Abraham accords as a moment of success in his last term in office. Is that a pathway back towards getting partners in the region around the table to discuss regional stability?

"A part of that has to be the recognition that Palestine is a state in its own right."

Additional reporting Tony Connelly