Germany and Italy to urge fellow EU members to reform to compete

BERLIN, Jan 21 (Reuters) - Germany and Italy will urge fellow members of the European Union at an informal summit next month to deliver reforms to simplify procedures and improve competitiveness or risk falling further behind the United States and China, a policy paper shows.

The paper, reviewed by Reuters, says Europe's living standards and sovereignty are at stake as new competitors increase their global influence and the growth gap between Europe and the U.S. and China has widened.

"Continuing on the current path is not an option. Europe must act now," the joint statement said.

The policy paper was drawn up for the Leaders' Retreat in Alden Biesen in Belgium on February 12, where German Chancellor Friedrich Merz and Italian Prime Minister Giorgia Meloni will press for a coordinated EU strategy to support businesses, attract investment and strengthen the single market.

It urges leaders to use the meeting and a European Council gathering in March to agree upon concrete commitments.

Meloni and Merz are also scheduled to meet on Friday in Rome for a bilateral summit, where the Italo-German document is set to be presented, according to an Italian government source, who spoke on condition of anonymity.

NEED TO EASE THE REGULATORY BURDEN

The paper cites International Monetary Fund figures showing EU internal barriers amount to internal tariffs of as much as 44% for trade in goods and more than 110% for services trade. It calls for an "ambitious ease of regulatory burden".

It proposes fast-track approval procedures, routine repeals of outdated laws and stricter scrutiny of new rules, with regular reports to EU leaders on progress.

Germany and Italy also advocate deeper integration in services, energy, capital markets and digital industries, a pan-European stock exchange and revised merger rules to help companies compete globally.

The paper urges the EU to speed up free trade talks with partners including Australia, India, the United Arab Emirates and the Association of Southeast Asian Nations, while warning Europe is ready to use defensive trade tools if necessary.