Trade secretary Patricia Hewitt

Trade and industry secretary Patricia Hewitt writes exclusively for ePolitix.com on today's Berlin summit.

When Tony Blair, Jacques Chirac and Gerard Schroeder meet later today, their top priority will be to breathe fresh life into Europe’s economic reform agenda

With growth down in Germany, unemployment up in France and every day seeing more jobs moving east, globalisation has moved from economic theory to stark reality for people in call centres, factories and homes across Europe. The world is changing and so must Europe’s place in it. New markets mean opportunities but new competition and challenges too.

When the Lisbon agenda was agreed in 2000, it marked a shift in thinking few had thought possible. Europe staked its claim to be the strongest economy in the world in a decade, selling high quality goods and services the rest of the world would want to buy. Regulation would be replaced with entrepreneurship; intervention with innovation. Europe’s always had a wealth of ideas. Our aim was to remove barriers and turn these ideas into wealth and work.

But four years on, it’s clear that reform has not flowed easily through Europe’s veins. Good intentions have not always been translated into deeds. Too many directives threaten to drive businesses away from Europe.

Europe – the world’s biggest single market - has huge potential. We have some of the best scientists, entrepreneurs, universities and businesses in the world. But we need to connect them all better, creating partnerships for innovation right across the enlarged EU.

Today, we have a new opportunity to invigorate the Lisbon Agenda. France is modernising its approach to industrial support. Germany’s labour minister has described our employment record as an "inspiration for Europe". In Britain, we are building the links between science, technology and business that France and Germany have long enjoyed.

Over the next two years – with a run of sympathetic presidencies – three issues must top Europe’s agenda.

First, enterprise and job growth. Five million more Europeans are in work than five years ago. But three times as many remain unemployed and eighteen times as many inactive. As new jobs increasingly depend not upon a small number of large businesses, but on a large number of small businesses, promoting entrepreneurship is inseparable from our employment goals.

Second, better regulation. No regulation should be introduced in Europe unless it passes a competitiveness test: will it promote employment; will it open markets, will it sustain our competitiveness globally? The draft chemicals directive – publicly criticised last year by President Chirac, Chancellor Schroeder and Prime Minister Blair – failed that test.

And despite amendments that have already cut its impact on industry by some 10 billion euros, there is still more to do before we can be satisfied that this particular directive will indeed improve health and safety – something we all want – without simply driving business offshore.

Britain, France, Germany and Ireland are all signed up to this better regulation proposal. And finance ministers have agreed that ECOFIN should work with a strengthened Competitiveness Council on a two-year programme to simplify European regulations – an opportunity that business and industry should seize.

Third, as Europe turns outwards to the rest of the world, we need to take a lead in reviving the Doha Development Round. More open markets – within a global framework of rules for trade that is fair as well as free – will benefit Europe’s consumers, savers and businesses. That requires us to press ahead with reform of the Common Agricultural Policy, supporting our rural communities without trade-distorting subsidies. Europe’s offer to eliminate export subsidies on a list of products of interest to developing countries is not a negotiating trick: it is the way to achieve what developing countries most want, an end-date for the export subsidies that so damage their farmers.

With China in the WTO, India producing a million graduates a year and ten new countries poised to join the EU, Europe has no choice but to change.

Our economic potential is huge, but unless we reform the way we do business, our jobs and prosperity will suffer, perhaps forever.