German President Horst Koehler warned Tuesday that the European Union will not remain competitive on the global market if it retreats into protectionism.
"Those who weaken the European internal market through protectionism do themselves a disservice," Koehler told the European Parliament. "The internal market is a real test of fitness for worldwide competition. Anybody that can stand that test doesn't need to be worried about competition from abroad."
Koehler said the European Union must "get back into fighting form" to withstand the challenges of emerging economies as well as its traditional economic competitors, such as the United States .
Koehler gave the EU's energy market as an example where EU countries must cooperate more closely.
In Brussels , EU governments on Tuesday debated a plea from the European Commission to drop separate national energy policies and work together to find solutions to Europe 's growing addiction to imported oil and natural gas.
High oil prices and a Russia-Ukraine dispute that temporarily cut off Europe 's gas supply have pushed European governments to find ways of guaranteeing its energy resources.
Europe faces tough choices for its energy sector. France and Spain are under fire for moves blocking foreign takeovers of their energy companies.
"It's obvious to everyone that all member states have an interest in securing cheap energy and must cooperate in reaching this goal," Koehler said.
Koehler urged an EU reform that would curb bureaucracy and see more issues resolved at a national level rather than centrally from Brussels .
"You should only go as far as you need to, ensuring that you respect the ability to act and the identity of every nation and every culture," he said.
But Koehler also backed the beleaguered EU Constitution, a unifying document which has been put on hold after last year's 'no' votes in French and Dutch referendums.
"It should not be given up lightly, especially since 14 member states have already approved the treaty," he said. " Europe has now given itself a period of reflection. We feel we should be using this period to decide what should be done, to discuss this question seriously,” reports the AP.
The Russian military have already achieved significant success in the demilitarization of the Armed Forces of Ukraine