(Adds ESM reform, paragraph 6)
STRASBOURG, Sept 13 (Reuters) - European Commission President Jean-Claude Juncker made key proposals in his annual State of the European Union address to the European Parliament on Wednesday.
For more on the speech, see:
EURO ZONE INTEGRATION
A vice president of the European Commission to chair the Eurogroup of euro zone finance ministers and play the role of European Finance and Economy Minister, promoting reforms in states and deploying EU financial instruments to help states in recession or crisis. But he rejects French ideas of a separate euro zone budget and parliament, rather a "strong euro area budget line within the EU budget" and EU parliamentary scrutiny.
He backs that argument by calling for all EU states to adopt the euro and offering technical and financial help for countries that need it. With non-euro Britain leaving in 2019, only eight states accounting for 15 percent of EU GDP will be outside the euro zone. However, the likes of Poland and Sweden are wary politically of being drawn into the single currency.
Juncker also wants all states to join the European Banking Union, making bank supervision common across the bloc and more common standards in labour and social policies. He wants to set up a European Labour Authority and also wants governments to give up veto rights in areas such as corporate taxation and VAT harmonisation efforts and a new financial transaction tax.
The Commission will propose in December ways to transform the euro zone bailout fund, the European Stability Mechanism (ESM) into a broader regional equivalent of the International Monetary Fund (IMF) for the the European Union as well as the creation of a double-hatted European Minister of Economy and Finance.
He also suggested making his successors as chief executives also the chairs of EU summits, fusing the roles of presidents of the European Commission and that of the European Council so as to make EU structures more comprehensible at home and abroad.
TURKEY AND THE BALKANS
Western Balkan states should have a realistic chance of joining the EU after 2019 but Turkey's abuse of fundamental rights rules out it joining in the foreseeable future.
Britain's departure is "tragic" and the British too will come to regret it but it should not prevent the rest of the Union forging ahead with integration in an ambitious way, in the knowledge that favourable conditions will not last for long.
Juncker made no policy statements on how Britain's exit should be handled or on plans for a new relationship. He called for an EU summit in the once German-speaking Transylvanian city of Sibiu on March 30, 2019, the first day Britain will no longer be in the Union. Romania will be chairing EU meetings then. It should agree plans for the future ahead of bloc-wide elections to the European Parliament scheduled for two months later.
The EU is to launch new, transparent free trade talks with Australia and New Zealand and aim to conclude those as well as ongoing negotiations with Japan, Mexico and South American nations by the end of Juncker's mandate in late 2019.
The EU is taking advantage of a cooling of the United States on free trade. Addressing unease in Europe about such deals, Juncker stressed their power to create jobs and impose EU standards in areas such as the environment on trading partners. New deals will also be stripped of controversial elements such as special business tribunals to make them easier to ratify.
While being open, the EU will also introduce at Union level some of the powers which some governments have to review foreign investments in strategic assets -- such as infrastructure or sensitive security or technology firms -- and raise objections.
A new European Cybersecurity Agency to be set up. He also wants a new European intelligence unit to coordinate sharing of information on suspected militants and to give the new European Public Prosecutor powers to investigate terrorism offences. A European Defence Union, supported by NATO, to be ready by 2025.
The EU is to propose ways to increase from 36 percent the rate of failed asylum seekers being deported back to their homelands. This is seen as essential to get member states to agree new rules on asylum to share out responsibilities and give more help to genuine refugees. Juncker wants states to make good on pledges of aid to Africa to promote growth and slow emigration.
Romania and Bulgaria should be brought into the Schengen passport-free zone without delay and Croatia as soon as possible -- part of a strategy to push all EU member states into all the bloc's structures, including the euro and banking union.
After blasting carmakers -- many of them German -- for deliberately misleading consumers on the emissions of diesel vehicles, Juncker proposed an Industrial Policy Strategy to help industries stay or become "world leaders in innovation, digitisation and decarbonisation".
While pointedly demanding that EU governments respect EU law and court judgements -- a barb aimed mainly at ex-communist states in the east like Poland and Hungary -- Juncker stressed that the poorer east must not be treated as second class.
He proposed efforts to ensure children are vaccinated to the highest standards across the bloc, fair pay and treatment for workers backed by a new Labour Authority and stronger national powers to punish companies which offer lower quality products in the east under the same labels as better produce in the west. "Slovaks do not deserve less fish in their fish fingers." (Reporting by Alastair Macdonald, editing by Robin Emmott)