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Page | 1A renewed trade strategy for Europe: Trade, Growth and World Affairs
The European UnionTrade Policy
March 2011
Page | 2A renewed trade strategy for Europe: Trade, Growth and World Affairs
Content
1. The EU in world trade2. EU trade policy – Basic features3. EU trade policy – How it works4. EU trade policy – Competing in the
world5. A renewed strategy for Europe6. Agenda for 2011: Next steps
Page | 3A renewed trade strategy for Europe: Trade, Growth and World Affairs
EU IN WORLD TRADE
Page | 4A renewed trade strategy for Europe: Trade, Growth and World Affairs
1. A few facts about world trade
GLOBALISATIONGLOBALISATIONTECHNOLOGICAL TRADE
DEVELOPMENTS OPENING
IMPLICATIONS• Opportunities for growth, but sometimes adjustment costs
• Need for global governance -> multilateral rules and institutions to ensure level playing field and better distribution of benefits
• Need to reinforce the competitive position of the EU economy
Page | 5A renewed trade strategy for Europe: Trade, Growth and World Affairs
1. A few facts about world tradeEvolution of Word* Trade: 1999-2009
Exports (billions of euro)
6 758
3 259
1 097
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
World (excl. Intra-EU27 trade) Developing Countries EU27 (excl. Intra-EU27 trade)
1999 2004 2009
Imports (billions of euro)
6 965
3 138
1 205
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
World (excl. Intra-EU27 trade) Developing Countries EU27 (excl. Intra-EU27 trade)
1999 2004 2009
Source: Eurostat (Comext, Statistical regime 4), IMF, WTO; * World exports (imports) except Intra-EU27 Trade
Page | 6A renewed trade strategy for Europe: Trade, Growth and World Affairs
1. The EU in world tradeA major trading power…
2008 2009 2008 2009 2008 2009 2008 2009
1. Trade in Goods
Exports 1 309,9 1 097,1 8 241,3 6 757,9 15,9% 16,2% First First
Imports 1 565,0 1 205,3 8 584,4 6 964,9 18,2% 17,3% First First
Balance -255,1 -108,1 - - - - - -Sources: Eurostat (Comext, Statistical Regime 4), WTO updated: 22.02.2011
2. Trade in Commercial Services (Total Services excluding Government services n.i.e.)
Exports 521,4 470,6 1 899,7 1 771,7 27,4% 26,6% First First
Imports 446,2 407,0 1 782,6 1 668,2 25,0% 24,4% First First
Balance 75,2 63,5 - - - - - -Sources: Eurostat (NewCronos), WTO updated: 22.02.2011
3. Foreign Direct Investment - Flows
Outflows 378,3 273,8 1 067,0 784,6 35,5% 34,9% First First
Inflows 165,7 218,7 1 004,7 758,0 16,5% 28,8% Second FirstSources: Eurostat (NewCronos), UNCTAD updated: 22.02.2011
4. Foreign Direct Investment - Stocks
Outwards 3 319,8 3 665,6 9 167,8 10 590,2 36,2% 34,6% First First
Inwards 2 522,3 2 707,2 8 860,7 9 853,8 28,5% 27,5% First FirstSources: Eurostat (NewCronos), UNCTAD updated: 22.02.2011
EU27share / World
(excl. Intra-EU27, %)
C = A / B
Position(in the World)
D
EU27(billions of euro)
A
World Trade(excl. Intra-EU27,billions of euro)
B
Page | 7A renewed trade strategy for Europe: Trade, Growth and World Affairs
1. The EU in world trade
27,5% 22,0% 3,3% 45,8%
34,6% 28,2% 4,9% 30,8%
28,8% 12,3% 1,1% 9,0% 48,8%
34,9% 22,7% 6,8% 4,4% 31,2%
24,4% 14,2% 6,3% 6,8% 48,3%
26,6% 19,2% 5,1% 5,2% 44,0%
17,3% 16,5% 5,7% 10,4% 50,1%
16,2% 11,2% 6,2% 12,7% 53,7%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Exports in Goods (2009)
Imports in Goods (2009)
Exports in Commercial Services (2009)
Imports in Commercial Services (2009)
FDI - Outf low s (2009)
FDI - Inf low s (2009)
FDI - Outw ards Stocks (2009)
FDI - Inw ards Stocks (2009)
EU27 United States Japan China Others
A major trading power (2009)
Source: Eurostat (Comext, Statistical regime 4)
Page | 8A renewed trade strategy for Europe: Trade, Growth and World Affairs
1. The EU in world tradeEU27 Trade in goods: Exports by region (2010)
1. NAFTA€ 290.1 billion
13. Andean Community€ 7.9 billion
11. MERCOSUR€ 40.1 billion
2. EFTA€ 150.0 billion
7. ACP€ 68.7 billion
5. CIS€ 123.7 billion
4. China & Hong Kong€ 140.0 billion
6. Japan & Korea€ 71.7billion
9. ASEAN€ 60.6 billion
12. Australia & New Zealand
€ 29.5 billion
8. GCC (6)€ 64.7 billion
3. MED (10)€ 141.9 billion
10. SAARC€ 42.0 billion
Source: Eurostat (Comext, Statistical regime 4)
Page | 9A renewed trade strategy for Europe: Trade, Growth and World Affairs
1. The EU in world tradeEU27 Trade in goods: Imports by region (2010)
2. NAFTA€ 202.5 billion
13. Andean Community€ 12.2 billion
10. MERCOSUR€ 43.9 billion
4. EFTA€ 166.9 billion
8. ACP€ 64.7 billion
3. CIS€ 195.9 billion
1. China & Hong Kong€ 292.9 billion
5. Japan & Korea€ 103.4 billion
7. ASEAN€ 86.2 billion
12. Australia & New Zealand€ 12.6 billion
11. GCC (6)€ 33.5 billion
6. MED (10)€ 102.4 billion
9. SAARC€ 45.7 billion
Source: Eurostat (NewCronos) – provisional value
Page | 10A renewed trade strategy for Europe: Trade, Growth and World Affairs
1. The EU in world tradeEU27 Foreign Direct Investment: Outflows by main partners(2009)
Switzerland€ 39.6 billion
Russia€ 0.0 billion
Canada€ -0.8 billion
United-States€ 75.1 billion
Brazil€ 7.6 billion
China & Hong Kong
€ 8.2 billion
Japan€ -0.0 billion
India€ 3.1 billion
Source: Eurostat (NewCronos) - provisional value
Page | 11A renewed trade strategy for Europe: Trade, Growth and World Affairs
1. The EU in world tradeEU27 Foreign Direct Investment: Inflows by main partners (2009)
Switzerland€ 26.2 billion
Russia€ 3.3 billion
Canada€ 11.5 billion
United-States€ 97.8 billion
Brazil€ 0.3 billion
China & Hong Kong
€ 1.7 billion
Japan€ -1.2 billion
India€ 0.8 billion
Source: Eurostat (NewCronos) - provisional value
Page | 12A renewed trade strategy for Europe: Trade, Growth and World Affairs
1. The EU in world tradeShare of (current) GDP in World GDP (2009)
28,2%
24,3%
8,7%
8,6%
0% 5% 10% 15% 20% 25% 30% 35%
EU27
United States
Japan
China
%
Source: UN (National Accounts Main Aggregates Database); Share = GDPi / GDPw
Page | 13A renewed trade strategy for Europe: Trade, Growth and World Affairs
1. The EU in world tradeTrade dependence (2009)
16,5%
34,5%
16,5%
19,1%
41,4%
0% 10% 20% 30% 40% 50%
Extra EU27
Intra EU27
United States
Japan
China
%
Sources: Eurostat (Comext, Statistical regime 4), WTO, UN nama Database; Ratio = (Imports+Exports, excluding Energy) / GDP
Page | 14A renewed trade strategy for Europe: Trade, Growth and World Affairs
1. The EU in world tradeEU27 Imports from Developing Countries…
0
200
400
600
800
1 000
Bill
ion
s o
f eu
ro
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Agricultural products Fuels and mining products Manufactures Other products
… and Least Developed Countries
0
5
10
15
20
25
30
Bill
ion
s o
f eu
ro
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Agricultural products Fuels and mining products Manufactures Other products
Source: Eurostat (Comext, Statistical regime 4)
Page | 15A renewed trade strategy for Europe: Trade, Growth and World Affairs
1. The EU in world tradeEU27 Exports to Developing Countries…
0100200300400500600700
Bill
ion
s o
f eu
ro
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Agricultural products Fuels and mining products Manufactures Other products
… and Least Developed Countries
0
5
10
15
20
25
Bill
ion
s o
f eu
ro
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Agricultural products Fuels and mining products Manufactures Other products
Source: Eurostat (Comext, Statistical regime 4)
Page | 16A renewed trade strategy for Europe: Trade, Growth and World Affairs
1. EU exports - crisis and recovery
Extra EU Exports (millions of euro)
2005
2008
2009
2010
2011
60 000
70 000
80 000
90 000
100 000
110 000
120 000
130 000
Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.
Source: Eurostat (Comext, Statistical regime 4)
Page | 17A renewed trade strategy for Europe: Trade, Growth and World Affairs
EU TRADE POLICY
BASIC FEATURES
Page | 18A renewed trade strategy for Europe: Trade, Growth and World Affairs
2. EU trade policy - basic features
Being the leading trade region
Strong interest in:
Open markets
Clear regulatory frameworks
Responsibility to:
EU citizens
Rest of the World
Need to reinforce EU
competitiveness on world
markets
Page | 19A renewed trade strategy for Europe: Trade, Growth and World Affairs
2. EU trade policy - basic features
Policy concept
A competitive European economy in an open world trade system organised by multilateral rules
Ensure that the European economy is open to the world and competitive in foreign marketsSecure real market access in foreign countries
Support a strong multilateral trading systemMost effective means of managing trade and enforcing rules
Promote European valueson democracy, rule of law, environment, social rights... Enforce sustainable development
Page | 20A renewed trade strategy for Europe: Trade, Growth and World Affairs
2. EU trade policy - basic features
Historic development
From tariffs and quotas...
… to “behind the border” issuesThe new shape of trade
policy
Developed from trade liberalisation in goods…
… to services and rules on investment, intellectual
property, public procurement
Evolution reflected in the EU Treaties
Extended the EU trade competence to services and
commercial aspects of intellectual property rights with qualified
majority voting
Page | 21A renewed trade strategy for Europe: Trade, Growth and World Affairs
2. EU trade policy - basic features
MultilateralMultilateral Bilateral/Bilateral/RegionalRegional
UnilateralUnilateral
3 3 DIMENSIONSDIMENSIONS
Page | 22A renewed trade strategy for Europe: Trade, Growth and World Affairs
2. EU trade policy - basic features
Multilateral
Mostly implemented in the framework of the WTO (= the most effective means of managing trade) aiming at promoting market access with rules, in the context of effective global governance.
Including the promotion of EU values :
• Environmental concerns
• Food safety
• Cultural diversity
• … and how to promote core labour standards ?
Page | 23A renewed trade strategy for Europe: Trade, Growth and World Affairs
2. EU trade policy - basic features
The core of the multilateral rule-based system
Unique forum for trade negotiations, rule setting, resolution of disagreements
Objectives
– To boost international economic growth
– To ensure business confidence
Functioning
Consensus = each country on an equal footing
Core principles
– No country may apply quantitative restrictions or similar measures
– Non-discrimination - ‘Most Favoured Nation’ principle
– National Treatment - no country may discriminate between its own products and imported products
– Transparency - all rules affecting trade must be transparent; publication, notification, discussion, trade policy reviews
Page | 24A renewed trade strategy for Europe: Trade, Growth and World Affairs
2. EU trade policy - basic features
Enforcement controlled by Dispute Settlement Mechanism
– All WTO members can seek redress
– Dispute Settlement Body (DSB) rulings are binding
– DSB may authorise retaliation
Membership
– Quasi universal: 153 member countries
– Covers 95% of world trade
Regulatory framework
– Trade pillar of global governance
– Rounds and agreements
Page | 25A renewed trade strategy for Europe: Trade, Growth and World Affairs
2. EU trade policy - basic featuresThe DohaThe Doha Development AgendaDevelopment Agenda
A round of trade negotiations launched in 2001
– To pursue market opening
– To strengthen rules, improve global governance
– To integrate developing countries in world trade
Development - a key component of the WTO
round
A development round
– Special and Differential Treatment– Addressing developing countries’ concerns– Aid for Trade
– Special measures for LDCs
Page | 26A renewed trade strategy for Europe: Trade, Growth and World Affairs
2. EU trade policy - basic featuresThe 3 legs of the DDAThe 3 legs of the DDA
Regulatory framework
Improving existing rules (e.g. anti-dumping, geographical indications) and creating new rules (e.g. “trade facilitation”)
Opening markets
– Agricultural goods
– Industrial goods
– Services
EU seeks real new MA
Development
Sustainable development (to respond to concerns of developing countries and civil society)
Page | 27A renewed trade strategy for Europe: Trade, Growth and World Affairs
2. EU trade policy - basic featuresThe Cancún setback (September 2003)The Cancún setback (September 2003)
Meant as a half-way point of the Round, the Ministerial broke up
without decision.
Serious divergences on agriculture and Singapore issues.
New balance of power in the WTO:
• Emergence of vocal developing country groupings (G20, G90)
• Rise of Brazil and India as key members of the WTO
=> New negotiating dynamics: different G progressively to replace “old” Quad
Page | 28A renewed trade strategy for Europe: Trade, Growth and World Affairs
2. EU Trade policy - basic features
After the suspension (July 2006): relaunching the RoundAfter the suspension (July 2006): relaunching the Round• EU remains committed to a successful and reasonably ambitious
outcome to: Create business opportunities and market access, Improve multilateral trade rules, Contribute to development
• All key Members confirmed their commitment to the DDA• No real alternative to the WTO• Objectives: narrow the gaps between Members on agricultural
tariffs, agricultural subsidies and industrial tariffs• In the short-term: to seek agreement on package of development
initiatives and resume technical work in Geneva
Page | 29A renewed trade strategy for Europe: Trade, Growth and World Affairs
2. EU Trade policy - basic features
Bilateral/regionalIn addition to the WTO's multilateral negotiations, the EU concludes bilateral agreements with third countries and regional areas. Many of the World’s countries potentially linked to the EU by regional trade agreements.
EU policy rationale for bilateral agreements
• Trade expansion and rules-making (WTO+)
• Fostering development and...
• … promoting regional development
Key EU bilateral agreements include:
• Economic Partnership Agreement with the Caribbean and in negotiation with other ACP countries
• Free Trade Agreements with some Balkan countries, the EFTA countries, the Mediterranean countries, Korea (not yet ratified), Chile, Mexico, South Africa...
• Customs Unions with Turkey, Andorra and San Marino
• On-going negotiations with India, Mercosur, Ukraine…
Page | 30A renewed trade strategy for Europe: Trade, Growth and World Affairs
2. EU Trade policy - basic features
Unilateral
The EU implements unilateral measures as an additional trade policy instrument in the interests of development and/or political stability in line with the Union’s key political priorities:
General System of Preferences (GSP): the classic instrument for fostering development is by granting tariff preferences. Products imported from GSP beneficiary countries enter the EU either duty-free access or with tariff reduction.
“Everything But Arms” initiative (EBA): a special GSP arrangement for the least developed countries. Grants duty-free access to imports of all products from LDCs without any quantitative restrictions (except to arms and munitions).
Asymmetrical preferences e.g. for some Balkan countries and Moldova, with the aim of ensuring peace, stability, freedom and economic prosperity in the region.
Page | 31A renewed trade strategy for Europe: Trade, Growth and World Affairs
2. EU Trade policy - basic featuresThe EU is the most open market for poor countries
176 developing countries and territories are beneficiaries of the EU’s GSP.
In 2008, EU imports benefiting from GSP preferences amounted to €68 billion. Bangladesh leading beneficiary country followed by China, Pakistan, Brazil, Malaysia and India.
The 49 Least Developed Countries (EBA - "Everything But Arms") benefit from duty-free and quota–free access for practically all exports of originating products to the EU for an unlimited period of time.
GSP guidelines for 2006-2015 in place providing stability to traders and economic operators. The scheme is implemented following cycles of 3 years.
Key Facts on the General
System of Preferences (GSP)
Page | 32A renewed trade strategy for Europe: Trade, Growth and World Affairs
2. EU Trade Policy – basic featuresThe GSP system 2006-2015 : simplifies graduation mechanism and reduces the system to 3 schemes
• General scheme: increase of product coverage from 6900 to 7200 (mainly agriculture and fishery sector of interest for developing countries).
• Special scheme for Least Developed Countries: Everything But Arms.
• New special GSP+ for vulnerable countries = duty free on 7200 products if the country meets criteria :
• Ratification and implementation of 27 key international conventions
• “Vulnerable”
• A poorly diversified economy.
Page | 33A renewed trade strategy for Europe: Trade, Growth and World Affairs
2. EU Trade policy - basic features
The reduced rate
provisions of the GSP
Special incentive arrangement (GSP+) honour beneficiary countries’ efforts to comply with certain internationally agreed environmental and labour standards. Meant to foster sustainable development by providing additional trade preferences. Duty free access for the products covered by the scheme.
The GSP provides tariff reductions without quantitative limitations. Reductions are modulated according to the sensitivity of products. While non-sensitive products enter the EU market duty free, the MFN rate for sensitive products, with some exceptions, is reduced by 3.5 percentage points.
Page | 34A renewed trade strategy for Europe: Trade, Growth and World Affairs
EU TRADE POLICY
HOW IT WORKS
Page | 35A renewed trade strategy for Europe: Trade, Growth and World Affairs
3. EU trade policy - how it works
How it worked before Lisbon Treaty
The negotiating process
The Commission is the negotiator
• On behalf of the 27 Member States
The Council is the decision maker • Mandate = determined by the Council on the basis of a
Commission proposal• The Commission negotiates on the basis of this mandate• The Council approves the result of the negotiation (generally by
qualified majority)
The European Parliament • Is informed by the Commission of trade policy developments• Gives “assent” on major treaty ratifications (covering more than
trade)
Page | 36A renewed trade strategy for Europe: Trade, Growth and World Affairs
3. EU trade policy - how it works
How it has changed …
PROPOSALS IN PROPOSALS IN THE EU THE EU
CONSTITUTIONCONSTITUTION
EP plays greater role in trade negotiations
Further extension of qualified majority voting for trade agreements
To extend the scope of trade policy to all foreign direct investment
To increase parliamentary control: co-decision for all autonomous acts of legislative nature, assent for major trade agreements
Page | 37A renewed trade strategy for Europe: Trade, Growth and World Affairs
3. EU trade policy - how it works
The trade defence instruments
“Defensive” instruments to ensure fair trade and defend the interests of European companies…
... have been designed in line with specific WTO agreements recognising the right of members to counter unfair practices:
Anti-dumping measures created to counter dumping practices, the most frequently encountered trade-distorting practices. Dumping occurs when manufacturers from a non-EU country sell goods in the EU below the sales price in their domestic market, or below the cost of production.
Anti-subsidy measures designed to combat subsidies, which are made available to manufacturers by public authorities and which can also distort trade when they help to reduce production costs or cut the prices of exports to the EU unfairly.
Safeguards: A WTO member may restrict imports of a product temporarily if its domestic industry is seriously injured or threatened with injury caused by a surge in imports.
Page | 38A renewed trade strategy for Europe: Trade, Growth and World Affairs
3. EU trade policy - how it works
The trade defence instruments
Since 1995, EC AD/AS activity is stable, with yearly fluctuations
• For the past 10 years, the EU was the n°3 global initiator of new AD/AS investigations
• Top of the league is India (over 400 cases) then the US (over 300) and EU (over 200).
In terms of the principal users by AD/AS measures in force, the EU is a modest user of TDI
Most EU AD/AS cases initiated over the last 10 years were in the iron & steel, chemicals & allied, textiles & electronic products sectors.
Less than 1% of total imports of goods into the EU are covered by AD/AS measures.
The biggest target of AD/AS measures is China. The EU is ranked in 2nd place.
Key Facts on Anti-Dumping (AD) and Anti-subsidy (AS)
activity(as at 31/12/2005)
Page | 39A renewed trade strategy for Europe: Trade, Growth and World Affairs
3. EU trade policy - how it works
The offensive trade policy instruments
“Offensive” instruments to open markets and eliminate obstacles to trade...
… across the multilateral, bilateral and unilateral fronts:
The Trade Barriers Regulation (TBR) gives EU industry the opportunity to lodge a complaint with the Commission when encountering trade barriers that restrict their access to third country markets. The TBR is then used to investigate whether there is evidence of violation of international trade rules, resulting in adverse trade effects - this could lead to the initiation of the WTO dispute settlement mechanism.
Market Access Strategy of which the EU’s Market Access Database provides: information about market access conditions in non-EU countries; a systematic way for the Commission to follow up complaints from business about barriers to trade in non-EU countries; and a means of ensuring that our trading partners abide by their international commitments.
Page | 40A renewed trade strategy for Europe: Trade, Growth and World Affairs
3. EU trade policy - how it works
The offensive trade policy instruments
Monitoring of third country trade defence measures:
• Ensuring third countries do not misuse the trade defence instruments (anti-dumping, anti-subsidy, safeguard) against EU exporters.
• Given the overall escalating use of these instruments important that there is full compliance with international rules.
• The Commission provides information and advice to all interested parties, identifies individual and systemic infringements of WTO rules by third countries, addresses these issues in the appropriate bilateral or multilateral forum.
Page | 41A renewed trade strategy for Europe: Trade, Growth and World Affairs
3. EU trade policy - how it works
The trade policy instruments
Towards a new generation of FTAs: “WTO++”
• Opening markets for trade in goods
• + investments, services, rule-making, standards, non tariff measures
Page | 42A renewed trade strategy for Europe: Trade, Growth and World Affairs
COMPETING IN WORLD TRADE
Page | 43A renewed trade strategy for Europe: Trade, Growth and World Affairs
4. EU trade policy - competing the world
55,6
5,5
48,4
17,9
-70,5
45,6
45,3
-0,7
-29,4
-8,2
140,6
7,6
49,6
26,2
-116,0
99,9
135,9
-4,3
-47,3
-14,6
-150 -100 -50 0 50 100 150 200
Manufactures
Iron and steel
Chemicals
Other semi-manufactures
Office and telecommunicationequipment
Transport equipment
Other machinery
Textiles
Clothing
Other manufactures20002010
* Based on SITC Rev. 3 Nomenclature: Manufactures: 5, 6, 7, 8, excl. 68, excl. 891; Iron and steel: 67; Chemicals: 5; Other semi-manufactures: 61, 62, 63, 64, 66, 69; Office and telecommunication equipment: 75, 76, 776; Transport equipment: 78, 79, 713, 7783; Other machinery: 71, 72, 73, 74, 77, excl. 713, excl. 776, excl. 7783; Textiles: 65; Clothing: 84; Other manufactures: 81, 82, 83, 85, 87, 88, 89, excl. 891
Source: Eurostat (Comext, Statistical regime 4); EU excluding Intra-EU Trade
Page | 44A renewed trade strategy for Europe: Trade, Growth and World Affairs
4. EU trade policy - competing in the world
0
10
20
30
40
50
60
Good performance in high-quality products
Ratio quality products / exports (%)
Page | 45A renewed trade strategy for Europe: Trade, Growth and World Affairs
4. EU trade policy - competing in the world
Market shares trends in world trade…
0%
5%
10%
15%
20%
25%
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
EU27 USA Japan China
Source: Eurostat (Comext, Statistical regime 4), IMF, WTO; EU27 (excluding Intra-EU27 Trade)
Page | 46A renewed trade strategy for Europe: Trade, Growth and World Affairs
4. EU trade policy - competing in the world
Comparative trade balance trends…
-800
-600
-400
-200
0
200
400
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Bill
ion
s o
f e
uro
EU27 USA Japan China
Source: Eurostat (Comext, Statistical regime 4), IMF, WTO; EU27 (excluding Intra-EU27 Trade)
Page | 47A renewed trade strategy for Europe: Trade, Growth and World Affairs
4. EU trade policy - competing in the world
EU trade not focused enough on rapidly growing markets
% of total exports to more/less rapidly growing markets
Contribution to growth in world imports
1995-2002US Japon EU25
10 most rapidly growing markets
79% 76% 48% 93%
20 least rapidly growing markets
8% 12% 13% -5%Source: Cepii
Page | 48A renewed trade strategy for Europe: Trade, Growth and World Affairs
4. EU trade policy - competing in the world
Globalisation has Globalisation has put trade issues at put trade issues at
the centre of the centre of citizens’ concernscitizens’ concerns Opening markets Opening markets
can provide can provide opportunities…opportunities…
… … if EU economy if EU economy sustains sustains
competitivenesscompetitiveness
… … if harnessed by if harnessed by collective rulescollective rules
Towards fairer trade...Towards fairer trade...
Page | 49A renewed trade strategy for Europe: Trade, Growth and World Affairs
A RENEWED STRATEGY FOR
EUROPE
Page | 50A renewed trade strategy for Europe: Trade, Growth and World Affairs
5. A renewed strategy for Europe
New EU trade strategy adopted 9 November 2010 - Why a new trade policy?
The previous strategy “Global Europe” generally on the right track
BUT
• Europe 2020 called for Trade and Investment to play crucial role in achieving growth objectives
• Changing economic environment • Impact of economic crisis and public opinion
Page | 51A renewed trade strategy for Europe: Trade, Growth and World Affairs
5. A renewed strategy for Europe
An opinion survey on international trade found that:
Europeans think trade is good for Europe and Europe is good at trade …
65% of Europeans think EU has benefited a lot from international trade
64% of Europeans think that European goods and products are competitive
… but they are less confident about the future
71% of Europeans think that in the coming years, trade will benefit more and more
emerging economies like Brazil, China and India
45% of Europeans think that the EU will be secondary economic power
…and they want trade to deliver jobs and consumer benefits
61% of Europeans believe that the priority for future EU trade policy should be to
create employment
Public expectations on trade policy
Page | 52A renewed trade strategy for Europe: Trade, Growth and World Affairs
5. A renewed strategy for Europe
• Growth: more than 90% of future growth outside EU Finalising all the ongoing negotiations (DDA, FTAs and
progress on strategic partnerships) would lead by 2020 to a EU GDP level more than 1% higher (150bn per year)
• Jobs: high stakes and expectations 14 million jobs are directly linked to EU ability to export But there is much more at stake: 36 million European jobs,
directly or indirectly, linked to trade 7% wage premium as a result of trade-induced competitiveness
• Consumer welfare: The average EU “variety” consumer gains around €600 per
year from wider trade induced choice
The triple benefits from trade
Page | 53A renewed trade strategy for Europe: Trade, Growth and World Affairs
5. A renewed strategy for Europe
1. Completion of current negotiating agenda2. Deepen trade relations with other strategic
partners3. Help European businesses access global
markets4. Create opportunities for investors5. More assertive approach to enforcement 6. Share the benefits of the global economy
What does the strategy propose?
Page | 54A renewed trade strategy for Europe: Trade, Growth and World Affairs
5. A renewed strategy for Europe
Deliver new opportunities for trade and investment through:
• Multilateral negotiations: the Doha Round
• Bilateral agreements
•Concluded: South Korea, Central America, Peru, Colombia
•Ongoing: India, Canada, Mercosur, Ukraine, Singapore, Malaysia, Libya, Euro-Med
Completion of current negotiating agenda
Page | 55A renewed trade strategy for Europe: Trade, Growth and World Affairs
5. A renewed strategy for Europe
China: • A fast growing market for EU’s exports with big potential • Tackling market access barriers• High Level Economic and Trade Dialogue
Japan:
• Regulatory obstacles
• High Level Group
Russia:
•WTO membership
• Partnership and Cooperation Agreement
US: • EU’s largest investment and
trading partner• Transatlantic Economic
Council
Deepen trade relations with other strategic partners
Page | 56A renewed trade strategy for Europe: Trade, Growth and World Affairs
5. A renewed strategy for Europe
Cutting tariffs is still important but majority of trade barriers now lie
elsewhere:
• Improved market access for services and investment
• Opening up public procurement
• Better protection of intellectual property
• Unrestricted supply of raw materials and energy
• Overcoming regulatory barriers
Deepen trade relations with other strategic partners
Page | 57A renewed trade strategy for Europe: Trade, Growth and World Affairs
5. A renewed strategy for Europe
• Mutual supportiveness of internal and external policies for market opening
• Public procurement in partner markets
• Market Access Strategy
• SMEs access to global markets
Help European businesses access global markets
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5. A renewed strategy for Europe
Lisbon Treaty
EU has powers to negotiate future deals on foreign investment in order to improve conditions for investors
Foreign investment = engine for job creation
Start on comprehensive investment agreements with: India, Canada, Singapore, China, Russia
Creating opportunities for investors
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5. A renewed strategy for Europe
Trade rules to be fairly applied to all
• Use all appropriate means to stand up for our rights
Anti-dumping rules
Dispute settlement mechanisms
• Effective enforcement of trade agreements
• Act against protectionism
More assertive approach to enforcement
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5. A renewed strategy for Europe
Not just about opening markets but helping people and countries benefit
• Inclusiveness - European Globalisation adjustment Fund
• Trade-development agenda Renewal of Generalised System of Preferences Communication on trade and Development Ongoing Economic Partnership Agreements
• Social and environmental issues
Sharing the benefits of the global economy
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AGENDA FOR 2011: THE NEXT STEPS
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6. Agenda for 2011: The next steps
We have already initiated much of this, and in 2011 will:
1. work for an early deal in the Doha round
2. make significant progress with ongoing bilateral trade negotiations
3. initiate legislation for an EU instrument to increase symmetry in access
to public procurement markets
4. conclude the debate on a new investment policy for the EU
5. present our views on how to develop mutual supportiveness of internal
and external market opening
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6. Agenda for 2011: The next steps
6. adopt a Communication on trade and development and initiate
legislation to reform the Generalised System of Preferences
7. adopt a Green Paper seeking to improve our export control system
8. present a Communication on support measures to help SMEs
9. review our strategy on the enforcement of IPR
10. produce a report on trade and investment barriers
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6. Agenda for 2011: The next steps
• The EC actively monitoring protectionism as part of a coordinated international response through regular reports
E.g. more than 200 trade restrictive measures in 32 partners were reported• classical border measures (such as tariff increases or licensing
requirements)• behind the border measures (such as certification schemes or buy
national policies)
• The bulk of new protectionist measures have been imposed by a limited number of EU trading partners and were concentrated in a few types of measures
• Latest effort: TIBR (Trade and Investment Barrier Report) 2011, published 10 March Was presented to the European Council on 24-25 March
Crisis-led protectionism: European views
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6. Agenda for 2011: The next steps
• the impact on the EU exports is greater than that estimated for world trade: “classical” border measures alone (mostly tariffs)
target around 1.7% of EU merchandise exports
• Russia was by far the country whose tariff measures could hurt EU export interests the most: Russian measures alone could affect around 1.25%
of the total value of EU exports
Impact of border protectionism on overall EU exports: the easy part…
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6. Agenda for 2011: The next steps
• New Trade Strategy key message: more assertiveness, enforcement, reciprocity and mutual benefits
• Significant non-tariff barriers in strategic partners China, India, Japan, Mercosur, Russia, US
• Main issues: Government procurement IPR enforcement Access to raw materials Services Investment TBT/SPS
TIBR 2011 - estimating « murky protectionism »: the difficult part…
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6. Agenda for 2011: The next steps
• EU exports potentially affected in the range of 100bn euros
• Raw materials (excluding energy) – some 6bn of EU imports
• « Lost trade » not possible to quantify but magnitude important
• Strategic partners barriers require closer interplay between political and operational levels China: HED, US:TEC, Russia
• Beyond numbers and EU negative economic impact, efforts to reduce/remove barriers abroad provide « public goods » and have systemic value
TIBR 2011: Key messages
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Thank you for your attention !
Find the Communication and accompanying analysis:
http://ec.europa.eu/trade/trade-growth-and-jobs/