Marlene Rosemarie Madsen

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European Competitiveness and EU Trade Policy

• Marlene Rosemarie Madsen
• Chief Economist Unit
• DG TRADE

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- Global Europe
Outline

• Global Europe EUs Trade Policy
• Increased importance of trade liberalisation
• Results from new study - EU businesses are doing
  well

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- Global Europe
Global Europe EUs Trade Policy

• Main objective is to contribute to growth and
  jobs
• An effort to see trade policy as part of the
  wider globalisation agenda
• To make sure we are addressing the most important
  challenges of the global age
• To ensure that EU trade policy instruments are
  fit for that purpose

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- Global Europe
Global Europe main pillars

• Opening up markets abroad
• Pushing for Doha Development Agenda
• Negotiating FTAs with India, Korea and South East
  Asian countries
• Market Access Strategy
• External dimension of the Lisbon Strategy

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- Global Europe
Global Europe market access strategy

• A key part of increasing European competitiveness
• A framework towards removing barriers on a global
  scale
• Market Access Database
• Benefits all sectors
• The New Market Access Partnership
• Commission, Member States and EU industry
• Identify the barriers that matter the most to EU
  business
• Work together to address them through FTAs,
  bilateral negotiations, dialogues or trade
  diplomacy

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Increased importance of trade liberalisation

• The financial crisis has turned into a global
  economic crisis
• Global trade is slowing due to sluggish global
  demand and the disruption of trade finance
  markets
• The World Bank forecast of a 2.1 fall in global
  trade is looking increasingly plausible (the
  first decline since 1982)
• We know from past global crises that there is a
  danger of emergence of protectionist policies.
  The challenge is to make sure that this will not
  be the case this time

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- Global Europe
EU is doing well - Performance in the Global
Economy based on a CEPII Study

• The report analysed EUs strengths and weaknesses
  in international trade
• It did so by examining EU competitiveness by
  category of trade through evolutions of EUs
  market share vis-à-vis main competitors

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- Global Europe
EU Performance in the Global Economy main
findings

• Europe is part of global production chains
• Europes trade performance is remarkable
• Europe has strong position in up-market products
• But we should not be complacent risks
• EU leading exporter of services

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Good performance in merchandise trade

• the EU has managed to roughly maintain its share
  of the global market
• More important losses for the US and Japan
• China stands out

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Positive development of trade balance for
manufactured products

• EUs trade balance has largely improved
  156.4bn in 2007
• The rise of 100.7bn since 2000 has partially
  offset the increasing deficit in energy
  (139.6bn over the period)

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EUs Specialisation Up-market products

• EUs overall good performance due to an upgrading
  of product quality

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EU Specialisation Up-market products

• Up-market products products sold at premium
  price due to quality, branding and related
  services
• Represent 1/3 of world demand and 50 of EU
  exports
• Not only luxury goods but across the whole range
  of EU exports (intermediary goods, machines,
  textiles)
• Represent the only way to uphold EU levels of
  social protection, employment and wages

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Good performance but the situation is at risk (I)

• Innovation and High-Tech products are key for
  future competitiveness
• EU Market Shares in High-Tech products is below
  average EU Market Shares for all products

All major competitors lose market shares except
China but US and Japan lose more market shares
than the EU
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Good performance but the situation is at risk (II)

• EU has suffered losses of market share on some of
  the fast growing emerging markets

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Good Performance in Services

• EU is the largest exporter of commercial services
  with 28.3 share of world market (US 19.2
  Japan 5.7)
• EUs market share is expanding while USs is
  decreasing and Japans is stable

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EU MS The Competitive Position

• Some MS are specialised in up-market goods and
  are the main engines of EU exports to third
  markets, some are specialised in up-market
  services
• Almost all MS are increasing their market share
  for up-market products
• Some (e.g. small MS and new MS) are doing well on
  extra-EU markets when looking at it in a dynamic
  way
• Some EU15 have developed strong production
  interlinkages with other MS and in particular new
  MS. This means that success in EU 15 MS on
  extra-EU markets is also a success in many EU 10
  MS which actively participates in the process
  (though this is not reflected as extra-EU exports)

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Sectoral Competitiveness EU member states
clustering
Main comparative advantange Dynamic comparative advantage
Manufactures Belgium Finland Luxembourg Germany Ireland Slovakia Sweden, Italy Czech Rep. Hungary Poland Netherlands Lithuania
Services France, Greece, Estonia, Lithuania, Latvia, Portugal, Slovenia, Spain, UK Belgium, Netherlands, Finland Sweden
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Importance of remaining open

• 2/3 of extra-EU imports (excl. energy) are inputs
  gt EU as whole relies heavily on global sourcing
• Being able to import at a competitive price is
  crucial for EU competitiveness

Inputs equipment goods intermediate goods
parts and components - primary products excluded
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Conclusions (I)
- Global Europe

• EU is the largest trading block (goods, services,
  investment) and thus has a major stake and
  responsibility in open, transparent and effective
  multilateral rules
• It is EUs interest to keep trade flowing and
  markets open both at home and abroad

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Conclusions (II)
- Global Europe

• EUs good performance in a very competitive
  environment is very much due to export of
  up-market goods and services
• Innovation remains a key component of EU
  competitiveness but is also a potential risk in
  future
• gt Internally, calls for an increase of
  investment in innovation and skills externally,
  justifies strong emphasis on IPR protection
• EU weak performances on some fast growing markets
• gt strong support to FTAs under negotiation

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Conclusions (III)
- Global Europe

• We are currently facing a major economic crisis
• The EUs overall sound competitive position makes
  it relatively well equipped to face the crisis
  but our specialisation in up market products and
  equipment goods may also create some challenges
• Reinforce the need to keep global markets open.
  Trade should be part of the solution to the
  crisis. We must ensure that
• - The G20 commitment on a protectionism
  standstill is respected
• - The DDA is finalised (the value of the deal
  has greatly increased)

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Thank you !

• Contact
• Marlene.MADSEN_at_ec.europa.eu
• Europa Commission
• DG Trade
• CHAR 07/95
• 1049 Bruxelles
• Belgium