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European Competitiveness and EU Trade Policy

European Competitiveness and EU Trade Policy. Marlene Rosemarie Madsen Chief Economist Unit DG TRADE. - Global Europe. Outline. Global Europe – EUs Trade Policy Increased importance of trade liberalisation Results from new study - EU businesses are doing well. - Global Europe.

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European Competitiveness and EU Trade Policy

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  1. European Competitiveness and EU Trade Policy Marlene Rosemarie Madsen Chief Economist Unit DG TRADE

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

  3. - 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 widerglobalisation 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

  4. - 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

  5. - 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

  6. 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 Increased importance of trade liberalisation 6

  7. - 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 EU’s market share vis-à-vis main competitors

  8. - Global Europe EU Performance in the Global Economy – main findings • Europe is part of global production chains • Europe’s trade performance is remarkable • Europe has strong position in up-market products • But we should not be complacent – risks • EU leading exporter of services

  9. 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

  10. Positive development of trade balance for manufactured products • EU’s 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) 10

  11. EU’s Specialisation: Up-market products • EU’s overall good performance due to an upgrading of product quality 11

  12. 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 12

  13. 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 13

  14. Good performance but the situation is at risk (II) • EU has suffered losses of market share on some of the fast growing emerging markets 14

  15. 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%) • EU’s market share is expanding while US’s is decreasing and Japan’s is stable 15

  16. 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)

  17. Sectoral Competitiveness – EU member states clustering

  18. Importance of remaining open • 2/3 of extra-EU imports (excl. energy) are inputs => 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 18

  19. 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 19

  20. 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 • => 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 => strong support to FTAs under negotiation 20

  21. Conclusions (III) - Global Europe • We are currently facing a major economic crisis • The EU’s 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) 21

  22. Thank you ! Contact: Marlene.MADSEN@ec.europa.eu Europa Commission DG Trade CHAR 07/95 1049 Bruxelles Belgium

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