Berlin, 22 May 2007, FHTW

1. Berlin, 22 May 2007, FHTW „Global Europe – Europe‘s Trade Strategy vis-à-vis the Developing World“ Marita Wiggerthale

2. Exports of goods Exports of services FDI Ouflows 2004 excluding intra EU trade The EU as a „Global Player“ The EU is largest exporter / first investor abroad http://ec.europa.eu/trade/gentools/downloads_en.htm

3. Top 100 companies worldwide(according to turnover in 2005) Source: Fortune magazine

4. Prospects till 2050 Source: Die Zeit, 20.4.2006

5. Laying the basis: Lisbon Agenda • Make the European Union “the most dynamic and competitive knowledge-based economy in the world” by 2010, starting in 2000 • 9 core tasks („New Lisbon Agenda“, 2005): • Extend and deepen the internal market • Improve European and national regulation • Ensure open and competitive markets inside and outside Europe • Expand and improve European infrastructure • Increase and improve investment in Research and Development • Facilitate innovation, the uptake of ICT and the sustainable use of resources • Contribute to a strong European industrial base • Attract more people into employment and modernise social protection systems • Improve the adaptability of workers and enterprises, and the flexibility of labour markets

6. What Global Europe is about

7. Objectives of Global Europe • Removal of trade barriers (incl. NTBs) • Secure access to raw materials and energy • Stricter rules on intellectual property rights • Accelerated opening of services markets • Enforcement of unhindered freedom of establishment • Liberalisation of government procurement markets for EU exporters • Introduction of competition policies in third countries, where they can be useful for supporting European companies’s market access ”Not a plan for competitiveness, but a plan for exporting inequality and poverty” (Oxfam International) “No to the new EC communication on ‘competing in the world” (see Good for Business, bad for the World, Seattle to Brussels Network)

8. „New generation of FTAs“ • Far reaching bilateral FTAs and investment agreements • 5 draft negotiation directives adopted at 24 April 2007 • Free Trade Agreement with ASEAN • Free Trade Agreement with South Korea • Free Trade Agreement with India • Association Agreement with Central America • Association Agreement with Andean Community • Trade Agreements with other blocs/countries in process or envisaged: MERCOSUR, China (update), (ACP), Russia (update), Ukraine (update)

9. Extra-EU Exports

10. Investment: tying hands of governments I • FDI flows in 2005: 334 bn US$ (all-time high) • Concentrated in few sectors and small group of DCs: Sectors  oil & gas, telecommunications, financial services; DCs …. • BUT, high volumes of FDI do not guarantee development! • Experience: economic development in DCs, where entry was allowed only for those investors that met the development needs of their economies (“pre-establishment rights” prevent such screening) • Conditions were set: “Performance requirements”, joint partnerships with local firms, technology transfer, upgrading skills of employees, buy intermediate inputs from local suppliers (ban through FTAs, limitation through TRIMs/WTO) • Regulation of capital flows: large flows of capital can provide much needed funds for local businesses; if missing risk of destabilisation of economy (see Asian crisis late 1990s), but US FTA with Chile, Singapore limits use of capital controls to situations of national emergency only

11. Investment: tying hands of governments II • 170 countries signed international investment agreements that provide foreign investors with the right to turn immediately to international investor-state-arbitration to settle disputes. Consequence: a government acting in public interest can be sued • Example of Argentina • 2001-2002: financial crisis, amid dramatic increases of unemployment and a precipitous decline in the value of household savings • Government emergency measures were installed: they forced foreign investors to stop charging dollar-equivalent rates for basic utilities such as water and gas • Investor-state-arbitration: 39 groups of foreign investors have lodged compensation claims, some successfully, for revenues lost • Current outstanding claims are estimated at 18bn US$

12. Undermining poor people‘s access to services • Example: financial services • IMF and UN studies: opening up the banking sector leads foreign banks to „cherry pick“ only the most lucrative customers, leaving the poorer and higher-risk customers for local banks • Consequence: a) Local banks are driven out of business b) Small and medium sized businesses and many of the poorest people are left without access to finance • Example: Mexico (liberalisation in 1993) • Foreign ownership increased to 85%, but lending to Mexican businesses dropped from 19% GDP to 0,3% in 2000 • Southern Mexico: access of small farms with access to credit halved, if lending at exorbitant rates • State of Sonora: lack of access to finance drove 70% of community farmers to sell out to large-scale commercial enterprises

13. Access to energy and raw materials • Energy resources: EU, 50% of imports (prospect: 70% by 2030; oil 90%, gas 80%) • Raw materials: since 2003 hausse in raw materials, peak: beginning 2006; prospects: doubling of world demand within next 30 years • Germany: 100% dependence on imports of metallic minerals EU Source: EU-COM (2006): European Industry: A Sectoral Overview

14. Value of German raw material imports Source: BGR (2005): Geostandpunkt, Rohstoffe

15. Origin of raw materials for Germany Source: Bundesanstalt für Geowissenschaften und Rohstoffe, Hannover

16. FTAs: a threat to Development • Strict IPR rules: reduce poor people‘s access to live-saving medicines, push prices of seeds and farming inputs beyond reach of small farmers and reduce technology transfer in DCs • Liberalisation in services: threaten to drive local firms out of business, reduce competition and extend monopoly power of large companies • Liberalisation in investment: prevent DCs from requiring foreign companies to transfer technology, train local workers, or source inputs locally  investment then fails to build national linkages, create decent employment, or increase wages (instead inequality exacerabates) • Deep tariff liberalisation in industrial goods: a key tool for development is taken away; all countries in the world used tariffs to protect nascent industries; no possibility to develop an industrial future • Tariff liberalisation in agriculture: small farmers are driven out of business, not possible to develop food industry in future, food inse-curity!

17. Turning the tide: development first • No reciprocity in FTAs and no WTO+ provisions • Enable DCs to adopt flexible IPR legislation • Exclude essential services (education, health, water, sanitation) from liberalisation • Recognise the right of governments to impose capital controls on foreign investment • Include enforceable commitments by governments to protect and promote core labour standards (see ILO) • Exclude agricultural tariffs from liberalisation (food security, rural livelihoods!), right to use permanent safeguards • Enable DCs to use tariffs, subsidies, and other measures in support of industrial policy and to modify them as their economies develop • Ensure democratic, transparent and participatory negotiation processes with participation of all stakeholders