Global Europe: Competing in the world

The European Union's (EU) trade policy requires new priorities and approaches to strengthen European competitiveness and seize the opportunities created by a move towards an ever-more encompassing international outlook. These new priorities and approaches are presented in an ambitious action plan comprising internal and external aspects. This plan will enable EU trade policy to respond to the growth and employment targets established in the Lisbon Strategy while at the same time meeting the challenges posed by globalisation.

ACT

Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions of 4 October 2006 "Global Europe: Competing in the world" [COM(2006) 567 final – Not published in the Official Journal].

SUMMARY

As part of the external aspect of the Lisbon Strategy promoting growth and jobs, the Commission proposes an ambitious programme for the competitiveness of the European Union (EU) and its businesses that places the emphasis on open markets. Fundamental to the programme are the rejection of protectionism in Europe, the opening up of the principal markets outside Europe and the bringing together of the EU's internal and external policies.

In this context, the Commission presents an analysis of the foundations of the EU's common commercial policy and competitiveness. Furthermore, the Commission outlines the measures necessary to respond to both these priorities and the challenges of globalisation.

The global economy is characterised by an increasing integration facilitated, notably, by new information and communication technologies and the reduction in the costs of transport. This increasing integration leads to a strong interdependence between economies and industries at global level, bringing about as many opportunities as it does risks for both citizens and the planet.

THE FOUNDATIONS OF EUROPEAN COMPETITIVENESS

Faced with these challenges, the EU must reinforce its competitiveness through the use of transparent and effective rules.

Firstly, European competitiveness is based on sound internal policies, namely:

• competitive markets which encourage the competitiveness of European businesses. The Single Market benefits from high-quality, transparent rules that make it possible to benefit from economies of scale and use resources efficiently. Furthermore, competition encourages businesses to provide high-quality products. Despite the strong performance of European businesses compared with their global competitors in the sectors of manufacturing and services, high-technology sectors could still improve in terms of innovation, education, research and development;
• economic openness: unlike protectionism, opening up to international trade and investment generates competitive pressures which benefit innovation, new technologies and investment, thereby facilitating the use of Single Market resources. In this context, trade defence instruments adapted to global trade remain indispensable to combat unfair commercial practices;
• social justice: the EU must be in a position to cope with the impact caused by an opening up of the markets, notably an acceleration in structural changes brought about by globalisation. This acceleration can have a negative impact on certain sectors, regions or workers. Therefore, not only must the effects of an opening up be predictable, but the values, particularly those concerning social and environmental issues, must also be promoted throughout the world.

Secondly, European competitiveness is based on the opening up of foreign markets based on fair rules. The EU should in particular show a commitment to opening up markets in emerging countries, which account for a growing share of global trade. The opening up of the markets in China, India and Brazil has shown the benefits that this can bring in terms of development and the fight against poverty.

Nevertheless, to draw the maximum benefit from an opening up of markets, new trade obstacles must be tackled head-on, going beyond customs duties. Against this background, the common commercial policy should place the emphasis on:

• non-tariff barriers: beyond customs tariffs, non-tariff barriers (trade-restricting regulations and procedures) are often less visible, more complex and more sensitive because they have a direct impact on domestic regulation. To promote trade that abides by transparent and non-discriminatory rules, the Commission, Member States and industry must define new ways of working in addition to the traditional methods at their disposal (mutual recognition, dialogues on standardisation and regulation, technical assistance to third countries).
• access to resources: European industry should have access to key resources such as energy, raw materials, metals and scrap. This access should not be restricted other than for environmental or security reasons. Accordingly, and in view of the essential nature of energy access for the EU, a coherent policy is needed to guarantee a diversified, competitive, secure and sustainable energy supply both within the Union (competitive market, promotion of a sustainable, efficient and diverse energy mix) as well as outside its borders (non-discriminatory access to export infrastructures for third and transit countries, assistance to third countries to strengthen their capacities and infrastructures). In this context, the link between trade and the environment should be strengthened because of the impact which trade can have on the environment, in particular on biodiversity and the climate. Energy efficiency, renewable energy sources and the rational use of energy should be encouraged.
• new growth sectors: intellectual property rights (IPRs), services, investment, internal markets and competition. These sectors offer major opportunities for the European economy, provided that a gradual liberalisation of global trade and transparent, effective and respected rules (both national and international) facilitate exchanges between the EU and its trading partners. Bilateral and international cooperation should therefore be strengthened.

ACTION PLAN

The Commission proposes an action programme aimed at strengthening the EU's external competitiveness and meeting global challenges. To achieve this, the action plan identifies the necessary priorities and methods, comprising an internal and an external dimension.

Internal dimension

European businesses must benefit from the EU's competitiveness and its citizens should feel the advantages. The Lisbon Strategy constitutes the foundation of the EU's competitiveness. In this context, the communication from the Commission entitled "A Citizens' Agenda" [COM(2006) 211 final] of May 2006 offers an in-depth examination of the Single Market to guarantee businesses’ competitiveness through diversification, specialisation and innovation.

The process of framing EU policies should focus on the Union's capacity to respond to global challenges. Coherent regulation at European or international level is therefore essential, and international and bilateral cooperation is of equal importance. The EU encourages good practices to be imparted, but also an open and flexible approach towards drafting these rules.

Concerning the repercussions of an opening up of the markets, the Commission and the Member States will ensure that the European citizens reap the benefits, notably through the introduction of a systematic monitoring of both import and consumer prices.

Furthermore, adaptation to change is a key factor for growth and employment. Cohesion programmes and the Globalisation Adjustment Fund will make it possible to predict and respond to these changes. The European customs system will also be modernised (revision of customs code, introduction of e-customs).

External dimension

Concerning external action, the EU maintains its commitment to multilateralism, which offers the means to eliminate trade barriers in a stable and sustainable manner. The World Trade Organisation (WTO) is the framework of choice to achieve these goals and the EU supports resuming the Doha round of trade negotiations.

As well as multilateralism, the EU must also endeavour to promote a faster and more comprehensive trade liberalisation within the framework of its bilateral relations. The Free Trade Agreements (FTAs) will be a driving force towards achieving this goal. These have the advantage of being able to cover domains not provided for either by an international regulation or the WTO. As well as serving the EU's neighbourhood and development policies, the FTAs should also bring increased benefits to the European Union's commercial interests. Nevertheless, the Commission notes that the FTAs should have a wider scope of content than the existing ones in the context of neighbourhood policy, the Economic Partnership Agreements (EPAs) currently being negotiated with the African, Caribbean and Pacific (ACP) countries, or the Association Agreements with Latin America and the Andean Community.

The EU must define economic criteria to negotiate and conclude FTAs and to identify its partners, such as the market potential measured in terms of size and economic growth, the level of protection vis-à-vis exports from the EU (customs tariffs, non-tariff barriers), etc. Other factors will also come into play, such as negotiations between the EU's potential partners and its competitors, the impact of these negotiations on the EU and the risk that they pose to the partners' preferential access to the Union's markets. Based on this, the partners to be privileged are the ASEAN countries, South Korea and India which fulfil the criteria mentioned, as well as Mercosur, Russia, the Gulf Cooperation Council and China.

As regards content, these agreements must be more comprehensive, more ambitious and broader to encompass a wide range of areas covering services and investment as well as IPRs. The FTAs must provide for a regulatory convergence to effectively combat non-tariff barriers, stronger and stricter provisions (IPRs, competition), simple and modern rules of origin adapted to suit circumstances, and monitoring mechanisms to evaluate implementation and results. The FTAs will be adapted to the specific considerations of development (including impact studies) and sustainable development. They will also respond to the needs of each country in accordance with the EU's strategies towards these countries and the regions to which they belong.

Transatlantic trade is at the heart of the EU's bilateral relations, in particular with the aim of meeting global challenges. The EU will continue to encourage the elimination of non-tariff barriers, given the economic advantages of a comprehensive liberalisation of trade between the partners. To this end, negotiations under the transatlantic economic initiative are continuing.

China is both an essential partner and a challenge for the EU, offering growth and employment opportunities. China itself is faced with challenges while accounting for an increasing share of global trade. Therefore, as part of its strategy for China, the EU proposes focusing on these challenges, establishing priorities and pursuing closer cooperation in these areas.

The EU and its partners must agree to do more concerning respect for intellectual property rights(IPRs). This action will take the form of special provisions in bilateral agreements, a strengthening of customs cooperation, dialogues, an increase in presence and resources in the field and awareness-raising among European businesses. The principal countries concerned will be China, Russia, the ASEAN countries, Korea, Mercosur, Chile, Ukraine and Turkey in connection with its accession negotiations.

The Market Access Strategy established in 1996 was renewed in 2007. The Commission proposes strengthening its work by refocusing action on certain countries and sectors as well as on the opening up of their markets to third countries. This effort must be made in cooperation with industry and the Member States.

The internal markets of third countries must be opened up to European suppliers. The Commission will launch an initiative aimed at reducing restrictive practices which are discriminatory. If necessary, targeted restrictions will be maintained for uncooperative countries with the aim of encouraging them towards a mutual opening up of markets.

Trade defence instruments will be a part of multilateralism. The EU will therefore ensure that its partners' instruments are justified, transparent and in compliance with international rules. Failing this, the EU could fall back on dispute settlement mechanisms such as that of the WTO. Furthermore, the EU will concentrate on improving its own instruments, which must respond to demands in terms of efficiency and adaptation to global changes in order to ensure that the diversity of European interests is taken into account.

RELATED ACTS

Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions on the external dimension of the Lisbon strategy for growth and jobs – Reporting on market access and setting the framework for more effective international regulatory cooperation [COM(2008) 874 final – Not published in the Official Journal]. This Communication is the first annual report concerning open markets in the European Union (EU) and access by European companies to global markets.

The Commission supports the strengthening of international cooperation and bilateral relations, to improve regulatory convergence, in particular in the financial sector. High standards must be adopted in terms of product safety, and protection of consumers and the environment. Particular efforts are being made with Enlargement countries, Neighbourhood Policy partners, the United States, China and Russia.

The report notes a reduction in import tariffs and duties. However, the general trend to increase non-tariff barriers is a hindrance to trade. The EU intends to use all instruments available to facilitate trade. It supports the conclusion of multilateral trade agreements in the context of the World Trade Organization (WTO), to achieve open and fair markets. Similarly for the conclusion of bilateral and regional Free Trade Agreements (FTAs). The removal of trade barriers can be facilitated through notification procedures and dispute settlement as laid down in the WTO agreements.

The EU Member States are pursuing coordinated action through the participation of all those involved, including at local level. As part of the Doha round of negotiations, European strategy aims in priority at improving access for companies in sectors with high potential for growth, guaranteeing compliance with intellectual property rights and developing internationalisation of small and medium enterprises through specific assistance measures.

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions of 18 April 2007 "Global Europe: A stronger partnership to deliver market access for European exporters" [COM(2007) 183 final – Not published in the Official Journal].

Communication from the Commission of 6 December 2006 "Global Europe: Europe's trade defence instruments in a changing global economy - A Green Paper for public consultation" [COM(2006) 763 final – Not published in the Official Journal]. The results of the consultation were published on 19 November 2007 (pdf).

Last updated: 20.05.2009