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

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

3. External Trade 3 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 Global Europe – EUs Trade Policy - Global Europe

4. External Trade 4 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 Global Europe – main pillars - Global Europe

5. External Trade 5 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 Global Europe – market access strategy - Global Europe

6. External Trade 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

7. External Trade 7 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 EU is doing well - Performance in the Global Economy based on a CEPII Study - Global Europe

8. External Trade 8 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 EU Performance in the Global Economy – main findings - Global Europe

9. External Trade 9 the EU has managed to roughly maintain its share of the global market More important losses for the US and Japan China stands out Good performance in merchandise trade

10. External Trade 10 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) Positive development of trade balance for manufactured products

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

12. External Trade 12 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 EU Specialisation: Up-market products

13. External Trade 13 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 Good performance but the situation is at risk (I) All major competitors lose market shares except China – but US and Japan lose more market shares than the EU

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

15. External Trade 15 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 Good Performance in Services

16. External Trade 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. External Trade Main comparative advantange Dynamic comparative advantage ManufacturesBelgium Finland Luxembourg Germany Ireland Slovakia Sweden, Italy Czech Rep. Hungary Poland Netherlands Lithuania ServicesFrance, Greece, Estonia, Lithuania, Latvia, Portugal, Slovenia, Spain, UK Belgium, Netherlands, Finland Sweden Sectoral Competitiveness – EU member states clustering

18. External Trade 18 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 Importance of remaining open Inputs: equipment goods + intermediate goods + parts and components - primary products excluded

19. External Trade 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

20. External Trade 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

21. External Trade 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)

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