External Trade
European Competitiveness
and EU Trade Policy
Marlene Rosemarie Madsen
Chief Economist Unit
DG TRADE
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External Trade - 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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External Trade - 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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External Trade - 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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External Trade - 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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External Trade
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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External Trade - 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
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External Trade - 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
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External Trade
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
World Market Share
25%
20%
EU 25
15%
Japan
10%
USA
5%
China
% of total world exports by value excluding energy
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
0%
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External Trade
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)
Trade balance for manufactured products
400.0
300.0
200.0
100.0
United States
Japan
China
European Union
20
07
20
06
20
05
20
04
20
03
20
02
20
01
20
00
-100.0
-200.0
-300.0
-400.0
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External Trade
EU’s Specialisation: Up-market
products
 EU’s overall good performance due to an upgrading
of product quality
35%
30%
25%
World Market Share
for Up-Market Products
20%
15%
1995
2004
10%
5%
0%
EU
Japan
US
China
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External Trade
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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External Trade
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
25%
World Market Share
for High-Tech Products
(2005)
20%
15%
10%
All products
High-Tech products
5%
0%
EU
Japan
US
China
All major competitors lose market shares except China –
but US and Japan lose more market shares than the EU
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External Trade
Good performance but the situation
is at risk (II)
 EU has suffered losses of market share on
some of the fast growing emerging markets
60%
50%
40%
EU's Market Share
in fast growing markets
1995
2005
30%
20%
10%
0%
Russia
India
China
Brazil
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External Trade
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
30%
25%
World Market Share 20%
in Commercial Services
15%
10%
2001
2007
5%
0%
EU
US
Japan
China
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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 upmarket 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)
External Trade
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
External Trade
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
in %
country
EU 25
Netherlands
Poland
Germany
France
65.3
73.5
72.8
68.4
63.5
Italy
Belgium
United kingdom
Spain
62.9
60.3
59.4
56.9
Inputs: equipment goods + intermediate goods + parts and components
- primary products excluded
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External Trade - Global Europe
Conclusions (I)
 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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External Trade - Global Europe
Conclusions (II)
 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
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External Trade - Global Europe
Conclusions (III)
 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)
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External Trade
Thank you !
Contact:
Marlene.MADSEN@ec.europa.eu
Europa Commission
DG Trade
CHAR 07/95
1049 Bruxelles
Belgium
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