13 Trade policy and stimulating growth
and jobs
| (27896)
13715/06
COM(06) 567
+ ADDs 1-3
| Commission Communication: Global Europe: competing in the world: A contribution to the EU's Growth and Jobs Strategy
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| Legal base | — |
| Document originated | 4 October 2006
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| Deposited in Parliament | 13 October 2006
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| Department | Trade and Industry
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| Basis of consideration | EM of 27 October 2006
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| Previous Committee Report | None
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| To be discussed in Council | 13-14 November 2006
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
13.1 According to the Commission, the renewed Lisbon strategy
in 2005 setting out the steps needed to deliver growth and jobs
in Europe underlined the importance of an open market, with high
quality rules being effectively enforced, and the need to complement
this with an external agenda to ensure open markets around the
world. The purpose of this Communication is to set out the contribution
of trade policy to stimulating growth and creating jobs, to stress
the need to adapt the Community's trade policy to new challenges,
and to address some of the links between its internal and external
policies.
The current document
13.2 By way of introduction, the Communication notes the significant
changes currently taking place in the global economic order, driven
by such factors as growing trade and capital flows and the revolution
in information and communications technology, adding that this
gives rise, not only to unprecedented opportunities for growth
and development, but also to pressures on natural resources and
traditional industries. It suggests that individual companies
are responding to these changes, and that more countries than
ever before — such as China, India, Brazil and Russia —
are seizing the opportunities provided by globalisation. As a
result, the nature of global trade is changing, with much less
reliance on tariffs, and a corresponding increase in the importance
of knowledge, innovation, intellectual property, services and
the efficient use of resources.
13.3 The Communication then addresses the basis of
Community competitiveness, which it says is the adoption of internal
policies which maintain an openness to trade and investment, coupled
with ensuring greater openness and fair rules in other markets,
with both being under-pinned by transparent and effective rules.
It stresses the vital role of the single market in creating globally-competitive
companies within the Community, thus helping its manufacturing
industry to broadly maintain its share of GDP in the face of globalisation,
whilst its service industries are world leaders in a wide range
of fields. It ascribes this leadership to a premium in design
and quality, but suggests that the Community is losing ground
in the highest technology areas, and that improving innovation,
education, research and development is thus critical, particularly
if it is to match Japan and the United States in the rapidly growing
markets in Asia. The Commission also stresses the need for economic
openness and to reject protectionism (though it also points out
that imposing temporary and targeted restrictions on anti-competitive
imports can defend European interests against unfair trade): and
it points to the need to recognise the disruptive impacts of market
opening for some regions and workers, particularly the less well
qualified (where it identifies the need to do better in anticipating
the effects of market opening, in helping sectors and regions
to adapt, and in ensuring that benefits are passed on to citizens).
13.4 The Commission also deals with the need to open
markets abroad, which it says must accompany the rejection of
protectionism at home. It notes that countries such as China,
India and Brazil have a growing role in world trade, but that
they need to play a full part in maintaining a global regime which
favours openness, and it says that, as tariffs fall, non-tariff
barriers have become the main obstacle — an issue which
it says is complicated, resource-intensive, and not fully covered
by the World Trade Organisation (WTO) system. It suggests that
measures such as mutual recognition agreements, international
standardisation, and technical assistance to third countries can
play an increasingly important role in promoting trade. The Commission
also highlights the importance of the Community's access to resources,
such as raw materials and energy, and of new areas, such as intellectual
property rights (where it sees enforcement of existing commitments
in the emerging economies as the biggest challenge at present);
services (which it describes as the cornerstone of the Community
economy, in which it has a comparative advantage offering the
greatest potential for a growth in exports); investment conditions
in third countries; public procurement (where Community companies
face discriminatory practices in almost all trading partners);
and competition (where the absence of state aid rules in third
countries raises new barriers which limit market access).
13.5 The remainder of the Communication sets out
an action plan, aimed at influencing the forces driving change,
seizing the opportunities of globalisation, and managing the risks
— a challenge which the Commission sees as lying at the
heart of its Communication A Citizen's Agenda for Europe.[35]
Within the Community, it says that policy-making should take
into account global competitiveness challenges when setting regulatory
and other standards so as to support European business where possible,
and it also stresses the need for citizens to feel the benefits
of economic and structural change (where it intends to put in
place a systematic monitoring of import and consumption prices).
13.6 Externally, the Commission says that there is
a need for a strong multi-lateral trading system, and that the
Community should be prepared to pay a reasonable price to maintain
this. In particular, it regards the suspension of the Doha negotiations
as a missed opportunity, and says that Europe is working hard
to resume negotiations as soon as circumstances in other countries
allow. It also deals with:
— Fair
Trade Agreements
It says that, whilst such agreements can build
on WTO and other international rules by tackling issues which
are not ready for multilateral discussion, they can also carry
risks, since they erode the principle of non-discrimination and
tend to exclude the weakest economies. It therefore suggests that
they must be comprehensive in scope, provide for the liberalisation
of substantially all trade, and go beyond WTO disciplines, the
priority being to ensure that they serve as a stepping stone,
not a stumbling block, for multilateral liberalisation. The Commission
also notes, however, that these agreements are not new, having
played an important role in the European neighbourhood, and in
relation to certain areas (such as the African, Caribbean and
Pacific countries), but that other major areas, such as Asia,
are less well served. It suggests that the key economic criteria
for any new partners should be market potential and the level
of protection against Community exporters, and that ASEAN, Korea
and Mercosur should therefore be priorities, along with India,
Russia and the Gulf Co-operation Council.
— Transatlantic
trade and competitiveness
The Commission describes the transatlantic trading
relationship as by far the largest in the world and as the heart
of the global economy, where the economic gains from tackling
barriers are potentially significant in both the Community and
the United States. Despite this, it notes that this has proved
to be difficult territory, and that a further injection of momentum
is necessary.
— China
The Commission describes China as the single
greatest test of Europe's capacity to make globalisation an opportunity
for jobs and growth, and a challenge which it must get right,
in the light of the huge challenges China faces in addressing
pressing social, environmental and economic issues. It says that
it intends to set out shortly a comprehensive strategy on China,
where it will identify a clear set of priorities on trade and
economic issues.
— Enforcement
of intellectual property rights
The Commission says that the Community should
seek to strengthen provisions on intellectual property rights
in future bilateral agreements and the enforcement of existing
commitments in order to reduce violations. It will reinforce its
activities in relation to a number of priority countries such
as China, Russia, ASEAN, Korea, Mercosur, Chile and Ukraine, and
work to improve enforcement in Turkey in the context of accession
negotiations.
— Renewed
Market Access Strategy
The Commission points out that the Community's
Market Access Strategy was launched in 1996, and aims to give
exporters information and to create a framework to tackle barriers
to trade. It says that it will bring forward early in 2007 a renewed
Strategy, which is likely to involve the setting of regular priorities
in terms of sectors and markets where the removal of trade barriers
would create the greatest gains for Community exporters.
— Public
procurement
The Commission notes that almost all the Community's
major trading partners operate restrictive and discriminatory
public procurement practices, and it says that it is considering
presenting a proposal to target these practices in order to ensure
a level playing field, noting that the best way to address these
issues is to encourage third countries to negotiate substantial
agreements with the Community.
— Review
of Trade Defence Instruments
The Commission describes these Instruments as
part of the multilateral system, which help to ensure that the
benefits of openness are not undermined by unfair pricing, trading
practices or subsidisation. It says that others need to apply
high standards in their use of these defences and that international
rules must be fully respected. It also intends to seek views on
how to strengthen the Community's defences, which it says will
lead to a Green Paper.
The Government's view
13.7 In his Explanatory Memorandum of 27 October
2007, the Parliamentary Under-Secretary of State for Employment
Relations and Postal Services at the Department of Trade and Industry
(Mr Jim Fitzpatrick) observes that the Communication does not
propose any new instruments or policy measures, but rather sets
out a series of future initiatives in a number of areas. He says
that the Government's overall aim remains a successful conclusion
to the Doha Development Agenda and that it wants to ensure that
the Community's next steps are consistent with maximising the
prospects of an ambitious and pro-development outcome to these
negotiations, as well as demonstrating its commitment to multilateralism.
He also says that, whilst the Government supports the general
policy direction of the Communication, especially in relation
to delivering the Lisbon strategy, it believes that the Community's
continuing and increasing openness to trade and investment is
fundamental to this policy. In addition, it believes that the
goals of European competitiveness and encouraging economic development
and poverty reduction in the developing world through trade policy
initiatives are not mutually exclusive, and that the Community
should continue to pursue policies to meet these goals through
a single integrated approach.
Conclusion
13.8 This Communication provides a useful resumé
of the ways in which trade policy can contribute to growth and
job stimulation, and of the measures needed if the Community is
to adapt in this area to the new challenges it faces. However,
as the Minister points out, it does not propose any new policy
initiatives, and consequently, whilst we are drawing the document
to the attention of the House, we do not believe it requires any
further consideration. We are therefore clearing it.
35 (27496) 9390/06; see HC 34-xxxi (2005-06), para
1 (14 June 2006). Back
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