International trade is an engine for global growth. It has a real impact on the day to day lives of people and businesses in Europe, and offers a path to development to those in most need, wherever they live. EU trade policy is a crucial element of the external dimension of the "Europe 2020 strategy for smart, sustainable and inclusive growth" and is one of the main pillars of EU relations with the rest of the world.
The European Union is the biggest global player in international trade and investment. The EU economy is not only the largest in the world, it is also the biggest exporter. EU firms exported € 1.6 trillion of goods and services in 2009, which is about 13% of GDP. The EU is also the most important provider and host of Foreign Direct Investment. The challenge in a changing world is for the EU to maintain and improve its position (see also Trade policy as a core component of the eu’s 2020 strategy).
The world economy and world trade have undergone profound changes in the recent past. Thirty-six million jobs in Europe depend today, directly or indirectly, on trade. Two thirds of EU imports concern intermediate inputs which boost productive capacity. For EU companies to stay ahead, they need to be able to rely on inputs, services and highly qualified people from all around the globe and their investments and intellectual property require robust protection.
The EU trade agenda must evolve accordingly: cutting tariffs on industrial and agricultural goods is still important, but the brunt of the challenge lies elsewhere. What will make a bigger difference is market access for services and investment, opening public procurement, better agreements on and enforcement of protection of intellectual property rights, unrestricted supply of raw materials and energy, and overcoming regulatory barriers.
A common trade policy
EU Member States have agreed to follow a common policy on international trade and investment. This common policy enables them to speak with one voice in trade negotiations, maximising their impact in such negotiations. This is even more important in a globalised world in which economies tend to cluster together in regional groups.
The European Commission is the negotiator, responsible for conducting trade negotiations, and the enforcer, responsible for ensuring compliance with international trade agreements by third countries. The European Council, where each of the 27 Member States is represented at ministerial level, issues 'directives for negotiation' to guide the Commission in its work and ultimately decides whether or not to accept a trade agreement with the consent of the European Parliament.
The Commission's Directorate-General for Economic and Financial Affairs has an important role to play in the development of EU trade policy by providing economic analysis and policy advice and ensuring that EU trade policy is coherent with other EU economic policies.