European Commission Directorate-General for Trade

European competitiveness

One of the central goals of the Barroso Commission has been to give new impetus to the Lisbon agenda, the ten year program to reform and renew the European economy. The Lisbon Agenda aims to give a decisive boost to growth and job-creation in Europe by strengthening the European internal market and improving Europe’s competitiveness in the global economy. Where does trade policy fit into this picture?

In the global economy, Europe’s trade policy must become an integral part of its wider approach to economic reform and competitiveness. To build a stronger EU economy at home, Europe has to be more competitive abroad.

International trade is a key part of this. Compared to its size, the EU is one of the most outward-oriented economies in the world. European trade in goods and services accounts for 15% of EU GDP. This is 3 points above the US or Japan. The share of industrial exports in the industrial sectors 'added value' to the EU economy is more than twice this figure. The EU is the first exporter of goods and services and the first investor abroad.

Like the European Single Market, the EU's openness to trade and investment has been a major catalyst of growth over the last two decades. Trade alone explains a quarter of the productivity gains witnessed across Europe, through greater competition and better specialisation and innovation.

Open and Fair Trade

An open and fair international trading system is one of the foundations of Europe's competitiveness. When tariff or non-tariff barriers block the flow of primary goods into Europe or the access of European companies to markets outside Europe, Europe’s competitiveness suffers. When anti-competitive practices distort or undermine resulting trade, Europe’s competitiveness still suffers. Competitive means open to the world, and the world open to us.

Europe ’s market must be open to cheap supplies of intermediary goods and raw materials for European producers of value-added products. Restricting this flow of goods raises costs for European companies, making them less competitive: we need to import to export. The EU has consistently removed these barriers to its own economy and now has one of the most open markets in the world.

Addressing barriers to EU exports in third countries accounts for the bulk of the potential to improve the competitive position of the EU industry. Its leading trading partners are less open than the EU; sometimes significantly so. The EU stands to gain from the further opening of markets worldwide. By negotiating the removal of tariff barriers and non-tariff barriers and ensuring our regulation converges with that of our trading partners, the EU can open new markets for its exporters. The EU does this through the WTO and the ongoing Doha Round of multilateral trade negotiations, through its bilateral trade relations with individual countries and through a market access strategy designed to target and remove individual barriers in key export markets. This includes a tough new approach on intellectual property rights, which are vital for European competitiveness.

The EU is also increasingly focus on barriers to services trade, which is an important comparative advantage for the EU and the question of investment, which is central to the ability of EU companies to operate effectively in other markets.

The Global Europe strategy

In 2006 the European Commission set out a new trade policy agenda designed to reflect these strategic priorities. The Global Europe strategy reoriented European bilateral trade agreements through a new generation of Free Trade Agreements with Asian markets and stepped up European focus in key areas such as intellectual property and access to raw materials.