Industry and Entrepreneurship
Globalisation
Globalisation is an opportunity
Globalisation is an opportunity. There are certainly drawbacks, but they can be potentially offset by the multiple advantages of truly open foreign markets, where companies can profit not only from lower tariffs but also from common standards, harmonised administrative procedures and new opportunities to bid for foreign procurement contracts. This could bring us closer to the vision of a world-wide internal market, where the benefits of the European single market are extended and multiplied on a global scale. The European Commission is committed to turn this potential into a reality.
For example, the European Commission is steering a reform of the UNECE 1958 Agreement on international vehicle regulations. This initiative brings together the 27 EU Member States represented by the Commission plus Japan, the Russian Federation, South Korea, South Africa and Australia. These countries have agreed on harmonised safety and environmental regulations for vehicles, enabling carmakers to enjoy the benefits of lower compliance costs and economies of scale.
"Globalisation is one of the solutions to the European Union’s crisis, not the problem. But to grab its potential, we need to develop common standards and harmonised procedures with our trade partners to remove the tangible barriers which prevent our companies from a real access to foreign markets."
The reform proposals steered by the Commission aim at establishing a worldwide type approval for cars, based on the principle of a car "tested once, accepted everywhere in the world". This means that in the future any car produced in conformity with these regulations can be marketed in every country which is a member of the initiative.The EU also supports this initiative by negotiating bilateral Free Trade Agreements with major trading partners through which other non-tariff barriers are also eliminated.
A new season of EU's bilateral talks is about to start, involving key partners such as the United States and Japan. The EU has a lot to gain from this fresh phase of globalisation, but to do so it is crucial that the new generation of deals will not focus exclusively on lowering or eliminating duties. We have to remove all the remaining obstacles that hamper access to third markets.
To achieve this objective, it is crucial to deepen the cooperation with EU's trade partners on standards, product rules and administrative procedures. Developing common industrial standards, eliminating conflicting rules and harmonising bureaucratic practices must be top priority. Too often EU producers struggle to access foreign consumers because of administrative or technical barriers. Little differences in rules and standards cause huge economic damage to our industry by preventing foreign sales, or by forcing costly adaptations of assembly lines.
It is mainly big manufacturers that have the resources to adjust their products to different legal and technical environments. The result is that smaller actors, such as Small and Medium-sized Enterprises (SMEs), are often deprived of the benefits of accessing third markets. Ideally, the Commission wants to put an end to this situation.
Open markets should also entail access for EU companies to public projects abroad. In most countries outside the EU, total government spending accounts for 15-20% of GDP, but only a very limited part of this expenditure is open to foreign businesses. While in the EU nearly 85% of the public procurement market is open (with an aggregate value of over €350 billion), only 32% of the US procurement is offered to foreign bidders (for a total value lower than €180 billion). In Japan, foreign companies can access only 28% of the procurement market (€27 billion). The European Commission is committed to change this situation and establish new durable relations based on a real reciprocity.