How can trade contribute to growth and jobs? The role of EU trade policy Signe Ratso Director Directorate General of Trade European Commission.

How can trade contribute to growth and jobs?  

The role of EU trade policy

Signe RatsoDirector Directorate General of TradeEuropean Commission

Outline

• Trade and growth

• Trade and jobs (new studies on factors contribution to trade)

• Greek exporters (firm level data)

• Trade policy

• Market access strategy2

Trade is a source of growth…•Growth in EU depends on global growth:

•EU countries can benefit from the emergence of new economic powers (Brazil, India, China and Russia) 3

…and trade supports jobs

• In 2007, extra-EU exports supported around 25 million jobs, which represented around 11% of total employment in the EU27.

• This represents an increase of 3 million export-related jobs since 2000.

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…but in Greece less than in other countries

Employment supported by extra-EU exports as a percentage of total employment (2007)

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- In Greece, in 2007, the sales of goods and services to the rest of the world supported the jobs of 128.000 people, which represents only around 3% of total employment.

- Moreover, (and contrary to what happen in the EU as a whole), the contribution of trade to job creation has decreased. In 2000, the jobs of 231.000 Greeks were supported by extra-EU exports.

•

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Many factors contributed to this:

• Greece exports tend be more oriented towards extra-EU markets than the EU average but…

• the share of exports over GDP remains well below that of other (comparable) small EU Member States (for example Belgium)…

• while Greek exports have become less labour intensive than the EU27 average

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Member States

Embodied employment in

Extra-EU exports (1,000

employees)

Employment shares

(%)

Embodied employment per million € of extra -EU

exports

Extra-EU exports

shares over total exports

(%)

Total exports shares

over GDP (%)

Extra-EU exports shares

over GDP (%)

2000 2007 2000 2007 2000 2007 2000 2007 2000 2007 2000 2007

Belgium 344 356 8.4 8.1 9.0 7.6 24.8 23.7 61.2 59.3 15.2 14.0

EU27 22,000 25,020 10.5 11.2 19.8 15.4 100.0 100.0 12.1 13.1 12.1 13.1

Greece 231 128 5.9 3.0 21.6 9.2 49.0 42.1 15.8 14.7 7.7 6.2

Looking at micro-data: many Greek firms are exporters….

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….but they sell abroad only a small fraction of their output

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The average export share is 30% (export revenue/turnover of exporters; non-exporters are not included)

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The weaknesses can be the basis of future export growth:

• The prevalence of marginal exporters can explain the disappointing export performance in manufacturing.

• On the positive side: marginal exporters can turn to foreign markets more easily than firms that have never exported.

• this process can lead to a long-term successful expansion of the export sector only if the bigger firms are involved

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Trade and investment policy – how we engage with our partners

Bilateral agreements(mainly Free Trade Agreements)

Multilateral policy(WTO/DDA)

Market Access Strategy

Our trade strategy

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Bilateral agreements – state of play12

Mexico

EFTA

Turkey

SAA

Caribbean ACP

Chile

South Africa

Columbia/ Peru

South KoreaEuro-MedCentral America

Agreements in force Negotiations concluded 12

Bilateral agreements – the way ahead13

Japan

Russia

Other ASEAN

Eastern Partners

Pacific EPAsMalaysia

India

Singapore

Mercosur

Euro-Med

Canada

Gulf countries

Ukraine

African EPAs

EPAs: Economic Partnership Agreements with ACP countries

Euromed: Forthcoming negotiations on deep and comprehensive Free Trade Agreements

Russia: Commitment to negotiate a Free Trade Agreement already contained in the Partnership and Cooperation Agreement of 1997

Negotiations ongoing

Negotiations under consideration

USA

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The example of the EU-South Korea Free Trade Agreement

• 1.6 billion Euros in customs duties saved per year

• Creates new trade opportunities (after full implementation the EU is expected to increase goods and services exports by nearly 20 billion Euros)

• Access for service suppliers

• Tackling non-tariff barriers

• Enhanced access to government procurement

• Protection of intellectual property

• Strong competition rules

• Commitment to sustainable development

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Market Access Strategy

• Cooperation between Commission, Member States and business to identify, analyse and remove barriers

• Importance of preventive action (“early warning”)

• 200 key barriers identified in more than 30 markets (publicly available on Market Access Database)

• Around 50 “success stories” per year• Strong focus on SMEs• Market Access Committee, sectoral

Market Access Working Groups and Local Market Access Teams 15

Local Market Access Teams• In more than 30 third countries• Local knowledge of the situation by EU

Delegation, Member States Embassies and business representatives

• Early warning function: easier to address potential barriers

• Assessment of the likely economic impact of market access barriers

• SME contact points available soon

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Trade finance

• There is potentially also a liquidity crisis that is currently affecting trade conducted on an open account basis.

• Task Force for Greece and other MSs' Export Credit Agencies are considering solutions.

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Conclusions

• The growth outside the EU is a great opportunity for EU countries: demand for exports and sources of investments.

• DG TRADE is actively pursuing new opportunities for EU firms (both through multilateral fora and bilateral negotiations and Market Access Strategy)

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