Toespraak eurocommissaris De Gucht over handel en protectionisme (en)

Ladies and Gentlemen,

My theme today is "EU Trade policy in Times of Protectionism."

This is an important subject, so we need to start from the beginning:

Do we really live in an age of protectionism?

I must admit that there is evidence to the contrary.

In the aftermath of the greatest economic reversal since the 1930s, it's possible to argue that governments have been quite restrained, in protectionist terms.

For instance, in their most recent report to the G20 i on protectionism, the WTO and its partners found that while there have been new restrictions, they only affect about 2% of world trade.

What's more, many countries are actually liberalising trade today through bilateral and regional free trade agreements. The European Union is negotiating with partners on almost every continent. In East Asia alone there are currently 43 regional or bilateral free trade agreements under negotiation.

"So where is the problem?" you ask.

There are several.

First, even if the amount of trade affected by new government restrictions installed since the crisis is proportionately small, European exports have been affected at twice the average rate.

In addition, the trade volume may be small but there are 425 measures in force just the same, to say nothing of the fact that 131 new measures were introduced in the last year alone.

Second, these recent developments are all the more worrying because the rationale given by governments is no longer simply the contingency of the crisis. Instead they are frequently justified as allegedly vital parts of strategic industrial policies. This kind of language suggests an unwelcome permanence.

And third, while bilateral liberalisation is a necessary tool, the fact that our trading partners could not come to the table and conclude the Doha Round last year, despite our best efforts, is indicative of this overall trend.

So while things could most certainly be worse, we would be naïve to rest on our laurels or to declare our jobs well done.

Instead we need to face the fact that there has been an erosion, not at the level of the European Union, but in some parts of the world of the broad political consensus on the benefits of open markets.

Despite lapses here and there, we had in recent decades a general agreement on where we were headed.

Today I am afraid that the end point has slipped out of focus for some.

Given the dramatic economic events of recent years that is perhaps unsurprising.

The debt boom of the years before 2008 led to the near derailing of our financial system, which helped push government balance sheets deep into the red.

This failure of financial markets provoked questions about the effectiveness of all markets. And the pain of mass unemployment has made those questions even more trenchant.

If this were not enough, globalisation has radically altered the international division of labour. Many former fixtures of the economic landscape have been consigned to history. And for some, the very existence of a successful economy like China's, with its hybrid system of state capitalism, represents an invalidation of the free trade consensus.

But these would be the wrong conclusions to draw.

For one thing, China's economic miracle has been based on an abundance of labour and gradual opening of markets, not on government intervention. To be clear, I am certainly concerned about the knock-on effects of some of China's policies. But the laws of the market have not changed. The company than profits from government's generosity today will feel the weight of its dead hand tomorrow. In the same way, countries that choose now to stick with open markets and free competition will be rewarded with dynamic, flexible and innovative firms in the future.

For another, unregulated markets are not the same as open markets. We have tightened up our controls on the financial sector but we must avoid at all costs the temptation to tighten up controls of trade.

And on top of all this, the latest economic understanding of how trade really works shows us that the world economy is even more linked together than we thought. In this new paradigm trade is no longer simply the exchange of goods and services but rather the exchange of added value.

Global supply chains mean that products we consider to be imports are often made up of components and designs that originated within Europe. The most famous examples are smartphones. According to our trade statistics, both the iPhone and the Nokia N95 are made in China, but 12% and 54% of their value, respectively, is added by European workers.

We saw this new reality in action when many European companies found that their lean and taut supply chains suddenly snapped after last year's natural disasters in Japan and Thailand. Why would we choose to cause the same effect by making protectionist policy choices?

In any case as Europeans, we have especially little to fear from trade. 36 million of our people are already in their jobs thanks to our open borders and the trade flows that cross them in both directions.

We are the world's largest exporter of manufactured goods and services, with a solid and consistent 20% share of all the goods exported in the world.

And we need trade to guarantee our economic future. 90% of the world's growth will be happening outside our borders as of 2015. We need to engage with the dynamism of Asia and Latin America so we can bring some of that growth back to Europe. Remember - Boosting trade is one of the only ways to spur growth without using public finances!

Now let me be clear, I am not saying we should bury our heads in the sand and pretend that nothing has changed.

We know that many Europeans are suffering the consequences of the crisis. If we are to keep their support for trade they must feel that it is not only free but also fair.

And that means striking a balance between remaining open ourselves and pushing for openness elsewhere.

And our European trade policy in times of protectionism consists of exactly that.

So what does it mean in practice?

The primary tool we have is negotiations.

So:

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  We are now looking to deepen our economic relationships with two of our largest trading partners - the United States and Japan.

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  We are hoping to conclude very soon some of our most advanced free trade agreement negotiations - for example with India, Canada, Singapore and Malaysia.

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  And, if Member States and the European Parliament agree, we will bring three concluded agreements into provisional application this year - Columbia, Peru and Central America.

A good example of the results we can deliver here is the EU Korea Free Trade Agreement. Because of the comprehensive deal that we were able to negotiate, some 70% of bilateral trade is already duty free. In the first six months it was in force, we saw a dramatic increase in our exports - 16% year on year. On top of that our trade deficit with Korea has fallen below €10 billion for the first time in more than 10 years.

But beyond negotiations, we also have other mechanisms to deliver more trade openness. Let me give you some examples of how we are doing this:

As I'm sure you will have heard, just last week Commissioner Barnier and I launched a new Commission proposal for an instrument to help open public procurement markets around the world.

If approved it would give us new leverage in international procurement negotiations

Today the European procurement market is wide open. That is to the benefit of European consumers and taxpayers. But it means that we have little to trade in negotiations with our trading partners - whose markets are very often shut to our exports.

What is new in our proposal is that it allows us to make a credible threat in those negotiations. It allows us to say to our partners that if they persist in keeping their markets closed they will lose out not once but twice.

They will lose out on the boost to competitiveness from open procurement at home.

And they will lose out when their companies no longer have access to our lucrative public markets here in Europe.

This is not a protectionist line of reasoning.

As I have said I remain a champion of openness. But if we are to have an effective trade policy we need to convince others to open also and that can only be done from a position of strength.

My friends, I have not taken the decision to request these powers lightly.

I know that powerful tools like this do come with risks, which is why our proposal makes sure that they are under the Commission's strict control.

And let me be clear: I do not wish to use them if I don't have to.

But with this proposal we are making a clear statement of intent. And we do not make such statements lightly.

Beyond procurement, we are already making full use of all the trade instruments at our disposal to ensure that trade rules are respected.

We have shown we are ready to take countries to the WTO when there is a serious breach of the rules. We have just done so again on Chinese restrictions on the exports of rare earths and that case builds on our victory on raw materials announced in February. We scored another success in the Boeing case earlier this month.

Neither do we hesitate to use our trade defence instruments, when we see that our businesses are harmed by unfair trading practices such as dumping or illegal subsidies by our competitors.

Both of these tools sit as key elements in a coordinated enforcement strategy and are backed up by our robust trade diplomacy, which draws on the resources of both the Commission and Member States all around the world.

Ladies and gentlemen,

These are not the easiest times to be a champion of open markets.

That is why I am pleased to be discussing trade here with you as business representatives.

I have shown you, I think, that our response to these times of protectionism is to forge ahead. We have a forward-looking, comprehensive agenda for a European trade policy that moves on all fronts.

But if we are to deliver on that agenda we must have the support of Member States, Members of the European Parliament and, above all, the European people.

To do so we need to win the debate on protectionism. And businesses, especially those that play an active part in the global economy, have a crucial role in that debate.

As I have outlined, we have a vital message to get out on the need for an open trade policy. I know that you make efforts to help us but I need to be clear on one thing - business needs to do more to communicate that message broadly and clearly.

Too often the voices of those wanting to promote protection are the loudest to be heard. The winners from open trade must become more vocal.

I hope I can count on your support.

Thank you very much for your attention.

I look forward to our discussion.