Speech - Working Together for Growth through Free Trade

European Commission

Karel De Gucht

European Commissioner for Trade

Working Together for Growth through Free Trade

EMO 2013 / Hannover

16 September 2013

Bundespräsident Gauck, Minister-President Weil, gracious hosts, ladies and gentlemen,

Let me start by saying how impressed I am with the scale of this event: with so many delegates, showing off so much innovation, all in one place - Hannover.

This part of European manufacturing is so dynamic, so vibrant - and indeed so united in its determination to succeed, even as you compete fiercely against each other. So I am encouraged to greet innovative entrepreneurs such as you who are working to finally turn the European economy around.

Stability has returned to the financial markets in Europe. You may not have noticed, but this summer was the first for several years without a crisis related to the euro.

And that stability is providing the foundation for growth. In August we learned that the economies of both the euro-zone and the European Union returned to positive growth, driven by particularly good output in Germany, France and the United Kingdom.

We have also seen progress in the countries worst hit by the crisis:

• - 

  It is likely that Ireland will become the first country to leave its bailout programme by the end of the year.

• - 

  Contraction has slowed considerably in Spain, driven among other things by a very successful period for its exports.

• - 

  And the Portuguese economy grew in the second quarter of this year, for the first time since 2009.

However, we are not out of the woods yet:

• - 

  Greece and Cyprus have a longer way to go than the other programme countries.

• - 

  The Europe-wide growth figures still only point us towards a slow recovery of the continent as a whole.

• - 

  In your own sector, even if the recovery is well under way, total output is still below the 2008 peak.

• - 

  There is still potential for unpleasant surprises - as the difficulties in India and other emerging markets over the summer have shown us.

So we will need to keep working hard at European and national level if we want to make sure this recovery is a success.

On the competitive side, that means continuing with structural reforms at national level to make sure that each of our 28 European economies is ready to take on the world.

And on the normative side we need to finish the new framework for a responsible economic and financial policy throughout Europe - most urgently by creating the banking union.

You might ask me, what I can contribute in my own portfolio - international trade - to your sector? Well, for me, as European Trade Commissioner, the figures are staggering: half of the world's production of machine tools is exported and exports accounted for almost 85% of the European industry's production last year.

Given your centrality to the production process for so many other sectors, those figures are just another confirmation of the way that international value chains are now so crucial for generating demand for our products. For, instance some 30 million jobs in Europe depend on our exports to exist.

And of course the import side of trade is just as important.

For international value chains to work, companies like yours need access to the best - and best priced - raw materials and intermediate goods in the world. Imports also force everyone to become more competitive and therefore more productive and innovative.

So trade offers us a concrete way to boost growth by allowing European and international firms to compete vigorously against each other through their ideas and innovations - and such competition should not be distorted by tariffs or other forms of protection to the domestic players.

The aim of European trade policy is thus to put in place the most favourable conditions possible for firms like yours to compete at home and around the world:

• - 

  By lowering the costs you meet at the border - like high duties or the cost of delays when your products sit for days in a portside warehouse.

• - 

  And by lowering the costs you meet once you get through the border - like having to do needless extra testing or face government procurement practices that put you at an unfair disadvantage.

• - 

  We also have to be sure that when we open up our own market that our companies face fair competition. So we look at whether foreign governments are providing your competitors with illegal subsidies. And we are catching more and more violations of intellectual property rights.

We have a range of tools to do this:

• - 

  We are building a network of bilateral trade agreements…
• - 

  … with developed countries like the United States, Japan and Canada…

• - 

  … but also with important emerging economies like India, Brazil and others.

• - 

  At the same time we are doing our best to make use of the World Trade Organisation, which allows us to tackle barriers in its 158 member countries at once. This December in Bali, I hope that we will reach a deal both to facilitate trade and breathe new life into that organisation.

• - 

  Along with these negotiating channels we are also using both the diplomatic and legal tools of trade enforcement to target the unfair commercial practices than can be so damaging to businesses like yours.

However, there are also a few challenges in trade policy.

First, in most cases we only make progress when we can reach agreement with our trading partners. Luckily, Europe's ability to persuade our partners is stronger than most.

In the last year we have done deals with Singapore as well as with a number of countries in our neighbourhood. I am confident that we will shortly do a deal with Canada. And we are implementing agreements with Central America, Columbia and Peru. All of this builds, of course, on the ambitious agreement with Korea that entered into force two years ago - an agreement I know has benefitted your sector.

Europe also manages to influence outcomes by making sure we have the right people in the right places. That is why Mr Karl Brauner is now Deputy Director General of the WTO and why Mr Pascal Lamy was the Director General there up till a few weeks ago. Both represent Europe and not just their country of origin, i.e. Germany and France. And both would not have gotten their job without European support.

So why is Europe good at persuading others in trade policy?

Because when we work constructively together we speak as a 12 trillion euro economy, the largest economy in the world, with 500 million consumers. No country that wants access to the global economy can survive without trade and investment links to the European Union.

But this only works when we speak with one voice. If we have divergent views among ourselves, we discuss them in the Council and in Parliament. I am all in favour of frank exchanges that will lead to a clear European position even if that position is not always the one I would have preferred. But when talking to third countries, it is the European Commission who will convey the message. This system was designed by the founding fathers of Europe. It has worked very well in trade policy in the past, and we should continue sticking to it, be it in the area of free trade negotiations or trade defence.

Ladies and Gentlemen,

It is a particular honour for me to speak on the same platform as Bundespräsident Gauck. He is a man of principle and dedication who understands the importance of unity instead of division - in this country but also in Europe.

His speech on Europe earlier this year made a persuasive case for why we need to work together across this continent.

And that goes for trade policy as much as, if not more than, any other area.

In trade we vitally need a European Germany… and a European France… and a European Greece.

We need a European Netherlands and a European Spain.

We need the individual national skills and specialisms of all 28 European Union countries.

But we also need their joint efforts if we want to take advantage of the opportunities trade has to offer us.

So working together is what we need - for a successful European trade policy and - more importantly - for a strong recovery that puts this continent back to work.

Thank you very much for your attention.