Transcript Global Europe – Europe`s Trade Strategy vis-à

Berlin, 22 May 2007, FHTW
„Global Europe –
Europe‘s Trade Strategy
vis-à-vis
the Developing World“
Marita Wiggerthale
The EU as a „Global Player“
The EU is largest exporter / first investor abroad
Exports of
goods
EU25
18%
Rest of the
world
39%
USA
12%
China
9%
Canada Japan
8%
5%
Exports of
services
FDI Ouflows
EU15
28%
Japan
7%
Rest of the
world
39%
Switzerland
3%
Canada
3% Japan
5%
Australia
4%
Canada
5%
USA
22%
USA
38%
2004 excluding intra EU trade
http://ec.europa.eu/trade/gentools/downloads_en.htm
EU25
40%
Top 100 companies worldwide
(according to turnover in 2005)
EU
USA
Japan
China
LA
Asia
(without
Japan)
47
31
9
3
(plus 3 CH, 1
Norway)
Source: Fortune magazine
3
(Venezuela
Mexico, Brazil)
6
(China und
South Korea)
Prospects till 2050
(Share of international
economic performance)
2004
2025
2050
EU
34%
25%
15%
USA
28%
27%
26%
Japan
12%
7%
4%
China
4%
15%
28%
India
2%
5%
17%
Source: Die Zeit, 20.4.2006
Laying the basis: Lisbon Agenda
 Make the European Union “the most dynamic and competitive
knowledge-based economy in the world” by 2010, starting in 2000
 9 core tasks („New Lisbon Agenda“, 2005):
 Extend and deepen the internal market
 Improve European and national regulation
 Ensure open and competitive markets inside and outside
Europe
 Expand and improve European infrastructure
 Increase and improve investment in Research and Development
 Facilitate innovation, the uptake of ICT and the sustainable use of
resources
 Contribute to a strong European industrial base
 Attract more people into employment and modernise social
protection systems
 Improve the adaptability of workers and enterprises, and the
flexibility of labour markets
What Global Europe is about
Objectives of Global Europe







Removal of trade barriers (incl. NTBs)
Secure access to raw materials and energy
Stricter rules on intellectual property rights
Accelerated opening of services markets
Enforcement of unhindered freedom of establishment
Liberalisation of government procurement markets for EU exporters
Introduction of competition policies in third countries, where they
can be useful for supporting European companies’s market access
”Not a plan for competitiveness, but a plan for exporting
inequality and poverty” (Oxfam International)
“No to the new EC communication
on ‘competing in the world” (see
Good for Business, bad for the World,
Seattle to Brussels Network)
„New generation of FTAs“
 Far reaching bilateral FTAs and investment agreements
 5 draft negotiation directives adopted at 24 April 2007
 Free Trade Agreement with ASEAN
 Free Trade Agreement with South Korea
 Free Trade Agreement with India
 Association Agreement with Central America
 Association Agreement with Andean Community
 Trade Agreements with other blocs/countries in process
or envisaged: MERCOSUR, China (update), (ACP),
Russia (update), Ukraine (update)
Extra-EU Exports
2005, Extra-EU
EU-Agrarexporte
in Mio. Euro (in %)
EU-Gesamtexporte
in Mio. Euro (in %)
699 (1,1%)
20.676 (1,9%)
ASEAN
2.378 (3,7%)
45.017 (4,2%)
China
1.230 (1,9%)
51.646 (4,8%)
AKP
4.323 (6,7%)
49.939 (4,6%)
197 (0,3%)
21.092 (1,9%)
Mercosur
Indien
Investment: tying hands of governments I
 FDI flows in 2005: 334 bn US$ (all-time high)
 Concentrated in few sectors and small group of DCs: Sectors  oil
& gas, telecommunications, financial services; DCs ….
 BUT, high volumes of FDI do not guarantee development!
 Experience: economic development in DCs, where entry was
allowed only for those investors that met the development needs of
their economies (“pre-establishment rights” prevent such screening)
 Conditions were set: “Performance requirements”, joint
partnerships with local firms, technology transfer, upgrading skills of
employees, buy intermediate inputs from local suppliers (ban
through FTAs, limitation through TRIMs/WTO)
 Regulation of capital flows: large flows of capital can provide
much needed funds for local businesses; if missing risk of
destabilisation of economy (see Asian crisis late 1990s), but US
FTA with Chile, Singapore limits use of capital controls to situations
of national emergency only
Investment: tying hands of governments II
 170 countries signed international investment agreements that
provide foreign investors with the right to turn immediately to
international investor-state-arbitration to settle disputes.
Consequence: a government acting in public interest can be sued
 Example of Argentina
 2001-2002: financial crisis, amid dramatic increases of
unemployment and a precipitous decline in the value of household
savings
 Government emergency measures were installed: they forced
foreign investors to stop charging dollar-equivalent rates for basic
utilities such as water and gas
 Investor-state-arbitration: 39 groups of foreign investors have
lodged compensation claims, some successfully, for revenues lost
 Current outstanding claims are estimated at 18bn US$
Undermining poor people‘s access to
services
 Example: financial services
 IMF and UN studies: opening up the banking sector leads foreign banks
to „cherry pick“ only the most lucrative customers, leaving the poorer
and higher-risk customers for local banks
 Consequence:
a) Local banks are driven out of business
b) Small and medium sized businesses and many of the poorest people
are left without access to finance
 Example: Mexico (liberalisation in 1993)
 Foreign ownership increased to 85%, but lending to Mexican
businesses dropped from 19% GDP to 0,3% in 2000
 Southern Mexico: access of small farms with access to credit halved,
if lending at exorbitant rates
 State of Sonora: lack of access to finance drove 70% of community
farmers to sell out to large-scale commercial enterprises
Access to energy and raw materials
 Energy resources: EU, 50% of imports (prospect: 70% by 2030; oil
90%, gas 80%)
 Raw materials: since 2003 hausse in raw materials, peak: beginning
2006; prospects: doubling of world demand within next 30 years
 Germany: 100% dependence on imports of metallic minerals
EU
Source: EU-COM (2006): European Industry: A Sectoral Overview
Value of German raw material imports
Source: BGR (2005): Geostandpunkt, Rohstoffe
Origin of raw materials for Germany
Source: Bundesanstalt für Geowissenschaften und Rohstoffe, Hannover
FTAs: a threat to Development
 Strict IPR rules: reduce poor people‘s access to live-saving medicines,
push prices of seeds and farming inputs beyond reach of small farmers
and reduce technology transfer in DCs
 Liberalisation in services: threaten to drive local firms out of
business, reduce competition and extend monopoly power of large
companies
 Liberalisation in investment: prevent DCs from requiring foreign
companies to transfer technology, train local workers, or source inputs
locally  investment then fails to build national linkages, create decent
employment, or increase wages (instead inequality exacerabates)
 Deep tariff liberalisation in industrial goods: a key tool for
development is taken away; all countries in the world used tariffs to
protect nascent industries; no possibility to develop an industrial future
 Tariff liberalisation in agriculture: small farmers are driven out of
business, not possible to develop food industry in future, food insecurity!
Turning the tide: development first
 No reciprocity in FTAs and no WTO+ provisions
 Enable DCs to adopt flexible IPR legislation
 Exclude essential services (education, health, water, sanitation)
from liberalisation
 Recognise the right of governments to impose capital controls
on foreign investment
 Include enforceable commitments by governments to protect and
promote core labour standards (see ILO)
 Exclude agricultural tariffs from liberalisation (food security, rural
livelihoods!), right to use permanent safeguards
 Enable DCs to use tariffs, subsidies, and other measures in
support of industrial policy and to modify them as their
economies develop
 Ensure democratic, transparent and participatory negotiation
processes with participation of all stakeholders