Karel De Gucht European Commissioner for Trade Imports, exports and EU-ports The Hague, Netherlands, 8 September 2011
Goedemiddag dames en heren, To be honest, as trade commissioner, I often get to confront difficult crowds. Not usually outright hostile ones, but people who are critical of international trade and fearful of liberalisation. It is a real pleasure therefore, to be able to meet with a particularly good crowd for once. I don't often get the opportunity to preach to the converted, so to speak. Because who will appreciate the benefits of international trade for Europe more than an audience full of people who make a living in and around our main ports, through which a huge part of that trade flows? Some 90% even, measured by weight! And an audience of mainly Belgian and Dutch people, no less, two regions whose wealth and history are intrinsically linked to trade. At a time when a lot of people - around Europe but equally so in the US and within developing countries are afraid that emerging giants such as China pose a threat to their jobs and their welfare When even companies who, in theory, are much in favour of open markets, fear that the reality is much less pleasant and that the level playing field which is necessary for open trade to benefit them is sometimes lacking And when the political debate around trade is heating up throughout the Western world, now that we do business with a lot of countries that have fundamentally different views and standards on human rights, labour rights, the environment and international cooperation In those circumstances, I think it is especially important to confront the difficult audiences, to answer the difficult questions and put into perspective what trade is really about. Because an open and coherent European trade policy cannot continue if public opinion is not convinced of its merits. And despite the economic setbacks or rather: because of the economic setbacks Europe needs global trade more than ever. There s a wonderful book about what trade really meant to the Netherlands. 'Vermeer s hat', it's called, 'The Seventeenth Century and the Dawn of the Global World'. In this book, Canadian writer Timothy Brook vividly describes how the wealth and innovation and the unheard of abundance in consumer goods the rise of Amsterdam as an inventory of the possible, as Descartes called it were a direct result of changing international trade patterns. It is a fascinating story of how art and society were profoundly affected by developments in technology and the economy all flowing in and out through the Dutch ports. And how the Dutch Republic became renowned and richly rewarded for its products, the most famous of which was of course produced in Delft, often made by Italian immigrants from Faenza, originally aimed at the Persian market and known across the English speaking world as china. The benefits from globalisation do not become more tangible than this. And the Low Countries never forgot that lesson hence their enthusiastic support for trade liberalisation to this day. 2
Today, however, the common view across much of the Western world is rather different: many believe that this is the Golden Age of China, Brazil and the like - and that this evolution is to our detriment. Because we no longer buy china from Delft, but rely on China to supply us with consumer goods that used to be 'made in Europe'. The first is to a large extent true: growth in the BRIC-countries is tremendously impressive, especially when compared to ours, and impressively stable, as the latest figures on China's manufacturing industry showed only last week. This while Western economies are in a fragile state, some indicators stoking fears of a double dip. This trend will continue in the years to come. By 2015 some 90 % of world growth will be generated outside the EU, one third of which from China alone. But the second part of the assumption is decidedly not true: growth and prosperity elsewhere are not an obstacle to our growth. In fact, they are a major boon to it. Our share in global trade remains stable for now, despite the emerging giants in the East and South. Exports from the European Union were responsible for one third of our 1,8% GDP growth in 2010. And of course, exports are only one half of the equation. Reducing barriers to imports also means increasing consumers choice and helps European businesses in keeping down costs through competitively priced inputs. So there is a very direct link between Europe's openness to imports and our export performance. A remarkable two thirds of what the EU imports is transformed into high value exports to elsewhere in Europe or abroad. We are also still the third destination of foreign direct investment worldwide, behind the United States and China, attracting 54 billion last year. At the same time, EU outward investment has increased by a factor of 5 over the last 15 years and, rather than threaten our jobs, this has increased the productivity of European companies and thus their chances of guaranteeing employment in Europe itself. So we need trade and investment to keep our economic engines running. And we will need more of it in the years to come because governments, struggling to rebalance their budgets, will not be able to provide much impetus through most other policy levers. That is the bottom line of our trade policy: creating more opportunities to sell goods and services and to become more efficient. For that reason, we have recently concluded a number of Free Trade Agreements, namely with South Korea, Peru, Colombia and Central America - and we have plenty of other negotiations on the boil. From Mercosur to Canada to India, from Ukraine to Singapore, we have real prospects to conclude some of these by the end of the year or the next. Some other economic partners are demandeur to start negotiations as well Japan being the most prominent, though not the easiest possible partner, and Indonesia is another example that might really benefit Dutch trade if we should come to an agreement. The agreement with South Korea, for instance, which is in force since last July, is the most ambitious trade deal concluded by the EU and our first in Asia. It has an unprecedented level of tariff dismantling and some groundbreaking provisions on non-tariff barriers. Some 70% of bilateral trade is now duty free, some 850 million Euros of import duties will no longer have to be paid in the first year. And those are just the immediate benefits. We hope to achieve similar results perhaps even a domino effect with other trade partners in Asia and elsewhere, taking into account their level of development. On top of that, the European Commission is now, since the Lisbon Treaty, in charge of investment and we are actively trying to make the most of the opportunities on offer by encouraging emerging markets to dismantle investment barriers. We have 3
recently got consensus across the EU to add investment to our negotiations with Canada. These negotiations have the potential to create new business opportunities for EU companies, who currently face numerous market access restrictions, inefficient joint-venture requirements, inadequate investment protection and the like. That Europe can take such a forward-looking and progressive stance on trade even in lean economic times says a lot about the role of trade in the European economy and the fact that there is still firm political support in favour of trade liberalisation. Our leadership and the hoped-for domino effect has not, sad to say, had much of an effect on the Doha Development Round so far, which remains as problematic as before. I sincerely regret this: we will all be in deep water if we can't even deliver on the easier parts of the Doha Round in a 'December package'. It would shed a pale light on the impotence of political leaders to deliver a proactive trade agenda, at a time when leadership is already strongly questioned in relation to the public finance crises in both the US and Europe. Trade policy is not only about liberalising trade, it is also about regulating trade and making sure the rules apply equally to all those who have signed up to them. I'm also convinced that, for trade to maintain its legitimacy under the current circumstances, the second part is as important as ever. A good example is the verdict by the WTO which, last July, ruled against China's use of export restrictions of certain raw materials, backing a case jointly brought by the US, Mexico and the European Union. The WTO found China's restricted export regime in breach of its international commitments and unjustified, regardless of the environmental concerns cited, because these are not and cannot be addressed simply by discriminating against foreign competitors. As a result, we also expect China to revisit its overall export restriction regime. Taking a major economic partner to court in this way is not an easy task, but it is an necessary one. We should cooperate as much as possible to keep the rulebook of international trade up to date, and make everyone stick to the rules as well. Public procurement is one area in which the rulebook is rather out of date, despite the sector's increasing economic importance. The EU procurement market is the most open in the world, whereas our companies are often confronted with obstacles to participate in procurement abroad. I am working together with Commissioner Barnier on an instrument that would create leverage in having greater access to procurement markets in countries like China. This would allow the Commission to selectively close a certain sector in the EU procurement market from third country operators if that third country restricts the access of European companies to its own market. The closure would follow only after a thorough and objective investigation of the issue and a conclusion that there is indeed a serious and persistent problem. It will be designed to be used as a carrot rather than as a stick, but we should not be afraid to use it if need be. I will not go too deep into the role of European ports for our potential as trade partners. Professor Notteboom will expand on that on the basis of his important study. Suffice to say that that role is vital, and that we as European Commission are well aware of the room for improvement there still is in the way we run our network of ports. 4
The ports of Holland were, of course, already the main engine of economic growth in Vermeer's time, and we should not forget that it was the way they were run, organised and financed that gave the Dutch merchants a competitive advantage. Management, even more than geographics, played a critical role. (Well, we could say one or two things about them closing off the river Scheldt for about two centuries in this context, but let's keep things friendly today.) So the question is: what can we do to improve our logistics management today? In light of an expected increase in European trade, there is a need to ensure that this trade is not hampered by constraints in ports and in the links to and from them. High quality and cost efficient port services are of key importance for reinforcing the competitiveness of European export companies in world markets. However, the development of ports and the integration of ports in wider logistic chains remain uneven at European level. Some European ports, in particular in the North-Atlantic sea-range, are important generators of added value and employment at the local, regional, national, and even European levels. For example, the main port of Italy, serving the Veneto industrial region, is Rotterdam, and freight destined for the Iberian Peninsula often comes to Benelux ports to be transported by road afterwards. So it is more than ever a truly European issue. And we try to find European solutions to the problems that emerge. In many cases, the problem is not the lack of infrastructure but the very low levels of productivity of the ports, in particular in the Mediterranean and Black Sea ranges. In a world of global supply chains, we cannot overestimate how important this is for our competitive position. On top of that, at present, many EU Member States are confronted with a problem of scarcity of financial resources. Failure to maintain existing infrastructure and to develop the new capacities required to cope with the expected freight traffic forecast would also hamper the economic recovery. Finally, a deficient regulatory framework can mean that port infrastructure projects with high EU added value fail to attract the investment needed from private companies. Today, there are no uniform rules guaranteeing transparency, nondiscrimination, and fair access opportunities for investment projects in ports. My colleague, Commissioner Kallas, is fully aware of the need for European cooperation and coordination in the European transport market and I am pleased to see that, based on this event and from professor Notteboom's study, that understanding is widely shared by port authorities, companies and governments as well. I would like to invite you all to actively work together with the Commission in this effort. And I thank you very much for your attention. 5