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How can trade contribute to growth and jobs? The role of EU trade policy Signe Ratso Director Directorate General of Trade European Commission Outline • Trade and growth • Trade and jobs (new studies on factors contribution to trade) • Greek exporters (firm level data) • Trade policy • Market access strategy 2 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 exportrelated jobs since 2000. 4 …but in Greece less than in other countries Employment supported by extraEU exports as a percentage of total employment (2007) 5 - 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. • 6 Many factors contributed to this: Member States Embodied Embodied Extra-EU Total employment in Employment employment exports exports Extra-EU shares per million € shares over shares exports (1,000 (%) of extra -EU total exports over GDP employees) exports (%) (%) 2000 Belgium EU27 Greece 2007 344 356 22,000 25,020 231 128 2000 2007 2000 8.4 2007 2000 24.8 8.1 9.0 7.6 10.5 11.2 19.8 15.4 21.6 9.2 5.9 3.0 Extra-EU exports shares over GDP (%) 2007 2000 2007 2000 2007 23.7 61.2 59.3 15.2 14.0 100.0 100.0 12.1 13.1 12.1 13.1 49.0 42.1 15.8 14.7 7.7 6.2 • 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 7 the EU27 average 0 20 40 60 80 Exporters (%) 100 Looking at micro-data: many Greek firms are exporters…. 16 Tobacco 35 Other transport equip. 22 Printing and publishing 26 Other non-metallic mineral 33 Medical, precision and optical instr. 34 Motor vehicles, trailers and semi-trailers 19 Leather and footwear 23 Coke, refined petroleum and nucl.fuel 18 Wearing apparel 20 Wood and products of wood 27 Basic metals 25 Rubber and plastics 36 Manufacturing n.e.c. 15 Food and beverages 24 Chemicals 21 Pulp and paper 29 Machinery and equipment, n.e.c. 32 Radio, TV and communication equipment 17 Textiles 28 Fabr. metal exc. machinery and equip. 31 Electrical machinery and apparatus, n.e.c. 30 Office, accounting and computing machinery 8 16 Tobacco 37 Recycling 22 Printing and publishing 20 Wood and products of wood 21 Pulp and paper 34 Motor vehicles, trailers and semi-trailers 9 30 Office, accounting and computing machinery 23 Coke, refined petroleum and nucl.fuel 36 Manufacturing n.e.c. 24 Chemicals 26 Other non-metallic mineral 28 Fabr. metal exc. machinery and equip. 29 Machinery and equipment, n.e.c. 25 Rubber and plastics 32 Radio, TV and communication equipment 15 Food and beverages 27 Basic metals 31 Electrical machinery and apparatus, n.e.c. 17 Textiles 18 Wearing apparel 33 Medical, precision and optical instr. 35 Other transport equip. 19 Leather and footwear 0 The average export share is 30% (export revenue/turnover of exporters; nonexporters are not included) 20 40 60 80 100 ….but they sell abroad only a small fraction of their output 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 10 11 Trade and investment policy – how we engage with our partners Multilateral policy (WTO/DDA) Our trade strategy Bilateral agreements (mainly Free Trade Agreements) Market Access Strategy 11 12 Bilateral agreements – state of play EFTA Turkey SAA Central America Mexico Euro-Med South Korea Caribbean ACP Columbia/ Peru South Africa Chile Agreements in force Negotiations concluded 12 13 Bilateral agreements – the way ahead Russia Ukraine Eastern Partners Canada Japan USA Euro-Med Gulf countries African EPAs India Malaysia Singapore Pacific EPAs Other ASEAN Mercosur 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 13 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 14 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 16 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. 17 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) 18