Ladies and Gentlemen,
I don't want to preach to the converted. You know better than anyone the benefits of open markets. That trade brings growth and jobs. And that protectionism poses a real threat to economic recovery.
Germany has long been Europe’s export powerhouse. More than 9% of German employment is directly or indirectly linked to exports outside the EU. And at least 3.5 million Germans owe their livelihoods to commercial links with the rest of the world.
And if Germany is an export powerhouse, then the mechanical engineering sector is one of the main generators. Members of the German Mechanical Engineering Association have an average export ratio of 75%. You are amongst the most successful traders in the world. Therefore I’m sure we are united in our drive for liberalisation.
Ladies and Gentlemen, you have asked me to talk about "Freihandel in der Sackgasse".
Indeed in the current framework, there is a lot of room for protectionist measures. If all WTO members were to raise their applied tariffs on goods to bound levels, world income would fall by some 350 billion $. In a more conservative scenario: if all countries raised their tariffs back to the highest level they applied since 1995, the loss to global output would be 134 billion $. These are extraordinary figures, but such scenarios are not entirely impossible.
Yet so far during this economic crisis we have largely succeeded in avoiding the 'beggar-thy-neighbour' scenario of the 1930s. Fortunately, today we have a global policeman in the form of the World Trade Organisation and a set of international trade rules that govern what countries should and should not do.
Moreover, successive meetings of the G20 have resulted in commitments to avoid protectionist measures until 2013, and to roll back any measures already put in place since the beginning of the crisis. The EU was instrumental in pushing for that G20 commitment. We have also closely monitored trade restrictions imposed by our G20 partners, and have regularly reported our results in order to help the WTO's work in this field.
So what’s the latest picture? Well, at the end of this week, DG Trade will publish its latest monitoring report on trade restrictions.
We have found that over the last year 130 new trade restrictive measures have been introduced by the EU’s trading partners - a rise of 30%.
Economic recovery in many countries has not led to the reversal of such policies - only 17% of all measures introduced since the beginning of the crisis so far have lapsed. So, measures designed to temporarily support demand hit by the crisis, are now locked-in.
What is more, several G20 members are embarking on industrial policies based on import substitution, local content requirements and restrictions in public procurement.
The members of the G20 have clearly not kept all their promises. The EU will therefore continue to remind its trading partners of their commitments in all multilateral and bilateral fora.
What other positive steps is the Commission taking to counter the situation? Well, we will continue to fight on both the multilateral and bilateral fronts.
The best way to guarantee free and fair global trading rules would be a new multilateral trade agreement. The EU has always played a constructive and proactive role in the Doha Development Round of negotiations at the WTO, and will continue to do so.
However it is true that so far finding a compromise has proved to be unlikely.
The cause for this is fundamentally different expectations regarding the reciprocity of commitments that developed and emerging countries should take in opening up their markets: one side wants almost full harmonisation of commitments, while the other insists on far-reaching special and differential treatment.
The EU’s position has been somewhere between the two, asking the emerging countries to take ambitious commitments, while recognising that a certain degree of flexibility is still justified.
We went as far as tabling a compromise proposal earlier this year, but that was not enough. And prospects for reaching concrete negotiating results when Ministers meet in December do not look encouraging.
We will however continue to support any proposals that might unblock the current stalemate, on the basis of three guiding principles:
-An ambitious negotiating agenda is needed to contribute to the recovery and rebalancing of the global economy;
-We must not throw out the baby with the bath water, but build on what is already on the table;
-And particular attention should be put on the needs of Least Developed Countries.
And we hope to use the December WTO Ministerial to at least map out the way ahead for the coming year to ensure that we continue to work towards a successful DDA outcome.
Regardless of progress on the multilateral front, we will also continue with our bilateral agenda, building on the solid foundations of the global trading system. Let me reassure you that bilateral is not the enemy of multilateral. Liberalisation fuels liberalisation. Negotiations will continue with important partners such as Canada, India, Singapore, and Mercosur. Agreements with these countries would deliver significant economic benefits.
Take the example of our FTA with Korea, which is applied since July this year. European exporters now pay 850 million € less in import duties, rising up to 1.6 billion € over time. EU exports are set to increase by about 20 billion €.
Many of the benefits will accrue to your industry. EU exporters of machinery will save 450 million € in annual import duties. Some studies argue that exports in this sector could grow by as much as 65% as a result of this deal. This is important to Germany. Germany’s machinery exports to Korea account for some 2.5 to 3 billion € annually, representing almost half of total EU exports. I hope this FTA allows you to tap into this market before your counterparts from the US.
Outside of the negotiating room, we are working at a more practical level to remove barriers to European companies' export or investment opportunities. Our market access strategy aims to tackle key obstacles in foreign markets. These range from specific Chinese standards and certification procedures in the ICT sector to burdensome licensing requirements in Argentina.
One real-life example before I finish: Obstacles created by new security provisions for telecommunication equipment in India threatened to harm EU opportunities in that market. Raising this issue at the highest level with the Indians has lead to positive signals that a non-discriminatory solution will be found based on international best practice, reconciling commercial and security interests. This is not trivial - the EU’s exports of telecommunications equipment to India are worth around 1 billion €.
Ladies and Gentlemen,
These are difficult times. The recovery of the global economy is in the balance, and the sound of protectionist voices grows louder. But Europe is active in its response. We are standing up to the fight against protectionism; we are working to unlock the multilateral stalemate. We are pushing through important bilateral and regional trade deals, which can allow new market access and opportunities for investment to kick start Europe's economic performance; and we stand ready to make the full use of trade instruments which ensure that EU businesses can compete fairly at home and chance to enter open markets abroad.
By promoting an active liberalisation agenda - both multilaterally and bilaterally - and by working for a fair deal for European companies in the global market place, we hope to help further the success of your industry. "Jede Sackgasse hat ein Ende".
Thank you very much for your attention.