Speech The National Board of Trade Conference "Ideas on how EU trade policy can contribute to a new growth strategy", Berns Salonger, Stockholm 12 June 2008
Ewa Björling, Minister for Trade

EU policy for external trade and internal market supporting growth - an integrated vision for meeting global challenges

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Ladies and Gentlemen,

It is a great pleasure for me to be here today to address such a distinguished audience. I would like to share with you some of my thoughts on how trade policy and EU internal market policy could be seen in the context of a strategy for growth and jobs in a post 2010 Europe, after the Lisbon strategy.

When it was launched, the Lisbon Strategy was a European response to the emerging "new knowledge based economy".

There was a growing insight among European governments about the increasing global competition. Europe had to sharpen its competitiveness, in order to be able to offer its citizen's high quality jobs and more prosperity.

Today, the challenges are even more pronounced. Worldwide trade is increasing and trade patterns are changing. Increased economic integration, in combination with new technology, brings markets, competitors and trade partners closer together.

We need to move up the value chain, to add more knowledge and competence to the goods and services that we produce. This enhances our prospects to be more competitive in global markets.

Economic growth and prosperity - in Europe and in the world as a whole - has largely been built through economic integration and trade. This is not breaking news to anyone.

A proactive policy for free trade and openness is fundamental in our efforts for growth. It is fundamental for job creation and prosperity in Europe. It is good for business, it is for competition and it is good for consumers.

Openness works both ways. Access to third countries' markets enhances prospects for European industry to grow. Openness to competition from abroad spurs European companies to strengthen productivity and innovation.

Short-term policy measures trying to protect European industry from competition will never be a sustainable solution.

Protected by trade barriers, firms are no longer exposed to changes in customer preferences, changes in technology or changes in business processes. Imported goods that European companies use in their production also become more expensive. These factors erode our companies' competitiveness. Consumers will meet higher prices and less choice.

Protectionism - in terms of direct or indirect trade barriers - will in the long run therefore have to be paid by lower growth and job losses, undermining European prosperity.

Against this background, in a strategy that claims to be aiming at sustainable growth, it is just not possible to neglect international trade as a vital component.

Instead, it should be one of the starting points of the analysis.

The people of Europe will be looking to their leaders when they ask for more and better jobs and sustainable growth. It is our task, and our mission, to level the field by policies contributing to sustainable growth.

This makes it necessary for us to promote openness, and create well functioning markets, internally as well as externally.

We must make the case and explain why globalisation is an opportunity for all of us, including for those who in the short run may feel adversely affected by free trade and open markets.

I hope that Europe is confident enough to see the obvious, to create sustainable long-term policies, rather than to make easy short-term decisions.

Earlier this year, the European Council called for a strengthened external dimension of the Lisbon Strategy.

This was a timely announcement.

The EU Internal Market is of great importance when discussing the external dimension of the Lisbon Strategy.

The internal market - with free movement of people, goods, services and capital, and the development of free trade - has made a decisive contribution to growth, prosperity and security in the European Union.

The principles of free movement were adopted more than fifty years ago. They are fundamental to EU co-operation today. They will continue to be fundamental in the future.

Today the internal market is in fact inspiring some of our trading partners around the world to follow a similar path in their own regional context. The internal market rules can thus become somewhat of a model for these countries.

The internal market cannot be taken for granted. The ongoing review provides an excellent opportunity to remove the remaining weaknesses and to harness the full potential of the internal market.

We welcome the Commission's focus in the review on the external dimension of the Single Market. The review is important, because the EUs internal market is a strong asset in the global economy. Sweden is working actively for an efficient internal market that can meet the needs of our businesses to compete and grow.

Another factor of great importance is that more and more member states will introduce the euro as their currency. This will facilitate trade and cash flows and reduce currency risks.

The internal market provides a springboard for European firms to expand globally. Competition in the internal market motivates our companies to become even more efficient and more innovative. This is necessary for an increasing competitiveness on markets outside the EU.

Furthermore, companies and investments from third countries that want to gain access to the internal market spur competition. A better working and deeper integrated internal market implies reinforced incentives for foreign investments in Europe.

The EU is committed to create good international rules to facilitate international trade. The EU has long experience in developing regulations that combine free trade with high levels of health and safety protection. And the EU should use this experience to take a leading role also when rules are developed at an international level.

In Europe we have laid the grounds for a solid system for standardisation. It is important that we work together with our trading partners to support it globally.

Standards are the language of trade. They are closely connected to the convergence of sectors and to innovation. They influence services and the evolution of the information society - the fastest moving sector of them all.

The European system for regulating industrial products is in fact one of the most "open" systems in the world. The success of the internal market is, however, also dependent on the successful governance on and policies of 27 different national markets.

We have pinpointed a few actions that we need to focus on in the Lisbon Strategy. They have a strong impact on the external dimension of the internal market. Most important is to improve the situation for small and medium sized enterprises. The goods and services packages will make a difference. It is also important to act in the field of climate and energy.

Sweden will hold the Presidency of the EU in autumn 2009. When it comes to the internal market our objective, in the lead up to and during the Presidency, is to give it a more coherent platform. That includes the important issue of the external dimension of the Single Market.

To be able to act decisively in this context, I think it is imperative to find an adequate institutional framework within the Union. This framework has to be designed in such a way that all important and relevant issues are taken into consideration. It needs to be flexible enough to take care of the consequences of the fast changes of the globalised world.

It is quite obvious that the policy for external trade and the policy for the internal market have clear interconnecting linkages. This is something that we should develop further. A coherent framework for trade, internally as well as externally, has the potential to add to the competitiveness of Europe, to its growth and its prosperity.

In 2006, the Commission's communication "Global Europe" showed an example how an external dimension could be designed.

Now it is time to renew those thoughts and initiatives. This time, as a formal and integral part of the strategy for sustainable growth and jobs. Coming closer to 2010, various parts of the society will be expecting from European leaders to be clear and decisive regarding policy directions.

The purpose of this conference is to discuss some new policy initiatives concerning the external trade. The conference should also connect trade policy more closely to the internal market.

One issue that I would like to highlight is the importance of following measures and evaluation of results. The significance of this cannot be underestimated. When the Lisbon Strategy today is evaluated every year, there are indicators for a variety of dimensions of national policy.

Since growth is so closely connected to external trade, it is also imperative to be able to measure the effects of the external trade policy. This could give us indications on which policy measures that work, and which measures that are less effective when it comes to promoting growth and job creation.

Different approaches and perceptions regarding how to respond to the challenges of globalisation risk driving the European countries apart. This could happen at a time when - more than ever - we need a coherent and concerted action.

Part of the solution could lie in the Lisbon Treaty, which is expected to enter into force in the beginning of 2009.

The new Treaty will bring several changes to the way trade policy is developed and carried out in the EU. These changes, in turn, might influence the way the EU acts in international trade negotiations.

First, the European Commission will receive a slightly broader and clearer mandate. This will strengthen and facilitate action in relation to third parties, such as the WTO or other countries.

Second - and perhaps more important - the role of the European Parliament will be enhanced. Under the Lisbon Treaty, trade policy and trade agreements with third countries will have to be approved by the Parliament.

This could create a stronger and more distinct basis for EU trade policy. It could also strengthen the accountability of trade policy, in a time when the EU needs to improve the confidence among its citizens.

The Lisbon Treaty will require EU institutions to collaborate more closely. It is essential to avoid creating a complex and unwieldy institutional environment. More transparency and openness will probably also be necessary.

All together, when the Lisbon Treaty comes into effect, the Union will be able to act more distinctively in trade negotiations, and on the basis of a stronger political mandate. This should lead to a more effective and coherent action.

Against the background of the Lisbon Treaty, I believe we need to have a discussion - in the Council - in what arena trade policy matters are best handled.
Today, trade policy is the formal competence of GAERC. But is trade policy really discussed in depth there? The outcomes of different trade policy options, are these really discussed in that council?

When the new Treaty enters into force, it is suggested by some that trade policy should fall under the competence of the Foreign Affairs Council. Others suggest that trade policy should be the competence of the General Affairs Council. Where we ultimately will arrive on this issue, is still an open question.

In any case, what is lacking is an arena where EU trade ministers, as myself, can thoroughly discuss how different trade policy options contribute to European competitiveness, growth and prosperity.

This is something that we should discuss further.

Many policy areas are affected by trade. I believe that trade policy - and the effects of different approaches - should be discussed in a much broader context .

For instance, is the Competitiveness Council discussing pros and cons of different approaches to trade?

The employment ministers, how do they take different trade related effects into consideration in their discussions?

It is important for us to find an adequate and suitable institutional "machinery" for discussing trade related issues. The effects of trade is an issue that concerns many ministers, since other policy areas are affected. We need to look at trade from different perspectives.

Let me conclude with some final remarks on the future of the EU. The European Council has asked Member States to start reflecting on the design of a new strategy for growth and jobs for the next decade. Many of us have started our internal work in this direction and a discussion on EU level will have to start in time before the next phase of the strategy.

For Sweden, an external dimension will be an important component of this strategy, and that is one of the reasons why we have this conference here today, to reflect and discuss against the background of the report of the National Board of Trade.

In the autumn of 2009, during the Swedish presidency, the future strategy for sustainable growth and jobs will be a priority issue. I am looking forward to continued discussions on this matter.

Thank you.