Brussels, 23/07/2012 (Agence Europe) - Further bilateral liberalisation could add €250 billion to the EU's income and help create over 2 million jobs, the Commission says.
In a staff working paper published on 18 July, the European Commission assesses the impact of increased trade liberalisation on economic growth and job creation in Europe.
The EU, as the world's largest exporter and importer, and principle provider and recipient of foreign direct investment, has, the Commission says, much to gain from deepening its trade relations with the rest of the world. By 2015, it points out, 90% of economic growth will be generated outside Europe. If the EU pursues its ambitious external trade agenda, based on the negotiation of bilateral agreements with some dozen partners, including the United States, Japan, Canada, India, a number of South-East Asian economies (negotiations could be concluded this year with Singapore, and next year with Malaysia) and China, it could boost its GDP by 2%, or more that €250 billion and help create more than 2 million jobs in the EU.
Without the contribution of trade in 2012 (up 0.7 percentage points) the EU economy would fall back into recession. The EU's trade performance is solid: it has a €281 billion surplus in the manufacturing sector, a figure that has increased fivefold since 2000 and more than compensated for the increased energy bill over the same period. In services, the surplus is 17 times what it was ten years previously, €86 billion in 2010. In agriculture, the EU has moved from a €3.3 billion deficit in 2000 to a €7 billion surplus in 2011. Almost 30 million jobs in the EU, more than 10% of the total workforce, depend on exports to the rest of the world.
The impact of the negotiations being conducted and potential talks on bilateral free-trade agreements could be a rise of 1.5% in EU GDP, €150 billion in the short to medium term, with an 6.2% increase in exports (€129.6 billion) and an increase in imports of 5.6% (€118.2 billion). An agreement with the United States would increase GDP by 0.52%, worth €65.7 billion, with a 1.4% increase in exports (€29.4 billion) and a 1.35% increase in imports (€29 billion). This does not simulate any reduction in tariffs, only in non-tariff barriers: 100% tariff removal estimates EU real income to increase by 0.02% or €3.3 billion. An agreement with Japan would bring a 0.34% rise in GDP, worth €42.9 billion, with a 1.20% rise in exports (€25.2 billion) and a 1.2% increase in imports (€25.8 billion). An agreement with Canada would increase GDP by 0.08%, or €10 billion, with exports up by 0.7% (€14.6 billion) and imports up by 0.4% (€6 billion). Agreements with the ASEAN (those with Singapore and Malaysia are in train, the one with Vietnam is forthcoming, and preliminary discussions have been held with Thailand, the Philippines and Indonesia) would result in a 0.035% rise in GDP worth €4 billion, with exports rising by 1.60% (€33.7 billion) and imports by 1.40% (€30.1 billion). An agreement with India would increase GDP by 0.03%, to €3.8 billion, with exports and imports rising by 0.55% (€11.6 billion and €11.8 billion respectively). An investment agreement with China would increase GDP by 0.03% taking it up to €3.8 billion, with a 0.07% increase in exports (€1.4 billion) and a 0.06% increase in imports (€1.3 billion). Finally, an agreement with the Mercosur bloc (Argentina, Brazil and Uruguay, with Paraguay having been suspended since the end of June and Venezuela becoming a full member on 31 July) would bring a GDP increase of 0.17%, or €21.5 billion, with exports rising by 0.65% (€13.7 billion) and imports going up by 0.66% (€14.2 billion). The agreement with South Korea, which has been in place since 1 July 2011, is expected to increase GDP by 0.075%, or €9.5 billion, with exports rising by 1.2% (€25.2 billion) and imports increasing by 1.10% (€23.6 billion). Productivity gains stemming from trade integration further increase the impact of trade agreements by more than half. Once taken into account, the longer-term effect of all on-going and potential negotiations could amount to 2% of GDP.
The Commission states that national exports and imports can no longer be approached from a narrow mercantilist angle. Nowadays, many products are no longer made in one place from start to finish, but are put together in a long series of steps, often in different parts of the world. This new organisation of production along global supply chains is blurring economic frontiers and transforming trade relations. Not only are exports essential to economic growth and job creation, countries also increasingly need to import in order to achieve these. Two-thirds of EU imports are raw materials, intermediary goods and components needed for the EU's production process. The share of foreign imports in the EU's exports has increased by more than 60% since 1995, to reach 13%. (EH/transl.rt)