Brussels, 16/10/2006 (Agence Europe) - In an interview with the Irish Sunday Business Post, the Director-General at DG Trade David O'Sullivan stressed the need for European companies to concentrate on production and on services that are knowledge- or productivity-based if it wants to compete globally. “Businesses in Europe must move up the value chain, particularly in financial services and telecoms, if they are to compete in the world market,” he said. He insisted that “knowledge and productivity” would be crucial if Europe lost its comparative advantage in wages and costs to other parts of the world. “People talk about Europe as being no longer competitive because we pay high wages, but high wages are not a problem, if you have high productivity,” he went on, stressing that Europe must “progressively move out of areas that were dependent on lower-cost labour and into those that were knowledge- and productivity-based”, where it would have a considerable comparative advantage. True to the logic of the EU's new trade strategy (“Global Europe”, see EUROPE 9278), Mr O'Sullivan added that China “is still a developing country, but once it reaches a critical mass of an affluent middle class people who start consuming, it will be a huge market of those interested in buying high value-added products that Europe exports”. (eh)