EU commissioner discusses Asia’s role in global trading

By: | at 08:00 PM | International Trade  

Every time I fly into Asia as the EU Trade Commissioner, over the skyscrapers of Bangkok or Singapore, I see the “globalization dividend.” In the last third of the 20th century, open economies grew on average more than five times faster than those that were closed. That’s the difference between doubling the value of your economy once every 16 years or once every century. Nowhere is this more apparent than Asia.

All across Asia, economies that are engaging with the global market are producing the kind of growth rates that “Old Europe” can only dream about. Nowhere else on earth have free trade and open markets lifted so many out of poverty and transformed societies so quickly. Asean exports to the EU are growing in double figures every year. For many Europeans, particularly those who feel this competitive challenge most sharply, Asia is globalisation.

This is not to say that the countries of Asia and the Asean do not still face huge development challenges. Not least, the management of the industrialisation that comes with economic growth. Rapid economic and social change brings the costs of adjustment, and the pressure of change. Asean governments deserve credit for holding their nerve against the backdrop of the Asian financial crisis and the dramatic rise of China. It seems unarguable to me that a commitment to economic openness is necessary.

Europe, for its part, has not adapted fast enough to this change in Asia and the challenge it offers. In many respects, Europe still has a 20th-century policy for a 21st-century Asia. One of my first commitments when appointed in 2004 as EU Trade Commissioner was to change that.

Asia offers Europe two challenges. The first is psychological. Asia’s dramatic rise is a competitive challenge to Europe, and it is too often greeted with anxiety. Asia’s natural low-cost advantages in labor-intensive industries have exerted intense pressure on their European competitors. That pressure underlies a growing call for protection from Asian imports.

I do not share the view of those who regard Asian growth as a threat to Europe. As one of the world’s biggest exporters and investors, Europe needs to have more confidence in its potential and its ability to manage change and stay competitive. I see the growing competitive challenge of Asia and its huge new markets as a means of sustaining Europe’s strength, not reversing it. Asia does need to understand that anxiety if it is to help ensure that Europe’s anxiety does not tempt its politicians towards protectionism. European businesses need to feel they have fair access to Asian markets for their goods and services. They need to know that their intellectual property rights are being respected. These are the challenges I have been taking up with my Asian counterparts.

The second challenge is one of policy and practice. In Asia, there is often a sense that Europe has spent the last decade looking inwards; focused on its enlargement to take in the countries of Eastern Europe. This is, in many respects, true.

Even when Europe has thought seriously about the changes in Asia, it has often focused too exclusively on China. China’s dramatic growth dominates the European imagination, and it is certainly the focus of most new European trade and investment strategies in Asia. But the Chinese experience is being repeated all over Asia, and one of my key challenges as European Trade Commissioner is to encourage European businesses to see more to Asia than just China.

This is why a new EU-Asean strategy is now vitally important. The US has been pursuing bilateral FTAs in the region. Asean countries themselves have been strengthening their internal trading network. The Asean has signaled to the EU that it is ready to take the EU’s commercial relations to a new level. Europe must be ready to engage.

That is why, in 2005, the EU and the Asean established a “vision group” to explore ways to strengthen trading relationships - up to and including the possibility of a free trade area (FTA) between the two regions. The EU opted for this


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