Revitalize the EUs open trade agenda a strategic imperative -25
An innovative and long-term competitive industry is acknowledged as a prerequisite for leadership in the global race to control the development of key technologies. Increased geopolitical tensions and less trust in the global trading system have given rise to a proliferation of unilateral trade measures and active industrial policies to favor domestic production and reduce reliance on imports. The development may exacerbate a politically driven regionalization process that limits the benefits of international trade.
Ladda ner rapportenThis can be especially detrimental to European interests. This year, 85 percent of global growth will be generated outside the EU – and 60 percent of EU imports are inputs needed for industrial production in Europe. This illustrates the need to secure access to external markets for Europe to be prosperous. International trade drives efficiency and specialization, and in turn the development of more advanced technological solutions that can address today’s and tomorrow’s societal challenges. By enabling diversification, trade is also an imperative to strengthen security of supply and with that the resilience of the European industrial base.
Yet, a prominent feature of EU policymaking has become addressing strategic dependencies on imports from third countries by subsidizing domestic production capacity. An inherent risk with import substitution is that it can lead to displacement effects through a reallocation of resources from areas that are competitive to those that are not, resulting in a less vibrant and dynamic European economy. It can also lead to centralized supply chains that are less resilient to disturbances to international trade.
Rather, a process to strengthen security of supply and limit overreliances that could potentially be weaponized for economic coercion should center around broadening the base of available suppliers for industry to source from. Thus, creating the conditions for companies to be able to optimize the supply chains by both diversifying risk and maximizing efficiency. The EU needs to enable both supply chain resilience and cost-efficiency in sourcing for the European industry to be globally competitive.
This requires a revitalized EU trade agenda that actively pursues trade liberalization and economic integration with key industrial countries, strategic partners, and growth markets.
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