Europe will gain most by working openly with both traditional developed partners and emerging economies. The Dutch Presidency priorities should ensure mutually open markets, so that Europe can benefit from our trading partners’ diversity and dynamism and use Europe’s own unique advantages as a multiplier, writes Dr David Landsman.
Dr David Landsman is executive director at Tata Limited, which represents the Tata Group in Europe.
For all the lively debates and discussions which take place in Brussels and across Europe, there’s no disagreement about what the broad goals of European economic policy should be: growth and jobs. Recent years have been tough and, even looking to the first few days of 2016, the global picture looks remarkably unsettled. Europe has particular challenges, perhaps in part because we are used to high levels of economic development.
Many European industries are long established, so they – and the people who work in them and the communities that surround them – have felt the pace of adjustment to new technologies and a globalised world. At the same time, Europe still enjoys immense competitive advantages, from the size of the market to the entrenched rule of law and from the skills of its people to the innovation potential of its universities and research institutions which can play a particularly strong role in shaping industries to meet the “new” challenges, particularly climate change. The game will continue to be hard, but there is everything to play for.
Of course, it’s the details that matter, and there are plenty in both the Commission’s work plan and the Netherlands Presidency and Trio priorities. A focus on investment and a smaller number of initiatives make it a practical approach towards the big goals.
When you look at the detail, it’s increasingly clear that in today’s interconnected world, Europe will gain most by positioning itself to work in an open and collaborative way with the rest of the world, both traditional developed partners and emerging economies.
This is certainly the experience which we at Tata have from our presence, in a majority of EU member states and across a wide range of sectors encompassing manufacturing and services.
There’s no point in lamenting the fact that in the 21st century, Europe doesn’t lead the world league table of growth rates. Actually, it represents an opportunity to be seized. By mutually opening up markets through free trade agreements with both developed and emerging economies, Europe can “enjoy a piece of the action” of our trading partners’ diversity and dynamism and use Europe’s own unique advantages as a multiplier.
Take India as an example. Given India’s impressive growth rate, rapidly increasing middle class and innovative technologies, Europe has much to gain as supplier, customer and partner.
So we should certainly welcome the successes in European FTAs, for example with Korea and Canada, and encourage the on-going negotiations with the United States on TTIP which would really be a big prize for jobs and growth in Europe. Of course, Europe should also actively continue to explore the opportunities to make progress towards agreements with, for example, India and Japan.
All kinds of free trade must by definition be a two-way street, so Europe must secure sustainable deals which combine openness to global partners with a level playing field for European industry. Our growth objectives demand that free trade is both ambitious and properly balanced.
Governments have traditionally promoted exports and encouraged (though perhaps not always as wholeheartedly as they could) inward investment. We at Tata of course welcome support for inward investment and see it as a major opportunity for Europe. But in a globalised world, the traditional categories may not always be helpful. So it is good to see an increased emphasis in a number of member states on promoting “trade” more broadly.
The logic is this: take, for example, a Tata group company which may arrive in Europe as an importer, but then establishes a European operation as an inward investor. That operation becomes effectively (and certainly in our view) a European business employing Europeans and contributing to the European economy. That business then supplies the European Single Market, but also exports beyond Europe, while the supply chain may also include other units outside the EU.
It’s the whole value chain which has the potential to bring more growth and jobs to Europe. So as we begin 2016, let’s commit ourselves to a more holistic approach to trade, trade promotion, investment and growth.