The EU’s place in the global market : making trade the currency of sustainable development.
Date: 2007-01-16
Institutions: Directorate-General for Trade and Economic Security
Subjects: European Union, international trade, public awareness campaign, sustainable development, world economy, young person

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The EU’s place in the global market
Making trade the currency of sustainable
development

The European Union is an economic heavyweight, but it is not a monolith. 
It works for the good of its own members but it also takes into account the global
good. Half a century of European integration has served the EU well and it
believes that closer regional and global integration can do the same for the world.

Wherever you live in our increasingly wired world, chances are you come across the European
Union  by  one  or  other  of  its  monikers  –  the  EU,  ‘Europe’,  ‘Brussels’,  etc.  –  in  the  media  fairly
regularly. However remote Europe may seem from your life, and despite its size and complexity,
it is not an impossible thing to comprehend.

Chaos theory’s famous ‘butterfly effect’ tells us that this delicate creature fluttering its tiny wings
in the Amazon could set off a storm, for instance, in China. What is true for the weather is also
true for modern economies. 
In our increasingly globalised world, the economic decisions each and every one of us makes –
weekly shopping, holidays, savings, investments – affects in subtle and intricate ways a worldwide
web of people that can count in the millions.
The way we all affect and are affected by one another makes it essential to learn more about the
rest of the world. That means that Europe is also of interest to you. This brief introduction will help
bring the EU, and particularly its overseas trade aspect, that much closer to home for you.

Historic times for Europe
The EU and its ‘borderless’ internal market have helped underwrite peace and prosperity in Europe by giving
European nations common interests and common causes. This year marks the 60th anniversary of the official
close of World War II – a five-year conflict which claimed the lives of some 50 million people. European integration
grew out of the ashes of this devastation and its main goal was to avoid its recurrence. 
What started off as a modest Steel and Coal union between six founding member states has grown to embrace
25 members. The Union now hopes to extend the unprecedented wealth generated by its internal market to
the ten new members who joined in May 2004 – not to mention the Union’s new neighbours. The euro – which
has soared on international markets since its introduction as a physical currency – is another recent success story.

Stage presence
In addition to internal peace and prosperity, the EU offers its Member States a more powerful presence on the
world stage. As the leading trading bloc, the EU actually speaks with one voice in international trade. 
One important function of the EU is to pursue and defend the international commercial interests of its Member
States and their citizens, through direct talks with other countries and regional blocs, as well as at the only
world forum for international trade, the World Trade Organisation (WTO).

Historic times for the world
The world has also been going through some historic changes. International trade – i.e. between countries –
stands at its highest levels ever. The growing importance of cross-border commerce is reflected in the WTO
and its expanding membership of 148 countries and territories. Its main functions revolve around setting rules
for international trade, settling cross-border trade disputes, and organising trade talks.
The EU is also a member of the WTO. This means that the 25 member states speak with one voice at WTO
meetings as they are represented by the EU’s executive branch, the European Commission. Meanwhile, the
Union’s  Council  of  Ministers  take  the  important  political  decisions  and,  together  with  the  directly  elected
European Parliament, co-decide on new legislation.
Giving  its  own  experience  with  the  power  of  common  markets  to  generate  common  wealth,  if  you  will,  the
Union is a strong advocate of trade as a forbearer of peace and prosperity. The EU thinks that its more than
fifty years of experience in the multilateral game can benefit the world.

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Sustainable markets
Although international trade has improved the lives of hundreds of millions of people around the
world, a more competitive world has had its victims. Easing the pain of developing countries in
the global market is essential for us all to gain from opening up of world trade. The EU is dedicated
to reforming the global system to spread prosperity and make development more sustainable.
“Trade policy, when used well, can make a powerful contribution to economic development all
round the world,” explains External Trade Affairs Commissioner Peter Mandelson, “as long as we
recognise the need for special and differential treatment for the poorest.”
“We gain through open trade and liberalisation… [but it] is not an end in itself. It is a means for
creating a better and more just society and improving people's lives,” he adds.

A gentler world
The Union realises that a great deal needs to be done to improve the global trading system, but
it takes the view that things have got better thanks to this multilateral approach to world affairs,
and they will continue to advance. The EU has been a major driving force behind the reform of
international commerce to better tune it to the needs of developing countries.
It was a pivotal force behind the formation of the WTO, which absorbed and replaced the 63-year-old
General Agreement on Tariffs and Trade (GATT). This development gave the ageing GATT more
power to pursue development-related issues and expand its remit to cover both manufactured
goods and the growing cross-border trade in services. 

From Doha to Cancun and beyond
Under the WTO, governments hammer out changes and shifts in the rules of international trade in what are
called  ‘negotiation  rounds’.  The  international  community  launched  the  current  negotiation  round  in  Doha
(Qatar) in 2001. 
The ‘Doha Round’ is built around sustainable development and covers a broad range of trade-related issues,
including intellectual property, agriculture and services. Its main focus is on making trade work for developing
countries by honing the rules of global commerce to their needs. Doha has become the EU’s number one foreign
trade priority.
“Of course, there is no simple panacea for development,” Mr Mandelson admits. “The answer lies chiefly in
building up the capacity of developing countries.”
In 2003, there was quiet optimism among negotiators that the WTO meeting in Cancun, Mexico, would push
Doha towards its 2005 deadline. Instead, in September 2003 the talks broke down over farm subsidies and
access to developed world markets.
But, just as some feared that all might be lost, the EU led the charge to salvage Cancun. In 2004, patient talks
at WTO headquarters in Geneva, Switzerland, led to a breakthrough between developing and developed countries
that helped put the Doha Agenda back on track.

Reform begins at home
The European Union is working hard to make Europe not only a better place for its citizens but also a better
place  for  the  world.  It  is  gradually  removing  remaining  non-competitive  practices  and  granting  increasing
preferences to more of the world’s poorest countries.
The  pace  of  reform  is  necessarily  set  by  complex  internal  dynamics  but  there  have  been  numerous  recent
successes, including the decoupling of farm subsidies from production, the opening up of European markets
to more agricultural and industrial imports from developing countries, and the removal of quotas on textiles.
The Union was the first to grant a Generalised System of Preferences (GSP) for developing countries in 1971.
In recent months, the Commission has reformed the GSP system to better adjust it to the countries that need
it the most. This will likely prompt other developed countries to follow suit and ensure that trade can really bring
opportunities for development.

European Commission - Directorate-General for Trade

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