REFLECTION PAPER ON HARNESSING GLOBALISATION
Date: 2017-05-10
Institutions: European Commission, Secretariat-General
Subjects: competitiveness, deepening of the European Union, economic cooperation, economic growth, education policy, globalisation, innovation, international cooperation, international trade, sustainable development

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 10.5.2017  COM(2017) 240 final   REFLECTION PAPER ON HARNESSING GLOBALISATION  
 
 
FOREWORD 

On  1  March  2017,  the  European  Commission  presented  a  White  Paper  on  the  future  of 
Europe. It is the starting point for an honest and wide-ranging debate on the Union's future at 
27.  To  further  contribute  to  the  discussion,  the  European  Commission  is  putting  forward  a 
number of reflection papers on key topics that will define the coming years. 

This paper on harnessing globalisation is the second in the series. It aims to make a fair and 
evidence-based assessment of what globalisation means for Europe and Europeans. 

Many  Europeans,  particularly  younger  ones,  see  how  being  connected  to  people  in  other 
countries and continents can better their lives. They are right to do so – around a third of our 
national income comes from trade with the rest of the world. 

But  many  Europeans  are  also  apprehensive.  They  see  globalisation  as  synonymous  to  job 
losses, social injustice or low environmental, health and privacy standards. They consider it to 
be  a  factor  in  the  erosion  of  traditions  and  identities.  These  concerns  need  to  be  addressed. 
And it is only by confronting these issues openly that we can do so. The debate will make us 
stronger and better equipped to deliver sustainable and fair responses that meet the aspirations 
of Europeans.  

Today,  more  than  ever,  local  issues  go  global,  and  global  issues  become  local.  While 
globalisation affects nearly every aspect of our lives, our citizens and regions experience these 
developments very differently. 

Now is therefore the time to consider what the EU can do to shape globalisation in line with 
our  shared  interests  and  values.  To  ask  what  we  can  do  to  protect,  defend  and  empower 
European  citizens,  especially  the  most  vulnerable.  And  to  agree  on  how  the  EU  –  from  its 
institutions,  to  Member  States,  regions,  municipalities,  social  partners,  wider  civil  society, 
businesses,  universities  –  and  its  international  partners  can  come  together  to  harness 
globalisation. 

2 

 
 
 
 
 
 
 
 
 
 
 
 
Declaration of the Leaders of 27 Member States and of 

the European Council, the European Parliament and the European Commission 

‘The European Union is facing unprecedented challenges, both global and domestic: regional 
conflicts,  terrorism,  growing  migratory  pressures,  protectionism  and  social  and  economic 
inequalities.  Together,  we  are  determined  to  address  the  challenges  of  a  rapidly  changing 
world  and  to  offer  to  our  citizens  both  security  and  new  opportunities.  We  will  make  the 
European  Union  stronger  and  more  resilient,  through  even  greater  unity  and  solidarity 
amongst us and the respect of common rules. Unity is both a necessity and our free choice. 
Taken individually, we would be side-lined by global dynamics. Standing together is our best 
chance to influence them, and to defend our common interests and values.' 

Rome, 25 March 2017 

'Being European also means being open and trading with our neighbours, instead of going to 
war  with  them.  It  means  being  the  world's  biggest  trading  bloc,  with  trade  agreements  in 
place or under negotiation with over 140 partners around the globe. 

And  trade  means  jobs  –  for  every  EUR  1  billion  we  get  in  exports,  14  000  extra  jobs  are 
created  across  the  EU.  And  more  than  30  million  jobs,  1  in  7  of  all  jobs  in  the  EU,  now 
depend on exports to the rest of the world.' 

Jean-Claude Juncker 

President of the European Commission 

State of the Union speech, 14 September 2016 

3 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
TABLE OF CONTENTS 

1. TAKING STOCK OF GLOBALISATION AND ITS EFFECTS 

1.1. Globalisation is not new but is changing fast 

1.2. It is a positive force for change… 

1.3. … but it also brings challenges 

2. LOOKING AHEAD 

2.1. Globalisation will look very differently by 2025… 

2.2 … and the temptations of isolationism or inaction will have to be resisted 

3. EUROPE'S EXTERNAL RESPONSE: INTERNATIONAL COOPERATION TO SHAPE GLOBALISATION, 
ECONOMIC DIPLOMACY AND INSTRUMENTS TO ENSURE A LEVEL PLAYING FIELD 

3.1. The EU is already a force for a fairer global order… 

3.2. … but more should be done in the future… 

3.3. … and the EU should act to restore a level playing field  

4. EUROPE'S INTERNAL RESPONSE: BUILDING RESILIENCE THROUGH BETTER SHARING OF 
BENEFITS AND PROMOTING LONG-TERM COMPETITIVENESS 

4.1. Robust social and education policies are key to ensure resilience and a fair distribution of 
wealth… 

4.2. … while major efforts are needed to make Europe a competitive and innovative 
economy… 

4.3. … in close partnership with more empowered regions  

5. CONCLUSION 

4 

 
 
 
 
 
 
1.  TAKING STOCK OF GLOBALISATION AND ITS EFFECTS  

1.1. Globalisation is not new but is changing fast 

Global  interaction  is  centuries  old,  reflecting  a  human  instinct  to  find  new  opportunities, 
discover  new  people  and  places,  and  exchange  ideas  and  goods.  The  core  drivers  of 
globalisation  used  to  be  trade  in  goods  and  capital  flows.  Today,  spurred  on  by  rapid 
technological change, it is increasingly knowledge-driven. 

Breakthroughs  such  as  the  Internet  and  the  rise  of  emerging  economies  have  further 
accelerated global exchanges and transformed their nature. Most products are no longer made 
in  one  country  alone  but  are  rather  “made  in  the  world”.  They  incorporate  raw  materials, 
components,  technologies  and  services  coming  from  different  countries  and  continents. 
Smartphones or medical devices can be designed in Europe or the US and assembled in Asia 
or Eastern Europe from parts made elsewhere. Supply chains have gone global.  

Figure 1: The phases of globalisation 

Source:  European  Commission  (2016),  Klasing  and  Milionis  (2014),  World  Bank  (2017), 
adapted from NBER Macrohistory Database 

5 

7060504030201001921-2219001989Third Wave of GlobalisationWWIGlobal traderatio:sumofworldexportsandimportsasshareof worldGDP(%)WWIISecond Wave of GlobalisationProtectionismFirst Wave of GlobalisationWorld tradeandinstitution buildingHigh tariffsand barriersto tradeOrigins ofglobalisationGreat DepressionEnd ofCold War Asian Financial Crisis19962008Inclusive growthinthe digital age19141944194719611967197319881994199519992000-012015192320151950195119611974199119922006200720092002: Eurozone1957: Treaty of Rome and European Economic Community (EEC)Global Financial Crisis2006: European GlobalisationAdjustment Fund 
 
 
  
 
 
While trade was responsible for less than 20 percent of world GDP in the early 1970s, it now 
represents around half. And even if the traditional trade in goods is broadly stabilising, other 
forms  or  exchange, such as  data flows, are still  growing  exponentially. Estimates  show that 
with  an  appropriate  framework,  the  value  of  the  data  economy  will  increase  to  EUR  739 
billion by 2020, representing 4% of overall EU GDP, more than doubling today's value. 

Figure 2: Global is today's reality 

Note: data for 2016 or latest available (2015) 

Source: McKinsey Global Institute, United Nations, World Tourism Organisation, OECD, 
European Commission 

At  the  same  time,  the  world  faces  more  and  more  transnational  challenges,  from 
unprecedented  migration  flows,  to  terrorist  threats,  financial  crises,  health  pandemics  or 
climate  change.  Even  the  biggest  and  richest  countries  no  longer  have  the  capacity  to  deal 
with  the  challenges  they  face  alone.  In  today's  world,  global  cooperation  is  increasingly 
essential. 

1.2. It is a positive force for change… 

A  more  connected  world  has  brought  with  it  new  opportunities.  People  now  travel,  work, 
learn and live in different countries. They interact with each other on the web, sharing their 
ideas,  cultures  and  experiences.  Students  have  online  access  to  courses  run  by  leading 
universities across the world. Countries can produce more for less by specialising in what they 
do best and exploiting economies of scale in global markets. International competition, global 
climate  action,  scientific  cooperation  and  exchange  of  ideas  have  stimulated  creativity  and 
accelerated  innovation.  Companies  active  in  international  markets  remain  competitive 
because they learn and adapt faster1. 

1 European Commission, 2010, Report Internationalisation of SMEs. 

6 

1.2 billion75 million914 million244 million13 million3.3 million2 millionInternational trips made in 2016 Social networking users with at least one foreign 'friend'Online cross-border purchases within the EU27 in 2016People living outside theirhome country globallyCross-border online students globallyPeople that studied abroad throughthe Erasmus programme since 1987Cross-border commuters in the EU27 in 2015 
 
 
 
 
 
 
                                                            
European  exports  have  grown  as  customers  worldwide  demand  the  high-quality  goods  and 
services  we  supply.  Our  airplanes,  premium  cars,  industrial  machines,  cosmetic  and 
healthcare products, high-end clothing and quality foods are highly sought after. Along with 
the  consulting,  engineering  or  transport  services  that  we  provide,  these  contribute  to  strong 
EU exports totalling EUR 1 746 billion in 2016 and supporting higher-paid jobs. Every one 
billion  euros  of  exports  supports  14,000  jobs.  It  is  not  only  large  corporations  who  benefit: 
over 80% of European exporters are SMEs2. 

One  Italian  SME  sells  precision  cleaning  machines  to  clients  in  the  aerospace,  medical  or 
luxury  industries  in  Europe,  Israel,  China  or  India.  It  employs  dozens  of  workers  in  their 
home  region,  and  contributes  to  the  local  economy  through  their  supply  chain  and  tax 
payments. 

Cheaper inputs and new technologies imported from abroad also make our companies more 
competitive, and therefore help maintain jobs in the EU.  80% of EU imports consist of raw 
materials, capital goods and components necessary for the European economy to function. 

Imports also provide European consumers with greater choice and lower prices. This helps to 
lift  living  standards  and  boost  purchasing  power,  especially  for  lower-income  households 
which  consume  more  goods  and  services  as  a  share  of  their  income.  Most  Europeans  now 
have  access  to  affordable  smartphones,  computers,  clothing,  food,  medical  treatments  and 
transport, which were not available to earlier generations. 

Foreign  direct  investment  is  a  key  source  of  capital  and  technology  transfer.  Many  people 
from  outside  of  the  EU  have  successfully  integrated  into  our  societies.  They  have  filled 
critical gaps in the workforce, from care for the elderly, to agricultural labour or specialised 
research and product development. 

The  rising  cost  and  scarcity  of  natural  resources,  population  growth  and  pollution  have 
spurred emerging economies to rapidly shift away from fossil fuels and to develop more clean 
energy and resource-efficient technologies, resulting in higher environmental standards. 

Global  trade  openness  has  boosted  EU  economic  growth,  raising  prosperity  and  helping  to 
keep  us  competitive3.  The  EU's  share  of  global  goods  exports  remains  above  15%,  having 
only fractionally declined since the turn of the century and the emergence of China as a World 
Trade  Organisation  member  and  export  powerhouse.  Some  of  our  Member  States  that  are 
most integrated in global supply chains also have both higher incomes and lower inequality. 
This success has provided resources to support our social model and protect the environment. 

2 European Commission, 2015, "EU exports to the world: effects on employment and income" 
3 IMF, World Bank, WTO (2017) Making Trade an Engine of Growth for All. The Case for Trade and for Policies 
to Facilitate adjustments. 

7 

 
 
 
                                                            
Figure 3: Open EU economies are not more unequal 

Note: Latest available data (2012). Distribution of income between individuals using the Gini 
coefficient where 0 represents perfect equality. Trade openness as import and export share of 
GDP 

Source: World Bank, 2017 

Globalisation has had similar positive effects around the world4. It has helped lift hundreds of 
millions of people out of poverty and enabled poorer countries to catch up. It has played a role 
in  increasing stability, democracy  and peace.  The UN  Sustainable Development  Goals  have 
provided  a  global  framework  to  address  poverty,  increase  living  standards  in  developing 
countries – ultimately also creating exports markets of the future. Providing the prospect of a 
sustainable and prosperous future at home also helps reducing and managing illegal migration 
flows to Europe. 

4 OECD (2017), Key Issues Paper : Making Globalisation Work ; Better Lives For All, C(2017)32, 

8 

Trade openness (% of GDP)Gini CoefficientMoreequalLess equalMore openLess open 
 
  
 
 
                                                            
Figure 4: Every day, more people are lifted out of poverty in the world 

Note:  International  dollar  is  adjusted  for  price  differences  between  countries  and  for  price 
changes over time (inflation) 

Source: Max Roser based on World Bank (2017) and Bourguignon and Morrisson (2002) 

1.3. … but it also brings challenges 

At the same time, globalisation also poses challenges. Its benefits are spread unequally among 
people and regions, some of which are less adaptable to change and competition than others. 
In recent decades, many countries - sometimes with lower wages, environmental standards, or 
taxes  -  have  increasingly  competed  with  Europe  in  low-skill  and  low-value  added  industry 
segments.    The  fact  that  other  countries  do  not  all  share  the  same  living,  social, 
environmental,  tax  and  other  standards  as  Europe  means  that  companies  can  use  these 
differences  to  their  competitive  advantage.  This  has  led  to  factory  closures,  job  losses  or 
downward pressure on workers' pay and conditions. Companies which are unable to compete 
with more productive or cheaper foreign counterparts close, leaving a lasting impact on those 
laid off, their families and the wider region. 

Some foreign companies and governments have engaged in unfair trade practices. European 
industries such as steel or shipbuilding have been hurt by 'dumped' imports linked to public 
subsidies  and  overcapacity  in  certain  third  countries.  Other  countries  enjoy  the  benefits  of 
international  openness  through  increased  exports,  but  fail  to  reciprocate  and  keep  their 
domestic economy closed to foreign companies.  

Moreover, large corporations can take advantage of loopholes in international rules and shift 
profits  to  low-tax  jurisdictions  rather  than  paying  taxes  where  they  produce  and  sell.  These 
strategies  deprive  EU  governments  of  tax  revenues  and  contribute  to  unfairness  and  the 
perception that global integration only benefits the bigger companies and well-off citizens. 

A  combination  of  globalisation  and  technological  change  has  increased  demand  for  skilled 
labour  but  reduced  the  number  of  jobs  for  those  with  a  lower  level  of  qualifications, 
particularly  in  manufacturing.  Displaced  workers  struggle  to  get  a  new  job  especially  when 
this means acquiring new skills. 

9 

1820185018701890191019291950196019701981199020158 billion7 billion6 billion5 billion4 billion3 billion2 billion1 billion0Extreme poverty is measured as living with less than $1.90 per dayNumberof people not living in extreme povertyNumber of people living in extreme poverty 
 
 
 
  
Legal  immigration  has  generally  boosted  the  economies  of  receiving  countries  and  can 
provide  the  EU  with  the  skills  needed  to  address  labour  market  shortages.  However,  where 
local  infrastructure  and  integration  efforts  have  not  kept  pace  with  the  increased  scale  of 
migration,  this  can  lead  to  social  tensions  in  communities.  In  particular,  in  countries  and 
regions with high levels of unemployment and exclusion, economic and societal costs can be 
high whilst marginalisation in some cases can also lead to radicalisation. 

Unless active steps continue to be taken, there is a risk that globalisation would compound the 
effect  of  technological  advances  and  the  recent  economic  crisis  and  contribute  to  further 
widening  inequalities  and  social  polarisation.  Over  the  last  decade,  real  incomes  of  middle-
class households in  the EU and other advanced economies  have  for the  most  part  stagnated 
even  as  the  economy  has  grown  overall.  While  inequality  in  Europe  remains  much  less 
marked than elsewhere in the world, the wealthiest one percent of our population still own 27 
percent of the total wealth5. 

Figure 5: Europeans' views on globalisation are mixed 

Source: Bertelsmann Stiftung and European Commission (2016) 

Many  citizens  consider  that  globalisation  directly  threatens  their  identities  and  traditions  to 
the  detriment  of  cultural  diversity  and  their  ways  of  living.  Citizens  are  anxious  about  not 
being  able  to  control  their  future  and  feel  that  their  children´s  prospects  will  be  worse  than 
their  own.  This  is  due  to  the  view  that  governments  are  no  longer  in  control,  not  able  or 
willing  to  shape  globalisation and manage  its  impacts  in  a way  that  benefits  all.  This  is  the 
political challenge we must now confront. 

5 Julius Bear, Wealth Report: Europe. September 2014 

10 

55% consider globalisation is an opportunity overall 45% consider globalisationis a threat overall38% view globalisation as an asset to their country's identity53% view globalisation as a threat to their country's identity65% view their economicprospects with confidence35% view their economicprospects with anxiety9% don't know 
 
 
 
 
 
                                                            
2. LOOKING AHEAD 

2.1. Globalisation will look very different by 2025 

We  are  still  in  the  early  phase  of  the  transformation  where  digitalisation,  robots,  artificial 
intelligence,  the  internet  of  things,  3D  printing  will  revolutionise  how  we  produce,  work, 
move and consume. 

Figure 6: Globalisation then and now 

Source: European Commission, McKinsey Global Institute, OECD 

Virtually all sectors will be changed, such as: 

transport with e.g. driverless and connected cars, drones or car-sharing, 

telecommunication with e.g. more powerful networks, virtual reality, virtual workspace, 

 
  energy with e.g. smart grids, renewable energy, distributed generation, 
  agri-food with e.g. climate friendly farming, applications to reduce food waste, 
 
  distribution with the growing importance of e-commerce, 
 
 
  health  care,  with  e.g.  online  diagnosis,  increased  cross  border  mobility  of  medical 

financial services with e.g. virtual banks and insurance, or crowdfunding, 
factory production with automation, or 

professionals. 

11 

Intangible flows of services and dataTangible flows of physical goodsDemand for more, and more diverse goods and servicesGlobal Supply ChainsFlows mainly between developed economiesStates and big multinational companies drive flowsEasily monetised transactionsTechnology transfer from developed to emerging economiesDemand for more Fair Trade, sustainable and local productsGlobal Value ChainsGreater participation by emerging economies, and megacitiesGrowing role of small enterprises, non-state actors and individualsRise of open source and shared contentTechnology transfer in both directionsGlobalisation so farTrends changingglobalisation 
 
 
 
 
Automation makes labour costs less relevant in decisions on where to locate production. This 
actually  helps  bring  some  manufacturing  back  to  Europe  as  observed  by  the  European 
Reshoring Monitor6. 

In 2016, a well-known German maker of sports footwear relocated production in Germany of 
one specific model of shoes to a factory entirely manned by robots. The company intends to 
open more such "speed factories" in Europe or the US in the future. 

However, simple and repetitive tasks that can be automated will disappear7. The jobs that will 
be  created  and  brought  back  to  Europe  will  be  different  from  those  that  moved  away  years 
ago. The challenge for Europe will be to innovate in strategic technologies and help workers 
to gain the right skills to avoid widening the gap in the labour market. 

Digital technologies and e-commerce will further increase cross-border opportunities for even 
the smallest companies. Many businesses are now "born global", reaching buyers worldwide 
through  the  internet.  On  the  other  hand,  some  large  online  platforms  are  becoming 
increasingly dominant in the market thanks in part to their ability to track and store personal 
data. The challenges of managing privacy, data protection, cybersecurity as well as avoiding 
abuses of market power will increase. 

Developed  countries  have  led  the  way  in  many  of  these  new  technologies.  However, 
competition  will  increasingly  come  from  emerging  economies  rapidly  moving  up  the  value 
chain.  The  divide  between  more  technologically  advanced  regions  and  those  less  advanced 
risks  widening,  unless  governments  invest  in  education,  equip  their  citizens  with  the  right 
skills, encourage innovation, ensure fair competition and regulate smartly where needed. 

In 2025, 61% of the world's 8 billion-population will be in Asia, predominantly in China and 
India. Europe's relative share of the world population will decline, with the EU27 accounting 
for  5.5  %.  This  may  bring  about  a  multipolar  world  order  with  different  political, 
technological,  economic  and  military  powers.  But  it  also  means  large  new  markets  for 
European companies. 

6 https://reshoring.eurofound.europa.eu/ 
7 The OECD estimates on average, across countries, 9% of jobs are at high risk of being automated, while for an 
additional 25% of the workforce, half of the tasks will change significantly because of automation. 

12 

 
 
 
                                                            
Figure 7: Most population growth takes place outside Europe 

Source: United Nations (2015) 

Mobility  seems  certain  to  increase.  Less  than  4%  of  the  world  population  currently  lives 
outside  their  country  of  birth,  with  the  figure  even  lower  for  Europeans8.  By  2025  more 
people  will  be  on  the  move.  A  youth  population  surge  in  Africa,  instability  in  our 
neighbourhood  and  elsewhere  and  growing  pressure  from  climate  change,  will  continue  to 
push individuals and families to search for safer and better lives abroad unless investments are 
made in promoting peaceful and prosperous futures in the countries of origin. 

Technologies  have  made  people  more  aware  of  opportunities  around  the  world.  However, 
they  also  make  it  easier  for  people  to  work  remotely,  including  in  another  country  or 
continent.  Participation  in  the  global  workforce  will  depend  less  on  where  people  live  and 
more on the speed and quality of their internet connection. 

A  more  interconnected  world  will  bring  new  opportunities  as  well  as  increased  threats. 
Criminals  and  terrorists  will  continue  to  seek  to  exploit  increased  openness  and  use  new 
technologies  to  pursue  illicit  trades  or  spread  hatred.  On  the  other  hand,  more  and  more 
stakeholders  –  citizens,  civil  society  groups,  businesses  and  municipalities  –  are  able  to 
engage  their  peers  anywhere  around  the  globe  and  work  together  to  help  tackle  common 
problems. 

Networks of cities work together to learn from each other how to combat climate change or 
integrate newly arrived refugees; regions partner with private companies to develop forward-
thinking  development  plans;  citizens  mobilise  online  to  show  their  solidarity  with  global 
movements, such as the Women's marches which took place in cities around the world on 21 
January 2017. 

8 UNFPA 

13 

2015202520502100WorldNorthAmericaLatin America andthe CaribbeanAfricaEuropeOceaniaAsia0.3  0.4  0.4  0.50.6  0.7  0.8  0.71.21.52.54.44.44.75.24.80.7  0.7  0.7  0.647.311.29.78.10.040.060.070.04 
 
 
 
 
                                                            
2.2 … and the temptations of isolationism or inaction will have to be resisted 

Changes  associated  with  globalisation  can  lead  to  calls  for  countries  to  isolate  and  insulate 
themselves  from  what  is  happening  around  them.  This  is  particularly  acute  in  regions  that 
have been left behind. Some want to put up barriers and close borders. At the opposite end, 
others would let globalisation take its course in the belief that self-regulating markets would 
ultimately ensure the best outcomes. 

In the wake of the economic crisis and anti-globalisation backlash, we have already witnessed 
moves  towards  isolationism.  Multilateral  negotiations  to  bring  down  barriers  to  trade  have 
largely  stalled  in  the  last  decade  and  protectionism  is  making  a  comeback9.  Even  countries 
that have traditionally championed an open global economy are now looking into ways to put 
a brake on imports, limit immigration and favour domestic production. These developments 
have all contributed to the recent marked slowdown in the growth of global trade. 
However, a majority of European citizens recognise that10 protectionism does not protect. It 
may  provide  short-term  relief,  but  history  shows  that  it  never  had  lasting  success,  and  has 
often led to disastrous outcomes11. A cautionary example is the 1930s Great Depression which 
was exacerbated by tit-for-tat protectionism, and ultimately contributed to war. 

If we close our borders, others will do the same.  We would all be losers. This is especially 
true for Europe with its high integration into global value chains. Protectionism would disrupt 
production and increase costs and prices for consumers. European exports would become less 
competitive  putting  even  more  jobs  at  risk12.  An  increase  in  trade  restrictions  by  10%  is 
estimated to lead to a 4% loss of national income13. We would lose access to new products, 
services,  technologies  and  ideas.  By  hitting  the  poorest  hardest  with  price  increases, 
protectionism would have the opposite of its desired effect.14  

To  avoid  this  downward  spiral,  multilateral  institutions  and  rules  are  needed  to  enable 
countries  to  jointly  promote  common  solutions  in  a  globalised  world.  They  are  essential  to 
tackle issues which require collective action, such as the global economy, climate change or 
tax avoidance. Without them, the more powerful and less scrupulous countries and companies 
could  impose  their  rules  and  interests  on  weaker  ones.  This  would  run  counter  to  the  EU's 
founding values of cooperation, the rule of law, equal rights and solidarity upon which the EU 
is built.  

To  better  harness  globalisation,  we  need  more  global  governance  and  global  rules.  And  we 
need  to  support  that  with  domestic  policies  that  boost  our  competitiveness  and  resilience  at 
home.  Europe must now decide how. 

9 WTO, OECD, UNCTAD Report showed that since 2008 over 1,500 new trade restrictions were recorded in G20 
economies. Only a quarter of these had been rolled back by May 2016 
10 A majority of Europeans view globalisation as an opportunity for economic growth. An even larger group are 
confident about their economy. Source: Standard Eurobarometer 86, Autumn 2016 
11 Autarchic experiments of the Soviet Union, Albania until the 1990's, China until the 1970's, Argentina in 
between the 1970's and the 2000's or more recently Venezuela failed to deliver prosperity 
12 Arto, Iñaki, José M. Rueda-Cantuche, Antonio F. Amores, Erik Dietzenbacher, Nuno Sousa, Letizia Montinari 
and Anil Markandya,"EU Exports to the World: Effects on employment and income", European Commission, 
2015 
13 OECD (2003), “The Sources of Growth in OECD Countries”, Paris. 
14 According to a recent study of 27 European and 13 other large countries, the real income loss from closing 
off trade would be 63% for the poorest households and 28% for the richest ones because the poor spend a 
higher share of their income on consumption (source: "Measuring the unequal gains from trade", Pablo D. 
Fajgelbaum and Amit K. Khandelwal, Quarterly Journal of Economics, August 2016) 

14 

 
 
                                                            
3.  EUROPE'S  EXTERNAL  RESPONSE: 
INTERNATIONAL  COOPERATION  TO  SHAPE 
GLOBALISATION,  ECONOMIC  DIPLOMACY  AND  INSTRUMENTS  TO  ENSURE  A  LEVEL  PLAYING 
FIELD 

3.1. The EU is already a force for a fairer global order… 

Building a fair international rules-based order, based on high standards requires cooperation 
between many countries with different interests, cultures and levels of development. The aim 
is to reconcile the means of globalisation - opening markets and technological progress - with 
its ends – projection of rights and increased human well-being.  

After  two  devastating  world  wars,  Governments  created  the  United  Nations  (UN),  the 
International Monetary Fund (IMF), the World Bank or the General Agreement on Tariffs and 
Trade (GATT) which later became the World Trade Organisation (WTO). These institutions 
brought peace, stability, trust and prosperity to many. Interconnectedness increased and global 
trade shot up.  

After the financial crisis, G20 governments agreed on a coordinated programme to support the 
global  economy  and  more  robust  global  rules  to  regulate  financial  markets  and  fight  tax 
avoidance. The 2030 Agenda for Sustainable Development and its Sustainable Development 
Goals  (SDGs)  were  endorsed  by  all  members  of  the  UN  in  2015.  A  binding  international 
agreement was also reached in Paris to fight climate change, kick-starting a process that will 
improve  environmental  standards  across  the  world.  Leaders  at  the  UN  summit  in  2016  also 
committed to developing a global policy to manage large refugee and migrant flows. Earlier 
this year, a new WTO Agreement on Trade Facilitation entered into force. 

These examples are evidence of a new global effort to cooperate on harnessing globalisation. 
Europe  and  its  Member  States  played  a  key  role  in  these  achievements.  The  EU  is  itself  a 
model  of  successful  regulated  integration,  enabling  us  to  champion  multilateralism  and  a 
rules-based order.  

3.2. … but more should be done in the future 

However,  the  global  rulebook  remains  far  from  complete.  Some  areas,  especially  on  the 
digital economy, are barely regulated.  In others, rules do not provide for a level playing field 
or  sufficiently  address  harmful  and  unfair  behaviours,  such  as  tax  evasion,  corruption, 
resources extraction, illicit financial flows, harmful government subsidies or social dumping. 

We not only need to uphold the existing global rules-based order in the face of unprecedented 
challenges, but also to develop it further. Challenges ahead, particularly in a multipolar world, 
will require that we continue and strengthen economic policy coordination to ensure strong, 
sustainable, balanced and inclusive growth. Multilateral cooperation with our global partners 
remains our preferred approach. To that end, we should contribute to the strength and reform 
of multilateral institutions to make them fairer and more effective, so that they remain a part 
of the solution. Yet, in an increasingly contested global order, we should also be ready to push 
ahead through cooperation with smaller coalitions, while leaving the door open for others to 
join  when  ready.  Likewise,  non-state  actors,  such  as  international  organisations  or  NGOs 
should be appropriately involved. 

The  EU  could  continue  taking  the  lead,  projecting  its  values  and  interests  and  promoting  a 
'race-to-the-top'.  The  2030  Agenda  for  Sustainable  Development  provides  a  common 
reference point to prioritise future efforts to benefit prosperity, the planet and people around 
the world, especially in developing countries.  

In  June  2017,  the  EU  will  adopt  a  new  European  Consensus  on  Development,  which  will 
align  its  development  policy  to  the  2030  Agenda.  In  order  to  effectively  address  the 

15 

 
 
challenges of a globalised world, the EU's development efforts need to go beyond aid. They 
need  to  bring  together  investment  and  trade,  private  sector  contributions,  domestic  resource 
mobilisation, the promotion of good governance, the rule of law and human rights, including a 
particular  focus  on  youth,  gender  equality  and  the  empowerment  of  women.    The  EU’s 
proposed  External  Investment  Plan  is  set  to  create  win-win  situations  by  fostering 
sustainable  growth  and  jobs  in  developing  countries.  This  will  help  to  alleviate  migratory 
pressures and create investment opportunities for European companies. 

More  integrated  and  pro-active  European  economic  diplomacy  would  also  deliver  better 
outcomes  for  our  citizens.  The  EU  and  Member  States  should  improve  the  coherence  of 
external policies and tools to foster growth and jobs in Europe and become more efficient in 
pursuing  our  economic  interests  abroad.  Depending  on  the  country  concerned,  EU  interests 
could include ensuring macroeconomic stability, supporting key economic and social reforms, 
or addressing market access barriers.  

Economic  Diplomacy  requires  more  coordination  between  the  EU,  Member  States  and 
financial institutions, such as the European Investment Bank. Using the wide network of EU 
Delegations in the world should also help European businesses, especially SMEs, succeed on 
global  markets.  This  could  be  done  through  support  to  better  seize  opportunities  created  by 
trade and investment agreements, to overcome persistent market access barriers, or to promote 
strategic  pan-European  commercial  projects.  It  could  also  include  engaging  in  setting 
international  standards  for  new 
technologies,  or  strengthening  European  business 
organisations abroad. 

The  EU  should  continue  to  develop  a  balanced,  rules-based  and  progressive  trade  and 
investment  agenda15  that  not  only  opens  markets  in  a  reciprocal  way  but  also  enhances 
global governance on issues like human rights, working conditions, food safety, public health, 
environmental  protection  and  animal  welfare.  These  agreements  must  uphold  the  EU  and 
Member States' ability to achieve legitimate public policy objectives and maintain the existing 
EU  high  standards  in  those  fields16  in  order  to  both  protect  our  citizens  and  safeguard  EU 
industry  from  unfair  competition.  They  should  also  contribute  to  the  achievement  of  the 
Sustainable Development Goals. 

International economic and financial rules should remain an area of focus. In particular we 
should  support  more  effective  mechanisms  at  the  global  level  to  monitor  and  adjust 
macroeconomic  policies,  step  up  the  fight  against  tax  avoidance,  ensure  the  stability  of  the 
financial  sector,  eliminate  overcapacity  and  related  government  subsidies,  facilitate  e-
commerce while protecting privacy, and promote convergence of technical standards so that 
they no longer act as unnecessary barriers. 

Furthermore,  we  should  take  forward  efforts  to  improve  social  and  labour  standards  and 
practices,  in  close  cooperation  with  the  International  Labour  Organisation,  but  also  civil 
society,  social  partners  and  the  private  sector.  In  this  context,  collective bargaining  systems 
should be promoted at global scale. 

Globalisation  needs  to  become  efficient.  Trade  helps  countries  to  become  more  productive 
through specialization, but true efficiency also implies that external costs are minimised, and 

15Communication COM(2015)497 of 14 October 2015 "Trade for All: Towards a more responsible trade and 
investment policy" 
16 See Joint Interpretative Instrument on the Comprehensive Economic and Trade Agreement between Canada 
and the EU and its Member States - http://data.consilium.europa.eu/doc/document/ST-13541-2016-
INIT/en/pdf 

16 

 
 
                                                            
economic  growth  decoupled  from  resource  use.  Pollution  as  a  result  of  transport  and 
packaging,  traffic  congestion,  and  the  depleting  of  precious  natural  resources  are  key 
examples of these externalities. 

The Paris Agreement on climate change serves both to fight climate change, boost the clean 
energy transition and provides new business opportunities for EU businesses, notably in clean 
energy technologies. It gives a competitive advantage to those industries that already reduced 
their carbon footprint. The  priority now is  to  finalise the rulebook for its implementation to 
ensure that all countries contribute to CO2 emissions reductions. 

Cultural diplomacy is an integral part of our common foreign and economic policy. European 
culture is major source of jobs and growth while, cultural exchanges and people-to-people 
can shape globalisation and promote our values and identity. 

As the world's largest single market, its largest trader and investor, and the largest provider of 
development assistance, Europe can shape the global rulebook. But to maintain this influence 
in  the face of demographic, economic and political shifts, we will increasingly  have to  pull 
together and speak with a single voice. By 2050, no single European country will be among 
the top 8 economies by size17.  

Timely,  transparent  and  inclusive  decision-making  procedures  are  needed  for  collective, 
international  action  to  be  effective.  The  EU  must  be  able  not  only  to  negotiate  broad 
agreements to tackle a wide range of global issues but also to ensure these agreements can be 
ratified and implemented. The question remains whether the EU's institutional set-up is fully 
adapted to this challenge. This will need to be addressed following the forthcoming opinion of 
the European Court of Justice on competence in trade agreements18. 

3.3. …and the EU should act to restore a level playing field  

While  standing  for  openness  and  cooperation,  the  EU  cannot  be  naive  in  its  approach  to 
globalisation.  There  are  situations  where  rules  exist  but  are  not  respected.  Closing  the 
loopholes  in  global  rules  and  raising  standards  may  take  time.  In  the  interim,  the  EU  must 
have the instruments at its disposal to restore a level playing field and act decisively against 
countries or companies that engage in unfair practices. 

This starts with better enforcement of existing agreements and rules in such areas as trade, 
labour  standards,  climate  and  environment  protection.  The  World  Trade  Organisation  has  a 
binding  dispute  resolution  system  which  the  EU  should  continue  to  use  when  required. 
Likewise,  we  should  ensure  commitments  by  partners  in  our  bilateral  trade  and  investment 
agreements are respected. Strong enforcement of our own EU rules will also ensure that all 
companies present or active in the EU which break the rules are effectively sanctioned. This 
should be done in cooperation with Member State authorities. Further investments could also 
be made in EU customs risk management in order to facilitate and accelerate legitimate EU 
trade, while ensuring the safety and security of citizens by stopping fake or dangerous goods 
permeating EU borders. 

The EU will also continue its efforts to establish fair rules for the protection of international 
investments while allowing governments to pursue their legitimate policy objectives. Disputes 
should  no  longer  be  decided  by  arbitrators  under  the  so-called  Investor  to  State  Dispute 
Settlement  (ISDS).  This  is  why  the  Commission  has  proposed  a  Multilateral  Investment 

17 The world in 2050, PWC, February 2017 
18 European Court of Justice, Opinion Procedure 2/15 

17 

 
 
                                                            
Court19 which would create a fair and transparent mechanism and is being discussed with our 
partners. 

We also need effective trade defence instruments: these should be overhauled to make them 
faster,  more  resilient  and  more  effective  in  tackling  dumping  and  unfair  subsidisation20. 
Similarly, the EU is the world's most open market for public procurement, but access for our 
companies  in  other  countries  is  not  always  reciprocal.  The  proposal  for  an  International 
Procurement Instrument21 would address this. Swift action is necessary on these fronts. 

Openness  to  foreign  investment  remains  a  key  principle  for  the  EU  and  a  major  source  of 
growth. However, concerns have recently been voiced about foreign investors, notably state-
owned  enterprises,  taking  over  European  companies  with  key  technologies  for  strategic 
reasons. EU investors often do not enjoy the same rights to invest in the country from which 
the investment originates. These concerns need careful analysis and appropriate action. 

European  companies  are  key  partners  in  shaping  globalisation  and  delivering  positive 
outcomes for all. There are many positive example of how to deliver sustainable growth for 
shareholders,  employees  and  the  communities  in  which  they  operate.  However,  when 
companies do not take their social or environmental responsibilities seriously they should be 
held to account. 

The EU should continue to take action for global tax justice and transparency. By the end 
of 2017, the EU will have a common list of non-cooperative jurisdictions. This will provide 
stronger  instruments  to  tackle  external  tax  avoidance  and  to  deal  with  third  countries  that 
refuse  to  play  fair.  The  Commission  will  also  continue  negotiating  international  rules  that 
prevent  companies  established  in  third  countries  from  avoiding  direct  and  indirect  tax 
obligations, thereby safeguarding Member States' tax bases. 

19 

See European Commission public consultation on a multilateral reform of investment dispute resolution 

launched in December 2016.
20 See Commission Communication "Towards a robust trade policy for the EU in the interest of jobs and 
growth", October 2016, and Commission proposals COM(2013)191 and COM(2016)721 for Regulations 
amending Regulation (EU) 2016/1036 on protection against dumped imports from countries not members of 
the European Union and Regulation (EU) 2016/1037 on protection against subsidised imports from countries 
not members of the European Union 
21 See Commission proposal COM(2016)34 of 29 January 2016 

18 

 
 
 
 
                                                            
 
4.  EUROPE'S  INTERNAL  RESPONSE:  BUILDING  RESILIENCE  THROUGH  BETTER  SHARING  OF 
BENEFITS AND PROMOTING OF LONG-TERM COMPETITIVENESS 

4.1. Robust social and education policies are key to ensure resilience and a fair 
distribution of wealth… 

Citizens must have confidence that their governments will protect and empower them through 
robust  social  policies  that  are  an  essential  part  of  our  response  to  globalisation.  The 
Commission  released  on  27  April  a  reflection  paper  on  the  social  dimension  of  Europe22. 
Even  if  Europe  already  has  the  most  equal  and  inclusive  societies  in  the  world,  we  need  to 
continuously strengthen and adapt our policies for the future and address inequalities through 
fair and modern tax policies. A better distribution of the benefits of globalisation coupled with 
effective  social  protection  will  help  people  find  a  decent  job  and  adapt  to  change.  More 
broadly, a fair and equitable redistribution of wealth, as well as focused investments fostering 
social  inclusion  of  more  vulnerable  categories  of  people  including  migrants,  will  help  to 
strengthen social cohesion. These are exactly the issues the Commission proposes to address 
with the European Pillar of social Rights23. It proposes a compass for improving employment 
and  social  policies  in  the  EU  and  its  Member  States,  to  make  it  fit  for  purpose  for 
digitalisation and globalisation. 

The  key  to  empowerment  is  lifelong  learning.  Equal  access  to  high  quality  education  and 
training is a powerful way of redistributing wealth in a society. This should start with a high 
standard of basic education and access at all ages to training and skills development. We also 
need  to  find  new  ways  of  learning  for  a  society  that  is  becoming  increasingly  mobile  and 
digital  and  provide  the right  blend of  'soft'  skills  notably  entrepreneurship  as  well  as  robust 
digital skills. Already 90 % of all jobs require at least some level of digital skills24. Europe is 
improving its digital skills, but more progress is needed25. Coupled with help for job-seekers, 
this will help citizens adapt to an ever-changing workplace and more flexible career paths.  

Modern and effective labour market should facilitate access for all to the job market. Policies 
should  also  provide  adequate  employment  security,  income  replacement,  and  appropriate 
safety  nets  for  those  people  going  through  a  difficult  transition.  Access  to  quality  services 
should ensure equal opportunities and social inclusion. These  can  range from health  care to 
child  care  to  raise  the participation  of  women  in  the  labour  market,  teleworking,  promoting 
work-life balance and to enhancing job opportunities for people with reduced mobility.  

The way Member States address these social issues is very diverse. Approaches developed in 
one country, region  or  town  may not  necessarily work elsewhere. Currently, the EU and  its 
Member States should continue to closely coordinate their social policies, while the EU could 
also support national and local efforts on education. Best practices are shared and there is an 
important role for social partners.  

Germany's  dual  vocational  training  ensures  that  students  learn  the  skills  that  are  really 
needed by companies, and promotes cooperation between schools, companies and students. 

22 Reflection Paper on the Social Dimension of Europe, European Commission, COM(2017)206, 26 April 2017. 
23Communication from the Commission on establishing a European Pillar of Social Rights, COM(2017)250, 26 
April 2017. Commission recommendation on the European Pillar of Social Rights, C(2017)2600, 26 April 2017. 
24 European Digital Progress Report (EDPR) 2017, SWD (2017) 160. 
25 70 % or more of the population have basic or advanced digital skills in Finland, Luxembourg and the United 
Kingdom, compared to less than 40 % in Italy, Cyprus, Greece, Bulgaria and Romania, European Digital Progress 
Report 2017. 

19 

 
 
                                                            
The  Scandinavian  flexicurity  welfare  state  model  strikes  a  balance  between  flexible  job 
markets and secure transitions between jobs, so that more and better jobs can be created. 
Estonia's  e-school  system26  is  preparing  a  future  generation  that  will  be  more  capable  and 
tech-savvy than ever. The use of digital technology has enabled Estonia to come top in the EU 
member  states  '  ranking  in  the  OECD's  Programme  for  International  Student  Assessment 
(PISA).   

At EU level, implementation of the Pillar in the European Semester process will lead to better 
uptake  of  distributional  impacts  of  structural  policies  to  make  growth  more  inclusive. 
Appropriate fiscal and structural policies by Member States also play a key role. EU structural 
and investment funds can also help promote essential investments to improve infrastructure, 
innovation, or support the development of human capital and employment. It is essential for 
the  EU  to  remain  a  Union  of  modern  and  active  welfare  states.  Solidarity  is  not  only  a 
fundamental value of the EU, but also essential for social cohesion in an open economy. 

The European Structural and Investment  Funds (ESF, ERDF and EAFRD) invest EUR 
34.5 billion (EUR 49.2 billion including national contributions) in education and training. 
The  Globalisation  Adjustment  Fund  helps  displaced  workers  find  another  job  or  start 
their  own  business  through  co-financing  of  activities  such  as  search  assistance,  careers 
advice, retraining, mentoring and coaching, entrepreneurship, and income support. Since its 
creation  in  2007,  the  EGF  has  assisted  140,000  laid-off  workers.  It  is  a  tangible 
demonstration  of  EU  solidarity  when  addressing  employment  and  social  consequences  of 
globalisation.  Consideration  should  be  given  to  make  the  instrument  more  operational  in 
order to ensure a fast deployment in case of factory closure, and more flexible in order to 
enable it to support a broader range of economic development actions than the current focus 
on the affected workers. In doing so, it will be important to bridge the gap between short-
term measures and longer term conversion strategies supported by cohesion policy. 

4.2 … while major efforts are needed to make Europe a competitive and innovative 
economy… 

Redistributive  policies  that  ensure  benefits  for  all  require  significant  investments  by 
governments,  which  in  turn  can  only  be  financed  by  a  thriving  and  competitive  economy. 
Policies  need  to  help  businesses  continuously  innovate.  Only  by  creating  products  and 
services that meet consumers' evolving demands can they thrive on global markets and create 
prosperity and jobs.  

This requires a vision for the future to modernise our economy by embracing digitalisation, 
technological  and  social  innovation,  decarbonisation  and  the  circular  economy.  Even  if  our 
economy becomes increasingly services-based, industry remains an important pillar. It is also 
an important source of jobs, filling the middle segment of the labour market, and helping to 
prevent  social  polarisation.  We  therefore  need  to  modernise  the  economy  taking  concrete 

26  According  to  the  Programme  for  International  Student  Assessment  (PISA),  a  premier  global  metric  for 
education, compiled by the OECD, the results of Estonian 15-year-olds are the best in Europe and among the 
strongest in the entire world (source: PISA 2015) 

20 

 
 
 
                                                            
 
actions at EU, Member State, regional and local level (see figure 8). It is not about keeping 
declining industries on artificial life support; instead we should invest more in the industries 
and workers of the future, focusing on new manufacturing technologies and related industrial 
(data)  services.  European  Digital  Single  Market27  and  innovation  strategies  should  help 
European companies become global players and pick up quickly on new technological trends. 

The essential elements are: 

  Innovation:  EU  Member  States  and  their  regions  must  move  up  the  value  chain  and 
exploit  their  comparative  advantages.  Start-ups  and  innovators  in  EU  regions  should  be 
brought into collaborations with leading players so that they can enter global value chains. 
The  productivity  benefits  of  innovative  technologies  should  be  spread  to  broader 
categories  of  the  economy.  Technological  leaders  are  five  times  more  productive  than 
other companies, while less than 20% of manufacturing SMEs use advanced technologies 
so more needs to be done to accelerate their diffusion 

AREUS is a project co-financed by the EU (Horizon 2020) focused on reducing energy losses 
and optimising resource use in robotised manufacturing. Its main outcome is a smart-grid that 
saves both energy and materials. Overall, it can save 5-9% of a factory’s energy consumption 
and potentially up to 20%. Italy, Latvia, Sweden, Denmark, Germany and Finland participate 
in this programme. 

Under  the  Vanguard  Initiative,  30  European  regions  collaborate  in  innovation  investment, 
for  example  developing  projects,  in  collaboration  with  industry,  which  use  3D-Printing 
technologies to create metal inserts which are much lighter and flexible. 

In Belgium, a tax exemption for highly qualified R&D personnel is available, leading to an 
effective reduction of employment costs for researchers. 

A  Portuguese  SME  has  developed  an  app  that  allows  shoppers  to  scan  products  to  avoid 
check-out  queues  and  combine  shopping  lists  with  shop  layouts.  Funded  by  Horizon  2020 
with  EUR  1.2  million,  they  have  expanded  internationally  with  offices  in  Porto,  Berlin  and 
San Francisco. 

Barcelona, Amsterdam, Copenhagen, Paris, Berlin, Lisbon and several other European cities 
have developed urban innovation policies to provide low-cost offices, support to incubators, 
free advice to entrepreneurs, or programmes to support entrepreneurs' communities.  

  Investment: Ensuring access for innovative companies to finance, providing investment-
friendly  regulatory  frameworks,  and  developing  critical  infrastructure,  including  digital, 
energy and transport. Private sector institutions can work together with the European Fund 
for Strategic Investment, and Capital Markets Union can help increase sources of funding 
to innovative entrepreneurs and companies. 

The  Investment  Plan  for  Europe  is  delivering  concrete  results.  As  of  early  April  2017,  it 
supported  total  investment  of  EUR  183.5  billion.  These  transactions  cover  all  28  Member 
States and are expected to benefit over 388 000 SMEs and mid-caps. 

With  a  budget  of  EUR  42  billion,  France's  Banque  Publique  d'Investissement  (BPI) 
supports the emergence of innovative start-ups by providing seed-capital to entrepreneurs and 
has contributed to many digital success stories. 

27 See the Digital Single Market Strategy for Europe, COM(2015)192 

21 

 
 
                                                            
  Sectoral policies28: A key priority is to further strengthen the European transition towards 
a digital, decarbonised and more circular European economy, to fully integrate the SDGs 
in European policy and dramatically deepen the Digital Single Market so as to lay down 
common EU rules and standards, to encourage investment in technologies of the future.  
The  Communication  on  the  European  agenda  for  the  collaborative  economy29  provides 
clear  EU  rules  and  policy  recommendations  to  help  citizens,  businesses  and  EU  countries 
fully  benefit  from  the  new  business  models  and  promote  the  balanced  development  of  e.g. 
crowd-sourced transport platforms or crowdsourced house rental platforms. 

Thanks  to  its  policy  to  limit  motorised  traffic  and  give  priority  to  pedestrians,  cyclists  and 
public transport, the city of Ljubljana was named 2016's European Green Capital. The city's 
economic growth  of 8%  in  2016 broke all previous  annual records, helped by the enhanced 
investment  opportunities  and  productivity  conditions  which  emerged  from  the  sustainable 
infrastructure development which attracted and facilitated tourism. 

  Regulation  and  taxation:  New  business  models  should  support  entrepreneurship  while 
ensuring a level playing field. All levels of policy-making must ensure that the regulatory 
environment  is  simple  and  supportive  to  entrepreneurs,  especially  SMEs.  This  does  not 
mean deregulation or a race to the bottom, but smart regulation. In parallel, governments 
must  ensure  that  tax  policy  remains  relevant  in  light  of  digitalisation  and  new  business 
models, and that companies pay their taxes where profits are actually made. 

Under  the  Commission’s  Better  Regulation  agenda,  the  Commission  is  making  business 
operations  easier  and  less  costly  by  simplifying  laws  and  regulations  at  EU  level.  A  single 
European  law  for  data  protection  adopted  in  April  2016,  will  replace  28  national  laws  and 
lead to estimated savings of up to EUR 2.3 billion per year.  The new EU law means direct 
benefits  for  citizens  through  better  data  protection  and  for  businesses  that  will  see  their 
administrative  burdens  reduced  and  will  be  able  to  operate  with  one  single  legislative 
framework throughout the Union.  

Thanks  to  its  simple  and  smart  regulatory  environment,  Denmark  has  consistently  been 
ranked  among  the  top  three30  countries  in  the  world  for  the  ease  of  doing  business.  The 
possibility to conduct almost all procedures online makes the country one of the frontrunners 
for efficient business administration. 

Getting all these policies right in the EU internal market, which is the largest in the world, 
will  provide  a  springboard  for  European  companies  to  expand  their  business  globally. 
Reinforcing the Single Market involves both taking policy and enforcement actions at EU and 
country level and refraining from putting up new barriers, such as in the retail sector. In order 
to  ensure  a  favourable  business  environment  and  strengthen  Member  States'  economies,  the 
European  Semester  should  continue  as  a  mechanism  for  policy  coordination  in  the  EU. 
Member  States  should  deploy  policies  that  enhance  productivity,  foster  inclusiveness,  and 
direct more of their resources towards investment in innovation, education and the long-term 
drivers of competitiveness. 

4.3. … in close partnership with more empowered regions 

While  the  benefits  of  globalisation  are  widely  spread,  the  costs  are  often  localised. 
Fundamental economic transformation happens at the local level, where industry and people 

28 E.g. in the field of energy intensive industries, food supply chain, space industry, or car industry. 
29 COM(2016)356 
30 World Bank, Doing business 2017 

22 

 
 
                                                            
interact.  We  therefore  need  to  target  regional  and  local  investment  needs,  skills  gaps  and 
regulatory obstacles to ensure that all regions can benefit from the internal market and better 
prepare  themselves  for  the  challenges  of  globalisation.  The  European  Structural  and 
Investment  Funds,  together  with  the  national  contributions,  provide  EUR  67.6  billion  to 
support  regions  with  smart  specialisation  strategies  that  build  on  their  strengths,  help  them 
move  up  value  chains,  and  stimulate  private  sector  and  target  investments  on  key  priorities 
and  challenges,  while  preventing  brain  drain  and  rural  flight.  In  many  cases,  this  transition 
does  not  need  to  mean  disruptive  and  high  tech  transformation  but  rather  more  incremental 
innovation ensuring a future also for more traditional industries. 

Innovation  clusters  linking  up  companies,  universities,  start-ups,  investors  and  local 
governments must be further developed and linked up across Europe. Many European regions 
are well positioned to take advantage of the opportunities offered by globalisation. But others 
face a higher risk of heavy job losses as a result of international competition and technological 
change. Vulnerable regions can be found across Europe though most are located in Southern 
or Central and Eastern Europe and are the focus of EU policies to boost competitiveness and 
strengthen resilience. 

After the bankruptcy of a large Swedish car manufacturer in December 2011, more than 3 000 
people  lost  their  jobs  in  the  town  of  Trollhättan  in  southern  Sweden.  The  European 
Globalisation Adjustment Fund stepped in to provide EUR 5.4 million to help 1,350 workers 
made redundant by the company and 16 of its suppliers. Since then, the town has fought back 
and reduced the unemployment by a quarter despite the layoffs. Unemployment today is even 
lower  than  it  was  before,  dropping  from  16  to  12  %.  The  success  is  a  credit  to  a  strong 
entrepreneurial  spirit  within  sectors  like  building,  transport  and  aerospace.  Many  new 
companies  have  started  and  they  employ  around  1  000  people.  Those  who  were  laid  off  by 
Saab  were  offered  the  possibility  to  study  without  losing  their  unemployment  benefits,  so 
many took the chance to train for a new career. 

Special attention should also be paid to strengthening the resilience of rural communities who 
are at risk of being left behind by globalisation or demographic change. A modern Common 
Agricultural  Policy  plays  a  key  role  in  encouraging  competitiveness  in  the  agri-food  sector 
and successful integration in international markets by promoting high standards. 

Making  the  European  economy  more  competitive,  sustainable,  resilient  to  globalisation  and 
ensuring that it generates the necessary resources to ensure a fairer distribution of its benefits, 
is a shared responsibility of all levels of government. 

23 

 
 
 
 
Figure 8: Harnessing globalisation – a shared task 

Source: European Commission 

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Trade agreements to open markets and enforce level-playing fieldMeasures to ensure global tax justice and transparency  Promotion of higher global regulatory standards Trade Defence MechanismEuropean Budget (such as EFSI, ESIF, GAF, Horizon)European External Investment Plan Development AssistanceProduct and Food Safety Provision of education and trainingActive labour market policies and instruments to assist workersSocial fairness through taxationDevelopment Assistance National Investment PlansInfrastructure spendingResearchand developmentModern infrastructure provision Cluster policies and smart specialisation Land and sea logistics networks Effective use of regional funds (EFSI for example)Provision of education and trainingSmart city solutions Integration of migrants Innovation hubs and entrepreneurship incubators Local LevelRegional LevelMember State LevelEuropean Union Level 
 
 
 
 
5. CONCLUSION 

Enhanced  global  economic  cooperation  and  technological  progress  create  opportunities  and 
challenges,  hopes  and  fears.  While  facts  show  that  the  European  economy,  businesses  and 
citizens continue to benefit immensely from globalisation, these benefits are not automatic nor 
are they evenly distributed among European regions and our citizens. 

The  fears  are  just  as  real  and  in  some  cases  well-founded.  Globalisation  and  the  associated 
technological change will transform our lives at unprecedented speed. This process will not be 
smooth but is not going to be stopped or reversed. The question now is whether Europe can 
find a common understanding on the way forward to effectively manage this transformation.  

Some want to pull up the drawbridge even at their own national frontiers. They even question 
whether the Single Market allows for too much free movement of goods, services, capital and 
labour inside the EU. But sending European integration into reverse is a dead end. 

The  EU27  remains  the  world's  largest  trader, investor  and development  assistance provider.  
We are deeply integrated into global value chains and will continue to carry weight even as 
other  powers  emerge.  Rather  than  sitting  back  and  letting  globalisation  shape  our  destinies, 
we have the opportunity to shape globalisation in line with our own values and interests.  

The  evidence  presented  here  shows  clearly  that  globalisation  can  be  beneficial  where  it  is 
properly  harnessed.    Outside  the  EU,  an  effective  European  economic  diplomacy  will  help 
write  the  global  rulebook  and  ensure  European  companies  can  prosper  in  fast-growing 
international markets. Their continuing success will deliver more and better jobs back home 
for  our  citizens.  Equally  we  should  not  shy  away  from  taking  measures  to  restore  a  level-
playing field where this is threatened. 

Inside  the  EU,  common  rules  regulate  the  world's  largest  single  markets  and  ensure  high 
standards.  Firms  that  operate  in  innovative  and  adaptive  domestic  ecosystems,  such  as  the 
German Mittelstand can also prosper in global markets.  High quality education and training, 
such as in Finland or Estonia, give citizens the skills and resilience they need to effectively 
adapt.    Active  labour  market  policies  and  effective  redistribution  policies  ensure  social 
cohesion and help tackle social exclusion – as they do in Denmark, Sweden and elsewhere.  

Harnessing  globalisation  therefore  starts  at  home.  Europe  must  act  to  share  more  fairly  the 
benefits  of  globalisation  in  line  with  our  principles  of  solidarity  and  sustainability.  The  EU 
should  also  be  an  innovative  and  competitive  economy  with  world-leading  companies  and 
citizens  who  can  adapt  to  change  and  are  able  to  generate  the  wealth  needed  to  uphold  our 
social model.  

The  EU  institutions  cannot  do  this  alone:  this  must  be  a  joint  endeavour  of  the  EU  and  its 
Member  States.  National  governments  are  for  the  most  part  are  in  charge  of  the  key  policy 
tools. Regions, cities and rural areas will all have to adapt. The EU can and will support with 
its own instruments.  

Our  citizens  expect  clear  answers  on  how  we  can  work  together.  That  is  why  the  future  of 
Europe debate, launched by the White Paper, is so important.  A Europe that knows where it 
wants to go can also help the world get to a better place for the benefit of all. 

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