This policy brief examines the latest developments in the EU-Mercosur economic relationship and outlines the existing non-economic relationship in order to contextualise the EU-Mercosur Association Agreement and its potential for strengthening common bonds between both regions.
A new consensus is growing across the European Union - and other parts of the world too: that globalization has gone too far. The argument goes as follows: as an exchange for higher efficiency and lower prices, Europe has sacrificed its ability to take care of itself and protect its own citizens. The Covid-19 crisis has revealed how much Europe depends on the rest of the world for products like medical goods and medicines. Therefore, if Europe does not want to live through another shortage of essential supplies, the lesson of the Covid-19 crisis is that the EU has to produce these products itself. This conclusion may sound intuitive but it is fundamentally wrong. Europe is not overly dependent on the rest of the world because most trade in the EU is done within its own borders. New evidence presented in this paper shows that there were only 112 products, making just 1.2% of the value of EU total imports, for which the four largest suppliers were non-EU countries as compared to more than two thousand products for which the four largest suppliers were from EU member states. And while not every product is equally important in the face of a global pandemic, there is not a single Covid-19 related good for which all EU imports only came from non-EU countries. This paper debunks the idea that the EU is too reliant on other countries. Instead, our analysis shows that imports from the rest of the world make every EU member state more resilient by diversifying its sources of supply.
We are at the moment, the first in seventy-five years, where there is no international consensus in support of trade. Indeed, trade is unloved, unsupported, and even unwanted. There is no shortage of topics in the rhetoric of trade complaints: from the rapid rise of China to Coronavirus as a metaphor for the evils of greater connectivity. Regardless of the validity of these complaints, none of them negate the central truth of trade: countries that engage in trade move ahead, and those that do not, stagnate. Our political leaders disagree. Anti-trade positions are held by leaders across the political spectrum, from Donald Trump to Bernie Sanders. And yet, the public is increasingly warm to the idea of trade. When Gallup asks Americans, "Do you see foreign trade more as an opportunity for economic growth through increased U.S. exports or a threat to the economy from foreign imports?" a record high of 79% see trade as an opportunity, with 18% viewing it as a threat. How did the world arrive at this moment where the benefits of trade are clearly evidenced while trade has become politically toxic? We identify four main factors: (i) U.S. absenteeism from the leadership role; (ii) detachment between trade and security architecture; (iii) no alternative leadership in Europe or elsewhere; and (iv) the cumbersome WTO process. Against this background we put forward five initiatives that will be big enough to count but unobjectionable enough to be adopted.
After the failed merger of Alstom and Siemens - the two giants of Europe's railway manufacturing sector - the French and the German governments presented a manifesto with a set of radical proposals designed to reshape EU industrial and competition policy. In an article addressed to all European citizens, the President of France, Emmanuel Macron, urged for reform of EU competition policy, to protect Europe from foreign competition[1]. MEP Guy Verhofstadt, the leader of the European liberals, supports similar claims that Europeans cannot compete with Chinese or American firms[2]. One of the Franco-German suggestions would empower the European Council to veto European Commission decisions on competition policy. French and German Ministers argue that Europe's competitiveness in manufacturing is in decline. Somehow weakening EU competition policy, the manifesto claims, will strengthen Europe's competitiveness. This argument is wrong. To be competitive, European firms need more not less competition. Measures to promote market competition in Europe should be at the front and centre of any future industrial policy. Unfortunately, the evidence shows that market competition in Europe is not rising but declining.
This paper concerns China's market for medical technologies and how the Chinese state is assisting its own companies to gain greater sales at the expense of producers from Europe and other advanced manufacturing economies. The medical technology sector captures a variety of products, services and solutions which are essential to the provision of healthcare to citizens. Examples range from fairly simple technologies such as sticking platers, to complex ones, such as coronary stents, orthopaedics and pacemakers. In the last decades, Europe's exports of medical devices to China have grown robustly. On the back of vibrant innovation, firms from Europe and elsewhere have not just followed the growth of Chinese demand for medical devices - they have also increased their share of Chinese imports. Now, however, this market is at risk of being gradually closed off for European firms as China doubles down on various policies that advantage local firms, while ultimately harming innovation and Chinese patients.
This study brings together two major sources of growth in the modern economy: trade and new ideas. Trade is a crucial process to improve economic specialisation and raise the productivity of economies. It is also a channel to diffuse technology and knowledge across countries. International exchange is therefore helping countries to modernise their economies. New ideas are all the innovations, technologies, know-how and business models that gradually power the economy - the intangible assets that define a significant part of modern economic growth. They are the basis for a society's stock of intellectual property, and that stock increases every time there are investments in research and development, production methodologies, brands, novel product design, business know-how and new artistic creations. Most societies allow for protection of intellectual property because intellectual property is necessary for prosperity. Our mission for this multi-year study was to get a much better and granular understanding of what role that intellectual property rights (IPRs) play for trade, productivity and growth, and how trade policies for IPRs have developed over time. Even by our cautious estimates, the results are very clear: copyrights, geographical indications, patents, trademarks and other intellectual property rights support trade and value added in Europe, and stronger IPR provisions in Free Trade Agreements (FTAs) increase the payoff even more.