Trade, competitiveness and the China factor

This chapter focuses on the relations between trade and competitiveness in the EU. Trade offers an essential way to harness the comparative advantages of domestic economies in the international market. Maintaining an open and liberalized trade regime is vital to promoting the competitiveness of the EU economy. However, trade may also bring foreign competitors, threatening the healthy growth, and sometimes the very survival, of European business. Facing such a dilemma, neither complete openness nor excessive competition is conducive to the competitiveness of the EU economy. Linking trade and competitiveness together requires policy-makers to walk a fine line between promoting competition and providing protection. Focusing on the concerns over EU competitiveness, this chapter examines the three major challenges facing the Common Commercial Policy since the mid-2000s: the growing internal diversities within the EU economy, the rapid surge of Chinese imports, and the changing mode of global production. The analysis shows that, as the world economy integrated, it has become more difficult to define the exact meanings of EU competitiveness. Different understandings of competitiveness will continue to be a major source of contestation in the EU’s trade relationship with the rest of the world.