Oliver Wieck is the Regional Director of the International Economic Policy Department at the Bundesverband der Deutschen Industrie e.V. in Berlin. The opinions in this essay are those of the author, Oliver Wieck, and not of the Bundesverband der Deutschen Industrie.

1. Introduction

From the economic perspective of trade relations the EU appears to be in a good position. In recent years the region has expanded geographically and is still the world’s largest economy and exporter as well as the most important donor and recipient of foreign direct investment. During the last decade the EU was able to maintain its share of world trade at around 17.5%, whereas the USA registered a drop from 21% to 14%.

However, it is also true that during the same period the Chinese share increased from some 4% to an impressive 12%. And this will probably continue in the future, the growth impetus in Asia (9.4% in 2010) and Latin America (5.7%) being distinctly stronger than in the EU (1.8%) or the USA (+2.6%).

These countries have an enormous need to catch up in terms of infrastructure, energy supplies and consumption, and will continue to grow. Demographic developments also favour — in addition to all related challenges — the rapidly growing countries.  They are drivers for growth, innovation and competition, whereas Europe’s population is increasingly aging. The lack of skilled workers and experts is growing and the social systems are getting out of hand. Both the will and the willingness to implement reforms are low. The current debt crisis in Europe is an additional brake on growth, the return to a path of sustainable economic growth will be long and difficult. The EU’s current strategy assumes that by 2015 90% of global growth will be generated outside Europe, a third of it by China alone. In 2020 the developing and emerging economies will account for 46% of world GDP (currently 35%) and by 2030 for around 60%. The share could grow even more rapidly if the EU does not succeed in mastering its debts and stabilising the euro.

What impact will the suggested shifting of the worldwide balance have on EU multilateral and/or bilateral trade policies?

2. Multilateral: avert damage to the institution WTO

At the beginning of the millennium the EU still underlined giving priority to the multilateral path of trade liberalisation and focused almost exclusively on concluding the Doha Development Agenda (DDA) of the WTO. However, after ten years of talks it no longer seems likely that it will be possible to successfully conclude the DDA within the foreseeable future. Not even a schedule for the coming months was agreed upon at the 8th WTO Ministerial Conference (MC8) held in mid-December of 2011.

The differences seem irreconcilable: the EU and USA demand greater concessions from the major emerging economies, in line with their new strength in the global economy.  Vice versa, in view of their economic growth and their increasing significance in world trade, the emerging economies do not find it necessary to make additional offers as regards market access. Their argument that the Doha Round is a “development round” may be formally correct but does not take into account that after the financial crisis the weights in the world economy have clearly shifted towards the emerging economies.