Imagine a researcher inventing technology that would halve the cost of manufacturing an automobile their contribution to growth and competitiveness would probably win unanimous support. Now let’s suppose that an entrepreneur achieves this same result by importing some parts for this automobile. The odds are that many would condemn him for not buying from local or national manufacturers. And yet, both would have the same result in terms of employment and competitiveness.

This hypothesis borrowed from the Nobel Prize winner, Paul Krugman, illustrates what is wrong with calls for “economic national preference” when making investment and economic policy decisions. At a time when efforts are converging to reinforce the competitiveness of European economies, it is useful to take a look at some facts.

• Thirty million European jobs only exist thanks to world trade, 50% more than in 1995. This figure will increase, since the rest of the world is growing faster than we are: in 2015, 90% of global growth will be outside of Europe. To benefit from it, we should increase our international trade.
• A lot of “made in China” products are made up of components from around the world. An IPhone imported from China includes only 4% of assembling costs in China, 6% of American components and 17% of German components! Today, what matters for an economy is to get more of value-added imports, not to fight imports.
• The competitiveness challenge is firstly a problem of competition between developed economies, rather than an issue linked to the rise of emerging economies. Europe, on the whole, succeeded in holding on to its share of world markets in comparison to developing countries. But Europe is far from having reaped all the possible benefits of free trade: the current trade negotiation agenda could be worth 275 billion euro, the equivalent of Denmark’s economy. To this end, Europe has set up an unprecedented programme of bilateral trade negotiations to foster reciprocal trade and improve access of our businesses to growing markets.

Trade is therefore the saving grace of the crisis, and Europe could benefit from it with a strategy aimed at both trade and localisation of the strongest possible value-added production in Europe.

In spite of this, it is true that the development of trade poses two questions. The first is redeployment: globally beneficial for employment, international trade might require holders of certain jobs in decline to be guided towards fast-growing sectors. This question goes beyond trade: innovation thus creates growth and, by definition, implies job shifts. The energy transition develops green energies but will reduce the carbon intensive sectors. Consumer safety requirements or the evolution of consumer tastes also shift jobs. We therefore have a huge challenge in front of us: reinventing a social model developed in the post-war period and adapting it to this new global order, in such a way that it facilitates full employment and guides everyone throughout their whole professional life by guaranteeing guidance, training and coaching of very high quality.

The second question is sustainable development. It is firstly internal: overall, developed countries do not generate fewer emissions than developing countries, and need “greener” products. Of course, the adoption of stronger environmental standards by our partners is also important. Europe could encourage this increase in three simple steps: show the example, establish bilateral co-operation and define multilateral rules. The recent APEC initiative to liberalize trade for clean technologies in a new WTO clean tech agreement would open new prospects in this regard. Finally, Europe ought also to take into account the game changer effects of the unconvential gas production on global energy markets. This reinforces further the case for a strengthening of the European energy policy and a strong industrial policy.