EU competitiveness requires trade policy reforms

News

A new report, the so-called Draghi report, presents a series of proposals on how the EU can strengthen its competitiveness in a world of major geopolitical changes and rapid global change. The National Board of Trade acknowledges the problem but is at the same time critical of some of the proposals.

The recently published Draghi report, which was produced by the former President of the European Central Bank, Mario Draghi, on behalf of the President of the European Commission, Ursula Von der Leyen, presents a number of proposals on how the EU can strengthen its competitiveness in response to geopolitical challenges and a rapidly changing environment.

The main message is that the EU has lagged behind comparable economies in terms of economic productivity and growth, and the report proposes reforms to reverse this trend.

The National Board of Trade agrees with the analysis but is critical of certain points

The National Board of Trade acknowledges that the problems outlined in the report need to be addressed. The EU needs reforms that stimulate productivity. It is also good that the report is clear that competitiveness is not a zero-sum game, but that productivity is the basis for the EU to be able to achieve the goals of prosperity, competitiveness, green transition and economic security.

‘At the same time, we are critical of parts of the report, especially the proposal that the EU's trade policy should function as a kind of support function for the EU's internal industrial policy’, says Per Altenberg, trade strategist and author of the National Board of Trade's analysis of the Draghi report.

The National Board of Trade’s criticism of the proposal is based on research results.

Modern research shows strong direct links between trade and productivity through technology diffusion, improved access to inputs and the ‘screening of the most productive companies’, which is done through international trade. Since the report identifies insufficient technology diffusion and a static industrial structure within the EU, with a weak ability to redirect resources to highly productive companies, it would be natural for the EU to use trade policy to find solutions to these problems.

Regarding the EU's internal market, the National Board of Trade finds it surprising that proposals for reforms of the governance of the EU are seen as separate from reforms of the internal market.

‘We believe that these two are dependent on each other and mutually reinforcing’, says Per Altenberg. The foundation of the EU is common EU legislation that guarantees the four freedoms. Therefore, efforts to improve EU institutions and regulatory framework are closely linked to reforms to strengthen the functioning of the single market.

Download the analysis
An analysis of the Draghi report

Contact
Per Altenberg
firstname.lastname@kommerskollegium.se
+46 (0)8 690 49 26