Bringing the single market to the world

Old Delhi, new economy: an EU-India free trade agreement is currently under negotiation. Photograph: Simon O'Connor

Recently, the European economy has started to see the first fragile signs of recovery after the seismic economic and financial shocks of the last 15 months. Taken together with the arrival of a new European Commission, and the appointment of Herman Van Rompuy and Catherine Ashton to the new posts created by the Lisbon Treaty, this may offer a political watershed; a moment for Europe to get back to fundamentals as it sets an agenda for recovery and growth for the decade ahead.

Trade and economic integration are at the heart of the European project and constitute the foundation of Europe's prosperity and stability. The single market (launched in the 1980s and fully implemented in the 1990s) and the subsequent enlargement of the EU have created the world's largest economy, worth an annual €12.5 trillion.

Internal competition based on judiciable rules is also the springboard for our external policy effectiveness. For me as an EU trade negotiator, the single market is our international calling card, because it sends a clear signal to our trading partners that when they negotiate a trade agreement with the Commission, they are negotiating market access into the 27 member states of the European Union: a market of 500 million consumers. This helps to explain why the EU is also the world's largest exporter, importer, foreign-direct investor and FDI recipient.

The challenge for the new Commission is to capitalise on these strengths, ensuring that both external and internal action is used to pursue the vision of an open, sustainable, greener and more innovative economy set out by President José Manuel Barroso in his political guidelines for the next Commission.

The current most important global trade policy issue is the Doha Development Agenda (DDA). Its significance lies in three areas: first, as an economic package worth €150 billion each year at a time when the scope for further fiscal stimulus is limited; second, as a major contribution to development, helping to anchor some of the world's poorest countries into the global economy; and, third, as a symbol of the international community's capacity to act, rather than simply talking about doing a deal, even against the backdrop of a major recession.

But we must also continue our bilateral and regional strategy, because we cannot wait for multilateral progress on our entire trade policy agenda. Many key issues, including some which remain outside the World Trade Organisation (WTO) for the time being, can be addressed through free trade agreements (FTAs). We are currently engaged in negotiating new FTAs with – among others – India and south-east Asian countries. We have just initialled a ground-breaking deal with Korea and in May we started negotiations on a comprehensive economic and trade agreement with Canada.

The EU-Korea agreement is trade-policy history in the making. As a deep and comprehensive deal between two developed economies, it provides concrete evidence of our capacity to make progress on our market-opening agenda even in the face of global economic headwinds. We are also continuing to engage with other emerging countries, for example China, on investment, intellectual property, government procurement and fair access to raw materials.

But we also need to learn lessons from the recent past. The Commission has been at the forefront of global efforts within the G20 and at the WTO to fight the risks of resurgent trade protectionism in the face of rising unemployment. I can say with complete certainty that the crisis would have been much worse had the global trade community not shown itself capable of avoiding the trade policy mistakes of the 1930s.

And the benefits of open markets are just as important in fostering recovery as they were in staving off crisis. The lessons of economic history here are clear: protectionist trade policy is not a sustainable means of protecting jobs in the EU. At the same time, successful market opening must be accompanied by international rules and domestic education and social policies that help workers and businesses adjust to the impact of open competition and cushion the inevitable volatility of markets.

President Barroso's vision for Europe in 2020 provides the blueprint for action. The challenge for the coming decade is to find ways to shape a new policy framework that allows Europe to continue to seize the benefits of globalisation while preserving the uniqueness of our social model.