The European Union’s Innovation Union and the Global Trade Environment
In 2010, the European Union (EU) committed to building the ‘Innovation Union’. This initiative responded to the economic challenges which the EU faced in the wake of the Global Financial Crisis, and the recognition that the EU was trailing others (specifically the United States and Japan) in its innovation performance. In short, Europe’s scientific expertise was not linked closely enough with industry and the enhancement of economic competitiveness. Horizon 2020, launched in 2014, has provided the largest public fund supporting research and innovation in the world, structured in such a way as to promote collaboration between scientific and industrial organisations.
The effectiveness of the development of the Innovation Union depends on the openness of global trade. The EU’s approach is reflected in its key statement on trade in 2015, Trade for All. The fundamental elements of the Innovation Union rely on increasing both Member State and EU support for scientific endeavour, but also ensuring that it is closely linked with industry and processes of commercialisation. Ultimately, competitiveness depends on access to global markets, and hence the importance of new agreements that reduce both the costs and regulatory barriers to trade. EU research demonstrates that this contributes, in turn, to higher employment and wages leading to enhanced social prosperity (a key objective of the Europe 2020 Strategy).
However, the nature of contemporary global trade is poorly understood, both by citizens throughout North America, Europe and Australasia, and by their political representatives. The interconnectedness of global value chains, and the extent to which components move around the world before becoming goods ready for market, means that there are many barriers to open trade other than tariffs. As a ‘knowledge economy’ becomes increasingly central to people’s well-being, services become as important a part of global trade as goods. The EU’s policies with respect to the ‘Innovation Union’ and to opening up global trade reflect a very positive approach to these issues.
The purpose of this project is to promote improved public understanding of the relationship between innovation and competitiveness and a more open global trading environment, and how this improves prosperity for the EU and its global partners. Its specific objectives are to strengthen EU studies in this field by:
- Performing an observatory function in bringing together research on the EU’s initiatives on innovation and competitiveness and global trade, and the implications for the global trading environment;
- Engaging senior policy makers, senior business leaders, academics and other key stakeholders in focused discussion of key issues under negotiation in efforts to develop more open global trading arrangements; and
- Promoting public discussion about the relationship amongst innovation, competitiveness and trade, and the implications for improved prosperity.
The principal outcomes from the project will be increased accessibility for both stakeholders and citizens to information about the emerging characteristics of regional, national and global economies, and the opportunities which can follow from more open global trade. Its impact will be reflected in more knowledgeable debate in all forums about the prospects for more open global trade.
Trade, Innovation and SMEs
In 2015, the EU released a new trade policy, Trade for All. The new policy was partly aimed at enabling trade to be more effective in delivering economic opportunities, but also being more transparent in opening up negotiations to more public scrutiny and addressing values as well as interests. The new policy sought to respond to increasing disquiet in civil society about the possible threat that more open trade arrangements might threaten jobs and living standards in Europe. It aimed to set new priorities for trade which ensured mutual benefits for all parties involved. Developing the Single European Market and bringing it to the world through trade has been a key objective of European integration for six decades, so Trade for All is a key initiative in strengthening civil society support for this key objective.
This project will contribute to the implementation of the new policy, specifically in relation to the proposed trade negotiations with Australia and New Zealand. The project engages key stakeholders from policy agencies, business and civil society to examine varying perspectives on trade and the implications of measures which lead to a more open trading environment between the partners.
In particular, the project engages with Small and Medium Enterprise (SME) stakeholders. This priority reflects the EU’s analysis of the sectors most likely to benefit from more open trade arrangements. Their evidence is that SMEs which export to at least one other country are more likely to demonstrate positive growth in employment, and to pay higher wages. This project will test these assumptions in Australia, particularly in the context where Australian Government policy is emphasising the importance of innovation, and facilitating SME access to global markets. The crucial question is how EU and Australian SMEs can benefit most from more open trade, and whether these benefits will contribute to enhanced quality of life for civil society.
The purpose of this project is to promote improved policy knowledge and engaged civil society awareness of the prospective implications of a more open global trading environment, especially for SMEs in Australia and the EU. It will strengthen EU studies in this field by:
- Engaging SME stakeholders, civil society representatives, senior policy makers, academics and other key stakeholders in sharing their perspectives on the benefits or otherwise of export and trade activity, the role of innovation, and the potential implications of more open global trading arrangements;
- Comparing the Australian stakeholder insights with an analysis of EU research on SME engagement with export activity and innovation, and their perspectives on the implications of a more open global trading environment;
- Promoting policy-focused discussion about the role of innovative SMEs in global trade, and the implications for improved prosperity.
The principal outcomes from the project will be to support policy development and the inclusion of clauses in the EU-Australia, and possibly EU-New Zealand, trade negotiations which improve opportunities for SMEs in a manner that encourages SME and civil society support. Stakeholders will have improved knowledge on the role which SMEs play in global trade, particularly those committed to innovative processes, and how more open trade can enhance this role.