Competitiveness and economic security: how should EU trade policy contribute to the objectives of the Draghi report?

A pivotal reference for our exploratory opinion is the Draghi Report that lays out a comprehensive analysis of EU’s competitiveness and key challenges and opportunities for the EU to achieve a sustainable growth.

The Draghi Report stresses the need for a resilient economic framework, capable of withstanding external shocks and fostering long-term growth. Using EU trade policy as a lens to analyse the Draghi Report, our opinion outlines four pillars that underscore the importance of an integrated approach:

1. Economic Growth and Stability

Our opinion advocates for policies that promote sustained GDP growth and reduce unemployment rates. It calls for structural reforms to enhance productivity and competitiveness, stressing the role of innovation, technological advancement and international trade.

2. Digital Transformation

Recognising the critical role of digitalisation, the opinion highlights the need for a comprehensive digital strategy. This includes fostering digital skills, supporting technological infrastructure, and ensuring data privacy and security. Digital technologies are seen as the backbone of future growth, with trade policies designed to support cross-border digital interactions.

3. Environmental Sustainability

Environmental concerns are at the forefront of the opinion, advocating for a green transition that balances economic growth with ecological preservation. Environmental policies and trade regulations are increasingly seen as aligned, with efforts to promote green trade and sustainable practices at the global level. The EU’s trade agreements must incorporate sustainability as a core objective.

4. Social Equity

Our opinion stresses the importance of inclusive growth to reduce social disparities and ensure equitable opportunities. By aligning trade policy with these principles, the EU can enhance its competitiveness, ensure economic security, foster a more sustainable future and address social equity, ensuring fair distribution of benefits across society.

In addition, financing aspects are equally important. The Draghi report stresses the need to reinforce public investment and the EU spending capacity, but it is ambiguous on financing objectives and strategies, mostly relying on financial markets and overlooking the necessary social investments and the role of public investment banks.

The EESC calls for an ambitious European industrial policy with significant investments that supports common goods and innovation and delivers quality jobs and social progress. Next to the completion of the single market, the report notes that ‘there is a lack of coordination across policies’, which should also be addressed to enhance Europe’s competitiveness.

Our opinion outlines four primary horizontal actions. First, the full implementation of the EU single market. Second, better coordination of industrial, competition, and trade policies to avoid internal protectionism and external barriers. Third, mobilising the necessary large-scale investments, including new EU borrowing for European public goods like innovation and cross-border energy grids. Fourth, strengthening EU-level coordination on industrial policy to move beyond the fragmented approaches that hinder economies of scale and global influence, as well as reducing the regulatory burden.

Exploring ways to simplify the Carbon Border Adjustment Mechanism (CBAM)’s design, including standardised carbon footprint accounting methodologies and data sources, would help reduce the administrative burden on businesses and facilitate more efficient implementation.

To conclude, the EU must act decisively on simplification, scale, security, and skills. The initiatives under the Competitiveness Compass and the Clean Industrial Deal are steps in the right direction, but their success will depend on their swift implementation. The new initiatives must deliver on expanding energy infrastructure, streamlining permitting procedures, and diversifying supply sources. 

Author: Georgi Stoev, Member of the EESC Employers' Group and Rapporteur of opinion REX/594 Competitiveness and economic security – how should EU trade policy contribute to the objectives of the Draghi report?