DRAFT. "The potential opportunities and challenges for SMEs in the context of the European Trade Policy:

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1 DRAFT "The potential opportunities and challenges for SMEs in the context of the European Trade Policy: Brussels - June 24th, 2014 European Economic and Social Committee V. President Giuseppe Oliviero Let me first thank you for the kind invitation of the Economic and Social Committee and to all the representatives of the EESC SMEs category. The impact of trade policies on micro SMEs is a key issue for the future of the economy of many countries of the European Union even if in several national Member States we register a severe economic recession and difficult recovery. Trade policy, it is a tool of exclusive competence of the European Union. Lisbon Treaties regarding investments, particularly foreign direct investments, can and should be a ground for renewed commitment of the EU and for the effects that investment have on small businesses at European level. UEAPME, in its policy agenda , emphasizes the importance of the revival of the European Union's trade policies for the benefit of SMEs. In this framework, the enhancement of the role of SMEs in Balkan region (Ionian-Adriatic) and the Mediterranean basin urgently need a revived strategy and new vision based on productive and service based partnerships between micro SMEs. What are the challenges and opportunities with EU trade policy for European SMEs and for the wider Italian and Mediterranean economic actors? International trade with third countries is certainly a great opportunity for micro SMEs in Europe but should be certainly improved to enhance the global competitiveness of Europe. However, international trade relations must be based on fair competition and SMEs must be against unfair and illegal conduct of global competitors. The ability to overcome challenges with China, India, Brazil, Russia and others, hoping in absence of military conflicts, will be determined by the capacity that Europe will deliver in terms of concrete industrial policies, coordination of foreign direct investment foreign flows, common and stable energy supply, standardization of products and services SMEs friendly that will be exported in the global markets. We need as well a real repositioning and strengthening of the entire system of SMEs through appropriate EU fiscal policies to strengthen made in production. Our organization has signed the main international agreements and conventions on working conditions fighting children exploitation: we see the benefits of Free Trade

2 2 Agreements (as is the case for the Treaty on the transatlantic trade and investment, and as was the case for CETA with Canada ) as of economic integration processes that determine the conditions of economic growth while respecting the right to stable employment. In broad terms, a Trade Agreement is relevant because: It improves non-tariff barriers; It harmonizes technical standards for the mutual benefit of consumers; It improves the quality of food products and beverages (source product, DOP, etc.) against products that "sound" Italian or European and against counterfeiting practices. It boost procurement markets; It promotes and make easier mutual recognition of qualifications (including selfemployment and non-regulated professions) and the temporary movement of business personnel; Improve health and safety and environmental protection rules. While a trade agreement creates generally a favorable environment for SMEs in the regions concerned, certain elements should be carefully taken into consideration: Strengthening of information on the cross sector prospects of trade for SMEs, investment and employment data at the level of industry and global value chains; Quality information for investment opportunities to both sides SMEs communities; Research and study of the potential impact on production systems and professional qualifications, mobility of factors included in the trade agreement (see especially young people); Cooperation activities for SMEs through the establishment of networks and industry partnerships for the exchange of experiences and the development of innovative start-ups, the promotion of business incubators. Italy is a country considered "model" for SMEs and crafts, and despite the current crisis, the Italian experience still could represent an inspiring model for many countries that have a similar productive structure. Through our SMEs representative organization we should increase opportunities for trade, to analyse new markets and promote cultural contamination. Imagine and work at EU level to prepare a business environment where we could exchange and develop new policy proposals. We could get together to enhance the unity of European SMEs and not to highlight the differences among us. In this perspective, the new EU Legislature (VIII Legislature, ) will enable a stronger commitment in collaboration with the Intergroup of the European Parliament, the European Commission, the EESC SME category of to determine a new policy framework for EU trade policies focused on SMEs. operating in international markets, as it indicates the Small Business Act (SBA) for over five years.

3 3 For this reasons, it is necessary that the European Union asks for legally binding SBA for the Member States and put small businesses at the heart of policy action adopting corrective measures to achieve the objectives contained in it. The appreciation of the Euro in recent years has certainly not favoured European exports including those SMEs with a strong propensity to export (in Italy today over 190,000. That's why it becomes important to focus on quality even before the price competitiveness. This has also led to the misconception that the problem was the EURO. Though there are strong populist pressures in this direction, it is now necessary to give a political response able to restore confidence in the domestic markets to the Internal Market and discuss the flexibility of the stability constraints in favor of investment policies geared to boost domestic demand. With a re- launch of EU trade policies and EU industrial policies we would need: To launch an extraordinary plan for European investment, through the establishment of a Fund devoted to the completion of the network infrastructures of common interest (gas, broadband, logistics and ports). To ensure easier and equal access for SMEs to bank loans and insurance products, for businesses that want to "do business" in the Internal Market and to export to international markets. Help SMEs particularly in the resolution of disputes relating to access to markets (procurement, non-tariff barriers, industrial-technological cooperation, language barriers, business intelligence), to solve problems related to import duties and customs procedures. To make easy to use anti-dumping procedures and combat discriminatory behavior in general to the free exercise of economic activity by SMEs. Strengthening the European policies designed to encourage the marketing and SME participation in standardization processes of European products and services; To encourage single SMEs and SMEs groupings to operate in the global markets for the energy sector, infrastructure and related fields of energy efficiency in SMEs, integrating them with the proposals already contained in the European plan for sustainable development to promote the green economy and the quality of the production chains. To confirm support for the new rules on origin marking as is already the case in the United States, Japan and other realities in the world. set up a coordinated European plan to combat counterfeiting. facilitate the matching of skills and competences in internationalization disciplines facilitating partnerships among Universities and SMEs organizations willing to explore new markets and regions. As part of the semester of Italian presidency of the EU, we would like to carry out a workshop to analyze the current agreements with the U.S. (TTIP), main European trading partner and those already concluded with Canada (CETA) to understand how and if the

4 4 micro SMEs of both continents will be able to grasp quickly, the benefits of such trade policies. The EESC and its SMEs category, with its Opinions REX 374 and REX 390, could help us in better understanding these processes, to take part in the work at EU/International level, to replicate this approach to other regions of the world. And 'necessary, however, that this positive impact is accompanied in the early stages of negotiating a'' impact on micro SMEs also not active at the international level, and then the entire SME community. The existing trade defense instruments to contrast the unjustified subsidies I still in need of a significant makeover and needs to be better be adapted SMEs reality. Today it is very difficult for SMEs to file a complaint because of the amount of information needed to prove the damage and the high costs that it entails. Concerning internationalization policies CNA and our European Organization UEAPME ask: to improve the positioning of SMEs in markets outside Europe, a new support program for cooperation and partnership strategies in markets outside the EU, designed and implemented through their representative organizations. It would be important that the EESC and the Intergroup of the European Parliament, with the help of the EC, could study the feasibility of such a measure within the COSME Program COSME or other existing programs in the EU's development policies. A pilot measure to "train the trainers" in EU trade policies for SMEs aimed at all organizations representing SMEs in need of new competences the internationalization of SMEs. This methodology could maximize results reaching a much larger number of SMEs throughout the EU. In Italy, the opportunities for the promotion of activities for the internationalization of SMEs face problematic in terms of SMEs policies and in the choice of the most effective tools for them. The economic crisis has confirmed that the most dynamic manufacturing companies that have improved their competitiveness, increased revenue and increased employment are those, mostly of medium size, that are open to foreign markets, offsetting the fall in demand inside with the increase in exports to emerging markets. The Micro European SMEs still depend primarily (over 70%) from the domestic markets, while firms that operate in markets Extra EU are only 13% Many Micro SMEs, both in Europe and in Italy, have products and technologies that can be potentially placed on the international markets, if properly assisted financially and with professional skills and organizational support measures. To this extent, we need to improve deeply processes of internationalization with the help of universities and research centers.

5 5 The EU and Member States must take active measures to be able to provide the physical and financial resources necessary to remove obstacles to the internationalization of micro and small enterprises, taking into account the specific manufacturing and industrial vocations of each member country. The EU and the Member States must, in conclusion, look into their commercial policies developing micro SMEs also in terms of potential inclusion in productive activities and services of entrepreneurs skilled migrants interested in creating new and more dynamic business opportunities between both the migrants themselves and with the indigenous SMEs. In this context and compared to the past EU Legislature, C.N.A. endeavors to carry on a qualified representative role at European level able to persuade the new European Parliament, the EC bodies, consultative bodies such as the Economic and Social Committee on the importance of adopting a strong discontinuity in the implementation EU policies for SMEs Thank you for your attention.