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Siim Kallas

Vice-President and Commissioner for Transport

Europe and southeast Asia: transport partners for the way ahead

Lee Kuan Yew School of Public Policy, National University of Singapore

Singapore, 15 February 2012

Ladies and gentlemen, distinguished guests,

It is a privilege and pleasure to be speaking today at Asia's leading public policy institute and to address this eminent audience. I would like to set out our vision for the European Union's future transport policy. But what is the context?

In a globalised world, transport systems are changing rapidly as demand rises for goods and services. If countries are to meet that demand, efficient transport systems with modern infrastructure have to be in place first. They provide the means for people and businesses to get better access to the global trading system, as we all get better connected. Globalisation also means that with more European integration – including in transport – there is a clear impact on the economies of southeast Asian countries. As I will explain shortly, these countries are very important to the European Union. In many areas, we are natural partners.

Transport is the backbone of growth; it creates wealth and employment. It is the bedrock of any national, or indeed regional, economy. So what does the future hold for Europe's transport policy in the next decades? In the European Union, as you know, we share a single market, single external border and single trade policy. This really makes it easy to do business and has been fundamental for EU development in recent years. On transport, however, we have some serious challenges ahead which I'm sure will also be familiar to you:

  • tackling our overdependence on oil,

  • developing reliable and clean alternative fuels,

  • meeting ambitious targets on climate change by reducing transport's greenhouse gas emissions,

  • filling in the important missing network links,

  • replacing today's patchwork of transport systems with a true European network where the different modes of transport are better linked together,

  • dealing with bottlenecks and heavy administration, technical incompatibilities.

As you can see, it's a long list!

Firstly, we need to invest - to expand and modernise transport infrastructure. Secondly, we must keep a strong emphasis on research and innovation as the way forward to sustainable growth, developing alternative fuels. Thirdly, we need to focus on our overarching goal: to build a single European transport area by 2050. When we have completed this unified area, the EU's partner countries will gain from reduced and streamlined regulation. They will also gain from easier and improved market access to Europe's 500 million consumers.

As the EU moves to complete its single transport market, we can all gain from working together: by making the best use of Europe's investment, its specialised technical expertise, skill in innovation and transport manufacturing capability. You are experiencing strong demand for transport: to support an Asian manufacturing boom and to move ever more volumes of cargo, by air and sea. So let us build more region-to-region links: this would benefit all partner countries, and especially Singapore: a safe, stable and secure transport gateway to southeast Asia.

Ladies and gentlemen,

Europe already enjoys many strong connections with this region. Transport is an example of where we can do more. As Europe's largest trading partner within ASEAN, Singapore is a good example of how such connections can really work. In transport, many EU companies have been quick to recognise Singapore's economic and strategic importance for southeast Asia, often using it as a hub to service the wider Pacific rim. And I am pleased that in turn, Singapore has recognised the quality products made in Europe. Take the French defence electronics group Thales, selected in 2008 to provide Singapore with a new air traffic control system. And most recently, Alstom, awarded contracts to provide new trains and enhance Singapore's rail capacity.

Once negotiations on an EU–Singapore free trade area are concluded, the EU will be able to move forward elsewhere in the region. This agreement will mark the start of a deeper European engagement with Asia. It can also serve as the basis for similar negotiations with other ASEAN nations. While ASEAN's dynamically growing markets offer great potential, many of them – although not Singapore – are protected by high tariff and non-tariff barriers. We would naturally prefer to see these removed.

As a whole, the ASEAN countries are our third largest export market outside Europe, after the United States and China, with total bilateral trade of some €160 billion. The EU is also by far the largest investor in ASEAN countries. That sets out, in economic terms, why this region is so important for Europe.

Ladies and gentlemen,

Let me return to transport and to areas where I believe there is scope for more cooperation and trade. I am thinking of aviation and the aerospace industry, the maritime sector, and research and development – in particular, into cleaner fuels.

To make cooperation work at its best, transport policies must be liberal and open-minded if bilateral or inter-regional trade is going to benefit. And like-mindedness yields results: it is important that both Europe and Singapore see trade and investment as a key element in the global economic recovery.

In aviation, I believe that we do think along similar policy lines. The EU has always been at the forefront of air services liberalisation. Our thriving aviation sector competes daily on a global scale: from 1992 to 2010, for example, the number of intra-EU routes with more than two carriers increased by 415%. Singapore's liberal policies have shown how a steady growth in traffic with EU countries can be successfully generated. They are also a major reason why Singapore has become the hub for Asian aviation today. It is clear that the continued expansion of the wider Asian aviation market will drive future growth in global air traffic in the decades ahead. So more bilateral cooperation in air traffic management would give a strong mutual benefit. We are also following ASEAN's moves to build a single regional aviation market by 2015 with great interest.

Let us also not forget international shipping, for which southeast Asia – with Singapore at its heart – is extremely important for the global maritime industry and global trade. Here, Europe's presence is already strong. Several European shipping companies now have Singapore-registered ships and operate a great deal of their Asian business from here. Part of the discussions for the trade agreement I mentioned earlier include increasing access for European companies to Singapore's impressive market for international maritime transport services.

For the EU, the world’s most important exporter and the second largest importer, shipping and related services are essential to help European companies compete globally. Shipping remains a vital industry for Europe. It has always contributed greatly to our economic growth and prosperity. With more globalised trade links, seaborne transport is more important than ever for Europe's and the world's economy. The maritime sector accounts for the bulk of trading between Europe and Asia, using some of the busiest shipping lanes in the world.

But there are some serious threats to free, efficient and secure shipping trade. We need to work hard, and together, to overcome them: volatile energy markets and climate change, piracy and other security concerns, increases in smuggling and counterfeit goods – just to name a few. Between 2005 and 2010, for example, our national customs authorities registered that counterfeit goods entering the EU had tripled. This is why we have engaged in an ambitious strategy to promote safe, secure, clean and efficient shipping. The "Blue Belt" project aims to reduce barriers to maritime movement by providing customs with reliable ship voyage data.

But we need global action for this global industry to succeed. We are ready to do our part and I sincerely hope that Singapore could join our efforts in the work being done at the International Maritime Organization. In shipbuilding, we are now more of a specialised niche manufacturer. As we look for new markets, that is also a strength: European expertise in top-end manufacturing can combine well with this region's shipbuilding industry.

Our companies have a strong track record in innovation and specialised high-tech production. As I said, we are investing a significant amount into research and development, particularly in clean energy innovation. This is where Europe's expertise in transport engineering could have a tremendous benefit for regional and global shipping. In this area, there is great potential for more EU involvement and investment. Cleaner combustion engines for ships, wider use of harbour treatment facilities to reduce ship exhaust gases, perhaps in locations like Singapore. More deployment of 'intelligent' technologies like smart containers – for securely integrated cargo flows across regions and different modes of transport. These are all good examples of how EU companies can get more involved, especially given Singapore's superior port facilities and prime location.

To conclude: our two regions can only benefit from improving and expanding transport ties, and not only in the areas I have mentioned. Many of the problems that we face are indeed global problems. Let us help each other tackle them in the best and most efficient way possible.

Thank you for your attention.

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