From the top of Central's St John's Building, where the European Commission in Hong Kong and Macau is located, the outlook is brighter, with key economic indicators raising hopes that the green shoots of recovery will soon appear. For the first time in two years, the economic sentiment indicator for the European Union and euro area showed the first noticeable increase last month. It increased by 3.5 points for EU nations and by 2.5 points in the euro area, to 63.9 and 67.2 respectively. EU officials said it resulted 'from a clear improvement in sentiment in industry and among consumers' as the majority of member states registered an improvement. And, despite the clouds of economic gloom still lingering, many have taken heart at the rise in sentiment recorded in the monthly survey of 800 investors by Germany's Sentix research institute. It was the index's highest recording since last October. 'Remarkably, despite the recession, the European Union's trade with Hong Kong has risen. Only by a modest 2 per cent, but that is significantly higher than one expects during times like these,' said Maria Castillo, new head of office at the Office of the European Commission in Hong Kong and Macau. Having arrived here five months ago from her last post in Seoul, the EU envoy, who originally hails from the Spanish city of Granada, said she felt energised by Hong Kong's multiculturalism and famous buzz. And she believes she's here at an important time for bilateral ties. Since the EU's policy towards Hong Kong was first set out in the treaty agreement, 'Communication: The European Union and Hong Kong Beyond 1997', the world's largest trading bloc and Hong Kong have enjoyed excellent relations that continue to grow. 'And not only has trade increased, so has investment in both directions,' Ms Castillo said. 'Indeed, excluding mainland China, the EU is the biggest investor in Hong Kong, ahead of Japan and the United States.' The EU strongly believes that trade boosts world growth to everybody's advantage. Liberalised trade enables the most efficient EU firms to compete fairly with rivals in other countries. In Hong Kong, some of Europe's most famous companies have found excellent business, which largely accounts for why Hong Kong is the city with the biggest concentration of EU passport holders in Asia. As for trade within the bloc, the dismantling of trade barriers has made a huge contribution to its prosperity and has reinforced its commitment to global liberalisation. As EU countries removed tariffs on trade between them, they also unified their tariffs on goods imported from outside. This means that products face the same tariff whether they enter the EU via the ports of Copenhagen or Felixstowe. As a result, an imported computer component from Shenzhen, on which import duty is paid on arrival in Denmark or Britain - or any other member state - can be transported to Spain or Poland and sold there in the same way as an EU-manufactured component. No further duty is charged. The EU's trade policy is closely linked to its development policy. The bloc has granted duty-free or cut-rate access to its vast market for many imports from developing countries under its generalised system of preferences (GSP). The EU goes even further for the world's 49 poorest countries, all of whose exports - with the sole exception of armaments - enter the EU duty-free. Here, in highly developed Hong Kong, Ms Castillo's concerns are not limited to trade. 'Thankfully, our trade relations are problem-free, allowing us to increase our efforts in other areas of great interest, not just to the EU but the whole world. We are constantly striving to make practical improvements in the areas of the environment and climate change, and these linked issues are at the top of the EU's list of priorities,' she said. 'We believe that Hong Kong has a role to play as an example in being environmentally friendly. Both Hong Kong and the EU are rapidly developing environmentally friendly technologies and practices, and we do have meetings at an official level on the issue.' Another issue is taxation. 'The EU and Hong Kong are working on taxation issues of mutual interest, especially with a view to getting out of this global economic crisis,' Ms Castillo said. 'Similarly, with aviation, we do have air-service agreements in place but are trying to develop more co-operation. We had some negotiations in March and will be redoubling our efforts soon.' On food safety and health, she said the EU and Hong Kong had an excellent tracking system for imports and exports. The EU is looking to expand ties with Hong Kong universities, particularly in the growth area of information technology. It also wants to expand educational exchange programmes. Asked to express her office's function as a whole, Ms Castillo said: 'In Hong Kong you have the British link, in Macau you have the Portuguese link, but I believe there is also an important role for the EU to serve as an east-west conduit. Our role is to build bridges in terms of culture and many other areas, providing a platform for co-operation.' As economies weather the recession, the EU's plan for sustainable growth and creating jobs is instructive and promising. According to Ms Castillo, it is based on 'mobility of jobs, mobility of goods and mobility of people'. The EU's Lisbon Strategy is designed to develop sustainable and fair employment to generate economic growth by boosting knowledge-based societies, making EU enterprises more innovative and investing in people. The bloc is mindful that today's growth must not be at the expense of future generations. 'The EU is going to have to get even greener,' Ms Castillo said. EU lawmakers and policymakers are emphasising the importance of keeping people in work longer as life expectancy rises, improving the adaptability of workers and enterprises, providing better educational opportunities and more up-to-date skills, and adapting social protection systems to the challenges presented by globalisation and mobility. This includes fitting the concept of 'flexicurity' into the picture. The days of the job for life are gone, so the EU advocates an approach that combines flexibility and mobility in labour markets with robust social security safety nets. Investing in people is crucial to this jobs and growth strategy, and the European Social Fund is the war chest. From 2007, it started spending Euro77 billion (HK$793 billion) and funding will run until 2013 to improve access to employment, enhance the adaptability of workers and enterprises, and develop disadvantaged regions of the continent. The European Globalisation Adjustment Fund has made Euro500 million available annually to provide personal support to workers made redundant as a result of trade liberalisation and the globalising economy. The drive to create more jobs will not come at any cost, however. The EU's long tradition of ensuring decent working environments and protecting workers' rights holds firm.