“The REER (or Relative price and cost indicators) aim to assess a country's (or currency area's) price or cost competitiveness relative to its principal competitors in international markets. Changes in cost and price competitiveness depend not only on exchange rate movements but also on cost and price trends.
The specific REER for the Sustainable Development Indicators is deflated by nominal unit labour costs (total economy) against a panel of 37 countries (= EU28 + 9 other industrial countries: Australia, Canada, United States, Japan, Norway, New Zealand, Mexico, Switzerland, and Turkey).
Double export weights are used to calculate REERs, reflecting not only competition in the home markets of the various competitors, but also competition in export markets elsewhere. A rise in the index means a loss of competitiveness.”
(Eurostat, http://ec.europa.eu/eurostat/cache/metadata/EN/tsdec330_esmsip.htm, 2015-02-23)