This work package is the starting point of the project and of particular importance for the FUTRE concept. It develops criteria for the assessment of the competitiveness of the European transport sector that can be applied in relation to the present situation and in relation to different situations in the long-term future. WP2 further provides a characterisation of innovation and a description of the transport sector and the related innovation system, a description of market structures and it introduces the lead market concept. It will further summarise EU transport policies and EU innovation programmes. With this highly relevant work in terms of concept and methods, it is setting the basis for the other Work packages in the project. Furthermore, by applying these settings to the present situation it provides an assessment of the global competitiveness of the European transport sector as an outcome in its own.