EU TRADE POLICY AMBITIONS

Based on answers of Phil Hogan, Commissioner designate for Trade to EP's written questions

Trade Strategy

I am a firm believer in pursuing an open and fair trade policy that strengthens the EU’s position in the world, promotes our values and protects our interests. International trade is the lifeline of the EU’s economy. It accounts for almost 35% of the EU’s Gross Domestic Product, it generates jobs and it ensures that consumers and companies have access to the best possible products at the best price.

I recognise that trade policy will be operating in a particularly difficult environment in the near future. The international rules-based trading system is facing its deepest crisis since its inception, as the rules at the core of the system are increasingly being challenged by some of the major global players. In the context of enhanced technological and geostrategic competition between the U.S. and China, trade and economic issues are also increasingly linked with geopolitical and security related ones.

In this complex environment, the President-elect has entrusted me to focus my efforts on levelling the playing field, strengthening Europe’s global leadership, ensuring trade’s contribution to sustainable development and climate action and making trade more transparent. In this respect, I will pursue the following priorities and actions.

First, to preserve a stable and predictable international trading environment based on clear and enforceable rules. The EU, its companies, its workers and its consumers, can only thrive in an international environment that is based on the rule of law and not on the law of the jungle. This is especially true for SMEs, which are often the most vulnerable to protectionist measures. To address this challenge, I intend to pursue the reform of the World Trade Organization - to create a new deal for the organisation, which puts it back at the centre of global trade. To do this, a new balance will have to be found in the organisation by creating new rules where needed, to level the playing field (such as on industrial subsidies and forced transfer of technologies), reforming the dispute settlement system, facilitating the integration of plurilateral work undertaken by interested WTO Members in the WTO framework and addressing the issues of development, climate and more broadly, the Sustainable Development Goals. My objective will be to launch a broad initiative by the end of 2020, following the next WTO Ministerial Conference. An important part of this effort will be to build partnerships with other WTO Members to pursue the reform effort. I will work toward a positive, balanced and mutually beneficial trading partnership with both the U.S. and China. With the U.S., we will focus on working together on advancing our shared interests, including linked to levelling the playing field. With China, we will need to continue emphasising the need to make a greater contribution to and take greater responsibility for the reform of the multilateral trading system, while continuing to develop a fair and balanced trading relationship.

Second, to create opportunities for the EU by opening markets or keeping them open. My focus here will be first and foremost on reaping the full benefits of the deals we have already reached by ensuring the full implementation of existing agreements and the enforcement of our rights. This will be key in the context of the growing threat of protectionism worldwide. I will be supported in this work by the new role of Chief Trade Enforcement Officer, who will be Deputy Director-General in DG Trade, who will work under my direct guidance. Beyond implementation and enforcement, I believe it is also important to seek new opportunities. I intend to pursue the conclusion of ongoing negotiations, including the negotiations for a free trade agreement with Australia and New Zealand, the negotiations with China on a Comprehensive Agreement on Investment and the plurilateral negotiations on e-commerce at the WTO. When the conditions are met and when there is a clear interest for the EU, I will propose to open new ones. Continuing to build a mutually beneficial trade and investment partnership with Africa will be particularly important.

Third, to ensure that trade policy contributes to our broader policy objectives, notably on sustainable development, the fight against climate change and more broadly in upholding our values. I will contribute to the design and introduction of a Carbon Border Tax, fully compliant with the rules of the WTO, working closely with the Executive Vice-President for the European Green Deal and with the Commissioner for the Economy. I will also ensure that we make full use of existing tools, such as the dedicated chapters on sustainable development in every new trade agreement, as well as in existing ones, the monitoring of the implementation of climate, environmental and labour protections enshrined in EU’s trade agreements, with a zero-tolerance approach to child labour, or the revision of the EU’s General System of Preferences to ensure that it keeps contributing to eradicating poverty and supporting the development of beneficiary countries.

Fourth, to protect EU companies and workers from unfair competition and pursue a level playing field. I intend to make full use of our trade defence instruments, and seek a level playing field in procurement. I will also consider introducing new tools, such as upgrading the EU’s Enforcement Regulation to allow the EU, in accordance with international law, to suspend concessions when others adopt illegal measures and simultaneously block the WTO dispute settlement process. I will also look at finding ways, together with the Executive VicePresident for a Europe fit for the Digital Age, to address the distortive effects of foreign subsidies in the internal market.

Finally, I believe that trade policy has a role to play in strengthening the EU’s security and position in the world. This is notably why I will keep a close eye on the full implementation of the new system for screening Foreign Direct Investments and work with the Council and the EP on further strengthening the EU’s system of controlling the exports of dual-use items.

I firmly believe in the importance of maintaining an open and dynamic dialogue with all stakeholders regarding the development of all aspects of our trade policy. In this context, I invite the European Parliament to further develop and share its views on the trade challenges we face and what best policy steps have to be considered to address them

Defending Multilateralism and WTO as the core of the international rules-based trade system

Multilateralism is in Europe’s DNA. The EU, because of its very nature, is suited to thrive in a rules-based international environment. The defence of multilateralism is therefore one of our strategic objectives, in terms of trade policy but also beyond. However, it is probably in the area of trade that the EU has the biggest role to play - because of its position as one of the world’s trading superpowers and the EU having exclusive competence with regard to trade policy. By speaking with one powerful voice, the EU can play a central role in shaping the international trading environment.

If confirmed as Commissioner in charge of trade policy, I will make the defence and promotion of multilateralism my first priority, in line with the mission letter from the President-elect. Internally, this will mean dedicating the necessary resources to developing our approach to strengthening multilateralism and the links between trade and the Sustainable Development Goals and the Paris Agreement, as well as working with other Commissioners to ensure that our multilateral interests are fully integrated into all relevant external and internal EU policies. Externally, alliance building will be essential to succeed in our plan to update and upgrade the multilateral trading system and I will intensify efforts to build partnerships in support of multilateral solutions.

The WTO is in need of reform. This system of trade rules needs to be adapted to all of the realities of today. It has brought many benefits to us and others, and it needs to be improved and strengthened. This is a project for the entire international community. And indeed, it is only by working together that we can be successful.

The EU has already put forward several ideas for reforms addressing the WTO’s three main pillars: the negotiating function, the dispute settlement function and the monitoring and deliberative function. At the heart of these ideas is the need to update the WTO’s rules to adapt them to today’s realities, including developing rules on issues such as e-commerce and to better deal with distortions caused by subsidies, as well as the need to update the institutional framework itself, to allow for example for greater use of plurilateral approaches. Indeed, this is absolutely critical in an organisation of 164 Members at vastly different levels of development. Similarly, the issue of how development is addressed in the organisation needs to be updated so that flexibilities and support are available and adapted to those countries that actually need them.

If confirmed as Commissioner in charge of trade policy I will continue to intensify our efforts to reform the organisation. I firmly believe that in order to find a solution to the current deadlock, we need to establish a new balance in the organisation - one which will allow it to regain its central place in global trade, which reflects the realities of today and which allows its Members to regain trust in the system.

In order to achieve this, my objective will be to launch a broad initiative by the end of 2020, following the next WTO Ministerial Conference with a view of reaching a comprehensive agreement by 2022. Such an initiative will have to address a comprehensive set of issues including creating new rules where they are needed (such as on e-commerce, industrial subsidies and on forced technology transfers), reforming the dispute settlement system, facilitating the integration of plurilateral work undertaken by interested WTO Members in the WTO framework and addressing the issues of development, climate and more broadly, the Sustainable Development Goals. Building support among the EU’s trade partners for such an initiative will be a central part of my work.

In parallel, on the specific issue of the crisis of the WTO Appellate Body, which risks to stop functioning after the 11 December 2019, I will continue the work on interim arrangements aiming at safeguarding the EU’s and other Members’ rights in WTO disputes in case the appointments remain blocked. This will notably build on the agreement reached with Canada in July 2019 to set up an interim appeal arbitration arrangement based on existing WTO rules.

Pursuing this reform agenda will require close cooperation with various stakeholders. More broadly, I firmly believe in the importance of the parliamentary dimension and democratic scrutiny of the WTO, without which an important element of legitimacy would be missing in the work of the organisation. As Commissioner for Trade, I will continue to support this parliamentary dimension and in particular the involvement of the European Parliament in Ministerial Conferences of the WTO. I also commit to keeping the European Parliament fully and regularly informed of developments in the WTO, and particularly on progress in relation to the EU’s reform initiative.

Finally, I intend to actively push for the establishment of a Multilateral Investment Court (MIC), which is being discussed within the United Nations Commission on International Trade Law (UNCITRAL) with the participation of over 100 States and numerous nongovernmental stakeholders. I believe that the EU should spare no efforts to push for the creation of this truly multilateral body. This implies multiplying alliances with third countries and proposing concrete steps, such as draft texts for the creation of the Court.

Implementation and Enforcement

Agreements, be they bilateral, regional, plurilateral or multilateral, offer the predictable and rules-based framework which is vital for the EU’s economy to function. But rules only matter if they are respected. In the context of increasing protectionism worldwide, proper implementation and enforcement of our agreements is becoming even more important. It is essential that our trade partners live up to their commitments made in exchange for which we had agreed to give them preferential access to our internal market. This is true for commitments on market access, but equally for rules including in particular the implementation of the climate, environmental and labour protections enshrined in our trade agreements. It is also a question of credibility for the EU’s trade policy as a whole.

If confirmed as Commissioner in charge of trade policy, I commit to further step up our efforts to ensure that our trade agreements are properly implemented and deliver the benefits to our citizens, farmers and companies for which we have fought so hard during the negotiations. To underline this commitment, I will be supported in these tasks by a Chief Trade Enforcement Officer, who will be Deputy Director-General in DG TRADE. He/she will become the public face of our increasing focus on implementation and enforcement activities in the coming years and ensure a more coherent and coordinated approach as well as streamlined procedures to deal with problems linked to the implementation of our agreements – be it on market access or on sustainable development commitments. The Chief Trade Enforcement Officer will work very closely with other Commission services as well as with the European Parliament, Member States and stakeholders. United, the EU has the political and economic weight and influence to stand up to all trading partners and enforce its rights.

This entails more focus on the monitoring of how the agreements work and ensuring that shortcomings are addressed quickly with the trading partner. It also means helping our trading partners in implementing some of the commitments via projects and expertise, notably linked to climate and labour provisions.

In case of breaches, the EU will need to become even more assertive and stand up vigorously for its rights and defend its interests in today’s increasingly volatile and hostile trading environment. That is why I am deeply committed also to increase further our enforcement activities to ensure that EU companies are treated fairly. We will make best use of our available toolbox to defend our citizens and companies and ensure that our partners strictly abide by their commitments, including those related to labour rights, environment and climate.

This will involve making full use of bilateral and multilateral dispute settlement systems in case of un-resolved and serious breaches by our trading partners. On the internal front, I will also ensure that the recently modernised trade defence instruments are fully applied, protecting our single market and hundreds of thousands of jobs in the EU from unfair competition and abusive trade practices.

But in today’s changing environment, this may not be enough. I will make sure that we strengthen further Europe’s ability to protect itself from unfair trade practices and that the EU disposes of the right tools to assertively defend its rights. I will be looking into upgrading the EU’s Enforcement Regulation to allow us, in accordance with international law, to suspend concessions when others adopt illegal measures and simultaneously block the WTO dispute settlement process.

Finally, we need to make sure that our companies make the best use of the additional opportunities and markets offered by the far largest network of trade agreements worldwide. Increasing further the use of the preferences granted by the agreements will require closer cooperation with the European Parliament, Member States (including their trade promotion organisations), and regions as well as with business associations and Chambers of Commerce to spread the information. It also requires more engagement and better communication with our companies and citizens, to bring them on board and ensure trade policy responds to their our companies and citizens, to bring them on board and ensure trade policy responds to their concerns. And we will need to commit to an extensive outreach programme to reach them.