G20 leaders meet in Hamburg on 7 and 8 July. Climate change, migration, the fight against international terrorism, gender equality and global growth all feature on the agenda. Trade is set to be one of the most sensitive topics tackled at the Summit. EU Heads of State and Government taking part in the G20 met on 29 June in Berlin to define a common stance based on the rejection of protectionism and isolationism. Right before the Hamburg meeting, Japan Prime Ministerhinzō Abe was in Brussels to meet with Commission President Jean-Claude Juncker and European Council President Donald Tusk for the 24thEU-Japan Summit. The three leaders gave their green light to the Economic Partnership Agreement and the Strategic Partnership Agreement. The political agreement reached at the summit paves the way for the conclusion of negotiations on the EU-Japan Free Trade Agreement. Trade MEPs are set to quiz Trade Commissioner Malmström on the agreement at their meeting on 11 July.
The European Council of 22-23 June also gave its backing to the conclusion of talks with Japan and encouraged progress on all ongoing negotiations, including withMexico, Mercosur and the Asian-Pacific region. The European Council also called on the co-legislators to swiftly agree on modern, WTO-compatible trade defence instruments (TDI).
The July Strasbourg plenary endorsed the start of talks with Council on the new methodology of TDI calculation. The first trilogue on this key INTA file is now set to take place on 12 July. Negotiations on the other file - TDI modernisation - are also ongoing and are set to remain a priority for the Estonian Council Presidency following intense work during the Maltese semester.
Trade MEPs are set to discuss the other outstanding trade files with Urve Palo, the Estonian Minister for Entrepreneurship and Information Technology at their next meeting. They will also debate a working document on theIPI regulation, hold an exchange of view on the INTA position on the2018 EU budget and discuss the negotiating mandates for trade negotiations with New Zealand and Australia and the UNCTAD’s World Investment report 2017. INTA members will also vote on the report on the impact of EU trade policies onglobal value chains, the recommendations to the modernisation of the trade pillar of the EU-Chile Association Agreement and the agreement with Iceland on agriculture and the protection of geographical indications.
Japan Prime Minister Shinzō Abe on the Economic Partnership Agreement at the EU-Japan Summit press conference on 6 July
“The EU and Japan account for 30% of world GDP, 10% of global population and 40% of world trade. This is the birth of the largest free advanced and industrialised economic zone […]. Ahead the G20 Summit in Hamburg […], the EU and Japan will hoist the flag of free trade high amidst protectionist trends.”
EU-Japan FTA: the final mile(s)
On 6 July European Commission President Jean-Claude Juncker and European Council President Donald Tusk met with Japan Prime Minister Shinzō Abe to seal a political agreement on the EU-Japan free trade agreement and the EU-Japan strategic partnership agreement. The political agreement represents a first step in the conclusion of the EU-Japan FTA negotiations. 19 rounds of negotiations have taken place since the official launch of talks on 25 March 2013.
Trade Commissioner Cecilia Malmström and Agriculture Commissioner Phil Hogan were in Tokyo on 30 June-1 July to tackle the last stumbling blocks on the path to the political agreement – notably in areas such as market access for cheese, beef and cars.
The deal is set to remove almost all custom duties which sum up to EUR 1bn annually. According to Commission’s estimates, a number of specific sectors are set to see significant opportunities with the new deal: EU exports to Japan of processed food for example could rise by up to 180% and exports of chemicals could rise by over 20%. EC President Juncker hailed the deal as a clear sign of the EU and Japan’s firm stance against protectionism ahead of the G20 in Hamburg.
The European Parliament is now set to scrutinise the outcome of the last round of negotiations and the political agreement. Commissioner Malmström will be in INTA for a formal exchange with trade MEPs on 11 July. INTA Standing Rapporteur for Japan Pedro Silva Pereira (S&D, PT) welcomed the agreement but cautioned: “An ambitious agreement has the potential to bring substantial benefits for sustainable growth and jobs. However, we know this is not the end of the road. The European Parliament remains vigilant and it will scrutinize the negotiations until the very end through its Monitoring Group for Japan”.
New Zealand and Australia: off the starting blocks
On 10-11 July trade MEPs are set to debate the draft reports by Daniel Caspary (EPP, DE) on the recommendations on the negotiating mandate for EU trade negotiations with Australia and New Zealand. The draft reports underline the importance of deepening relations between the EU and the Asia-Pacific region for economic growth in Europe and recognise Australia and New Zealand as key countries in this respect.
The Commission had earlier this year concluded the scoping exercise with the two countries. The reports will define the EP position and red lines ahead of the Council’s adoption of the negotiating directives before direct talks can begin. The draft reports also crucially call on the Commission and the Council to clearly distinguish between an agreement on trade and the liberalisation of foreign direct investment (FDI), only containing issues under exclusive EU competence, and a second agreement on investment protection, including on FDI and non-direct investment, which would be subject to an Investment Court System. The reports would in this way signal a response to the ruling 2/15 of the Court of Justice of the European Union of 16 May 2017 on the distribution of competences in the EU-Singapore Free Trade Agreement.
Estonian Presidency: moving trade forward
Since 1 July Estonia is at the helm of the Council of Ministers of the EU, taking over the reins of the EUpresidency from Malta. On INTA’s field of competence, the Maltese presidency and Parliament reached successful trilogue negotiations on Macro-financial assistance to Moldova, the alternative trade measures to the DCFTA with Ukraine and held four trilogues on the modernisation of trade defence instruments (TDI) inching closer to a deal. In its programme and priorities the Estonian presidency, in line with the programme of the presidency trio (with Bulgaria and Austria) will continue to push for an ambitious bilateral, plurilateral and multilateral trade agenda. On the legislative front it will start and continue negotiations with trade MEPs on the two TDI files, it will advance discussions on Dual Use and aims to steer the debate on the main parameters of a Multilateral Investment Cour.
IPI new lease of life
At the June European Council leaders asked to deepen and take forward the debate on how to enhance reciprocity in the fields of public procurement and investment. At the moment firms from third countries enjoy a high level of access to EU markets and public procurement; the same cannot be said for EU firms in third countries. In light of the new prominence given to the principle of reciprocity, the INTA Committee will be considering the Commission's amended proposal of a five year old file known as International Procurement Instrument (IPI). While Parliament's position on the proposal established in the previous legislative term has been reconfirmed, Members did not yet have an opportunity to discuss in-depth the renewed attempt by the Commission to break the deadlock in the Council by presenting an amended proposal. The rapporteur Daniel Caspary(EPP, DE) will bring discussions in INTA forward by presenting a working document setting out his view on how the Parliament should react to the new elements of the amended proposal.
Increasing Transparency and Responsibility in Global Value Chains
INTA members will vote on Tuesday the own initiative report by Maria Arena (S&D, BE) on the impact of international trade and the EU’s trade policies on global value chains. The draft report proposes a number of measures with the aim of strengthening the responsibility, transparency and fairness of EU trade policy. The draft report suggests among others the systematic inclusion of a binding and enforceable chapter on sustainable development in all FTAs concluded by the EU, create a level playing field for firms in the area of Corporate Social Responsibility, the fight against corruption and tax avoidance and create multilateral norms which would prompt upward convergence on standards. DEVE, FEMM and AFET all provided their opinion to this report, which is preliminarily set for plenary in September after the vote in INTA.
Rules of origin to support Syrian refugees in Jordan
INTA members will debate the state of the implementation of the ‘Rules of Origin’ initiative aimed at integrating Syrian refugees in Jordan. The initiative stems from the ‘Jordan Compact’ agreed at the Donors’ Conference for Syrians held in London in February 2016. In July 2016 the EU and Jordan agreed to simplify the rules of origin in line with preferences given to Least Developed Countries under “Everything But Arms” arrangements. In order to be granted preferences, goods must be produced in one of the 18 specific industrial zones in Jordan and involve a minimum percentage of Syrian refugee labour in the production facilities. This exchange of views will serve as an opportunity to discuss with Jordanian authorities, with the European Commission and the EEAS the results achieved so far and possible ways to further integrate Syrian refugees in the Jordanian labour market.
INTA in plenary
On 4 July MEPs gave their go-ahead to two trilogue agreements reached by INTA MEPs with Council negotiators. Parliament backed further trade concessions to foster the economic development ofUkraine. In talks, co-legislators approved most of the proposed new concessions, but reduced the volume of the additional quota for certain agricultural products and ensured that fight against corruption becomes a condition for granting Ukraine preferential exports. MEPs also voted in favour of Moldova receivingmacro-financial assistance to the tune of €100 million to support recovery from economic turmoil. The EU will provide a combination of grants and loans to support the external financial needs of the country. On 5 July the plenary debated an Oral Question put to the Commission by INTA on the Court of Justice’s ruling of 16 May 2017 on EU-Singapore FTA. Members asked among others how the ruling would impact on future mandates for the negotiation of trade agreements and the procedures for their ratification and how the Commission plans to ensure that future negotiation directives draw a clear distinction between EU exclusive and shared competences. Finally, as no objections were raised to the announcement of the beginning of negotiations, plenary gave its green light to start talks with national governments on new EU anti-dumping rules designed to better protect EU industry and jobs – the so-called new methodology of TDI calculation. The first trilogue is now set for 12 July.
Votes in INTA
On top of the Arena report, trade MEPs are also set to vote on a draft opinion to the AFCO report on the Implementation of the Treaty provisions concerning national parliaments by rapporteur Franz Obermayr(ENF, AT). The draft opinion and the amendments to it, suggest ways to promote the inclusion of national assemblies in the trade debate. INTA will also vote on its recommendations on the modernisation of the trade pillar of the EU-Chile Association Agreement and the agreement between the EU and the Republic of Chile on trade in organic products by MEP Inmaculada Rodríguez-Piñero Fernández (S&D, ES). Members will also vote on two files related to trade ties with Iceland: on the protection of geographical indications for agricultural products and foodstuffs and an agreement on additional trade preferences in agricultural products. Both files are authored by INTA Standing Rapporteur for Iceland David Borrelli (EFDD, IT).
RECENT TRADE NEWS
Barriers to trade on the rise – EC and WTO report
Two separate reports on trade restrictions published by the World Trade Organization and the European Commission ahead of the G20 in Hamburg point to the same conclusion: trade barriers are on the rise across the globe and especially among G20 economies. The WTO’s 17th monitoring report on G20 trade measures, issued on 30 June, shows that trade restrictions in G20 economies have risen at a moderate rate similar to that of previous years. A total of 42 new trade-restrictive measures were applied by G20 economies between mid-October 2016 and mid-May 2017, including new or increased tariffs, customs regulations and rules of origin restrictions. On 26 June the European Commission issued its annual report on Trade and Investment Barriers covering the year 2016. European exporters reported a 10% increase in the number of trade barriers they encountered in 2016 alone. 372 such barriers were in place at the end of last year in over 50 trade destinations across the world. According to Commission’s estimates, the obstacles created in 2016 could affect EU exports to the tune of €27 billon. The Commission claimed success in having removed as many as 20 different obstacles hindering European exports. The report also shows that, contrary to their formal pledges, most of the trade barriers stemmed from measures taken by G20 members.
US readies for announcement on section 232 investigation
The US Department of Commerce is in the process of finalising a report which will propose to the US President whether to impose sanctions to US trade partners on the grounds on national security under Section 232 of the 1962 Trade Expansion Act. Secretary of Commerce Wilbur Ross had stated his intention of presenting the findings and recommendations of the investigation on aluminium and steel imports by the end of June. US trade partners such as Canada and the EU could be the target of punitive tariffs. Commenting on the investigation at a press conference, Trade Commissioner Cecilia Malmström stated: "We would have to see if that measure is in compliance with the WTO of course and if it hits us like it could we will of course retaliate. Exactly how and when I will not answer now, but we are making preparations."
STATE OF PLAY OF EU TRADE DISPUTE SETTLEMENT
Russia complies with WTO ruling
In August 2016, the WTO ruled against Russia in the case regarding the tariff treatment of certain agricultural and manufacturing products, which included tariffs on paper and refrigerators. On June 8th, Russia claimed to have complied with the Dispute Settlement Body’s recommendations and rulings. By the end of June, the EU has said that this is in fact the case.
WTO panel rules in favour of Pakistan in its dispute with the EU over plastic exports
On the 6th of July 2017 the WTO circulated a panel report which found the EU had breached a number of articles of the Subsidies and Countervailing Measures Agreement. In 2014 Pakistan requested consultations following the imposition of countervailing measures by the EU on the imports of certain polyethylene terephthalate from the Asian country.
EU-China Investment Agreement: 13th round, 11-14 July, Brussels
EU-Micro States Association Agreements: 11-12 July, Brussels
DG EXPO Policy Department
Studies and workshops:
Openness of public procurement markets in key third countries
International Court System’s mechanisms in recently negotiated and future EU FTAs
European Parliamentary Research Service
EU-Cuba Political Dialogue and Cooperation Agreement, Enrique Gomez Ramirez, Briefing (International Agreements in Progress), European Parliament, EPRS, June 2017, 8 p.
Macro-financial assistance to Moldova, Naja Bentzen, At a Glance (Plenary), European Parliament, EPRS, June 2017, 2 p.
EU-Singapore Free Trade Agreement - Stimulus for negotiations in the region, Krisztina Binder, Briefing (International Agreements in Progress), European Parliament, EPRS, June 2017, 8 p.
Prospects for a Multilateral Investment Court, Roderick Harte, At a Glance, European Parliament, EPRS, June 2017, 2 p.
From arbitration to the investment court system (ICS): The evolution of CETA rules, Laura Puccio, In-Depth Analysis, European Parliament, EPRS, June 2017, 31 p.
EP Research Service library collection
Business and human rights: History, law and policy - bridging the accountability gap, Nadia Bernaz, Taylor & Francis, ix-313 p., 2017, "Adopting a legal perspective, the book looks at the historical background of the field of business and human rights, and examines salient periods, events and cases. It goes on to explore the relevance of international human rights law and international criminal law for global business. International soft law and policy initiatives which have blossomed in recent years are evaluated along with private modes of regulation. It also examines how domestic law, especially the domestic law of multinational companies’ home countries, can be used to prevent and redress corporate related human rights violations."
CETA : quand l'Europe déraille, Paul Magnette, Editions Luc Pire, 156 p., 2017, “Paul Magnette revient sur la saga qui l'a mené à prendre la tête de l’opposition au CETA : comment assurer qu’à l'avenir le commerce soit véritablement mis au service du développement durable, de la réduction de la pauvreté et les inégalités, et de la lutte contre le réchauffement climatique ? Comment garantir que les négociations soient menées dans le respect des principes démocratiques de transparence et de contrôle parlementaire, en y associant les représentants de la société civile ? C'est un véritable changement de perspectives qui est proposé ici, car sans un tel renversement des priorités, l'UE ne retrouvera pas la confiance de ses citoyens.”
Außenhandel : Grundlagen internationaler Handelsbeziehungen, Clemens Büter, Springer, xx-429 p., 2017, “Dieses Buch erläutert den Ordnungsrahmen internationaler Handelsbeziehungen und gibt, darauf aufbauend, eine grundlegende Darstellung aller wesentlichen Teilgebiete und Zusammenhänge des Außenhandelsgeschäfts. Die 4. Auflage wurde vollständig überarbeitet und erweitert. Wichtige Neuerungen betreffen u.a. Neuregelungen des Außenwirtschafts- und Zollrechts, der internationalen Zahlungsbedingungen und der Außenhandelsfinanzierung sowie Weiterentwicklungen im Rahmen der Risikobesicherung im Außenhandel.“