Special Event – Trade and the European elections: what is at stake?

Speakers: Rizza Piero, Pondelek Ursa, Cepova-Fourtoy Andrea, Köhler Martin, Adam Ulrich
Moderator: Carnell Poppy

On the 10th of April, PubAffairs Bruxelles hosted a debate on how the main political groups will address the question of trade throughout their campaigns with Ms Ursa Pondelek, Policy Advisor, ALDE Group, Mr Piero Rizza, Policy Advisor, EPP Group, Ms Andrea Cepova-Fourtoy, Head of Unit, ECR Group and Mr Martin Köhler, Policy Advisor, Greens/EFA Group.

Mr Ulrich Adam, Director General, Spirits Europe, hold an introductory speech.

Mrs Poppy Carnell, Chief Correspondent for Trade, MLex, moderated the discussion.

Mr Ulrich Adam started his introductory speech by emphasising the relevance and the importance of this debate for the upcoming European elections and the next legislative term, as trade will continue to play a crucial role for both European enterprises and citizens. In addition, Mr Adam explained how, with a share of 10 percent of the total value of EU agrifood exports, the European spirits industry has been a success story. This achievement illustrates how both the spirits sector and European citizens have benefited from an effective trade policy, he said. In fact, the speaker clarified that exports have been driven by geographical indications (GI) and constitute a commercial accomplishment on a global level, while the tangible economic benefits have been felt on a local level. Against this background, Mr Adam concluded his speech by specifying that the EU trade policy has two main challenges ahead: in the long-term, maintaining the EU as a a power house in global trade, and, the more imminent challenge, to achieve a greater level of public understanding of the benefits of trade in Europe.

Poppy Carnell introduced the panel and asked the speakers to elaborate on the EU trade policy priorities of their respective political groups for the upcoming legislature.

Ms Andrea Cepova began by stating that one of the pillars of the ECR’s Spitzenkandidat Jan Zahradil is the continuation of Europe’s global leadership in trade. Whilst highlighting that the EU has successfully completed several important deals, such as with Singapore, Japan and Canada, Ms Cepova stressed the threats posed by the rising tensions over trade and the WTO and emphasised that Europe needs to clearly stand in favour of open and free trade. Introducing the ECR’s position for the next legislative term, Ms Cepova firstly stated that new trade deals must not only be implemented, but also extensively explained to European citizens in terms of benefits and opportunities. Subsequently, she highlighted the importance to conclude currently negotiated deals, such as the one with Vietnam, but also with the United States, whose negotiating mandates are about to be approved. The panellist also urged for a swift conclusion of the negotiations with the four founding members of Mercosur, namely Argentina, Brazil, Paraguay, and Uruguay, and highlighted her group’s aim to conclude ambitious agreements with Australia and New Zealand by the end of this year, as well as to relaunch the ASEAN-EU talks. Referring to the Africa – Europe Alliance, she presented the prospect for extended engagements with the African continent, while highlighting that the questions of services and e-commerce in the WTO should also be domains in which the EU should remain mobilised. Ms Cepova concluded her introductory remarks with a pledge for an ambitious new commissioner and a continued cooperation in the European Parliament in order to achieve these ambitious goals.

Mr Piero Rizza opened his intervention by stating that the EPP Group’s position for the EU electoral campaign regarding trade could be summarised through the issues of market access to third countries and trade defence instruments. The speaker explained that these questions are both two sides of the same coin. He considered that the current legislature, which is about to end, had taken these issues as two main lessons which were learned. He cited the successfully negotiated agreements with Canada, Singapore, Japan, as well as with some African countries, as examples of how market access has been valued by his political group, while underlying the unique institutional role of the European Parliament in stimulating, concluding and ratifying trade agreements. Mr Rizza added that the EPP considers the recent finalisation of the two agreements with Singapore as a true success story. Referring to the question of trade defence instruments, Mr Rizza affirmed that the conclusion of important regulatory measures have been necessary due the rising relevance of the question of how to deal with non fully-fledged market economies. In this respect, he indicated the modernisation of basic anti-dumping regulations and the approval of foreign investment screening instruments as major EU achievements. As the EPP aims at fostering a free and fair global trade environment, Mr Rizza reiterated that the question of market access and trade defence should be considered as the two main pillars of his group’s position. Regarding the agreements which will not be finalised within the ending term, Mr Rizza pledged to maintain the pressure on the next Commission to conclude the current negotiations with Mercosur, Australia, New Zealand, but also with Indonesia and Tunisia. He subsequently underlined the importance of the finalisation of international public procurement agreements and concluded his first intervention by stating that the results obtained so far by the EU trade policy can be considered satisfactory from his political group’s point of view.

Ms Ursa Pondelek started with an overview of the state of play of the cooperation between the different political groups in the European Parliament by underlying that they all have gained a developed sensibility for their respective positions, as witnessed by the practice of trying to agree on possible compromise amendments before crucial committee votes. This practice, she explained, resulted in a swifter legislative process as some compromises were outlined and reached at the important stage of the parliamentary debate. Regarding the ALDE’s position on trade, Ms Pondelek started by premising that globalisation will remain a permanent phenomenon, while asserting that, given its bargain power stemming from the single market, the EU must continue to play its role of rule-maker. She further added that her political group supports the idea of multilateralism and and that the question of the WTO impasse is also a priority for ALDE, as the WTO is the only organisation which would be able to recompose the fractures emerging in the current international context. With regard to US-EU relations, while highlighting the discrepancies of views between Europe and the current US administration, Ms Pondelek quoted Winston Churchill by stating that “there is only one thing worse than fighting with allies, and that is fighting without them”. Ms Pondelek continued by saying that the ALDE group will continue to support ambitious trade deals and to value the questions of meaningful market access for goods and services, geographical indication, as well as the rules right and maintaining high level of standards. Additionally, she remarked that the her political group followed a value-driven approach to trade and, for this reason, she insisted on the importance of the question of enforceability of sustainable development and human rights clauses, while stating that another challenge for the next legislature will be creating the appropriate tools to display proportionate and effective responses when EU exports are harmed, or heavily disadvantaged. On another note, Ms Pondelek also affirmed that the question of trade is often used within the EU as a scapegoat for economic strains or unequal distribution of wealth and she stressed the need to act at a national level in order to compensate possible imbalances, regardless of whether they are created by trade or not. In the same fashion, she urged national governments to take more responsibility regarding the public discussion and awareness on the benefits of the new trade agreements at an early stage and not to tackle this question when they are about to be ratified. Finally, the panellist highlighted the progress made in enhancing transparency while negotiating trade agreements by recalling, as an example, that members of the German Parliament have had, for a long time, better access to relevant documents regarding trade negotiations than European parliamentarians until European institutions decided to upgrade their standards.

Mr Martin Köhler shared his view that trade policies are at a crossroad and this situation has induced the Greens/EFA group to reconsider some of its traditional stances. For instance, he mentioned the relatively new position of the Greens regarding the defence of the WTO as a forum in which the multilateral trade system must be preserved. In addition, Mr Köhler explained how bilateral trade agreements have reached a stage that makes it more difficult for the involved parties to put them to work without compromising multilateral trade. The speaker took the example of the renegotiation of the NAFTA agreement that has created some concerns about market access within the EU transatlantic relations. As a further critical point, he recalled the rise of public concern on climate change and, elaborating from this issue, he stated that the top priority for the Greens in the next legislature will be how to make trade agreements climateproof. Acknowledging the potential for conflict in bringing these two issues together, Mr Köhler however pledged for a cautious way of heading towards this direction. Regarding the question of climate in trade agreements, he proposed reference to the Paris Climate Agreement as a new standard  not only in the preamble of every trade agreement, but as a binding and enforceable obligation throughout all climate-relevant chapters of a trade deal. Mr Köhler also suggested the widening of existing WTO rules on climate with the goal to create a framework for the possibility of compulsory licensing of the most relevant climate technologies, similarly to the 2001 Doha declaration on TRIPS and Public Health. The speaker concluded his introductory statement by pointing out the interrelations between trade policies with democratic legitimacy and, in this regard, he pledged for a binding role of the European Parliament in determining the terms of negotiating mandates of the Commission.

Poppy Carnell asked the panellists their views on how to promote value-driven objectives of trade agreements, such as the standards on sustainability, climate change and/or human rights, and their enforcement.

Ms Cepova rMs Cepova responded by stating that the EU has initiated a new generation of trade agreements which include, beyond tariffs and regulatory cooperation, sustainable development chapters. She continued by explaining that, while efforts have been displayed over the years to introduce value-driven elements in trade agreements, the EU considers them already part of its trade policy: indeed, every new trade agreement has to include a commitment of the given partner/s to the Paris Agreement. Ms Cepova expressed the ECR group’s satisfaction about the state of play of EU trade policies, while agreeing with Mr Köhler that enforcement of sustainable development chapters will be a question of primary importance.

Ms Pondelek declared the ALDE group’s commitment to the Paris Agreement in the form of precondition for the ratification of any trade agreement. She also pointed out that there  should be no exception concerning two sectorial agreements with the US on industrial tariffs and conformity assessments which the Parliament recently voted a resolution on. However, the speaker explained that this exception passed as they were both considered as limited in scope, while reiterating that the EU should not conclude a trade agreement with any country that is not party to the Paris Agreement. Ms Pondelek ended by underlining that the challenge for the next mandate consists of how enforceability of sustainable development clauses will work from a practical point of view.

Mr Rizza started by stating that the insertion of sustainable development chapters and the Paris Agreement in EU trade deals has been a standard practice in the current legislative term, except for the case of CETA, as an additional declaration was added. In the speaker’s view, trade agreements would offer an additional chance to table constructive dialogue on climate-related issues, as the majority of the EU political spectrum in the current term has agreed on this stance. Regarding the possibility of creating links between WTO rules and the climate question, Mr Rizza explained this task would be challenging as resistance within the WTO to be expected. Nevertheless, Mr Rizza expressed his favour on the possibility of bringing this question before the WTO, as such a reform would go towards the best interests of the EU.

Mr Köhler replied that it is surely an advancement to have references to the Paris Agreement in trade deals, while expressing his scepticism that the mere reference to the Accord will have meaningful implications. In the speaker’s view, a climateproof trade deal would allow for a carbon pricing mechanism and could hence lead to less exchanges as it is not the framework in which we presently conceive free trade. Mr Köhler acknowledged the dangers of opening another front in the already troubled multilateral system. Nevertheless, he also said that the question of the climate could lead to a new balance and a renewed combination of interests in the WTO, if, for example, a discrimination between like-products for their carbon content would be balance by better access for developing countries to climate technology. The speaker subsequently suggested shifting the focus towards better social and environmental regulations of some key global supply chains in order to come to an agreement between developing and developed countries. This could give organisations such as the WTO new momentum, as it would be in the interest of all, he claimed. Mr Köhler concluded by stating that the EU is one of the three larger markets, as a result Europe has both the possibility and the moral duty to shape trade dynamics on a multilateral level.

Poppy Carnell subsequently raised the issue of alliances in trade and asked the panel if the EU needs to reshape its global strategy.

Mr Rizza highlighted the EU’s successes in the recent years, which conveyed towards new trade agreements and, as a result, new perspectives for the European industry. The speaker continued by stating that the relationship with the US is of crucial importance as it is in the interest of the EU to maintain a strong alliance with Washington. Mr Rizza took the example of the new agreement with Japan, which could also be considered as a measure to extend Europe’s global influence, while noting that the EU-China dialogue has already been fruitful. Indeed, the speaker explained, Beijing has taken some commitments regarding the functioning of its economy and we should be able to see the results in a reasonable amount of time. Mr Rizza proposed the creation of a taskforce inside the European Commission to handling the relations with China, a relationship he expected would become ever more challenging. The speaker continued by explaining that, on the one hand, the EU is trying to table negotiations with China while, on the other hand, Europe is adapting to an unexpected shift towards unilateralism which the US has gone through in the recent times. Mr Rizza then noted that even in the direct dialogue with US representatives in the European Parliament, it was difficult to understand thoroughly the rationale behind the stances of the United States towards the EU, while affirming that the only immediate action possible is to finalise the mandate to negotiate an agreement with the US in order to deal with the new administration’s expectations.

Ms Cepova replied to the question by advocating adapting to the new US administration, which has intensified its protectionist stances towards Europe. Regarding this matter, Ms Cepova expressed the opinion that the US protectionist claims are used as tactics rather than a final stance, while agreeing with Mr Rizza that the EU must finalise the mandate in order to start negotiations on industrial goods and regulatory cooperation with the US. Specifically on China, Ms Cepova proposed to look for a solution beyond bilateral relations. Indeed, the speaker explained, as China has raised concerns regarding its status of a market economy and as the EU could be tempted to enter into a “tip-for-tap” dynamic regarding, for example, market access, she expressed her group’s conviction that the best forum to address these questions is the World Trade Organisation.

Ms Pondelek shared her opinion, that even if Europe has several allies, such as Canada, Japan or Australia, the EU should continue its dialogue with the US also because the current administration might not be in charge anymore in two years. Additionally, she pledged for a more pragmatic EU tactic on alliances, as Europe should be able to play its cards at best in the current international context. Furthermore, Ms Pondelek stated that there is no need for a change of strategy as the EU has achieved tangible results with its value-based trade policy. Instead, the speaker highlighted the importance for the EU to have charismatic leaders to make sure that Europe can stand on its ground in the global arena.

Mr Köhler described his view of trade policy as an epiphenomenon of industrial policy. The speaker explained that the larger picture consists of three big blocs which are practising different industrial policies and are in permanent competition with each other. He praised the work of the European Commission which, in the speaker’s opinion, has so far adopted a “wait and see” strategy and did not rush in concluding a new trade agreement with the United States. Mr Köhler also expressed his positive opinion on the Commission’s approach to China. Indeed, the speaker specified that the relation with China has undergone some substantial changes in recent times as the underlying divergences with Europe have become more open.

The moderator asked the panellists if some of the controversies within the public opinion emerged from EU trade agreements could be avoided with better communication from European institutions and which should be the role of political groups in this regard.

Mr Rizza confirmed an important role for the members of the Parliament and of the political groups in terms of informing the public. He specified that it has not been a long time since both the Parliament and European citizens have gained access to the negotiating documents thanks to the Commission’s improvements of its transparency practices. Additionally, he underlined that the Parliament has relatively recently gained an increased power in influencing trade rounds. Mr Rizza explained that the turning point regarding the question of transparency was indeed the TTIP negotiation, which, on the one hand, has created tensions between EU institutions and a part of the public opinion, while, on the other hand, has conveyed EU institutions towards the adoption of more transparent procedures. The speaker consequently stated that the communication between the Commission and the Parliament is vital both in order to influence the negotiations themselves and to be to able to communicate more effectively with EU citizens. Mr Rizza concluded by saying that that it would be however naïve to push the question of transparency to its extreme, as MEPs and their respective political groups should pass the information in an appropriate way to avoid the disruption of the negotiation process.

Ms Pondelek started by agreeing with the analysis of Mr Rizza on the positive evolutions of the transparency question in trade agreements, underlined the improvement of stakeholders’ involvement during the pre-negotiation process and praised an ever closer relation with the citizens and national parliaments, especially in terms of communication. She went on to explain that the new cooperation setting between the Commission and the Parliament has worked well and defined the relation between DG TRADE and the relevant EU parliamentary committee on international trade (INTA) as exemplary. She continued by stating that, although national parliamentary procedures impose to discuss the position of their respective governments ahead Council meetings, she pointed out that, in some cases, the participation of national parliaments has been surprisingly limited in terms of both actual engagement and involvement of national stakeholders. She finally expressed her belief that governments shall take their share of responsibility and involve their parliaments better before taking positions in the Council.

Mr Köhler replied by considering that citizens and civil society organisations are well informed about trade policy as the availability of information in the public sphere has valuably increased. The speaker explained that in a domain such as trade, notably an exclusive EU competence, the EU should be praised for its efficiency and transparency practices. However, what was of a greater relevance for Mr Köhler was the question of a better communication beyond the topic of trade. In the speaker’s opinion, the citizens’ concerns are less focused on trade policy as such, but rather on the link between trade and economic welfare. He concluded by stating that the European political groups, including the Greens, have to improve further their communication strategies towards the wider public.

Ms Cepova also praised the Commission for its improvements, while pledging for a truth-based dialogue with European citizens. She stated there is a need to explain that trade and trade policies cannot be beneficial to every stakeholder, at least in the short-term, and that some economic sectors may benefit or lose out more than others. She called for better preparation at both EU and national level on the trade-offs of commerce as the possible negative effects of a given agreement must be anticipated, while counterstrategies must be developed in advance.

The Q&A session covered the following issues: the complexity involved in trade deals between developed and developing nations, the red lines for the respective groups and the impact of populist parties in the European Parliament, the question of the ultimate goals of EU trade, the matter of digital trade, the connection between artificial intelligence and trade, India and the EU economic diplomacy, the impact of Brexit for the EU and its trade policy, the subject of WTO reform, the impact of disrupting technology on trade, alternative strategies to deal with China, and the risk of protectionist stances in the current global context.

Want to know more about the issues discussed in this debate? Then, take a look at the selected sources provided below!

Parliamentary scrutiny of trade policies across the western world, European Parliament, Directorate General for External Policies

The European Union and its trade partners, European Parliament

International trade and globalisation, European Parliamentary Research Service

Implications of the escalating China-US trade dispute, Bruegel

A new era in EU-China relations: more wide-ranging strategic cooperation? European Parliament, Policy Department for External Relations

Transparency Policy in DG TRADE, European Commission

Trade Defence, European Commission

The future of sustainable development chapters in EU free trade agreements, European Parliament, Policy Department for External Relations

EU-U.S. Trade: Commission welcomes Council’s green light to start negotiations with the United States, European Commission

What is in store for the EU’s trade relationship with the US?, Bruegel

EU-Japan trade agreement: a driver for closer cooperation beyond trade, European Parliamentary Research Service

The Doha declaration on the trips agreement and public health, World Trade Organisation

EU as a global actor, European Commission

The case for intelligent industrial policy, Project Syndicate

EPP Group website

ALDE Group website

ECR Group website

Greens/EFA Group website