Committee on International Trade Ordinary meeting
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INTA European Parliament
Follow its sittingsBernd Lange
We met the secretary of the anti-red tape authorities. This is an authority that's trying to simplify and harmonize the procedures in the administration, and it might also be an idea to establish similar things here in Europe. And, of course, we...
I also met the speaker of the Philippines parliament and the country director of the ILO. And we visited.
IMI is a company producing electronic supplies for European companies. Lufthansa Technik, the largest EU investment in the Philippines, is looking for safer airplanes, and we also met the administration of the Philippine Economic Zone Authority, which is looking for specific incentives for innovation and industry in the Philippines. And overall, of course, we discussed quite intensively the development of the trade agreement with the Philippines, and I guess there's a really dynamic development. I'm sure that this will lead to a conclusion this year. I am really convinced, and this was a really positive climate in which we, as the European Union, are recognized as a reliable partner and that they want to have a good relationship with us. And the issue which often led to some turbulences, the agriculture sector is not so relevant here because they are not producing beef.
They are producing coconut, coconut milk, pineapple, and some other products, most of which we are not producing here in the European Union. So, there is a really good possibility of exchange. So, of course, I could make a long speech about that, but I now give the floor to my fellow members of the delegation. Jurgen?
Speaker 3
Thank you, Bernd, and thank you to all colleagues who were on this mission, and not least the secretariat that produced us a fantastic program, I have to say. It was very well executed. What is hard to assess from Brussels is getting the feeling when you meet our counterparts. But I'd like to tell you all that I have a very good feeling about this agreement now that we have met with a lot of government officials and secretariats from their sides. And it seems they are very eager to close this deal.
Speaker 4
And, of course, so are we. There are some obstacles, and both sides need to show flexibility in order for us to achieve this. We have an ambitious timeline. And hopefully, we will be able to conclude this at least this year. We have two more rounds already decided before the summer.
Speaker 3
So, all in all, very good meetings. They also had, interestingly enough, an anti-red tape agency, which I think is a fantastic idea that we should, of course, bring to Europe as well because we need more simplification in trade. So, all in all, very good. Thank you very much.
Speaker 6
Thank you, Chairman, dear colleagues. Not repeating what was said, but I totally agree with what the chair and rapporteur have said as conclusions of our visit. Also, let me join the appreciation for how the delegation was prepared by Secretary Art, by our representation there, the EU delegation in Manila. Just one aspect I would like to emphasize: Kjell has spoken about our other meetings there, and I would like to emphasize our two meetings with the business environment, namely the Philippine companies, the Chamber of Commerce and Industry of the Philippines, and other business representatives; on the other hand, the European companies, our European Chamber of Commerce in the Philippines, and their optimism about the potential for business in the Philippines. Their optimism is linked to some competitive advantages there.
Speaker 5
I think the most important, of course, is the level of salaries, which is competitive, but also the level of mastering the English language, which makes communication very easy. And this is a very interesting competitive advantage. And so I am also quite optimistic. I think that the remaining outstanding issues can be bridged. And I think that if companies are optimistic, that means that we can also say that this is a free trade agreement for the benefit of the people and the companies, for new jobs and for competitive business there.
Speaker 7
And also to frame it a little bit in the ASEAN perspective because the Philippines are chair of the chairmanship. They have the chairship of the ASEAN for this year, and they have repeatedly referred to the ASEAN, which is interesting because that also happens in the other countries with which we are having trade negotiations. So there is a sort of, not a competition, but a mutual positioning of the ASEAN members. With some of them, we already have functioning trade agreements, as the colleagues know very well. With Indonesia, we have already concluded, and we are waiting for the commission to present the Indonesia agreement for our analysis.
Speaker 9
And for the other members, I think it is quite a perspective that we could cover them also with our ongoing trade negotiations. So I think it is interesting, full of potential, and I think that our going there was meaningful. Thank you.
Thanks a lot. Christine?
Thank you.
Speaker 8
Thank you very much. I'll be speaking in Spanish. I'd just like to echo the words of my other colleagues who were on this mission. I think it was an extremely positive mission. I think there is a clear will on both sides to move forward with a trade agreement.
Speaker 10
I would first like to thank the secretary, Andrea and Yuan, all of the staff from the political groups, and, of course, the EU ambassador and the delegation in Manila, who really did excellent work, the whole team. Obviously, there are things to fine-tune here, and there are some difficulties in the country. But I think there really is a clear will to move forward. And I think there will be a lot of opportunities on both sides. Of course, it's not all perfect.
There are improvements to be made, such as the non-tariff trade barriers that are having an impact on access to public procurement markets. But I think that the government in the Philippines is making progress in terms of equality and democracy. And I would echo my colleagues' comments that the authorities are looking at tackling issues of bureaucracy, which I think is something very important, and it shows that they're seriously trying to improve democratic standards. So, I think we took a positive feeling away from that, and I hope that by the end of the year, we can have a trade deal with this country. Thank you.
Bernd Lange
Yeah. Thanks a lot. So, I would also echo what my colleague said. Andrea, thanks a lot. And, June, thanks a lot for these wonderful advisers.
And exactly as well, a wonderful program, and everything worked. So, you can imagine I chaired a lot of delegations, but here we see everything worked perfectly. And, of course, in my delegation, we also have a tough program. So, step by step, it's not for leisure, it's for work, and everything worked. And it was really one of the best delegations I have ever had.
And thanks also to my colleagues. It was really a united issue, and we are speaking with one voice. This was really great. Thanks a lot, Jurgen and Julio, for this cooperation. Thanks. So, we are now switching to point six, and the next delegation will go to Yaoundé in Cameroon.
And we have the MC14, and we requested, as coordinators, a paper on the role of the WTO in EU trade: state of play ahead of WTO MC14. And I give immediately the floor to Mr. Steve Bullock, who will present the paper and the results for 10 minutes, please. Thank you.
Speaker 11
You, Mr. Chair. My name is Oscar Hmiel, honorable members of the European Parliament. It is a privilege to present here today the findings of our study prepared by the Parlatrace Consortium entitled "The Role of the WTO in New Trade: State of Play Ahead of WTO MC14." The study examines the importance of the WTO and the international trade regime for the EU and its businesses, and analyzes the key issues in the current debate about WTO reform. Next slide, please.
Yeah. So, the overall conclusions of the study are as follows. First, the EU's prosperity depends on open markets and the predictability provided by the WTO. Second, the WTO's legal framework significantly influences the EU's preferential trade agreements. Third, we find that the WTO is therefore of great importance, and that it is in the EU's strategic interest to take the lead in the reform of this organization.
In the next slides, we will tell you more about the findings that led us to these conclusions. So, next slide, please. And now, we would like to mention a few economic findings that support these conclusions. First of all, a paper published by Felbermeier and others estimated that the EU gains from the WTO are at 5% of manufacturing GDP in welfare terms and contributed to over 7% in export expansion. Also, it is important to note that the WTO's most-favored-nation principle provides significant economic gains for European companies and for MSCs in particular, thanks to nondiscrimination and predictability.
Research also suggests that the growth of bilateral deals would disproportionately affect EU high-value manufacturing and technology-intensive exports. And weakening MFN risks accelerating global trade fragmentation. Next slide, please. Yes. So, in this chart, we see the effects of the WTO on welfare and trade that I have just mentioned, where a counterfactual analysis estimated the simple average result for the EU-27 at 5% of manufacturing GDP in welfare terms and over 7% in export expansion.
Of course, we can also see that these effects vary between different EU member states, but the effects on welfare are positive for all of them, and the effects on exports are positive for the vast majority of EU member states. These differences depend on the level of openness and the structure of the economy. Next slide, please.
Okay.
Speaker 11
So, on this chart, we can also see that MFN tariffs provide predictability in supply chains, as the share of total EU imports subject to MFN tariff in 2024 was almost 80%. Moreover, almost 20% of imports from the partners with whom the EU has a preferential trade agreement were still subject to MFN tariffs. Next slide, please. And when it comes to extra-EU exports, we can see on that chart that although this share has been decreasing over the last decade, in 2024, 47% of EU exports still benefited from MFN tariffs. Next slide, please.
Now I will let Professor Wolcock tell you more about the prospects for WTO reform. Thank you.
Speaker 12
Thanks very much. So, the premise is that the WTO has been beneficial for the EU in terms of economic trade and welfare. But, as I think we all know, it faces an existential challenge at the moment. Many of the issues in the reform debate concerning C14 are well known. As background to this study, we researched the various positions of the different WTO member states and then conducted a series of interviews in Geneva to really assess how things stand, because these are really the key political decisions that have to be taken.
Speaker 13
In many ways, the instruments for bringing about reform can be identified, and what has been lacking for a long time has been the political will to do this. So, what are the prospects for reform? We found that there was support for real change among the vast majority of WTO members, as represented in Geneva. There was also a clear view that the EU has a crucial role in driving forward the debate on reform, and many WTO members stress the importance of the EU. When it comes to the aims of WTO members in the run-up to MC14, I suppose you could say they're realistic rather than very ambitious.
Speaker 12
In other words, everyone stressed the need for ministers to agree on a specific, concrete agenda for the reform debate that would then take place over the coming years. So the expectation is not that there will be real substantive negotiations on substantive issues. Plurilateralism was seen as the best way of making progress, providing flexibility to make progress on some of the key issues. But the question remains as to how the outcome of agreements discussed plurilaterally would then be incorporated into the WTO. And on this, it is linked to the whole question of decision making.
The view of all the people we spoke to in Geneva was that there is consensus on consensus, by which I mean that there is a consensus on retaining the norm of consensus in WTO decision making. But at the same time, there is growing frustration with a limited number of WTO members who are wielding the veto power they have irresponsibly. So there's pressure on these WTO members to adopt a more responsible use of the consensus principle, as was the case going back to the GAP days. Another key issue is the level playing field question, of course, and the view was that this is the issue on which there is a need for the most preparatory work before progress can be made. There was a view that a focus on industrial policies and reform of the anti-subsidy and countervailing measures agreement would be the best way forward.
A lot of rhetorical support for transparency and improving notification procedures, but this still needs to be implemented. On special and differential treatment, another issue we are asked to look at, the general view is that the approach should be a combination of persuading some key emerging markets to adopt a voluntary graduation, alongside greater differentiation in the application of specific WTO rules. And finally, on dispute settlement, the picture at the moment doesn't seem very optimistic when it comes to a general reform of the two-tier WTO dispute settlement system. Many stressed the point that it was not the time to do this. It was not the right time.
So, the MPIA, the multiparty interim agreement, is seen as a workable alternative. Sorry. Could you move on two slides? Okay. So we were asked to come up with some suggestions as to what the intercommittee's position might be.
The suggestion is that the European Parliament might wish to consider unequivocal support for reform of the WTO and MFN as a core principle in nondiscrimination and a rules-based trading system. The committee might also want to urge all WTR members to set aside short-term national interests and commit to a concrete reform agenda. This really means that there are some specific WTO members who want to get an agreement on MC14 for their particular interests, but they should put that aside and focus on reform. Next slide, please. Plurilateral agreements would be the way forward, providing the necessary flexibility in order to achieve flexibility with accountability.
On the level playing field, a key issue here would be to press and gain more momentum on transparency disciplines because this is really a precondition for progress on any reform of the subsidies and countervailing measures agreement. In line with the broad consensus supporting voluntary graduation and encouraging key emerging markets to graduate voluntarily, but also a need to refine S and D T in its application. And then finally, to keep the pressure on, the need for the restoration of a fully functioning dispute settlement, but recognizing that this is not about to happen in the short term? Thank you.
Bernd Lange
Thanks a lot for these clear messages. I give now the floor to the steering group members. Jurgen Warband is the first for two minutes.
Speaker 3
Thank you, Chair, and thank you to both of you who presented this very interesting, very timely, and helpful report, especially since we are now preparing for MC14. As it says, the WTO is very important, and the EU should take a leadership role within the WTO. It shows the economic importance and the importance of the MFN principle, not least to small and medium-sized enterprises, and that businesses in general need more predictability. And that is, of course, more important now than ever, maybe. So, all in all, a very good report.
I have two questions that I would like to ask. First, you do a, what should I call it, a case study on the European issue. And since that is very timely as well, a lot of us in the parliament are discussing that.
Speaker 3
Moment, it would be interesting to hear a bit more in-depth how you view this issue because, if I understand, you say that there is some policy space for a European bio policy. But at the same time, there are clear violations of the GPA agreement or the governmental procurement agreements, especially when it comes to local content requirements. So, maybe we can have some clarification on that issue. And my final question is on the MFN issue itself. And you say that there is a possibility to adjust the rights and obligations related to the MFN, followed by yes, regarding the MFN, which, of course, we are listening to the commission also stating.
But couldn't this issue question the very predictability that we are seeking now? And how would we be able to change the MFN principle or the rights and obligations without making any violation of predictability? Those would be my questions.
Thanks. Pablo.
Thank you.
Speaker 14
Thank you very much, Chairman. Thank you very much for the clear presentations from our guests. And I consider this advice very precious in view of the upcoming meeting of the MF14. And it is very important to avoid fragmentation in the future. There has to, therefore, be a shift change, a model change.
And we have to have a model. We know that there are going to be more and more cases of use of bilateral agreements. We've all followed the events of Trump this week. And we have to find a position which is a happy medium, as it were, with all the different factors involved, such as industrial policy. The situation globally is very serious, and it's a central issue for the European Union, which has always had multilateralism enshrined in its DNA, as it were.
I would like to ask what the realistic possibilities are, in your opinion. What's going to come out of the upcoming ministerial conference? What should we expect? Some substantive changes and solutions to some of the controversies or changes in decision-making processes? Or is it going to be rather declarative and political in nature? On the question of e-commerce, the moratorium on the e-transmission transfer has become very crucial.
And we have to understand whether we should be expecting an increasing limitation for countries in their room for maneuver. We have to look at the convergence between the active factors, middle powers, which Mark Carney spoke about, and the multilateral situation. That is, for example, having a structured dialogue between the European Union and the Indo-Pacific area or a relaunching of a more ambitious WTO. And finally, the recent Beijing position paper sets out theoretical support for the multilateral system. If we look at the Chinese capacity for production and the strategic issues involved, this is very important.
We have to look at all the distortionary practices that exist and be decisive. This particular ministerial conference is really decisive for the global situation. Thank you.
Speaker 16
Thank you, Chair, and thank you for the presentation. I wonder if you could please comment on Trade Commissioner Zevkovich commencing the Financial Times in January concerning the MFN principle, proposing to give WTO members more freedom to raise tariffs. Do you believe that this is a welcome approach and that this should be the EU's approach as well? I would also like to take the opportunity to raise a question on technology transfer in medicines. While the EU has always been willing to support poor developing countries, it must also be acknowledged that several major developing countries such as India, South Africa, Brazil, and Thailand are now among our main competitors in these sectors, which is the best way to tackle these issues in incoming WTO reforms.
Thank you.
Thanks a lot. Katharina.
Speaker 21
Thank you, Chair, and thank you for the presentation to both of you. I have 3 questions. The first one also relates to MFN and the points that my colleague Karen just raised on Mr. Stefkovic's remarks recently. And how do you see that position versus the advice you gave and the analysis you made on the MFN? If there is room for a tweak on the MFN, do you see it as desirable?
Speaker 17
And do you see that as possible, the unanimity that is still required within the WTO? Secondly, I would like to ask you: in your study, you mentioned that the EU free trade agreements also impact international rulemaking on trade, in addition to what the WTO does, for example, through our TST chapters that have turned into a normative tool to influence trade flows. I'm wondering what patterns, if any, you see in our trade partners such as the US or China? What kind of norms are they also creating by themselves, as well as we might, as the EU? And finally, thank you for your summary at the end on where you'd like us to focus as a delegation in Cameroon.
Speaker 18
I was wondering if you have any advice on which of those specific points you mentioned should be our main focus, and if there are any key partners that we should make sure to meet in those meetings. Thank you.
Željana Zovko
Right. Thank you. And I really like your presentation on these plural bilateral talks and states. Can you please clarify a bit what Switzerland is doing with the like-minded partners and which other groups you have knowledge of that are having these talks, gathering like-minded partners on this plural side organization that is trying to bridge over the present situation with the WTO? Thank you.
Speaker 19
You, chair. I too would like to echo thanks to the authors of this report. I have a question to add to some of what has already been asked. Now, in the current lines of reflection, does the subsidies regime appear in current thinking? That was my question.
Bernd Lange
You see, from my side, perhaps you mentioned some recommendations regarding the situation, also regarding a talk I had with the director general in the context of the ministerial meeting last week. I guess we should really manage expectations properly. So I guess there will be no big step. What would be your most important recommendation on where we should focus? Some questions for you, please.
Speaker 12
Thanks, Chairman. Rather a lot of questions. We have tried to answer them. On the MFN issue, I think it's maybe useful to distinguish between tariffs and non-tariff issues. So, on tariff issues, I think there is a strong case for defending MFN, pure MFN with no conditionality.
But.
Speaker 13
The plurilateral agreements are a way forward in addressing topics such as those raised earlier about e-commerce, environmental issues, a wide range of issues, or the issues of the future, as the discussion goes on in Geneva. The argument is that the best prospect for progress is a plurilateral approach. Now, a plurilateral approach is, by definition, not necessarily MFN. It depends on how the final agreement is adopted into the WTO. So, in the past, agreements on subsidies, government procurement, and a range of rules-based issues, as opposed to tariffs, were addressed by plurilateral approaches, and they resulted in a form of qualified MFN.
So it doesn't mean to say that MFN should damage the nonparticipating countries. The way it's put by some parties in Geneva is that it's "do no harm." So, if you can conclude a rules-based agreement on issues of the future that don't affect the benefits or commitments of non-participating countries, then that may be the way forward for plurilateral agreements. The question is: is that MFN or not? It's beginning to change MFN a little.
Speaker 12
If there's to be progress, I mean, the key question is whether the US is engaged, and whether it's engaged in a constructive or a disruptive fashion. If the US is not fully engaged, then it needs middle powers, other like-minded countries, to make progress. There was a question about Switzerland. Switzerland is engaged with the EU, other OECD countries, and China in many discussions between like-minded countries. These are the joint study initiatives on e-commerce and on investment facilitation for development.
So this, in practical terms, the plurilateral approach is the engagement of the middle powers in pushing ahead with an agenda. And it's worth making the distinction here that China is engaged in these in a way that the US is not at the moment. On the bilaterals, I'm not sure what my colleagues here online will want to say about this. I think it's worth making a distinction between preferential agreements, which are agreed and negotiated, and on which the parties seek a shared solution to a problem, and bilateral agreements, which are deals struck by bargaining and the use of market leverage. If the EU pursues the former, in other words, preferential agreements based on agreed approaches to dealing with future problems, that is different from simple bilateral agreements on tariff structures.
So, I think it's worth making a distinction between them. On the key issues, what is the most important topic? It's probably stressing the importance of the EU leading the reform debate and supporting a nondiscriminatory, open, rules-based system because the EU is looked to by many WTO members to provide this key role in the reform debate. Beyond that, there are some more specific points on plurilateralism and how you approach it. But it's worth saying that a key question is getting ministers to agree on a firm agenda in Yaoundé.
On the other hand, Europe, I'm not sure if my colleagues want to come in on this. Of course, China is not in the GPA. So if it's on government procurement, there isn't an issue with China and a number of other emerging powers not being signatories to the GPA. So, that provides a bit of policy space. In terms of the "Made in Europe" discussion, I think that there is some policy space for promoting strategic procurement, such as in R&D and the environment, and certainly this is practiced in some national procurement policies where they have used strategic procurement.
But, of course, that is not discriminatory. It can't be discriminatory under the GPA. Do you want to come in? Not sure if any of my colleagues want to come online.
Bernd Lange
I heard somebody is online and wants to come in. Mister Stoyle, do you want to come in for a short remark?
Speaker 23
Thank you very much, Chair. I would like to add, concerning the question regarding European preferences or something like this, that we made it clear that under the GATT agreement, there is flexibility concerning giving preference to domestic producers and tenderers. The EU agreed with some other countries in the general procurement agreement and the bilaterals, which have been mentioned, to offer equal access for their partners from abroad, on the understanding that, of course, EU businesses will also profit under the general procurement agreement or bilaterals in foreign procurement markets. There is not much flexibility there. As we discussed, the security exceptions might be, in a very limited and targeted way, an option, but it is so far untested and should be interpreted cautiously. Thank you.
Bernd Lange
Thanks a lot. And we will discuss this point in the next few weeks and months. The Industry Acceleration Act is now postponed again until next week, I guess. And there will be some elements where we have found the balance between exactly this part of the gut and protecting and stimulating European industry. So, thanks a lot.
I will now give the floor to Fabienne Gael from the Commission. Having now heard the presentation and the discussion, what is your assessment?
Speaker 24
Thank you very much, Chien. Good afternoon, and thank you very much for having us in this discussion. I will start by thanking the authors of the report, which, as has been said, is very timely and very important, and thank you very much to the European Parliament for commissioning it. So some preliminary comments on both the report and also the discussion taking place this afternoon, which is, I think, very important for us to fine-tune the approach of the EU as we're moving towards MCMC 14. I would say, across the board, as a general point, we very much support the conclusions of the study, of the report.
Speaker 27
By and large, they converge with the approach we have developed over the last few weeks. Starting with the diagnostic that is proposed by the study. We obviously concur with the authors that the WTO has been tremendously important for our trade policy, both from an economic and legal perspective. But especially, that issue came back several times in the discussion this afternoon about the predictability it has provided to our trade policy and, at large, to the multilateral trading system. And as you will remember, this is why we put in our strategy towards a reformed WTO the notion of predictability as a central first pillar, and this is where we're starting from when we call for reform of the WTO.
Speaker 26
And I will start with the most obvious point that has been discussed many times, which is the whole debate and discussion on MFN and on the balance of rights and obligations. And I did find it very interesting to see in the proposed study that it suggests developing objective and transparent criteria linking MFN treatment to their favorable commitments on market openness, fair competition, and transparency. And I think this is a very important discussion that we should have with the WHO members as we move forward. As you know, the commission has been calling for a rethink of the system, a rethink of the balance of rights and obligations, which is a very important cross-cutting question that we have identified. Because, as has been discussed in the past, if the system does not deliver a sense of balance and fairness, then the constraints arising from the system are seen as lacking legitimacy, and they will lead to reduced buy-in at the political level and, in the end, being increasingly ignored. We have seen signs of that already happening.
Speaker 24
So unless we examine this balance, we fear that we might lose the system as a whole. But that means we should have a fresh look at the fundamentals that underpin this balance, and that includes the principle of MFN as it is today. But let's be very clear. What MFN provides, and that's stated several times in the study, which is for us fundamental and necessary, is predictability. And in that sense, MFN is a bulwark against the arbitrariness we have seen proliferating recently.
Speaker 25
But as has been said already, MFN today is not unqualified. It is subject to a number of exceptions and moderations, and maybe at the outcome of the reform, these types of exceptions can be revisited to better shape a reform of the WTO in light of today's reality. Let me also stress that we're very mindful of the role that MFN has played historically in protecting the most vulnerable members, and those are obviously not the relationships we are targeting by such a rebalancing. Quite the contrary. We think that this discussion is meant to contribute to safeguarding the rules-based system in an environment which is increasingly power-based.
So, this is the conversation we want to have with the members. We're not suggesting addressing it outside of the WTO, or addressing it unilaterally, but rather starting a conversation with WTO members. Very much linked to that, there is the question of plurilateral agreements. And I don't think we can have a conversation about MFN without bringing up the notion of plurilateral agreements. I find it very interesting in the study where the author said that stubborn opposition to plurilateralism seems likely to result in more poor-based unilateralism, which shows that this new form of plurilateral agreements might consist of what will be the building blocks of the future of the multilateral trade system.
So, I think for me, that links back to the debate on the balance of rights and obligations and how plurilateral agreements can play a role in the future as a way forward to deliver outcomes at the forthcoming ministerial conferences and negotiations on WTO reform. Finally, let me stress that in many instances, the study offers a very convergent view with what we're trying to develop and push forward from the WTO on decision making, level playing field, special and differential treatment, and the notion of greater differentiation. We can find in the study, indeed, a lot of like-mindedness with the points we're trying to push forward, which includes, obviously, as well the restoration of a fully functioning dispute settlement mechanism. Thank you very much.
Bernd Lange
Thanks a lot. Indeed, there are a lot of necessities, but I'm not sure that we will reach or achieve all of them. Let's perhaps also discuss some elements with India. So, of course, we are always optimistic. Nevertheless, thanks a lot to everybody.
And looking ahead to MC14, hopefully, we have some small steps in the right direction. Thanks a lot. The next item is also relevant for trade policy. It's AI and trade policy, and we decided to make an analysis on that because we want to have a say in this whole discussion about the digital area. And, of course, one of our members was also involved in the AI Act, and he is now the rapporteur for this.
And, Brando, you have the floor for 10 minutes.
Speaker 14
So, thank you, Chair. Artificial intelligence is no longer a technology question sitting at the edge of trade policy. It is becoming a general-purpose capability that changes how trade is organized, how firms compete, and how economic power is exercised. And when AI reshapes services trade, it shifts comparative advantage across borders at a speed that trade policy has never had to manage before. It's also happening in a specific geopolitical context that we cannot ignore.
Access to the inputs that make AI possible—chips, compute, cloud, data flows—is increasingly shaped by strategic decisions made in Washington and Beijing. When those inputs can be restricted or conditioned, dependency becomes leveraged. That is the economic security reality we are operating in. In this context, we need a values-based realism of the kind Mark Carney has described: an approach that recognizes power politics and the weaponization of interdependence while remaining anchored in the rule of law, human rights, and open markets. For the EU, that means pursuing strategic autonomy and resilient supply chains not as a retreat into protectionism, but as a way to uphold our values credibly in a fractured trading system.
This report responds to that reality with a single, integrated approach structured around two core questions. How can AI strengthen the EU's trade competitiveness? And how can trade policy reduce Europe's exposure to strategic dependencies in the AI value chain? The answer requires working simultaneously on three fronts: deploying AI for trade facilitation and competitiveness, securing resilient access to critical inputs through open strategic autonomy, and shaping interoperable, trustworthy rules for AI-enabled trade at the international level. The first answer is the most concrete.
AI is a powerful tool to help European firms compete, and we need to encourage adoption, particularly among SMEs, which stand to gain the most but are currently the least equipped. That means enabling our public authorities too: smarter supply chain coordination, paperless trade, and logistic tools that reduce bottlenecks. And it may mean using AI for enforcement. This committee knows the problem well. Noncompliant goods are flooding our market through e-commerce, and custom systems are overwhelmed by volume.
AI enables detection at a scale traditional approaches cannot match, making the system fairer for those who comply and harder to exploit for those who do not. But AI is not just changing how trade is conducted. It is changing what is traded, who benefits, and on what terms. In goods, competitiveness in manufacturing, automotive, pharmaceuticals, and energy technologies will increasingly be decided by AI-enabled productivity gains rather than factor costs alone. In services, AI is commoditizing expertise and accelerating cross-border delivery, eroding Europe's historic advantage in high-value professional and technical services.
For workers, the displacement risks are real and must be assessed systematically in every trade agreement we negotiate. If we want a durable political consensus for open trade, we cannot treat labor impacts as an afterthought. Finally, this is not only a European question. If AI-driven growth remains concentrated in a handful of economies, partners in the global South risk being locked into dependency on imported models and platforms. That is bad for development and bad for the kind of resilient, diversified trade relationships that serve Europe's long-term interests.
The EU should use its trade and... sorry. Use its trade and investment partnerships and global gateway capacity-building to support genuine local capability rather than extractive dependence. The second dimension is harder but more urgent. Deploying AI for competitiveness only works if Europe can access the inputs that make it possible. Advanced semiconductors, frontier compute, and cloud infrastructure are concentrated in a handful of firms and geographies.
And the EU attracted only 6% of global AI private investment in 2024. We are not starting from a position of strength. That means dependence, and dependence has direct geopolitical consequences. The United States has used export controls on AI chips as a tool of strategic competition. China controls close to 100% of our supply of heavy rare earth elements and has shown its willingness to use that leverage.
When access to critical inputs can be administratively restricted, dependency becomes a sovereignty risk. The report response is about strategic autonomy, not outer key, but derisking, diversifying supply through agreements with like-minded partners, and using our economic security tools: FBI screening, export controls, the anti-coercion instrument, and trade defense as a coherent system. The recently signed US, EU, and Japan strategic partnerships on critical minerals are a step in the right direction. But let me be clear: multilateral coordination of supply chains is only useful if it genuinely reduces our dependencies rather than shifting them. Europe must engage with such frameworks on its own terms, ensuring they complement our Critical Raw Materials Act and serve our strategic autonomy objectives, not the other way around.
The third dimension is about rules. Diverging governance frameworks and conflicting data rules create real friction for European firms. As Christine Lagarde noted at Davos, AI depends on scale and global networks, which are directly threatened by fragmentation. Regulatory divergence is becoming the next-generation non-tariff barrier. The AI Act is already functioning as a global benchmark.
I was just in India for the AI Impact Summit, and the interest is real. Across large democracies—India, Brazil, the UK, and Korea—we are seeing convergence towards risk-based regulation. We should build on that actively through trade and technology councils, digital partnerships, as well as the international fora. Let me be direct. Those calling for us to soften the AI regulations, including the AI Act, are misdiagnosing the problem.
Our challenge is not too much governance. It's too little capital, too much dependence, and too little strategic coherence. Data flows are the final piece. AI-enabled trade runs on data, and the rules governing cross-border data flows are fragmented, contested, and increasingly used as instruments of digital protectionism. Europe's position is clear.
Flows must be lawful, safeguarded, and enforceable. This also means GDPR-level protections for personal data and regulatory autonomy preserved in digital trade agreements, as we have done with the Korea digital trade agreement. More broadly, the EU commitment to a rules-based multilateral trading system means the WTO remains the right forum to establish common binding rules on data flows. The MC14 Ministerial Conference in Yaoundé is the moment to act, and the Commission must go there with real ambition, as we just discussed. Building on the joint statement initiative on e-commerce to advance meaningful rules on data for AI-enabled trade.
So, to conclude, the question this report poses is simple, even if the answer is not. Will Europe participate in the AI-driven transformation of international trade on its own terms or under conditions set by others? That choice is not abstract. It's being made now in investment decisions, in trade negotiations, and in geopolitical competition over the inputs and rules that will define the next decade of the global economy. This report argues that Europe can be competitive, open, and strategically autonomous at the same time, but only if we act with coherence and ambition across all three fronts together.
I look forward to working constructively with colleagues this time and to the opportunity to strengthen and deepen our common position. I'm convinced that the contributions of the shadow rapporteurs will significantly enrich this work, which for now is only the exoskeleton of what can, thanks to everyone's input, become a report truly able to refine and advance the European strategy carried forward by the Commission and the Council. Thank you very much.
Bernd Lange
Thanks a lot, and good to, at the end, have some positive outlooks. So I thought eight minutes were left to describe the weaknesses and the problems, but in the end, we have a positive outlook. Jung, you will speak for the EPP.
Speaker 3
Yes. I will speak for Miriam Lexman. So, I will read out her statement. And she says the following: I would like to thank the rapporteur for his work on this file, and I am looking forward to constructive cooperation.
I believe the draft report addresses well the main aspects to be considered for the adoption of the AI strategy for trade. Still, I believe we should focus more on the opportunities and show the EU as a confident and ambitious actor. I would, therefore, like to balance out the overall tone of the report. I also believe we should put more emphasis on the critical role of the WTO as the principal multilateral platform governing international trade and the global digital economy. This is especially important in enabling AI development and adaptation, as WTO agreements already make significant contributions to AI development and should be at the core of the EU AI-enabled trade policy.
I would also like the text to further reflect the latest ongoing developments in the field of competitiveness and governance. With this, I mean especially the work on AI Omnibus, the 28th regime, and much-needed regulatory simplification and harmonization between the member states to reduce trade-related barriers. Thank you.
Speaker 19
Thank you very much. I think the point that we are looking at today is absolutely key. Artificial intelligence is not just an innovation. It's a technological challenge, and perhaps the greatest we've faced in some time, and it's only the start. When we look at the standards and the calculation models, that will really make up part of our sovereignty.
We can't allow artificial intelligence to become a new area of technological, industrial, and strategic dependency, as our rapporteur said. The reality is simple. If we look at semiconductors, platforms, etc., they are really very much concentrated in several areas. So if we do not react, our companies in sensitive sectors will be held captive. So, we need to go on the offensive in a constructive way.
Let me go into four points, if I may. First of all, we need to look at the protection of our know-how. So, we need to have clear rules on data and on sensitive technologies. It's hard to talk about being open without security, confidentiality, cybersecurity, and, of course, our raw materials. The second point is competitiveness.
Artificial intelligence could become a dumping tool in terms of subsidies and privileged access to data, for example. And the third point, I think this is really key, and it should be integrated into the report. I don't think it has been addressed by our rapporteur, but I do want to say something about this. And the consequences on the labor market. It's important to realize that tens or hundreds of thousands of jobs may disappear within the EU because of these challenges.
And then the fourth point, do not create a policy that only benefits the very big companies. SMEs need help, simplification, support, and access to solutions. So, to conclude, artificial intelligence should certainly help us leverage competitiveness and independence. Otherwise, we will simply create more dependencies. Thank you.
Speaker 29
Yes. Thank you very much. One second. And thank you to the reporter for the work. We will propose, of course, some amendments to strengthen the report even more.
But overall, we very much agree with what has been said and have written down the areas where we want to slightly strengthen it. The report recognizes uneven access to AI tools between large corporations and smaller actors. We should go further and explicitly support open-source AI solutions because this would reduce market concentration and prevent structural dependency on a handful of dominant providers. European SMEs deserve fair access to digital infrastructure. We also see dangerous trends where trade secret clauses are used to block access to source code and algorithmic logic.
We must firmly oppose any provisions that shield automated decision-making systems from public oversight. If an AI system impacts European consumers, then our regulators, researchers, and civil society must have the right to audit it. And we also welcome the report's stance that GDPR safeguards remain the primary mechanism for personal data transfers. However, we must be explicitly clear. Cross-border data flow provisions in free trade agreements must never be weaponized to bypass our data protection standards.
The fundamental rights of our citizens are not bargaining chips for market access. Thank you, and I look forward to the cooperation.
Thanks a lot. Rudy?
Speaker 30
Thank you, Chairman. AI is already restructuring trade. Our goods are produced, our services cross borders, and we make profit from data. The rules we make now will determine if AI promotes shared prosperity or increases dependency and inequality. The report rightly says that Europe's AU future should be based on transparency, accountability, and governance that respects rights.
But its trade vision goes in the opposite direction. It treats the WTO as a place to make new digital trade rules, even though the WTO process has been shaped by big tech firms and risks constrained taxation, competition policy, industrial policy, and democratic AI governments, especially for the global South. The report also promotes data flows with trust. Of course, we need trust. But in trade agreements, data flows often mean free flows, rules that help big tech extract data from weaker economies, making it more difficult for these countries to promote accountability and the public interest.
This clashes with the vision of AI that is based on public control, rights, and democratic oversight. And there is a big contradiction. Today's digital trade agreements increasingly prevent governments from accessing source code or algorithms. This means that the EU trade rules are already undermining the transparency and accountability that this report claims to promote. We propose a different path: put public control of data and digital infrastructure at the center, treat key infrastructures as public utilities, build data commons with democratic governments, and defend every country's rights to choose its own data and industrial strategies.
Cooperation with the global South must be driven by demand and respect for sovereignty, without forcing our partners to liberalize their markets. AI and trade can serve people, but only if we reject a big tech constitution for the digital economy and build rules that prioritize accountability, public value, and shared development. Thank you.
Speaker 31
Thanks a lot. Quite clear. Now, I give the floor to the commission, please.
Speaker 32
Thank you, Mr. Chairman. Thank you for letting the commission present the trade's views today on the drafting of the report on opportunities and challenges presented by a comprehensive artificial intelligence strategy for EU trade. Artificial intelligence has become an important element of economic development. It is reshaping how we trade, how we compete within the Union and externally, and also how we regulate. From a trade policy perspective, it is clear that it can facilitate trade and make it work better.
Speaker 33
It can reduce costs across the value chains from marketing through logistics to the design of better solutions for final products and services. It can reduce compliance costs, which is particularly important for SMEs. It can help sports navigate tariffs, rules of origin, and regulatory requirements. It can make supply chains more efficient, reduce bottlenecks, support, and improve customs risk management. Artificial intelligence can also be helpful in terms of trade rules enforcement.
Speaker 32
It can strengthen enforcement capacity while reducing administrative burdens. In this case, artificial intelligence is a powerful tool for trade facilitation. But the implications go much further. Artificial intelligence is also reshaping competition. In good trade, competitiveness will increasingly depend on productivity gains in strategic industrial value chains.
Countries that successfully integrate artificial intelligence into production processes will gain scale, quality, and efficiency. Artificial intelligence is also transforming services trade. Digitally delivered services are becoming increasingly automatable and scalable. This challenges Europe's traditional strength in high-value professional services. Artificial intelligence-enabled trade depends on trusted cross-border data flows.
For the European Union, this means safeguarding high standards of personal data protection while enabling non-personal data to circulate. The challenge is to facilitate digital trade without compromising regulatory autonomy. This balance is delicate but essential. We also face the risk of regulatory fragmentation. Diverging AI compliance regimes could raise trade costs and create de facto barriers.
This makes international regulatory cooperation through digital partnerships, standards bodies, and platforms increasingly important. Finally, artificial intelligence raises questions of economic security. Access to advanced semiconductors, computing power, and secure cloud infrastructure is becoming a strategic determinant of competitiveness. Dependencies in these areas can be weaponized. Trade policy should neither overestimate nor underestimate its role.
Speaker 33
It cannot by itself create AI competitiveness, but it can help create the conditions in which European firms operate globally under predictable rules, high standards, and fair competition. The artificial intelligence aspect of trade policy is not about lowering tariffs. It's about shaping the rules of interdependence. The key question is not whether AI will transform trade. We are past that stage.
Speaker 32
The real question is whether we can align innovation, regulation, and openness in a way that preserves competitiveness, safeguards rights, and strengthens resilience. Thank you very much.
Bernd Lange
Thanks a lot. And no doubt about the importance of AI. Also, I recently visited the customer authority in Hamburg, and they showed me how you can really analyze with AI the custom formal rights, the procedure, and the registration elements, which used to take days. Now it's served in one minute. And so that's also a real improvement for customer service.
Vandu, to conclude.
Speaker 14
I want to thank all the shadow rapporteurs for their comments and ideas. I think it's important that we send a clear message with this report that we are ready to engage with these challenges, which we can say are multifaceted challenges but also opportunities. And I'm sure, as I said in my opening intervention, that the work with the amendments will make this skeleton of a report that I've presented richer and more detailed, so that it can be a useful instrument for the next steps that we have to take together. Thank you very much.
Bernd Lange
Thanks a lot. And the deadline for amendments is February 26 at 12:00 noon. February 26, high noon. You mentioned in your report also the question of economic security, and this is, of course, the wonderful bridge to the next item, item eight: the role of trade in strengthening the EU economic security, which is built on the report by our rapporteur, Mr. Soydu Alvares. And I have now, unfortunately, to leave for some minutes, and Julio will replace me and give the order for the discussion about this report.
Speaker 34
Thank you very much, Chair. Europe has grown as an open economy. Our prosperity, our development, and our weight internationally are built on trade, investment, and integration in the global markets. In recent years, though, we've seen how the economy can be used as an instrument of geopolitical pressure. The pandemic, Russia's aggression against Ukraine, strategic export restrictions, economic coercion, and bottlenecks in logistic routes have revealed real vulnerabilities in our supply chains and critical infrastructure.
Given these reality checks, economic security is no longer a theoretical concept. It has become a fundamental part of our foreign and trade policies. Now, our response cannot consist of isolationism or exclusionism. We continue to rely on openness for the EU, but we need strategic openness based on diversification, competitiveness, and clear rules. That's why this report sets out three lines of action: preventing risk, managing dependencies, and ensuring that rules are followed.
Preventing risk and strengthening our own economic base should be our starting point. It is clear that the best way to reduce external vulnerabilities is to ensure we have a solid and diversified economy that is competitive and allows us to face risk with a greater margin for maneuver. That's why economic security should not take restrictions as its starting point, but rather competitiveness. Resilience starts at home. A single market that is fully integrated is a fundamental pillar of economic security.
Speaker 35
If our own standards lead to fragmentation, doubling of work, and so on, that weakens our industrial capacity. In the same way, overregulation and legal uncertainty do not strengthen our autonomy. Rather, it erodes it. I think the commission, therefore, is right in its simplification efforts, and this will contribute to our economic security. The next step, looking beyond our own borders, should be diversification.
Speaker 34
We have to reduce excessive concentration in suppliers, raw materials, and logistical routes. We cannot allow one single country or point in our logistic chain to pose risks to our economies. Reducing vulnerabilities does not mean substituting one dependence for another. It means multiplying them. Here, the report stresses the need for an active and ambitious trade agenda.
Trade agreements are not just instruments to increase our exports. They are tools that allow us to diversify our supply, guarantee access to critical raw materials, strengthen regulatory cooperation, and build stable relationships with trusted partners. Managing risk, diversification is essential, but it is not sufficient on its own. When we talk of dependence and high degrees of concentration when it comes to critical infrastructure and sensitive technologies. We cannot just rely on market dynamics alone.
Speaker 35
Here, the European Union must be active, but it must act in a balanced manner. And here, the report sets out some lines for such an intervention. First, measures should be proportionate to the identified risks. Not all dependencies are equally serious. Second, they should be based on objective and verifiable analyses.
Our economic security policy cannot be built on perceptions or conjunctural reactions. Third, we must have impact assessments. Before we adopt measures, we should analyze what effects they will have on our businesses, on employment, and on our competitiveness. Fourth, measures need to be periodically reviewed as risks evolve, and our regulations should too. Ensuring that rules are followed.
In order to manage risk, that's not sufficient on its own unless the rules we develop are effectively applied. That's why we must focus on credibility and the consistent application of the instruments we already have in our toolbox. The EU has a number of trade defense instruments, ranging from investment control to dealing with cases of economic coercion. The problem isn't a lack of tools. The problem is in how they are applied.
When decision-making is put off, the dissuasive effect vanishes. When applying our rules and standards becomes inconsistent between different member states, the Union loses credibility. And that is why the report stresses the need for predictable consequences and clear decision-making when we identify anticompetitive practices or real risks. If dissuasion cannot change behavior, then our response must be firm, gradual, proportionate, and reversible. It must create space for de-escalation.
Speaker 34
That's the general framework, which I've tried to reflect in our initial draft. Economic security relies on very specific sectors, and that's why there's limited space for this type of report. We have worked on a number of amendments to strengthen and complement the text. I can present them very briefly for technical critical technologies. We've put in proposals to reduce dependencies related to technology transfer.
Speaker 35
Within technology, the digital sector is especially relevant, along with all of its infrastructure. We should strengthen our protections for submarine cables and Internet hubs, while offering greater guarantees for digital businesses. In critical raw materials, we should focus not just on extraction or refineries, but also look at where there are concentrations that exacerbate our vulnerabilities. We need to reduce excess dependencies so that we can ensure the distribution of critical medicines. We also need to protect our own innovative pharmaceutical industries and guarantee their intellectual property rights.
When it comes to logistics infrastructure, it is a key element of our resilience. Recent events in the Black Sea and Red Sea have shown how interruptions in critical logistics routes can immediately affect our supply chains and, thus, our economies. When it comes to energy, I propose improved oversight of critical infrastructures and strengthening supply capacity in sectors such as gas and nuclear. Finally, in the financial sector, which houses a few of our key vulnerabilities. When it comes to, for instance, our reliance on foreign players in payment systems and international financial communication systems, we need to strengthen our systems given the geopolitical tensions currently present.
So that is what is in the current draft, and that also covers the different aspects I want to maintain through amendments, with a view to the format of the report itself. Thank you very much.
Speaker 6
Thank you very much, Juan Ignacio, for this presentation and for the considerations that you shared with us as the rapporteur. And I'm turning now to the shadow rapporteurs. And first is the S and D group, Kathleen Van Dam, please.
Speaker 36
Thank you very much, Chair, and thank you very much to the rapporteur. I think the draft report is a good starting point. And as you mentioned, we can build on that, and that's what we will do from the S and D side. Let me start by highlighting the fact that the rapporteur, rightly so, says that the EU's deep integration into the global economy has increased our dependencies on third countries for strategic input, and we all know the examples. Our mind is very much on the United States today, but we should not forget to look at China as well, particularly our high dependencies on critical raw materials coming from there.
And I shared the assessment of the rapporteur that many of these growing dependencies have become structural and really dangerous vulnerabilities. So reinforcing our economic security is not just a matter of strategy. It is of high and urgent priority. So, yes, I think it's good to welcome the commission's communication and the call for a more strategic and proactive approach, but I think we need more than that communication. We need concrete actions.
I often have the impression that with the commission, they establish communication and a strategic approach. But what we need is concrete, tangible action, a clear road map, and measurable milestones. And diversifying trading partners is essential in reducing these vulnerabilities. So today, there's much more support for new trade agreements, and we support that fully. But it would be naive to think that simply signing free trade agreements will automatically lead to diversification and fewer vulnerabilities.
A recent report of the Court of Auditors, in their findings, said it wasn't happening. So, with diversification, but also with, for instance, the Critical Raw Materials Act, although interesting acts, the opposite is still happening. So, it's not enough. We absolutely have to acknowledge that it is not enough. So, we need to more fundamentally rethink our trade policy by linking market access and trade liberalization more closely with broader objectives like economic security, sustainable development, and the promotion of democratic values.
Let me give you the example of fossil fuels. We know we are overdependent on fossil fuels from the rest of the world, and that the rest of the world is not the most sustainable and reliable partner: Russia, the United States, and the Middle East. And so, the sustainability agenda on the one hand and the economic security agenda go hand in hand. That's a very interesting approach that we need to strengthen. Another very important issue is the existing instruments, the anti-coercion instrument.
I think we all agree that it's an interesting instrument. It's only a little bit strange that we haven't used it yet. And it's not as if there's no coercion going on these days. So, it's not just by having an instrument. It's also by using it and implementing it.
So, I think we need to be forceful on that, but we also need new instruments. We must be able to deter economic coercion more effectively and better protect European industries from unfair subsidized imports, and also acknowledge the fact that entire sectors are at stake over there. So I'm looking forward to working together with the rapporteur and the other shadow rapporteurs because I think it is very important that there is a strong report from the European Parliament to encourage the Commission to take stronger action.
Speaker 6
Thank you very much. And I now turn to the PFE Group and Christophe Bey.
Speaker 19
Thank you very much, Chairman. I'd like to make a comment, first of all. I am glad that this has come up in our committee and that this INI report has been produced, and its security is obviously just as important as AI. Economic security conditions our ability to manufacture, innovate, and have balanced choices. But unfortunately, we do have to be clear when thinking about this.
There's been a certain amount of naivety in all of this. We have to reinforce it but not actually become more dependent. And for that to happen, we have to have clear priorities. We have to, therefore, protect our vulnerable sectors. We have to identify the critical points, in particular materials, medicines, and sensitive technologies.
The report quite rightly underlines the risks attached to certain forms of investment. We have to have reciprocity when companies respect the various rules—environmental, social, and so on—and act in a secure fashion in terms of importing and exporting. We have to have proper instruments and control mechanisms for exports. And something that was underlined by the rapporteur: we have to make sure that there are not too many rules which would penalize SMEs. The need to have targeted and proportionate measures.
And I'm thinking, Mister Rapporteur, that we could go even further than you have in this domain. Economic security, but we have to protect our markets and our vital interests. And we have to put manufacturing and production at the heart of it in order to avoid dependence.
Speaker 5
Thank you very much. I am now looking for an ECR or an ECR speaker. And since it is not the case, renew speaker number. So then, I turn to the Greens. Anna Cavazini, you have the floor, please.
Speaker 39
Yeah. Thank you, Chair. First of all, of course, thanks to the rapporteur, Mr. Sergio Alvarez, and I'm looking forward, together with all the colleagues, to working on this important file. I think it's really crucial that we, as the European Parliament, as some of the shadows have already said, have a strong position on economic security because it's very important and very timely, actually. Of course, it's also good that the commission put forward the report, but as Kathleen Van Bren said, I miss a little bit the concrete actions, and that's why I hope that with this report, this parliament can also come forward with more concrete actions than the commission.
Speaker 38
And the analysis, of course, I share. We are a little bit squeezed in between China and the US, and we, with a lot of pain, feel how dependent we are. I think the solutions are not so easy, yet. I think it's, of course, important to diversify, but I think we cannot focus only on diversification. Oh my God.
Speaker 40
I cannot pronounce this word. And I agree with Kathleen Van Premt. I think it's important to also analyze where the FDA has probably increased our dependencies. I think we need to be really closely looking at the different FTAs and the different measures we have put on the table in the past. I think we must gain a deeper understanding of the vulnerabilities.
Speaker 38
So I think it's, of course, important that the commission has a lot of observatories and monitoring groups. We must understand this, but, of course, we must also be able to act, and that is why I think we need to strengthen our trade defense instruments that are, at the moment, very cumbersome, very slow, and a little bit more difficult to implement. And, of course, we must also systematically reduce our dependencies. And here, I also agree with the SND. A lot of the dependencies could be reduced with more sustainability.
That's super clear to me, like the circular economy, also getting rid of fossil fuels and switching to renewables. But, of course, not only that. So, we have to explicitly look at what we can do. I think another very important point for me is, because again, diversification is important, but we also need to strengthen internal demand and create lead markets in order to be sure that our European companies get rid of their products. And I have something in hand, especially when it comes to the crazy overcapacities that China is, at the moment, pouring into our markets, and we need to make sure that we end this unfair competition.
Again, it's not very easy, but it's very important that we do it. I think, for me, it is also a question of how we can influence the member states. Because, for example, last term we negotiated as the European Parliament, and the IMCO Committee actually handled the Single Market Emergency Instrument; it's also in the Commission report. So it's meant to have better coordination, basically, when we have a crisis in the internal market. But the member states back then ripped out everything from this law.
So, I don't want to say it's like a toothless tiger, but it was very much weakened in the trial log against the will of this parliament. And I have the feeling that sometimes the member states don't want to be directed or give up competences, but economic security also means that there is a more European approach. And I think this is something we also have to be super clear about for me. Having increased economic security means more Europe, and how do we deal with that vis-à-vis the United States? So, these are some of my reflections, but again, I'm very much looking forward to working with the team of shadows and the rapporteur because I think it's a very important and timely topic.
Thank you.
Speaker 5
Thank you very much. And the next shadow is on the left, Rudy Cannes. You have the floor, please.
Speaker 30
Thank you, chairman, and also thanks to the rapporteur. Unfortunately, this draft report largely repeats the narrative that we have been hearing from the commission and from the political majority in this parliament. It talks about economic security in the language of competitiveness, deregulation, and trade openness. But who is this economic security for? For workers, security means stable jobs, fair wages, affordable energy, and strong public services.
This report addresses none of the economic security concerns of everyday people. Moreover, many of the vulnerabilities the European Union now wants to secure were created by the very policies that this report continues to defend. Deregulation of key sectors, weakening public investment, and delocalization of production. At the same time, this economic security agenda attempts to reduce dependencies by reinforcing unequal relationships and resource extraction in the global South. Instead of repeating our mistakes from the past, we should learn lessons from those countries that have surpassed us.
Economic security must start at home: rebuilding industrial capacity, strengthening workers' rights, investing in public infrastructure, and ensuring democratic control over strategic sectors such as energy, pharmaceuticals, and key technologies. Our amendments will, therefore, go in a different direction. First, we will insist that workers' rights, social standards, environmental protections, and corporate accountability are central elements of economic security. Second, we will challenge the deregulation narrative. Resilience does not come from cutting the so-called red tape.
It comes from regulation that protects workers, significant public investment, and democratic control of strategic sectors. Third, we will argue for a more democratic economic model, including a stronger role for public ownership or public stakes in strategic industries. Europe does need economic security, but that security must be built with the people's interests at its core. Thank you.
Speaker 5
Thank you very much, and I'm looking forward to any other speaker in the room. If it is not the case, then, Juan Ignacio, maybe on my behalf, one or two brief questions. You have spoken about our trade defense tools, about investment screening, and the other tools that we have. And, in certain circles, there is a renewed discussion about one specific instrument that could eventually be imagined, which is outbound investment screening. What is your opinion, if any, on such an instrument for outbound investment screening?
Speaker 6
And my second question to you as a rapporteur would be about another discussion which is periodically coming back, which is the European provision, the European preference in European Union procurement for specific products. And it also came as a question to me when meeting certain like-minded partners who are worried about such a perspective of European preference. So, what is your opinion on all this as a rapporteur for economic security? Those would be my questions, and I now turn to the commission. And you have the floor, please.
Speaker 41
Thank you very much. Let me start by warmly welcoming this draft report and the discussion that we just had on the role of trade and strengthening the EU's economic security. I think we very much share the diagnosis that has been presented in the report and share the assessment that structural vulnerabilities need to be addressed quickly. But I think we also share the perspective that it is very clear in the report that the EU benefits tremendously from international trade and investment, and the measures that we take need to be proportionate, need to be targeted to the particular vulnerabilities that we have so that we continue to profit from this international system. Now, the commission came out with a communication on economic security on the third of December that essentially put forward three broad policy signals.
The first one is a shift to a much more proactive approach, based on anticipation and leverage. Secondly, the joint and full use of our tools, based on coordinated use of the tools that we have to their full extent. And thirdly, our cooperation with international partners, trusted partners, but also our current and future FTA partners, to address shared economic security challenges. Now I think that the priorities that the rapporteur has outlined very much mirror these objectives. And I would just like to go very quickly through the three elements that the rapporteur mentioned.
First of all, preventing risk. Fully agree on the importance of strengthening our economic base, strengthening the single market, and driving towards simplification. I would further emphasize the importance of investment in research and innovation, which is at the heart of putting the EU at the forefront of economic developments that we seek. Second, an element that the rapporteur mentioned is diversification, which drives, obviously, and we very much welcome the references to our trade agenda and the conclusion of FTAs and other types of agreements. We very much see these agreements and approaches as frameworks that help create a more conducive environment for de-risking.
They allow us to have a stable basis on which companies can seek new export opportunities, but also new sources of supply. And the third element that the rapporteur mentioned is the management of risks through targeted and proportionate intervention, to which I fully subscribe. That is, in fact, what we are doing through a progressive process of risk assessment and the formulation of mitigation action plans to address the risks, the first of which came out through the Resource EU action plan just in December of last year. I would maybe add to this list of areas the importance of strengthening our information base. So it's very important that, in parallel to all the consideration of actions that we take to diversify, to prevent risk, to manage risk, we invest in strengthening our understanding of where our vulnerabilities lie, but also where our strengths lie, so that we have this at a very granular level and we know what we need to do more specifically.
Finally, I noted in today's debate many references to the need for more specific actions that need to be undertaken. And I would just emphasize that it's very rare that we can address a risk we have through a single tool. And the whole approach that we're trying to develop with the new communication is precisely to make coordinated use of various tools and various policies to advance the interests that we have. Because in any particular situation that we are dealing with that is actually important right now, we know that we need to invest in our own capacity to a certain degree. We need to monitor the developments in that sphere, and we need to make sure that we're deploying our tools in a proactive way to limit the potential for undermining the objectives that we're pursuing.
The coordination and the comprehensive aspects of all of this are very important. Thank you very much.
Speaker 5
Thank you very much, and I am now going back to our final remarks. Ron Ignacio, the floor is yours. Please.
Thank you.
Speaker 34
Thank you very much, Chair. First of all, I would like to say that I appreciate the tone of debate and also the contributions that people have made speaking today. I would agree with the points made that it's a very relevant topic, and we certainly need to deal with it. So, I think on this point, we all agree. I look forward to working with all of the shadows, listening to the ideas and proposals, and coming up with a robust proposal.
I think that this is really a fundamental matter for the future of Europe. I can touch on some of the questions that already came up in the discussion today. As Katerina said, there are some tangible actions that are missing. No. And the anti-coherence coercion report is one of them, question report.
Speaker 34
I think it is important to look at regulatory excess that can create complications. So that's something that we can go into meetings to define how far we can go. I think it's important that we don't lose the perspective that we do have quite a high rate of development here in Europe, and that's due to economic openness. So, I think we can go into more detail. But as we've heard from the commission, they preferred to have slightly different criteria.
Speaker 35
Now, on the anti-coercion instrument, what's important, I think, is the suasion. So, we don't necessarily want to start a massive trade war, and it's something that can be canceled. But the moment that we deploy this, we've really lost any capability with any other country. So, I think it will be important to analyze each of the cases and really think about the impact, or what's most opportune here. So, when it comes to resolving a very specific problem, you might go completely over the top in the situation.
Speaker 34
So, I think it's better to take measures to deescalate a situation. Now, I hope that we can make progress on the specific questions of the outgoing investments. Now, it is not specifically regulated at the European level. The foreign direct investment screening had a minimum agreement, but as far as I know, it has been formulated fairly ambiguously in Article 19. However, the Commission has said that there will be a specific and careful analysis, and we will see if we reach an agreement in the draft. That's not really dealt with in detail.
Same for the industry-related law. I think it's prudent to wait and see what the criteria will be in the definitive text that the commission will present. So, it's true that this is something that comes up a lot. There are a lot of companies. There are a lot of sectors, and people are wondering what the criteria will be that will be used so that we can really strengthen our industrial capacity and our resilience in the long term.
Speaker 35
I'm convinced we can come to an agreement, and this really, I think, is an opportune moment to do so. Thank you.
Speaker 5
Thank you very much to the rapporteur, to the shadows, and to everyone in the Netherlands for this very good discussion. Deadline for amendments is Wednesday, March 4, at 12:00. So this concludes the point of our debate, and I think I will also pass my interim leadership of this meeting to the chair for the shadows meeting. Not the shadows, the coordinators' meeting. Thank you very much.
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