Committee on International Trade Ordinary meeting
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INTA European Parliament
Follow its sittingsSpeaker 3
We continue to engage with the Chinese side, and here too, I am in constant touch with my counterpart, Minister Wang Wentao. We are currently discussing prospects for high-level engagement this year, while keeping in mind that any such engagement should be results-driven. Furthermore, we should look into more effective and efficient autonomous trade and industrial actions where merited, as per the economic security strategy. Lastly, we must accelerate diversification through new free trade agreements and deeper partnerships with like-minded partners. We need these countries to effectively break off our dependencies on China and open new trade and investment possibilities for our companies, and I will come to this point a little later on.
The economic security strategy, which we published in December, reflects a paradigm shift, moving to a more proactive and targeted use of our toolbox. It also outlines the urgency for the EU, its member states, and, importantly, industry to systematically factor in a security premium to reduce vulnerabilities and enhance our overall security. This reinforced approach is designed to ensure that the EU remains competitive and is able to secure supply chains in the changing geopolitical landscape. Our work to diversify our trade is another key element of this effort and is yielding much fruit. The deal with the Mercos region will create a unique regional bloc, a free trade area of over 700,000,000 people.
The required protections were built into the deal with the passing of the bilateral safeguard regulation, offering assurances to the farmers. I think parliament's decision to refer the deal to the ECJ was unfortunate, not least because it may delay parliamentary scrutiny, your scrutiny, for up to 2 years. The commission and I personally remain committed to seeing Mercosur ratified and implemented quickly. Every year we lose is a year of lost trade, lost jobs, and lost economic opportunities that we badly need for our competitiveness and prosperity. Let me be specific.
Between 2021 and 2025, the EU would have benefited from an extra €183 billion in exports and €291 billion in GDP if the agreement had been enforced. I hope that very soon, I will bring to your table the final process of signature and ratification of the free trade agreement with Mexico. If you allow me to continue on the recently agreed FTA with India, which will help us to open up the world's fourth largest economy, traditionally marked by high tariffs and significant non-tariff barriers, to the EU. The deal liberalizes 97% of our trade; 90% would go to zero, with €4,000,000,000 per year in tariff savings. It opens huge opportunities to expand trade that is currently commercially unattainable.
In addition, the Comprehensive Economic Partnership Agreement with Indonesia offers EU exporters the chance to expand and find new markets, liberalizing 98% of trade with the largest economy in Southeast Asia. Looking ahead, talks with Australia are ongoing. I hosted my Australian counterpart earlier this month, and Commissioner Hanssen joined us to discuss the most sensitive agricultural elements of the proposed deal. We were able to make good overall progress, and further technical work is now underway to address the remaining divergences. Talks with the Philippines are also advancing, and we hope that it may be possible to conclude them still this year.
The latest round with Thailand was of a more technical nature, given the recent elections there, but we see a strong commitment from the Thai side to move forward. A round also took place last week with Malaysia, as we look to exchange market access offers later this year. A round earlier this month with the UAE allowed for further exchanges in a number of important areas, with a view to narrowing the differences on key outstanding issues. We also continue our work to forge close relations with the CPTPP, as well as to diversify our offers to third countries through digital trade agreements, CFAS, and CTIPS. Indeed, next week, we will see the first government-to-business meeting in South Africa as part of the implementation of our first city.
The EU's active trade agenda also signals our third firm commitment to rules-based trade at a time when these principles are under increasing pressure. With the World Trade Organization finding itself at a defining crossroads, we must work to prevent further erosion of the system. And this is precisely what we have done with our vision for a fundamentally reformed WTO, which we put forward in January ahead of the 14th ministerial conference in Cameroon in March. This is a long-term vision that aims for a system rooted in predictability, fairness, and flexibility. And it's about a time we take a fresh look at the balance of rights and obligations agreed 30 years ago, which is no longer in tune with the global trade landscape of today.
We are now in the process of establishing a key group of WTO members that wish to push for reform to see how best to move forward. Turning to steel. Our proposal to reduce steel quotas by 47%, to double the out-of-quota duty to 50%, and to strengthen traceability via the introduction of Meldenpur requirements are all vital to protecting this strategically and economically important industry. I'm therefore very happy that yesterday I could attend the first trial log on the steel measure last night, and the commission remains committed to facilitating a swift and smooth conclusion. If you allow me, I will finish by touching on the two other key pieces of legislation.
First, I'm very pleased to see the vote earlier today in this committee in favor of the final outcome of the FDI screening regulation. This is an important step towards further reinforcing public order and scrutiny across the EU. And similarly, after protracted negotiations, we should all celebrate the conclusion of the new GSP framework, which underpins our trading relations with 65 countries across the globe. It was vital that we find a way forward to ensure continuity and predictability for these trading partners and for business. So, honorable members, as you can see, there is a lot happening in our joint work at the moment.
And I am really grateful for the continuous cooperation on so many key files, for the permanent exchange of views, and for your support in what was indeed an extremely intense year in global trade policies, but also in the European trade offensive. So, I'm very much looking forward to your questions and to our debate. Thank you very much.
Bernd Lange
Thanks a lot, Maros. And now I'll give the floor to the political groups and to Jurgen Warband first for three minutes.
Speaker 5
Thank you, Chair, and thank you, Commissioner Shebkovic, for your introduction. Let me start by congratulating you on all the active negotiations that you both have concluded in the commission and those that are ongoing. It looks really promising and more promising than for a very long time. Maybe say something about the Mercosur agreement, since you mentioned it as well. And I mean, there have been a lot of calls for provisional application.
Speaker 4
EPP, of course, supports this. We know that business and business organization support it. There are also other political groups that support it here. We know that the Mercosur countries are moving fast on this issue, and the Council has given its clearance. So, I can only send a message that I hope it will be professionally applied as soon as possible because, especially as you said, it is very important that we now get all the wins, benefits, and growth that we need with this agreement.
We have fought hard for it during many years of negotiation, and now businesses need it. It is also needed for good-paying jobs in Europe. I'd also like to take the opportunity to bring up the WTO issue, and not least, the most favored nation principle. You had an op-ed in the Financial Times earlier this year, and it created some turbulence about what the commission really means when it comes to the MFN. So maybe I would like to give you the opportunity to clear up some of the issues and explain what you're really aiming for here. And then, turning to industrial policy, we have heard about the proposed Industry Accelerator Act, which, of course, is clearly an ambitious effort to reinforce Europe's industrial base.
But I must admit to having some concerns regarding elements related to European sourcing, public procurement preferences, and local content requirements here. My question is: how do we make sure that we find the right balance between, of course, strengthening Europe's industrial capacity, but also maintaining our openness? Our agenda has been openness and rules-based trade, making sure that we have competition and investment from other partners. And why should we switch our agenda now? It seems like we are adopting the agenda that some of our trading partners are doing, and I don't think we need to do that.
Let's stay on track. Let's stay open for business, for more free trade agreements, and for more diversification. Thank you.
Thanks a lot. Katrin from Wemt.
Speaker 7
Thank you. Thank you very much, and happy to see you. I know you must be extremely busy, Maros. And let me start by a very positive note. If I listen to you carefully, everything that has been done and everything that's in the pipeline, both on economic security, where we started to work in the parliament as of yesterday with the report of the rapporteur, but also mainly, of course, the advancements in the FDAs.
Speaker 6
Let me mention India. You know, if you look at the trade agreement with India, it's not top notch. Indonesia is an opportunity. And you see, we need to grasp that, and I think you'll find a lot of support in my political group there to advance. And I hope you come quickly with these agreements because we are eager to work on them.
And I know you agree, and it's not easy to get your administration fast enough, but it's extremely important that if we have an agreement, it comes fast to the parliament. Then we shouldn't do what we have done with Mercosur, but let's not go there. But I do have to switch to the United States, of course. It's the event of, not the day, not the week, not the month, but of the last year, and it will be the event of the coming year. And I think we are in a slightly different mood there.
And I understand that you have to defend it, but I do want to explain as well where we are as a political group and how we look at it. We were not happy with the agreement at all from the start. We said it's not an equilibrium. The one has 15%, and we lowered it to 0%. Because they threatened more than 20%, we didn't think it was a good deal.
We were ready to work on that. And our partner, who's also a chair, did an extremely tough job, and he had an extremely tough result, mainly on steel and aluminum, where we, from the start, said, you remember, a few days after Tonbury, they already violated the deal. They have already violated the deal. After that, other violations occurred. And you have to understand how we feel about it.
When he started violating the deal by threatening tariffs on Greenland, we said, "This is it." And now, here we are with the court. And one of the arguments of the commission—I really want you to comment on that. One of the arguments of the commission was no. No.
This is a good deal because we have the 15%, and nobody else in the world has it because they have 15% or more on top of the WTO normal agreements. So that gives us that advantage. And because of that advantage, we go to 0%, and we also promise them to do this and that. That's no longer the case, Maros. There is no advancement anymore.
There is no advantage anymore. It's all a level playing field. Maybe that's the good news. It's all a level playing field. So, actually, we don't have to go to 0%, and I don't think we want to.
What we ask you is to go back to the negotiating table and make a really good deal, a fair deal where we have respect for one another. Last point, and then I finalize on China because what we should really be working on, and you mentioned this, is, of course, China because the threat coming from over there is real. And so my question is, you said, I'm in constant touch, and we're dealing and wheeling. When will we deliver on what? When will we deliver on agreements with China?
Thanks a lot. Inigo.
Speaker 8
Thank you, Mr. Chairman. I will speak in Hungarian. You don't mind. Thank you.
Enikő Győri
Mister Commissioner, Mister Chair, thank you for being here. These are not simple times we are living in. No, it's not business as usual in trade policy either. Let me start with Mercosur. This is something that has been causing us a lot of headaches.
The commission, if they had acted differently five or six years ago, then the situation would be very different. However, we are where we are. It's a fact. Now, I would like to ask the Commission to be the guardian of the treaties, not only in theory but also in practice. And treaties tell us how international agreements must be strengthened and fortified.
The commission should negotiate based on the mandate it received from the council, and the member states accept that with a qualified majority. Then, the European Parliament must reinforce the agreement. And I would like to ask, with all due respect, that this is something the European Commission should comply with as the guardian of the treaties. And if this European Parliament, with the majority, requests a legal position from the European Court, then the Commission should wait for the result of that procedure. That is the minimum; in any decent legal community, that's how you should act. Now, there are interesting things in the commission.
The Cyprus presidency did not put to the vote an already prepared position proposal because some member states exerted pressure on it. And even though there was an agreement in the council, the case did not go forward. I think that is a major political faux pas. It's an error. It's a mistake.
And there are ways around the commission. It has the authorization to do this. We would like to ask the Commission not to use these workarounds because that will upset the decent cooperation between the institutions laid down in the treaties. My second comment on the agreement with the U. S.
Our companies, sooner or later, will need legal certainty. They will need to know what they will face. I understand there is a sense of urgency that the commission is facing, but we should look at the figures. We should see the numbers. We don't know what the numbers are telling us.
We don't know what percentages of tariffs will be on any product. And I would like to, as a commissioner, fight for Europe, including your vice commissioners. In some other issues, I feel the commission is trying to act more rationally and is giving up on some issues that have been causing new delays, which seems to be a more pragmatic approach. Thank you for that. And please confirm that the trading policy from now on will be about trading and less about green and other agendas that are not part of the trade policy of the EU, because you have to create opportunities for our companies.
For now, it's.
Speaker 10
Thank you, Chair, and thank you, Maros, for being here with us today. Today, we mark 4 years of the full-scale invasion of Ukraine, and we have to ask ourselves: have we done everything possible to stop Putin's war machine? Have we done everything we can to support Ukraine? Unfortunately, the answer is no. Trade is both an economic lifeline for the war-torn Ukrainian economy and one of our most important tools for speeding up Ukraine's integration into the EU.
Initially, the EU did the right thing. We introduced full tariff-free access for Ukraine through autonomous trade measures. Since last summer, however, we have gone completely in the wrong direction. First, we removed the ATM regime and worsened Ukraine's access to the EU market for agricultural products. Then we promised that Ukraine would be able to trade steel tariff-free, something we are now in the process of taking away through the new steel tariffs.
Let us stop that. And still, three member states maintain special import bans against Ukraine. Commissioner, this situation is unacceptable. And I really want to ask the commission how you will handle this urgent issue. If we truly mean what we say when we claim that we will do everything we can for Ukraine for as long as it takes, we cannot continue like this.
We are talking about a country that fights for our freedom and security and that is soon becoming a member of the internal market. The Ukrainian economy is under high pressure, and Ukraine needs trade and aid. I would like to take the opportunity to say that it's a shame. It's a shame that some member states blocked a €90,000,000,000 support package to Ukraine. And it's a disgrace that Hungary is taking the support package as a hostage.
And I wonder how colleagues from Hungary can be proud of themselves when you put not only Ukraine but the whole of Europe at risk. Thank you.
Bernd Lange
Thanks a lot, Karen, for this clear message. Now, for the Greens, Anna Cavattini.
Speaker 11
Thank you very much. I also want to start with the USA. I think it is actually, of course, a very good decision that the Supreme Court confirmed what all of us have been saying from the beginning: that these tariffs are illegal. And on top of that, they are also highly unpopular in the US. They also did not create more jobs.
And also, unfortunately, now that they didn't create more stability, because we know that Trump already announced additional tariffs and additional investigations. So, I think it is very good that this parliament did not vote today. And let me be very clear. I think before we can vote here in this parliament, we don't need only rhetorical commitments by the US that they stick to the deal because, clearly, the actions at the moment show differently. We need, like, black and white on paper that there is a solution for the aluminum and steel, and that there will be no additional tariffs beyond what has been agreed in Turnberry. So, I find this very important.
Secondly, I also want to actually touch upon Ukraine, but in relation to investment policy because we have seen that there are a lot of cases or threats of cases when we apply sanctions on the basis of old ISDS treaties that are still in place by some of the member states. And we all know, we have a very common approach here in the parliament. The commission has a very good approach, saying that with the grandfathering regulation and also with our new rules, the member states should actually renegotiate or terminate the old bids. And we see how dangerous they are because we are now threatened by Russia due to our sanction policy. This is outrageous.
So I wonder what the Commission is now doing to have real action vis-à-vis the member states and make sure that these old BITs are either getting renegotiated or terminated. And then I have one last question on the India FTA. Probably, can you say a little bit more on the sustainability parts? Because my feeling is they're very weak. But I read in the Q&A of the commission, I mean, we have not seen the text yet, that there is an additional climate agreement. Probably you can, like a climate MOU or whatever, elaborate a little bit on what that is.
And the last question on India: can you make sure that India will still be able to produce generics? Because we know it is of utmost importance for any country in the global South, African countries must get access to this medicine. Otherwise, we will have a huge health crisis. And this is, for me, one of the most important topics. Thanks.
Speaker 13
Thanks, Mr. Commissioner. I'm going to speak in French. I don't know how fluent your French is, but feel free to listen to the interpretation. Thank you.
Speaker 14
Thank you, Commissioner, for being with us here today. I'd like to start with a question that is quite simple, and I think I have already asked you this question. So I'd like to have a clear answer. Are you not trying to get rid of the parliament? I'm asking that because you have tried to get around national parliaments when it comes to free trade agreements such as Mercosur, and now you're trying to get around our European Parliament when it comes to adopting this free trade agreement, which is the worst possible free trade agreement signed by the European Union.
And it's going to involve many tons of beef and chicken, and nobody here has voted for this agreement. So, what kind of democracy can this be? Worse than that, there was a vote in parliament. It was a vote to go to the Court of Justice of the European Union, and they intervened a couple of weeks ago. And so, I think that your stubborn approach with regard to this agreement is a double mistake.
First of all, it's a political mistake. It's the first time that we've had this type of FTA implemented without any vote from any parliament, but it is also a legal mistake. And I know that often you attach a lot of value to these European agreements for reasons such as austerity, but there is a rule, a page looking at rules. And so, I'm going to read part of that: Article 218 of the Treaty on the Functioning of the European Union is very clear with regard to this procedure and the obligation of involvement of the European Parliament at all levels. Quite clearly, you have respect for that rule because you were really confirming the provisional application of this agreement without our European Parliament having had its say on the subject.
And that very same Article 218 confirms the capacity of the European Parliament to go to the Court of Justice. Now, once the Court of Justice has actually been handed the file, and if they decide that the Merxur agreement is incompatible with the European treaties, how are you going to justify the provisional implementation not only without the vote of our parliament, but also with regard to a part of an agreement that is not legal? Now I'd also like to remind my colleagues here. Now, how indeed can you be satisfied that we have this type of agreement without our having had our say? You might agree with me or not, but at least we have this right: a democratic right.
And I'd like to just finish up with regard to the agreement with the United States. Now, maybe I didn't hear properly. And we've just received a great slap in the face from the United States, with the court now in the United States having said that this is an illegal agreement. And so you say now, no. We're going to implement it anyway.
Dumb Donald Trump has slapped us in the face, and you're actually turning the other cheek so he can slap it. Now I think that what we want here is an FDA with Australia, the Philippines, Mexico, whatever. And you're never questioning the FDA with Israel. And so, I think, Commissioner, that beyond the political agreements that we might have, and there are many of them, what is really difficult for us to accept is the whole business about the variability of the rules that you apply.
Bernd Lange
Dear colleagues, we also invited the chair of chairs of committees that are related to trade policy. And, luckily, the agriculture committee is here with us, with the vice chair, Norbert Linz, and I give him the floor for three minutes.
Speaker 15
Yes. Dear Chairman, dear Commissioner, we all recognize the indispensability of international trade, especially since the EU is a major world exporter and notably a major exporter of agricultural products. However, we must admit that EU trade policy is also a matter of concern for the farming community. This fear seems well-founded because production conditions and costs in parts of the world cannot be compared to those in the EU. Competition is sometimes distorted.
The agriculture sector has also been severely affected by the upheavals caused by the Russian invasion of Ukraine, and it is now impacted by the US trade war. Under these circumstances, EU trade policy attracts criticism, in particular from farmers. It is sometimes seen as not defending their interest. The agreement currently being negotiated with Australia certainly reinforces that skepticism, at least among our producers of beef, lamb, sugar, and rice. So, therefore, the commissioner, in your opinion, how should the EU's trade policy evolve to maintain free trade while meeting the expectations and addressing the fears of many farmers?
Bernd Lange
Thanks a lot. And, Marius, from my side here, four points. First, of course, I have a different view regarding the United States and the breaking of the agreement. For me, it's clear that the United States has broken the agreement several times. Some weeks after the deal of Scotland, we introduced the lifting from 15% to 50% of the so-called derivatives.
And this is harming, day by day, small and medium-sized enterprises in Europe. And I can invite you to come to this company and explain to the people there that they are losing their jobs because they are not able to export to the United States anymore. And we have the Greenland issue. And now we have tariffs, which are much higher than 15%. For cheese, for example, it's not 15% anymore.
It's now 30%. So, a totally different view. And my question is, then, of course, Marius, you mentioned there will be some clarification. And so, from my point of view, at the moment, there is no guarantee. What is the format of clarification?
It's a written letter, a post from the president on social media. What is the clarification, and when will it come? So, this is important for us. Second point on Mercosur. Argentinian will finalize the work on Friday, likely, and they will notify it next week.
What would you like?
Bernd Lange
Would you like me to do it? I would like to go for a provisional application, no doubt about it. And this is important because, as you know, Argentina is also negotiating with the United States. And it's clear that, for example, the question of GIs is also in the portfolio of the negotiations. So, there is a kind of urgency.
So what rent will you do? Certainly, we also discussed this recently in Nicosia. The time between the finishing of an agreement, its signature, and then transmitting it to the parliament. Sometimes, it's two years. And this, I never understood how this could happen.
Translation and legal scrubbing: two years. You have some ideas to really speed up the process. Perhaps you can elaborate on this as well, so that we are in a time where sometimes more happens in a week than in previous decades. We should also be quicker in the process of finalizing the agreement. And fourthly, Maersk, there are more and more so-called mini deals.
The SIFA with Ecuador, the raw materials partnership, the investment partnership, and others—I have no clue what else. So, what is in your mind for further mini deals? Are you considering some specific countries, and when will some mini deals come to the table? How will the European Parliament be involved? First man, for you.
Speaker 3
You. Thank you very much. The question is: where to start? If I should go in the orders, the question has been presented. I'll try to group them. So let me maybe start with the first question asked by Mr. Varbourn, and I would say Madam Van Brent, Madam Jury, Bianciur, Madam O'Brien raised this question as well as the chairman of the Agri Committee, Mr. Linz.
I think that also in my introductory remarks, I was describing how important this deal is for European economies and how many very clear economic opportunities we have lost in only the last five years. I'm sure that several of you have visited Mercosur countries, and I believe that you would agree with me when I describe to you the cultural proximity, the strong historic ties, and also the wish of these countries to work as closely as possible with us. On top of it, there is a huge complementarity of our economies, where we see that what we export, they actually need. And because we have simply not been present enough, they are now getting it from China, slowly reducing our share on the market. And on top of it, they have what we need: critical raw minerals and, of course, access to the big market.
So, I think that we should not dwell on the past. But there were a lot of missed opportunities in the past, and we should have done this deal years ago. And we would not lose 10% of our exports to China as we did because we didn't have the free trade agreement. So, what we are doing right now is actually catching up. But the good thing is that all our projections, if the Mercosur deal is in place, by 2032 will be back in the situation we had 10 years ago.
We can get back our share. We can consolidate our investments. We can start a completely new chapter in cooperation in critical raw minerals and simply open new opportunities. On most of the products where Europe is very strong in exporting, from machinery down to agri-food exports, the tariffs are more than 35 percent, and they will go to zero. Only on tariffs, our exporters will save €4,000,000,000 a year.
That's a lot of money, especially in these days. Not talking about the simplification of the trade, not talking about, you know, all the guarantees which the investors are getting through this agreement, and not only talking about the fact which I believe will be very important for our pharmacies: the protection of our GIs. Mister Langhe, you are absolutely right. The United States does not like our GI system, and, of course, they are questioning it. They are talking to our free trade agreement partners, having questions about the GI protection. Therefore, I think that we should positively respond to the fact that all Mercosur countries, despite the tough time we gave them over the last two years, stop and go.
Very tough safeguards. If it comes to agriculture, there are really very strict quotas. Full respect of our food and safety standards. And then, of course, we thought that we would be able to conclude in December, but we needed a couple more weeks to do that. So, they really demonstrated a strong willingness to work with us as a strategic, real partner, and I think that we should clearly respect that.
Indeed, Argentina will most probably be the first one to conclude the ratification. Other Mercosur countries are coming next, and therefore, we are, of course, reflecting on how to proceed. I disagree with some of you who said that we are depriving the European Parliament of the vote. No. It was not us who sent it to the European Court of Justice.
You could have voted for this agreement. You decided to send it to the European Court of Justice, which I fully respect. I fully respect that. It's your right. But I believe that you will get the answers which you already got in the case of Singapore because the questions are very similar.
So it's kind of delaying tactics, which might delay the ratification by two years. And I honestly think that, in this case, it would be very unfortunate to pile on other hundreds of billions of euros of lost opportunities. Therefore, they are consulting with the member states. We are consulting with the members of the European Parliament. Thank you very much, Chairman Lange, for a very clear statement.
And I just would like to say that when Mercosur countries are ready, we will be ready as well. But let's continue these consultations with member states, with you, but I think we cannot let this chance slip through our fingers anymore. Then, if it comes to the second question of Mr. Varbon, WTO and MFN principles. Indeed, the article in the Financial Times brought attention to our submission. It was our intention because we wanted to start an honest debate about what we need to change in the WTO.
There were a lot of questions about China. There were a lot of questions about how we use our trade defense instrument. And, of course, there is one underlying cause for most of it. And these are global overcapacities. These are unfair trade policies.
These are state subsidies. These are different, nontransparent interventions from the state level. And, of course, it has a dramatic impact on the trade. So the MFN agreed 30 years ago, based on the principles that we are open because you are open, and we will be trading on a level playing field. Those conditions are not there anymore. So, we just want to start the discussion.
How can we actually balance these rights and obligations with a new reality? If you are not a fair trader in all aspects, what kind of impact might it have on fair agreements? Madam, Carnesboro was referring to our safeguards on steel. I can tell you that for me, as a trade commissioner, this is pretty difficult, so whenever we have an issue with overcapacity, if you want to respect the WTO, we have to go through the erga omnes principle. So even the countries that are not causing the underlying problems of overcapacity have to be hit by our measures in the same way as anyone else.
That's the WTO approach if you want to respect international law.
Which?
Speaker 3
It is paramount for us. Therefore, we just want to put this issue on the table. I know that we will not be able to solve this within Cameroon, but I think that if we start to honestly discuss this issue—how to bring balance in global trade, how to bring more fairness in the WTO mechanism—I think that is very important. And I would say, speaking about the balance, the same applies to the industrial accelerator act, where we are currently discussing within the commission how to find the proper balance in making sure that we can protect the European industry from unfair competition, how we can make sure that European public money will be there first and foremost to support the European projects, and how to respect our international obligations and also to protect our coveted relationships with our free trade agreement partners. That's the balance we are seeking, and that's what we are working on in the European Commission.
Was asking about India. And I would also appreciate your comment, which was very well seconded by Mister Langhe, on how long it will take us to approve all these agreements. And I can tell you that it was not only in Neposia. I also presented in the official sitting of the Trade Minister's Council that we cannot afford to do business as usual. So if we kind of conclude the negotiation, which sometimes lasts many years, even though over the last year, we managed to find a way to accelerate all the ongoing negotiations.
Nevertheless, we are usually talking about the years. But once we finally, after strenuous and tough negotiation, conclude the deal, for me, it's simply unacceptable in the current situation that we would wait two to two and a half years before these agreements could enter into force. What is the problem? Of course, one of the issues is legal scrubbing, which has to be done by both sides. And then, of course, we are talking about the translation into 24 languages.
So what I was suggesting to my colleagues in a trade ministerial council is that we are, of course, respecting all the languages, and the agreements will always be published in official journals in all the languages. But I think that we should start the proceedings in English because it would make it much faster and much easier. We would not lose time, and we are not depriving any single linguistic group or any single official language of any rights or any kind of legal position in that regard. We had the preliminary discussion where I think there was support for this approach from the council, but we are not there yet because the language questions are always very challenging. But I hope that in this, we could be pragmatic, and we can really achieve much bigger or much better results.
If you allow me, I would then continue with China, then go to Ukraine, and end up with the United States and India. Yes. You're right. So if it comes to China, I mean, last year's deficit with China is 360 billion euros. So it went to the growing level again.
And, clearly, this is not sustainable from the medium to long term. And we are also faced with different figures, even from official sources like the IMF, which actually presented a study that 4% of the Chinese GDP is used for different kinds of state subsidies or state support for export promotion. And, of course, in this case, it has been very difficult to compete on a level playing field. So all these are the issues which will be raised with our Chinese counterparts. And on top of it, we are using, I would say, a defense mechanism.
We are well over 200 cases where we are using TDIs. But here, I would also like to say that, in the framework of our economic security discussions, I think that we have a clear understanding in the commission, and I heard it from you as well, that we have to look at how we can speed up the process. Because, again, if you want to be totally diligent with our rules, the investigation might take more than a year. We need a total detailed study. We need the complaints coming from the company, or we can do it ex officio.
That's a process which takes a lot of time and very often misses, I would say, the opportunity to act when it's really needed. And all these issues which I mentioned will be, of course, discussed at the top level with my Chinese counterpart. If it comes to Ukraine, Madame Kasbir, I want to thank you for your absolutely staunch, relentless public support for Ukraine. I mean, Ukraine is very lucky that they have you as their reporter, and I fully understand your strong push in that regard, especially today where we have this very sad anniversary: four years since Russia illegally invaded and attacked Ukraine. At the same time, what is very important is to maintain public support for our policies towards Ukraine.
And I think where we presented our proposals for new quotas for Ukraine, in the case of the most sensitive agricultural products, we did it after very broad consultations, and we focused only on a narrow group of the most sensitive products in the field of agriculture. But it was very clear that our farmers are in a very difficult situation. We negotiated with the Ukrainians in the end. There was agreement on these quotas, and I think that was the best we could do under these circumstances. If it comes to the steel, yesterday we discussed it in our first trial.
And the fact is that in some of the products, the increase of exports of Ukraine to Europe went up more than 50%, and that again is something which just points out that the steel sector in Ukraine, despite the terrible war which is taking place there, is very competitive. And, again, we have to respect the WTO approach and treat everyone equally. What I promised you yesterday, and what I stated here very clearly, is that we would do our utmost within the margins we have under international commercial law to treat Ukraine as a close partner, as our FDA partner, and look for the best possible solution for them compared to those who do not have such an agreement with us. And if it comes to the United States of America, which was the question raised by several of you, I know that many of you didn't like the deal, but to be honest, I never heard any alternative solutions from your side. What was the choice?
To have this deal or to go to the trade war in August? Would you be praising me if I told you in August that, okay, negotiations failed? We are entering the trade war. Would you be happy if you saw that factories are closed, jobs are lost, and we have a dramatic turn for the worse in our relationship with the United States? You are criticizing this deal, and I understand that it's absolutely right.
But also look at the numbers. If you look at the numbers, our exports to the US actually increased over the last year. If you talk to many of the industries, they prefer this solution to the trade war. And I think that we have to look at it not only from the point of view of the elegance of the agreement or the framework, but also what it does on the ground. Are our people better or worse off if we have this joint statement or not?
And I know that our opinions are diverging, but they're also talking a lot to the companies, to the workers, and, of course, to the European leaders. So what is happening right now is, of course, another stage of what is, as I said, an extremely demanding and challenging relationship management. But I have to say that on Saturday morning, I got a phone call proactively coming from the United States where they told me, "Look." We have this ruling of the European Court of the US Supreme Court, and I want to reassure you that we are going to stick to our deal, that we will respect the deal if you respect the deal. Therefore, you heard me in my introductory remarks that we both have to stick to our bargain.
Of course, what is now ahead of us is the transitional period where they are figuring out how to deal with this landmark court ruling. And we talk every day. Just before coming here, I had another phone call with the Commerce Secretary, Latten. Yesterday, I spoke twice with Ambassador Greer, and I am very vocal about what is very difficult for us. For us, 15% all-inclusive is a deal.
And I know that 10 plus more than 5% is outside the deal. But I also understand that they need to figure out themselves how they would operate in this new environment, and that we have to simply bring you more information, more detailed information. I would still plead that we should also stand on our side of the bar. So if you had a vote in the March plenary, what would happen? Thanks to Mr. Langhe, you have quite a few safeguards. I think you call them five S's.
Then the trialogue starts. So you have all the options as co-legislators: to amend the agreement, to vote for it, not to vote for it, and to present your opinions. And I'm just pleading with you. Let's go to that stage. And by then, I believe we would have more information about the derivatives because I got reassurances from our risk colleagues that they know this is a big problem for us and that they are looking into this matter.
And, hopefully, we will be having better news in that regard rather soon. But I think that we should approach this from this angle. I also have to say that the picture is not in black and white. When we had the crisis with the legacy chips last autumn, I was speaking with Scott Bessent three times a day until the problem was solved. And I was asking him, once you will be talking to your Chinese counterparts, bear in mind that in this one, the supply chains are transatlantic, and they did it.
We had two very important sessions on the critical raw minerals, on our bilateral agreement, and on the plurilateral agreement, where we want to break the dependencies on monopolistic suppliers. So, I mean, it's not only about one aspect, but we have to look at it in all general aspects. I'm not going to elaborate on geopolitics. On India and the question of Madam Kavatcini, she also had a question on investments. So, on India, agreement, I think you're absolutely right that when we had the summit in India, the free trade agreement was a very important element of it, but there was also the discussion on the EU-India strategic agenda, cooperation in defense, but also cooperation in the environment.
And we established, based on the memorandum of understanding, the EU-India platform for cooperation and support on climate action. This platform will be launched in the first half of this year, and that is why you have seen an announcement of €500,000,000 in EU support over the next two years in the press release for India's efforts to reduce greenhouse gas emissions. So this is the initiative which I think we should welcome, and it would definitely help to promote even further cooperation on climate actions between India and the EU. On generics, promoting access to medicine is important. And, of course, we are very attentive to it.
And we have agreed with India to include the same level of protection of regulatory data as in the TRIPS agreement. And this provision aims to incentivize innovators in medicine to invest in research and innovation. And on top of it, our FDA also contains an explicit recognition of the Doha Declaration on public health to ensure that the TRIPS flexibilities can be fully used by both parties. And if you allow me the last point, which is very technical but very important as well, you would understand that it's difficult to comment on the position of individual member states, but the Commission clearly expects that our member states will continue the close coordination with the Commission services regarding the bilateral investment treaties with the Russian Federation and the Republic of Belarus, with a view to bringing them in line with the Union's investment protection policies. In the meantime, the EU sanctions regime includes measures introduced to add extra procedural safeguards against any damages claims and arbitrations, such as those based on EU member states' bilateral investment treaties with the Russian Federation.
Therefore, regarding the complaints, the responsible commission services will provide an assessment and reply accordingly. Of course, it's very difficult to prejudge the outcome of such an assessment, but then you see the process is ongoing. And, mister chair, last point, because this agriculture was mentioned so many times, and I think that mister Lin has already left. But I still would like to make one very important point because I spent quite some time with our farmers, and I believe that it will be mutually very enriching discussions. One point I shared with them is that the European Union is an agri-food export superpower.
Nobody exports more food products than we do. It's 235 billion only in the last year. And on top of that, we are very good at it. Our surplus is €64,000,000,000 only for 2025. When I was talking to Mr. Corman, the head of the Irish Farmers Association, he proudly told me that 5,000,000 people are producing proteins for more than 40,000,000 people.
I think he later corrected himself, saying that it's 50,000,000 by now. So I think that if you look at that, what is very important is to create this new market access for our agri-food producers because there has to be demand for this production. And if there is a demand for this production, these 3,000,000 jobs that depend on agri-food exports will be preserved. Therefore, I hope that we will also look at it from this perspective. Therefore, I appreciate and always accept discussions on these topics with the farmer associations and the agri-food industry.
Thank you very much, Mr. Chair.
Bernd Lange
Thanks a lot, Mahesh. It's the second round. This time, I will start again with the United States. So, the alternative trade war ordeal is not our alternative. We always said, regardless of whether you like the deal or not, we are sticking to the deal.
And I guess our American friends can also look to the compromise amendments. We worked out, after a long process with different political groups, this compromise amendment you mentioned, the five S's, so everybody can look at that; it is within the frame of the deal. We're sticking to the deal. And we hope that the United States is also sticking to the deal. That's a question.
They are not doing it. They are breaking the deal. And yeah, you mentioned you hope that we have better news. Agaf, yeah, hope is good, but security is better. And if you can guarantee something, I would really appreciate it.
But at the moment, of course, I'm also an optimistic man, no doubt about it. I'm from the north of Germany. We are all optimistic people because of the storms, the wind, and so on. We have to be, but just having hope is not sufficient. And secondly, you mentioned there needs to be time to figure out how much time.
What is the time limit to that? And, second, you missed my question: what kind of the next mini deals will be?
I have it here.
Speaker 18
Thank you, Chair. Like you said, last July, the commission secured what was, particularly in comparison with other blocs, a good and balanced deal with the US. And I welcome your acknowledgment today that the US has reassured you it stands by that agreement. And your confirmation too, I would say that the European Union will not seek to capitalize on the court's decision. It's important.
The latest US Supreme Court ruling is noteworthy, but we have to deal with realities. And the reality is, whether we like it or not, this administration is clearly committed to tariffs and to continuing to find ways to sustain that system. So, what we need now is absolute clarity that a good deal reached in July remains a good deal here in February, both in substance and in spirit. So the message is clear on our side: we stand by our word, as the chair has said, and this good deal remains a good deal. The carve outs remain, and the negotiations around steel, aluminum, and spirits will continue. We expect you to do your duty in relation to those issues.
Our exporters, particularly in the agri-food and advanced manufacturing sectors, require predictability. They cannot invest in our trade on the basis of rolling legal improvisation, and our rules-based EU-US partnership must rest on clarity and mutual confidence. So, crucially, in light of your stated intention for the parliament to vote on the deal next month, I would agree and propose that we do so. And I acknowledge what you've said in relation to the opportunities that exist for members of parliament, for their representatives who can, during trialogue, fulfill other thresholds of certainty that they require in order to proceed with the Turnbrier agreement, which, as I said, is a deal that we can stand over. In comparison to other blocks throughout the world, notwithstanding the improved figures that you referred to in relation to our exports, these only signify that we move ahead at pace, therefore, as a result of the same.
Thanks a lot. Nina?
Speaker 20
Thank you, Chair, and thank you, Commissioner, for joining us today. I appreciate your time in keeping this committee and our members informed. I would like to start off with the UK. Could you give us an update on the progress of the SPS negotiations, specifically on the timelines, whether there is a timeline for concluding, and if there are any stumbling blocks appearing? Getting the Agri-Food deal with the UK over the line will be a huge step for cutting red tape for Irish farmers who were most acutely impacted by Brexit.
And secondly, a specific issue on EU steel safeguard measures was raised with me last week during my constituency visit to County Mead. A number of companies that rely on specific, unique, pre-coated steel coil from South Korea have raised an issue about the lack of EU alternatives and the potential knock-on impact this has on Ireland's infrastructure delivery plans. And if some of the proposals around the quotas and tariffs are implemented, knowing that demand for the product is already above the quota. For me, this is clearly a competitive issue. So, can you outline whether exemptions will be considered when specific steel products are not available within the EU market?
Thank you.
Speaker 22
Thank you very much, Chairman. And, Commissioner, thank you very much for this dialogue, which indeed reflects the tons of volatility that we have now in the world of trade. European trade offensive, you said, and I support very much such kind of an offensive. And since it is global, I would like to take you to the part of the world that you didn't touch on when responding to questions, namely ASEAN. I would be very curious to know what is happening with the Indonesia documents when we get them. Are they coming soon?
Speaker 21
And I hope they will come to approval very soon, since this process—I mean, I hope it will not take many months from now—the famous process of legal scrubbing, translation, and so on, because this committee has visited our ASEAN trading partners last year and this year. And I think that it is a self-enforcing phenomenon there. So the ASEAN members are looking one down to the other. And I think that the Philippines could also come this year, at least for the signature, of course. And also, I think that this would give some ambition to Thailand and Malaysia.
So finally, in maybe not one, but two years, we could have the biggest partners, the biggest players in ASEAN, having an agreement with us. So please tell me, give me some good news about Indonesia, and then about the others. And please, excuse me. I don't want to be impolite, but I have to go to a meeting with the Chamber of Commerce of the member states. Our chair knows best, and they are an important member.
So, I will check your answer on Webex. Thank you very much, Commissioner.
Thanks, Judy. Udo?
Speaker 23
Thanks very much, Chair, and thanks very much, Commissioner. Let me echo what you said about the parliament's decision on Mercosur. I share the opinion, and I would be more than happy if this house requested you to take action. But I don't think it's an accident. I think this world is full of contradictions.
Speaker 24
This is full of different information, full of distrust, and sometimes things like that happen. They can happen again. And therefore, I have two very concrete questions. Do you share the opinion that our trade agreements are not only about tariffs, growth, and economic benefits, but rather more and more about legislative collaboration? Because by doing so, we open corridors with like-minded partners to negotiate something that is more than positive in a totally chaotic world, bringing back reliability and the rule of law into trade relationships.
If you agree to that, could you secondly provide this committee with an overview of the decrees in which our collaborations, whether trade agreements or investment mini deals like in South Africa, which was very successful, open the door for legislative collaboration, so that we can build on that and pursue this avenue of collaboration on equal footing? I think this is one of the most dynamic elements, but it would be good to have empirical insight from your services.
Speaker 25
Thank you very much. Sorry. I was running between the two meetings, and we don't have trains like in the US Congress in this parliament. But hopefully, we'll still have trade with the US. First of all, thank you very much that the deal with India is not including agriculture, because I think we are avoiding a big problem that we have with Mercosur.
And I believe that it's very important that the future deals will focus more on issues which are of mutual benefit because, otherwise, we can end up in problems like we did with Mercosur. But I have three quick questions. I'm not sure if there are quick answers. First of all, combustion engines, there is this revision. We are not very happy with the revision proposal of the commission, or at least my group is not.
And I'm thinking that if we wait now, it will take too long, and we will not be able to stop the influx of Chinese electric vehicles into our market and protect our companies. So, what do we do there? Because I believe that the result of the revision of the combustion engine, the ban of the combustion engine is still a very long process, which enables China to influence our markets. Second, the Chinese export control of critical raw materials. We have legislation to access critical raw materials.
How successful we are in investing and helping companies that invest in critical raw materials to mine and process them. Second, there was a meeting for all partners in the Transatlantic world in Washington DC two weeks ago on access to critical raw materials. Is there any result for the EU and any cooperation that we built from this result? And the third question is about the Goshen investment in Slovakia to build electric batteries, because now we have this environmental issue with Samsung lithium batteries in Hungary, and we know that the Goshen factory did not provide proper information for the environmental impact assessment. They were practically lying about the chemicals and the amounts of the chemicals. And I'm wondering if the Commission is following this process because we might end up in another environmental catastrophe in Slovakia.
Thank you.
Thanks a lot, Gabriel.
Speaker 28
Thank you, Commissioner. I fully share your comments on Mercosur and its importance. The European Parliament, from my point of view, made a serious mistake in renouncing its prerogatives and leaving decision-making up to judicial bodies, which are removed from political decision-making, as curious as you say. But in this case, at least we've decided that temporarily someone else will be making that decision. I was going to ask you whether the commission, in parallel with that mandate, will apply this provisionally.
And if you asked me what the chair asked you, I would also say I'd apply it immediately. But I would also say that we would apply it when the Mokusu states are prepared for it. My question then would be: are we going to wait to apply provisional measures until everyone is prepared and has notified their ratification instruments, or would it be possible to apply them gradually, given that some member states are much further along than others? Thank you.
Deeply impressed.
Speaker 27
Commissioner Sokovich, questions on three topics. First one: US tariffs. You'll need the crystal ball for this one. What do you think President Trump will do next? This is my attempt to provide President Lange with the clarity and assurance that he needs.
Speaker 31
Because one thing is sure: he will not remain with the solution that he has now, because what the Supreme Court outlawed last week was the tariffs imposed through IEMPA. The other ones don't allow the discrimination that he needs. The section 122 measures are across the board. The biggest beneficiaries of the change at the moment are Brazil and China, which are two of the countries he wants to hurt the most. So, we'll do something else.
Speaker 29
So, what do you think he will do? Because your answer may provide part of the clarity and simplification that President Langan needs. Second issue: Industrial Accelerator Act. We had a quick exchange of opinions on this in the last plenary. You may remember.
This act, we already know we're going to have a lot of political tensions between groups and even within groups, between countries, but it's the classical dilemma between protectionism and free trade. And you know their own DG trade will not see eye to eye with DG growth, for instance. And the issue will be what is really strategic for Europe, what deserves to be protected, and where you draw the line. And even if it's a very difficult political question, the answer is technical. I'm sorry to say. Which are the sectors that technically we cannot live without, or which are the sectors that we can be blackmailed with by our former partners, enemies, I don't know, who can force us to do something that we did not like, like it happened last year because we were too dependent on certain things?
Where are we going to draw the line? What is the political process? Third topic, Marco Sur is not just a provisional application. I urge you, the commission, to do that. Mister Lomberg was very clear about that.
Speaker 31
I second his words. I'm going to do something. It's a pity, Madam Mubri is not here yet, because her outburst forces me to have my own outburst. Because this is a provisional application, I'm not going to discuss the deal itself. But the provisional application, those who are against the provisional application, use only formal or legalistic arguments.
Speaker 30
It's the threat. This is the rule of the parliament. It's the procedure. Fine. That is of great importance to us.
We are the guardians of that. But those that are for the provision of the application of this agreement are talking about the economic benefits, cultural affinities, geopolitical necessities, and things that matter to the people outside and their day-to-day lives. And that is why some people outside look at this part of parliament and ask, "What's the parliament for?" Can it be overridden? Can it be ignored?
Speaker 29
Perhaps it can, if all it worries about are legalistic and formal things. We should not care about the people. I still remember the time when the left cared about the real well-being of the people and not just formalistic or legalistic arguments.
Enikő Győri
Yes. Thank you. Because Madam Karzbo was really very harsh and seriously attacking my country, Hungary, including Hungarian MEPs. So, I have to answer and clarify just the facts, Karim. Just the facts.
So, how did the story start? In January, the Druzhba pipeline was damaged by the Russians and repaired. So oil supply deliveries could have started, but Ukraine is not doing it. And let me quote that for Ukraine, it is not optional. They have a legal obligation to supply.
I'm quoting the EU-Ukraine Association Agreement. It's article 276, paragraph 1, subparagraph b1. Each party shall ensure the transmission system operators take the necessary measures to additionally restore the normal operation of such transit or transport which has been accidentally interrupted, reduced, or stopped. There is a clear legal obligation. But we have been fleeing the commission for weeks now to mediate and to ask Ukraine to fulfill its international obligations.
So you forgot how the entire story started, and the commission is not doing it. That's our problem. Somehow, we had to react because the consequences in Hungary would be extremely difficult: soaring energy prices even more, risking not Europe, as you were saying, but our own people. So somehow, we had to react to this injustice, to this illegal action by Ukraine. So, please do not forget how the story started.
Thank you.
Jurgen?
Speaker 5
Thank you. Since we are marking the very unfortunate four-year anniversary of Russia's illegal and full-scale invasion of Ukraine, I'd like to bring back the topic on the steel file since you also mentioned you had dialogues yesterday on this. Less than a year ago, the parliament adopted a position together with the other EU institutions, giving Ukraine preferential treatment for this deal. That was something that should be valid up until 2028. But with the steel file, the proposal from the commission is to take that back.
Speaker 4
And this is what we have also voted for in the committee. And I think it is a bit unfortunate, and I'm just raising this because I think, in the dialogue, it will be important for all institutions that are now negotiating to take into consideration that we did not have a plenary mandate when this went to trialogue. It was only at the committee level. And I think there were quite a number of MEPs who think this is problematic. First, we gave Ukraine preferential treatment so that we could support them in the war against Russia.
And now, less than a year ago, we took that back. I think that is problematic on a moral basis. And I hope that this can be changed in the dialogues so that when we vote on it in the plenary, there will be very strong support for the steel measures. Thank you.
Thank you.
Speaker 32
Chairman. Thank you, Commissioner, for all the information provided. I would like to ask three questions. The first thing on the Mercosur deal. I would like, Mister Commissioner, to explain one thing to us.
When one Mercosur member state, let's say Argentina, ratifies this deal on Friday and notifies the EU about it, then the decision of the European Council of January 9 will be published in the Official Journal of the EU. When can we expect this agreement to provisionally enter into force? Is the Boccaccio Leggis deadline two months? Does it apply? The second question is about Australia.
When do you intend to finalize the agreement, and what are the quotas, in particular on beef and sugar? And my third question is about Ukraine. Poland has introduced an embargo on the import of food and agricultural products from Ukraine. So, if the EU cannot defend member states against unfair exports from Ukraine, then the member states have to do it because the Polish farmers are unable to compete under unfair rules against the Ukrainian farmers. Thank you.
Speaker 11
As I already spoke, I will be very brief. Colleagues, and also you yourself, Commissioner, have already mentioned the Industry Accelerator Act. Let me just add my opinion or perspective on it. I know why there are, of course, also hesitations, and there can also be a backlash. I completely get it.
But I would also say, if I look at our economic security—and we discussed this yesterday here in this committee—and also the behavior of some of the global competitors like China, I think we have no other choice. We must also make sure that we create and boost demand for some of our industries in Europe and not let highly subsidized, highly overcapacity products basically ruin all of our companies. So, I think I get your hesitations, but I would say it is really important that we also speed up our European demand, and I think this is one of the most important tools we have. Thanks.
Speaker 34
Yes. Thank you, Chairman. I will speak in Dutch. Commissioner.
Sefkovich, the EU's own diplomatic source, has said that the new Israeli measures in the West Bank clearly violate international law. A lot of experts have said that this is a de facto annexation of large parts of Zone C. The opinion from the Court of Justice says that the Israeli occupation is illegal and affirms that third countries, including the EU, have a legal obligation not to have any economic or commercial ties that would allow Israel to maintain its illegal presence. Each time, the EU simply reacts with declarations and letters; that is not going to make Israel change direction just because of articles in the press. We have rules that, unfortunately, are not being properly applied, so I wanted to ask some questions.
When will the Commission have specific measures, and when will they act to stop these violations of international law? Will the commission be proposing measures to stop trade with the illegal settlements? If that is not the case, on which basis can the Commission argue that its current policy is in conformity with international law, especially if we look at the International Court of Justice ruling from July 2024? Does the commissioner not think this is a hypocritical system when it comes to only applying international law to certain countries? This has not weakened the credibility of the EU and the economic security agenda.
Russia annexed Crimea in 2014. At that time, all trade with the occupied territory of Crimea was stopped, so we should also stop trade with the illegal settlements.
Speaker 3
Very generous, Miss Mister Chair. Very generous. Very well, I will start with the answer which I forgot to provide you in the previous round concerning the mini deals. First, what was the reason and what was the purpose? I mean, we've been discussing in the first part of our discussion that negotiating a free trade agreement is an enormous effort, and it sometimes takes a very long time.
And I think we have agreements which we negotiated for more than 10 years. I think we started with GCC countries 32 years ago. So it's not something that is happening overnight. And in this new dynamic world, I would say, we've been looking for what could be new products on the DG Trade or the Commission shelves to address some of the elements we would like to target more specifically and avoid the heavy procedure of the free trade agreement, which has to follow the templates and has numerous chapters. And, if you look at the printed free trade agreement, I have one in my office, the simplest one with New Zealand, and it's a bulk like this.
So, therefore, I think that what we intend to do with these CIFA and CTIP agreements is to be much faster on the ground and to offer better possibilities for structured cooperation with the country, and it was very much welcomed. I was negotiating the CTIP agreement with South Africa. They are much thinner documents. They are very focused on the concrete areas of cooperation. And we, of course, always like to bring it, if possible, down to the level of the projects.
So that was, I think, the purpose of Concrete City. And I know that, for example, Vietnam, despite the fact that we already have a free trade agreement with them, is also interested in the city because it has a specific nature for project support. If it comes to CIFA, this is sustainability in investment facilitation agreements. I think we started with Africa. I think Angola was the first one, if I recall correctly.
Now, we recently concluded the negotiations with Ecuador. And, when I had the Ecuadorian, foreign, and trade ministers in my office, they very much appreciated it. They decided to go this way because they knew that, also from the point of view of administrative capacity and complexity of the negotiations, this is much easier for them to reconnect. What we would like to do next is to see if there is strong interest from Egypt to have an agreement of that sort. So we are kind of pointing out and scoping what should be, I would say, the parameters of this agreement.
And, of course, we continue to keep Parliament informed about all these developments. Maybe we can discuss bilaterally what would be the best way to proceed. Should we inform you on a regular basis if there are any developments or, for example, concrete questions that might come from your parliament? So there is absolutely no problem sharing with you all the information, processing the negotiations, and also the agenda for the future because we do this since it's simpler, faster, and very much welcomed by our partners. And we want to be present in Latin America, in Africa, in Asia, and sometimes to go through the whole FTA process as you discussed here.
It's a very complex process. So let's discuss further how to increase the parliamentary scrutiny here. We're absolutely fine with that. Then I think that there have been questions from Mister Matto and madam on Mercosur and the legal possibilities of provisional applications. I very much appreciate this debate because it already gives me the sense of where the majorities lie and what the opinions are in the European Parliament.
And I am, of course, gathering the same intentions from the council. So legally, what is possible is that indeed we can provisionally apply the Mercosur agreement from the first ratification with Argentina, which would probably happen next week. But in that case, what we would need to do, the European Union and Mercosur countries, would be to finalize the technical regulations and adaptations of this provisional application only to one country of microservices. And until we are done with that, I think that other microservices countries will also ratify. So these are, I would say, the questions we are currently looking at because we want to see what the timeline is in ratification processes in the Mercosur countries and what would be the most efficient and fair way to proceed, but we are looking at that.
But as I said, we still need to complete the political assessment and deliberations on how to proceed in that regard. I think I got the question on Australia. I'm just looking where it was coming from, but, nevertheless, most important, I would say, is the question. So on Australia, this is, I would say, again, a country with whom we cannot be more aligned from the perspective of respect for the values, geopolitics, and complementarity of our economies, language proximity, and you name it. And also, I would say this mutual feeling that we need to do much more together, particularly in this very difficult geopolitical time.
So, I was very happy that, after the meetings we had in Melbourne, Australia, where I have to say that it was New Zealand and Australia who invited us as partners to the CPTPP. It was under the Australian presidency that they proposed it to the partners. I'm talking about twelve countries of CPTPP, and they've been extremely helpful in making this happen and creating this partnership which the EU and CPTPP countries represent today. We are talking about 30% of the global GDP and 40% of global trade. So, if this group works together, it has a huge impact on WTO processes, on how trading is done, and how global supply chains are formed.
And on top of it, Australians have all the critical raw minerals we need. They need investments, expertise, cooperation, offtake agreements, and so on. So, there is really a lot to do. Of course, we are fully aware of the sensitivities of agriculture in these regards. Therefore, when my counterpart, Senator and Foreign Trade Minister Don Farrow was here, I believe that we closed on most of the industrial parts.
But, of course, the agriculture part is always very sensitive, as we have seen also in this afternoon's discussion. Therefore, we need to continue our discussions and negotiations, and we are talking on a technical level. We will again resume with Minister Farrell. And I hope that we will be able to land this because I think it would be good news for both Australia and the European Union. Then, if it comes to the question of Mr. Langhe, I'm coming back to the US.
So what would be the time of the transition? So what we hear from our American counterparts is that, of course, the transitional time is very clearly framed by a maximum of 150 days because this is how long these so-called universal tariffs could be applied based on article or section 122. So within this time, we should definitely have much more clarity. When I was talking to my counterparts yesterday, they believe that it could happen even in a shorter period of time, three or four months. And, they're, of course, going through the whole process of revising the whole system.
So, I think the court ruling happened on Friday. Today, it is Tuesday. So I understand that this requires some time, but the communication between us is very intense, and it will continue like that also in the future. I mean, if it comes to questions from Mr. Cohen, who was also referring to the US, I very much appreciate your statement on the fact, which we also put in the official communication of the Commission. The deal is a deal.
That's our firm line in that regard. And to get there, we went through rather complex negotiations. And you would probably all recall, because I think I was also in your committee several times at that time. We've been offering zero for zero. We've been ready to go for the full elimination of the tariffs, but that's not the policy the United States of America under this administration supports.
So it was clear that after we tried everything possible, that was the end. So we had to look for other solutions. We wanted to avoid trade tension and eventually conflict. Of course, the wines and spirits. Of course, the derivatives are permanently on the agenda, and we'll continue to push for that.
What I would like to avoid is creating a pretext for some in the US to say, "Look." I mean, you are not living up to your commitments. Why are you pushing us to live up to our commitments? I think that we simply have to be kind and fair in meeting the bargain on both sides. Madam, Carberry was asking about the UK.
Yesterday, we had another session with Nick Thomas Simmons, who is the minister responsible for the relationship with the European Union. I have to say it's a pleasure to work with Nick, and I saw how his political steer helped to resolve many issues from sensitive areas like citizens' rights. I'm not 100% satisfied, but the progress under his leadership and steer, in that regard, is very much welcome. And I believe that first and foremost, the beneficiaries are the European citizens who are living in the UK and who are the right benefactors of the withdrawal agreement. And he's bringing the same energy to what we would like to see as three deliverables for the summit, which most probably would be organized at the beginning of July.
And, of course, what would be the best way forward if we can indeed have an agreement on SPS? If we can have an agreement on linking our ETS systems. And what is very important for you and for 20+ member states is to have a solution for the youth experience, where we have to find the way from our side to other institutions' questions. And from their side, I know the possibility for young Britons to work in the European Union. So these are, I would say, the three fundamental questions.
Of course, if it comes to these negotiations, they are very complex because very often they have either financial implications or, in the case of SPS but also ETS, the dynamic alignment element. I very much appreciate that the UK side is not disputing this approach, but they are also bringing to the table the sectors which they believe could be exempted or not covered by these agreements. And this is what we are discussing. And, of course, the more you go into the detail, the more complexities there are. And, therefore, we agreed with the minister, Nick Thomas Simmons, that we would be in biweekly contact just to provide the political steer so we can have, I would say, these three important agreements, which would clearly improve not only the atmosphere, but make our relationship closer.
You know that I was working a lot on the Northern Ireland Protocol. And, when we've been discussing the steel, I think one very important element to say there is that, if you would respect the Northern Ireland protocol and we find the solution for the steel sector, which would fully respect all the specifics of the economy of the island, and we are working on that with also our Irish and British colleagues. Then, if it comes to the overall question of the steel, I would say the whole philosophy behind the steel safeguards is the fact that we didn't take this decision lightly because this is the most important decision on how to safeguard the US steel ever taken. Our calculations are very clear. If you want to have steel produced in Europe, we have to reduce imports by 47%.
If we do that, by 2030, the European steel sector will have a growth of 1.4%. So, we are not greedy. We just want to make sure that in these geopolitical times, when we want to produce more arms, we are able to rely on our own steel production and not develop another dependency on importing steel from abroad. It's very difficult. It's challenging.
But what we did, of course, with our close partners, our FDA partners, our strategic partners, is that we will do our utmost to reflect the quality of this relationship in these new arrangements, which they'll be negotiating in full accordance with the WTO procedures, as was acknowledged by Dr. Ngozi, Director General of WTO, when we discussed this with her in Nicosia last week. Mister Winkler was asking about Indonesia, and I would just like to tell you that there is our joint goal, and I know that for Indonesia, this is an absolute priority to have this agreement enter into force next year. Of course, the challenge here is exactly what you all have been pointing out. I very much appreciate your political support for accelerating the processes, simplifying them, and making them as quick as possible. We're very happy to transfer this political support also to the council services, and I believe that together with the member states, you'll find a way to make these procedures much faster.
He was asking about the ASEAN countries. So, I was mentioning the Philippines, Malaysia, and Thailand. I believe if all three of them, with a little bit of political will, encourage, you can complete the FDA agreements within two years. Of course, region to region, the FDA is a little bit more complex because there are also countries in the region with whom we currently do not have very intense relationships. So then, if it comes to Mr. Bulman's question about the legal cooperation, I think we would be very happy to discuss this with you because I believe that the FDA, as you rightly pointed out, is not only about market access.
I think we made it. Sometimes I say it is a little bit more complicated for us because we put a lot of emphasis on respect for human rights, respect for climate policies, and respect for the Paris agreements. And many of them, we want to have essential elements in our agreements. But it has much more than these elements in it because it gets the countries closer. Of course, it forces us to work on common standards because we have to respect their standards where we export, and they have to respect our standards. So, of course, this is one of the topics that is always discussed.
And I think this is also bringing us closer to each other in all the, let's say, international frames like the WTO. But we'll be very happy to explore what more we can do in that regard. Madam Lexman was asking about India and saying that agriculture is not included. I would disagree a little bit because the agri-food products are included. We just avoided sensitive commodities and sensitive products.
And I think that was the crucial step taken at the beginning of the year because it allowed us to focus on what is essential and, let's say, not to create the bedrock on the commodities where we knew it would be impossible to proceed. And in that, everyone is very happy with that solution. On combustion engines, as you know, this belongs to my other colleagues. But what I can tell you is that indeed the exports of Chinese EVs to Europe are growing despite our countervailing duties. We are now monitoring very closely the increase of plug-in hybrids, Chinese vehicles, and that's another area which we need to discuss among ourselves, but also with our Chinese partners. And on the MOUs between the EU and the US, there are two tracks happening right now.
First, there is a discussion of an MOU between the EU and the US on cooperation in the field of critical minerals. This is headed by the State Department in the US, and my colleague, Stephane Sejourner, who is representing the commission in that discussion. And then there is this bilateral agreement, which I would describe as a G7 plus. Under Plus, I mean India, Australia, and I think Korea and other countries where we are discussing how to increase the demand in our markets in a way that it cannot be fluctuated by another big actor. So we are discussing price floors, offtake agreements, and other mechanisms we can use to simply stabilize the prices.
Information about Ocean Factory, and whether it is being studied by the commission. I do not have that information. I can ask and provide you with. Mister Cotrim, De Figuero was asking about the IAA. Here, I think the work really continues because this is, again, I would say, a new approach to how to promote the strategic sectors of the European industry.
We are clearly working very hard to find the appropriate balance, but it is very clear that we want to respect our international commitments. And when any measures are proposed, they have to be based on robust economic analysis. And I can assure you that for me, it's very important that, after we invested so much effort in having these FTAs, I would like them to be fully respected also by these proposals, and this is what we are working on. I think that this has been, I would say, the question Mr. Rudikanis was asking about, the question about Israel. Here, I can only respond to explain that our association agreement with Israel does not cover settlements because they are not part of Israeli territory according to our law, which we fully respect.
Banning trade with the settlement would require the adoption of restrictive measures through CFSP sanctions, which require unanimity. And you know how the situation in the council is in that regard. And, therefore, I think the measures which we have been taking on some of the union programs have been the measures which we could take on our own, and we did what was, I would say, the most appropriate at the time. Dear Cherry, you have been very generous with me. You give me two more minutes.
I really appreciate it, and I would like to thank you for the opportunity not only to answer but also to listen to the points of view and the questions of your members. Thank you.
Speaker 36
Thanks a lot, Maric. Thanks a lot for being here for two hours, having this discussion, and staying in contact. Thanks a lot. So, dear colleagues, I hope there is no misunderstanding. The interim meeting is not over.
Bernd Lange
No. We still have two items on the agenda. And the first one is 18. The conclusion of the negotiation with Ecuador on the Sustainable Investment Facilitation Agreement. We had it in the discussion with Maroj as well.
And, George, where are you? There. You are well known here in the room. You will now give us a hint of what is in the agreement and how it is foreseen to work. George?
Speaker 37
Thank you, Mr. Chairman. Thank you very much indeed for this opportunity. And since this is indeed the first CIFA, the Sustainable Investment Facilitation Agreement that we have the opportunity to discuss in this legislature, the previous one was with Angola. Thank you. And indeed, thank you for the opportunity.
Allow me first to put a little bit into perspective what we do with investment facilitation in more general terms before zooming in on the CIFA sustainable investment facilitation agreement with Ecuador. The EU is the biggest foreign direct investor in the world. We invest outside the EU €9,000,000,000,000. We have invested €9,000,000,000,000. And we are also the biggest recipient of foreign direct investment in the world.
We receive €7,500,000,000,000. This is important for our diversification agenda to access markets and diversify suppliers, so it is important for our competitiveness. It is therefore not surprising to find the EU among the top supporters of our partners' efforts in pursuing investment facilitation reforms, reforms which are meant to create a more transparent, efficient, and predictable business and investment climate, making information on investment rules public and easily accessible, and reducing delays in obtaining government permits or approvals. We have been pursuing this agenda on investment facilitation on two tracks: one on the multilateral plurilateral level in the WTO by supporting the incorporation of the Investment Facilitation for Development Agreement in the WTO. We are also active on the bilateral front, negotiating sustainable investment facilitation agreements, the latest one being with Ecuador.
Speaker 38
Now, why Ecuador? Because we already have a basis to work with, with Ecuador. We have the multiparty trade agreement with the Andean countries, of which Ecuador is a party, which offers trade preferences and predictability in our trade relations. Our investors and our traders know which tariffs apply in our trade between Ecuador and the EU, and this is increasingly important, as we know. We are also the largest source of FDI in Ecuador.
Speaker 37
We have invested €9,100,000,000 in 2024 as an investment stock. And despite this leading role of the EU investing in Ecuador, compared with other countries in the region, there is still, I would say, a lot to do. There is a lot of potential in Ecuador, a country with 18,000,000 inhabitants, and that offers a lot of potential. We have looked at studies that were done before we negotiated the C fund. There was strong interest by EU businesses in investments in Ecuador regarding renewable energy, digitalization, agriculture, but also transport and logistics.
And yet, our investors reported several challenges that they faced. They reported regulatory uncertainty. They have pointed to unnecessary bureaucracy, to difficulties, of course, with legal enforcement, with a challenging security situation, and frequent blackouts. Not long ago, there were sometimes 14 hours of blackout in Ecuador, which, you can imagine, disrupted not only households but also companies, investors, and factories in particular. And in fact, the EU has been active in working with Ecuador in addressing these issues also.
For example, to improve energy supply, Global Gateway is supporting the interconnection between Peru and Ecuador, a project that totals €350,000,000, and which we hope will also help address these challenges of energy supply. But overall, there is a strong rationale for us to partner on investment facilitation with Ecuador through a sustainable investment facilitation agreement, addressing, in particular, some of these obstacles, which is important especially for small and medium enterprises. We know that if you're a big investor and you arrive in a country with a big investment, there will be a lot of attention paid. But for smaller investors, they have to face difficulties that bigger ones do not have to, and this is why this sustainable investment facilitation agreement can also help. Now, there was already a lot of convergence.
So the negotiations with CIFA, which we started at the end of last year, have not started from scratch. We have, as I said, the multiparty trade agreement with other countries, which already offers some provisions and commitments in our relationship with Ecuador. But we also share with Ecuador the support for the WTO Investment Facilitation and Development Agreement. So there was a lot of convergence which allowed us to actually very quickly, swiftly, and expeditiously negotiate this agreement that we have shared also with you. And what can we find in this agreement with Ecuador?
There are a number of provisions that are also similar to the Investment Facilitation for Development Agreement in the WTO, with online publication for investment laws, so increasing transparency of laws and regulations, in particular, also improving stakeholder consultation on investment-related measures. There are also provisions on simplifying investment authorization procedures, including through the use of digitalization and e-commerce, e-government approaches, and also to improve communication between investors and the administration, ensuring good regulatory practices and an investment framework that takes into account a whole-of-government approach, which is very important. Now the CIFAs also go beyond the WTOIFD provisions, in particular on the sustainable development dimension, with Ecuador. There are commitments on investment and sustainable development, which bind us to uphold labor and environmental standards and ensure that protections are not weakened in order to attract and encourage investment. There are also additional provisions to elaborate transparency on investment incentives to help investors be more aware of the concrete opportunities that they have.
Speaker 38
And there's a novelty now in terms of the CIFA approach, which we didn't have in the previous CIFA that we've done, like, as you mentioned before, chairman, with Angola, which is that there's an annex on sustainable energy and raw materials. This is an annex that covers sectors where Ecuador has expressly been keen on working with us in more detail for particular sectors. As I mentioned before, the issue of energy supply is crucial for Ecuador, and we have this annex that allows us to operationalize the investment facilitation provisions in these two important sectors. So sustainable investment is a sector that is projected to be the largest sector for EU FDI investment in Ecuador between now and 2040. So there's a clear interest from EU investors in that sector.
Speaker 37
There are also provisions in the annex regarding raw materials, where there is a lot of potential with Ecuador, but we also underline the importance of taking into account sustainability considerations. And that is why the annex also includes provisions on environmental impact assessments for projects concerning energy goods and raw materials, which further support sustainable investments in this sector. Now, what are we doing since we have concluded the negotiations? We are now preparing the proposals for signing and concluding the agreement. So, we have to go through legal scrubbing.
And you had a discussion previously on how this, of course, takes time, and it depends, of course, on other services also. But we expect to come with a proposal soon, hopefully, still, of course, before the end of the summer break, to be able to sign the agreement then. And then, of course, Parliament will also be asked to provide its consent to the agreement. So, a lot of work will still have to be done. We will also be working on the implementation of the unit agreement.
The agreement is only as good as you actually implement it, but it offers a platform for us to cooperate and to work with Ecuador in order to improve the attractiveness for investment and also to facilitate the investments that Ecuador so much needs in order to develop. Thank you very much.
Speaker 39
Thank you very much. We're talking about the sustainable investment agreement that the EU has just concluded with Ecuador. This is an important step forward in the relations with the Andean region and South America. This is the first type; it's the first time this instrument has been used on the other side of the Atlantic. This will be very beneficial for our businesses.
Speaker 41
There will be simplified procedures, less administrative burden, and greater legal certainty. There will be more flexible points of contact to facilitate investment, but we are going beyond that. This sustainable agreement looks at environmental aspects, good governance, among others. This agreement means more quality investments for Ecuador, stable jobs, and for our companies, more certainties and clearer operative conditions. At a strategic level, we can consolidate the European presence in Latin America, compared to China or the US, for example.
Speaker 39
So, this is more than just a technical framework. It sends out a geopolitical message. It shows that Europe is betting on Latin America to have more balanced and more sustainable relations. Our job is to support that implementation and to ensure that the benefits are tangible for our companies. Thank you very much.
Hannah.
Speaker 40
Thank you. Thank you very much. Thank you to the reporter, indeed. At the moment of uncertainty, increased relationships with Latin America should be prioritized.
Speaker 40
Priority. Having concluded the Mokasur agreement, I think it is fundamental that we support every possible way to strengthen our cooperation in trade with other countries in the region, such as the members of the Andean Community. Therefore, the conclusion of this CIFA agreement with Ecuador is the first negotiated with a Latin American country, and that is big news. We should celebrate that. CFAT will contribute to facilitating the investment of European companies in Ecuador. Above all, it will be a key instrument to diversify our trade relations.
Part of its usefulness at the time of driving is European investment in renewables, transport, digital, and it will also improve the robustness of the legal framework that governs our relationship. There's no point in trade agreements unless they are effective for businesses and citizens. We can have trade preferences, but we should ensure that they are translated into our practices and contribute in real terms to meeting sustainable development goals. This says something about the potential of this agreement, but I think the credibility of it will depend on its implementation. CIFA has a key component when it comes to sustainable development, which means that it's not just another agreement. That's why we ask the commission to ensure investment facilitated by this agreement goes hand in hand with social and environmental standards.
We will also demand that it respects international labor standards and commitments that we've taken on with the Paris Agreement. These matters cannot remain just on paper. They need to be implemented in practice. This agreement should contribute to structured dialogue mechanisms with the country and with other stakeholders in the local economy. For Ecuador, this means we need to pay specific attention to indigenous communities in investment projects.
If I can ask a question, I'd like to know what views the Commission takes on environmental matters under CIFA. What specific evaluation mechanisms are you thinking of implementing, and how do you view their implementation benefiting indigenous communities? Thank you.
Bernd Lange
Yes. George, from my side, four points. First, are there European investors waiting for this agreement or this deal? We have some concrete examples. So some mining companies, but whatever.
I have no clue. So that this is not really an abstract undertaking, but also kind of really concrete. Secondly, Hannah mentioned the question of the Indian people and civil society. Is there in this agreement some similar body or similar involvement of civil society like we have in our normal trade agreement, such as the domestic advisory group? And, thirdly, how will the situation be solved if there is a dispute, if access to raw materials for a company is not given, or whatever? Is there a specific dispute settlement mechanism?
And firstly, in the agreement, there are similar conditions on obligations as in the investment facilitation agreement of the United WTO, which we negotiated and hopefully will be adopted.
Speaker 45
Thank you. Well, in light of this, the agreement is somewhat asymmetrical, and there could be some disadvantages. I have a fundamental question. How can we justify the situation in Ecuador when it comes to the question of giving these big multinationals the possibility of influencing environmental rules? And let's imagine that we are ready to tolerate that type of risk.
Speaker 44
Would there be any kind of guarantee to make sure that these investments are really sustainable? And how can we build on this hope and make sure that the investment takes place in a way that it can lead to the protection of the situation.
Speaker 37
Thank you. Thank you very much, Chairman, indeed for the very good questions, and indeed, also thank you for the interventions which were made, which, of course, very much underline the importance of an agreement like this with a partner like Ecuador and indeed with the region. Indeed, in terms of interest by investors, we are aware that some of them have attempted to invest, and some of their projects have already been subject to bureaucratic steps that have led them to question whether they should continue to invest. And we will, of course, be picking up on that and see the next steps that can be taken by Ecuador in order to take these investments to fruition. We had also an interesting event during the visit of the Ecuadorian president to Brussels in January.
There was a roundtable organized with potential investors here in Brussels. And indeed, there were investors expressing interest in the potential that Ecuador has to offer. And indeed, often the constraints and the obstacles have been flagged, but there was actually a very strong commitment by the president to address those issues. And this CIFAC can indeed be seen as a contribution and an important platform for us to address those concerns, constraints, and obstacles. The issue of implementation, how it is done and monitored, and working with civil society and indigenous communities is indeed part of the agreement.
This is something to which we will pay a lot of attention. There are provisions that indeed foresee that we will have dialogue with civil society regarding also the work that we need to do on the implementation of the CIFA. To give you an example, we are already doing this with Angola, but we do intend to continue to work further with Ecuador in order for us to reach out also to civil society and stakeholders, so that we get that input regarding implementation. There is indeed a dispute settlement mechanism that applies to this agreement. There is one important difference, I would think, in terms of what a trade agreement typically is and what the CIFA has in terms of the dispute settlement mechanism.
And that is typically, if you have a trade agreement and you don't respect your commitments to lower tariffs, then you can win a dispute settlement case, and you can retaliate by not reducing tariffs to your partner, as you had committed, because the partner is also not respecting the commitments. Now, here with the CIFA, we are talking about our transparency of procedures, our publication of procedures, of laws, and having contact points for investors. And, of course, it becomes difficult for us to say if our partner is not respecting the commitments, and that we will also not be publishing our laws. Of course, it doesn't make sense. What is important for us is indeed to address the constraints that are leading our partner into difficulties in implementing, and that is what we intend to do with the CIFA.
We want to work with Ecuador in the implementation of these measures so that indeed both Ecuador and our investors benefit from these provisions and that we are able to facilitate further investment in the country. And indeed, as we try to work on implementation, the way we have devised this agreement is that it should be mutually supportive with what we do in the WTO. So what we are making sure by having this agreement also, even if we go further than some of the provisions that we have in the WTO agreement, is that we hope indeed to incorporate them in the WTO rule book in MC14. What we are doing is that this is an agreement that mutually supports the efforts in the WTO. By implementing this agreement, Ecuador will also be implementing the agreement in the WTO, and we indeed want to make it mutually supportive because we want, by doing our bilateral agenda, to reinforce the work that is being done at the bilateral and multilateral levels.
So indeed, it is very important that these agreements remain mutually supportive. Even if, as I mentioned, we go further into certain areas. And indeed, by signing up to the AWG agreement, countries are opening. They are saying that they are committing to attract and facilitate investment by doing the CIFA with the EU. They are focusing in particular on sustainable investment that they want to attract.
And this, I think, is also a very important aspect. Now, the last question was also regarding the role or the alleged influence that multinationals would have by commenting on legislation. This is not the case in terms of the possibility, indeed, for parties and stakeholders to be able to comment in certain procedures that the CIFA partner will have. We think that this is valuable. It doesn't oblige the authorities to take the comments on board, but it offers an opportunity to have good legislation and good regulatory practices also being pursued as far as investment is concerned.
We have made very clear that this agreement does not give rights to the investors and cannot be used in investment protection agreements. This is a totally separate area, and we have made clear in the agreement itself that this is the case. Thank you.
Bernd Lange
Thanks a lot, Josh. Of course, we will continue to have an even more intensive investigation of the agreement and look, of course, quite closely at the implementation. Thanks a lot. And now we are switching, I guess, to our last item for today. It's Item 19, information about the possible price undertaking regarding battery electric vehicles coming from China.
We discussed the situation about the tariffs on Chinese battery electric vehicles a lot, as well as the investigations. And it's certainly clear we have three options to solve it. It would be an export tax from China that will never happen. It is possible to avoid the subsidies. That's really complicated.
And the second and third options are to have price undertaking so that, at the end of the day, the price is fair in the field of competition. And now, after two years of negotiation, there is a window of opportunity to find a solution regarding the price undertaken. With China. I guess one case is based on that so far. But, of course, I'm not the expert from the commission.
The expert is Ms. Carolina Kumbo Naccelli will now explain to us how the situation is.
Speaker 46
Thank you very much, and thanks for the introduction and for having us today. Indeed, we are coming here to give you first an overview of what this is about, how this started, what happened, where we are now. Then, we will get more into the last developments on price undertakings. So, I will start with how these measures came into force. So, all this started in 2023. You may recall that in the State of the Union, the Commission President announced that the Commission would investigate unfair subsidies affecting the EU production of battery electric vehicles.
Speaker 47
And indeed, shortly after, an investigation was initiated. So in TDI, as this was an anti-subsidy investigation, trade defense investigations have a process, and they are about finding the facts and drawing conclusions from the facts that we gather. So, we had sufficient prima facie evidence that pointed to indeed significant subsidies given to producers of battery electric vehicles in China, and that these exports to the EU were threatening to cause injury to the producers of battery electric vehicles in the EU. So this investigation had a number of steps, many internal steps, but also a number of steps that resulted in a publication. And in the slide, you can see that first we registered the imports in case we needed to go retroactively into the collection of any measure that would be a result of the investigation.
Speaker 46
That happened in March 2024. In June 2024, we published what we call the pre-disclosure. So, at that point in time, when the commission announced that we would be imposing provisional countervailing duties, the level that was estimated was published a few weeks later together with the provisional findings of the investigation. That was July 2024. What happened between provisional and definitive findings were comments from all interested parties.
They made the views known, and they could also offer undertakings. I'm coming to that in the next slide. So indeed, in October, the commission published the definitive countervailing measures on battery electric vehicles from China for five years. So, this was a result of these positive findings on the subsidies that were available to the whole supply chain in China at different levels: national, provincial, and local. The findings are all published in a very lengthy commission implementing regulation.
These subsidies were threatening to cause injury to the union industry. The commission also looked into the union interest aspects of the investigation. So, all this investigation was carried out in accordance with EU law and WTO law. So, we fast forward some months. And in December 2025, the commission initiated an interim review following a submission and the undertaking of a price offer from an exporter.
So it was Volkswagen and Hui, together with the related importer, SEAT. They had been preparing a takeover offer, and they submitted it to the commission. Here, the Parliament and the Council, as per our basic anti-subsidy regulation, received a copy of the open version of the undertaking offer that was received by the Commission before the interim review investigation was initiated. Now, we initiated that interim review because the undertaking offer that we received contained sufficient evidence pointing to elements of acceptability and practicability that could be investigated by the commission. So, this was a very expeditious investigation.
Unlike other investigations in trade defense, where the beginning of the investigation is with the questionnaires that are sent to all operators in order to gather the facts that will then be verified and on the basis of which findings will be drawn. Now, this investigation didn't have such a feature because this interim review investigation was only limited to the undertaking offer that was presented. It was about parties being given the possibility to make their comments on such an undertaking offer, in order for the commission to be able to draw a conclusion, which was then disclosed to interested parties so that they could comment on the findings of the commission regarding the undertaking offer received. So, as you can see, this trade defense investigation entailed due process that allows parties to make their views known. So we published the acceptance of the undertaking offer on February 10, very recently.
In the meantime, we also published a guidance document, and I will mention a few words about that in the next slide. So, next slide, please. So, this is the conclusion of the investigation, the original investigation imposing the countervailing measures. What you can see is that there are a number of countervailing duties that are enforced, and they are applicable to individual groups. Then there is a category for cooperating non-sample companies.
And there is a whole annex in the commission implementing regulation to identify those individual companies that would benefit from that duty rate. And then, as usual in trade defense, they have a residual duty for all companies that are non-cooperating, and they typically have the highest level of the measures. So, these findings are still valid. They remain unchanged. And what has changed with the acceptance of the undertaking from Volkswagen and Huey and its related importer SEAT is that this is exclusively for them.
They are not paying the countervailing duties when clearing customs for the battery electric vehicle that they import from China, in view of the undertaking that is enforced, which is considered to be a different form of the measure. Maybe a couple of words about what we have observed since the imposition of the measures in October 2024. What we have seen is that imports from China have continued to come to the European market, albeit at a lower level. The market shares are still significant, but not at the levels that we saw increasing over a relatively short period of time. So, just to recall, findings during the investigation pointed to a market share of China for Chinese imported battery electric vehicles at around 25%.
What we observed is that now it's below 20%. And that brings me to the last slide, where I would like just to look at undertaking from three different angles. The first one is what you will find in the regulation imposing the definitive countervailing duties. So, that's the first column. So, in that regulation I mentioned before, some exporters did offer undertakings during the investigation and at our appropriate time, which is a window of opportunity that goes from provisional measures to a few days before the end of the deadline for commenting on definitive findings.
Those undertaking offers were not accepted, and there is a whole reasoning in the Commission Implementing Regulation explaining why these undertaking offers could not be accepted. And there is also recital 14.22, which is the one that opens the door for these discussions on undertakings that go beyond the publication of the definitive countervailing duties. So, this is the recital that has allowed the discussions that were already taking place at that point in time and has allowed others who would be interested to continue the discussions with the commission even after the imposition of the definitive countervailing duties. And this indeed happened. Many words about the guidance document.
You are probably aware, it's on our website that on January 12, we published a guidance document. This is a guidance document that was customized for battery electric vehicles in particular. It's for the submission of price undertaking offers in this particular case and is intended to guide the Chinese exporters who may consider these price undertaking offers and have a very practical approach to the complexities of how a price undertaking offer would need to be designed. It identifies and addresses relevant issues when these exporters are considering that undertaking offers, and it's, as I mentioned, practical and customized for the case. It's important to bear in mind that this possibility of offering undertaking price undertakings is in the WTO rules.
It's also reflected in our basic anti-subsidy regulation. This guidance document reflects the standards that are already established by the commission. So, there is no change in substance. It's intended to just give guidance, as the document says. The last column, maybe a few words on the content of the undertaking that was offered by Volkswagen and Ruiz, and the related imported SEAT, which was finally accepted.
The commission considered that the minimum import price was adequate. There is a second element that is a challenge for exporters, in particular in these kinds of sectors where the sales channels and the group of companies are so complex, and the product is so complex, which is that they have to present in their undertaking offer the mitigating measures to address the risks of gross compensation, given that a basic element of an undertaking offer is to have a minimum import price. We have to ensure that the minimum import price is respected and is not compensated by having artificially lower prices to the same customer coming from a different transaction. We have considered that it is practicable. Just to recall, the one model that is being exported from China to the EU is the Cupra Tavascan.
And in the undertaking offer, they add two elements. One is a volume element per year. And the second one, which I think is also interesting to present, is investments in the EU. And on that one, they also put forward a number of milestones because these undertaking offers are not an expression of interest or what they expect to do, but a contract that needs to be honored, which means that all this information and all the milestones that are presented are to be verified by the commission regularly to ensure that they are respected. If it is not respected, it can lead to a breach, which means that the undertaking comes to an end, and it can also lead to a retroactive collection of the countervailing duties that would otherwise have been due.
As a bottom line, the Commission considered that the undertaking offer was acceptable and practicable, that the minimum import price was adequate, and that it was enforceable. Thank you very much.
Thank you.
Speaker 39
You, chair. I'd like to thank the commission's representatives for the very rich information they shared with us this afternoon. For months, we've seen how the European Union has imposed additional duties of over 20% on Chinese electric vehicles as an outcome of this investigation on illegal subsidies. Now, to put this in context, the decision to accept the Volkswagen undertaking is a necessary and correct measure that should be interpreted as a specific response in a given situation. This is a particular case with a tailor-made solution so that we do not endanger European industrial projects underway.
Speaker 41
Kuprat Havascan is assembled in China, but its industrial strategy is developed in Europe. Behind this project, there is an investment to the tune of €2,000,000,000 in Spain, and that is linked to electrification. This investment will support thousands of direct employment opportunities throughout the value chain and will also support the manufacture of other models that are being assembled in Europe. In this context, I had a couple of questions for you. Has the Commission identified other similar cases to CUPRA?
I'm thinking of cases where there are European, clearly European, industrial components, even though the final manufacturing takes place in China. Second, what relationships does the commission have with other European manufacturers in China following this agreement? And third, I'd like to stress that Chinese tariffs on pork meat are very detrimental to our producers. When is the commission expecting to see real results in eliminating them? Thank you very much, and I apologize that I am on my way to another meeting. I would like to thank you very much.
Speaker 48
We're still waiting for answers, but thank you very much for that extensive information.
Bernd Lange
I'm happy that the chair of the China delegation is here with us, and I give him the floor for two minutes.
Speaker 49
Chair, thank you very much for the floor. I was on time, but I seem to have missed the commission presentation. Now, when it comes to the minimum importer pricing, I think, at first glance, it seems positive and is going in the right direction. But at the end of the day, when we look at the developments and the manipulation of the Chinese currency, it really should be higher. I don't know if we can rely on this minimum pricing in the long term.
We have to look at the whole supply chain, which could end up disappearing from Europe. If these cars are put together in China, then we might not be manufacturing cars in Europe at all in the future. So I think this is a good transition for half a year or a year, but we urgently need a solution for our economy to be competitive and still have that production in Europe. I think that has to be the target. So, we need to work together with the Chinese side, but we don't want to have the same shock in the automotive industry as we had in the solar industry and other industries. So, I am pleased that there's been an intensive exchange with the Commission, but I think it really is important, and I'll say it again.
Speaker 50
The minimum pricing is not the solution. We need to have WTO-based rules. That's really the only solution to help create that value in the EU. Thank you.
Bernd Lange
Is this price guaranteed with the undertaking? Or are there other elements that are even necessary? We have also seen now that, regarding some investments in Europe, the foreign subsidies regulation is also being taken on board. So, as the chair of the China Delegation said, the important issue is that we can really guarantee that the competition is fair and, therefore, whether the price undertaking is a secure instrument for truly having fair competition. So, Jean Marc?
Speaker 51
Sorry. I just had to make a couple of comments on behalf of Kathleen Van Bijn, who could not be there today, and a couple of additional questions to the ones that you raised. First, Kathleen wanted to say that she welcomes that this undertaking is legally sound, WTO compliant, and subject to a strict monetary on-site verification, but enforcement will be crucial if commitments are not respected by the commission. Kathleen Van Wandt says we must act swiftly and firmly. It's a condition for this price undertaking to take place that there are no additional trade barriers.
At the same time, this decision sends an important political signal. Trade disputes do not automatically have to escalate into tariff wars; dialogue, when grounded in clear criteria and reciprocity, can deliver results. Thanks for the comment. And then the four questions that my colleague, Kathleen Van Bren, would like to ask the commission would be, first, price undertaking concerns one exporter and one model. Can the commission clarify whether all the Chinese BEV producers are close to submitting comparable offers for a price undertaking?
Second question would be: how will you ensure that the minimum import price truly reflects a nonsubsidized level and prevents any form of circumvention? Third question: what change in recent months has led Volkswagen and Hanhui to agree to this undertaking now? And finally, can the commission clarify the extent of engagement by the Chinese authorities during the process? And was there any broader coordination between the Chinese government and exporters in preparing this offer? Thank you very much.
Speaker 46
Thank you very much for the questions and the interventions. So, maybe to start with, there are many questions about whether there are other undertakings coming. Are there discussions with other producers or exporters who would be interested in submitting a price undertaking offer? So, this is confidential, so I cannot give details about it. What I can say is that many companies reached out to us to ask questions, and the parliament is going to receive, as we did with the undertaking offer from Volkswagen and Kuwait and related importers, the open version of the undertaking offer if and when there is another one that fulfills the basic criteria, which would allow the commission to further investigate whether this could materialize.
So, this is as far as I can go on interest. The Chinese companies and the Chinese government were very appreciative when we released the guidance document. They found that this was a very useful document because it goes into quite some level of detail as to how to design a price undertaking offer. It has different sections, and in each of the sections, it gives an indication of how this could be presented and what is in conflict with what other aspect. For example, if a company exports a lot of different models and different equipment, and each of them has different price levels, then that would get into tension with the risk of gross compensation. How can a company mitigate the risk of gross compensation if some cars are priced double compared to others?
So how do we know what the right price is for each of the particular types? So, all these very practical indications are in these guidance documents. So, it was well received in general. Now, the minimum import price conceptually has embedded the notion of adequacy. So, it has the notion that the price resulting from respecting that minimum import price is a price that is fair, non-subsidized, and has an equivalent effect to the payment of countervailing duties at the border.
So that's why this is a critical aspect of any undertaking or offer. How do we verify that this is respected? Well, this undertaking offers a number of commitments, as I mentioned. And these commitments are regularly verified. So the exporter has to notify us about the exports that are coming to the EU, and then subsequently, they will notify us about the level of prices, which will allow us to verify whether these minimum import prices are respected.
The same happens with the other aspects of the undertaking offer. I mentioned before, in this undertaking offer that we have now in place, there's a commitment on investments, and these milestones for the progression of investments are going to be verified regularly by the commission as well. Any finding of a breach can lead to the termination of the undertaking, and then the countervailing duties would resume for that particular exporter.
Speaker 52
Good afternoon. My name is Pedro Folasco, and my team at the time of the original investigation investigated the Chinese part of the subsidies. I would just like to add to a couple of points. Mister Chairman, there were references here to the WTO panel and to the retaliatory cases where measures remain in place. So indeed, as Karina pointed out, these last initiatives and the issuance of the guidelines were very much welcomed by the Chinese side and seen as a positive and constructive way of addressing irritants.
But the fact remains that our measures are still being challenged at the WTO, and we remain fully engaged. It's intensive work. We remain fully engaged in that and confident that what we did complies with the WTO, but it's still very heavy work. And we are looking at an important moment when there will be a hearing towards the beginning of summer. So, that is still there.
Speaker 53
And the retaliatory measures on the three cases: pork, dairy, and yes. I'm sorry. I'm Brandi. Brandi remains. So, yes, I'm afraid we cannot really talk about solving everything through dialogue.
On our side, undertakings were accepted on their own merits, and this is not part of a package deal. But the fact remains that both the legal dispute and the justified retaliatory measures are still in place.
Speaker 46
Going now through the questions, maybe I can address two or three more? So, how do we ensure that the minimum import price is unsubsidized and that it would not be cross-compensated? As you have probably seen from the guidance document on the Digitrade website, there are two different pathways that were identified. The more classical pathway is the one that is based on the export prices of the investigation periods, or the investigation period, to which we add the countervailing measures that were calculated for that particular group of exporters. There's a second pathway that was also identified, particularly in view of the fact that this investigation took place at a time when many exporters were starting to export, and not all exporters had exports during that investigation period.
So, there is also the possibility of constructing a minimum import price based on a non-subsidized price for a similar battery electric vehicle with a notional profit that is constructed in the EU. So, this is another pathway that was identified and has proven useful as well. Now, why did this particular exporter offer the price undertaking at that point in time and not before? Well, designing a price undertaking takes time. There is a lot of work that the company has to do, a lot of adjustments that they have to make in their sales channels and in the way they price.
There's a lot of evidence that they have to present to us. So, this takes time. There was a whole team working on this particular project for them. So, they came when they considered that they had all the elements sufficient for the commission to assess whether that was an acceptable undertaking offer. And then the last question I have identified here, which I think was also asked, is how was the engagement of the government of China in the process of the price undertaking? I can also say for the original investigation.
So, the government of China is an interested party in these investigations, and they have the right to put forward their views and comment on the elements that are in the open version of the file and on the definitive findings of the commission. Thank you.
Bernd Lange
Thanks a lot. And I guess we will follow up on this. Do you have another question, Kjell?
Speaker 49
There's a question I'd like to ask the commission. Is your goal to have fair competition? Is that what you want as a commission? Or are you more focused on the minimum price? I have the impression that if we focus on the minimum price, then I think the same thing will happen as what happened in the solar industry.
What is the strategy that the commission is aiming for? Fairer competition or the minimum or the lowest price? Because I think that would help the supplier because they can make better, lower profits than in Europe.
Commission.
Speaker 53
Yes. Well, the commission has done its job and has concluded the investigation with the imposition of the duties for 5 years. That was our goal. We have exceptionally accepted, as part of the process, to conclude the imposition of the measures. We have exceptionally accepted that an undertaking could be offered after the measures were in place.
And now, after one year, there was one that was acceptable. So, clearly, undertakings are not a very adequate instrument to deal with such a complicated product. Really, the only undertaking that we have in place for the moment is on biodiesel. Biodiesel is a liquid that has one mode of that. So, when you come to a car, which is very complicated with companies that have dozens of models and hundreds or thousands of variations, this is not adequate because for each of them, you have to have a minimum price.
And you cannot fail to meet that minimum price, even for a car. That would be a failure of the undertaking. So, it's obviously not the goal, and I don't think that we will see undertakings across the board. But at the same time, we respect our law and WTO law. So, if a company can come to us and show that they have a price that does not include subsidies, and they can give us convincing and verifiable information that they will not be compensating for that high price, for instance, by selling a hybrid at a low price or by providing repair or spare parts at a low price, then, exceptionally, we will consider and possibly accept that undertaking.
But clearly, for a product like Bevs, it is very complicated. And after that, so yeah. Almost two years in total, one and a half years of negotiations; the fact that there is one accepted is an indication of this difficulty.
Bernd Lange
Yeah. Thanks a lot. Of course, the important issue was that we have fair competition on a level playing field. Otherwise, we have serious issues with our employment situation inside the European Union. Therefore, investment inside the European Union would also be quite good.
Thanks a lot for the debate, and this was the last item on the agenda. Thanks to the interpreters for the work. And the date for the next meeting is in March. Thanks a lot.
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