Committee on International Trade Ordinary meeting
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INTA European Parliament
Follow its sittingsSpeaker 2
Next slide, please. It has also been difficult to secure funding for any activities related to producing critical raw materials, although things are improving there. And even if projects go ahead, as said, they can really take very long, partly due to the complex permitting procedures. We have in the report one example from one Member State where we show that it can take up to 30 years to open a mine, meaning that if we were deciding to start a strategically important mining project today, we may celebrate the opening not in 2030, not in 2035, but in fact in 2056. CRM Act also envisaged that at least 25% of the EU strategic raw materials should originate from recycled sources by 2030.
And we can go to the next slide. We do see this actually as the lowest-hanging fruit. But as things stand currently, again, out of 26 materials that are needed for the energy transition, have recycling rates between 15%. And 10% of materials are not recycled at all. And to mention the nonbinding target, again, the target was 25% by 2030.
Furthermore, most EU recycling targets are not specific to individual raw materials. So we have one aggregated target for all the materials combined. And as a result, the target fails to incentivize the recycling of individual materials, especially those that are harder to extract, such as rare earth elements in electric drives or palladium in electronics. The recent legislation is intended to further improve the recyclability of CRMs through labeling requirements, and also by promoting circularity already at the product design stage. However, what we also underline in the report, the regulatory obstacles, for example, those affecting the waste trade, and also market barriers still persist, which means that those barriers are limiting commercial liability of the recycling operations.
Next slide, please. And this is my last slide on the observations. It concerns the concept of EU strategic projects. And those strategic projects should contribute to the three objectives I mentioned earlier: the diversification, domestic production, and circularity. So the strategic projects should benefit from faster permitting and, of course, also more visibility.
But so far, they have come with no EU money attached. In other words, they are strategic mainly, or maybe even only in name. As of November 25, there has been two calls for those strategic projects, and this is by 2025, which means that many of those are unlikely to provide supply by 2030, which was the target here for the targets. Next slide, please, and final slide. So I have absolutely no illusions about the challenge that the EU faces in securing a stable supply of critical raw materials.
However, I firmly believe that with really dedicated effort, you can overcome these hurdles and really also achieve success. In our report, we have quite a few and detailed recommendations, and I am quite encouraged by the fact that commission accepted almost all of them, one partially. So the recommendations we gave were first focusing partnerships and trade agreements on really pragmatic, practical actions that will increase the supply in real life. The ultimate goal of those partnerships should not be forgotten, and the ultimate goal was to increase and diversify imports. So this is what we underlined several times.
Second, financing for domestic production should be more easily available. I must say things are improving in this regard, but the sector is still considered risky, and many projects struggle with funding. Third, we must already use or we must use already excavated materials more wisely. And the way we see it, unleash the potential of reusing and recycling. Fourth, the EU should prioritize those strategic projects that already have offtake agreements with EU manufacturers to make sure that we don't end up with strategic projects supplying our EU's competitors.
And finally, the commission should also assess the overall policy's impact on supply. This is what I mentioned also earlier. I mean, we may speed up the process. We may increase the money. We may set new targets, binding or non-binding.
But if we don't really know if this has actually increased the supply of the materials the EU needs, we may simply find out too late that there might be a need to adjust the cost. So to conclude, the understanding of the urgency in the CRM front is certainly there. I think the EU is already doing quite a lot, but it has to push stronger, faster, and with more resources on all different policy fronts. So I very much hope that our report, I briefly introduced, will be a useful tool in your hands and in your colleagues' hands, and I will be ready to answer as many questions as I can within the time limits. Thank you.
Bernd Lange
Perfect. Thanks a lot for this comprehensive overview. And indeed, when I read the press release when you published the report, I think now all alarm bells in Europe should ring. So the figures are really dramatic, so that we have really to join our forces to reach the target and to be clear. And also, the figures regarding recycling that 10 of the critical raw materials have no real recycling targets and measures.
Unbelievable, to be honest. So, but it's firstly not my duty to comment. We have a critical raw material monitoring group. The members are invited to speak first, and Lydia is the first for the EPP for 2 minutes.
Speaker 4
First of all, I'd like to start by thanking you for presenting the outcomes of this risk report. It's very important indeed, and the message you send is clear. The EU has understood the strategic importance of CRMs, but the political responses that have been given are not solid enough. The report shows us that the CRMA is pointing us in the right direction. Yes.
But there's a lot of work that remains to be done, particularly when it comes to diversifying supply chains. So we're still focusing on production, recycling, and access to funding for new mines. And at the end of the day, we almost need another omnibus to unlock this whole stalemate, because the rhythm at which we are working, the speed is too slow. We're not going to be able to meet the 2030 goals in time. This cannot be an abstract debate about theories and so on.
Speaker 5
That's why in July, we issued a text saying that we are exploring this issue. Our dependence when it comes to CRMs shows us that this is not just an economic weakness, but a real strategic weakness. The EPP supports and will continue to support the European supply chain in this area. This needs to cover all the different phases of the supply chain. It's important to talk about this because here, we're in the international trade committee, and trade is part of the issue.
Speaker 4
The report shows us that trade agreements are vital to ensure access to these CRMs. As such, I'd like to remind colleagues that the Mercosur agreement that some of you want to refer to the Court of Justice did include provisions relating to CRMs, which are plentiful in countries such as Argentina and Brazil. I don't have any questions. I just wanted to share these comments with you. I think it would be worth us taking a look at all of this.
Thank you.
The s and d.
Speaker 6
Thank you very much indeed. And, we like to see how many women are involved in these reports. Thank you for that. And good afternoon, Mr. Penta Sorsimanus. I would like to thank the members of the European Court of Auditors for this study.
You have produced a very insightful resource which gives us a clear picture of the different dimensions of the EU's response to raw materials and helps us hold the commission accountable. Your conclusions and recommendations are both timely and also concerning, because as you just rightly summarized, while the EU's raw materials policy sets a strategic course, it rests on incomplete foundations. I would like to focus on three aspects of your recommendations that are particularly relevant for our work in the INTAA committee. First, your study clearly highlights the importance of the EU trade agreements for securing critical raw materials. Here, you call on the commission to assess whether trade agreements contribute to improving supply security based on your findings.
Are there specific elements of our trade agreements that you consider particularly relevant for critical raw materials? And, are there concrete actions that could help improve how DJ Trade approaches future agreements? The second issue I want to highlight is funding. This is something I consider crucial, as without a specific budget, all initiatives will be just empty words. Throughout the study, you underline the need for more specific and tangible financial support, which right now is very scattered, and we really support that idea.
Funding is essential. Among the various suggestions you propose to address funding bottlenecks, which one should be the Commission's top priority in the short term? And finally, in strategic projects, your study proposes extending the eligibility to additional raw materials relevant for the green and digital transition. Do you have any specific materials in mind? Thank you very much.
Very interesting in this.
Speaker 8
EU is in a growth crisis and has forgotten one key aspect. Without CRMs, there is no green transition. Today, we do not have enough CRMs and we don't produce enough. The ECA in this excellent report spells it out clearly. Our strategy is not realistic and is not delivering.
Speaker 9
We are hugely dependent on CRMs are imported. 10 of the 26 are imported, and no rare earths are produced in Europe. In other words, the commission seems to be completely disconnected from reality, and this energy transition that it is envisaging is impossible. They have put the cart before the horse. We don't have enough resources.
And now in this emergency, this crisis situation, the commission is pulling at this magic wand of diversification. The ECA is responding to this, saying that partnerships are not enough to secure supply. This pileup of agreements doesn't do anything to counter our dependency. We need to produce our own resources. The red tape and the green deal are standing in our way.
And you said that in one country, two got 30 years for permitting. I'd be intrigued to know which country this is, but I'm not surprised by that. We need to develop recycling sectors, but there's a paradox here. We want to be sovereign, and yet we are planning our weakness. Can we claim to be an industrial power when we refuse to mine resources that we have in our own territories and when we depend on third countries for raw materials and when we bury our heads in the sand?
Speaker 8
The answer is no. If Europe wants to be credible, we need to change our logic here. We need to produce more at home. We need to cut red tape and relook at what we're doing with Rwanda. If we want, if we don't do this, we will be more dependent and less sovereign in our transitions.
Rihards Kols
Yes. Thank you very much for the report. I mean, it's welcoming at the same time scary, knowing where Europe is in the light of the critical raw materials and our, let's say, strategic autonomy that we are trying to achieve. CRMs is good that we are signing new partnerships, a collective effort, at least for the like-minded countries. But I think the biggest issue is you mentioned, I think it's a core that in the last period, we had the smart industrialization.
Speaker 12
What happened to that? Where is it? And where have we delivered it or not? But the question with critical raw materials, I will emphasize the recycling aspect. And we have very innovative, advanced companies in Europe that actually recycle batteries.
Rihards Kols
And I'm not talking about AA or AAA batteries. I mean, the EV batteries and so on that produce precious metals and etcetera, and particularly some specific, I forgot the name that some of the companies become the major leading supplier globally on that particular byproduct of the recycling. And the biggest issue is, so we identify, let's say, in defense area. So we talk about now the defense of Schengen in Europe, so military mobility. When it comes to recycling, the complaint is from the companies.
We could do more gathering the recycling material from the member states, but the problem is the permits getting from, let's say, Italy to Belgium. It takes nine months. All the getting the approvals and so on. Couldn't we just start actually discussing creating the recycling Schengen, where we identify highways that are used particularly for recycled materials, those like batteries and etcetera. So we speed up this recycling process, and we become more self reliant because we produce the byproducts that are crucial for our industries. And also, we become competitive when it comes to these byproducts that are needed elsewhere in the world.
So that brings up the European competitiveness as well. So recycling Schengen is something possible, or just my imagination or wishful thinking. Thank you.
Thanks a lot. Bart?
Speaker 11
Yes. Thank you. And I always read the reports of the European Court of Auditors with a lot of attention. Demonstrate. You are able and willing to independently review policies.
Thank you. I was fascinated by the vicious circle you mentioned in your report. You didn't really speak about that, but in your report, you do speak of a vicious circle we keep hanging in. I would like to see what works in the real world. And what works in the real world is Donald Trump lifting or getting 8 to 9,000,000,000 of private investments in an Australian mine.
I'm not a political fan of Mr. Trump, but this is something we have to look into. $8.09 billion in a new mine. How did he pull that off? First of all, not just by subsidizing. He did it by also making sure there was a long term off take agreement.
There were businesses able and willing to buy those light minerals from those Australian mines, first thing. Second thing is a price floor, a guaranteed price floor. If you have a mine and you know this is the minimum price I will get, you know for the next 15 years people will buy it, you have a business case. Third thing he did was with the trade policy. Foreign subsidy instrument we could use or antidumping measures.
If we have those three, not just subsidizing like we do, but we also have a price floor, we have offtake long term offtake agreements, and we have trade in instruments, then we break the vicious circle. At least that was what he's demonstrating in reality, and it's working. The same he's doing in a magnet mine somewhere in the US. So I would like to see us learning from that. And is it true?
Is my analysis correct? How does the European Court of Auditors view this actually working policy, and is it working to also break the vicious circle you spoke about in your report?
Speaker 16
Thank you, chairman. Just very briefly, I'd like to touch upon what was just said by a right-wing colleague who is defending Mergersor, saying that we need to protect our farmers in order to have access to producers in Latin America, raw materials in Latin America. Thank you very much for the presentation of this report. It was extremely interesting. It's true.
Speaker 19
Critical raw materials are necessary. We need them. As you showed, the report highlights the difficulties that we face in obtaining them. I have a few questions. Have the auditors looked at the human resources behind these permits?
Speaker 18
There are people, officials. There have been austerity measures. What kind of assessment have you made of the availability of human resources behind these permits? Second question is more about acceptance. There's also this issue of acceptance among the citizens.
Speaker 15
You carried out an analysis. Have you looked at citizen involvement and asking citizens' opinions on protecting these resources? Thank you.
Speaker 22
you. If you give me this opportunity, I will use it, especially as the member speaks my language. To start with, I think in the European Union, ESA is one of the most adequate institutions, and the reports that they produce are a good reading material. They are realistic. They are critical, justified.
Speaker 17
And secondly, in response to the previous speaker, I would say that stopping the Mercosur agreement is very bad. Food security is not at risk, but what is at risk is the new trading areas that we could make use of. But now it's not possible. In the same way, access to rare earths for our entrepreneurs is not possible because certain groups or politicians play games here. This damages all of us.
But as we know, since 2019, under the leadership of the European Commission, we have undertaken a big revolution: climate neutrality, fit for '55, all big slogans. We know that this revolution means more resources in order to transfer to the use of green energy, cars, etcetera. But all these sources are actually under China's control today. Has the ECA actually analyzed or calculated that if this ideological plan of the European Commission is indeed realized, then what would be the deficit of rare earths in the EU actually? What would be the difference between reality and wishful thinking?
And has the European Commission taken into account those analyses if you have done those analyses yourself? Thank you.
Speaker 20
Thank you very much, and thank you for this report. I think this is a very important report, and it is very realistic. And it puts some questions, which we are also debating, discussing, at least some of us in the European Parliament. First, just to respond to my colleague's theory, I think the thirty years permitting country is Romania. Or if it's not Romania, then it is also Romania because I have in my constituency a gold mining operation for which the permitting started in 1997.
Speaker 21
So next year, it will be thirty years, and the mine is not working due to legal proceedings of NGOs in all stages of the permitting. But just to have one question, because I agree with all your conclusions in different sectors. My question is when you did an analysis on extraction and processing inside the European Union, did you also make the analysis or did you try to find out what about human resources aspect for mining, extraction, and processing operations? Because my impression is that we have renounced for 25 or 30 years to all the technical backgrounds that could give us the technicians, the engineers, the operators, and so on for such operations in the European Union. Thank you.
Bernd Lange
Thanks a lot. And from my side, also two questions. You mentioned that trade agreements should focus on pragmatic and practical access to critical material. What's that mean exactly, practical and pragmatic? Also, as you know, next week we will conclude the agreement with Australia.
Australia has a lot of raw materials. What is your expectation? What should be in to have this pragmatic and practical approach? And secondly, we have these strategic partnerships and memorandum of understanding and whatever. You mentioned, I guess, 15 different from then.
Can you have any indication, are there in operation or coming critical materials from then? I heard a lot of good words, holy words, but no investment in infrastructure. So can you give me a hint how they deliver raw materials to us? So.
Speaker 2
Thank you very much for all the questions, and thank you for all the encouraging words you had about the report. I'll try to cover as much.
Speaker 2
Possible. Maybe to start with the trade agreements, and also the strategic partnerships that we analyzed for the report. Basically, our recommendation is that we see that it is important that the agreements are as concrete and actionable as possible. And when it comes to the strategic partnerships, then we don't have the evidence that we could say that these partnerships have actually increased the supply of the CRMs, Critical Raw Materials. So this is to answer your questions that whether we can say that because of the agreements or the partnerships, the supply has increased or it's diversified, we don't have the dividends right now.
And this is exactly what we have in mind if we say that we basically recommend to choose a very pragmatic and practical angle when making or closing those strategic partnerships or also trade agreements. Then, about the financing. We also have the data in the report, but just to repeat that when I say that things are a bit improving there, for the last two programming periods, that is for the last 14 years, the overall amount that was dedicated to this front was 1,800,000,000.0 altogether. So now the commission has promised to mobilize EUR 3,000,000,000 within the next twelve months. So we see the improvements there.
But I also want to share that after publishing the report, I also had the chance to be present at several events that also have included the industry representatives, and I'm sure you have those contacts as well. But what the industry also says is that although the financing part, of course, is one of the bottlenecks, the whole administrative path. The whole issue with permitting is at least as important as the financing part. And also the certainty or the lack of the certainty of the regulation and the framework is something that, for sure, has an impact on the big investment decisions because this is one of the fields where the investment decisions are, well, first, big, but they also have a really long timeline there. So which sector specifically should be the commission's top priority?
What we recommend is that the commission should make clear where the biggest bottlenecks are in the financing and administrative parts, and then solve those bottlenecks. The resources, we have not really analyzed the resources part that specifically. When we also interviewed and did a survey for the member states, then of course, what we can say is that for the member states, the lack of knowledge is one factor that has a relatively big impact there, whether it's the permitting or also the whole development of the sector. So that certainly is to have an impact. Do we have data?
What is the amount of CRM that is or will be needed to have the successful transition? This was the question we asked the commission. Also, regard to the targets, non-binding targets that are set, that if the targets are met, can we say that or what can we exactly say that are they all the four critically important sectors well covered, and we did not get a really detailed response there. So currently, I think it's fair to say that there are at least in our possession, we don't have that sort of data. Then the recycling Schengen or the emphasis on the recycling part, I can only repeat what I said, that we do see also in our report that recycling, reusing, but also substitution is something that is currently unused potential there for sure.
And also, the internal barriers between the member states when it comes to the movement of waste are certainly one aspect that has an impact there. So this is also part of our conclusions. I'm sorry, there was something I was not able to cover yet. And the question is what the amount of or which critical materials are needed for the energy sector. There are 26 of the critical raw materials that are needed for the energy transition. They are not all, or they are not only strategic materials.
As you know, there are like 2 layers. First, critical raw materials, and then among those, critical raw materials, but like a smaller portion of strategic raw materials. But for the energy transition, the strategic raw materials are not enough. There are also those materials that are currently defined as critical raw materials that are needed as badly if we want to succeed there. And as you also see from the figures included in the report, they are mean, they are critical for our industry, critical for the transition, but also critical for defense and digital development.
When you so critical raw materials do not really make a difference whether they are used for energy transition or defense or digital, so they are all equally needed for the different sectors. I do apologize if I missed some of the questions. And if needed, we will come back to you if there is more detailed response needed. But thank you very much. And I do agree that this is one of the most strategic sectors and fields and discussions we are currently in.
So thank you, and good luck. And once more, our report is in your hands. Should you ever need some more information, please do not hesitate to reach out. We'll be happy to provide. Thank you.
Bernd Lange
Yeah. Thanks a lot. This is really, I guess, helpful for our work. And we were, of course, having a specific focus on raw materials, but now it's even sharper. And this is due to your work.
Thanks a lot. All the best to you. Same. And safe contact. Thank you.
No space. So even the next item of our agenda is dealing with critical material. And as you know, there was a meeting of some of you between the European Union, United States, and Japan on this critical mineral action or whatever we can name it. And there was an intention to conclude negotiation on the EU, US Memo of Understanding, by the way, in 30 days, on this pre lateral agreement on Critical Raw Materials. And of course, these Critical Raw Materials, as we just heard, are playing an important role in our value chain and our economic security as well.
And therefore, we are, of course, quite interested in what this means and what the content is. And I'm happy that Ms. Sophie Muller, Head of Unit from DG Grow, is here with us and our well-known Matthias Jorgensen, responsible for the relation to our friends and partners and sometimes our competitors on the other side of the Atlantic. So, Ms. Muller, I will give you the floor now for around ten minutes.
Speaker 23
Good afternoon and many thanks for inviting me today. I, of course, also listened with great interest to the previous debate, and I hope that all of this, especially now with the United States, can also be seen in the context of a very pragmatic approach when it comes to concluding a memorandum of understanding. I will shortly do a very quick framing, go into the details of the MoU and the negotiations, also a bit of the technical discussions. And then I will give the floor to Matthias, who is in charge of, well, the joint action plan and possibly a plurilateral outcome. Now you've heard it a little bit before. Where are we coming from?
We want to overcome our dependencies on critical raw materials. We have the political objective to diversify away beyond 65% if we are dependent on one specific country. And this is also how we have to consider all our external engagements. You've heard it before. We are trying to increase our supply from different sources.
In this context, we have these 15 Memorandums of Understanding with third countries. And there was previously a question: what do they actually deliver? For example, when we concluded our MOU with Kazakhstan, our CRM imports increased from 32,000 tonnes to 674,000 tonnes. And also when we, for example, did our clean and technology partnership with South Africa, we packaged that with a roughly EUR 200,000,000 project on CRM specifically. So there is a very concrete angle between these MOUs and the increasing supply.
Now, what does this mean in relation to The United States? Maybe it's fair to say that The United States is not a resource-rich country when it comes to CRMs, but we also have MOUs with, for example, Japan, which is also not resource-rich. And what is fair to say is that we share common challenges and that we have common objectives when it comes to critical raw materials. So the memorandum of understanding stems indeed from previous discussions and was publicly announced in the joint press statement on the occasion of the summit that Secretary Rubio convened in the United States on February 4. And this memorandum of understanding is really about our bilateral relationship with the United States when it comes to critical minerals.
And yes, the thirty-day deadline has passed, but I can reassure you we are very close. And I hope, if you want, next time, we are also happy to hopefully present an already made or already negotiated text. So maybe a little bit on the what. So what are we actually looking at in this memorandum of understanding? So first, it is really about working together on securing the diversification of the supply.
We've heard it before by one of the honorable members. The United States is very active at the moment in investing overseas. We don't have maybe the same amount of money, but we have similar objectives. And here, we really want to cooperate. Secondly, to address unfair competition.
Now, what does this mean? What has been observed, especially if we then invest in projects and alternative projects, the moment before we see an offtake, prices drop, and then the business case is gone. So this necessitates really to work around demand-side measures. And here, a discussion in the G7 framework has already been started under the Canadian presidency around standards-based markets. And here, we are really looking at all the different tools to pull the demand under fair market conditions.
And one of the honorable members mentioned before a price floor, but we're also looking at offtake agreements, at joint public procurement, at price gap subsidies, etc., etc., whatever we can do to create fair market conditions. Third, we really want to look at supply chain integration and complementarities. This links a little bit up with where we are strong, where they are strong, where we can partner together, where we can link up, possibly also, for example, in the recycling area, as I heard before. So we need to have a proactive approach to bringing our industry partners together. Then we want to cooperate on rapid-response disruptions.
We all still have maybe four last year in mind when we had export restrictions from one of the main suppliers, and we are discussing rapid response cooperation here. Another point is innovation and recycling. I've heard this also before. So we believe that we actually can bring something to the table here. And also, when it comes to the diversification potential, we can cover a lot of our supply by making use of CRMs through recycling.
Another issue we are also discussing, and that was also mentioned before a lot, is permitting. So cooperation on that. The United States has very similar challenges to us in this respect. In the CRMA already, we had some regulatory proposals here, but also the Industry Accelerator Act that was presented just a few days or weeks ago has, for example, the proposal of digital permitting in the latest Commission legislative proposal. And then this is roughly the areas that we want to cooperate on.
We are now in the final stages of the negotiation. So if all goes well, I hope that after the Easter break, we have come to the conclusion of all of this, and then we might be able to present something before the summer. Thank you very much. And now the floor is with Matthias.
Speaker 24
Yes. Thank you very much, Chairman. As Sofia said, and I'll be brief, I mean, the key question is, how do we diversify supply? How do we shore up supply chains? How do we make production viable?
How do we protect ourselves against pervasive nonmarket policies and practices and unduly subsidized production? So there are various measures and steps that we can take. The MOUs with various countries, including the U. S is part of the story. But another part of the story, one of our possible policy responses is a plurilateral trade initiative on critical minerals.
And that is what we would like to see and explore, whether it's a possibility to do that. And for that purpose, we are looking at an action plan, agreeing on an action plan with the U. S. Exactly with that purpose. We want to try to explore what could be done, what are the instruments, the policy instruments that we could use.
Could we, for example, use a price floor? Could we coordinate stockpiling? Could we coordinate offtake agreements? Is there space for border-related measures? What role could standard-based trade, which would be picking up on labor or environmental standards, high environmental or labor standards, play?
What could we do in terms of export controls or investment screening? There are a number of areas that we believe could be interesting if they are done in the right way to address this problem and shore up our supply chains. That's something that is interesting to look at together with the U. S. Because we, together with The U.
S. And, of course, also a couple of other countries like Japan or the U. K. Or Korea, where we are the big market for critical manures. But there are a lot of things to be considered.
For the moment, we are looking at engaging in an exploratory manner, as I said, in the initiative that The U. S. Have been trying to push very, very strongly. And that's what the action plan would do. It would say, yes, we're ready to look at it.
There are many issues to discuss, and we have to engage in it. That's a political signal that we will want to do with The US. So we are quite advanced also in this negotiation of an action plan, and we would try to get those two things finished at the same time, the MOU and the action plan. Thank you.
Bernd Lange
Thanks a lot. To be honest, now I have more question marks in my mind than before. Perhaps because this is a little bit on raw materials, but also in relation to United States as a repertoire, perhaps I will start on that. So this MOU you're negotiating, is this the same model like the US and Japan concluded in October 2025? And so I have my doubts, is a little bit in general.
So the elements you mentioned were also covered by that, but not really focused on details and concrete mechanism. And so perhaps you can explain if this is a similar exercise or where the difference is. And are there some deliverable bids from The US, Japan, MOU? Second point, the whole set of criteria on both. Of course, in our normal trade agreements, we have also only always looked to the sustainability of production and labor rights and environmental standards.
None of you mentioned this in the presentation. So for us, I guess, it's also important, like we did, for example, with Chile, that the question of proper environmental standards in the mining of lithium and the respect of the interest of the Indian people is also core. And then we have also one instrument, which is quite good, developed this double pricing for lithium so that we have an incentive for processing the raw material in the country and give added value to this country as well. And this, I guess, should also be an effect, not just taking away the raw materials and that's it. So there should also be an added value for the countries.
Third point, so it was quite vague, your presentation, and I can't really understand where the difference is to these 14 MOUs we have so far with other partners worldwide. And the court of auditors made a reference to that as well. And then, Miss Muller, you mentioned a bit that the US is investing a lot in raw materials all over the world, in Brazil, in Australia, in the Democratic Republic of Congo, especially the Slobeti Corridor. Is in this MOU discussion also clear that the access to raw materials is created in fair partnership, or is there what was I, first take to the big investor or something like that? So this America first approach in.
And then, of course, I heard rumors that Japan, France, and Canada are creating or trying to create a similar system, without US because they fear that this America first approach would be coming as well. And lastly, the whole exercise is not in the normal process of a trade agreement. And this means that the parliament is more or less out of the game. So what is your plan to ensure parliamentary scrutiny? So just some small questions.
Lydia, you want to come in?
Speaker 3
Thank you very much, chair. I'm speaking on behalf of my colleague Zeliana Zovko. And I'd start by saying that the EPP welcomes the ongoing discussions between the European Union and the United States following the high level ministerial meeting held on February 4 in Washington, which launched a broad alliance on critical materials involving more than 50 countries. These discussions highlight a very important reality. Access to critical raw materials cannot remain so heavily concentrated in the hands of a single actor.
Today, too much of the global supply chain, from extraction to processing and refining, is still dominated by China. And this creates a clear strategic vulnerability, not only for Europe, but also for the United States and for all like-minded partners that depend on secure and predictable supply chains. This is exactly why close transatlantic cooperation matters so much. Only by working together can we reduce the risk of disruptions, limit the leverage that China currently exercises over critical materials, and build more resilient supply chains for the future. In that respect, the planned Memorandum of Understanding between the EU and the United States on critical raw materials would be an important step forward.
Speaker 4
A coordinated approach could help avoid unnecessary price competition among partners. It could also help create a broader, safer, and more reliable market for non-Chinese suppliers. A strong EU. S. Partnership in trade, energy, and critical raw materials is not just about industrial policy.
Speaker 3
It is also about economic security, geopolitical resilience, and maintaining technological leadership in key sectors, including artificial intelligence, clean technologies, and advanced manufacturing. In this context, I would like to ask the commission for more information on the state of play of the negotiations. How are we discussing this, how are our discussions progressing, and what are the main outstanding issues? In particular, there have been reports that a possible price floor mechanism for certain materials is being considered. Could the commission clarify whether this option is indeed under discussion, and how it would fit within the scope of the memorandum?
And finally, could the commission clarify the expected timeline for these negotiations, especially given reports that the United States plans to launch formal talks with the EU and Japan in the coming months? Thank you.
Thanks a lot. Anna?
Speaker 6
Thanks a lot. Thank you, chair. Thank you, Miss Muller and Mister Jorgensen for your time. Seeing the EU, the US, and Japan exploring a purely lateral trade initiative on critical minerals is in the current geopolitical landscape. Particularly in light of our current trade tensions with the US, finding a concrete area where we can actually advance and also involve other countries like Japan is something which a priority we certainly welcome.
I understand all discussions are still at an early stage and that the commission may not be able to share many concrete details, but I want to stress that it's very important for the European Parliament to be involved and informed through the whole negotiation process. Because drafting joint plans is one thing, but here, we are potentially creating a truly binding international framework on critical minerals. I have some brief points where I will appreciate further insight for the commission. First, on price floors. Price floors have been widely discussed in the last months, but we still don't have many details on how they will be materialized in practice.
Could you share more insights on this regard? What form will they have? How will they be governed? The scope is also a relevant issue. Since different minerals have very different value change, what works for one may not work for another.
Is the idea that price flows within this agreement that cover a broad list of critical materials, or to start with just a few? Also, are hearing that the United States seems to consider price flows as a primary solution to take forward. Does the commission also view them as a main tool, or are there any instruments such as price subsidies also being considered as part of this agreement? Second aspect, I will not go to the third one because it's gonna be too much, you know. It's a number of members joining this plurilateral initiative. Are there any plans or discussions to involve any other countries at this stage?
Thank you.
Thanks a lot. Anna?
Speaker 25
Thank you very much, Chair. We're all very aware of how critical these resources are: rare earth minerals, and how they feed into production. Without these raw materials, we have no defense capacities, no advanced telecom telecommunications and electronics. They have key importance for the telecommunications networks, robotics, and automatization of industry. But we're extremely dependent on third countries, especially China.
Hence, we need to have a partnership with the US as long as it helps support the defense of the EU. We need to have secure supply chains for new technologies in Europe. At the same time, the European Union needs to work on its own capacities. So building up a partnership with the US constitutes an opportunity. We need to make sure that we have investments in safe and secure supply chains and recycling.
We need to make sure that we are looking to more details from the commission on the future agreements. Thank you.
Speaker 8
Read attentively the joint communication of the US, Japan, and the EU on critical minerals, and it left me thinking that this is a document drafted in a parallel universe, divorced from all political reality, refusing to see what has been happening since the new American president arrived on the scene. So it's almost touching to have this memorandum of understanding, this formal memorandum to try and stimulate demand and work with supply over the course of 30 days as if this critical minerals market can just be dictated by some sort of agreement by Washington. Washington doesn't respect anything if it's not what its president has decided. The America of Donald Trump is not a protective angel helping us. We're looking at demands for America first, and it's their sovereign right to do so.
So how can we seriously believe that this very same America is gonna line up in fair cooperation with the European Union on critical minerals, when at the same time, it is attacking us on competitive fronts everywhere. We know that rules are mutable. Whenever you have a crisis, it's every man for himself. The US has signed their bilateral agreement with Japan back in 1925. They're sorting out their supply chains.
Speaker 9
We're working with production countries as well, and we need to do that more quickly. We're talking about pre-adjustment border mechanisms and plurilateral offtake agreements, which are technocratic approaches, working through customs when our competitors are actually doing things. The commission has no strategy, no credible strategy, as we've seen from the court of law's report. This three-way partnership, even if it has good intentions behind it on paper, cannot replace a genuine European industrial policy. We've been humiliated, ridden roughshod over by the customs position of the US.
Speaker 8
I don't know if it's masochism, and jealousism, or whatever, but it's the rule of reality that I think is gonna impose the politics now.
Rudi Kennes
Chair, less than a month ago, another mine collapsed in the Congo. More than 200 workers were killed. And we know that the minerals being extracted from these mines end up in European supply chains because we've struck such a fantastic deal with Rwanda. And what's the EU doing? It wants to strike even more of these sorts of deals because suddenly we've got panic here in the West.
The Western imperial dominance is no longer self-evident. Suddenly, we can't do as we please anymore. So what's the response? Well, the so-called European standards and values are being cast overboard to secure access to these raw materials. Just in the good old days, three Western blocs amongst themselves are trying to divide up the raw materials of the global South.
And at the same time, we're dismantling all the rules that protect people and nature. Due diligence destroyed. Environmental protection, we're not doing that anymore. And all of this in the name of competitiveness and resilience. If this commission is serious about a fair green transition, about human rights, or the most basic workers' rights, then we need to do things very differently.
We need to have binding due diligence, thorough impact assessments, consent from local communities, and protection of workers' rights throughout the entire supply chain. Those are the guarantees we need. And as long as these are not included in this sort of deal, then this is nothing more than colonial plunder, for which the people in Congolese mines, amongst others, are paying a heavy price. Thank you.
Speaker 24
Yeah. Thank you, chairman. I think it's been very interesting, debate and questions. I mean, I think, basically, what I take from it is that there's an agreement that there's a problem. There's a clear agreement also to support us from your side that we need to address this issue.
It's also quite clear that we can't do it alone. We can't do it alone just with the US, and we wouldn't be able to do it without the supplier countries. Also, there are many questions, and we need to follow the appropriate internal EU procedures. And for us, it's quite clear that as you quite rightly raised, there's a question of why is it possible for some countries to produce at lower prices. Well, one of it is subsidies, but another reason is maybe that there's not a respect of environmental and labour standards.
This is clearly something that we need to look at in case we go for a legally binding agreement of a pro-lateral nature. Absolutely, there's a need to give producing countries a fair share of the added value. That's, for example, an element that we have when it comes to the FTA that we have with Chile. And I think that's something that has to be considered also in this context. What about, and just a question, what is in this idea of a price flow and price mechanism?
I think this is one of the things that we need to explore and look at much more carefully. That's not a one-size-fits-all solution. It might be a price for a critical mineral. It might be a subsidization or a bias club for another critical mineral. There are a lot of things to consider there.
And it's true that we've heard a lot of enthusiasm from the American side when it comes to the idea for price flow and price mechanism, but we haven't heard a lot of details yet. Now we can't just wait for the Americans to come with an idea and then react to it. We want to look at it ourselves also, and we'd be happy to have further meetings with you when we have progress on that. That's one of the things that we're working on for the moment. So that's when it comes to the question of the action plan and of the possible collateral agreement.
And let me underline again. If we do go into a negotiation for a collateral agreement, we will, of course, follow the appropriate EU procedures in that case. Thank you. And maybe over to Sophie, with your permission, Chairman.
Speaker 23
Yes. No, I will just say a few words on the MOU. I mean, I'm not going to speculate on the Japanese MOU or so. But we have, of course, our position, and the United States have their position, and it's a negotiation. So we have our offensives.
They have their offensives, and we're negotiating. So I think we are on a good track, and we hope that we can deliver something that is mutually beneficial. Your remarks have been clearly heard. So we take this, of course, back to the negotiation chamber. And what will it actually deliver?
Well, we hope that it will deliver concrete cooperation. I mean, if you also look into third countries where we are having our own MOUs, I can just say that out of the 13, no, 15 MOUs that we have concluded, we did get 13 concrete strategic projects out of it, and it is increasing supply. And very often, there are, of course, also other third-country partners on the ground. And this means we need to work with them together, and then MOU can frame that in a certain way as well. So yes, I maybe leave it at that, and hope the next time with more concrete details, once the negotiation is completed, I come back.
Bernd Lange
Thanks a lot. Hope is dying the latest. So we hope that next time we have more details and more clarity on that. Yeah. Thanks a lot to be here, and good luck for the negotiations.
Good. This is concluding item 13, and we switch to item 14. Okay. So we make a break for five minutes, because the commission was so quick.
Okay.
Bernd Lange
So, dear colleagues, take your seat, and then we will continue with item 14. And the item 14 is quite sensitive. It is about the unilateral import bans on Ukrainian products. Because as you know, we had a long discussion about lifting tier queues in the context of the TCA with Ukraine regarding the Russian aggression against Ukraine. We lifted all limitations, and this led to some really heavy import from Ukraine.
Remember, sugar, we had a quota for 20,000 tons sugar and exported 400,000 tons of sugar. That led to some, let's say, discussions in some member states. And therefore, we switched to a different system. And at the end of the day, we changed article 29 in the DCAFDA. And now the situation is clear.
And this was accepted by the legislative bodies of the European Union. So, but nevertheless, we still have import bans in force by Hungary, Poland, and Slovakia in place since spring 2023. And, of course, there might be some understanding as a reaction to the surge in agricultural imports. But nowadays, we have fixed everything with the new regulation. And, therefore, it is really a discussion on how to deal with this situation.
And, of course, it's politically very sensitive, but nevertheless, unilateral risk import restrictions are not in line with our common commercial policy. And therefore, we put it here on the agenda, and I want to first invite the commission and welcome Mister Leon DelVogh, our well-received guest here, to explain the situation for ten minutes.
Speaker 30
Thank you, mister chair, and good afternoon to everybody. So let me start by saying that, indeed, as of today, some member states still maintain national bans or other import measures on imports of agricultural products from Ukraine. We continue engaging with member states' concern in this regard, and commissioner Septovich and Hansen have jointly addressed this issue in a letter sent to relevant member states last January. I mean, last January this year, of course. The persisting national measures fragment the EU single market.
Speaker 31
They also have a negative impact on the predictability and stability of the recently reviewed DCFTA pursuant to article 29, as you mentioned, Mr. Chair. We believe that the review DCFTA provides a good balance, and we had a lot of discussions on this year. Presenting our proposals, we have extensive consultations. Our review focused on a very narrow range of the most sensitive products in the field of agriculture. It was very clear that our farmers were in a very difficult situation.
Speaker 30
We negotiated with Ukraine. And in the end, the negotiation outcome was, we believe, the best possible outcome we could achieve. We have now an agreement that allows us to provide support to Ukraine and liberalized trade for non sensitive products such as whole milk powder, fermented milk, mushrooms, or grape juice, and improve the DCFTA TRQs for sensitive ones while at the same time moderating the peaks in imports reached during the ATM years and thereby protecting our farmers. The agreement entails reciprocal concessions with improved access to the Ukrainian markets for EU producers of poultry, pork, and dairy. The reviewed agreement only entered into force on October 29, so we don't have yet a full year assessment that we can provide.
But I would like to go through some of the interesting data we can share, and I think which point to a very clear direction. I would start with sugar. You remember that this was a very sensitive product and for which there was a lot of discussion. So on sugar, we increased the TRQs, as provided for in the DCFTAs because that was the moment, point of reference. So we increased it from 20,000 tons to 100,000 tons, a quota that represents 0.6% of the EU consumption.
Since the end of the ATMs on June 25 until the end of last year, so over the last seven months, Ukraine's export of sugar to the EU reached nearly 30,420 tons. So essentially, the six-month period, half of the annual TRQ. This is below the amount agreed for this period under the modernized TRQ, and it's very low compared to previous years. For instance, 2023, in which we had exports worth 500,000 tons. So just to give you a sense of proportion as to the reduction this represents.
In addition, during the first five months of 2025, when still benefiting from ATMs, Ukraine exported 85,000 tons to the EU. Therefore, both the ATM emergency brake and the modernized DCFTA have been very effective in limiting the export of sugar from Ukraine in view of the sector's vulnerability. On wheat, another topic that was widely discussed, we agreed, you'll remember, to a very moderate increase when it comes to the TIQs allowed under the CFDA from 1,000,000 to 1,300,000. This was expected to lead to a major decrease in imports as compared to ATM levels, which were close to 6,500,000 tonnes in 2023. So 1,300,000 compared with 6,500,000.
The decrease has already been visible over the last year. So from June, the end of the ATM period, to December, Ukraine exported 550,000 tons of wheat to the EU. This quantity, therefore, is even below the amount allowed under the CFTA, which can be explained by Ukraine's production and export challenges last year, in the context we all know. To complement, so in the last ATM period, so between January '25, exports to the EU reached 1,500,000 tons. So combined, we have essentially 2,000,000 tons of import of wheat for last year compared to 6.5 in '24.
I think this is a clear indication of the evolution. On Bali, the quota was increased moderately from 350000 tons to 450000 tons. Ukraine exports of barley to the EU last year were well below this quantity, amounting to 110,000 tons and again very significantly below the point that was reached in 2022 of 700,000 tons. So I think for these three products, I wanted to highlight it and which were considered as particularly sensitive. We see a very clear sense of direction in terms of reduction of imports from Ukraine.
On the EU export side, EU agri food products exported to the U to Ukraine reached in 20 25 4.3 billion euros, up 18.18 percent compared to '24. Then we take it that the updated, so the revised DCFTA has contributed to this evolution. For instance, pork products, Ukraine increased the quotas from 20,000 to 45,000 tons. Our export reached last year 30,000 tons, which for value, sorry. Yeah.
So compared to 1,000 tons the year before. So from 1,000 to 32,000 tons of exports of pork products for dairy, for which Ukraine agreed to further reduce or abolish duties over three years. EU exports saw an increase of 14% in value in 2025 compared to 24. And the same goes for cheese, where exports grew from 37,700 tonnes in 2024 to 40,300 in 'twenty five. So a 12% increase.
So this is just to illustrate the dynamics, evolution and the dynamic of import and export of agricultural products with Ukraine on the basis of the revised agreement. Let me recall that under this revised CFTA or review the CFTA, additional market access is accompanied by a robust safeguard clause. The mechanism can be activated in case additional imports would cause serious difficulties, as you will remember, either in the EU or as a whole, sorry, or in the market of one or several member states. This safeguard clause permits the EU to adopt safeguard measures if imports of a product covered by the additional reduction or elimination of customs duties cause persistent economic, societal, or environmental difficulties. This type of safeguard was considered necessary given the possible logistical challenges for Ukrainian exports, which could lead to the concentration of imports in some specific member states.
Finally, under the agreement, Ukraine has committed to complying with the relevant EU production standards by 2028. So we hope this illustrates that in our view, we have achieved what we set out to do in this negotiation. We think that conditions are in place for both member states and Ukraine to benefit from the review of CFDA. And I would like to maybe finish here by echoing what commissioner Septovich said in this committee in February, that we need to continue supporting Ukraine while keeping public support for the US policies in regard to Ukraine. Thank you very much.
Bernd Lange
Yeah. Thanks a lot. And now I give the floor to our standing on Ukraine. It's Karin Karlsbro for, yeah, let's say, 5 minutes. We, yeah.
Speaker 32
Thank you so much, maybe it will not be five minutes, but we'll see. And, thanks to the commission. Thank you, mister Delvoir, for your presentation. Let me begin with saying that since the beginning of the full scale Russian invasion, free trade with the EU has served as an economic lifeline for Ukraine. It has been said before, but it's important to underline that.
Speaker 33
And I must say, when the commission describes reduced imports from Ukraine as a success, I do not agree. I really do not agree. This is a very strange message to a candidate country, in general. But when it comes to Ukraine, Ukraine is defending not only itself. Ukraine is defending us.
Speaker 32
So what do you want to say with this? It needs to be explained, actually. Well, last year, when the EU decided on the trade agreement with Ukraine, we promised them predictability and stability. We promised this and increased the tariffs on agricultural products compared to the ATMs. Almost six months after the implementation of the DC FDA, the national import bans are still there.
And according to figures from Ukraine, this has led to a 10% reduction of Ukraine's agriculture exports to the EU in 2025. And from the commission side, we have heard that there is no justification for the import bans. Despite this, no action has been taken. Well, a letter, but no actions have been taken in real reality. I mean, actions to, and or attempts to actually punish the concerned member states for what they are doing.
This also sends a very strange signal to Ukraine, a candidate country currently making their utmost to comply with EU standards when three member states so bluntly disregard EU rules. So, my very straightforward question to the commission is, when will you start to take real action on this matter? You said the commission has sent a letter, as I said. It is clearly not enough. Another question not directly linked to the import bans.
Could you give us a short update on the flanking measures the commission promised when the DCFTA was revised? I think it's important that we go directly to these concrete questions because time is, the clock is ticking, and we see no action and not enough commitment from the commission on these items. Thank you very much.
Bernd Lange
Thanks a lot, and pleasure to give the floor now to Zanma. Good to see you again.
Speaker 34
Thank you. I will continue where rapporteur just finished because listening to the report made by the commission, I still got all the statistics, but there were no indications of what commission is going to do with those countries who are not complying and remain in place unilateral import bans. If we speak we are used oftenly to speak about strategic autonomy. But without a functioning single market, that can withstand the pressure of the war next door, now two wars, maybe even three wars. Strategic autonomy is an illusion.
Last year, we reached the difficult compromise, which was also reported now by the commission, the results of that compromise. And we put in place emergency brakes, reduced quotas for sensitive products, and tied market access to environmental standards. We did our job. We created a legal framework to protect our farmers while supporting a nation at war as much as we politically were ready to do. Yet today, we see the same old story.
Unilateral import bans remain in place in Poland, Hungary, and Slovakia. This is absolutely unacceptable. This is a direct gift to the Kremlin, and these bands create division where we desperately need solidarity. By maintaining in place these national bans, these member states are not just hurting Ukraine's war economy. They are fragmenting the European Union's market from within.
They are telling our partners in Ukraine, Moldova, and that an EU signature on a trade agreement is only as good as the national politics of the day. Ukraine, as we all are underlying, is fighting not only for itself. Ukraine is also fighting for Europe's future. And now with the Iranian crisis, we must be even more aware of that. The least we can do is to defend the integrity of our union instead of fracturing it with unilateral bans.
And I have a question to the commission. I just described how the bans are destroying legal certainty. But my question is, how does the commission plan to use the lessons learned from these unilateral bans to create the long-term structural solution we need for Ukraine's full accession? And commission, how you will future proof the EU trade policy to ensure that national level protectionism does not become a new normal. Thank you.
Chairman,
Speaker 36
Madam standing rapporteur, ladies and gentlemen, dear colleagues, decisions in front of us are challenging. Our group, the S and D, completely supports the idea of tearing down trade barriers to support Ukraine. Moreover, we support more direct help, loans granted to Ukraine, and particularly the most recent €190,000,000,000. We're hoping that will be unlocked as soon as possible. We do have ongoing concerns.
Speaker 35
We want to make sure that Europe can support the war effort made by Ukraine. I'm sure you're aware that it is the very future of the Ukrainian freedom that is at play, and we need to make sure that the measures we take do not cause market distortions. That's why we supported both those measures that help to boost Ukraine's experts and why we support this renewed DCFTA. We think this is fair. It contains safeguard clauses for those countries that are most heavily impacted and those countries that have imposed unilateral import bans from products coming from Ukraine, Hungary, Poland, Slovakia.
Speaker 37
And now this agreement is on the table. We think it is fair, and therefore, these import bans should be lifted by Hungary, Poland, and Slovakia, given that these European measures have been introduced. But once again, we must always ensure that we strike the right balance, and that is a question directed to the Commission. The right balance between these direct support measures, the €90,000,000,000 loan, which is blocked at the moment, and the reconstruction loan, as well as on the other hand, ensuring that international trade can bolster economic activity in Ukraine. And if this isn't possible, we should find other ways to do that.
Speaker 35
We want to be able to support Ukraine via international trade. So those were a couple of thoughts I wanted to share on behalf of our group. We welcome the new trade agreements, and we think Hungary, Poland, and Slovakia should lift their unilateral import bans. And we need to keep an eye on protecting our European producers. It's important for them, and it's important to increase acceptance of the work we're doing to support Ukraine, and it's very big to exceed to the EU.
Thank you.
Now, Eniko.
Enikő Győri
Thank you so much, Mr. Chair. Well, you said in your introductory remarks that the situation has been fixed. Well, the situation has not been fixed, and far from being fixed, but I will continue in my mother tongue with your permission. Colleagues,
I think you need to refresh your memory because here, you are demonizing Hungary. You're talking about Hungary as if it were the devil. Now I need to clarify a few things. For nine years now, we've had a free trade agreement with Ukraine, but agricultural products were consistently protected, and there wasn't free trade in those products. Then we saw the war, and there was a decision to have 0% tariffs for Ukrainian goods without any restrictions on quantity.
I'd like to show you what the result of that has been. If we look at what's happened in Hungary, in '22, we saw this grain increase. It was 57 times what it had been in the previous year, 57 times more products came in from Ukraine. So please do look at those figures. It caused serious market disruptions in the European Union, and the commission, despite our requests, didn't take action.
We were therefore forced to introduce unilateral protection measures. The commission confused solidarity with trade policy, and they didn't focus on the interests of the EU farmers. Then in May 2023, the ATM was introduced by the commission, for example, on wheat imports, but that ended in September because it wasn't actually extended. So we were forced to introduce our own measures for 25 different product types. And then we saw the renewal of the DCFTA.
That was a little bit worse than under the ATMs, which had an automatic system that stopped. And the TRQs were increased significantly. For example, 6x for honey, sorry, sugar 6x, but eggs and wheat as well. We saw significant quantities coming in. Now, Mr.
Delver highlighted some figures. I do understand those, but we don't know what the figures would be if we didn't have protection measures from these three individual member states. And then if we add Mercosur to this, we're seeing green measures, which are being imposed on farmers. And then from 2028, there's going to be lower agricultural funds from the CAP for the farmers. So despite all of our requests, why hasn't the commission ever produced an impact assessment of all of this?
Even Copa Cachica asked for an impact assessment with the Green Deal, and we never got one. Another thing, transit through Hungary has never been blocked. So when it came to transporting grain, we never blocked transport through Hungary in transit. But we do check that it does not enter the our domestic market. So I'll be concluding now.
The commission is not a partner for the European and Hungarian farmers. It's not protecting them. We want them to represent the interest of European farmers in our interest, because otherwise, you will not have enough European food on your tables. And the last sentence from Ms. Karzbrel, Ukraine is defending itself.
And this is a very noble goal, and it demands our solidarity. But Europe is not protecting Ukraine. Ukraine is defending itself. It's fighting for itself.
Rihards Kols
Well, lots to reflect on last speaker. Well, there's a food overproduction in Europe in general. But on this particular issue, I think we should keep it simple. And, yes, the raised question, there are real concerns on member states that are bordering Ukraine. And if local farmers are under pressure, that has to be addressed seriously.
There is no doubt about that. But unilateral import bans are the wrong answer. And just to clarify, once again, the trade policy is an EU competence, a shared joint competence. It cannot be that when things get politically difficult, the national governments just decide to ignore the rules and act alone. That weakens the single market and creates a bad precedent.
And the problem was not the grain itself. And here, Miss Gyori, I can, if you can follow me, you will understand. The problem was that goods meant to move onwards got stuck in neighboring countries. That points to infrastructure, transit routes, and coordination failures. That is the main reason.
So if the real problem was transit, then the answer was to fix transit, not to break EU trade rules and call it a strategy. So instead, members, they started improvising with national bans, but the focus should have been on moving the goods properly and faster. We gave Ukraine temporary trade liberalization for a reason, not as a favor because Ukraine is under attack and it needs the economy to function, and a country at war needs weapons. Yes. But it also needs export revenue and basic economic stability.
That is where the EU should put in more work. Better rail links, better border capacity, better transit support, better coordination. And just a reminder, trading with the Ukraine, EU is in surplus by a far large margin, 18,000,000,000 surplus. In the meantime, Russian imports to the EU last year alone, 30,000,000,000. Shouldn't we actually focus on how to ban the Russian import and put all these efforts then on how to limit candidate country and country that at war based on the one issue that grained, which I already elaborated, wasn't because of overflowing the market, but because of the shortages in our transit strategies and infrastructure as such.
Thank you.
Speaker 25
Thank you. I need to clarify a few things from the perspective of Poland as well, because Poland maintains these bans. The crisis was huge in the Polish market. This happened in 2022, when the market was liberalized due to the war, and farmers are still suffering the consequences. So from March 2022 to March 2023, Ukraine exported 10,000,000 tons of grain to five countries: Polonia, Slovakia, Romania, Bulgaria, and Hungary.
4,000,000 tons of grains and 3,500,000 stayed in Poland. The embargo that was introduced by Poland in 2023 slowed down the process. What's more, for Polish farmers, opening up this market means unfair competition for them. Why? First of all, because of the cost of production.
But then Ukraine produces based on different standards to the European Union. And this needs to be adapted by 2028. This is a third country. The EU cannot open up its markets to products that are subject to different standards. We've seen this in Poland with certain types of grain that are not right for consumers or as animal feed, and we don't know what has happened to that grain.
So Ukraine cannot jeopardize the Polish economy. If the European Commission can't do anything to defend European and Polish farmers, member states need to take the bull by the horns.
Bernd Lange
Thanks a lot. It's not my duty now to comment, but it's the duty of the chair of the delegation EU to Ukraine. We got to give now his assessment on that.
Pekka Toveri
Thank you. Thank you, chair. Well, there's been a lot of talk about what's fair and what's not. It's not fair that Ukraine is producing agricultural products without following fully EU standards, even though we have agreements that they are doing their best to start following them in productions and everything else. I'm in the agriculture agricultural agri committee.
I still know that agriculture is 1.2% of the EU's gross national product. Still, a third of our EU budget goes to agriculture. So that support of European agriculture is coming from 98.8% of the rest of the trade and business, which is producing the money for the farmers. We should be thankful for that, actually. And then we talk about countries like Hungary and Poland who have now caused some problems to Ukraine who was fighting for its existence against aggression from Russia for four years.
And last twenty years, Hungary has gotten over €70,000,000,000 from the EU, and Poland over €160,000,000,000 for EU net. So what's fair in my opinion is that everybody puts their support to Ukraine, especially since we know that when you look how much of your cross national product you have actually put to support Ukraine, countries, northern European no. Northern Euro European countries, Baltic states, have fared much well, much better, and done much more than other countries. So what's fair is that we let Ukraine make trade with us, especially since we know that only product with larger amount they can encourage situation to trade in Europe is agricultural products. And there's a huge surplus, which, again, benefits Europe and European countries.
So I think that these kind of national bans are really unfair and so tried it and against European Union's strategic interests. Thank you.
Bernd Lange
Thanks a lot. And, mister DeVo, two questions from my side. First, there is a two case against this ban from Ukraine. Can you give me a hint how this state of play is and what the EU is doing in this case? And secondly, you mentioned that the commission has wrote some letters to these three countries.
Did you get any reply, and did you get some indication what they wanted to do, to be in line with international law and European treaty? Mister Davo?
Speaker 30
Thank you very much. So let me start by saying that indeed, we, of course, have seen what the impact of the ATMs has been in the member states. We have been listening both to members, the peer present and to the council, and that's why we indeed thought last year we need to find a new balance to use what has been one of your members who mentioned that between the support by trade and the rest of the support. And that's why we decided not to propose to prolong the ATMs, but to go back to the DCFTA and enhance the TRQs where we thought this was possible, where this was feasible, and where this was both acceptable in terms of our imports, but also creating new opportunities in terms of our exports. And something that I would like to, some of you have mentioned, I miss Carlsbro that we somehow seem to be proud of limiting imports.
I think we just tried to highlight what we were asked to do, and that it works in the sense that we have identified sensitive agricultural sectors. We have therefore introduced reintroduced the IQs that we have increased where we thought it was possible, and this approach works. I would also like to underline that this was a negotiation, contrary to the ATMs, where it was a unilateral approach to the CFTA. The revision, the article 29 revision, was a negotiation, a very intense one. We had very intense discussions with Ukraine, and they at the end of the day, we found an agreement.
And I think this is important to underline that this was done on a jointly acceptable basis. So what we think, and it's why I gave some of the figures, what we think that this does is that it should reassure those member states that have concerns on and these constituencies because I wouldn't want to limit the issue to the neighboring member states. There were clearly concerns beyond those that our policies work, that our policies for the protection that is necessary, but also the support that we think we should give to Ukraine via trade, means, underlining that is, of course, not the only mean by which we support Ukraine. There were some questions on flanking measures. So, yes, flanking measures are still, we were still working on this.
So this is something we certainly have not left aside. We're working together with other commission service on this and hope to be able to make proposals to Ukraine in the coming weeks. On the solidarity, I think one of the members mentioned the infrastructure issues. I think, of course, fully support this mention because as you will remember, we have worked a lot on the solidarity lanes and indeed in trying to improve transit throughout the EU and bringing these products to where the markets are and where these products are being asked for. So, this work, course, there was particular stress on this by the solidarity lanes, but it continues and infrastructure issues and bottlenecks.
We continue working on them. I just like to mention one just to avoid any misinterpretation on the standards, I think every and this committee were very well, note very well knows that when we import agricultural products, they have to comply with SPS standards of the EU, all of them, from wherever they come. I think what we are discussing here and what we have been negotiating with Ukraine is production standards so that they slowly come closer towards the way we, I mean, the, yeah, the production methods in EU with fertilizers or other rules. So this is something they have signed up to and that we will be assessing throughout the coming years. On the WTO, Ukraine has not taken, I mean, you remember, yes, at the outset of the national bans, Ukraine had seized the WTO trying to attack, well, attack is not the right word, to take these individual member states to arbitration.
I think we were clear that this is a matter for the EU and not for those individual member states. Ukraine, we had discussions with them outside the WTO, and they didn't decide to take this forward. And I don't expect them to do that. On the letters, as indicated, mister chair, we this letter was sent a few weeks ago. We have continued engagement with the member states, with all member states, of course, but particularly the ones concerned.
We hope and we think that given the kind of data we are able to provide now as to the impact of the revised d c DCFTA TRQs, this will offer the reassurances that these member states were looking for and that we gradually can come to an outcome on this. We believe, I think I said that these national bans are not warranted. They fragment the internal market, and we think they should go, because they also have very good reasons, because they're not needed. So, alright.
Speaker 32
Thank you. Thank you so much for this exchange, which I unfortunately think shows that we have to follow-up very soon because we have not received acceptable answers from the Commission so far. And I think you have promised us in the parliament, as well as Ukraine, action on these subjects. And I can't hear that enough has been done so far. So we have to follow up.
And I also want to comment on the debate among the colleagues. I have to say something because, first, I want to remind everyone in the room that Ukraine is in Europe. Second, EU membership means rights and responsibilities. And colleague, Gurri, do you think the EU is a bank machine? It demands rights and obligations.
Speaker 33
I have never heard anyone complain about receiving support from the common agriculture poll policy. Never ever. But a lot of complaints about rules and that we are supporting Ukraine and trading with Ukraine. If you want to be a member of this union, you have to behave. It's simple, like that.
Thank you so much.
Ennico.
Enikő Győri
You are getting personal, Karin, to tell a member state to behave. So you're very rude. So please don't use this word in the case of my member state, my country. Okay? So don't do that.
You can have your opinion, but tell a member state to behave. Cash machine. Most of our EU funds are blocked. What are you talking about? I'm talking about trade policy here.
I'm talking about the commission's responsibilities. And there is a huge difference between being a member state and being a third country. And I want to be sure that the commission, which is the guardian of the treaties, serves the member states, serves the European farmers, and represents the interest, even my member state's interest. You don't have to like our views, but still the construction is that we are inside, we are a member state, we have our own interest, and you have to understand that we can have diverging interest. In and our interest very often are ignored and neglected. And I want free treatment by the commission, by you all, even to Hungary and to the eastern part of the European Union.
Bernd Lange
No. Indeed, no double standard, but this means that everybody, every member state should accept the rules of the European Union, and trade policy is a common approach. And we had concluded the DCA with Ukraine, and this should be respected by all member states. So it's not a question of behavior or like or not like. It's just our common system.
So thanks a lot for that, and this concludes this item. So we have to do another five-minute break because the speaker is not here.
Catarina Vieira
Good. Okay, colleagues. I think we can resume now, right on time. And we end today's committee meeting with a presentation of a study on EU trade in dual-use items with conflict-affected regions. Obviously, it's a very topical item, and I would like to very much welcome to our committee Doctor Ian Stewart, who's here in the room, and he is a recognized expert in export controls.
Thank you for being here. The objective of this study has been to examine the extent to which the EU's legal framework, such as the dual use regulation and member states' practices on dual use export controls, align with their respective legal obligations, particularly as they relate to conflict-affected regions, of course. So the study has very interesting conclusions that emerged, and it would be very useful for our work on the topic. So I think no one better to lead us through the findings and the conclusions than Doctor Stewart himself. Please, you have the floor for 10 to 12 minutes.
Speaker 49
Thank you, and good evening. And thank you to the committee for having me here to share this work, and for the opportunity to work on this topic. So, to dive into this, this study asks a simple but important question. Is the EU adequately managing the risks of dual-use exports to conflict-affected regions? So bottom line up front, what I say is that for listed goods, the answer is broadly yes.
Broadly and legally, yes. For nonlisted goods, the situation is more complex. And I will spend a few minutes describing the methodology and the results that support that argument. So then coming from that, will I make some recommendations in the report about areas where the EU regulation on choice goods could be strengthened as part of our future process. So why does this matter?
And let me help situate this. So Julius' goods are not weapons, but they can enable weapons production. They can support military logistics, or they can facilitate surveillance and perhaps repression. So here, we're not necessarily talking about weapons. We shouldn't be talking about weapons, but we are talking about dual-use technologies that can support weapons development.
The EU is a major exporter of such goods, including to conflict-affected regions. But then with this, there's tension between legitimate trade because many of these dual-use items have industrial uses or commercial uses, but they can also be used to contribute to conflict or to violations of international humanitarian law. The current system, the regulation, was principally set up not to address this issue, but to manage Julius' goods in relation to weapons proliferation issues. And in fact, let me say, I enjoyed working on this topic partly because in all my years working on export control topics, I don't think we've ever looked at this specific question of conflict-affected regions in this way. So it's novel from that perspective.
But we have a system that wasn't set up to address the specific challenges of trade with conflict-affected regions. And we have a system that's set up not to prohibit trade across the board, but to selectively prevent exports when there might be a problem with exports. So, you know, there's a little bit of attention there that needs to be worked through. So then to dive into the meat of the study, what can we see and what we can't see? So we have some real challenges here with the data, actually.
For many years, the EU, both driven by parliament and also the work of the commission, have worked to improve the quality of data related to dual use exports. And the commission has made good strides in strengthening the quality of the report in recent years. But we're still, unfortunately, in a position where we don't have granular data related to the export of Julius goods and particularly to conflict affected regions. In the report, I go through different methodologies to try to speak to this, including looking at the EU report, the reports of individual member states, and also trying to infer trade in Julius' goods from other data, from customs data. And through that process, we, you know, we do get to some interesting results.
But overall, the data is simply lacking. And I'll come back to this point, but we really do need to have better data if we're going to address, firstly, understand the challenge and then address any problems that arise. And I do flag in particular that some member states have very good national reports, but those are by far the exception. Most member states do not have very detailed national reports, if they have any reports at all. And in fact, it's interesting to me that some member states rely on the report of the commission as their public facing annual report on these topics given the, you know, the limitations of the report by the commission I just mentioned.
So that's the first point with regards to the data and visibility, and there are some limitations of this study that come from that. So then I work through the legal framework. I find that even though the legal framework wasn't really designed for addressing this challenge of trade with conflict-affected regions, it's actually quite well suited to that. So by and large, I find that the legal basis, at least for Julius' goods, is as strong as it relates to conflict-affected regions. I've made my point, and I'll elaborate on it in a second that that's less true with regards to listed goods.
And to speak to some of the points that make it particularly strong, you know, there's elements around the licensing requirements, the risk assessment, the criteria that's built into the regulation. And then from that, the ability for member states to deny exports when they would violate any international commitment, including in relation to international humanitarian law. The tools exist, and they can be leveraged. Where the situation is more complex related nonlisted goods, and there are some particular limitations, and it gets a little bit technical here around where I see the limitations. But principally, they're related to what I described as the military and just control contained in article four, which, and by current approaches, applies only to countries that are subject to sanctions to an arms embargo.
And a key point that runs through this report is export controls are not sanctions. They're different instruments and different measures. There's a small convergence because we have certain tools in the export control domain that we can leverage under the current regulation when there are sanctions in place. But if there are no sanctions, then we can leverage those tools. Here, we see that many countries affected by conflict or conflict-affected regions are not subject to sanctions, which then means that those particular tools cannot be leveraged.
So there's a specific legal point there that I do think needs to be strengthened in the regulation. And the way I would think about it is to broaden the military and just control so as applicable, both in cases where there are, you know, sanctions or arms embargoes, but also where there are other concerns related to military end use. So in that context, what do we see in practice? In my view on this, having worked through the data, you know, with the limitations of the data I've described, is that we don't see systematic or even sort of clear evidence of noncompliance by member states. But there's, you know, some specific points that go along with that.
So let me kind of spend a minute providing some nuance there. So the first one is that there does seem to be diversions of views and outcomes between member states. That could be driven by a few different factors, including risk tolerance, access to intelligence information, because intelligence information does become relevant in assessing export licensing cases, and perhaps also political context. So there is, I think, as fair to say, signs that there's a diversion of approaches or decision making between member states. Related to that, and the second, or partly related to that, and the second point then relates to the use of general and open licenses.
So in export controls, we can look at each individual export as an individual case and have a license for that case. But given the very significant volume of cases, we often allow exporters to use open or general licenses to reduce the burden on looking at cases individually. It surprised me a little bit that open and general licenses are still widely used in some conflict-affected regions or for export to conflict-affected regions. Because in those cases, it strikes me that there should be more case-by-case review. There's a need for more case-by-case review.
So that's an important point that I think is worth further consideration. Then this point around non listed goods and, you know, the vulnerability posed by that is sort of a key one. And in the report, I go into a little bit the fact that the EU has now added certain items to the EU list that are not controlled by the multilateral export control regimes, but we are struggling. The practitioner community is struggling with the challenge of non-listed goods because export controls are never really designed to capture the, you know, the very large swaths of electronics that could be used in UAVs, for example. So there's some real challenges there where we simply need to kind of work through the approaches we use.
So, but the overall core conclusion from this report, I find that the overall system seems to be legally sound from my analysis. Although, you know, there is this constraint with the data that makes it a little bit difficult to fully substantiate that conclusion, but there do seem to be strict structural weaknesses with regard to non-listed goods. So from that, I will now quickly speak to the recommendations. You know, the first one relates to addressing this point around data and transparency. It's disappointing that, you know, frankly, decades on from when we started talking about or at least have started talking about data structures and reports and so on, we still lack granular data on Julius exports.
So I do think that is a point that needs to be addressed. And perhaps if there's reluctance to do that on a global basis to provide granular data, there would be a way to agree on more granular data on specific countries on conflict-affected regions, for example. Without that, unfortunately, I think oversight is not possible. We do need good data.
be able to
Speaker 49
Address and understand risks. My next recommendation relates to expanding the mechanisms to control non-listed goods. Apparently, I've already spoken to the need to broaden article for the military and use control. I haven't fully addressed it in what I've said, but there is this point around being able to add more items to the EU list that are not controlled by the multilateral export control regimes. And then there might be value in thinking about broadening the application of mechanisms like the common high-priority list, which is a tool developed in the Russia sanctions case to benefit export controls.
And then there are some points around strengthening licensing practices. So with that, I'm assuming potentially issuing guidance for member states on how to assess international humanitarian law risks and export licensing because I do think there would be value in digging into that a little bit more. And then also trying to figure out how to promote common views on licensing assessment across the member states. I have some specific thoughts on how one may accommodate or address that point. Next point is the need to tighten license types available for conflict-affected regions, discourage the use of open and general licenses, and encourage the use of individual licenses.
And then the final sort of point related to recommendations relates to improved enforcement and coordination, which, you know, provides or would require more ways for member states and the EU to exchange information and data. My final point here relates to the role of the European Parliament. It's clear to me that the data is still lacking. You know, members the EU member states should be held to account here. Data is lacking.
So there's a clear role for the European Parliament to encourage, to expect better data to be able to, you know, fully understand the issues here. And then I do think this has been a useful study. So I would also encourage a broader study that looks not only at conflict affected regions, but looks at the Julius regulation as a whole. I will pause and pass back. Thank you.
Catarina Vieira
Thank you very much. And now we'll move to the discussion with the members in the room, and we're starting with a colleague from the DPP, mister Jimenez Lares, please.
Borja Giménez Larraz
Thank you, Chair, and many thanks for this very interesting presentation. This is a very interesting and important topic, specifically given today's turbulent geopolitical times. I understand it must also be tricky. European Union define conflict-affected regions in a way that is both operational and legally sound without becoming overly broad and politically contentious. I have a few follow-up questions.
We often hear that the issue is not legislation, but implementation. In your view, we are the main shortcoming, interpretation of criteria, lack of guidance, or insufficient enforcement capacity. Until convention, do you see evidence of forward shopping or rerouting of exports through third countries where controls are weaker or easier to bypass? Our transit routes are becoming a structural loophole in the system? On reporting and transparency, why is there still such limited availability of detail and harmonized data across the member states?
How can we improve reporting while keeping the system efficient and not overly burdensome? The study calls for a more proactive approach. What will this look like in practice? And in particular, what kind of information sharing system or enforcement cooperation mechanism between member states will be most effective in preventing circumvention while maintaining a level playing field? Thank you.
Catarina Vieira
Thank you very much. And on behalf of the ECR Group, Mr. Reherz Kolz.
Rihards Kols
Yes. Thank you very much. Well, big shout out to Dr. Stuart. It's really essential to study. And not only the in-depth analysis of the shortfalls, caveats in our regulations, but also the very concrete recommendations. And I do hope that this study will not just end up here in the European Parliament, but it will also pass to the European Commission and, if possible, also to the Member States.
But I will start with, I think, a very uncomfortable truth. The problem is not that Europe lacks rules. The problem is that Europe has built a system it cannot properly see or control. That is the biggest issue. And this study makes that very clear.
For listed dual use items, dual use export controls regulation works. The failure begins where modern wars operate with non-listed goods, weak data, and fragmented national practice. Russian missiles get their European electronics. We express outrage every time European components are found in weapons hitting Ukraine or elsewhere, but many of these components are perfectly legal exports, common microelectronics, sensors, machine tools, etcetera. So not exotic, not listed, but essential to the warfare.
This is not just about the re-exports from third countries. This is about our own regulatory blind spots. So the second point I wanted to make on this, so we do not actually know what we export. This is what references also the data sharing. So this study is explicit.
EU and national reporting lacks detail, precision, end user traceability, and consistency. Most member states publish nothing useful. And we cannot trace flows to the conflict zones. We cannot quantify risk. And yet, we pretend we exercise strategic oversight.
That is like wishful thinking, I guess. First strong foundation, the 20, we Open and general foundation licenses are handed out even to the high risk destinations because they reduce paperwork. That is something we also demand, less paperwork. The study shows they also slash oversight exactly where it is most needed, and there is a clear legal gap. Article four, catch all controls, let authorities block non-listed dual use items to military and uses only if the destination has UN, EU, OECD arms embargo.
Yet many conflict zones are not under embargo. In those cases, authorities often lack the legal basis to stop non-listed items going to military end users. So before lecturing others, we need to fix our own house. So, three priorities. First, mandatory standardized EU-wide transaction level reporting: country, category, value, end user, license type.
Then template-based reporting and monitoring. If there is no data, there is no control, as was mentioned by the doctor. Stuart. Second, broaden controls on non-listed items. If it ends up in a drone or a missile, it is strategic, whether or not it is on the list.
Third, restrict open and general licenses to low-risk environments only. Conflict-affected regions demand case-by-case scrutiny. And my question would be both to the author, but also to commissioners present as well. Which of these will you do first? Fix reporting, expand Article 4, or restrict open licenses, and when?
Because if European technology keeps powering the wars we condemn, then our system is not failing, but not by accident, but by design. Thank you.
Catarina Vieira
Thank you very much, colleague. And then we'll move on to the Greens. My colleague, Marquette, couldn't be here today, so I will speak on her behalf. She was the rapporteur for the dual use regulation in the last mandate, and so she sent her apologies that she couldn't be here. In any case, having reviewed the newly published Interstudy on the EU trade in dual-use items with conflict-affected regions, we must confront a highly uncomfortable institutional reality, which is that this parliament frequently champions its commitments to international humanitarian law, yet the study exposes severe structural policy failures in our export control regime that leave us practically blind to how our technology is used in war zones.
If we are to act as a sovereign federalized power, then we must immediately address the outrageous policy failures that have been identified in the text. Number one, the arms embargo loophole. The EU is currently unable to restrict unlisted dual-use exports unless the destination is already under the very formal and veto-prone UN or EU arms embargoes. By chaining our export controls to this sluggish Security Council, we surrender our sovereign ability to prevent European technology from being weaponized in undeclared conflicts. Number two, the data black hole.
We are regulating our export market blindfolded due to the severe lack of granular, high-quality data on what is actually leaving our borders. Because member states hide behind statistical obscurity, the EU cannot effectively track or manage the flow of technology into conflict-affected regions. And third, and last, the multilateral paralysis. The EU artificially cripples its own response times by relying on slow consensus-based international forum to update our export control lists. Brussels must establish the unilateral executive agility to restrict emerging technology threats immediately, without waiting for global permission.
It's time to shift to a proactive, federalized approach regarding the risks associated with dual-use trade. The Greens EFA Group strongly demands immediate revisions of regulation 2021 821 to broaden the military and controls in article four, to mandate strict granular data reporting, and to close these loopholes once and for all. The true European sovereignty means taking, sorry, taking absolute responsibility for where our technologies end up. So that on behalf of the Greens, and then last but not least, I have colleagues from the left. And first, we have Mr. Rudy Canis, please.
Thank you, chairman. I will speak in Dutch.
Rudi Kennes
Thank you, chair. From my own town, Antwerp, material is being shipped to Israel. It's being used to commit genocide. And according to this study, the EU has no legal basis to stop it. This legal loophole is a political choice because at the moment, the EU couldn't give a damn about what we export to whom and whither.
And as long as our defense industry is making money from it and is happy, and our so-called geopolitical interests are being served. Year after year, dual-use goods are being channeled to other countries to spy on and murder civilians. This study shows that there are loopholes in our legislation. They have to be closed immediately to make this sort of export impossible. Our dual standards have to stop.
International humanitarian law has to be fully incorporated in our export regulations. The European Union needs to be a neutral player working towards peace in the world. Instead of that, we're pumping billions into militarization and exporting material that's being used to commit war crimes elsewhere. Thank you.
Catarina Vieira
Thank you very much. And then I open to catch the eye, and I see our colleague Lynn Boylan, please.
Lynn Boylan
Thank you, chair. I think this is a really important study and an analysis, and I welcome the fact that we're having a conversation on the report today. I think the loopholes in our legislation let certain duly use goods invisible or untraceable, and we thank the authors of the study for highlighting the worrying gaps at a time of heightened conflict and increased militarization. As others have said, the electronic components, industrial bearing software, civilian drones are all on the surface, just ordinary trade. But, however, as the study confirms, these goods do end up in missiles and arms factories in the hands of forces that violate international humanitarian law on a daily basis.
And I would kind of ask the authors maybe to comment on the fact that a Belgian court has demonstrated the loophole. In 2025, a Flemish judge ordered the suspension of a shipment of industrial bearings destined for the Israeli defense industry. So it wasn't a parliament. It wasn't the commission. It was actually a court.
And that's because, of course, our institutions have failed to act, and our legislation has not put in place the necessary mechanisms. So this is a legal precedent. It is also a huge warning, but I would be interested to hear just the author of the report what their view is on that report on that case. And as others have said, it's not necessarily the lack of the legislation, but it's that the legal framework has a structural problem that unlisted goods circulate freely to countries at war as long as there is no formal embargo. So whether that's Israel, Saudi Arabia, the Emirates, there's no embargo, so there's no mandatory controls.
And this was from the left's perspective, we are calling for three things, and others have made these requests as well, and that is to close this legislative loophole. But it's also to incorporate humanitarian law as a binding criterion. And then, of course, as has been very, very clearly heard and I hope will be listened to by those who can affect the change, is that we absolutely need to publish the clear granular data on what we are actually exporting because we cannot rely on courts to do the work, where politicians are failing. So I leave it there, chair.
Catarina Vieira
Thank you very much. I don't see anyone else to catch the eye. And so before we move on, I would also quickly add that there are lots of items that have been covered by the reports, which have clear link to software, items that are used in manufacturing of drones. There's also been numerous reports about items that are not usually considered dual use items, including civil society reports on, for example, the export of dogs trained in The Netherlands for police dogs essentially being exported to Israel and used in severe human rights abuses against Palestinians. So I'm wondering what kind of different unexpected examples did you also encounter, to what extent these can be covered in the future, and whether or not this, public campaigning and changing public opinion and interest from civil society and NGOs, makes in your view and in the view of commission, an important stepping point and an important reason to update the regulations as we have.
So with that, I will give the floor back to Mister Ian Stewart for answers for five minutes.
Speaker 49
Thank you, and thank you to the members for, you know, the really valuable comments. And if I could start by making a broader point, then I'll try to respond to the specific comments. So I'm one of, unfortunately, only a very small number of researchers that spend all their time working on export control issues, and I spend my time traveling to inform governments and help governments implement controls. This report had a very specific scope and purpose, you know, conflict-affected regions and also a time element to it. You know, the world is moving quickly and there are things that I've asked to write a report today that I would want to cover that I didn't hear.
But this speaks to part of the problem, and, you know, there was a question about prioritization. So it took sort of with apologies for raising this, but it took more than a decade, I think, to fully work through the last recast of the EU regulation. I'm trying to remember the number of years that we were coming to Brussels to talk about that. We can't have timelines like that driving the, you know, improvement of controls. And then in terms of the controls, you know, here we're talking about conflict-affected regions.
If I was to write a report more specifically on Russia, there would be things I wouldn't cover here that, you know, have come up in the last few months that need to be covered. Same goes with regards to other countries like China, for example, and we have other gaps there. And then we can also talk about the Middle East now. So the abiding point I would like to leave at this point with is these are fast moving issues. And, you know, we need to be much more in line with addressing points as they come up rather than, you know, having year or before we can address gaps because by then, you know, issues have changed.
To try to address some of the questions, so what is the key gap? Is it legislation or implementation? So I do think some of it is legislation, but I think the legislative gap comes from the fact that the world has changed and the things that need to address today are not what we need to address three or four years ago. So it is that kind of tempo or the cadence of update points. But then, clearly, there are, you know, significant implementation gaps that this report surfaces, and that we know from more contemporary events.
You know, the Russia case is clear in that because many of those electronics are just not being effectively controlled because of, you know, the fact that actual controls weren't designed for this. Now this point around forum shopping or transit points and so on, minutes, and this is partly by a letter by saying so. I spend my time traveling the world to help governments implement these measures. And we see, for example, there are dozens of countries outside of Europe that were implementing the common high priority list, which is a specific tool intended to address the diversion of these electronics to Russia. And a lot of countries have helped, you know, stepped up and taken useful steps to address gaps in export control systems.
In many cases, countries have been able to do so more quickly than the EU, actually. And this is the point about the timelines for the recast of the last regulation and then the review period for the next regulation. But I would also, and then in terms of transparency, I should mention that I support this program, but I'd also mention that the EU has a good program with the p2p program that goes out to other countries to help implement controls. And in fact, one of the long standing points that are in the last recast was the EU does a lot to help other countries implement export controls, but we don't really have what was described as an in reach program to help EU member states implement controls. It's a longstanding challenge just because of, you know, the way budgets and so on work.
So there are definitely implementation gaps. Fire report details are limited. I'm actually not sure. I'm not sure, partly. So, you know, I'm a Brit that used to work in the UK export licensing system, and the UK did publish the type of granular detail we're talking about.
I know that some member states feel that publishing very granular data can reveal details of company transactions, and there might be a, you know, previous year commercial point there. But if countries like the UK or others can publish that level of detail, why not others? You know, I think it's a really interesting question. And then I do think there's a need to push the member states on that. And then, what does being more proactive mean?
You know, so information sharing forums, we see a little bit of that in the Russia context. There are forums that the commission now organized that help to share data cases and so on amongst member states and broadening that, and maintaining it even outside of the Russia sanctions context, I think, would be a useful step. And then I see I'm at five minutes, so I'll pause there. Thank you.
Catarina Vieira
Thank you very much. And then to round off our discussion, I would like to give the opportunity also for DG trades. So I would like to give the floor to Mr. Stephanie Chardon, please.
Speaker 54
Thank you, Chair, honorable members. First of all, allow me to thank the Inter Committee for commissioning this study and doctor Ian Stewart for delivering a well researched and thoughtful, insightful study. The first point I would like to make concerns the relevance of the study. Export controls is a trade tool with a security objective. EU export controls are set out in the dual-use regulation aimed at upholding international security, including respect for human rights and international humanitarian law.
Speaker 55
I, therefore, heartily welcome that the study's focus on conflict-affected region is fully consistent with the purposes of the regulation. The second point I would like to make by way of introduction is about the timing of the study. The regulation was comprehensively overruled after many years indeed of discussions through a recast, and a new regulation was adopted in 2021. What that reflects in particular is the emphasis that the European Parliament made, or that EU trade should support international peace and stability and should uphold human rights. And this regulation, this '21 regulation, provides that an evaluation will be carried out between 2026 and 2028.
Speaker 54
The commission is now starting this evaluation with the objective of having the evaluation report adopted at the end of this year or early 2027. In this context, therefore, the study is particularly timely and will contribute directly to the evaluation of the regulation. Let me turn now to the substance of the study and the main findings. The studies or one of the studies' main finding is that the regulation provides a good basis for controlling exports of listed items, but that there are limitations when it comes to the control of exports of nonlisted items to conflict-affected regions when there is no related arms embargo to provide a legal basis or legal reference for action under the export control regulation. In this respect, I would first emphasize that the EU has specific tools to restrict exports of non-listed items, which are basically all possible types of commercial items which might have military applications.
So the EU has specific tools to restrict such exports of nonlisted items to conflict-affected regions under sanctions regulation. And the EU currently has over 40 sanctions regimes in place, many of them related to ongoing or recent conflicts. As for the export control regulation itself, I would first and foremost stress that member states actively implement the regulation and prevent European technology from fueling conflicts. The data, albeit imperfect, that is published in the annex to the annual report shows that there are a number of denials. And I can certainly share with you that a number of denials concern the export of non-listed items.
Speaker 55
Roughly half of the denials concern exports of non-listed items. And many of these denials concern regions and countries which are affected by conflict. That being said, the system is not perfect, and we would agree fundamentally with the studies finding that the reference to arms embargoes limits, and duly limits, the EU's capacity to control nonlisted items for military end users in conflict-affected regions. And this is an aspect of a regulation that the upcoming evaluation will allow us to together examine closely. The study also recommends a more risk-oriented approach and, in particular, discourages the use or to discourage the use of general licenses for exports to conflict-affected regions.
Speaker 54
In this respect, I would note and thank the co-legislators for granting competencies to the commission to adjust the regulation, in particular, a number of parameters of general licenses. And I can inform you that we are currently engaged in an exercise, a full review of the general export licenses, and we will take into due consideration the risks associated with the specific destinations, which are listed on these general licenses. So this is also a recommendation of a study that we would concur with, and that we are, in fact, already acting on. The study recognizes that the annual reports, which have been prepared or which are prepared under the terms which have been negotiated and agreed and are reflected in the '21 regulation, have improved transparency over the last few years, but nevertheless do not provide sufficiently granular data to closely monitor exports to conflict affected regions. I would here again largely echo the study's findings, as we need robust information to form a solid basis for sound policies.
I would, however, caution that we will need to strike a balance between the need to gather sufficient information and to minimize administrative burden both for exporters and also for competent authorities. Overall, and to conclude, I would really welcome the studies call for a more proactive approach to risks associated with dual use trade with conflict-affected regions. And as indicated, the evaluation that is now starting is providing us, commission, parliament, council with an opportunity to enhance the use capacity to ensure that this trade is consistent with regional peace and international security. Thank you.
Catarina Vieira
Thank you very much. I'd like to thank the commission, our expert, and the members. And I think with this, we can close the meeting for today. Have a good afternoon.
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