Committee on International Trade Ordinary meeting
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INTA European Parliament
Follow its sittingsSpeaker 3
And in fact, I think you will not be surprised by what you find in the first column. Let's consider a couple of figures. In the ceramic industry, the overcapacities is 8.5, which means capacities can meet more than eight times the European consumption, man made fibers close to 10 times, and maybe the best of the worst case is silicon, which, by the way, is a critical and strategic metal material, 12 times. So Chinese installed capacity can meet 12 times the EU's consumption. If we go to the next slide, please.
I will now take the ceramic tiles as a good or bad example of what's happening in industry. So I just mentioned the figure, more than eight times the European consumption, but it's not only that. This federation and this industry is extremely active in trade defense, and so they have antidumping measures where it's suitable. And in fact, China has found an extremely efficient way to circumvent those measures by investing in a series of third countries where they are producing the product concerned, the same production patterns. And so the result is that despite all the efforts made by that industry, in fact, the measures are not as efficient as they should be.
And as you can see on screen, there is an impressive list of countries where China has invested and keeps investing. So whenever you have measures against China, you think that you are protected, that you are safe, and it's not the case. But, in the second panel, I know that the speakers will address this rather new phenomenon. Next, please. What are the solutions?
In fact, there is not one solution. There should be a combination of solutions. And as you can see on the screen, there are recommendations from Aegis Europe in relation to the changes to the practice in our trade defense law or proceedings, and the changes to the law itself. The first recommendation that I would like to address here is let's have enough staff in the TDI service. This is an argument, a recommendation that we, as Aegis Europe, keep repeating.
This service is blatantly understaffed. How come that, and we know it from the lawyers who are working with us. How come that when you send a mail in October, by April, you still don't have an answer? So this is extremely worrying. And we know that when a case is initiated by the office of complaint, one case means at least five or six case handlers, and these people are not available.
So this is a huge priority, and we have addressed it already for many years, but so far, I would say, rather unsuccessfully. Then changes to the practice, let's say the TDI practice. Social and environmental costs, we all know how much they can impact our costs. They do impact our costs a lot, but we face competitors who are not abiding by the same rules. And so there is a gap there which is not taken into account in our dumping margin calculations.
The same applies to input dumping. What is input dumping? Whenever an input, let's say China, sells an input at a very low price, a dump price, to another country, this country processes the input and exports the processed product to the EU, of course, at a very competitive price because this product has incorporated a dumped input. And this is something that should be better addressed in our proceedings. Now, changes to the law.
I will not go through all our recommendations, but one certainly safeguards. We all know that safeguard is more used than in the past to some extent, even to a limited extent. A major problem that we face there is the voting system. Qualified majority. Very difficult to reach a qualified majority in Europe, and it is essential to the decision-making process.
And then last but not least, the removal of the lesser duty rule. It's a bit technical, but I think you are aware that here in Europe, we are calculating two margins, the injury margin and the dumping margin, which, by the way, is not requested at all by the WTO, but we do it because we want to be the best in class, but the best plus. So this is not needed, and this also explains why, in so many cases, the level of our measures is much lower compared to other countries. Now, if we go to the next slide, please. Introducing a value chain approach, a big priority for us.
What we hear from our members is, we go product by product. This is good, but this is not enough. We should find a way to address the value chain. And in fact, you have on screen a series of proposals. One could be that the commission opens ex officio a case encompassing the whole value chain.
Another possibility would be, for instance, to bundle all the downstream products. A series of proposals are there that, by the way, we are discussing bilaterally with DG Trade. Last but not least, in the next slide, please, the famous steel measures that the parliament, of course, knows very well, addressing the consequences of overcapacities. Our plea is very simple. We would like to have this instrument accessible to any industry that is facing the same type of situation.
This is really a priority because what we hear from the commission is more post safeguard instrument, and we say no. There shouldn't be any requirement that the instrument be accessible to a sector which has been first through a safeguard process. That's not legally needed. So that's an important plea from our side. And the last slide, please, addresses the energy subsidies, which nowadays and probably more than ever do impact so much our cost.
On the screen there, you find a calculation of the ratio of the energy subsidies versus the GDP of the country. And guess what? The ratio is the highest ratio for China with 13%, while the level of the European Union, it's 0.7. So there is something to address there. And I stop here.
Thank you very much for your attention.
Jude Kirton-Darling
Thank you very much. Thank you very much for the invitation. It's very nice to be here amongst you. And it's an honor to represent Industrial Europe here and Europe's mining, manufacturing, and energy workforce, because for us, this isn't a theoretical debate about trade flows or market dynamics. It's a debate about the future of European industry, about quality employment, and about the resilience of our economies and societies.
Our industries and the jobs that are built in them rely on free and fair trade with other countries and regions. We are not advocates of autarky or trade wars. We believe in international cooperation for the betterment of all. But what we've seen is a profound shift in the reality of globalization, and therefore in how it must be understood and governed. Over the past decade, globalization has fundamentally changed.
We no longer are discussing open markets and benign interdependence. Supply chains themselves have become instruments of power, and dependencies at key choke points of the value chain are increasingly weaponized. The extraordinary story of China's development and integration into the global trading system sits at the center of this transformation. Europe's relationship with China has entered a new phase, and we have to recognize that. Today, we face what is no longer balanced interdependence, but structural asymmetry and strategic vulnerability.
We saw this clearly during the COVID-19 crisis when factories halted production overnight because essential inputs were no longer available. More recently, we've seen critical raw materials weaponized through export restrictions on, for example, gallium and germanium in 2024, and again, in documented restrictions on rare earth exports. More recently, notably, it's worth reading the latest USTR report on rare earths. Earlier this week, I started this week on Sunday in Oslo with the Norwegian minister of defense, and he made an analogy which I think resonates very strongly. The Roman Empire understood that whoever controlled the supply of grain could control everything else.
In our time, the geopolitics of supply has moved to the periodic table and to clean tech. And how did we arrive here? It has to be said very clearly that this isn't a Chinese problem, and I think it's very important that we, as industrial workers, say that. The answer in part lies in decades of corporate and political choices made in Europe that prioritized cost competitiveness, export opportunities, and profit maximization over strategic autonomy. Many European companies offshored not only production but also R and D and engineering, creating long-term vulnerabilities.
Market access in China came with conditions on technology transfer and joint ventures, and we're now living with the consequences. China, meanwhile, has pursued a highly coordinated industrial strategy. Weak domestic demand, internal deflation, and massive state support reinforced a turbocharged export-driven model. And the results are clear, as Ines has shown on her slides, but the real challenge goes deeper in our view. China holds dominant positions across the entire industrial value chains.
And this isn't simply competition. It's market-shaping power. For Europe, these dependencies are systemic. Around 10% of EU imports fall into high-dependency categories. And in most of these, China is the dominant supplier.
Diversification has not kept pace with the scale of exposure. These challenges are rooted in the structure of China's economic model. Extensive state support, preferential financing, subsidized energy, and policy-driven overcapacity distort competition. Overcapacity is long established in the steel and chemical sectors, and is now clear for all in electric vehicles, batteries, clean tech, the very sectors that Europe defines as its own strategic industries. When this overcapacity is exported, it undermines European industry and places sustained downward pressure on wages and working conditions across global value chains.
And there's a human rights dimension to this that we cannot ignore. Restrictions on the freedom of association, collective bargaining, and well-documented risks of forced labor create structural labor cost distortions that are incompatible with a level playing field, and the consequences are real. European industry provides about 30,000,000 direct jobs, many in regions where industry underpins the economic and social life of the region. When supply chains fail or unfair competition hollows out production, the result is plant closures, job losses, and deepening regional inequalities. So what do we see as needed to be done?
Well, first, and I think Ines has laid that out, we need to strengthen our trade defense instruments. Decades of antidumping experience show that the existing tools are too slow and too weak for today's scale of overcapacity and circumvention. We need to make sure our toolbox is up to speed with the challenge that it faces, and that's also a human resources challenge. There are joint letters coming from various industries. We're part of many industrial initiatives, but I would particularly highlight the work of the Critical Chemicals Alliance, where there's a working group on trade questions, where the question of resources is particularly pertinent.
Secondly, the new steel measure, and I would really like to say an enormous thank you to MEPs in the trade committee. I've just come this morning from Dusseldorf, where steel workers and their representatives were analyzing what's been agreed. This is a lifeline for one of our key industries, and we really appreciate the work that's been done in this house to deliver it. But this is an important innovation, and we should learn from it. Steel isn't steel was the first sector where the overcapacity was identified.
Years of working in the OECD. We went there together, Burnt, I seem to remember, before a major world event in my own country took place. And as this structural capacity spreads to other critical materials and components and sectors, Europe must be ready to develop similar instruments, including stricter tariff rate quotas. Third, the international dialogue that the commission president started, and we were together there, Maria, on industrial capacity and questions of international cooperation at the 2024. We saw it as a very positive step forward to strengthen the dialogue with trading partners like-minded countries, and it must become a structured and sustained process with continued engagement amongst major partners.
And lastly, Europe has to use the internal market far more strategically. A genuine made in Europe approach should combine geographic criteria with strong social conditionalities, not only in relation to foreign direct investment, but as is already proposed in the Industrial Accelerator Act, but especially in vulnerable sectors for all actors. Chinese companies are, and they should be, significant players in Europe in the future, but on terms that reinforce our resilience, reciprocity, and industrial capacity. Above all, Europe must discover an industrial policy that's proactive rather than defensive, coordinated rather than fragmented, and firmly anchored in the interests of working people in Europe. Our trade policy must be allied to this objective.
So I'm really looking forward to this afternoon's discussion, and we're very keen to remain a key part of this debate as you take actions going forward. Thank you.
Bernd Lange
Yeah. Thanks a lot. Until now, we give the floor to the rapporteur and the shadow rapporteur. Unfortunately, the rapporteur can't be here. So I start with the EPP shadow, and it's Mister Soylio Alvarez for one and a half minutes.
Soido
Thank you very much indeed, chairman. I would like to thank our experts for being here from Aegis Europe and also to the curtain darning because they've highlighted the economic, strategic, and political aspects of trade policy here in Europe. We've been talking about dependency of our industry and dependence on critical raw materials and on supply chains dominated by China, but now the debate has changed. It's not just a question of structural dependence. It's a question of how these dependencies are weaponized, and this is indeed a way of serious concern, the way this is being implemented by decree of law.
There is a new regulation on security and on supply chains, and so forth, and it's absolutely vital that we recognize that we can't cut relations with China because that would be detrimental to our own interests. We would be investigated and potentially open to penalties and sanctions. We've obviously got to comply with the law, and we could be running the risk of breaching the Chinese law. But the provisions that have been enforced since March do go a bit further. They increase the oversight that the state has in a strategic way.
And China is therefore retaining the capacity to decide how and when it actually supplies what Europe needs. This is a very difficult situation for us and for the industry in general. The Chamber of Commerce in China has said that this is a very serious problem because trying to comply with European and Chinese legislation is becoming, by definition, virtually impossible. So these recent provisions introduce a great deal of legal uncertainty into the overall picture and where a picture where legitimate TDIs could actually be interpreted as a threat in trade terms. So our dependencies are becoming a major source of vulnerability, and this is something of great concern.
So I would like to ask two questions to our panelists. What, how do you see what is happening out there? How do you think our industry is adapting to the realities on the ground, and how do you think it should adapt to the realities on the ground? And just to conclude, a word of thanks again for being here.
Kathleen Van Brempt
Thank you very much, Sharon. Thank you very much. And so happy to see you back, Judith. We will have to discuss that event in your country to reverse it. You know that, but that's another topic.
First of all, it's very interesting to see that you are both very much aligned in what you say. It's not always the case if you look at industry representatives and works representatives. And that's good. That's very good news because we will need a common and new strategy when it comes to China. Often, hear in council or commission voices that we have a strategy.
I think that strategy is long due. It doesn't work today, and we need a new one. And then it's good that in our society, in industry, we see a common approach. Second, you both mentioned the steel safeguards as a sort of benchmark, and you made the combination with a new necessary instrument in the trade defense on overcapacity. It's a huge discussion that we have amongst political groups.
So, because you had to be quick, I'm very interested to know how you see that. Is it a steel safeguard, so we need just a new instrument that then implies all of the, I'm laughing because already I triggered. But I think it's important that we have that discussion, and we need your input on that. You made a lot of proposals, missus Leirde, on what you think is necessary. I can give you very positive feedback in the sense we are negotiated as it stands on the economic security report of the Parliament, and everything you said is more or less in there.
And I want to underline because it's such a no brainer, and it really gets on my mind because I agree. Before getting new instruments in place, we need to implement the instruments that we have. And if we have an understaffed commission to do that, it's, and we've been saying that for so long. So we really need to push the commission to go through that. And I have two final questions.
The Industrial Accelerator Act has also been mentioned. What would you and I address that also mainly to Jude. From a workers' perspective, what would you want us to have enforced and changed? And the last one is a little bit of a philosophical one in the strategy of the commission. You know, the
Kathleen Van Brempt
famous partner, economic rival, and no. Economic competitor and systemic rival. I always muddle them up. How would you describe China today? One of these three.
Thank you.
Cristian Terheş
Thank you very much. Me too. Thank you to both of you for being here. It's been a great pleasure to hear what you had to say and to hear where there's an identity between you and how concerned you are about the clear threats that exist in our world because of the aggressive stance of China. So we've already looked at supply chains to try to see how we can actually improve our strategic supply chains and how we can better address these dependencies, which have been evolving over years, either because of negligence or ignorance.
In any event, a few years ago, 5 or 6 years ago, we realized that we really had to change our tune and up our game. This was around the time of the pandemic. There were some very alarming illustrations of quite how problematic the situation is. There is, of course, a bit of an anti-American attitude too, not just here in Europe. And therefore, many are out there seeking new trade agreements with other partners.
And this, I think, sometimes can be problematic. I'd like to hear a bit more about what you think about the visit to China of President Sanchez, Prime Minister Sanchez, who went to China for four days. I think this was an example of another risk taken by a European leader. Does he really think that China is on the right side of history? After all, we know that there's forced labor, concentration camps, minorities whose rights are completely repressed.
There are huge numbers of political prisoners in jail there, and they are flagrantly violating every one of our values. So is this honestly a way that we should be pursuing? Germany too seems to be pursuing this in pursuit of a positive relationship with China. Of course, in Spain, it's a much more political thing. I think it's very regrettable and worrying, the political trends in Spain that are leading to these sorts of actions.
Thank you.
Martin Schirdewan
Thank you, Bernd. And also, I thank both of the speakers. I don't know whether I'm in agreement with my colleagues that your presentations are quite the same, because there was a position from the industry put forward. And it doesn't happen so often in this house, but there was a clear picture of the workers and what their needs are in industrial policy. I would like to put forward two questions.
And the first is addressed to Judith and her contribution. Belle, thank you very much for throwing a spotlight on the job side of the equation. So it's not just about external foreign policy errors, but also about European policy and management. And you indicated that the question of strategic autonomy from the European Union has been neglected way too much over the last few years. There's been hardly any initiatives in this direction.
And there's been very much a one-sided export model, which has been based on cheap energy prices. This is over, of course, because of the Russian war of aggression against Ukraine, and because of the situation in Iran. So we know that is weakening the sustainability of that in the future. So a lot has to happen in terms of foreign policy and with regard to state aid, cheap energy, and so on. And this is what is bringing the European market under pressure.
European industry has profited in the past, but what would be the toolbox that you say we would need to act against unfair trade practices? What has to happen so that European policy, both within Europe and externally with regard to partners such as the USA, what would have to happen? And then Ines, thank you very much for your very interesting contribution here, the study which was presented to the Trade Committee, and we have discussed it. And I think the result of the studies, it doesn't exactly overlap. But what would you say with regard to protectionism for the European market?
Could you perhaps go into that a little bit? Which protectionist measures for industry would you wish to see on the European market? And I'm very interested to hear your questions. So thanks for being here. Thank you very much.
Speaker 13
I was very pleased to hear these two contributions. And then once more, there is the question of whether a statement can be made about what you see as risk from risk from our point of view, this underestimation of the Chinese appetite for our experts. So I think that there is an opinion that we have an export problem. But if we produce products, then we still have a currency issue. So how do you see that from the industry side?
That is what we have to tackle. We have to be more competitive in the European Union. We have to produce products which we can then export. And I think we need to have an opportunity to come to rights in the very high level of competition that we face. So the risks that you very clearly outlined, these can also be seen in some ways as opportunities.
In many industries in Europe, the Chinese are actually more innovative than we are, for example, in mechanical engineering and the production of batteries. So I think we can learn a lot from the Chinese about how mechanical engineering or battery production can be carried out. But that doesn't change anything if we don't change the status quo. So I think we have to face that we have a serious wealth issue with the standard of living in the European Union. So we have a trade deficit with China, which isn't necessarily bad in itself that we have one.
But even in the European Union, we don't have any industrial growth. And that's a minus for us in terms of the standard of living in the European Union. So at the present time, we are not growing enough to cover what we need to finance in terms of debt. And I think that means in about ten years, we won't be in a situation to tackle the issues that the two panelists have set forward today. So we need to find solutions now with our Chinese partners, and not in ten years' time.
Juergen.
Jörgen Warborn
Thank you, chair, and thank you to both panelists. I have a question I'd like to direct to Aegis, because I couldn't agree more. I think I'm also for free trade, and it has to be fair, meaning a level playing field. What I didn't really understand or what I think is a bit problematic with your presentation, to be honest, is the definition of overcapacity. So maybe you could expand a bit on this.
Because when you define overcapacity as the ratio of how it plays into, for example, Europe, I think we actually have the opposite problem or the same problem, because we have overcapacity in Europe when it comes to some products to Canada or to Argentina or South Africa. I think that ratio complicates things. And if that is the analysis, that might lead us in the wrong direction of how we solve it. However, I do agree with you that the trade defense instrument is where we have to work, because, of course, we have to level out the playing field. And that's the key thing.
Speaker 14
When you have subsidies, I'm also, I like the market economy. So when you have subsidies distorting the market economy, that's what we have to take care of. So why did you define overcapacity the way you did? Thanks.
Bernd Lange
Thanks a lot. And now I give the floor to Dirk Gottnik, a new substitute member here in the intercommittee. Welcome.
Thank you.
Very much. Have fun here in the committee.
Speaker 16
Well, I it's a great pleasure, and I find it very nice to start with this panel. I'm in Imco as well, and there, I'm the rapporteur on the customs code. And we just finished the negotiations. We will adopt the legislation in July, normally in plenary, and this is about e-commerce. And together with Engen, we were in Beijing and Shanghai two weeks ago to talk to the biggest platforms, but also to the customs there and the political level.
It was very instructive. And I think in that sense, the challenge is way too big to simply scratch the surface on some small topics. I only have limited time. But let me just say that I had one learning point, which was, listen, the cars that we see on the street is just the beginning. We will have more and more product groups that will simply become that we will see simply Chinese brands pop up on the market, and it will be everywhere. And one of the places where it will be quickest is at home, in our houses.
Your washing machine, your TV, and many other things will become simply with names on it that you've never heard before in your life. One of the reasons is, for example, that now an unknown company, but the biggest e-commerce player in China, is buying Seaconomy. They own MediaMarkt and Saturn. MediaMarkt and Saturn, they're everywhere in Europe. And I think in terms of client profiles, they probably have around 100000000 client profiles of Europeans.
That's why they buy Seacomny. That's why they buy MediaMarkt and Saturn, because they want to sell their products via these distribution systems. We have had zero political debate on this. I think we need a foreign subsidies investigation into this takeover. All the competition authorities have already approved the takeover.
I'm just saying I'm quite a practical person, so I'm in favor of fair competition, absolutely. But when we have clear takeovers, we also need more political debates about them. And especially even if it's with companies that we don't know the name of, they are the size of Amazon. Yeah? And we're talking and we don't know them.
And that's the crazy part about it. We're talking about the companies that are so big, and we don't know them. So it's also for us to learn more about what is going on there. Thank you very much, chair.
Speaker 17
Thank you very much, Cher, and thank you very much to Aegis and to Industrial for these presentations. And I'm sorry I was a little bit late at the beginning, because I had another meeting. But, anyway, I hope that my question comes to the right place, Ines, if you could, because what I heard of your presentation was mainly about defense instruments. And if this is what you presented, then my question would be, what about offensive interest? What about the European Union's offensive attitude to China?
What can we do to be more present, to be more efficient on the Chinese market? Because I think that this is also a very important part of our relations. And if I may, a philosophical question, more or less, because it's not linked to EU China relations. But, Jude, what you told of the employers that employees that you represent and the people and the industries, which are very close to my heart, because in Romania, also, we have a lot of those industries. But, how do you see the future of labor force in those industries?
In 15 years, will you have labor force? Because we are discussing not only our short term, but also the mid and the long term. Thank you very much.
Thanks a lot. Christophe.
Nicolas Bay
Thank you, chair. And thank you for your presentations. It was a real cry of alarm that you set out today. I'd like to talk about the difference between oversupply and overcapacity in China. So the question is, what is free and fair trade?
In China, it's not we can't have free and fair trade if there is such a big difference. That's my first point. Secondly, you highlighted that trade with China is very asymmetrical. We've seen in technology and aeronautics. We've seen the consequences of that today.
There's an inequality here because it's a regime that doesn't want to reform from within. This is because it's a communist dictatorship. And so the EU has never found the right response to this offensive aggressive policy from China. It's a key partner, of course, but nonetheless, we do need to react. And in my opinion, what you said was very enlightening.
The response from the EU and the Commission is simply not enough. So I want to ask you a couple of questions. Can you be a little bit more precise about the responses that we could use to counter Chinese policies in terms of trade? And secondly, given your two studies, what do you think is the sector where it's most urgent to protect them in Europe? Thank you.
Benoit Cassart
Trade is, of course, the bedrock of European wealth, but the figures that we've just seen are more than just alarming. It's an economic tsunami within the EU. That shows that the world has changed, and we need to bring about a change to tackle these issues. And we need to modify things whilst bearing a couple of important criteria in mind. That is our strategic autonomy.
We need to stop being dependent on everybody else. There's also this requirement to be coherent when it comes to the standards that we impose here in Europe. If we don't change that, then we'll be committing economic suicide in Europe, and so we need to be quick on this. Thank you.
Bernd Lange
And from my side, first, also the question of overcapacity. I need a really concrete definition. So at the moment, we are producing in Europe round about 12,000,000 cars, and we are exporting 5,000,000. Is this over capacity? So, and this is not only in relation to China, relevant also to other countries.
So we need to be clear also in the frame of the WTO. If we want to go to the WTO and discuss this question of overcapacity, we need a concrete definition, which is, yeah, reliable to everybody. And secondly, on the dependency on critical raw materials. I guess in Jude's statement, it was a little bit clear. It is not only the responsibility of China.
It's our responsibility. I had a recent discussion with the CEO of the biggest electronic company of Germany. And he said to me, oh, regarding China, we were a little naive. No. That wasn't naive.
It was low wages and low environmental obligations. So the refinery of lithium or other products would be profitable for this company. And, therefore, we have to look a little bit also to our responsibility to stimulate the sustainable growth here in Europe. Looking to the result of the Critical Raw Material Act so far, it's quite limited. We just saw the result or the report of the European Court of Auditors.
So what is our responsibility in the relation to China? And then, of course, also the question of opportunities. So if our industry was a little bit slow in developing batteries, we should reflect on how we can use for our sustainable growth technology from China in battery technology and some other elements as well. And, also, of course, the question regarding innovation might be also useful to have some cooperation to have really also jobs here in Europe. So is there an idea to have an I would not say the Kai back out of the freezer, but something where we can go in a legally more concrete element?
On the critical raw material, we had the agreement about this expert group about the licensing of critical raw material that was established. Did this change the situation for European companies? And lastly, on the defense instrument. Yeah. We have a lot of them.
What is, in your point of view, the most important? So if I reflect what is missing in our toolbox, and I could really see that sometimes investment is coming and which is leading to a one way dependency into a third country. Perhaps you could go in this direction, reflect about that, but perhaps you have other ideas. So now it's your turn to answer, and I will give you the floor, I guess. So around about, yeah.
How much time do you have? Five minutes, roundabout six minutes.
Speaker 3
Yes. Thank you. Many questions about what we should be doing in relation to trade defense. In fact, Aegis Europe is issuing every year a survey, very detailed, very precise, with a series of recommendations about how to improve our practice and also TDI changes of law. So I will not expand, let's say, on this, but just be aware that this is really a priority for us, because it is based on the experience of the members who are intensive users of the instruments.
So that's already one thing. Offensive interests, I don't want, of course, to go outside the mandate of Aegis Europe, but one important aspect would be the CBAM, the export adjustment, which has a huge impact. It's not a trade defense tool. We all agree. But let's say, this missing export adjustment has impacted and still impacts a lot our exports.
And it's second tool that I'm thinking of, which is not a tool, it's a fact, it's the level of energy, the energy price, which is putting an extraordinary high pressure on our industries and not now for many years. Now responsibility in our relation with China, may I say we need to be two to dance the tango. That's the expression. So, honestly, we let it happen. As I said, this was coming for at least 20 years.
And Aegis Europe was born when there was a discussion about whether or not China had to be recognized as a market economy. And when we started our lobby, there was a unanimous position within the commission and the majority of member states who say, we should, we have to recognize China as a market economy. And because legally, WTO, etc. And if we hadn't been there, to be honest, I think that would have happened. And probably that our is already in an extreme. So I think we certainly have a responsibility because when you let it happen, you are also responsible.
But I don't want.
Speaker 21
To monopolize because maybe, Jude, you want to, we're checking the time. Please. Yeah. Thank you very much for the comments and questions. Maybe a couple of responses.
Jude Kirton-Darling
The first is that we might agree, and we aligned on, I think, some of the policy proposals with industry, but you see the differences in analysis between industry and the unions when we're looking at how we've got to the situation that we find ourselves in. And your example of a prominent German player would reflect a conversation that we have very intensively in European works councils, in sector committees, and so on. But this is now an existential question of European industry. We produced for the first time a trade union, a worker version of the Dragi report, looking along our sectors. We're the only organization, perhaps ages we were even bigger than you, in terms of the coverage of the economy that we cover in manufacturing.
We go from the well and the mine and the circular mine down to the final product, and we produced in November an analysis of our 20 sectors investigated. What we found was that only three are in a healthy state in Europe. Some are in a more existential crisis than others, but the three that are in a healthy state, I think it's very important to say what they are. It's parts of the aeronautics sector, the shipbuilding sector, ironically because the shipbuilding sector has been a long-term patient, but because of the investment in defense, these sectors have full order books. And it comes back to the question of what can we do in Europe in response.
This is a question of long-term underinvestment in Europe. It's private underinvestment. We are at the historic lowest levels of private sector investment in Europe, so we need policy instruments that unlock that private investment. And that's where it comes to the, for us, what is a critical part of this industrial policy, this new industrial policy that Europe is developing, the Industrial Accelerator Act, because we have to use that demand side measure, use the internal market as a lever to channel private sector investment. And the only way that we can do that in our view, in a way which guarantees the future of our industries, it also deals with the long term labor market questions.
How do you ensure that the workforce is there down the line? It won't be the same workforce. It won't be in the same sectors. It won't be people doing the same jobs. That, we know.
This is about anticipation and management of change. It's what we do as trade unions every single day of the week. But unless we have that investment, we are talking about massive deindustrialization in Europe. I'll give you just one figure, which shows you the scale. At the moment, something like 4,300,000 industrial workers, manufacturing workers in Europe are in some form of labor market buffer scheme, short term working, or some form of different systems, different countries, solidarity mechanisms.
You can only do that for a short period of time. We are now crisis after crisis, starting with COVID through the energy price crisis, through the situation now with supply chains and what will be coming as a result of what's happening in the Straits Of Hornus. So this scale of deindustrialization at the moment has been hidden because we have an aging workforce. And many of the workers who've been impacted have filtered out of the labor market into early retirement or have been an invisible deindustrialization. Unless we take action now, in our view, concrete action on industrial policy, then we face a really very different challenge.
Deindustrialization is corrosive economically, socially, and politically for Europe. And that's why tying conditionalities to investment using the internal market cleverly is actually a really key way of driving of dealing with the challenge. But we also have to deal with the trade defense instruments. And we also believe, and maybe that's feeding your discussion, that the steel overcapacity instrument should provide a basis for looking at how you develop a common methodology around overcapacity, because that work was done over 20 years in the OECD to agree how you measure it, how you tackle it. There is this overcapacity developing in other sectors.
The OECD is also looking at the overcapacity in other sectors. So we should be developing with like minded countries a common methodology about how we deal with overcapacity to ensure that we don't end up with a situation where that kind of dystopian future waits for us because we haven't taken the action that we need now. And we need to dialogue with everybody, and we need to ensure that we are stabilizing the global economy through dialogue and through global rules making and avoiding this.
kind
Jude Kirton-Darling
Of degeneration into trade wars, conflict, the use of leverage and choke points in the economy to bully each other. This is a dead end for European industry. It's a dead end for European industrial workers.
Bernd Lange
Thanks a lot. And now we switch immediately to the second panel. And Marie Patte is taking notes. So at the end, she can answer from the point of view of the commission. So we have now a lawyer and a think-tank.
A little bit to discuss what is the potential EU leverage and what are the specific opportunities. And I give first the floor to Marie Sophie Dieplink, partner from Cassidy Levy Kent for round about eight minutes.
Marie-Sophie Dibling
So, good afternoon, members of the European Parliament. Ladies and gentlemen, this is a great honor for me to be here today to talk about this hot trade topic, China, also to share the story I hear every day from European companies facing competition from China. And my participation today is a bit news from the front, I would say. And so before I start my presentation, I would like to recall that the views that I'm expressing today are those of an international trade lawyer who is representing exclusively the interests of European companies and not acting for Chinese or Russian companies and in their fight against unfair competition at the international level but also market access. And before I jump into the topic of this panel today, I would like, I think it's important to recall what are the new market realities today.
So if you go to the next slide, please. So first, let's see the progression of China between its accession to the WTO in 2001 and today. And I think you can see a complete economic transformation. First, China climbed the industrial ladder from low-value to high-value products. And so the concept of specialization that I heard when I was an intern at the WHO in 2010 that actually the EU and China will never compete to each other because one is on the high segment and the other is on the low segment, I think it was just wrong, and it's completely outdated today, I think.
And second, I think, also relate to a question that we have on overcapacity. I think China is pretty much export oriented. Why? Because they have very big ambitions. They want to develop capacity, but not capacity for their own market.
I mean, each time they develop capacities to meet the world demand. And it's interesting how China got there. I think it follows a great political stability. I think the Chinese would say that it's freedom. And they have a nonmarket economy country, so you have market forces that are directed by a strong Chinese Communist Party, and they implement rules through five-year programs.
So if you go to the next slide, please. Thank you. So what has been cooking since the past 8 years in the world? And so first, I'm pretty sure you know it. US woke up and said stop to China's work economic ambitions.
So they imposed tariffs. They imposed sanctions. They are pretty mad. And second, the domestic consumption in China stays very weak right now. So they also have an issue of internal competition.
A lot of companies and the price is very low in China, so they get low profits. So that encouraged them to export more to other countries such as the EU so that they trigger higher profits for high value products. And third, the redirection, of course, of exports from China to the EU because the US imposed tariff and the EU did not impose tariffs. So everything is going to the direction of a big market like the EU. And, of course, all these things had a big pressure on the EU markets and also on European industries, obviously.
So if you go to the next slide, please. So what is the reaction of China to these new market realities? And I think I mean, it's quite simple. You can read it between the lines of the five-year program. So I would say this is China's, you know, saying, well, I need to find ways to circumvent the US tariffs.
I need to circumvent European anti-dumping duties. Well, obviously, I cannot reduce my overcapacity. It's too political. I need employment in my country. I need to avoid social unrest, so I need to grow by relying more on exports and FDI.
Europe is key. It is a very big market. Compared to the US, it is still open. They have a good profit margin. It forces me to modernize my factories.
They have good consumers. They can pay, and they are too disorganized at 27 to efficiently react to my action in time. This is what we call the catch me if you can game, and Chinese companies, they are applying this so well in Europe right now. So if you go on to the next slide. So what are the concrete actions that are being taken by China to these new market realities?
And we discovered that very recently in cases that we had. So first, of course, China is investing in other countries where the EU has trade preference and the US as well, so that they can bypass the tariffs from the US, but also all the antidumping duties that were put in place in Europe. But they went a bit further, they went to develop what we call this going in and going out and going in strategy. And it is written in black and white in their five-year program. They call it off-shore trading.
We call it actually duty offshoring. So what is this going out and going-in strategy? It's quite simple. First, they asphyxiate and weaken the European industries by exporting massively exports from China to the EU at dump price so that they kill European industries. And so they are very weakened, and at some point, they just stop producing.
As a second step, when this European industry is dead, what are they doing? They're acquiring it, and that's very simple. They take over these companies for symbolic euros, and they were doing that for two reasons. First, they're doing that to circumvent the anti-dumping duties that we imposed. But not only that, because they have a footprint in Europe, they can actually export from Europe with a new origin and export to Turkey or to the UK where they have also imposed antidumping duties against China.
But the second reason, which is probably also very important, is that with a symbolic euro, they purchase intellectual property rights and know how, and they're doing that exactly for this reason. So if you go to the next slide, please. So now that we have the same understanding of the new market realities, I would say, for European producers, let's look at the economic opportunities. So if you go to the next slide, please. So my conclusion is that, actually, because of these new market realities, the opportunities are most exclusively for Chinese companies today, not for European industries.
There is a sort of economic Chineseization of Europe today. If you look in 2025, at least 60 European companies were acquired by Chinese groups, and there was a gentleman saying that there is appliance, you know, would become very soon Chinese. Actually, among these 16, these 60 companies, most of them were appliance companies. There's also a progressive leadership in the intellectual property rights and know-how, and the recent figures are very impressive. If you go to the next slide, please.
Yeah. So fewer opportunities for European companies today. They have been severely impacted by a flood of imports. They have been severely impacted by unfair competition, and they are all shutting down. You have massive plant closures in the EU.
I think if you look at what is happening right now in Germany and in The Netherlands, in the chemical sector, you'll be afraid, very, very afraid. We are losing jobs. That's a reality. We have also losing a capacity to manufacture and manufacturing basic goods. If you take tubes with gas, then how do you do if you don't have that?
Then you became more dependent on China, and you put at stake the European security. If you go to the next slide, please. So what's the EU leverage today, and what has been used so far by the EU to tackle this? So from an industry perspective, being a lawyer, you know, the first response that we get from member states and from the European Commission is that, oh, don't worry. We're gonna use more of the trade defense instruments: antidumping, antisubsidy.
Well, that's not a solution, I can tell you. So product specific antidumping and antisubsidy are, which means that if you want to deal with overcapacity of China, which actually is overcapacity in the entire value chain involving thousands of products, it means that you have to launch thousands of antidumping investigations. Okay? That's not sustainable. And the reality, and I hope DG Trade recognizes it today, is that the office of complaint of DG Trade is completely overloaded.
They are doing their best, but they are not responsive at all to the urgency to avoid plant closures. What I have seen in the past, in the recent past that I have never seen in my career, is that when I lodge an antidumping case, there are at least two or three sites debts when duties, when provisional duties arrive. So that's the new reality of Europe today. The second response to the EU provided is a sort of proliferation of recent instruments. So foreign subsidy regulation, anti coercion instrument, and, of course, these instruments are welcome.
But let's be honest. I mean, in our view from the side of practitioner, there are more paper tigers right now. They are not efficient enough, and they are not used in an assertive way to address China's concern. And let's be realistic. Does it really scare China today?
I don't think so. So this new instrument on steel, yeah. Finally, a great initiative. WT compatible in our view, but only covering one sector among 100 sectors in Europe who are dying. So the reality is if you go to the next slide, please.
The reality is that today, none of these instruments is able to tackle the concern of China. So if you go on the next slide because of the time, yeah. So now that we have looked at new market realities and economic opportunities and new leverage, I would conclude, is there any room for potential cooperation with China today? I think before we respond to this question, there is a need to fix the imbalance between China action and the EU response. And time is ticking, and there is a clear temporality issue right now.
First, what I think the EU industry needs is a much stronger enforcement of our rules today. Circumvention in any form must have big consequences for Chinese companies. They cannot play with our rules. Second, yeah. Yeah.
I'm concluding it. Yeah. Thanks. Thanks. Much so and then, yeah, immediate action, I would say, to stop the bleeding.
I think it's necessary. This is not protectionism. This is survival, and you need to design an instrument to tackle overcapacity. And we stop here. Thank you very much.
Bernd Lange
Thanks a lot, Marie-Sophie. Our next expert is Bernard Barge, director of external relation from his well known institute. MERRIX, please.
Bernhard Bartsch
Thank you very much, and it's an honor to be here. My point of view is that, of a China think tank, we try to understand how China acts, why it does what it does, and try to take key signals in our discussions about China. And I agree with a lot that has been said, and I'm grateful for the data and numbers that were provided. I'll not repeat that, but I will try to pick up some signals that may be important for the discussion. And first of all, I think it's important to try to take a look at what China's self perception is at this moment, and the five year plan has been mentioned.
Speaker 26
And we know that five-year plans are not rituals, but after thirteen years of Xi Jinping rule, they do give indications of where China is heading. They're taken seriously. There are serious signals in there. When China looks at the world today, I think it is in many ways as worried as we are. China is, I think, the Chinese leadership, very worried about its internal situation.
Speaker 25
Growth is lagging. There's a number of issues from demography to youth unemployment, impact of AI, that are all major concerns for China. And China, at the same time, feels that it has analyzed its own problems and the global environment rightly, and it feels vindicated that it has taken the right approach ten years ago, at massive cost, to protect its own industry in the way it does. What this means though, and this is again where our concerns start, is that when China talks about trade and investment, and we look at the language in the five year plan, it's a totally different language than the one that we use. It's not a language of lower prices and getting technology and integrating.
Bernhard Bartsch
It's a language of dual circulation, of reducing dependencies, of technological autonomy, and of resilience. It's not in the five-year plan, but Xi Jinping is, of course, on the record, having said that China needs to reduce its own dependencies and create dependencies, and we are feeling these dependencies. We have no reason to believe that China will be backing down from any of these policies. And even if for diplomatic reasons, we might not always call this a systemic rivalry, we must have the basic understanding that there's a systemic divergence here to stay. The recent regulation on supply chain security has been mentioned.
And even though in the five-year plan, we do find language about opening up specific sectors, these are often sectors that are already dominated by Chinese players and where, at the end of the day, economic security concerns and China has a very comprehensive understanding of what national security entails would, in the end, overrule any significant market openings for our companies. Let me go through this with this basic understanding through the three points that we've been asked to talk about, the opportunities, leverage and the cooperation. When we talk about opportunities, something we've not talked about here is the opportunities for European companies in China, and many of them are doubling down on their strategy to be in China for China. And also, more recently, to use China as an export hub together with their Chinese partners to benefit from the technological leaps that China is making, to also benefit from the currency advantages that they get from being in China. And this has led to a situation where, in the words of the European Chamber of Commerce in China, we're not only no longer in a situation where what is good for a European company in China is good for Europe.
It's not even neutral anymore. We're entering a phase where what European companies do in China may actually have a huge cost for Europe because many of them are reimporting or producing in China to export to Europe, to benefit from the massive manufacturing house that is there, from cooperation with top partners, and from the currency. This brings advantages that they can't use here. But these are all dynamics that, at the end of the day, may speed up the fears of deindustrialization that, for very good reasons, we have here. Another opportunity story is, of course, the opportunities that arise from looking at a lot of other countries that have similar concerns with China that we have.
We've looked at the 50 biggest economies in the world. Basically, all of them have defensive instruments towards China because they have the same concerns of being overwhelmed by, we've called it, overcapacity here. I think overcapacities is indeed a complicated term, not only because we have a very different understanding here of whether companies need to make a profit or not, and the whole subsidy issue. What's behind it is really a big strategic intent to become dominant in key industries and to control the whole value chains within China and also internationally. And a lot of countries, even the ones that partner with China in fora like BRIG or SEO, at the same time have concerns.
So when we say today that China policy is not only what we do together with China, but also because of China, because we take China's role in the world seriously, a lot of opportunities arise from the partnerships with like-minded countries. And this is also, of course, where our leverage comes in as a major market, and we've already heard about. I'd like to pick up one more signal when it comes to cooperation, that is going to be a discussion. It has been a discussion recently. Has been mentioned.
And I think it's clear today that none of the problems that we have today, none of the issues that we face, none of the imbalances that we have would have been made any better if KAI had been ratified. Still, there are push from China to bring Kai back. And the more we are in a situation where we're totally lost at what we do with the transatlantic partnership, where we need to stabilize our relationship with China, and we need to do that as long as we have the dependencies that we have. We need to stabilize that relationship. And I think a lot of recent trips by European heads of government have been to that end, to stabilize the relationship.
To that end, there will be pressures to bring Kai back, or even more, to start talking about a free trade agreement. The German chancellor has recently mentioned it in a Bundestag session. From all that I know, that was nothing that is really a process. It was something rather spontaneous, but these ideas, the spontaneity comes from somewhere. We know that a free trade agreement is a talking point that a lot of Chinese diplomats use, I think, for DG Trade.
It's a total nonstarter, and still it will create political dynamics, and it's important to have the arguments against any such discussion at hand. There'll be many among them that it would totally destroy our ability to use the instruments we have here. And it would lead us into a narrative where we deny the big divergence that we all know exists, and that I think should be the basis of our analysis. I think in the coming years, our core opportunity lies in reducing our dependencies and buying time where we can until sovereignty or autonomy in Europe is not only a claim, but something where at least the window closes until we get there and the pressure that we can be put under will be reduced. I'll leave it at that for now.
Jörgen Warborn
Yes. Thank you. Very interesting interventions from both of you. And I'd like to give miss Stibling the chance to have some more time and come up with the solutions. I think you touched upon it, but maybe you can expand a bit on that.
And to mister Burch, so Kai is not the way forward, and the free trade agreement is not a way forward. So, what is the way forward? That would be good to know. And then I maybe take the opportunity to ask the commission and Maria Martin-Pratte a few questions as well. I asked a question of the definition of overcapacity as well.
Maybe from the commission side, overcapacity, is that the issue or isn't it really as I think it is? The subsidies. It's a cheating by China that is the problem, and that creates the overcapacity. And we should really focus on the TDIs to make them better. Maybe you can comment on the criticism of the TDIs.
Then on the they're developing China's status as a developing country in the WTO. Now they have said for the future negotiations, we will not ask for it. But shouldn't we push them retroactively, so to speak, on everything that has been? My final question, chair, I know we are running out of time, is on how Europe should act unified. And this is also from Mister Soydou, who's our rapporteur on this.
Because now we see a lot of leaders going to China, having bilateral negotiations. Right? And I fear a bit that this might crack the unified response that Europe needs to have because individually, at least from Sweden, a pretty small member state, we couldn't do it alone. We have to do it together. Maybe you could comment on that as well.
Thank you.
Very well. Kathleen?
Kathleen Van Brempt
Thank you very much, chair, and thanks again for the interventions. I think, very interesting, and also very much aligned. First of all, and it's something that we really need to discuss here, chair, that issue about overcapacity, and it's good to ask all of these questions. But I personally think it's, of course, a combination of overcapacities based on over subsidies in a planned economy, and we don't have that. We do have subsidies, and we do have, as the chair mentioned, sort of overcapacities in industries where we used no longer used to be very powerful, but it's the combination that makes it killing for our industry.
And I think that's what we have to look at. And that brings me to the rather gloomy analysis of Missus Dibling on our TDI. You more or less said it's not working. It's useless. It's inefficient.
Okay. I think we may have worked years on the TDIs, but I think one where I absolutely agree, you mentioned it, for instance, the anti coercion. Also, we had a lot of discussion on that. I think we have anti-coercion. You can say, does it work or not?
We don't have a clue because we haven't ever used it, and there's been so much coercion the last couple of years. So we just also, and that's something that we have to acknowledge ourselves. We lack the courage to use our instruments. And I think it's I would like to have the comments on that because it it's really one of the things that we have to address. And I want to say one more thing, because nobody really addressed the fact what are our benefits, what is our strength.
You mentioned a little, but I think one of the most important strengths that we have is our economy, is the wealth in this country. Look at it, I'm from Belgium. And what today, one of the top articles in Belgium says, Belgians have never been richer than today. Never been richer. Their wealth grew with €50,000,000,000 one year.
We have a very poor state, but that's another discussion. But that means there's so much money with our people, in our economies, and we don't use it. And for that, and it's not gonna help all over, and it's not the one thing. But the Industrial Accelerator Act is one of the instruments that we need to use, and I really would like your comments. How can we strengthen that?
Because the FDI proposals in there on joint ventures and the strength of our people and all of that. It's only a few sectors in there. So how can we enlarge that? So, thank you.
Julian. Oh, and Christophe. Christophe.
Nicolas Bay
Thank you very much indeed. I'd like to thank the experts for their presentations, another set of excellent presentations, which I very much welcome. I'd have to say I'm not terribly optimistic as the afternoon wears on about our relations with China. I hope that our friends from the commission are hearing these messages loud and clear. They're not coming from political groups.
They're not coming from partisan advocates of any particular position, but from experts in economics, in politics, in law, relations with China. Therefore, I think the message is loud and clear. We need to act robustly, forcefully, and in an intelligent way. China is a very important partner, but at the moment, it's a very unbalanced relationship. And there is also evident bad faith on the part of our counterparts.
So I have, with that in mind, a very simple question to put to you. This is a rather dramatic situation, and it is one which I think is deteriorating very rapidly. We have a few instruments we could deploy. But is it not time that we actually deployed something much more resembling a shock therapy vis-à-vis China, iron quotas, and anti-coercion measures.
Speaker 17
Thank you very much, Kjell, and thank you for the two presentations. Of course, it seems that economists seem to be similar to politicians lately because you should be a doomsayer, then you have success as a politician. Now it appears that you should be a doomsayer as an economist, and then you can have success. I was joking. Maybe you don't like this joke, but it is my impression that it's too much doomsaying in all analysis because, as Kathleen said, Belgium is the best place to live in the world.
I think that the European Union is the best, the safest, and the brightest place to live in the world. So much doom, I think, does not take consideration of our force, of our future power building the power of building the future. One question. So if we have a scale of people, politicians, and economists saying we have to decouple. And the other side of the scale is that the European Union's strategic interest is to cooperate, to negotiate, and to discuss with China.
Where is the reality? So it's a scale. But where should we stand? What is your opinion on this scale? Thank you.
Bernd Lange
Always a question. Where is reality, and where is the reliable ground? So, and Jessica.
Jessika van Leeuwen
Thank you very much, chair. Thank you also for the speakers today. I think I have to agree here with what Juergen said. I think we need to reconsider whether we should still consider China to be a developing country. And that is a thing that we have to have on the table, because otherwise, there's no fair free trade.
I have a couple of questions. We've been dialoguing with the EU with China as EU for a couple of years now, but do we have any concrete measurable improvements that we have delivered here? And for the speakers here, the question is, in your assessment, in which areas of cooperation with China is it still realistic and beneficial for the European Union? And where should the EU draw some clear limits? Is that possible to say?
My concern is that it's very difficult to have any type of agreement and make sure it's followed up. And as an example, I would like to bring to the table the example of Chinese poultry meat. China is the fifth supplier of the European Union of poultry meat, and a recent audit from the commission showed that there is absolutely no compliance with the EU standards whatsoever. So if this is the case in poultry meat, I am very sure it's the case in other products as well. One last point I'd like to make, chair, if you allow me, is when we look at science and how science has evolved and how Chinese science has evolved today in pretty much any scientific field, if you look at the amount of publications being published, you can see that about 50% or more are coming from China, which means a tremendous technological boost.
So, again, another argument, this is no longer a developing country. Thank you.
Bernd Lange
Thanks a lot. So Marie Sophie, round about four minutes for answering.
Marie-Sophie Dibling
Yes. Thank you for these questions. I think on first, on the solution that can be taken, It took ten years for the steel industry to get finally an instrument that may work. It is based on article 28 of the GATS. It seems to me that it's very WTO compatible.
Actually, any WTO member has the right to negotiate, to modify, or to withdraw tariff concessions. That's right. It's not because you do that that you are against the WHO. And I think that's very important. In my view, the EU must support WHO as a key source of stability for world trade, but you have to adapt your rules to the new market realities.
Otherwise, you will miss the train. And so in my view, there's still another WHO compatible instrument that you can take even if it's temporary that fights specifically against overcapacity from China, but also tomorrow from other countries. Of course, the big debate is the definition of overcapacity, but you can talk about oversupply and these types of elements. What counts here is really the, okay. How do you give BRIT right now to those who need it in Europe if you still want to have jobs and industries?
Then it brings me to the second point on TDI, trade defense instruments. I mean, don't get me wrong. I'm not saying that the TDR are not working at all. I'm saying that TDI and the trade defense instrument are not for addressing China's overcapacity. If you look at the, you know, the implementation and the goal of the trade defense instruments, it's to fight against individual unfair trade practices from a company.
That is not meant to address the Chinese five year program of a communist party. And that's where I think if we continue to think that TDI is the solution to overcapacity, that will not work because you would have, again, to lodge a thousand complaints to address the value chain right now. And so I think if you want to have TDI that is working again, you need to see how you can displace this part of China because I guess and maybe the DG trade could elaborate on this, but I would guess, at least on the table of a lawyer, you have 80 or 90% of your antidumping complaints are against China. Okay? If you remove that from the office of complaint, then TDI will work again correctly, and then you can continue improving it, having more efficiency.
But today, we're talking about overcapacity, and it's clear that TDI will not be the solution. I think there was, yeah, a question on where do we stand between political and industries in Europe. I think it's really, I mean, up to you to decide. I mean, if you still want to have jobs in the future in Europe, that's for sure. If you still want to have industry, this is the time right now to take actions because after that, it would be too late. And I, I'm pretty sure about this.
And I think if you want to work on something, I think that our standards are very important today. They need to be respected. What you have on your table every night, you have to ensure that it's good for your kids. And this is where you have to put a lot of effort in right now in Europe. I will stop here.
Thank you.
Thanks, Hart. And Bernard?
Speaker 25
Thank you. The way forward, I'd like to reiterate what I said about like-minded partnerships. The way forward is working with the Australians and the Canadians and making the most of Mercosur and with the Indians. All the other countries like minded to different degrees that share similar concerns and share similar questions, as a lot of China policy is outside direct links with China. I think a key element is getting real about the costs of this.
China is where it is today because it took the cost. And as the Chinese saying always goes, the Chinese leadership makes its people eat the bitterness that it thinks is necessary in order to achieve the autonomy and self-sufficiency that it wants. And of course, there's a different communication, political communication process in China and here. But at the end of the day, it's about the costs, for example, making sure that our critical infrastructure is safe and built by European companies or like-minded companies that we have the know-how to do that, that we do take the cost of having our own supplies of critical raw materials. Many of the rare earths were produced in Europe before.
Speaker 26
We were glad that China did it for us because China did it cheaper, and China took all the environmental damage from it. These are costs that we have to be real about. And I guess we're talking about a ten-year time frame here of getting real about it. And we don't have to solve everything at once, but I think it's really critical to have a lighthouse project and successes to see that we are moving in the right direction. And we are with a lot of instruments, and I think defensive instruments can buy us time that we desperately need, be it to make sure that our European automotive industry does make the transition to electric vehicles.
Finally, China was faster than us there and is ahead of us. We need to acknowledge that. But at the end of the day, it's also about being competitive and investing. I don't think shock therapy is going to work. Donald Trump worked tried that.
Bernhard Bartsch
It didn't work well for him. And I think it's a major win for China today that it could actually face down the trade war with the U. S. I don't think decoupling is a realistic goal. I don't think anyone is seriously asking for a complete decoupling from China.
But I think we need to be on a way where we become independent and where China and the U. S. For that matter, maybe has less pressure points, choke points, as they call it in China. Yes, there are many ways where we desperately need to cooperate. And just to make one point here, green tech, anything towards the green transition, China is a leader there too.
Speaker 26
And if we don't want to throw our green transition and carbon reduction goals under the bus, we absolutely need Chinese technology and cooperation there. I don't think there's any easy solution. All of these are costly solutions, but we have to get real about the fact that we need to make some very long-term decisions here, decisions that go well beyond one or two legislatures. But I think that's where the responsibility lies.
Bernd Lange
Yes. Thanks a lot. Thanks a lot to the experts from the two panels. And now, it's the duty of the commission to react and describe a little bit the strategy of the commission. And I'm happy that the deputy director general of DG Trade, Maria Martin Prod, is here with us.
Before giving her the floor, I want to congratulate her because she will be the new ambassador at the WTO starting on May 1. Mhmm. So good luck, and all the best to you. And I guess the next council meeting will be in May. So.
Maria Martin-Prat
But thanks for the good wishes. I'm gonna need them. And thanks for this extremely interesting hearing. And to each of the speakers, it was very rich, very interesting. It was very relaxing to be here, not having to think who's gonna ask what, what I have to reply.
The questions go somewhere else. This has been the easiest discussion on China for me so far. Now let me a little bit and quickly reflect on my thoughts from the point of view of the commission, of someone that's been doing with China policy from a trade perspective for many years. And what I think is very interesting today is that there is a very clear convergence, I think, at the political level, but also largely, within businesses and civil society as to the existence of the problem and the need to react to it quickly. Now the existence of the problem.
And I think I hope I'm not overinterpreting anyone. We are talking about a problem that we face with China that goes beyond a trade deficit. And I will argue as well that it goes beyond overcapacities. What we are facing is an economic model that, in combination with the size of the economy that takes that economic model, the second in the world, is not sustainable. It's not sustainable for the European Union.
It's not sustainable for many other countries around the world. We are not the only ones that are facing these problems. But, again, I think sometimes we have focused too much on the existence of subsidies that we will consider to be legal, which exist and are a problem, or to the existence of overcapacity that exist and have consequences. But if, basically, if an economy of that size adopts an export led model and it puts in place the type of ecosystem that if you go to China, you see today is extremely innovative, very rapid cycles in terms of innovation, a very well coordinated industrial policy with a massive support and direction from the state, huge competition that once you master in what it is a very big and rough market, makes you very, very competitive anywhere else. This is a reality.
And that is something that I think, obviously, we can go and discuss what is the definition of our capacity, and I agree that there's been a very important work done under the OECD. We can't discuss a number of reasons, but the reality is is hitting out. And that's the second thing. I think there is a real sense of urgency. I will, but obviously, you can define this in different ways.
I would say that the origin of the objective is to find a path to recalibrate our relation with China. But here, this is also important, and this has been a little bit missing in the discussion. You have to recalibrate, but we need to continue to engage. You do not disconnect from the second economy in the world, an economy as well with levels of innovation, which are extremely important for all of us. And reference has been made to green technologies, but we can make reference to many other sectors.
So how to respond to the identified problem and to the urgency is what we are all grappling with, and that also includes, obviously, the European Commission and the member states. We do tend to focus our discussions on tools. I know. We all like to have tools and to add tools. But by that, I do acknowledge, and there is reflection ongoing as to the need, for instance, to look into our trade defense instruments and see how we can enhance their efficiency.
And this is something that the commission has committed to do already in the economic security, communication and its work undergoing, and we are engaging with those that bring ideas to us to see what is it that should be done, can be done, what is what is realistic. So we do understand and are working and have and are deploying the importance of tools to ensure the level playing field within our market and in their markets to improve our resilience. And this is industrial policy, but there is another thing. I often hear, and I have heard that CR today, yeah, we need to use our internal market. And for that, we need to have an industrial policy.
Before that, let's go and do something we've been doing for the last 25 years. Let's complete the internal market. Let's make sure the internal market functions. So yes, we need to work via often tools that are not trade related, but we work very closely with other VGs to improve our resilience, our security, not only economic security. Our security is also very important.
And there are also initiatives taken there that are very important. But that also requires a strategy, and that is where the discussion really needs to happen. It's a strategy that needs to be prioritized. It needs to identify what are the sectors where we need to react, where we need to have space, where we need to maintain, but also requires engagement with China. You cannot have a China strategy without engaging China.
Engagement obviously needs to deliver results. It's not engagement for the sake of it, and far too often, that engagement seems to just not produce the results. What I will argue is that it should be possible for the European Union to put very clearly to China that we do have a responsibility to act, to protect our citizens, to protect our industrial base, and to protect our economies in exactly the same way that China does. So that is, in my view, a message that needs to be passed to China very clearly. That has been passed.
There is, for instance, a very good engagement between commissioner Chekhovich and the trade Chinese minister, mister Wang Wan Tao. We are very clear in terms of the fact that we are at a turning point, that we are witnessing changes that are structural, that are very rapid, and that have consequences that are very serious, that we are determined to act to rebalance, to protect and to compete. We will act independently, but we are mindful of the fact that also, it will be important to be able to engage on these issues with China. What China needs to understand is that ultimately maintaining an open global trading system that has helped the country so much requires that it is a system that is fair, balanced, and sustainable. And I'm getting a bit worried about it.
I'm standing to sound like this part of the table over there.
It's always gonna happen.
Maria Martin-Prat
Sooner or later. But, voila, I think, again, there is far more of a convergence in terms of understanding the problem and the urgency. What we now need is to have a realistic strategy that includes as well an engagement with China.
That's true.
I was fast.
Bernd Lange
Really? Yeah. Thanks a lot, Maria, and good luck. And good luck to the European Union regarding the strategy as well. And, once again, thanks a lot to the experts here.
And let's stay in contact. I guess, really, clear voices from outside are really necessary and helpful for us. So, thanks a lot. All the best. One minute break.
Speaker 33
So this was not only one minute. It was 2 minutes. And we will continue now. Hello. Item So 11, amending regulation as regards the extension of its scope to downstream goods and anti-circumvention measure.
Bernd Lange
It's the famous issue. Yeah. So is not here so far. Another way. So now, what should we do?
Speaker 32
Be patient and wait one more minute. It's a bit tricky if we don't have the Savior Kwatu. Apparently, she's on the way, chair.
Bernd Lange
Good. So this famous CBEM is under revision, specifically the scope. And this is an opinion for the environment committee. And ours is Lynn Boylan, and I give her the floor for five minutes.
Lynn Boylan
Thank you, Chair, and apologies for the delay. You run on time, but, unfortunately, the envy committee doesn't. So I'm running from one room to another. But, look, I'm proud to present the interdraft opinion on the CBOM regulation extending its scope to downstream goods and introducing new anti circumvention measures. And I wanna broadly welcome the commission's proposal, and I believe that practical amendments to CBAM can improve its effectiveness as a climate instrument.
As members of the International Trade Committee, we all want to see that CBAM provides certainty for operators and does work to deliver a more sustainable trade model. So in the draft opinion I'm presenting today, and I look forward to hearing colleagues' feedback, is I've tried to address the elements where I feel either the commission proposal is problematic or where I feel it's missing crucial elements. So I'll first address, I think, the problematic part, which is the commission's proposal in the new article 27 a, which proposes to give the commission sweeping powers to exempt certain products in response to short-term events. I don't believe that this is evidence-based. I think it creates a needless uncertainty for operators and our trade partners.
And I am very sensitive to, I suppose, sectors who are impacted by the current oil and gas crisis, but I think that there are alternative methods that the commission could bring forward that would bring very targeted measures for the individual sectors as opposed to trying to do it through this instrument here. I think it is also, by giving that power to the commission, would also make the EU susceptible to external pressure and coercive practices by third countries in our trade negotiations. I would also like to point out again that CBOM is still a new instrument. We're still at the stage of trying to identify where it can be improved before it becomes a fully-fledged instrument. And one of the key issues, I think, that has been identified that's particularly relevant to our committee is around the international acceptability of the instrument.
And a crucial element of that is the need for fairness in the operation of how CBAM works in developing countries. So I think this is a chance for us to build confidence in CBAM among our trade partners. And to do this, we need provisions which address specifically the positions of developing countries in order to deliver a more equitable and workable model. So this would reflect what the parliament's previous position was during the negotiations in the last mandate on this regulation and would help us to ensure that CBAM works as intended and puts to bed those arguments that we hear about it being a protectionist measure rather than a climate measure. So I think we have got an opportunity to get it right.
And if we don't, I think we're lining ourselves up for more years of contesting of this piece of instrument. So to address the issue, I am proposing the targeted measures. So in one of them is that the commission provides technical assistance to third countries, particularly lower middle income company countries and those least developed countries, to assist with the monitoring, the reporting and the verification and emissions accounting and the development of pricing policies. Secondly, I'm proposing several measures to better support low- and middle-income countries and least developed countries in order to adequately understand the global impact of CBAM on the economies of developing countries, their ability to comply with the regulation, and its contribution to industrial decarbonization and the development of climate policies in those countries. Additionally, LDCs could be exempted from financial obligations of the CBAM but remain subject to its reporting requirements in order to avoid circumvention.
And I think the commission should also consider simplified procedures to apply to SMEs in LMICs and LDCs. And thirdly, I think the sincerity of the CBAM as a genuine climate policy should be further demonstrated through the union's proactive and constructive engagement within international organizations and multilateral fora. So I think the union has an opportunity to show its commitment to multilateralism, and to use these fora to engage with partner countries on industrial decarbonization. So in order to increase its support for decarbonization in partner countries more broadly, I think, again, to go back to the European Parliament's original position on this regulation, I propose that the commission direct an amount equivalent to at least 25% of the CBAM revenues towards additional international climate finance. And I note that the recent proposal on the temporary decarbonization fund, and strongly believe that the equivalent level of political will is needed to identify funding sources for additional international climate finance.
And I will wrap up here, Chair. In addition, the commission could also promote technology transfer of low-emission technologies, including through adaptation of WTO rules and the promotion of partnerships between EU producers and those in developing countries. So I look forward to working with colleagues on the opinion and with the envy rapporteur to build a collective position, and hopefully to strengthen CBAM as a climate instrument, but also most crucially provide certainty for operators and our trading partners.
Jean-Marc
Thank you very much, chair. Thank you to our colleague Boylan. I'll start by stating something that I think is obvious, that the CBAM is an important instrument. And, the way the EPP sees it, is for what it should be, a mechanism to protect the climate, prevent carbon leakage, and ensure a level playing field for the European industry. And that is the core purpose, and that is the purpose that we must preserve throughout this process.
The climate agenda requires credible instruments, but credibility does not mean blind rigidity or unnecessary complexity. And it means mechanisms that work in practice. So if we want to protect the climate while also protecting the European industry, then we must ensure that the CBAM is workable for businesses, proportionate in its obligations, and compatible with the reality faced by those who produce, import, and comply. Simplification is not dismantling. Simplification is not weakening.
Simplification means preserving the purpose of the mechanism, making it more functional, and ensuring that bureaucracy does not end up weighing more heavily than the environmental objective itself. So that for us is the real challenge in this file. The commission itself frames this review precisely in that logic, strengthening the effectiveness of the CBAM by extending its scope to certain downstream products and tackling circumvention, while keeping proportionality and operational feasibility in view. And that is also why we have reservations about my colleague's rapporteur approach on a number of points. We understand the concern about the international acceptance of CBAM and the need for dialogue with third countries, but we should not turn this regulation into a vehicle for parallel agendas.
CBAM must not become an instrument for development policy nor a mechanism for year making, revenues or for external climate finance, nor a space for new lateral political conditionalities. We should also be cautious when proposals create more reports, more parallel structures, more accessory criteria, and more institutional rigidity, without a clear gain in effectiveness. At the same time, we do not agree that the answer to concerns about article 27a should simply be to remove any safeguard clause altogether. What is needed is to frame it better with the proper justification, time limits, and predictability, not to delete a potentially useful instrument. In fact, we should also consider the possibility of allowing the commission to add products to the list through delegated acts or implementing acts.
The EPP line is therefore very clear. We support the commission's central objective. We support the extension to certain products containing steel and aluminum. We support stronger anti-circumvention rules. We support improvements in the registry verification, data collection, electricity-related rules, and coordination with customs authorities, provided that all of these make the mechanism more functional rather than more burdensome.
We want a CBOM that is strong, but also that is simple and effective, focused on emissions, fair competition, and fair protection of the European industry. That is the line that we will defend in this fight. Thank you very much.
Speaker 37
Thanks a lot, Jean-Marc. Yes. Thank you, chair. I was speaking French. Thank.
Speaker 38
you. Just to start, I'd like to make clear that we, in the S and D, also very much support the CBAM system. And we feel that it's important that we do have an equivalent approach between the European Union producers and suppliers outside the EU. The mechanism, which has been in operation since 01/01/2026, has contributed to the reduction in emissions and has elicited a lot of debate internationally on climate change and climate policy. So that, by way of preparatory comment, over and above that, in terms of the proposals from the commission, we support the commission's methodology.
It has a targeted approach, which seeks to extend the mechanism to encompass a number of derivatives in the steel and aluminium industry. The objective is clear, but I think it is necessary to introduce the modifications that have been proposed. Embarrassing as it maybe is, because it hasn't been enforced for very long, but it is necessary to be a bit more evidence based. The current provisions could actually be circumvented. We need to make electricity imports more flexible, and there are other minor amendments too, which are submitted to the structure of the mechanism as it currently stands.
And I think that should help. Then the third point, the draft opinion from the NV Committee from Mohammed Chaim, I think we can support. He wants to delete article 27a. This would enable the temporary reduction of some removal of some items from the CBAM scheme. If unforeseeable circumstances emerged.
This would make it easier to have greater regulatory predictability, and it would also require justification for any kind of exemptions, which would be more acceptable politically. Then fifthly,
Speaker 38
In conjunction with Mohammed Cham's report for his committee, we feel that this is a method which has got to be managed carefully because we don't want to be taking precipitate measures which might jeopardize the market. There's a great deal of volatility, price volatility that is, across the market. And there's also a degree of variability in the impact on the environment. And therefore, it may be necessary to envisage flexibility and reserves in the payment of CBAM and carbon credit taxes. In terms of the opinion per se, it's a good text which has been drafted for us by Lynn Boylan.
I think it's important to say that we are open-minded in terms of additional provisions which need to be introduced to support, for example, developing countries, as the rapporteur has just said. There's also the question of accessibility and applicability of the legislation in countries which require technical assistance, at the very least. Now, of course, this is not a debate which will come to a conclusion at this point in the proceedings. But at some point, we are going to need to discuss how we will finance climate action internationally. So that really, in summary, is our position.
I think there will probably be further recycles or amendments proposed. We would certainly wish that when the CBAM mechanism is revised, which should be in 2027, we consider the expansion to encompass other sectors and also making the legislation somewhat more robust. That would be effective, I think, in terms of contributing towards fairer trade. Thank you.
Karin Carver
Yes. Thank you very much, Cher. As the shadow reporters for the ECR Group, I would like to start with a fundamental but very simple point. CBEM must remain what it was intended for, a tool to prevent carbon leakage and protect the European industry and jobs. From the draft opinion, I read that CBEM is kind of leaning slightly in a different way.
It is not a global climate aid tax with ever expanding mandate, and that is the problem for the whole opinion. We fully support the core intention of the commissions with this proposal to close possible loopholes and extend CBAM to selected downstream products where there is real evidence of carbon leakage risk. If higher carbon costs extension can help to keep production in Europe, which is essential and vital. But colleagues, this draft opinion goes far beyond that. It tries to rewrite the proposal aimed at closing the loopholes by existing it to downstream products as a broad external climate and development instrument.
It proposed to earmark at least 25% of CBAM revenues for additional international climate finance on top of existing commitments. I have to stress that. The opinion also introduced sweeping new differentiation between countries, with exemptions from financial obligations for least developed countries, special regimes for lower middle income countries, and very far reaching language on technology transfer and changes to WTO rules. Of course, disproportionate impact on poorer partners should be limited, and we can provide targeted technical assistance, especially on monitoring and reporting. But we cannot build permanent exemptions into CBAM that will serve as obvious circumvention routes.
On governance, we actually share one concern raised by the rapporteur, article 27a, the so-called emergency break, allowing the commission to remove goods from the CBAM scope by delegated act in response to serious and unforeseen circumstances. Used badly, this could turn CBAM into a political joystick, undermining predictability for EU businesses and for our trading partners. For ECR Group, the priorities in this file are clear. First, keep CBEM tightly focused on preventing carbon leakage, ensuring level playing field, including for downstream goods with full respect for WTO rules. Second, strengthen anti-circumvention rules so that honest operators are not undercut by those who try to play a game with shipment sizes or routing.
Third, resist attempts to convert CBAM revenues into a new external climate and development finance scheme. Last but not least, our industry's workers and citizens were told that CBAM would be about defending European production while raising global climate ambition, and we should keep that promise. Thank you.
Thank you, Karin.
Carwyn
Thank you, chair. Dear rapporteur, dear colleagues, in today's world, it's more important than ever to address climate change and carbon emissions with efficient tools like carbon pricing and stick to the polluter-pays principle. And CEBAM is, first of all, a climate tool. Let us remember that. What we are discussing today is not a technical amendment to an annex.
Speaker 44
It's a question of whether the carbon border adjustment mechanism actually works. The commission's own impact assessment is clear. Downstream carbon leakage is real. It is already happening, and it's always clear that an extension is inevitable. The CBOM was a landmark achievement of the last term, and it needs to be strengthened, not undermined.
Speaker 41
And from our perspective in Renew Europe, we support the core logic of the proposal, but we need to ensure predictability and ensure that the legislation works for our exporting industry. And I'm looking forward, on this, to work together with all of you on this important file, and we are happy and ready to engage to find a solid majority for a reasonable solution. And the climate and competitiveness case for this revision is strong. And let's work, let us make the political case in Inter equally strong. Thank you so much.
Thanks a lot. And, Katharina?
Katherina Reiche
Thank you, chair. And let me start by thanking Lynn, for presenting today and for the work already. We look forward to working together on this. On behalf of the Green ZFA Group, we do believe, of course, that CBAM has been one of the important cornerstones of the EU green deal, which has put a fair carbon price on carbon intensive goods imported into the EU. It's an essential structure to prevent carbon leakage and to level the playing field for low carbon products sold in the EU.
So we very much welcome that for this revision, INTA will have its opinion, on which we can particularly address the international dimensions of CBAM and the implication of the expansion to downstream products. And I'm very much supportive of the approach taken by the rapporteur to identify measures to help the least developed countries in low and middle-income countries with CBAM compliance. In particular, if we look at the fact that we're expanding the scope, it's essential that these countries can benefit from climate financing and technical assistance in developing their own carbon markets and greening their industrial outputs, and to build acceptance of CBAM as a climate instrument and not as protectionism, which it's not. This can very much be done. And we can take lessons from other times, for example, with the UDR.
We need constructive dialogue combined with technical assistance to make sure that this flies not just with us, but also with our partners. In our amendments, we'll be looking to questions of circumvention and abusive practices because we must be certain that there are firm mechanisms to prevent circumvention where an industrial product is exported from another country to benefit from lower embedded emission. On this topic, then I would have a quick question for the Commission. At the time in which the EU is, of course, negotiating many different free trade agreements and considering that this regulation will widen the scope of the CBAM, do you also sense that there's an increased risk that companies circumvent the rules by moving final assembly to countries which have lower emission intensity or which have perforation trade agreements with the EU? And for example, could we look at the example of China and Vietnam in circumvention?
Bernd Lange
Thanks a lot, Katharina. And now I switch to the commission. And it's Astrid van Meerlo, the head of unit DJ Taksut, for some comments and perhaps answers.
Astrid van Meerlo
Thank you very much, Chair. Thank you very much all for your comments on the proposal. I think I will start with recalling the objective of CBAM, and that has also been stressed by several of you, the importance of this instrument as an environmental measure in addressing the risk of carbon leakage. This is indeed the rationale for CBAM, and this is also the rationale that has been guiding this revision of the proposal. So the revision of the proposal has different sides to it.
Speaker 48
First, as was already mentioned, we have a proposal for an extension of the goods in the scope of CBAM to address the carbon leakage risk going downstream, a risk that was already anticipated and identified and where a need for action was our conclusion. We have done it in a targeted way based on clear criteria, a transparent methodology. Also, the need, and that comes to a point, a question that was made in the end: the importance, of course, of ensuring that there is no circumvention with the rule. It is clear that rules are as good as they are complied with. So we need to make sure that we have C band that is complied with.
Speaker 47
This, we are facing a novel instrument. So that is why in this new revision, we have introduced additional anti-circumvention rules because we have been learning from the two years of the transitional period, and we will, of course, keep on monitoring this over time. But again, we have now strengthened with the current proposal the rules against circumvention to address those risks and make sure again that the environmental integrity of the mechanism still happens and is maintained. I think another point I wanted to make is that, of course, we have CBAM as a legal proposal. We have also a lot of attention that is being paid to how CBAM is working, how CBAM is impacting other countries.
Astrid van Meerlo
I'm also hearing the point on least developed countries, developing countries. And as you know, parallel to a proposal, we have published the article 30 report, which was already learning from what has happened over the last two years. And moving forward, of course, we will keep the same logic of monitoring what is happening and making sure that we draw the lessons. It has also been planned that in this next report in two years' time, we would also be looking at possible extension to other sectors, to other downstream goods as was raised in the conversation. So we really keep this mindset of looking at what the impacts are, what are the need for revisiting the mechanism to make sure that it keeps on delivering on its objectives.
Speaker 46
The question of the simplicity, simplification, and administrative burden has also been raised. I would also take the opportunity here to remind that we have, with thanks to the also the quick agreements by the core legislators, simplified CBAM in 2025 with a drastic reduction in the number of importers in scope.
So I would say.
Astrid van Meerlo
Simplification and proportionality have also guided the way the proposal has been designed. And then, maybe a last point, on coming back to third countries. Again, we have to see CBAM, what it delivers, what it implies. There is also, of course, a wider ecosystem, and technical assistance is, for example, something that is clearly something in which a commission is also very much engaged and of attention. And then finally, on article 27 a, I take note that it was raised by several delegations.
So here, I can only recall the objectives of the provision for a temporary suspension in case of serious and unforeseen circumstances. With this, I think I can close my intervention, but thanks again for all the feedback and comments that we have heard today, and we'll be happy to further engage. Thanks.
Lynn Boylan
No. I'll just keep a very brief share just to thank colleagues for their feedback, and I do believe we can come to agreement with some colleagues, and I look forward to the negotiations.
Bernd Lange
Thanks a lot. And the deadline for amendment is April 21, 12:00, high noon. April 21, 12:00. Thanks a lot. Next item 12 is the economic security.
So remember, we want to have an economic security doctrine. It's in the mission letter of Mr. Sevkovich. At the moment, it's a little unclear what this is. And to give an impact of what it could be, we have a rapporteur on that, and I give him the floor, mister Soido, that we can really have a view on your report. And, yeah, I guess I will give you the floor for 4 minutes,
Soido
Thank you very much, chairman. First of all, I'd like to express my warmest thanks and appreciation to all these shadows, because we've had an excellent atmosphere in working through it together throughout this whole process. A number of amendments were submitted, and the vast majority actually enriched the report. They were complementary to the text that we started with. So, my warmest thanks to them.
Obviously, in this legislature, we have a lot of reports which actually touch upon very fundamental aspects of the real world in which we live. I think we've all realized that we've been far too ingenuous in Europe for a long time. And I think this report flags that up. It shows that there has been a huge structural transformation in the economy, which has caught us napping. And we've been actually very slow off the mark to introduce the changes we should have introduced.
We're facing a system now where a number of global actors are actually knowingly and wittingly using economic dependence as a way of exerting political pressure. They're weaponizing dependency. This has happened since the illegal invasion of Ukraine, when, for example, energy dependency was weaponized. It simply was used as a basis for all-out blackmail. So we've seen that.
We've seen that with critical raw materials where the same has happened, where a handful of third countries control the resources which are required by the rest of the world for industrial energy transition and for our industry and defense. We see the huge challenges that the overcapacity of certain economies is generating. We can see excess capacity, which is subsidized by the state, which flies in the face of any market rationale and logic, is generating a 400,000,000 deficit in trade with the European Union. So that's the backdrop to this report. So what it looks at is the context.
It is not just a list of measures. It's intended to be a roadmap to achieve greater economic security. I'm just going to extrapolate one or two of the fundamental points, which I think are so central to the agenda going forward. So, first of all, prevention. Now here, we need to look at diversification.
We need to try to move away from a single supplier in strategic sectors, because this is not just a theoretical risk, it is a very real vulnerability. And we've experienced this in real life. And therefore, this is a report which supports trade agreements with, for example, Australia and India or other partners in the Indo-Pacific. It is very important that we diversify trade partners, suppliers, transport routes, and energy sources. It's not a political choice any longer.
It is an economic necessity for us to be able to act independently. So the second pillar is to mitigate these structural dependencies, which have evolved over time. And we're asking for more rigorous and harmonized implementation of investment scrutiny legislation. There are a lot of very critical items and areas of investment where we've got to be much more vigilant. So we want to have a proper European framework for analyzing FDI, so that we can identify any areas where there might be an endangerment of the European economy.
We've also got to
Soido
Use the whole system of FTI in a much more intelligent.
endangerment way. And where European money is involved, we've got to have clear conditions as to procurement, as to conclusion of contracts, and as to jurisdictions, because we must not do anything which undermines our industrial capacity nor which generates new dependencies. The third pillar, which is perhaps the most urgent of the whole lot from a political perspective, is the implementation of our trade defense instruments. Europe does actually already have in its panoply the necessary instruments. The problem is that we're not using them promptly enough, nor in a robust or firm enough way.
We take far too long to do investigations. The tariffs which we do impose are lower than those of our trading partners. And therefore, there is no real comparability. We're much more restrictive on our approach to ourselves than we need to be, or than we need to be in terms of international regulation. So we really do need to be more open and supportive of our industry.
We therefore think that an annual report giving a transparent and comprehensive analysis of our position in terms of economic security would be really useful. We need to have this so that we have a benchmark for the commission, and for others to see how we're progressing. And we need to have the requisite resources, human resources, and others to ensure that DG Trade can actually work in such a way as to meet these gigantic challenges which lie ahead. So the inter committee is determined not just to be sounding on the sidelines, but much rather to be a fully engaged participant in shaping better coordination and planning measures that the commission is recommending in its proposals, which date back to December. So we're determined to be in the forefront here, working with the commission, working with partners so that we can build on what is a good basis, but we just need to up our game, accelerate here, and make sure that we translate these recommendations and ideas into real action on the ground so that we can see a genuine improvement in our economic security.
As I said, I've been delighted to work with the vast number of political groups who've been very constructive and helpful in their suggestions, recommendations, and, I'd like to thank you. Thank you.
Bernd Lange
Now the shadow rapporteur, Kathleen Van Bremt, for one and a half minutes.
Kathleen Van Brempt
Thank you very much, chair, and big thanks to the rapporteur. As he mentioned, it was a very good and constructive negotiation, and we're very much aligned. And, I think that is important. It's, of course, an initiative report. It's not legislative, but it will sure also be the basis for the discussions that we will have on the China strategy.
As we mentioned in our hearing just now, there's a lot of issues that touch upon the same issue. But for instance, also when we will start to work on the legislative file of the Industrial Accelerator Act, because that's, of course, an integral part of that. So it's important to have this report and to have so much alignment between the pro-European groups. Let me just outline a few important issues that I think are key. First of all, economic security starts with a transition.
And I think what's happening in The Middle East today and in Iran, and the effect on, again, our energy prices and our access to energy, yes, as long as we are dependent on fossil fuel, we remain extremely vulnerable, and that is not a good thing for our economic security. Just signing trade agreements is not enough. We need targeted trade and investment partnerships. So it's not just about tariffs and quotas. It's about de-risking resilient supply chains and so on.
We need stronger tools. We had a good discussion in the China hearing today on all these tools. We have a lot of tools. The question is, are they efficient enough? And, especially, do we use them?
And I'm very happy that in this report, you will see a very strong paragraph on the use, for instance, of anticoercion. And finally, Europe must be able to act when it is under pressure. Economic coercion is not theoretically as Greenland has shown us. It is existing, and we need to act, and we need to act together. That was one of the things in the hearing as well.
We need to act as one, and that is still also very important for our economic security. I leave it to this. Thank you.
Nicolas Bay
you. Economic security determines what we can actually produce. Today, we're not talking about the choice between an open or closed economy. We're talking about moving away from the strategic dependencies and resolving these problems that we have and our dependence on China. We largely endorse the diagnosis given by the rapporteur.
The diversification and the establishment of reliable partnerships are absolutely vital. We've got to avoid excessive bureaucracy and burdens on industry, but there is a lot more than that. We need to re-industrialize. We need to have greater security in the supply protection of our strategic sectors. And I think that means we've got to be farsighted in technology transfer, and so forth.
We are clear about all that. We're also clear that subsidiarity is really important for economic security. We can't demand high standards of our own industry if they are undermined by imports, produce lower-quality goods. This undermines economic security and simply penalizes our industry. Therefore, we need to ensure that we have a constructive and realistic approach throughout.
I'd like to thank the rapporteur for his economic security strategy, because I think it is realistic and will give us the tools that we need. Thank you.
Anna Cavazzini
That was a very fast, unexpected order. Okay. Thank you so much. First of all, also to the rapporteur for the excellent cooperation, and all the other shadow rapporteurs. I think it is really a good report, a good compromise in times where we need a stronger and united Europe to react to all the geopolitical global challenges, and, of course, to make our European Union economically more secure.
And a lot of colleagues have also mentioned that, of course, there is not one silver bullet. There are different tools we need to develop, but we also need to use, and we also need to basically Europeanize. So for me, very important that we agreed on language on using, but also strengthening our existing trade defense instruments, but also clearly saying that we cannot stop there. We also have to reform them to make them more effective. We have to create also new tools, for example, to deal with overcapacity or with economic security problems.
We also have to strengthen the internal market, boost the transition, strengthen demand for low-carbon European goods. We have to become less dependent on fossil fuels and continue the shift to a green transition. We have to go full circular in order to also be less dependent and vulnerable to imports. We have to diversify our supply chains, and we have to also be making sure that our economy is functioning and resilient and sustainable. So I think probably for a lot of groups, there are different aspects in the report that are important, but I want to mention the ones that I find critical.
And, yeah, hopefully, we will have a very strong and united parliament behind this report. Thank you so much.
Thanks a lot. And I'll give.
Barry. Oh, yeah. Yeah.
Barry Cowen
Thank you, chair. Global trade is under pressure. It has been alluded to, and inevitably, Europe is feeling it. The United States is becoming more protectionist, and China and Russia are acting with clear economic intent. An ongoing instability, whether it relates to Ukraine or the Middle East or elsewhere, is putting real strain on global supply chains.
We cannot control that environment. We can control our position within it. And there's been progress, and trade agreements are moving at a greater pace and focus, thankfully. And as a member of both this committee and that of the Agricultural Committees, I've worked to support that through direct engagement with the likes of Commissioner Sefkovich and advancing partnerships through trade missions, including a recent one that has been alluded to in relation to India where a deal was recently concluded. But our core weakness, in my view, is not external, it's internal.
And we have lost competitiveness and are struggling to regain it. High energy costs, shaped by past dependencies, have fed through into every part of our economy. And for those producing goods we trade, our businesses, our farmers, and manufacturers, that has real consequences. Economic security starts with production. And if we cannot produce competitively, we cannot trade effectively.
And right now, delays in planning and permitting are holding back investment and slowing delivery of critical infrastructure, including energy, and that has to change. And where projects are of strategic importance, the common good must take precedence. So if we want to trade to strengthen our economic security, then we need to fix the fundamentals at home so that European producers can compete, and Europe can engage globally from a position of strength rather than one of weakness, which many feel is the case presently.
Bernd Lange
Thanks a lot. And I now give the floor to the commission, Mr. Peter Ritskovsky, head of unit from DG Trade.
Peter Berkowitz
Thank you very much. Very much welcome, this discussion and the attention being paid to the needs to advance economic security, interest of the union. The commission very much shares the analysis and the diagnosis that has been presented in the draft report and in the debate that is ongoing. I wanted to come back to maybe a few issues that have been raised in the draft report and mentioned today. First of all, on governance and information.
Speaker 58
Very much welcome the calls that are being made with regards to closer cooperation between the institutions, to advance economic security. Questions? Note as well the calls for more specific analysis that needs to underpin our work and our economic security efforts in this regard. Monitoring is very important, as well as ongoing risk assessment. A lot of this is underway, and more needs to be done. Secondly, dependencies and EU strengths.
I very much welcome the references to identifying not just EU dependencies, but also the strengths that we have because we do have them, and the necessity to be ready to use that as leverage whenever the need arises. Thirdly, on de-risking. There were several mentions of the need to move away from single suppliers. I think that's very much a shared objective. We need to move in this direction.
But I also want to emphasize the importance of ensuring that when we do take de-risking measures, we don't create new dependencies as we go along. It's very important in the context of the energy transition, and we're seeing some of that already developing, and we need to take action. Fourth, the dynamic between internal measures and external cooperation. I note very much the statements being made about not interpreting economic security as economic isolation. Indeed, it's very important that we are strengthening our internal competitiveness on the one hand, strengthening the single market while also engaging with third countries, seeking cooperation with them because we do have shared interest and shared derisking interest and trade agreements.
Various types of trade agreements will play a very important role in that. Final point, enforcement and the use of tools. I would like to note that we do have a lot of tools at our disposal. The whole objective of the communication from December 2025 was to emphasize how these tools can be used better individually, better to the maximum extent to advance economic security, but also how to use them together in a better way to advance economic security interest. This coordination between the use of our tools is extremely important, and it's particularly relevant in the short term as we need to act fast, and we need to fill the gap between a time when we develop new tools that might be needed to address the issues that we're facing.
So thank you very much.
Thank.
Soido
you. I'd like to thank all colleagues and contributors to the debate for the valuable points that they've made. I'm sure that as we progress with our dialogue to finalize this report, many of their points will be taken on board. Thank you very much, everyone.
Bernd Lange
We will do it. Thanks a lot to the rapporteur. Next item is the item 13, the ongoing tri-logs. We had two of them on Monday. The first is on steel, the second on the US.
And Karen gives us a hint about steel.
Carwyn
Yes. Thank you. As you know, the new steel regulation replaces the provisional safeguard measures that have been in place since 2018 and were set to expire on the 13th June this year. So this file was very urgent. The sector needed legal and economic certainty, and the parliament delivered.
And late on Monday night, almost midnight, we managed to find an agreement with the council and the commission, which incorporates many of the parliament's priorities, such as strengthened rules on melting pour crucial for fighting circumvention, for example, a joint statement with the three institutions reaffirming the strong commitment to a swift phase out of all Russian steel products by September 2028, strengthened language considering the current trading status for Ukraine, much faster review of the product scoop also with a separate focus on certain products, which we already know are under heavy pressure, and this was a very important point for us. So, that should be noted specifically. And, more well, strong criteria for the commission to assess the need for carryover of quotas from one quarter to another. Strong focus on decarbonization, common security and defense policy, trading distorting effects of third countries, as well as the respect of ILO conventions and multilateral environmental agreements. I can say that the negotiations was not easy, but I think we can be comfortable.
We can be proud of what we have achieved. So I would like to really thank you all, the shadows, the staff, the advisers, everyone involved. And I know you are still working on that on technical level with the last things. And I know it's not you are it has not been much sleep for you the latest days, and we appreciate your hard work so much. It wouldn't been possible without your effort.
Bernd Lange
Yeah. Thanks a lot, Carwyn. And I guess it's really a big success for the Parliament. And thanks a lot to you and the work you did, and I guess you can really be proud of this really good result. Second trialogue was also on Monday, the first trialogue regarding the two US files regarding the obligations from the Scotland deal.
And it was more or less an exchange of positions between the council and us and perhaps the commission. So sometimes that's a feeling that I had to negotiate with the commission, in a quite controversial way, and not with the council. But, nevertheless, we will see the next trial will be on May 6. Good. Last item for today, point 14.
It is a minor issue. It's an exchange of letters regarding the Brexit with Pakistan, and the aperture is not here. It's a tariff-quota issue. And I have one shadow aperture here, Bogdan, and I give him the floor. I will speak Polish.
Thank you.
Bogdan Rzońca
Well, it's quite a simple matter, so I won't take too much time of the commission. It is about adjusting the tariff quotas of the EU after Brexit. Pakistan accepted our suggestions, so we have an agreement that provides continuity of agreements on the WTO. The methodology was followed, so the effect was positive. I want to thank the rapporteur for a very clear explanatory statement.
Thank you.
Bernd Lange
Thanks a lot. So I got now the information that the operator will come perhaps in two minutes, but nobody knows. In between, I give the floor to the commission, Miss Agata Galinska, head of unit from DG Agred, to give us a short, hello, again, comment.
Agata Galinska
Hello. Good afternoon. Well, almost, good evening. It's a pleasure to be here again. Thank you very much for giving me the floor, and it's great to hear the reconfirmation of the recommendation for consent of the parliament for conclusion of this agreement.
So indeed, today, we're here with an agreement, in relation to the split of the TRQ commitments, after the UK's withdrawal from the European Union, and today, it's an agreement with Pakistan. It's another good news in an exercise which has been quite a complicated one and a long one. An agreement with Pakistan is another step towards conclusion of article 28, and you may remember I mentioned the last time we're actually coming close to concluding this exercise. As for previous cases, this negotiation was about splitting the quantitative commitments that we have, in TRQs on in the schedule of the European Union in the WTO. So this was not about new market access commitments.
This was not about increasing market access for Pakistan or any other of the partners with whom we negotiated. For Pakistan, they held consultation rights in this negotiation for six TRQs. They all concerned rice. Pakistan was in agreement with the quantities that were proposed for the split between the EU and the UK. So compared to the other negotiations, the substance of this negotiation with this partner was relatively smooth, but then procedural obstacles appeared along the way, and this is why it has taken us a few years to get to the stage of signing, and now moving towards conclusion of the agreement with Pakistan.
But I'd like to say that the agreement that you saw in 2001 is precisely the same one on the table today. So there was no disagreement on the substance, and the numbers are still the same. With Pakistan, we come to 18 partners with whom we have concluded negotiations out of 22. So that's good news for us. And I hope I'll be back again, with more good news on the remaining partners with whom we're still negotiating.
And here, I can say that with Canada and with Uruguay, we're making progress towards reaching agreements, hopefully, soon. Of course, as a larger, broader comment, let me say that this is a it's important that this exercise has been concluded, with Pakistan according to the rules of the WTO. This is also a recognition of commitment of the EU and our partners to the rules, and rules-based trade. And I in this case, this is also something that Pakistan themselves have underlined in the communication around the signing of this agreement. I stop here.
I'm available in case there are any further questions. Thank you.
Bernd Lange
Perfect. Thanks a lot for that. And, it's, I guess, really a good result that we have an understanding with Pakistan. And I remember that sometimes we had some conflict with Pakistan on several items. So it's a good solution that we have now tier queues on that.
And the deadline, if there are some, on the consent is April 20. But I guess at the moment, there's a big consensus here that we should let this pass. Good. Twenty April at high noon, 12:00. Good.
This is the conclusion of the inter meeting of today, and I would like to remind the political groups that we will have 41 members normally in the committee and 41 substitutes. So please talk to your members and the substitute. The meeting of tomorrow is starting at 09:00. Thanks a lot.
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