Committee on International Trade Ordinary meeting

14 July 2026

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INTA European Parliament

Follow its sittings
04:05 - 06:27
Speaker 3
So, good morning, dear colleagues, good morning, ladies and gentlemen.  We continue with our last inter-meeting before the summer break, and we start with point nine of our agenda: state of play of the EU-China trade and investment relation.  And I'm happy that Denis Redonnet is here with us, the Deputy Director-General of DG Trade and, of course, important Chief Trade Enforcement Officer.  Welcome, Denis.  China is really in the middle, in the heart of the political discussion of the last weeks and months. 

You remember the Commission made an orientation debate on that, then the Council discussed a little bit the relation, and then the Chinese Trade Minister Wang was in town.  And there was, interesting, an agreement on having a new format of exchange of views, the so-called, I guess, TIC or something like that, to have a discussion about the trade imbalances, the IPR, the WTO, and there should be some really important point agreed, taking into account our concerns about the situation at the end of October.  And this is quite interesting because in October we will go to China as well.  So we will have a delegation to Beijing and Shanghai and the surroundings, so that we have direct contact to the Chinese authorities, discussing perhaps also this question, how we can have a more corporate approach and not such an approach based on unfair trading measures.  But it's not my duty to make a speech here. 

It's your duty, Denis, and I give immediately the floor to you for roundabout 10 to 15 minutes. 
06:27 - 11:25
Speaker 1
Thank you very much, Chairman.  Apologize in advance, I have a little cold, so I hope voice is going to hold.  Since this is a state of play point, I will try to do that.  So I will try to maybe first elaborate a bit on our assessment of the challenges that we see in the trade and investment relationship with China at the moment, and then perhaps give you an update indeed on some of the more policy aspects, notably the nature of the renewed engagement that Commissioner Šefčovič has initiated with the launch of the trade and investment consultation with his counterpart last week, and perhaps sketch out how we see that engagement indeed in the coming months, so that can perhaps inform your preparations and your thinking ahead of the delegation visit to Beijing in October. 

So maybe I should start with the obvious, which is the economic importance of the relationship, which is the reason why there is a fair amount of political attention to the state of the relationship at the moment.  In the trading goods and services space, China is our third largest trading partner, and critically in the other direction, of course, the EU remains an essential market for China for all kinds of reasons which I will further elaborate on.  But at its core, the EU-China trade relationship is increasingly and very significantly unbalanced.  And that unbalanced nature of the relationship is also in turn entrenching dependencies, undermining in some cases our competitiveness in some of the strategic sectors, and exposing us also in some cases to economic security risks or risks to the resilience of the EU's economic fabric, which are being addressed.  Last year in 2023, the overall trade deficit with China increased by 15% in value, so reaching 360 billion euros. 

It's the second highest on record, as you know, and in volume terms, deficit surged by some 30%.  So if you take the longer period since 2015, our trade deficit with China has more than doubled in value and increased roughly fivefold in volume.  At the same time, during an equivalent period, or at least in that zone of a small decade, when the Chinese economy of course expanded significantly, some 40%, our exports to China have declined in volume terms, again fairly significantly, around 30%.  And the assessment is that there's nothing cyclical in this.  There is some cyclicality, of course, in the business cycle across both economies, but we also see this as being the result of more structural factors, notably China's state-driven economic model, which prioritizes production over consumption, as a result generates overcapacity and also in practice and in several sectors restricts market access for, in this case, foreign firms and foreign exports. 

China accounts today for 37% of global manufacturing, but only 13% of global consumption.  So there's a chronic surplus of goods that are flooding global markets, not just the EU market, but beyond the EU.  The industrial rise of course of China is very impressive.  It's been enabled by many different things, an economic model which combines industrial policy at scale, rapid innovation cycles, also fierce competition inside the market itself, and in some cases also between provinces, because there is a decentralized element to this.  We've seen chronic producer price deflation, and I think some numbers have come out over the last few days confirming in the most recent period this trend. 
11:25 - 15:24
Speaker 2
A depreciation and in all likelihood an undervaluation of the currency, although I will not give indications of what we believe that is, because that falls outside the responsibilities of the trade part of the Commission.  And as you know, and has been now increasingly documented, including by international organizations, the phenomenon of subsidization in the industrial sectors, so a distortion to the cost of capital, which is much greater than in other economies.  I refer here, for example, to the numbers that the OECD has now been able to put together in the Magic database.  So in total, the growth model in China has become structurally dependent on the expansion of exports.  And if we look ahead, the outlook is also concerning because by 2030, it is expected that this share of global manufacturing, which stands at about 37% today, is likely to grow to 40, perhaps 45%. 

So it's a very significant increase in what is becoming a form of industrial dominance.  And that, for the time being, seems unlikely to change because there are no signs of any macroeconomic adjustment in China and no sign that the structural characteristics that I was referring to are fundamentally changing.  The observation of the objectives of the 15th five-year plan, which was adopted in March, seem to confirm this trajectory and for us is a guide for how we are looking at prospects for the future.  And these industrial policies in particular have got a distorting effect with respect to the Chinese economy, but it's also distorting increasingly because of size global competition.  So in a way, we have come to the view that the Chinese economy today presents to us, but to many parts of the world, a global macro-industrial challenge. 

And in the last few months, we've seen also that the effects of this, which is the rapid rise of a number of dependencies through trade because of this industrial dominance, can lead to situations where these dependencies can be weaponized.  In addition, we are also seeing out of the Chinese regulatory machine a number of newly adopted regulations on industrial and supply chains, on regulations that relate to the countering of extraterritorial jurisdiction by foreign states, so sort of a blocking statute type frameworks, and more recently a new regulatory approach to outward direct investment by China.  All this increasingly looking like a form of securitization of civilian industrial trade and value chains, which is something that China itself says is of concern to them about what other jurisdictions are doing. 

15:24 - 28:28

Denis Redonnet

So that is a trend that is concerning because it might also ultimately place globally integrated economic operators, including those that have a strong foothold in the EU, in a situation increasingly of conflict of jurisdiction where they will find it increasingly difficult to operate both in Europe and in China and therefore leading to a form of fragmentation which we think is unjustified. Now it is against this backdrop that as you indicated, Chair, both sides have launched the trade and investment consultations following the meeting in Brussels between Minister Wang Wentao and Commissioner Šefčovič on the 29th of June. It's a new and renewed framework for addressing at core this imbalance in the bilateral trade relationship for the EU side. The objective is very clear. The trade and investment consultation will consist in a ministerial level engagement allowing actually in-depth personal exchanges between the Commissioner and the Chinese Commerce Minister in frank and non-scripted manner.

And that will take place at regular intervals and prepared through meetings notably at in China the vice-ministerial level. And the operational core of this focuses on four specific workstreams. The first one being this question of trade and investment balancing. The second one concerning the question of export controls in the form of our enhanced export control dialogue EU-China that we reinvigorated and actually expanded last year in 2025 as a result of China's expansion of its export control regime, notably in April of last year where you will recall that China decided to put under its export control authorities a vast universe of upstream minerals and materials, notably rare earth elements, which led in 2025 to tension in civilian industrial value chains. And to address this we decided at that time to engage further in the area of export controls.

And that will remain a significant part of the trade and investment consultation process. And in addition to this, two other workstreams will operate under this framework. One on intellectual property rights, which has been a long-standing systemic challenge together with the question of the distortion of capital in the Chinese economy for us in the relationship. And a strand of discussion on the reform of the WTO because we are of course two big members and custodians of the WTO system. We have in the past actually taken initiative bilaterally to shore up the WTO, notably through the establishment of the MPIA, which China is a founding participant.

And as we push forward ideas for reforming the WTO, we will use this bilateral track to engage in depth the Chinese authorities on certainly our ideas and potentially ideas that they will bring forward in the WTO reform context.

So these meetings on the 29th of June were quite constructive or very pragmatic actually on all these issues and essentially enabled the EU side Commissioner Sefcovic to make clear that for us this question of balancing the trade relationship is the central focus of the discussion. That means that this trade balancing workstream must address both sides of that challenge. So on one hand the huge surge of Chinese exports towards the EU in a range of areas and this by the way is evidenced by the import surveillance data that we have put in place since last year. We're coming up and we will be putting forward publicly refreshed new numbers which identify the areas where we see significant increase in imports across some of these industrial sectors. And at the same time the dialogue will also look at the need to expand opportunities for European exports to China which is another element of the rebalancing whether it is through in some cases possible tariff reductions, removal of a whole host of non-tariff barriers which have been the subject of discussion between our two sides for quite some time in a number of sectors whether it is pharmaceuticals, whether it's medical devices, whether it is agro-food and perhaps in some cases looking at direct purchase commitments in particular where trade is taking place via government procurement or state or state trading.

As I said another big area of work because it remains an area of potential concern is the issue of China's export controls on those rare earth and critical minerals. Now the export control dialogue that we have been maintaining since enhanced since the middle of last year has enabled to stabilize the situation in the sense that we are using the dialogue to push the Chinese authorities to issue licenses when there are pressing needs for those authorizations to take place because if not they would threaten the functioning of a number of civilian industrial supply chains where we have end users on the EU side. That has enabled a certain stabilization of the situation. We have not had hard production stoppages linked to insufficient authorization of exports in this area by the Chinese authorities but of course that problem remains because those materials remain under under the legal authorities of dual-use export controls in China. I will probably come back to this in the in the in the following point in more detail.

So that level of uncertainty remains and the dialogue here can be a tool to reduce to some extent the level of uncertainty that has been created by this expansion of of controls. When it comes to IP, intellectual property, there we are continuing to push for a number of things which we believe need to happen in the Chinese on the Chinese side.

There are some legislative gaps still in the IP area that need to be addressed. There is an issue about strengthening enforcement of IP protection and the question of ensuring equal treatment of right holders in the context of improving judicial transparency. I would just also say before finishing that this dialogue is underpinned by a system of data exchange so that we have the basis to have an evidence-based discussion with China about the extent of the unbalance in trade at the moment. So we have established as well in the context of the trade investment consultation a joint monitoring mechanism which will actually start operating and which will meet before the end of this month again to be able to confront our data with Chinese data in terms of making clear where we see abnormal trade flows and specifically import surges into the EU. It's very likely that the the trade investment consultation will lead to a further ministerial engagement, ministerial meeting by Commissioner Šefčovič who intends to go to Beijing probably in the early part of October to take stock of the results of that engagement between now and then, probably preceding that with contacts at his level with Minister Wang Wentao already in early September.

So that is really the the idea and the scope and the way in which we see the next few months with respect to the engagement process. But I should maybe just say three things that this this engagement pillar is only one basket of the overall policy stance that impacts the bilateral relationship with China. The other one is of course that in certain cases and in the next few months we will continue to deploy where necessary and where legitimate both structural and contingent trade protection measures. Structural in the sense of the use of our anti-dumping and anti-subsidy authorities and there you know and we report to you on an annual basis about the extent to which these instruments are used and I'm happy to to to reply to any questions that your members might have in terms of how we see the efficacy of the instrument, how we see the deployment of the structural trade defense instruments. It may be that we are also in a situation because of the import surges where contingency trade protection type tools like safeguards also become legitimate and necessary on a case-by-case basis.

And then finally there are two other and this and as you know the the deployment of our trade defense tools indeed tend to concern mostly Chinese imports. Not only but a very large part of the anti-dumping cases that are being initiated and where measures are being imposed concern imports from China. Beyond China there are of course horizontal policy responses that are not you know related specifically to China but that will have an impact on the relationship. The whole effort with respect to reducing structural dependencies which is not a China problem only but given the level of dominance that China is reaching will concern also some of our sourcing dependencies on on China is another pillar of the overall response as is of course the internal response which is how to continue to put focus on the conditions for the internal competitiveness of the EU industrial base which needs to run faster in the face of extreme competition either

So these are not China-specific strands of policy, but they do have and they will continue to have a very big impact on the overall bilateral issues and be elements to address the challenges that I have tried to set up in the first part of the intervention. Thank you.

28:28 - 28:38

Bernd Lange

Thanks a lot. And now we have the standing rapporteur for three minutes and then the shadow rapporteurs for two minutes. Pascal.

28:38 - 31:53

Pascal Canfin

Thank you, chair, and allow me to quickly switch to French because I think Mr. Redonnet has quite a good knowledge, extensive knowledge in French as well, and because also we are on Bastille Day, so I think it's our duty to talk French. Merci beaucoup pour vos propos. Je voudrais rebondir sur ce que vous avez dit à plusieurs reprises dans votre intervention. Je pense qu'on a tous les chiffres que vous avez partagés en tête. Et à plusieurs reprises vous l'avez dit et c'est très important de le souligner, nous sommes, c'est vrai, dépendants de certains produits chinois sur certaines chaînes de valeur stratégiques, vous avez mentionné les matériaux critiques par exemple.

Mais les Chinois ont un modèle de croissance qui repose très fortement sur les exportations et nous sommes probablement pour eux aujourd'hui le meilleur partenaire commercial potentiel. Nous sommes à la fois unis, un marché unique, et nous sommes parmi les zones les plus développées économiquement au monde. Donc nous sommes irremplaçables. Nous sommes irremplaçables, ça veut dire qu'il existe une dépendance chinoise à l'Europe. Et donc il faut poser les termes non pas de manière dégradée en quelque sorte sans nier la réalité sur certaines chaînes de valeur, mais en rappelant que les Chinois ont un modèle de croissance qui implique d'avoir accès à notre marché unique de manière significative.

Donc je ne vais pas revenir sur les différents outils que vous avez évoqués, il y aura peut-être d'autres questions là-dessus. Je voudrais vous poser une question sur les conditions politiques sur lesquelles vous travaillez dans l'hypothèse où le dialogue seul ne suffirait pas. Évidemment nous espérons tous que ce dialogue portera ses fruits, personne ne souhaite une escalade. Néanmoins, néanmoins, pour que ce dialogue porte ses fruits, je pense qu'il est nécessaire de préparer un éventuel rapport de force. Et donc merci de nous indiquer davantage ce que vous faites avec les États membres pour préparer d'éventuelles actions, comment vous comptez vous prendre, vous y prendre pour créer le consensus entre nous qui nous permet de dépasser des intérêts qui peuvent apparaître parfois contradictoires et ça ne sert là aussi à rien de le nier.

Ils sont contradictoires entre pays, ils sont contradictoires entre entreprises de la même chaîne de valeur et ils sont contradictoires entre les différentes chaînes de valeur. Mais ces contradictions, si on veut agir ensemble, il faut réussir à les dépasser. Sinon nous serons toujours faibles et divisés. Donc quelle est votre stratégie à l'intérieur de l'Union européenne pour parvenir à cela ? Monsieur le commissaire Šefčovič a mentionné je crois par exemple un fonds de solidarité, c'est une idée, est-ce que vous en avez d'autres, quel dialogue avez-vous engagé avec les capitales ?

Et dernière question, au-delà de l'Union européenne, d'autres pays sont exactement dans la même situation que nous. Quel type de dialogue avez-vous avec d'autres pays de façon à ce que l'on puisse agir ensemble, ce qui nous permettrait de créer un rapport de force avec la Chine encore plus important.

31:54 - 32:04

Bernd Lange

Merci beaucoup. And now the shadow rapporteurs for two minutes. Mr. Zoido is the first.

32:04 - 35:18

Juan Ignacio Zoido Álvarez

Voy a hablar en español. Monsieur Redonnet, muchas gracias por su comparecencia en la mañana hoy aquí y creo que es importante que yo le hable hoy en español por dos motivos. Uno, porque es mi lengua materna y en segundo lugar porque hoy bien Francia o España seremos uno de los dos equipos que representará a la Unión Europea en la final del campeonato del mundo. Que gane el mejor. Monsieur Redonnet, en primer lugar darle las gracias por la abundante información que nos ha suministrado en la mañana de hoy y como muy bien ha dicho el pasado 29 de junio la Comisión puso en marcha un nuevo mecanismo de diálogo sobre comercio e inversión en China.

Uno de los posibles compromisos que Pekín puso sobre la mesa es que sus hogares compren más productos europeos. Pero cuando miramos el decimoquinto plan quinquenal recientemente publicado no parece que sean esas las intenciones que tiene China. No le puedo preguntar sobre todo lo que ha dicho, pero este tema sí me parece muy importante. Creo que el plan quinquenal no busca reequilibrar la economía china hacia el consumo, sino por el contrario pretende intensificar la producción industrial, la exportación y la autosuficiencia económica. Por eso me pregunto hasta qué punto creen ustedes que los objetivos de diálogo que acabamos de comenzar son realmente compatibles con los objetivos de este plan quinquenal.

Más allá de esto me gustaría preguntarle a la Comisión sobre algunos aspectos de esta negociación. Según hemos podido saber la Comisión ya ha compartido con China un listado de obstáculos para el acceso al mercado. ¿Podría indicarnos qué barrera concreta han podido eliminar o al menos para qué sectores de una manera particular? En tercer lugar, sobre la contratación pública en este caso, ¿creen que puede haber avances significativos en paralelo a la revisión del reglamento de contratación pública que esperamos para septiembre? Otro de los pilares en los que se basa la negociación, termino presidente, es el control a la exportación de tierras raras y materias primas críticas a la que usted también se ha referido.

Más allá de establecer plazos máximos de tramitación, ¿van a exigirse garantías de que las empresas europeas no tendrán que entregar información comercial o tecnológica sensible? Muchas gracias.

35:18 - 35:19

Gracias, Juan Ignacio.

35:19 - 38:13

Kathleen Van Brempt

Thank you very much. I'll do it in English, although we beaten the United States in the World Cup, so.

Right on. Thank you very much for being here. Thank you very much, and I'm also having a cold, so my voice is a little low. For the analysis, although, Mr. Redonnet, it's an analysis that is very well known for many years now. It just gotten worse, and the problems are getting more intense, especially, of course, for Europe.

As an example, we have to look at the critical raw materials and our dependencies on that. And you know there's been a report of the Court of Auditors looking at our Critical Raw Materials Act and said it didn't help. Maybe the time isn't sufficient, but it is important. We have policies in place and they don't work, and I would like you to comment on that. The second point is related to the strategy that you've outlined, and the first one in the dialogue.

And of course, we all, I think, support the fact that there is a dialogue. Let that be crystal clear. We don't want another trade war, we want a dialogue, but we want results. And in that case, just looking at imbalances in terms of the money value or the amount of trade is not good enough. You really have to look to the sectors and the products that we want to uphold.

Let me give you a stupid example, but it would not be good if we could increase our export in diesel cars and get more EV cars in return from China, because at the end we will lose. What I want to say is we have to look to the critical infrastructure and to the critical industries, of course steel and all of that, but also the new technologies, robotics, quantum technologies, things like that. Is that in the strategy? Because just cars is not good enough. Is that in the strategy?

My second question is on the atmosphere around the table. Do they understand that we are crossing a red line and that this is so unacceptable for us that either we have a good dialogue and things can be solved, or else we are obliged to really protect our industries? Is that an understanding? Is there some sort of, well, mutual approach to that? And my last point, I made that to Mr. Šefčovič in the past as well, when it comes to our trade defense, it needs to be faster, quicker.

And it doesn't, we don't see the results over there. Instead of taking a year, two years to get them in place, in a few months we need to tackle these imbalances. Thank you very much.

38:13 - 40:51

Hermann Tertsch

Thanks a lot. Hermann Tertsch.

Muchas gracias. Yo voy a hablar en español también. Viendo lo que nos cuentan, lo que nos cuenta usted, gracias por esta detallada información, como nos la dio también Šefčovič, pero lo que estamos viendo es, los datos son claros. China nos está arrollando con sus exportaciones. China nos está arrollando con sus limitaciones a nosotros.

China nos está al fin y al cabo engañando, como está acostumbrada a engañarnos, y nosotros nos hemos acostumbrado a que China nos engañe. Y seguimos todo el tiempo igual. Y desde luego nuestros pasos que se dan, esas tenues amenazas no les sirven de nada porque la experiencia les ha demostrado que salvo algún gesto hace un par de años, salvo algún gesto no ha sucedido nunca nada y que nuestras tensiones con Estados Unidos nos han distraído de lo que es nuestro mayor enemigo en cuanto a estabilidad y en cuanto a la amenaza comercial que es China.

de estabilidad y en cuanto a la amenaza comercial que es que es China en ese sentido creo que no estamos estamos en una situación de debilidad en estamos en una situación de debilidad manifiesta que va a continuar y que estas medidas que se está diciendo que se puede amenazar realmente deberían empezar a perfilarse y a plantearse ya porque no hay en China ninguna intención que se vea ningunos visos de intención de corregir de corregir su situación posiblemente ellos piensen que es que tampoco están tampoco se lo pueden permitir eso cabe también dentro del cálculo de la dirección china pero eso nos da a nosotros nos es debiera ser indiferente nosotros estamos en una situación que empieza a peligrar gravemente nuestra seguridad y es nuestra seguridad y es también la división dentro de Europa donde algunos países y me voy a referir concretamente en España tiene una agenda con China absolutamente propia que está creando fisuras y que es una agenda en gran parte clandestina también y que nos lleva a otros a otros planteamientos de peligros y amenazas que se están produciendo que también habría que estudiar muy a fondo en ese sentido creo que estamos en una pésima situación muchas gracias

40:51 - 40:56

Bernd Lange

Gracias Dominik Tarczyński

40:56 - 43:37

Dominik Tarczyński

Bardzo dziękuję panie przewodniczący Bardzo dziękuję wszyscy tutaj mówimy o skutkach głównie finansowych dla Unii Europejskiej to jest naturalne wszyscy wiemy i znamy dane wiemy że nasz deficyt wynosi miliard euro dziennie ten deficyt to jest ponad 360 miliardów rocznie i oczywiście na tym musimy się skupić bo to jest bardzo ważne ale chciałbym państwu przypomnieć szczególnie tym którzy pracowali w tej komisji w poprzedniej kadencji że oprócz tych elementów ekonomicznych politycznych w wielu naszych umowach handlowych zawarte były wymogi moralne przypomnę naszą umowę z Indonezją chodziło o handel drewnem tam domagaliśmy się aby nasza strona partnerska zapewniła tak zwane podstawowe prawa człowieka ze szczególnym uwzględnieniem praw kobiet do aborcji wtedy wydawało mi się to absurdalne co handel ma do naszego światopoglądu ideologii a jednak takie zapisy się znalazły dlatego mam pytanie czy w tym przypadku naszych negocjacji z Chinami upomnimy się o prawa człowieka szczególnie o szczególnie o chrześcijan tak zwany kościół podziemny który jest prześladowany od lat uważam że jeżeli w innych umowach ten element moralny wartości chrześcijańskie wartości europejskie był zawierany to czy upomnimy się o prawa człowieka chrześcijan w Chinach uważam że powinniśmy być stali w podejściu do każdej umowy handlowej i nie traktować ich wyrywkowo skoro takie standardy przyjęliśmy to uważam że ta umowa także powinna odzwierciedlać to co robiliśmy w innych umowach handlowych w poprzedniej kadencji bardzo bym prosił o odpowiedź niestety będę musiał wyjść bo moje obowiązki mnie do tego zmuszają ale chciałbym żeby ta odpowiedź znalazła się w naszych minutes z tego posiedzenia będę bardzo wdzięczny no i oczywiście mam pytanie kiedy odbędzie się nasza misja do Chin czy to będzie jedna misja dziękuję

43:37 - 45:38

Markéta Gregorová

Next Lord Mackeda

Thank you very much and good morning, Mr. Redonnet. I of course do understand that being in a public hearing, certain things are always difficult to say when talking about international partners, but of course also international competitors. But you know, the Chinese never shied away from being very public about their, let's say, opinions. Me myself as rapporteur for Cyber Security Act, we have received quite a long letter full of threats and statements such as "China always honors its words with deeds". So that's why I want to ask publicly how exactly are we going to honor our words with deeds?

Because in this room today and in other rooms other days when talking about China, we do have very strong words and I'm very glad that we are realizing what a problem we have. But we also have certain instruments. We don't need a new proposal, we don't need anything new. We do have the anti-coercion instrument. We also have the international procurement instrument and foreign subsidies regulation.

And I know you've mentioned to a certain degree the anti-coercion instrument, but you know, I still want to dig deeper and know whether we are prepared to use it. Because we are in unprecedented situation and this is exactly what it was designed for. I have been here last term when it was being designed and we all know why it started and that it was partially because of Chinese actions towards one member state and now it's Chinese actions towards all of us. So isn't it time to start honoring our words with deeds? Thank you.

45:39 - 47:33

Martin Schirdewan

Ja, danke Bernd und vielen Dank Herr Redonnet für die Einführung. Ich glaube, dass es erstmal gut ist, dass wir zumindest alle eine gemeinsame Analyse teilen, dass es ein wirkliches Problem gibt in den Handelsbeziehungen, dass das Handelsbilanzdefizit mittlerweile sorgenbereitend ist und dass wir dagegen natürlich vorgehen müssen. Glaube auch, dass Ihre Analyse, dass es eine strategische Abhängigkeit der Europäischen Union an dieser Stelle völlig zutreffend ist in zwei Bereichen vor allem, was moderne Technologien und andererseits aber auch kritische Rohstoffe und seltene Erden betrifft. Da wäre die erste Frage logischerweise, wenn denn diese Abhängigkeiten, und das haben Sie so formuliert, als Waffe benutzt werden in den Handelsbeziehungen mit der EU, wie man sich aus diesen Abhängigkeiten herausentwickelt. Also was wir europäischerseits machen, um die technologische Abhängigkeit zu reduzieren und andererseits wie die Diversifizierung gerade bei kritischen Rohstoffen aussieht.

Das sind nämlich zwei politische Fehler, die wir selbst begangen haben in der Vergangenheit und deshalb diese Abhängigkeit überhaupt erst entstehen konnte. Und der zweite Punkt ist, Sie haben gesagt, das chinesische Wachstumsmodell völlig richtigerweise basiert auf Exporten. Das war ja lange Zeit auch zumindest ein europäisches Erfolgsmodell für wirtschaftliche Entwicklung gepaart mit Freihandel hat es dazu geführt, dass andere meinten, das ist eine smarte Idee, dass das kopiert wird an dieser Stelle. Ist es jetzt nicht an der Zeit zu einer anderen Strategie zu finden, die vor allem auf die Stärkung der regelbasierten Handelsordnung wieder abzielt und gleichzeitig aber auch darüber nachdenkt, wie strategische Sektoren in der EU geschützt werden können. Und das heißt für mich Energie, der Digitalbereich, auch die Gesundheitsversorgung, solche Dinge.

Wie ist denn da Ihre Analyse seitens der Kommission, weil ich glaube, da müssen wir noch massiv nachlegen, weil das exportbasierte Wirtschafts- und Handelsmodell auch seitens der Europäer natürlich an ihr Ende gelangt zu sein scheint, wenn man sich ansieht, wie die chinesische Seite das kopiert hat und die europäische Wirtschaft unter Druck setzt. Vielen Dank.

47:33 - 47:45

Bernd Lange

Danke schön. Now we have eight requests for the floor from further members. So, one minute each, and Anna is the first.

47:45 - 49:06

Anna Cavazzini

Yeah, thank you so much. As one of the co-rapporteurs of the AIA, I think the AIA is super crucial in order to react to China and some of the global shifts in geopolitics, but of course it's more like a mid-term instrument and I'm deeply convinced that we also need more short-term instruments. Of course, like my colleague Marchetta has said, we have some laws in place that could be used, but I'm also deeply convinced that there might not be enough. And of course we followed very closely what was being discussed at the last ECO, and having a more targeted, you know, overcapacity instrument, however you might call it, I think is of big need, at least in some sectors. And I would be really glad if you could elaborate a little bit more detailed on your plans.

And I just want to stress what also my colleague Kathleen Van Brempt said. I had the feeling, you know, everyone, everything what we are describing is absolutely true. Some people describe it as a second China shock, but I would also say if you quote some of the people, for example, the boss of the EU Chambers of Commerce in Beijing, he is saying we sleepwalked into the situation because everything was clear. China wrote it even down in several five-years plans, so it was black on white what is the strategy, and the European Union just basically sleepwalked in the situation. And probably you can also elaborate a little bit of on why that happened.

49:06 - 50:43

Jessika van Leeuwen

Jessica.

Thank you, Chair. Mr. Redonnet, thank you very much. I heard you say that our export to China declined by 30% over the last decade. And that is disturbing, but I think that instead of pointing a finger to all the unfair things that China does, should we not be looking at what we did ourselves to allow China to jump in a production gap that the EU created? This is the trade committee, but without industry there is nothing to trade.

The drop in export coincides with the start of the EU Green Deal that chased large manufacturing out of the EU. We ourselves created this dependency on China by not supporting our own industry. To think China is depending on the EU is naive, to say the least. Same thing is happening now in agriculture. So my question today is about the tariffs on pork.

Spain, the Netherlands, Denmark and France are large exporters of pork, of parts that we do not consume here. On September 10 last year, I called for an emergency debate on this topic, but we're stuck with tariffs of 4.9 to 19.8%. So agriculture is again paying an important price here. So my question to you is what is the Commission doing to keep the pressure on China, because these tariffs now are permanent for five years? And how do we accept as a European Union that some companies receive 4.9% while others get 19.8%?

That is unacceptable. Thank you.

50:43 - 51:40

Céline Imart

Céline.

Merci Président, merci Monsieur Redonnet pour cette présentation. Si je reconnais bien au Parlement et à la Commission beaucoup de naïveté, il semble que sur ce sujet un consensus a été trouvé, qui est celui du combat commercial contre la Chine. Avec les contre-mesures, vous l'avez rappelé, prises dans le cadre de l'IPI, les enquêtes anti-dumping sur le maïs, la lysine, les véhicules électriques et depuis la semaine dernière sur le canard, mesures sur la surcapacité de l'acier et prochaine mise en place de l'IAA qui est imparfait sauf sur l'adversaire qu'il désigne. Donc merci pour tout ce que vous faites et tout ce que vous nous avez rapporté. Mais malgré cette énergie, je tiens à rappeler que les mesures coercitives chinoises contre le cognac et le porc ne sont toujours pas réglées.

C'est que quand on a vingt-sept États membres qui s'accordent sur le concept de de-risking, donc de réduire les risques avec la Chine, mais ne s'entendent pas sur la solution à adopter face à la Chine qui avance ses pions sans aucun complexe, est-ce que nous aurons en tant qu'Union avec les vingt-sept de manière coordonnée le courage politique d'aller jusqu'au bout de notre stratégie ou est-ce qu'on va se contenter de gestes techniques par dossier alors que Pékin joue un jeu d'ensemble ? Donc est-ce que la Commission a réellement une stratégie chinoise ou seulement une addition de ripostes ? Merci.

Stabilisées pour l'un, durcies pour l'autre, mais réglées en aucun cas pour aucun des deux. Alors ma question sera moins technique que politique.

52:05 - 53:33

Anna Bryłka

Dziękuję, panie przewodniczący. Relacje są niezrównoważone, to jest bardzo delikatne określenie. My jako Unia mamy ogromny deficyt handlowy z Chinami, trzysta sześćdziesiąt miliardów euro i dotyczy to każdego państwa członkowskiego. Europejski przemysł jest po prostu pożerany przez chiński. Chińczycy produkują naprawdę wszystko, od prostych towarów przez procesory, auta elektryczne, fotowoltaikę i tak dalej.

I jeśli wszystko będzie wyglądało tak jak dotychczas, to w ciągu pięciu, sześciu lat, i to według prognoz Międzynarodowego Funduszu Walutowego, Chiny zwiększą udział w globalnym przemyśle do poziomu czterdziestu pięciu procent. I oczywiście my możemy mówić o konkurencji, tylko jak ma Unia Europejska konkurować z nierynkowym modelem gospodarczym Chin ? I tutaj trzeba się przebudzić, bo po prostu przegramy, bo po prostu przegramy. I moje krótkie pytania do Komisji. To znaczy więcej szczegółów w sprawie zrównoważenia stosunków handlowych, to znaczy jakie konkretne ograniczenia taryfowe, pozataryfowe.

Druga sprawa, w jaki sposób Unia chce zwiększyć eksport do Chin i jaki jest sygnał ze strony chińskiej, aby zmniejszyć ograniczenia dostępu do rynku. I trzecia sprawa, w jaki sposób Unia udzieli pomocy przedsiębiorcom, którzy są narażeni na odwetowe działania ze strony Chin. Dziękuję.

53:33 - 54:16

Jörgen Warborn

I first of all I wonder about WTO issues. You mentioned that that is one of the four pillars. So what will you discuss when it comes to WTO with China ? What are your expectations that we can achieve together with China when it comes to WTO issues ? And then on the trade and investment consultation, how will the Parliament here be involved ?

We had the experience of TTC and now with India of course as well. So it's important that the Parliament understands where we're heading. That would be my questions. Thank you.

54:16 - 55:24

Iuliu Winkler

Thank you very much, Chair, and thank you, Mr Redonnet, for being here and debating with us. Dialogue is very, very important. The two partners, China is big, complicated and coordinated. The European Union is also big, powerful, complicated, but less coordinated. Any strategy is as valuable as you can line up the stakeholders.

Our stakeholders of course are first of all the Member States, but this is not the aspect I want to inquire upon, but our other very important stakeholder is industry. And of course EUCCC is giving those wonderful white books and so on, but what I hear is that behind the words, many of the European companies are ready to leave as the conditions will change. So they have more short or mid-term plans. And if conditions would become tough, they are ready to give up the operation rather than restructure their operations in China. So is this true or am I mistaken ?

55:24 - 55:27

Speaker 16

This would be my question. Thank you.

55:27 - 57:03

Angelika Niebler

Vielen Dank, ich würde auch gerne in meiner Muttersprache sprechen. Sie haben davon gesprochen, Herr Redonnet, dass es ja diese Ungleichheiten, Imbalances gibt, da würde mich noch mal ganz basic-mäßig interessieren, anerkennen das die Chinesen denn? Also sagt die chinesische Seite auch, es gibt Ungleichheiten, darüber müssen wir reden, wir schauen, wie wir die Balance hier etwas besser hinkriegen? Das ist meine erste Frage, also ob wir, wo der Ausgangsbasis einfach ist, auch mit Blick auf die weiteren Verhandlungen. Und dann zweitens noch mal ganz grundsätzlich zu unserer Strategie, so ganz klar ist sie mir noch nicht.

Ich meine, wenn man den 15. Fünfjahresplan jetzt anschaut, der spricht ja eine klare Sprache. Also da ist keine, meiner bisschen, der Binnenmarkt wird schon ein bisschen mehr bedient auch oder der interne Markt in China, aber es ist keine grundsätzliche Veränderung zu sehen. Dann wenn man das Wirtschaftsmodell anschaut, es ist einfach ein anderes Wirtschaftsmodell, das werden wir Europäer wahrscheinlich nicht ändern können. IPR-Rechte, also wenn es, ich sag mal, wenn es DNA ist zu kopieren und das akzeptiert ist überall, dann glaube ich, haben wir da einen schweren Stand auch in Sachen IPR-Rechte da unsere Position zu beziehen. Also meine Frage, auch noch mal Kollegen haben es ja angesprochen, müssen wir uns nicht mehr auf uns konzentrieren und schauen, was wir hier machen können?

Wir machen das ja mit Binnenmarkt stärken, mit Handelsverträge schließen, Handelsinstrumente nachschärfen und und und. Aber so ganz, wenn Sie zur generellen strategischen Linie noch mal was sagen könnten, wäre ich dankbar. Und ich muss auch ein bisschen früher gehen, weil ich im anderen Ausschuss um 10:00 Uhr abstimmen muss. Danke.

57:03 - 58:24

Enikő Győri

Thank you, Mr. Chairman. Mr. Redonnet, thank you for your presentation. Well, actually EU-China relations for me it's like my reading of the Draghi report. I agree with the diagnosis, but I'm full of doubts concerning the recipe. Because this relationship is like an a hopeless marriage.

Because there is a mutual dependence, partners need each other, but they are in permanent fight with very different tactics, legal and very far from being legal means, but cannot live with each other. So I would say that be aware of this and be very cautious with any punitive measure because it can counterfire. But I agree something has to be done, whether it's punishing or other means, leave it with you. One concrete question concerning the Central and Eastern European countries which heavily invested in electric car industry, which attracted a lot of Chinese investment for especially in the battery production. How will you guarantees that these countries which invested in competitiveness and in greening heavily will not suffer the potential consequences of potential economic further potential economic security measures to be taken by the European Union?

Thank you.

58:24 - 01:13:55

Denis Redonnet

I must apologize for being undisciplined at the beginning as well. You have not managed to discipline me completely yet, but I'm sure you'll get there. Okay. Well, let me try to address especially the questions to the extent that I can do that and there's a lot there. But the challenge is very significant as has been pointed out by many interventions.

There are structural forces at play in China going in a certain direction of policy and course correcting the effects, the externalities of that is a very, very big challenge and a very big ask. So there is no question that the exercise that is being undertaken as part of these renewed consultations in and of itself will not solve the fundamental challenges to the relationship.

Alors je vais peut-être justement là-dessus basculer en français et répondre à certains des points qui ont été évoqués. Donc effectivement le dialogue seul ne suffit pas, vous avez tout à fait raison et je dirais à différents niveaux. D'abord, il y a des éléments de réponse structurelle à apporter par l'Union européenne pour l'Union européenne dans ses politiques internes. C'est probablement sur les sujets les plus structurels de moyen terme la seule solution. La réduction de certaines des dépendances ne se fera pas par le dialogue, elle se fera par des politiques structurelles qui impliquent d'ailleurs un certain degré d'intervention de l'État dans l'économie qui permettront de dérisquer en diversifiant.

C'est le seul moyen de véritablement dérisquer compte tenu du niveau de dépendance qui a été atteint dans certains domaines. La question des terres rares et des matières premières critiques est très très claire. Il y a des niveaux de dépendance sur le sourcing vis-à-vis de la Chine pour tout ce qui est transformé à hauteur de 90 %. À partir de ce type de niveau de dépendance, le marché ne fonctionne plus comme un marché. Et donc l'objectif sera inévitablement de réduire ces dépendances à des niveaux plus raisonnables, probablement autour de 50 %, ce qui permet à partir de là d'avoir des mécanismes de marché qui sont réétablis et qui permettent d'insulariser la production face à la domination par les prix que peut exercer l'acteur principal.

Il y a aussi, vous avez raison, un besoin de préparer une réponse commune, notamment pour ce qui est de la nécessité d'imposer inévitablement à court terme maintenant un degré de protection supplémentaire sur le marché intérieur face aux importations et face au saut qu'on voit d'augmentation de ces importations. Ça demande de la solidarité parce que d'abord ça demande d'avoir une vision industrielle commune, c'est-à-dire qu'est-ce qu'on veut préserver et pourquoi dans la base industrielle européenne. Et puis les instruments sont là. Nous avons des instruments de défense commerciale, je vais peut-être y venir un peu plus en détail, qui ont des limites mais qui fonctionnent relativement bien sur lesquels les mécanismes de décision sont là mais qui ne remplacent pas la solidarité et l'unité entre les États membres. Lorsqu'on parle par exemple d'utiliser un instrument comme la sauvegarde, qui est différente dans sa nature de l'instrument de défense commerciale structurelle face à des distorsions comme l'antidumping ou l'antisubvention, nos mécanismes de décision prévoient que la proposition de la Commission doit recevoir le soutien d'une majorité des États membres, pas d'une majorité à l'envers, d'une majorité simple en faveur de la mesure.

Ça exige donc dans une situation où on serait amené à défendre la production industrielle, les producteurs communautaires qui inévitablement vont être localisés dans peut-être deux trois États membres, un certain degré de solidarité d'une majorité d'États membres qui vraisemblablement dans beaucoup de domaines n'auront que des intérêts utilisateurs et pas des intérêts producteurs. Donc il y a un élément de solidarité nécessaire et donc il faut qu'il y ait pour que cette solidarité s'exerce non pas simplement l'utilisation d'instruments qui permettent de créer de la solidarité à travers le mécanisme de décision mais quand même une compréhension commune du problème à l'origine.

Et évidemment, le rééquilibrage structurel de ce qu'on voit aujourd'hui ne va pas se faire d'ici au mois d'octobre. La question c'est de savoir si d'ici au mois d'octobre on peut commencer à voir dans certains secteurs le début d'un rééquilibrage, notamment d'une modération des exportations, puisque le problème principal aujourd'hui c'est cet énorme push sur les exportations dans les secteurs industriels, notamment dans des secteurs industriels sur lesquels on n'avait pas vu ce type d'acquisition des parts de marché sur le marché européen jusqu'ici. Je pense notamment aux secteurs qui ont traditionnellement été des secteurs où l'Union européenne et ses opérateurs économiques étaient très concurrentiels, y compris sur les marchés mondiaux. Je pense à tout ce qui relève du chapitre 84, 85, la machine-outil, les industries électriques et électroniques, tout ce qui est le cœur de la base industrielle européenne. Là on voit maintenant, code par code, des sauts, des sursauts d'importation avec un effet volume et un effet prix qui nécessite un ajustement.

La question va être de savoir si on peut commencer à voir côté chinois des éléments de modération des exportations. Mais de toute façon, probablement, ça va s'accompagner en parallèle avec des éléments de protection unilatérale côté européen puisque les deux vont devoir marcher en parallèle. Et vous avez évoqué la nécessité évidemment de ne pas penser ce problème seulement dans l'Union européenne pour l'Union européenne, mais aussi à travers les partenariats puisque nous ne sommes pas les seuls à faire face à ce problème macro-industriel puisque la Chine génère des surplus sur tout avec tout le monde. Ce qui est d'ailleurs est le problème. Pour ça, la question des partenariats est très importante parce que dans des perspectives de diversification, évidemment l'alignement des politiques permet probablement de réduire le coût de la diversification.

Le vrai problème c'est le coût sur le downstream des secteurs économiques européens de la diversification qu'il faut faire de toute façon pour réduire les dépendances. Et ça, ça a forcément un coût. Et donc le travail avec les partenaires permet a priori de réduire le coût de la diversification. But you know, to come back, switching back to English, when I mentioned this, it is correct that what we're seeing in terms of direction of policy from China, notably our interpretation of how we understand the five-year plan, indeed suggests to us that this rebalancing is going to be a big ask, is going to be very difficult because it requires a course correction on some of the fundamental economic policy settings in China itself. I was asked about the list of market access barriers that we're trying to tackle when it comes to EU exports to China.

exports to to China so to say here that we are engaged in specific discussions about specific barriers at a sectoral level and that concerns the a number of agri-food sectors including by the way the question of what we consider are illegitimate anti-dumping or anti-subsidy measures in certain agri-food sectors notably pork but also brandy and dairy products even if the definitive duties that China has imposed on our exporters have been reduced compared to the provisional levels they are still constituting an obstacle to trade which in our view should be part of the overall discussions about what's happening in these agri-food sectors but it also concerns a number of technical issues NTB type issues in the pharma sectors medical devices sectors and cosmetics and in addition to those sectoral specific NTB type barriers that we are discussing in detail with the Chinese authorities with MOFCOM we also have other more horizontal regulatory type obstacles to market access notably when it comes to the overall policies in procurement on the Chinese side as well as the question of data flows which are also the subject of discussions because these can be impediments to both European operators that are invested in China or that are exporting out of the out of the EU. On the question of the fact that diversification for the time being is insufficient you said does not work I think the the critical test the litmus test on this if you look at those dependencies in goods which relate to China is probably in the CRM the critical raw material space. There are other pockets of significant dependencies downstream on some of the green tech sectors on active pharmaceutical ingredients for example for generics but if you take the the CRM space diversification is very difficult to achieve even though some policy settings are in place notably with the resource EU action plan because it's very difficult to break the dependency at those levels of dependencies and releasing also insulating an additional level of demand outside of China requires various forms of government intervention on the supply side i.e. support to the supply side and also on the demand side offtake agreements aggregation of demand possible contract for difference type approaches there's a universe of interventions that have to work in sync in order to arrive at a situation where a number of additional projects that are not yet on stream will be releasing supply that will reduce the dependency from as I said 90% to something like 50% through a basically a portfolio of industrial projects at different levels of the supply chain that would achieve that diversification. It is correct that it is not yet there and will require probably more government intervention in order to recreate the conditions for those investments to ultimately bear fruit. In the meantime we are doing our best to make sure that the supply chains which are relying too much on some of these imports from China are simply not disrupted by an excessively constraining use of export authorizations out of China.

And very concretely, we discuss with the Chinese authorities actual authorizations of individual license applications when we see that, based on our contacts with stakeholders, these are likely to lead to disruptions. I think there is an understanding. Maybe I will finish with a couple of points. There's an understanding. You asked, you know, is this dialogue based on...?

We saw on the 29th of August, and this is what enabled Commissioner Šefčovič to actually agree a statement jointly with Minister Wang Wentao as a result of the discussions. We had not actually agreed anything in terms of joint statements with China since 2019. So that is a signal to me that there is a certain degree of understanding about what we're looking for. Is it going to be easy? No.

But there is a certain degree of understanding. In the meantime, we will not accept threats of retaliation, and we should be extremely mindful of that. You raised this when it comes to unilateral regulatory measures such as the CSA review, for example. The same applies to the IAA, etc. If there are divergences of views, we believe that they should be adjudicated in the proper way, but not be the subject of retaliatory threats.

Somebody said we sleepwalked. So I think the whole purpose of the engagement, as well as the other measures, is at least to avoid sleepwalking at two levels. One, not sleepwalking into excessive dependencies anymore. But two, on the other side, not sleepwalking into an unnecessary trade war with China. And it's going to be a combination of these two things, or navigating between these two extremes, that this engagement is about.

Perhaps I could bilaterally address some of the specific issues that have been raised, including on specific sectors. I'm happy to also give an update to Mrs. Imar on some of the specific anti-dumping cases that we have, perhaps not possible now.

01:13:55 - 01:14:24

Bernd Lange

Thanks a lot, Denis. But let me come back to one question of Jörgen. So you know we have this new framework agreement between the Commission and the European Parliament where even not this traditional trade agreements should be in a close dialogue with the European Parliament. So how is the Parliament involved in the TIC?

01:14:24 - 01:15:55

Denis Redonnet

Well, look, I mean, you exercise democratic scrutiny over all of the trade arrangement agreements, engagement that we do. So I think Commissioner Šefčovič, I know, I mean, he's very keen himself to come and engage and report to you if and when those consultations happen at ministerial level. I would expect that after the October moment of verification of what this is delivering, he will, one way or the other, report to the committee. I'm at the vice-ministerial level. I have been tasked by him to lead those discussions with my counterpart, Vice-Minister Ling Ji.

I'm happy to come and report on this as often and as necessary as possible, already in September again, if you so wish, to give you an update of what has been discussed over the next weeks and months, because those discussions, by the way, will continue in the coming weeks. I am planning to have a stocktaking in the middle of August with my counterpart at vice-ministerial level, and perhaps, depending on the advancement of the discussions, go again to Beijing at the beginning of September. So before that or after that, I am available to you and the committee as often as you feel is useful.

01:15:55 - 01:15:57

Bernd Lange

Thanks a lot. I'm sure that we'll take this offer.

01:15:58 - 01:16:36

Jörgen Warborn

Yes very shortly and one message on that to the Commission because and I'm glad that you are mentioning our role as a Parliament to scrutinize the Commission in this but it's not easy when you have the feeling that you don't get the information. And that's what I felt when we did the TTC so in this case I would say it's even more important. So please make sure that we find a way to work properly when it comes to these kind of arrangements because I think they are very important and I think they can solve a lot of issues and and imbalances we have but we need to have the information in order to do that scrutinization.

01:16:36 - 01:17:23

Bernd Lange

Yeah indeed so we will stay in contact and try to guarantee that the information are there and we'll have a meeting after the summer break in September with you again. So we switch immediately to point 10 and I'm happy that Denis is staying here because now we are looking to the export control of dual-use items and we have the regulation from 2021 where we adopted it and this control of export is I guess in this geopolitical situation really crucial and now we have an report about the implementation and Denis is presenting this to us for 10 minutes maximum.

01:17:23 - 01:30:44

Denis Redonnet

Okay thanks. I get the message. So so this this report is a bit a priori dry because it is a backward-looking factual report which is actually based as you know and this is something that has been the subject of discussions during the adoption of the recast regulation it's based of course and limited by the extent to which we are able to consolidate data which is essentially generated by Member States. On the other hand beyond the report I think you were alluding to this this is a policy area where we see rapid change where we see that the geopolitical geoeconomic challenges do influence the way in which this this policy tool of export controls for security strategic trade controls is being challenged and reviewed in many ways. We see increasingly more unilateral forms of controls.

We see recourse to non-traditional forms of controls in much broader areas going beyond the operation of the multilateral export control regimes notably in the by the United States and by China. We see the phenomenon of the extraterritorial reach of export controls. So we believe that that links also into the continuous review that we must do of our own European Union framework in this area so I will connect this this a bit to that to that as well. We you know that basically at EU level our controls apply strictly to genuinely dual-use goods.

What is covered in the EU list is essentially defined at international level in the four multilateral regimes: Wassenaar, NSG, Australia, and MTCR. Where incidentally the EU as EU is a participant in only one of the multilateral regimes itself, so there's also a specificity of our framework which operates at two levels of government if you want. We're an observer in another. Most member states participate in all of the multilateral control regimes and they remain the anchor point for our approach to strategic trade controls. So there is a delicate balance of responsibility between what is done at national level and what is done at EU level.

Obviously we operate in a single market and then export controls are actually trade measures. On the other hand the logic is a security logic and the implementation of the EU export control framework is essentially done at a national level. And the report, perhaps in its limitations, reflects simply this reality. But because of the changes that I've evoked already, we must ask ourselves whether the export controls framework, even though it has been updated relatively recently, entry into force of the recast regulation in 2021, whether it is still fit for purpose, whether it should continue to evolve given the rapidly evolution of the security landscape and the trade landscape itself. So the evaluation process that we have launched will be the opportunity to analyze the dual-use regulation.

You'll recall that we have decided, the Commission decided to bring forward the evaluation of the regulation compared to what was initially planned by the co-legislators because again we see that the environment around us evolves more quickly than we would have anticipated. So this week we will launch a public consultation in order to underpin the evaluation of the dual-use export control regulation. And we would very much encourage members to draw your constituents' attention to that public consultation, encourage participation in that exercise. We are also going to launch a more detailed consultation in parallel for the entities that are specifically active in the dual-use areas in a whole-of-government approach because that is both on the industry side but you also have other actors that have strong direct interest when it comes for example for research organization, higher education, given against the nature of the way in which sensitive technology can be transferred, notably in an intangible manner. And so we're also happy to organize a specific briefing on the evaluation itself whenever you see that useful.

On the annual report itself that we published on the 25th of June, it contains information, data covering the year 2024, so there is obviously a problem or a lag in our ability to bring to the attention of the EP through this report sufficient information. I'm very open about the shortcomings of this and maybe this is something that you will want to raise and discuss. We see in 2024 that the total value was authorized in terms of dual-use trade is quite significant because it's about 3% of the total EU exports of goods is dual-use authorized trade and this is on the increase.

It's a vast number of authorizations if you take the EU as a whole, talking about more than 133,000 licensing authorizations. A majority of that actually flows through the EU general export authorizations, about 90,000 of those authorizations are on the back of our EU-level general export authorizations, which we need to continue also to review in scope, in origins. They also flow through national general export authorizations and then of course through individual licenses, which are actually not a big part of how exports of dual-use goods are actually authorized, which is interesting given the vast number of individual license authorizations that for example are being implemented by our Chinese counterparts when it comes to their export controls, which on top of that apply to a universe of goods which we believe goes far beyond what should actually be controlled from a dual-use strategic export control logic. In terms of destinations, we see that actually China remains the largest destination by value in 2024 for dual-use exports, and that is something that we actually bring to the attention of China in those discussions. And then we also have a significant part of those dual-use exports going to the US, the UK, Korea, and also Ukraine.

And all this is actually very much influenced, that ranking of destination, because of what flows through notably the first EU general export authorization EU001, where there is a lot of basically a lot of exports under that particular facilitation tool, the general export authorizations being a way to facilitate legitimate exports in the area of dual-use. Now, we also have and put forward in that report data on what is not approved, on the denials in the area of strategic trade controls. Those denials as reported in the report remain a small, very small part of EU exports, actually 0.01% of the value of total extra-EU exports of goods is actually subject of denials of exports for security reasons. We also document in the report, and that is very important, Member States are also increasing their enforcement activities. We see the number of reported infringements raising and the imposition of penalties for circumvention of dual-use export controls.

By the way, the question of proper implementation, the fight against circumvention is very important in one specific area, which is almost an ad hoc export control regime that we have created at EU level, which is our export control measures with respect to Russia in the context of the war in Ukraine, where de facto we have created a fifth plurilateral export control regime specifically applying to dual-use and other emerging tech exports to Russia, which goes way beyond and is much broader than the multilateral regimes in terms of scope, and where the question of active enforcement and the fight against circumvention remains a very important issue.

Let me just finish with cyber-surveillance, because I know this has been an important subject of interest and concern by the Parliament, notably because we've seen over years that the misuse of cyber-surveillance items, notably for human rights violation, is a significant issue and therefore requires specific attention in the context of export controls. The report gives data on this. We also have seen recent reports, notably by Human Rights Watch, which have identified certain exports of cyber-surveillance items from member states to certain third countries, which are a source of concerns. There, we basically have tried to bring to bear in this area more transparency, notably through the report on the number of authorizations that are granted for exports of cyber-surveillance items. We have also published guidelines in October 2024 to support exporters in the application of controls on non-listed cyber-surveillance items.

There is in this area, as you know, and it has, we have said this in this committee many times, a limitation to our role with respect to dual-use licensing in this area as in others. From the Commission side, the member states are responsible for licensing and for enforcing individual decisions on the exports of all dual-use items and cyber-surveillance technology in particular. I have earlier talked about China, so I will not go into this now, but just to say maybe in conclusion that we do have challenges in compiling this report and coming back to the committee, because we are still facing difficulties in making sure that the member states share the data in a timely manner. This is why we have a fairly backward-looking instrument here of reporting. With the gradual move towards electronic licensing, which as you know is something we have invested about over a decade now with or more with the member states, we are reasonably optimistic that the process of collecting, sharing, and aggregating the data, which then enables you on the back of this report to exercise democratic scrutiny over this policy area, is going to become quicker and less burdensome for some member states' national competent authorities, which are also facing limitations in terms of administrative capacity.

So that's what we are trying to work towards in order to improve the reporting to INTA in this area.

01:30:44 - 01:30:48

Speaker 30

Thanks a lot, Denis. Jörgen.

01:30:48 - 01:32:52

Jörgen Warborn

Thank you, Mr. Redonnet, for presenting this report. First of all, I'd like to touch upon your, you mentioned the issue on circumvention and especially on Russia. Maybe you can share some more knowledge about this. How do we make sure that the circumvention does not happen, or how can we minimize it? I didn't really pick up on the measures for this, basically.

And then second of all, on China, you mentioned that they restrict dual-use usage much more than we do.

We talked about China of course on the previous point on the agenda. Do you see a necessity to rebalance things here when it comes to dual-use as well? And finally, so there are 133,000 authorizations made and only 487 denials. Doesn't that imply that there is a possibility to simplify things? So we have a lot of civil servants working on this authorizations that the taxpayers are paying for.

And there is for sure also, which is stated in the in the report by the way, but there is also a lot of business owners of course working on this, which the report is not picking up, the cost for businesses when it comes to this. And given the very low percentage of denial and the very high number of businesses and cases that have to go through authorization, it indicates for me that there is a possibility to simplify things and still not increase the risk for dual-use happening elsewhere. So we are working too broad in a sense. How will you address this issue of simplification?

01:32:52 - 01:33:00

Speaker 33

Thanks a lot. Kathleen, you want to? Lynn, yeah.

01:33:00 - 01:35:33

Lynn Boylan

Thank you, Chair. And I just I suppose first I'll make a comment just around some key principles about the dual-use regulation, which is not only about protecting European security, but it also requires that these sensitive technologies are not exported when there is a risk that they could be used for internal repression or serious violations of human rights or international humanitarian law. And I suppose I would take have come to a different conclusion than my colleague in EPP because human rights considerations appear to be applied only to a very limited extent. And though although the regulation strengthens controls on cyber surveillance technologies, the fact that only 13 export licenses were refused in 2024, I think this raises questions about how member states are actually assessing the human rights risk of the technology. I think transparency remains insufficient.

Almost half of all authorized exports are covered by global export authorizations, which makes it very difficult for the Parliament to know which technologies are being exported and to whom. And I think the Commission's silence particularly on Israel is concerning. We know Israel receives around 2% of EU dual-use exports, but the report doesn't provide any assessment of exports to Israel. It doesn't indicate whether any licenses were refused or suspended, and it doesn't explain how the regulation's human rights criteria were applied in that current context. So I suppose my question for the Commission is first is why does the annual report contain no specific assessment of dual-use exports to Israel when the regulation requires human rights risks to be taken into account and the situation in Gaza raises very serious concerns under international humanitarian law.

Secondly, does the Commission believe that member states are correctly applying the dual-use regulation when they continue to authorize exports of dual-use items to Israel, and if so, on what basis? And then I will wrap up here. I think my own member state Ireland has actually called the genocide in Gaza a genocide, but they have also sent dual-use technology worth at least 20 million euros to the IDF and other Israeli state bodies since 2024. So I think that this demonstrates that there is real problems with how this regulation is being applied and how the human rights assessments are being applied.

01:35:33 - 01:35:35

Speaker 34

Marketa.

01:35:35 - 01:37:35

Markéta Gregorová

Yes, thank you, thank you again. So there has been mentioned the the Human Rights Watch report already several times and I know that everybody has read it and is aware of it, but just as a context of why I will ask what I will ask, saying that, you know, we and it was mentioned, currently because of the 2024 Commission guidelines, we don't know what kind of technology is being sent to what country. And I do think that's quite a bit of a problem seeing the Human Rights Watch when we know there's various ministries of trade giving license permits, export permits and licenses to countries such as Rwanda or even Iran. I'm surprised there's not North Korea, you know, in this kind of list. And yes, that's a member states issue.

It is not something we can completely resolve, but that's why we have the reviews and the annual reports. And maybe there is a reason why we are sending something to Azerbaijan, but if it's an intrusion and surveillance software, then very probably it's being used against political opponents because we know what a regime is there. And so I want to ask you whether there is a plan to change these guidelines of the Commission from 2024 so that we can connect the dots or these independent organizations can do so for us and we have actual scrutiny as a Parliament and of course as you, a Commission. And secondly, this evaluation of Commission will begin in September and given the Human Rights Watch report, what the member states are actually proving to be sent to these countries, do you envision some changes that could, you know, block the risk of such exports and also give, you know, ourselves a meaningful transparency? Thank you.

01:37:35 - 01:37:39

Speaker 35

Thanks a lot. Dirk.

01:37:39 - 01:39:01

Dirk Gotink

Thank you very much, Chair, and thank you, Mr. Redonnet. I'm just abusing a bit by extending the last discussion because I wanted to talk about a bit about China and because they have this concept, military-civil fusion strategy. They integrate, they're really thinking strategically about how civil infrastructure and businesses can be integrated in the work of the military and especially when you think about, I've worked a lot on the customs side, on the reform of the customs code, for example, but thinking about the e-commerce platforms is obviously quite obvious. Pentagon even qualified Alibaba as a basically a military company, which for us is weird because we only order from Alibaba, but they are huge in cloud and computing and a lot of other things that are important for military operations. To what to what extent are we integrating these kind of sort of broader context considerations?

You mentioned the whole-of-society or whole-of-scope, let's say, approach. And then we're also building, your colleagues at DG TAXUD are building a data hub, a customs data hub, which I think will be a game changer in the customs world. We will integrate EU customs data. To what extent can that be helpful in your exercise here? Thank you.

01:39:01 - 01:41:10

Miriam Lexmann

Miriam.

Thank you very much. I will maybe continue on this question because we know that China has the national security law where it actually stated that every company, and we know because it's a communist regime that there is no private company, I mean it's a company which is practically used for national purposes and purposes of the Communist Party and any company anytime has to serve what the Communist Party decides.

So practically there is no freedom of the companies and there is a high risk also for international companies when they trade with these companies and they are trying to investigate in and get some information, for example, if their partner is not using slave labor because that's required by the EU law, but if they try to do so, they can be accused of espionage on the basis of this law. So it puts at risk our companies to actually figure out with whom they are trading and also I mean it kind of shows in a naked way and blatant way that practically there is no private sector in China, but everything serves the Communist regime. So maybe the question is like how do we reflect this because the national security law has been passed like I think three years ago in China and now it was imposed on on Hong Kong. That also kind of merges to the question that Hong Kong still has the has the representation of the economic what is it called the economic representation in Brussels having a having a diplomatic diplomatic status. And maybe to follow on Jörgen's question on on how the how to automate the permission that the question is that if there is any thinking to use AI because that could make it actually more efficient.

Thank you.

01:41:10 - 01:42:39

Bernd Lange

Thanks a lot and from my side three elements also regarding China. 25% of the whole value is going to China. Can you give me an hint is this big companies, small companies, big projects, small projects and what what is the content of this huge value which was allowed to go to China? Secondly, on the report, so the the Member States reporting. I looked and looked and I didn't found the report for even 23 in in your communication.

So is this report from the figures in 23 public available and and what is your assessment regarding the work of the Member States? And then there is a lot of yeah decrease in in declining the request, so about half of the amount of declining than the year before. So what is the reason behind it? Is this the geopolitical situation or are there less problematic request put on the table? Why you can explain that this decline amount is so low compared to the years before?

01:42:39 - 01:54:13

Denis Redonnet

Thanks. On these various questions, on Russia and the question of how we sorry how we are focusing on the question of effective implementation of the export control restrictions that are part of the sanctions regime, I think there are different or there's a whole suite of of things that need to be done. First of all, there are elements in the regulatory regime itself which are which are directly actually geared towards the prevention of circumvention, whether it's the no Russia clause in contracts that is a provision in the Russia regulation, whether it's the the transit bans for some of the most sensitive items so that basically they don't fall off the track if they cross Russia to go to Kazakhstan, or whether it's actually working through entities and listing entities that have been identified as involved in circumvention which then are subject to a presumption of denial under the regulation effectively by our licensing authorities. On the other hand, of course, it starts at home.

So there's a question of if there are EU origin goods that are transshipped, what's the origin of that? And then there is a Member State enforcement action in terms of sanctions circumvention that is taking place across Member States with many cases where the Member States' national authorities are actually curbing the transshipment or the redirection of EU items towards Russia from at source. There's also a lot of work that's going on in terms of engagement with the potential transshipment countries and a lot of progress has been made, notably via the actions of the sanctions envoy, David O'Sullivan, who's been working very closely, for example, with countries that are in the neighborhood, Turkey, Central Asia, where we are seeing that these countries are progressively taking customs measures to, even though they're not part of the sanctioning coalition, to make sure that there is no re-export of EU goods. But the problems remain. We know that Russia sources a vast part of the most sensitive dual-use goods that are found on the battlefield in Ukraine through complex procurement networks that actually in a lot of, for a big part, transit one way or the other via China and Hong Kong, which are a source of those goods still making their way into the Russian military-industrial complex.

And frankly, Russia's economy, which has been militarized now to a point where a lot of the civilian industry sectors are actually also somehow contributing to the war effort. So this is why this issue is very important. This is why we are constantly trying to do more in this area. When it comes to China, I'm not sure what else I could say apart from the fact that, so on the Chinese export controls themselves, for us the problem is very simple. There is a problem of the breadth of the scope of application of their controls under the export control law, which we are not reconciled with, which we believe is an excessive scope of application of export controls for security reasons because these items are too far removed from military use.

They are essentially civilian in nature. And the proof of that is that Chinese are actually authorizing an enormous amount of exports of these goods. Except that creates a chilling effect on civilian industrial supply chains because everybody's waiting for their license to come in. So there is an unnecessary chill and fragmentation of civilian industrial value chains out of this policy, which is not the case in our view in terms of what we do because EU export controls remain centered on genuinely dual-use items and technologies. In some cases, the regimes do not work fast enough or are being prevented from reaching consensus.

And so the actual expansion of the list of control items is too slow compared to the risks that are identified with specific technologies. This is why, for example, increasingly we will see, we believe we're going to see, and this is linked to your point about civil-military fusion, we see a universe of emerging tech items and technologies and goods which can be dual-use because that emerging tech is almost ubiquitous in nature, if you want. And the regimes are not necessarily agreeing on consensus to list those items fast enough. So therefore we see more and more unilateral controls taken out of certain jurisdictions, notably the United States. And we are also now updating the EU list, so Annex I, on the basis of a mechanism where we are also able to incorporate into the EU control list items that are agreed on a consensus-minus-one basis in Wassenaar.

Which is very important because it means that our system continues to operate even though there are clear shortcomings in terms of the actual multilateral framework, which again remains the anchor, but that we cannot be completely hostage to if it is not functioning well enough. There are other issues linked to what you have said. On China, very difficult to give you detailed information about what exactly flows on what because again we are limited by the aggregation of data that is the basis of this report. What we know is that on based on risk assessment, a lot of what flows are very low-risk items to China, and a lot of stuff flows through the global licenses, where China is a recognized origin for. So there are reasons to think that even though the value is high, which frankly is a reflection of the size of the Chinese industrial economy, that that is not in itself a particular source of concern when it comes to the application of the regime.

On the, there were other points that were raised, notably this question of the link to customs. On customs, there's a lot to be done indeed in terms of integration between the licensing authorities, dual-use licensing authorities and customs. The customs data hub will play a role in this. This links to the question of simplification as well. So this very important point about do we have the right balance in the way in which this system is calibrated, given the fact that a lot of trade under control is actually ultimately authorized.

The numbers are a bit maybe, first of all, there are issues about the way you look at the numbers because the vast number of authorizations, it contains all authorizations and notifications, right? So it's a very, very broad universe on one hand. On the other hand, the denials are actual denials. There are probably a lot of trade that is simply not taking place because, well, either some of the authorization are withdrawn or simply not put forward. So the data on denials is a bit perhaps deceiving in terms of what it tells you about what ultimately does not take place.

But the question of simplification remains relevant. So as part of the evaluation, we want to focus on the question of the possibility for further simplification. Because again, the administrative capacity in Member States, first of all, differs very much between Member States, to be clear. And which is a problem because we need a uniform application of this policy. But in consultation with industry, in consultation with Member States, it will be part and it should be part of the potential revision that will flow from the evaluation.

In any case, we want to put the spotlight on this in the evaluation. And on the final, finally on the question of cybersec, sorry, cybersurveillance technologies. Look, on this, the answer is basically yes, we need to use the evaluation now to take a further step in this area. I'm aware of the concerns that are expressed about the fact that the October 2024 guidelines do not do the job and in a way do not increase transparency in this area. For the time being, we have done what we could through this particular instrument.

But again, ultimately on the basis of an agreement with Member States, that has been at the basis for the guidelines. I think what we will want to do in this area is to find a way to enhance transparency and therefore also the effectiveness of the export control framework for cybersurveillance items as a result of the evaluation process. Because there is clearly a further step that needs to be taken in this area. The findings of external observers such as Human Rights have to be taken seriously. We must have collectively more transparency about exactly what flows in this area, to whom and why.

Obviously, a lot of things, for example, when it comes to Israel, flow through the general authorization, so it aggregates, it's a facilitation. So therefore there's more aggregation of that information. But given the sensitivity of these particular items under control, we think we should try to take a further step. We would want to do that as a result of flowing from the evaluation process that is really getting started now. And so therefore we will be looking for input specifically in this area as well.

Thanks.

01:54:13 - 01:54:32

Bernd Lange

Perfect. Thanks a lot, Denis, for staying for two important items here with us. And I hope that your health will be really recovered so that you can do your job specifically also regarding the negotiation with China. So, thanks a lot.

01:54:32 - 01:54:33

I'll try not to collapse here.

01:54:33 - 01:56:16

Bernd Lange

Yeah, exactly. Thanks a lot. This leads to the next item, which is the item 11, the update on the new legislation addressing global overcapacity on steel in the European market. And I'm happy that from the DG Trade, Pauline Weitsel is there. And we will get a report about the situation when now the legislation is in force since the 1st of July.

And also the quotas for the trade partners are adopted, I guess, only two days before.

So that we have now a picture where we see how the different trading partners in different countries worldwide were recognized and which possibilities they have to export steel to the European Union and what are the conditions for that. And Pauline will now present the results of this exercise, also the negotiations regarding Article 28 GATT with the trading partners in Geneva and how the new issue will be implemented by an act so that we have an overview about the situation. Please.

01:56:16 - 02:07:13

Pauline Weitsel

Thank you very much, Mr. Chair, and good morning to all of you. Good to see you. So let me provide an update on where we stand with this important steel regulation. And first of all, I wanted to also thank all the members here for the constructive work that we have done over the past year on this file and for ensuring the continuous protection of Europe's steel industry, which I recall is the third world largest steel industry providing 300,000 direct jobs in the EU. And this is also, of course, the protection of this sector, the main aim of the new regulation addressing the negative effects of global overcapacity.

And this has now fully applicable and in force since the 1st of July. Today, in particular, I want to focus, of course, on also the implementing act that simultaneously entered into force on the 1st of July and was adopted just in time on the 30th of June, that sets out also the country-specific allocation of the 18.3 million tons of steel that can enter the EU as of now without tariffs. This is, as you may recall, around a 47% reduction compared to the previous safeguard. In addition, of course, the regulation then sets a 50% out-of-quota duty up from 25% as opposed to the previous regime. The quota allocation that is now in force of the 18.3 million tons is basically based also on what the regulation set out under Article 5 in terms of criteria, but it is also the result, of course, of our negotiations and engagements with our trading partners under Article 28 of the GATT in the World Trade Organization with over 20 trading partners that hold negotiating or consultation rights in that process.

And that is also important because that is how we ensure the legality in the WTO of our change of tariff from 25 to 50%. Well, it's actually from 0 to 50% of our bound MFN tariff. I just briefly also recall that we have adopted this now in a very urgent situation, so basically using as mandated in the regulation the urgency procedure, which also means that this implementing act setting out country allocations is in force now only for six months and we will then have to re-adopt this with an ordinary procedure before the end of the year.

The Commission, also for the negotiations and how to set out this country allocation, was of course guided by the criteria set out in Article 5 of the regulation itself, of which currently the following are applicable and formed the basis. First and foremost, it's the historic trade data, the shares of each country in the period of 2022 to 2024. This is also the legal period that is necessary and mandated under Article 28 of the WTO and has been the basis for all calculations of all quotas. Secondly, though, the regulation clearly spells out that FTA partners, existing and future, should be taken into account on a preferential basis. And thirdly, the existence or the conclusion of Article 28 agreements.

Additional to that, there is of course the requirement to ensure supply diversification, to take into account trade-distortive third-country measures that have an impact on our steel market, and notably to take special consideration the situation of a candidate country in the immediate security situation, and that is of course a reference to Ukraine. Now, as a baseline, and also following the negotiations with our trading partners, it was decided to basically split the 18.3 million tonnes into two halves. So one half, roughly 9.15 million tonnes, that has been distributed in a non-discriminatory manner in the WTO on MFN basis to all trading partners using the historic trade shares. And the other half, 9.2 million tonnes, that is only available for countries that are FTA partners and is then further distinguished by the existence of the other criteria, so notably an Article 28 agreement concluded in principle at this stage. Another important element that we maintained from the current safeguard regime is that to decide on whether or not a country gets country-specifically allocated quotas, we took a 5% cutoff point for the reference period in terms of market share.

And those countries above get country-specific allocations, again with the exception of Ukraine, which received some additional country-specific allocations. Now let me elaborate a little bit on the Article 28 outcome and our agreements in principle with key FTA partners. I recall also that FTA partners are accountable for around 80% of EU steel imports. This was also why the measure applies erga omnes to all FTA partners, with the only exception being the EEA countries. But however, as I already said, the quota distribution and also the aim in the negotiations was to minimize the impact of this steel measure on our preferential trading partners, and in particular then also those that agreed under Article 28 to the quota allocation.

This meant also that we have lowered significantly the kind of reduction of quota, which is on average 47% for those countries. Countries that are not FTA partners have received access to the MFN quotas.

Also important to underline that some countries are in line with the regulation treated as FTA partners where those are concluded or provisionally applied, notably India, Indonesia and the Mercosur countries, whereas purely ongoing negotiating countries are not yet treated as FTA partners. I already mentioned also of course the special treatment of Ukraine, just to say also that this resulted in allocations of additional volumes for Ukraine to have the best possible treatment by granting additional country-specific allocations and higher volumes beyond purely proportionate shares based on historic trade, which also allowed us to safeguard more than 70% of Ukraine's historic trade under the quotas here. And we will analyze very carefully this in the future and we also will do some statistical corrections that had an impact on some of Ukraine's quota. In terms of the negotiations I already called, we had about over 20 partners and made with those 11 firm agreements in principle with the key partners really on steel trade, including our largest suppliers Turkey, India, South Korea, Indonesia, but also close partners like UK and Switzerland, important countries in the vicinity like North Macedonia and of course Ukraine, Egypt, but also South Africa and Singapore. We have also made preliminary agreements in principle with Argentina and Brazil with a few more open issues to resolve, but already deemed to be sufficient for agreements in principle.

These countries have all agreed to the quota allocation and have also agreed to thus not challenge this measure either in the WTO or under FTAs. It has been based on a very fair and objective process. The aim now for going forward will be to conclude firmly and formally these legal agreements, which are then international agreements, in the coming months and to continue negotiations with those partners we did not manage to finalize yet, notably Japan or Vietnam and of course China and Taiwan. And then as I already said, before the end of the year, adopt a final implementing act of quota allocations that could also take into account any new agreements reached. Finally also to mention of course that a key focus now shifts to the implementation and how it actually works out also for our industry, for our trading partners.

And there I would like to recall that we're also going to be implementing now the melt and pour principle by October based on implementing act we're adopting at the end of the summer. We're launching the product scope review for the first four products to be reported on by the end of the year. We will shortly launch also public consultation on the wider product review. And of course we will very closely monitor any disturbances in the EU's market also for downstream industries and as I already said, as a matter of priority continue the really constructive negotiations with all of our trading partners. Thank you very much.

02:07:13 - 02:07:31

Bernd Lange

Thanks a lot and normally I would give the floor to our rapporteur but unfortunately she is not available today, so we start with the shadow rapporteurs for two minutes each and Lidia is the first for the EPP.

02:07:31 - 02:10:12

Lidia Pereira

I'm replacing, good morning Chairman, I'm replacing my colleague Martine Kemp. She cannot attend as you said, so I will speak on her behalf. So first of all, we welcome the timely entry into force of this legislation. Delivering on time ensured continued protection for the European steel sector and avoided a legal gap after the previous safeguard measures have expired. The European Parliament played a key role in strengthening the text.

It secured an early review of the scope, greater attention to downstream industries and SMEs, the melt and pour requirement to improve transparency and traceability, and consideration of the Union security and defense interests when tariff rate quotas are reviewed. The focus must now shift from legislation to implementation. Although the agreement has been broadly welcomed, some stakeholders have raised concerns about how it will work in practice. This is why the Parliament's review clauses are so important. They must ensure that the measures protect the European steel industry, preserve the competitiveness of downstream users, and allow any shortcomings to be corrected without delay.

We would therefore like to ask the Commission, as the implementation has now begun, have you already identified any practical shortcomings or unintended consequences that may require legislative or regulatory adjustments during the first review? The Commission mentioned yesterday at the technical briefing that the first product review is already underway. At this stage, are there already areas where you consider that the current framework may need to be strengthened? And in addition to Martine's questions, I have a question of my own. As the quota allocation methodology has raised concerns on some sectors of the manufacturing industry, particularly SMEs in smaller markets, my question is whether the upcoming review assess whether country-specific and residual quotas ensure fair, sufficient and diversified access to imported steel across all Member States.

To conclude, Europe's steel industry is a strategic sector for our economy, our industrial resilience and our security, so we look forward to continuing our close cooperation with the Commission to ensure that this legislation delivers its full potential. Thank you.

02:10:12 - 02:12:46

Hana Jalloul Muro

Thanks a lot, Hanna.

Thank you very much. As well as you, our S&D coordinator and shadow reporter of the steel measure Bernd Lange asked me to take the floor on his behalf because he's not here today. So first of all, I would like to thank Mr. Winciard for her presentation and this useful update on the state of play. Thank you, the S&D group welcomes these latest positive developments. They show that the Commission is engaging proactively and constructively with our international partners on an issue of strategic importance for Europe's industrial future.

The agreements already concluded and those reached in principle demonstrate that many of our key trading partners recognize the need to work together with European Union to address global steel overcapacity. This is reassuring and provides a solid foundation for our work on a number of important legislative files. And it should also give the Commission a strong confidence boost as it prepares the extension of the steel measure to additional downstream sectors, strongly demanded by the Parliament and agreed in the final text of the regulation. But we can also say that this approach of the WTO negotiations also provide another important point.

The European Union can strengthen the protection of its industrial base and at the same time full respect its international commitments and remaining a credible actor in the multilateral trading system. This approach will also be essential as we move forward with key initiatives such as the Industrial Accelerator Act, the future Chips Act and the Cloud and AI Development Act. If Europe wants to attract investment, strengthen manufacturing and build resilient value chains, it must continue to use effectively trade defense instruments where they are justified and necessary. And this is fully in line with the joint non-paper supported by Italy, the Netherlands, France and Lithuania, which calls for a stronger and more effective EU trade defense framework. Let me conclude by saying that the S&D group encourages the Commission to remain as ambitious as necessary in defending European jobs, strengthening our industrial base and fostering investment across our continent.

This is the direction of travel we need, a genuine European industrial strategy that supports the industrial transition, protects our strategic interest and remains firmly anchored in open rules-based and multilateral trade. Thank you.

02:12:46 - 02:12:47

Thanks a lot, Enikő.

02:12:47 - 02:13:39

Enikő Győri

Thank you. Thank you for the presentation. I think everything is clear. My question is concerning the impact. So how will you measure the impact of these new safeguards for steel for the EU industry as such and for the individual member states, if you will measure it at all?

And the second, what kind of indicators you're going to use for that? So will you see or how will you examine what kind of impact it had on workforce, on workplaces, on industrial capacities, whether we had any increase in the EU steel industrial capacities and how it has improved the competitiveness of the Union? Thank you so much.

02:13:39 - 02:15:59

Daniele Polato

Danilo.

Grazie, grazie Presidente. Buongiorno a tutti. È importante tenere alta la guardia sulla questione dell'acciaio, perché se anche il negoziato è terminato rimane pendente la questione degli annessi. Come noto dopo gennaio 2027 la Commissione valuterà se inserire i settori con il codice doganale 73. Il tempo sta scadendo e sta giocando contro il nostro tessuto industriale.

Il settore dell'acciaio è in difficoltà, perde commesse e capacità produttive sotto la pressione dell'import dei paesi terzi. Non possiamo competere né sui prezzi né sulle quantità, su questi tavoli saremo sempre perdenti. Possiamo agire sul piano della qualità e della decarbonizzazione, dove come europei siamo all'avanguardia. Questi sono gli asset che vanno tutelati e protetti. Senza produzione europea non avremo competitività né rilancio industriale, tema peraltro oggetto in questi mesi di negoziato con l'Industry Accelerator Act.

In sede negoziale hanno detto che non c'erano dati pronti sugli annessi. Ebbene, spero che entro dicembre 2026 avremo tutti i dati sufficienti per far fronte a questa crisi industriale. Occorre fare presto. Non possiamo permetterci sbagli o ritardi. Dai primi di gennaio dobbiamo agire per tutelare anche gli annessi e quindi i prodotti derivati.

Le categorie lavoratori del settore siderurgico aspettano risposte immediate, non protezionismo ma legittima tutela dei nostri interessi economici e industriali. Con costruttivo spirito di compromesso abbiamo concluso un negoziato che lascia aperte alcune importanti questioni per l'acciaio.

Le risposte di gennaio dimostreranno se questi mesi abbiamo trascurato settori cruciali e meritevoli di un'eventuale tutela. Per questo mi auspico, presidente, che la Commissione affronti da subito questo problema, non lasciandolo crescere e poi pensare a come rimediare. Grazie.

02:15:59 - 02:16:02

Bernd Lange

Grazie. Katarina.

02:16:02 - 02:18:58

Catarina Vieira

Thank you very much for the update to start with, and maybe also good to bring back the idea that this file is really a test to see whether we are serious about protecting our industry from unfair competition, keep our workers in Europe, and give the right conditions for transition for our hard-to-abate sectors. So I really see this as a first step, and if successful, we can replicate it in other sectors like chemicals, automotive, or machinery, considering that China's vast trade surplus is over one trillion last year. But it's also good to remember that this is not just a China problem. India and Southeast Asia have also seen a significant capacity growth, and at the same time, we see Brazil, Canada, India, Mexico, and the United States all raising tariffs on many basic steel products. So I'm really proud to see that the EU is opening the way for a more serious conversation on how to deal with overcapacity globally.

Of course, we always knew that this had the potential of being challenged by our trade partners. That's part of the reason why the Greens pushed from the start of the negotiations to use exemptions regime foreseen in the GATT to ease the process and make it even more robust. And I'm very happy to hear you reporting that this is going well with some trade partners and that there's still work to do with others. And we have to be clear also, thank you for mentioning melt and pour. It's something that the Greens fought very hard for to make sure that this could not be circumvented by actors like China.

So a mandatory melt and pour rules with strong supporting documents make sure that steel made in China and then melted in a third country would still be considered Chinese steel, and we expect the Commission to have a good application of this criterion we inserted for this purpose in the new legislative proposal on this. Finally, I'd like to add a word on the decarbonization criteria. It's very important. The 2025 OECD report found that 40% of projected new capacity additions between 2025 and 2027 are expected to rely on emission-intensive processes, which undermines investments in low-carbon technology. And this is why we really need our new tool on overcapacity so that the transition of our industry really is possible here in Europe.

So with this comes also other things at play. Any attempt to weaken the emissions trading system would not only penalize the frontrunners which did their job to decarbonize the industry, but also ruin the good work that we've achieved on this file when it comes to decarbonization and would also have an effect on CBAM and its expansion. So good to keep all of these things in mind, and thank you very much for the update.

02:18:58 - 02:21:26

Martin Schirdewan

Thanks a lot. Martin.

Herzlichen Dank, Bernd, und vielen Dank für die Information bezüglich der Umsetzung der notwendigen Stahlschutzmechanismen. Die Situation ist ja so, dass wir in den letzten Jahren Hunderttausende Jobs in der Stahlindustrie in Europa verloren gehen sehen haben aus verschiedenen Ursachen: wegen billiger Importe, wegen hoher Energiepreise, auch wegen strategischer Fehler, die im Management gemacht wurden.

Die Anforderungen waren, die unter anderem europäische Politik, auch die Europäische Kommission ihm mit auf den Weg gegeben hat. Und die sind einfach kurz vor der Schließung des Konzerns. Die sind kurz davor, Tausende Jobs abzubauen, weil einfach der internationale Druck zu groß geworden ist, während gleichzeitig Konzerne wie ArcelorMittal oder ThyssenKrupp, die nicht in den grünen Stahl investiert haben, sogar öffentliche Fördermittel empfangen haben, jetzt sagen: Nee, wir machen das nicht, weil wir einfach konkurrenzfähig sein müssen. Das ist die Situation. Das heißt, die industrielle Basis von Stahl und der Stahlindustrie in Europa ist gefährdet aufgrund der Entwicklung in den letzten Jahren, aufgrund der Entwicklung in den letzten Jahrzehnten.

Und damit sind wirklich weitere Hunderttausende Jobs bedroht. Ich glaube, wir brauchen eher eine Gesamtstrategie. Die protektionistischen Maßnahmen jetzt von Quoten und auch Zöllen gehen in die richtige Richtung. Wir begrüßen die sehr. Wir haben auch sehr dafür gekämpft.

Im Übrigen auch die Gewerkschaften haben sich sehr dafür eingesetzt, dass die Steel Safeguards jetzt so verabschiedet werden. Aber ich glaube, wir brauchen eher eine Gesamtstrategie. Und in die Richtung geht auch meine Frage an die Kommission, wie denn dort weitergearbeitet wird neben diesen richtigen protektionistischen Maßnahmen, um Beschäftigungssicherheit herzustellen. Wir brauchen also Beschäftigungsgarantien, wir brauchen Standortsicherheit. Das geht in die richtige Richtung.

Aber gleichzeitig frage ich mich, wie wir dann trotzdem nachhaltige Produktion von Stahl entwickeln können, weiterentwickeln können, um einfach die Industrie auch zukunftsfähig zu halten. Und gleichzeitig glaube ich, müssen wir auch dazu gelangen, dass wirklich der Stahl am Beginn einer jeden Produktionskette in Europa steht, dass wirklich auch Produkte, die in Europa hergestellt werden, also dass europäischer Stahl in jede Produktionskette auch mit eingebaut wird. Und dieser Dreiklang, also Nachhaltigkeit, Jobsicherheit und europäischer Stahl in europäischen Produktionsketten, das wäre, glaube ich, ein guter, kluger strategischer Ansatz. Da interessiert mich, ob die Kommission auch in diese Richtung denkt und wie die weiteren Maßnahmen aussehen. Danke schön.

02:21:26 - 02:21:33

Bernd Lange

Danke. And now I give the floor to the ITRE rapporteur for the opinion, Ms. Sofie Eriksson. Two minutes.

02:21:33 - 02:23:50

Sofie Eriksson

Thank you. Thank you, Chair. I would like to begin by thanking all of the colleagues in INTA for taking the initiative to organize this meeting with the Commission. It is important that we keep up the momentum here and ensure that this regulation becomes the protection that European industry needs against unfair trade practices. As you may know, ITRE Committee is strongly supportive of this regulation.

It was highly demanded from our side prior to all the work that we have been doing because of the, of course, the overcapacity of the unfair competition and price dumping. This regulation is bare minimum to see that we can support and save our industry in Europe because, of course, it is, we are talking about resilience, competitiveness, autonomy, security, defense. Everything this needs our own steel production. I would also like to thank the rapporteur and the colleagues who took part in the negotiations. It was Parliament that secured a clear and ambitious review clause.

Let us not forget that because this is about people's jobs. Had we not secured this review, around 300 jobs in a small town of Garphyttan in Sweden could have been lost because of unfair practices by other countries. This is not acceptable. The Union has a strong tradition of steel production in towns and regions where skills have been passed down through generations of steelworkers. They have played a key role in building Europe's manufacturing base and remain essential to sustaining jobs, security, and resilience.

But now we also need to deliver on what we have agreed. Garphyttan and many other steel communities across Europe are still waiting for the Commission to act. Therefore, on the behalf of the Committee of Industry, Research and Energy, I would like to ask the Commission two things. First, when can we expect the Commission to present the review requested by Parliament? And two, what is the timeline for the work going forward?

02:23:47 - 02:24:29

Jörgen Warborn

Thank you, Chair. It is for sure the case that the steel sector in Europe has a lot of problems and we need to do what we can to help them fix the situation. At the same time, I don't really like the wording overcapacity because I think that is not the problem. Trade actually builds on overcapacity. We have overcapacity of forest in Sweden and we like to sell it to places where they do not have overcapacity of forest.

02:23:50 - 02:23:51

Sofie Eriksson

Thank you.

02:23:51 - 02:23:53

Bernd Lange

Thanks a lot. Jörgen.

02:24:29 - 02:26:00

Jörgen Warborn

And in some cases, they have overcapacity of critical raw material and we would like to buy it for Europe. So overcapacity is essential for trade. The problem is rather overcapacity due to non-market policies and that should be mentioned every time we mention overcapacity because it's the non-market policies that is the problem. It's the subsidies that is the problem. And that's why I think it would be interesting to listen to the Commission and hear your view on China.

I listened very carefully and you said you have not yet concluded the negotiations with China, which is one of the countries that do the non-market policies and why we have this situation for the European steel market. I also would like to mention something about Ukraine because we pushed from the Parliament that Ukraine should have certain favors or certain, certain, well, a year ago or a year and a half ago, we gave Ukraine a lot of preferential treatment and then we pulled it back. And I think that in this instrument, and I think that was a disgrace to be honest. And now I hear that for Ukraine, they will get 70% of what they had. This is a future member of ours.

I think they should have more to be honest. So to the Commission, can you give Ukraine more and give China less? That would be my ask. Thank you.

02:26:00 - 02:26:04

Bernd Lange

Okay, thanks a lot, Pauline.

02:26:04 - 02:33:01

Pauline Weitsel

Yes, thank you very much and thank you all for your very useful remarks and pertinent questions. I think there was clearly a very overwhelming echo and focus and questions, I think, on the way forward and the question of how we will handle reviews going forward. And indeed, I think the Parliament strengthened those provisions in the final, final regulation. And I would like to recall that as regards the product scope, we have a two-step approach. We already are working on the first product review for four product categories that is due to be presented by the end of the year.

So that is also the timeline mandated in the regulation. And we've already opened a public consultation, running a public consultation on this and have actually already started the work on the larger review of downstream products, which can cover a large amount, of course, of potential products and a lot of different industries that we need to analyze much better. And therefore, you know, we will come with our findings before the end of the year and recommendations on how to proceed. I think it's important to recall to companies that in the meantime, they have recourse to traditional safeguard investigations and TDI measures. And it is really important to use those as much as possible because they can be also triggered in a very timely manner, especially on safeguard investigations, before we can come also with a further big product review.

Also to underline that we have a requirement to evaluate the full effectiveness of the regulation by June 2029 and then every three years. This is also when we will assess, for example, how this has fully impacted various aspects, and some of you mentioned the fact that we need to look at the bigger picture, of course, and the bigger angle, including the decarbonization path of the industry, price and capacity levels, the impact on upstream and downstream, and of course also on the final consumers in the Union. And we will do that, but we will not, of course, wait for three years to look at some of these things. We are monitoring really already now and then on a weekly, if not monthly basis, how the quota usage is actually working out, what the impact on our industry is. Now we are on day 14, so it's a bit too early to give you clear indications because some of the quotas are not even yet opened, some of them are only opening as of tomorrow, actually, some of the more competitive pots.

But we are working on that very closely with DG TAXUD, our trading partners and our industry. I recall also that the Commission has been empowered under Article 6 of the regulation to take action if there are disturbances in the market, if there are supply shortages, if there is crowding out in product categories, and if necessary to also adjust quota volumes, including on a punctual or urgency basis for certain product categories. This is a very important security mechanism for our own downstream industries in particular, and we will be extremely vigilant about this because, of course, we need to make sure that in its functioning, in its application, this regulation delivers for our whole industry, for our whole economy, both the steel producing and the steel using part of our economy. So we need to be very lucid now on how we look at the functioning, and we will of course happily report on this in future exchanges. I think finally I think I would also like to point or thank you also for mentioning the fact that we've chosen of course the Article 28 path here to ensure legality of the measure and engage with our trading partners on this quota, on this new regime.

As I said, it's an ongoing process to conclude them and actually still negotiate with some of them, including of course our pure MFN WTO partners like China and Taiwan. As you know, the challenge in the steel sector is not based on a single country because we have had a big push-out effect of capacities also through investments abroad and production that happens in many different countries, and this is why it's a country-neutral regulation.

And at the same time, we are extremely vigilant about non-market policies and practices that can distort the level playing field. And we are working and continue to work on this also with our partners in the global forum on excess steel capacity, where we focus in particular on the question of how to further tackle non-market policies and practices. Also to recall, as some of you mentioned, the melt and pour requirement will be instrumental in really creating transparency on the steel supplies. And it will enable us to also see where is the steel produced and how, and are there any circumventions happening. And this is very important, of course.

And finally on Ukraine, we have, as I explained, really taken into account and given very special consideration to Ukraine. We will continue to monitor, of course, how this then works in practice. We have agreed in principle with Ukraine under Article 28 on this quota allocation, which is also a positive sign. And we will then, I think, have to take stock also when we readopt, or when we adopt a final quota allocation, to see if any adjustments there are warranted. But in principle, we have agreed this also, of course, with Ukraine.

And as I mentioned, there are some technical adjustments that we will make that would also work in their favor.

02:33:01 - 02:33:30

Bernd Lange

Thanks a lot, Pauline. One additional question from my side. So the customs authorities of the member states have to execute the whole exercise. Are you sure that they are able to operate in a proper way so that the different tariff quotas and the tariff-free import is really well, let's say, controlled?

02:33:30 - 02:34:25

Pauline Weitsel

Thank you very much. So the implementing act is very similar to the current safeguard regime. So it sets out quotas per country and then some quantities that are erga omnes quotas usable by all. And each of those comes with an order number. So the exporters will have to choose the order numbers, and these are then clearly assigned to specific countries.

It's a system that the customs authorities are very well used to, so are the companies. We will then see, I think, within the next months after the first quarter also of how some of the more competitive parts are functioning, whether there's crowding out somewhere. But I think for customs, we work very closely with DG TAXUD on this. The system is very similar to what was already in place for the last eight years.

02:34:25 - 02:34:29

Bernd Lange

Thanks a lot. So Barry, you was a little bit late, but you have a short question.

02:34:29 - 02:35:52

Barry Cowen

Apologies, yes, I was at Agriculture Committee meeting. Briefly to raise the case and the difficulties particularly we have in Ireland as a result of these new arrangements and quota systems, whereby the UK access to the EU has been increased, but it's across 26 or so different steel products. And you know, any one may already have exceeded its quota. And I'm particularly disappointed to learn that Northern Ireland is being treated as non-EU in this instance. And that's not the thrust of the agreements we've reached with the UK.

It's not the thrust of the agreement we've reached in relation to Northern Ireland's specific place as one that can benefit from membership of the EU and also the UK.

And it's something that needs to be resolved because it's critical now in our country and is, you know, the cost of alternative mills in Europe is 50% above even paying the increased tariff associated with UK steel. But the main point I want to make is the provisions contained in the declaration agreements with the UK and the significant role that Northern Ireland has has to be respected.

02:35:52 - 02:36:04

Enikő Győri

Just maybe I try to pay attention, but I haven't got an answer to my question concerning the impact on member states on EU industry and how you will measure it. Thank you.

02:36:04 - 02:38:11

Pauline Weitsel

Yes, thank you very much. So first, I think on the impact, I mean, we will do full evaluation of the effectiveness, as I said, by June 2029. We will look at this in advance, of course, but we can only really assess the full impact once it has been also in force. We've discussed that, I think, quite extensively also during the legislative process. And for that, we have we have our method exactly as we have also done in our staff working document economic analysis by looking at the impact on pricing, on on on availability of supplies.

So I think we will we will be doing that, of course, a bit further down the line. In the meantime, we are already consulting, of course, also on other products. So I think that will also enable us already to provide some assessments as we go along. On Northern Ireland, let me briefly underline that in line also with the regulation, the quota allocation fully respects the and maintains the solutions that were agreed and found in the Windsor Agreement. And so what is actually what has been done is to create here additional TRQs distinctly separate that fully maintain the historic trade quota of Northern Ireland for the flows that concern the flows of Great Britain to Northern Ireland.

And that was the solution, of course, for seven product categories that was enshrined in the Windsor Agreement. And that maintains the current the system that was in place already fully. And we are very closely engaging, of course, with the UK also going forward to ensure that we can we can have the system in place and also look as to its proper functioning, as this is extremely important, of course, for us as well.

02:38:11 - 02:42:43

Bernd Lange

Very glad. This concludes this item 11. And of course, we will stay in contact, Pauline, on on that. So I'm sure that specifically regarding the first review and then the second one one year later, we will have a look on that. Thanks a lot to everybody.

Point 12 and the last point for this morning is the state of play with the EU-US trade relations. And I thought it was quite relevant to have this point on the agenda because something or some elements happened since we discussed this the last time. Of course, it's now more or less one year after the Twinberry deal was concluded. We had our legislation now into force. There was the NATO summit in Ankara where we celebrated the 250 years of American independence.

Belgium made a great performance against the United States at the World Cup after this red card issue. And so a lot, a lot of of fireworks going on and they are still on on fire.

We see that there is still some discussion what's going on after the 24th of July when the actual legal basis Trade Act 122 is expiring. We saw that there is this investigation based on Trade Act Section 301 on the forced labor issue where we also be guilty not to do enough against forced labor products coming into the European Union even we have a forced labor legislation. But nevertheless, so there was a hearing yesterday in the United States on that and this will lead I guess then to some legislation or some legislation on executive orders. And there's still another investigation on excess capacity which might be also coming soon. So one of the key questions is of course what will happen after the 24th of July.

And then there are two other investigations which are still going on. One is on the 232 on pharmaceuticals in general. And so this is I guess more directed to bring more production into the United States. And then we have now from the I guess on the 18th of June quite new a new investigation. I guess it's also under 301 against Germany's persistent underpayment of innovative pharmaceutical products.

So this is an attack a little bit against domestic legislation here in the European Union. So this two investigations also quite interesting in relation to our deal from Scotland. So of course I'm happy that Matthias Jørgensen, our US expert, is again here with us and give us can give us now answers to this question I mentioned and give us a little bit the hint where we are in the relation between EU-US. Matthias, you have the floor for about 10 minutes.

02:42:43 - 02:56:11

Matthias Jørgensen

Thank you very much Chairman and thank you thank you for inviting me today to update you where we are on EU-US trade relations. I think it's a good moment. Roughly a year ago the EU and the US agreed on the Turnberry deal. So I think it's a good moment to inform you on where we both are on the implementation of this deal, the developments which we have seen recently, further work on the joint statement and also other areas of cooperation like critical minerals or digital issues. But maybe we should just remind ourselves a little bit of the situation a year ago.

There was a lot of uncertainty, there was a lot of instability.

It's the view of the Commission that it was important to act to keep our trade and economic relations as stable as possible and reduce and ideally avoid unnecessary trade tensions. And that was the key objective we pursued last year and where we believe that we were successful. With the Turnberry deal, we managed to go from a situation of high instability to a stabilization of relations to a large degree. And it provides us with a basis for work on tariffs, on non-tariff issues, and on a wider range of cooperation around which we can structure relations with the current US administration. Now, with the fact that you also referred that we have passed our tariff legislation, we have very much lived up to our commitments on the tariff side.

I don't think we need to dwell too much on it. You're fully aware of the content of the regulation. We had tough but successful trilogue in which the various priorities of the EP were reflected. And having done what we have committed to gives us now a good basis for moving forward with the key tariff-related issues on the US side of the deal. That for us includes involving pending issues.

So we will continue to insist for the US to respect the 15 tariff, 15% tariff ceiling. And that, for example, will include that we will continue to pushing for our priorities on steel and aluminium derivatives, but also on the US lowering tariffs on truck and truck parts. We will push for the US to restore the exemptions as agreed in the Turnberry deal and as reflected in the joint statement of 21st of August last year, e.g. on cork, on precious stones, certain pharmaceuticals, etc. And we will want to engage with the US to seek further decreases to US tariffs by expanding the list of EU products only subject to US MFN tariffs. And our Commissioner has recently been very clear in his communication of these priorities to the US, of our priorities in that area.

So, overall, we therefore have a good basis to engage with the US on the tariff issues and also beyond. We also prolonged the large civil aircraft extension of the truce that you're also aware of. And we have constructive EU-US engagement on critical minerals and on polysilica, and that is creating positive momentum, we believe. At the same time, and we need to remain very clear-headed on this, the transatlantic relationship will continue to remain volatile or at high risk of volatility. We have seen recent actions of the US towards individual member states on member states' digital services taxes, as well as the launch of a Section 301 investigation on pharmaceutical pricing.

Now, you referred to that, Chairman, and while this investigation currently concerns only Germany, investigations involving other member states cannot be ruled out. And as you said, ongoing or new US Section 232 investigations could result in new US tariffs, not necessarily, but it could result in new US tariffs or in new US trade measures.

So it will therefore continue it will therefore require continuous management both at the political level and at the technical level. We believe that from the side of the EU we need to remain calm, constant, united and coordinated and to be sure that we do our very best and that we focus on pursuing the EU's trade interest in the in the context of important challenges and a wider political setting. So that will while we are cooperating also mean that we need to be ready to make our views known, send clear signals and take action where warranted. Let me therefore now focus on some key areas of ongoing work and and very and very topical issues. And the first one is section US so the US section 301 investigations that you referred to to establish a durable US tariff regime.

Then we'll look a little bit and where we are on the work on the non-tariff parts of the joint statement. I'll briefly also touch upon critical minerals and digital issues. Now Tim you mentioned that the US is working on a section 301 investigations on forced labor and excess capacity. And the reason is as you say as we all know that the temporary US regime based on section 122 will be replaced or will have to be replaced because it will expire on the 24th of July. So the US is working to replace its legal basis and they're trying to create a legal basis which will be legally solid and withstand internal legal challenges successfully.

The US have confirmed their intention to move forward with measures both on labor and on excess capacity but the exact timing of these measures is not clear. The investigation on forced labor appears advanced but we are still waiting for for the final results on this. And the one on overcapacity looks as if it will take longer and the date of finalization of the report, the findings and possible recommended measures in relation to excess capacity remains to be seen. So in that situation because we need certainty and we need to know how to move forward we have sought we have looked for and we have received clear and strong guarantees at the political level that the US will ensure that it will respect the temporary commitments. And that is the premise upon which we believe it is in our interest to work while remaining vigilant and prepared for all eventualities.

So we have continued to engage what we have seen as as a constructive engagement in what is in essentially an internal US procedure to get its house in order on tariffs. At the same time we have made very clear that we are absolutely not in agreement neither with the basic premises nor the detailed findings of these investigations. The EU is at the forefront of the fight against forced labor. You know the many ways we are and the EU is not in any way a source of excess capacity. Now let me work let me turn now to the work on further implementing the joint statement.

And that's important because there's a tariff part and then there's a whole non-tariff related part of the joint statement. And with the tariff part of the joint statement now largely behind us the work with the US focuses on how to further implement the rest of the joint statement. You know it consider it covers a number of issues NTBs, investment, economic security, purchase commitments etc. And we've had several opportunities to exchange views with the US on this and I think we feel now that each side has a better understanding of what it is that the other side is is able to do or ready to do, what it wants to do, the opportunities but we also think the limits.

The US has shared certain ideas in terms of scope, structure, and oversight of this part of the cooperation that they would like to pursue on the basis of a joint statement. And it picks up on parts of the areas set out in the joint statement and includes a number of ideas on touching up on standards, regulatory cooperation, conformity assessment, SPS, economic security, or other issues. I think we are now looking at getting more clarification and we are reflecting on how we respond. And I think our preliminary assessment, and that's an important I think, is that there's scope for constructive talks in some areas, while in other areas there are clear gaps between our positions, as could be expected. And I think in that regard, I think I want to make something quite clear, and that is that we've been very clear from the beginning that changes to EU rules, implementation of our or implementation of rules, or changes on our regulatory autonomy are not up for negotiations.

But that doesn't mean that we cannot have constructive work with the US. That doesn't mean that we cannot move forward in various areas. There's dialogue, scope for dialogue, cooperation, and increased transparency to address some US concerns, for example, with respect to the implementation of certain EU rules. And what we want here, and what we think that we need, is a mutually beneficial and balanced outcome. And that's what we will pursue, and we will keep on continuing to inform you on how this work processes.

Now, very rapidly, I would say we've also had discussions with the US. We've been engaging with the US on CRMs, critical minerals. You've seen our joint statement with an action plan, a joint action plan. We've concluded a bilateral MOU. The US is still working on this internally.

It's a complicated issue. And we also continue work inside the EU on this between DG GROW and DG TRADE notably, but also with other DGs. We'll be presenting and continuing discussions with member states. And we'll come back to this also in the fall. And again, we'll keep you informed of progress on this.

But I think we're still very much at the beginning of this work. Finally, on Paxilica, the digital dialogue. Well, you know, on the 23rd of June, the EU signed the Paxilica declaration. It's useful. It will allow us to have more resilient and secure AI-relevant supply chains.

We also had a discussion with the US on the 2nd of July, first dedicated discussion on digital matters. That's an important area. Digital matters are important for EU growth and EU jobs. And I think we had a first positive meeting. I think it will reduce the risk of unnecessary intentions.

It will increase the understanding of our legislation. And we look forward to continue what we hope will be a constructive process in the autumn. So, to sum up in very shortly, I think one year ago we were faced with a lot of uncertainty, with serious consequences for EU firms, workers, and citizens. A year later, we have a much more stable situation. Both sides have delivered on their commitments, or are on the way to doing so, or close to doing so.

There are further confidence-building measures that we have taken, for example, the prolongation of the truce on large civil aircraft countermeasures. Work will continue on the implementation of the joint statement, both the tariff and the non-tariff part, and further than that. These will not be easy talks. They will continue to reflect both sides' interests, and there is a continued risk of volatility. That is the situation we're in, but we will continue work, and I believe we have a good basis to do so in the form of the joint statement, and we look forward to continuing this work and to keep you informed.

Thank you very much.

02:56:11 - 02:56:21

Bernd Lange

Thanks a lot, Matthias. So now I give the floor to shadow rapporteurs for two minutes each, and Seliana is the first.

02:56:21 - 02:58:18

Željana Zovko

Thank you very much, and we are finally implementing the commitments we jointly undertook under the EU-US trade agreement. This is an important milestone, but it should also be the beginning of a new phase in our transatlantic partnership. The joint statement explicitly commits both sides to continue improving market access and to explore additional sectors where only MFN tariffs would apply. My first question is where do you see the greatest opportunity for further tariff reduction on EU exports, and which sectors do you believe should be prioritized in the next phase of implementation? Secondly, following the recent EU-China ministerial meeting, how do you assess its implication for EU-US trade relations?

And the final one, the joint statement includes important commitments on energy cooperation. At the Dubrovnik Forum, we recently witnessed the signing of strategic energy investment agreements involving the United States, Croatia, and partners from Three Seas Initiative. How does the Commission intend to build on these developments and further strengthen EU-US cooperation on energy security, infrastructure, and strategic investment, especially as we have seen that this means for a long-time wanted diversification from Russian dependency in candidate countries such as Bosnia and Herzegovina? On the Pax Silica, we remember that under the previous US administration, export restriction on advanced AI chips affected some EU member states unevenly. Can you clarify what Pax Silica will mean in practice, and can European businesses expect equal treatment across all member states with regard to access to advanced AI technologies and semiconductors exports?

Thank you.

02:58:18 - 02:58:21

Bernd Lange

Thanks a lot, Christophe.

02:58:21 - 02:59:18

Christophe Bay

Merci, Monsieur le Président. D'abord, je voudrais vous remercier pour les précisions apportées par le représentant de la Commission. Comme vous le savez, donc, en février 2026, la Cour suprême a sanctionné la base juridique qui fondait la taxation des produits, notamment l'International Emergency Economic Power Act. J'ai lu que, mais peut-être que le chiffre mériterait d'être précisé, j'ai lu que le montant des droits de douane indûment perçus s'élevait à plus de 130 milliards de dollars. Donc ma question est simple, en complément déjà des réponses que vous avez pu nous apporter, selon quelles modalités l'administration Trump entend-elle rembourser aux entreprises et aux acteurs le montant de ces droits de douane indûment perçus?

Merci.

02:59:18 - 02:59:22

Bernd Lange

Merci, Anna.

02:59:23 - 02:59:28

Hana Jalloul Muro

Thank you very much. Thank you, Chair. Thank you, Mr. Jørgensen, for your explanation.

02:59:28 - 02:59:37

Bernd Lange

Excuse me. You are taking for the S&D, yeah? Okay, Hanna, okay. Yeah, no, no, it's fine. Okay.

02:59:37 - 03:00:59

Hana Jalloul Muro

Thank you. I would like to focus on a specific dimension of our trade relations with the United States, which is our cooperation on critical raw materials. I'm going to ask like Ms. Sofko just did now. Just a few days ago, the EU officially joined MSP Forum. We know what the initiative is about and its goals, you have mentioned, Mr. Jørgensen, but we want to ask what is next.

What concrete initiatives follow from that membership? Is there a timeline for concrete action? I also want to ask you about the negotiations toward a plurilateral agreement to better understand what's the next state of play there. Have negotiations shown any substantial progress in the last months in the Commission's planning on requesting Council authorization to enter formal negotiations? As regards the content of such agreement, I understand that the US has considered price floors as the primary instruments to be used.

Is that still the case or are there any other tangible alternatives being discussed? And the last point I want to mention is related to our cooperation with other partners. We saw how the recent G7 meeting in Evian concluded with an important declaration on critical minerals, which highlighted the role of the International Energy Agency. Has this somehow impacted the discussion with the US on the plurilateral agreement? Thank you very much.

03:00:59 - 03:01:04

Bernd Lange

Thanks a lot. And now it's Anna Cavazzini.

03:01:04 - 03:02:49

Anna Cavazzini

Thank you so much. I receive a lot of letters by citizens, but also stakeholders, on a very important topic that is a little bit INTA but also not, but nevertheless I talk about it. The recent US Supreme Court ruling in the Trump versus Slaughter case means that the US President has the unprecedented power to fire members of more than 20 independent federal agencies, including the Federal Trade Commission. So this is basically, I would say, the end of the independence of nearly all federal agencies in the US and compromises the political independence of the FTC. The FTC's independent role is crucial in ensuring that US consumers are protected against unfair business practices.

Its independence is also a cornerstone of the adequacy decision that enables people's personal data to flow safely between the EU and the US. So the threat to the FTC's independence compounds the existing issues with the adequacy decision, such as the lack of effective redress mechanisms due to the Privacy and Civil Liberties Oversight Board not being fully staffed. And I would say without an independent FTC, the adequacy decision cannot be maintained. So I also welcome, of course, the Commission's announcement that it will assess the impact of this decision on the EU-US Data Privacy Framework, but I wonder what this assessment will entail, because for me, I'm really highly alerted, and again, not only me, but a lot of stakeholders, a lot of citizens, of what will happen with their data if the US is basically scrambling their internal oversight mechanism. So probably the Commission can answer to that.

Thank you.

03:02:49 - 03:02:51

Bernd Lange

Thanks a lot. Martin.

03:02:51 - 03:04:46

Martin Schirdewan

Vielen Dank, Bernd, und ich finde, das einmal mehr sehr beredt, wie widersprüchlich eigentlich die Aussagen auch des Vertreters der Kommission sind. Vielen Dank trotzdem für die sehr detaillierte Darstellung. Auf der einen Seite wird dargestellt, dass es einen Zustand der Stabilität jetzt gäbe, auch nachdem das Parlament geliefert hat, was ich nach wie vor für einen Fehler halte, die Art und Weise, wie das passiert ist. Andererseits wird aber von einer Volatilität geredet. So, und dieser Widerspruch, der wird nicht aufgelöst und der kann nicht aufgelöst werden, weil man es mit einem sehr unseriösen Handelspartner derzeit zu tun hat, der immer wieder die Inhalte dieses Abkommens infrage stellt, und zwar massiv infrage stellt, der zum Beispiel droht, jetzt eine Liste mit Strafzöllen gegen Spanien vorzulegen, der droht, 100 Prozent Strafzölle, wenn die Digitalsteuern weiter umgesetzt werden sollten auf nationaler Ebene, umzusetzen und so weiter und so fort, der jetzt in Ankara wieder beim NATO-Gipfel auch seine Drohung gegen Grönland wiederholt hat.

Also die Liste ist lang, wo mögliche Verstöße gegen das Abkommen sich abzeichnen, wo die Instabilität doch überhandzunehmen scheint gegenüber der Stabilität.

Das ist im Moment auch schon so, dass 7 % der Güter und Produkte, die aus der EU in die USA geliefert werden, mit mehr als 15 % Zöllen belegt werden. Wir haben immer noch die Unsicherheit bei den Stahl- und Aluminiumderivaten. Ich frage mich, wann denn dann die Kommission gedenkt, und das hat leider gefehlt in den Ausführungen, wann denn die Kommission gedenkt, tatsächlich dann auch sich gegen sowohl diese Drohung als auch gegen die Ungleichbehandlung und die Verstöße, die offenkundigen Verstöße gegen das Handelsabkommen zu wehren, welche Maßnahmen da vorgesehen sind und wie dort der Zeitplan aussieht, um europäische Industrie, europäische Jobs zu schützen vor den willkürlichen Maßnahmen der US-Regierung. Vielen Dank für die Antwort auf diese Frage.

03:04:46 - 03:04:55

Bernd Lange

Danke schön. And I give the floor to the head of the delegation, Brando.

03:04:55 - 03:07:17

Brando Benifei

So, thank you, Chair, and thanks to Mr. Jørgensen for the presentation. We have always a lot of issues to comment on when we discuss our EU-US relations, but also especially the trade relations. I want to just focus on a few points that were already partially touched, but I would insist especially considering the initial intervention of Mr. Jørgensen to ask for a bit more in-depth answers on the prospects of the Commission proposals to grant MFN treatment to a number of EU exports. I think this has been a very good practical engagement to rebuild a more positive momentum after the approval here in Parliament and in the institutions on our commitments on the tariff rates. And I want to support this action of the Commission, but also I would like to ask for some ideas on where we could realistically go on this topic in the next weeks and months.

Also, I'd like to understand what is the attitude of the Commission towards the new unacceptable statements that we heard from President Trump directed at Spain, that threaten from the trade perspective one of our Member States. And finally, also because this has also a trade dimension, how we are looking, and I ask the Commission on that, their assessment on the developments regarding the International Criminal Court and the possible activation of the EU blocking statute. The expressions of US Secretary of State of yesterday, of Mr. Rubio, are very direct at attacking the Court and to challenge the international rules-based legal order. So I would like to ask also on this specific point. Thank you.

03:07:17 - 03:07:19

Bernd Lange

Thanks a lot. Katharina.

03:07:19 - 03:08:46

Catarina Vieira

Thank you, Chair. I've heard in this meeting talk about a new phase and positive momentum, but I just want to do a quick timeline.

On the 3rd of June, there was the probe into the EU forced labor and the threat of more tariffs. On the 27th of June, a threat of 100% tariffs on European countries that impose digital taxes for tech companies. On the 9th of July, a threat to halt all trade with Spain because of what they're doing in NATO or not doing. And on the 13th of July, yesterday, Marco Rubio on the ICC, really threatening not only the international rules-based order, but also our courts that we host here and where European citizens also work. Also yesterday, and this is not trade, but it's important because we also talk about human rights with our trade partners, the killing of 26-year-old Sebastian Guerrero in front of his three-year-old daughter.

And this goes into the endless list of killings and detention by ICE. So I'm wondering, and to all the colleagues here, what kind of new phase and stability are we talking about? And more specifically to the Commission, I'd like to ask about the EU-US dialogue, which took place, but on digital, sorry. We've heard three public versions. The Commission says it was an exchange of information.

The US government says it expects this to become a forum to discuss their concerns about EU legislation and implementation. And the tech industry says that they want a forum for regulatory cooperation. So my question is, what exactly is this dialogue? Thanks.

03:08:46 - 03:10:45

Bernd Lange

Thanks a lot, and Matthias from my side on this joint statement. So there is the possibility that there are TRQs regarding steel and aluminum copper. Are there any news on that? Secondly, what is about the derivatives? Martin asked this as well.

So when will they come back to 15%? And you mentioned that there is a request regarding the other items of the joint statement from the United States. Can you give a little bit more hint what they are asking exactly in on this other points? And then back to the pharmaceutical. So in this joint statement, there are clear commitments.

So generica should be based on MFN tariffs and pharmaceuticals general covered by the 15% inclusive rate. Would you agree that this newly launched 301 investigation against the pharmaceutical price building in Germany is really contrary to this commitment in in the Ten-Me-Ri deal? And what will be the reaction if there will be some tariffs or other trade measures against Germany because of this investigation by the Commission? So how will the Commission react on that? Matthias.

03:10:45 - 03:24:03

Matthias Jørgensen

Thank you very much. That's a broad list of questions, touching upon a whole number of issues. So maybe I'll try to be as concrete as possible in my replies. First question or one question is how will the US government reimburse tariffs? Well, the US government has set up a system for reimbursing tariffs.

Those tariffs are of course paid by individual importers and the reimbursement between these importers and the US government is something in which we do not have insight. Those are US-based or private the transaction involving private actors.

However, what we have seen is that we've seen reports that there have been reimbursements. The latest I saw this morning was that 81 billion euros, or 81 billion dollars, had already been reimbursed. That is evidently something that we have to check up on, but again, this is a question between the US Customs and Border Service Control and individual governments. Now, you expressed interest in knowing which sectors are we pressing for when it comes to further extension of the list of EU exports subject to US MFN tariffs. Well, what we have done is we have put together a list of priorities that we have communicated to the US for a wide list of products.

We have tried to make a list which reflects both EU interests but also which makes sense, or which we believe should receive a positive consideration by the US. So therefore, which could, for example, represent irreplaceable inputs or components, or which are critical to US strategic interests. And for us, it also has to be economically meaningful. The US might be relying on us to a high degree. There's a limited domestic availability in the US.

So we have put together a broad list of products covering around 150 billion of EU exports, including medical devices and equipment, wines, spirits and beer, olive oil, olives, certain dairy products, specialized cheese, broad categories of machinery, electrical equipment, and other important products. How will these talks go? I think it's too early to say. What I can say is that we will pursue this issue vigorously. It's part of the joint statement.

We believe that we have a good basis upon which to talk, and we believe that this is an area where we should have progress, and we will push for that. But clearly, I think these, we hope that these conversations will intensify in the course of the fall. It is true that the US, until we had actually passed the tariff legislation on our side, said that this was not something that they wanted to talk about. They wanted to see whether the EU was going to deliver on its tariff commitments, that we have clearly done now. We believe we have a strong basis upon which to speak.

And that's a bit the same when it comes to TRQs on steel and copper and the possible ring-fencing. That's something we need to pick up now. We believe we have a good basis again there, but I think also we need to recognize that talks will be challenged. I don't hide that. The US has made very clear that for national security reasons, these areas, this is an area where the US wants to maintain and protect US production to a very high degree.

And that has a negative impact on everybody's exports to the US, and also on ours. But we will continue to try to press and show the US that it is also in their interest to increase the amount of steel and aluminum which they import from the EU to zero-level tariffs.

Derivatives, where will the US go? I hope they will go forward. I think it's quite clear that we are on a, I would say, increased vigilance, I would rather say, from your side on this, that there are certain expectations which have been clearly expressed in the tariff legislation. We're very aware of that, so this is clearly an area which we will also pursue and where we hope for a constructive reply from the US because we believe that that will be very important to show positive development. Chair, you're also asking what the US is expecting on the joint statement, what are the ideas that they have put forward.

Some of the ideas, as I said, are positive. I think in the area of regulatory cooperation, I think there's real interest in trying to, there's scope for constructive work to make it easier, cut some red tape in both directions. On other areas, some of the US positions are quite well known when it comes to CBAM, when it comes to EUDR, when it comes to other areas, CS triple D. The complaints and the concerns and the wishes of the US for having special treatment for US firms is repeated, but I think what our reply will continue to be what it has been last year and what it has been during this last year, since last year, that is that we have a set of rules which apply to EU firms and also to third country firms in a non-discriminatory manner and that is the way that we continue, that we will continue to apply it. We might simplify it, we have done that in various ways.

We might look at how to solve practical problems, for example in the area of methane or other areas, but it will be on the basis of our interests, our own interests, and it will be applied in a non-discriminatory manner. And that, I think, leads me a little bit to say, what do we expect from the US on energy? Well, I think when we had the joint statement last year, I think a lot of the focus was in terms of increased imports and increased purchases by the EU of US LNG. I think we have seen then since then that the energy discussion is much broader and it is quite fruitful. It's about oil, it's about nuclear, it's about LNG and that there really is scope for some very good work which will both help us in our energy security, lowering our carbon footprint and also allow us to fulfill the aspirations which were in the joint statement.

So I think it's very much work in progress, but I think again a point that we will make to the US is that if they want to export LNG to us, well it will also be in the interest of the US to lower the tariffs on steel and aluminium, for example, which will be necessary for making pipelines in the US. So there's space for joint benefits there. On Paksilica, I think, I mean we've had a first summit, right?

I think this is a new form. I think to say exactly what will come out of this is, is a bit, is a bit early to say. What we see is that it is something that will allow us, we believe, to have better access to the, to the AI stack. It will allow us to have better and more secure access to, to semiconductors and to be in a privileged position when it comes to the possibility to, to buy this kind of tech and to avoid the kind of unfortunate situation of, of, of, well, more or less one and a half to two years ago where, where EU countries were, were divided up in an A-team and a B-team in terms of how trustworthy they were in the area of, of digital AI and, and semiconductors. And, and that is something that we will continue to, to pursue.

Our impression from the recent Paxilica summit is that, that we have really scope for some very good, good, good, good relations there. And that also brings me back, I think I did explain a little bit on, on the question of, of the digital, of the digital dialogue. It is broader. It is, it covers areas such as governance. I mean, how do you, how do you govern markets well?

How do you increase competition? How do you deal with policing the web? How do you deal with export controls, investment screening? How do we work together on, in the WTO on, on e-commerce, on continuing the e-commerce moratorium? So we think we've had a good start and, and we will continue to, to work with the US.

I would expect that we will have a second high-level meeting. The last meeting took place at the level of Director General Roberto Viola from Connect. DG Connect is in the lead of this. DG Trade and DG Comp and the EEAS is supporting, but it is DG Connect that is in the lead of this. And that I think explains very well the, the overall flavor that we want to give, that we want to give to this.

I think I have, I think I have more or less replied to, to the questions. Yeah, I think, yeah, there are a number of statements. There are a number of signals from the US. I think from our side, what we, as I said in the beginning, is we need to remain calm, constant, united and clear in our messaging. And I think react to facts and not, and not, and not statements.

There are a lot of statements. Many of them don't become or translate into, into policy decisions or measures. Those which do, we need to look very carefully on. That's why we're very, very focused on the question of, of the Section 301s and on holding the US to its, to its commitments. A final question is, I think from you, Chairman, the pharma on, on Germany.

We are concerned about it. We are in close contact with Germany. It is about pharma pricing which you know is not an EU competence.

But evidently, in case that the US does take trade measures in response to this, it does become an EU matter. So we think that that would be a very unfortunate development. So we are maintaining close contact with Germany to see how to address this in a manner that avoids unnecessary trade tensions inconsistent with the joint statement. Thank you.

03:24:03 - 03:24:16

Bernd Lange

Okay, this is the end, my friend. We will start again at half past two. Thanks a lot, have a good lunch break.

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