Committee on International Trade Ordinary meeting
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INTA European Parliament
Follow its sittings
Jorge Vitorino
And we can build on that work in areas that are of particular importance in our bilateral relation also. And here I would like to underline also the fact the importance of sustainable investment in particular in the cocoa sector. Of the EU imports from Côte d'Ivoire, 78% are cocoa or cocoa derivatives. So it is not surprising that when we are discussing with Côte d'Ivoire how we can work together on investment, that we also look in particular on the sustainable cocoa sector. And that in we can build also there on the work that we have done in particular regarding the EU Sustainable Cocoa Initiative in order to improve the cocoa sector sustainability.
Which is also an opportunity by having specific provisions in the agreement, the Sustainable Investment Facilitation Agreement, specific provisions with regard to the cocoa sector. It's also an opportunity to support and recognize the work that has already been done by Côte d'Ivoire on sustainability, including the development of the new regional African standard, what is called the ARS 1000, which precisely addresses the sustainable, ethical, and traceable cocoa production and which we support. And we hope actually to support Côte d'Ivoire's efforts in order to increase the transformation of cocoa beans from the current 40% to 50% by 2030. So these are efforts that Côte d'Ivoire is developing and which we would like to support. So in sum, this is we are now engaging in these discussions, in these negotiations with Côte d'Ivoire.
We will cooperate with them as far as sort of the work that needs to be done in order to to then also prepare the implementation of the agreement, which will of course be where the crux of the matter will lie because this is indeed the most important part is what we can do together once the agreement is negotiated and of course subject to the European Parliament's consent before it will enter into force. This will be an opportunity then for us to work with Côte d'Ivoire in these important matters of improving the country's attractiveness and retainness of investments, in particular European investments of course. Thank you very much.
Thanks a lot, George. I give now the floor to our standing rapporteur Katharina for about three minutes.
Catarina Vieira
Thank you very much, Chair, and thank you also, George, for your presentation. As the rapporteur for West Africa here in the INTA Committee, I would like to welcome these new platforms for cooperation with the countries in the region. It has been ten years since the Economic Partnership Agreement with Côte d'Ivoire has been applied, and now we are very much ready to take the next step in making our cooperation more qualitative and extensive. The SIFA between the EU and Côte d'Ivoire has lots of potential to anchor cooperation, in particular on focusing on a transparent setting, and I am very much looking forward to seeing these negotiations play out. Cooperation to create more transparency in the investment setting is crucial at the time when development cooperation funding is unfortunately shrinking.
It's important to anchor the Sustainable Development Goals in these efforts and to create platforms where civil society can engage with the EU. So in this agreement, I really hope that sustainability is defined clearly in the framework of the agreement. And this means having strong language on sustainability and potentially even country-specific commitments, which we have not seen in previous SIFAs but could be brought out on this one. For instance, issues linked to deforestation and responsible business conduct should be clearly addressed and sought to instrumentalize in these texts. I'm very happy to hear that there will be a separate annex on cocoa, given the importance of the cocoa sector for the EU and Côte d'Ivoire alike.
And I would like to ask the Commission how they are planning to operationalize this annex with Côte d'Ivoire. And I would also be keen to hear, and I hope so, will the civil society have a role in this annex on cocoa, mirroring the successful civil society and business engagement that has been done with the Sustainable Cocoa Initiative? Of course, it goes without saying that civil society and business community must also have a strong role in the agreement, beyond the annual dialogue coinciding with the meeting of the Committee of Investment Facilitation. So I'm wondering, has there been any discussion with the Ivorian counterparts on increasing the role of civil society in this agreement? It would be very crucial in our view.
It's also very important that we're able to evaluate in the midterm how useful the SIFA is to promote sustainable investments. We would like to propose from the outset that there's a commitment to have an evaluation, say three or four years after the entry into force, of the quantity and quality of investment since the adoption of the SIFA, so we can also monitor the impact a little bit more. So I urge the Commission and the EEAS to work extensively with Côte d'Ivoire to provide technical assistance at a time when negotiations conclude, as technical capacity and commitment to reforms is really important for the successful implementation of any SIFA, as we know. Thank you very much.
Jörgen Warborn
Thanks a lot. I give now the floor to the shadow rapporteurs and for two minutes, and Jörgen Warborn is replacing Céline.
Thank you, Chair. The competitiveness compass sets out a clear direction: to open up new opportunities for our business in third countries while securing and diversifying our economic partnership. It is in this context that on the 17th of July, the Commission launched negotiations with Côte d'Ivoire on a Sustainable Investment Facilitation Agreement, which will complement the Economic Partnership Agreement already in force. Côte d'Ivoire is an important economic partner for the European Union, with EU foreign direct investment already amounting to 3.8 billion.
on the African continent, which offers considerable opportunities, but where investment can also, we must acknowledge, sometimes remain complex and risky. I therefore welcome the opening of these negotiations. However, I would like to draw the Commission's attention to three points that require particular attention. First, this agreement must deliver concrete improvements in terms of legal and regulatory certainty, transparency, and administrative simplification. Our businesses do not need statements of intent, they need tangible results on the ground.
Second, we must ensure that the mechanisms provided for under the agreement are genuinely accessible to our SMEs. The opportunities created by our trade policies cannot benefit only large companies that already have the resources needed to invest in third countries. And finally, I would like to emphasize the cocoa sector, which will receive particular attention under this agreement. Côte d'Ivoire is the world's largest cocoa producer and a key supplier to the European market. We must therefore ensure that the sustainability and traceability requirements to which we are committed remain proportionate and realistic.
Excessive requirements could indeed result in some Ivorian exports being redirected towards other markets, including China, the United States, or Canada. This would ultimately be counterproductive, including for European companies that depend on supplies of Ivorian cocoa. So to sum up, facilitating investment, yes, but with clear, workable, and proportionate rules. Only under these conditions can the agreement both benefit our European businesses and Côte d'Ivoire's economic development. Thank you.
Javier Moreno Sánchez
Buenos días a todos y a todas. Gracias, presidente, quiero también agradecer la intervención de la Comisión y como bien ha dicho el presidente, voy a leer la nota que había preparado el compañero Francisco Assis. Me gustaría comenzar expresando el apoyo del grupo S&D al inicio de las negociaciones para un acuerdo de facilitación de las inversiones sostenibles, el SIFA, entre la Unión Europea y la Costa de Marfil. Costa de Marfil es un socio estratégico de la Unión Europea, no solo desde el punto de vista comercial, sino también como destino de la inversión europea. Por lo tanto, acogemos con satisfacción los esfuerzos por establecer un marco de inversión más transparente y predecible y eficiente que pueda contribuir a la diversificación de la economía de Costa de Marfil y al crecimiento sostenible.
Sin embargo, para el grupo S&D, un acuerdo de inversiones sostenibles no puede significar simplemente reducir las barreras a la inversión. Un acuerdo de esta naturaleza también debe contribuir a garantizar que la inversión sea mutuamente beneficiosa, promueva mejores condiciones de trabajo y respete los compromisos medioambientales y sociales. Queremos que estos acuerdos creen las condiciones para una inversión productiva y responsable. En el caso de la Costa de Marfil, nos gustaría destacar especialmente el sector del cacao, como han hecho los otros compañeros. Es esencial que estas negociaciones complementen la iniciativa del cacao sostenible y contribuyan a reforzar la cooperación en materia de inversión sostenible y la trazabilidad de las cadenas de valor del cacao.
Costa de Marfil es uno de los principales productores de cacao del mundo y este sector es crucial tanto para la economía del país como para la relación económica con la Unión Europea. Por lo tanto, debemos garantizar que la inversión europea contribuya a generar más valor a nivel local, promueva la transformación y la diversificación y mejore la sostenibilidad de toda la cadena de valor. Y voy terminando. Por último, creemos que es importante que este acuerdo se considere complementario del acuerdo de asociación económica existente y que también involucre a las empresas locales, los trabajadores y la sociedad civil. En conclusión, mi grupo apoya estas negociaciones, pero queremos un acuerdo que no se limite a facilitar la inversión, queremos un acuerdo que garantice que dicha inversión sea sostenible, responsable y aporte beneficios tanto para Europa como para Costa de Marfil.
Muchas gracias.
Muchas gracias, Christophe.
Christophe Bay
Je vous remercie, Monsieur le Président. La Commission a en effet lancé donc le 17 juillet dernier des négociations avec la Côte d'Ivoire en vue d'un accord de facilitation des investissements durables. Personne ne peut être opposé par principe à une relation économique plus stable et plus approfondie avec la Côte d'Ivoire. Ce pays est un partenaire majeur de l'Union européenne, un partenaire historique de la France et un acteur essentiel de l'Afrique de l'Ouest. Des échanges progressent fortement, 14,8 milliards d'euros de biens échangés avec l'Union en 2025.
Et l'Union européenne représente plus du quart du commerce extérieur ivoirien. Mais ces chiffres doivent aussi nous alerter. L'Union européenne affiche un déficit commercial de 6,3 milliards d'euros avec la Côte d'Ivoire, principalement du fait des importations agricoles, notamment de cacao. Notre vigilance doit donc porter sur trois points. Premièrement, cet accord ne doit pas devenir un simple outil d'accès aux matières premières, au cacao, aux filières agricoles, au bénéfice de quelques grands groupes.
Il doit garantir une vraie transformation locale et des retombées industrielles concrètes. Deuxièmement, les entreprises doivent réellement en bénéficier. On nous parle beaucoup des PME, très bien. Mais alors, il faudra des garanties pratiques, mesurables et non une nouvelle couche de discours technocratique. Troisièmement, remarque plus générale, ces mini-accords posent une question de méthode.
La Commission multiplie les accords ciblés, plus rapides, parfois moins visibles politiquement. Nous demandons donc de la transparence sur le calendrier, sur les secteurs concernés, sur le suivi parlementaire de notre assemblée, les clauses de sauvegarde et l'évaluation des effets sur nos filières sensibles. Donc en conclusion, mesdames et messieurs, oui à un partenariat équilibré, oui à une coopération renforcée avec la Côte d'Ivoire, mais non à une politique commerciale européenne qui avance par petits arrangements successifs sans contrôle suffisant et sans réciprocité. Ma question est donc simple. La Commission peut-elle s'engager à transmettre au Parlement un calendrier précis des négociations, la liste complète des secteurs concernés et une évaluation de l'impact de cet accord sur nos PME ainsi que sur la filière agricole.
Je vous remercie.
Benoit Cassart
Merci, Monsieur le Président. L'Union européenne représente le principal partenaire commercial, le premier investisseur et le plus important donateur de la Côte d'Ivoire. Elle est la première destination des exportations ivoiriennes, absorbant près de 37 % des produits exportés comme le cacao, le café et la noix de cajou. Ce succès s'explique en grande partie par la coopération de longue date qui existe entre l'Union européenne et la Côte d'Ivoire dans le cadre de leur accord de partenariat économique. Avec le lancement des négociations officielles d'un accord de facilitation des investissements durables, AFID, le 17 juillet dernier, le gouvernement ivoirien et l'UE écrivent une nouvelle page de leur histoire commune.
Les accords de partenariat économique comme les nouveaux accords visant à faciliter les investissements durables sont des outils clés. Mais leur succès dépend de notre capacité à les traduire en actions concrètes, que ce soit dans l'agriculture durable, les énergies renouvelables ou les infrastructures.
Un accord réussi est un accord qui se traduit sur le terrain par davantage d'investissements, de création de valeur, d'emplois et de développement économique. En ce sens, l'objectif de l'AFIT est de simplifier les procédures administratives, renforcer la transparence et faire des investissements un véritable moteur du développement économique et social. Cet accord répondra aux besoins concrets de nos PME, souvent étouffées par des barrières bureaucratiques. Je me réjouis de constater que la Côte d'Ivoire souhaite faire de la durabilité un pilier central du futur accord, en valorisant les ressources forestières, agricoles et maritimes comme levier de développement. En tant qu'agriculteur et éleveur, je crois fermement que l'Afrique et l'Europe ont un rôle majeur à jouer.
Je suis convaincu que la Côte d'Ivoire peut faire de sa transition agricole et énergétique un moteur de croissance et d'autonomie stratégique. Le nexus eau, énergie, alimentation peut faire de l'Afrique un continent résilient, souverain et prospère. D'ailleurs, grâce à l'initiative Global Gateway, plus de 6 milliards d'euros ont été mobilisés entre 2021 et 2025 pour soutenir cette dynamique. Cependant, une question persiste. Un accord ne vaut que par son application.
Dès lors, comment garantir que les engagements pris seront respectés ? Le futur AFIT entre l'UE et la Côte d'Ivoire ne devrait pas instaurer de mécanisme de règlement des différends entre investisseurs et États. Alors, quel dispositif permettra d'assurer la transparence, la responsabilité et le respect des règles ? La Commission envisage-t-elle un mécanisme interétatique contraignant incluant des procédures d'arbitrage ou d'un autre mode de règlement des différends ?
Bernd Lange
Merci. From my side, three elements. So in the discussion about the EPA, the question of child labor, forced child labor was a crucial element and Côte d'Ivoire and Ghana rejected to include the ratification of the child labor ILO convention. Is child labor also an element in the discussion because it is a result of this monoculture on cocoa in Côte d'Ivoire and Ghana? Secondly, how is civil society in Côte d'Ivoire but also on our side involved in the negotiation process?
And thirdly, is there a cooperation with Ghana as well because regarding cocoa this is I guess similar with Ghana, so is there also an intention to extend this SIFA to Ghana as well?
Jorge Vitorino
Thank you. Thank you very much, Mr. Chairman, honorable members, indeed for the comments made which touch on very important aspects of these negotiations and things to have in mind which indeed we are aware and which we have taken good note. And in particular picking up on the point that you have also mentioned and the Madam Standing Rapporteur on involvement of civil society. And this is indeed an important aspect that we will be addressing because this will be essential, the involvement of civil society on both sides will be essential for the success of the SIFA.
And as under our first SIFA, which we have done with Angola, we intend to organize indeed dialogues with civil society before the meetings of the Committee on Investment Facilitation, which is foreseen in the agreement which we intend to negotiate, which we are negotiating, precisely to better understand how this agreement can contribute to sustainable and inclusive growth in Côte d'Ivoire. And this involvement of businesses, workers, environmental organizations, other stakeholders will indeed also help us in the work to ensure that the agreement responds to these real needs on the ground and that strengthens the legitimacy of the agreement and supports the effective implementation. So we will be working on precisely these aspects of involvement of civil society, using as much as possible also the existing channels that we have and which will be available through the EPA, for example, but also through the sustainable cocoa initiative. And this regular dialogue will be a key feature in our work on implementation. There was also a point raised regarding the need for evaluation and also to make sure that indeed the agreement is translated in concrete developments on the ground.
Indeed, the agreement what it does is to offer this framework of facilitation work that we would do with Côte d'Ivoire. But of course, the investments are done on the basis of, in particular, the opportunities that are offered for potential investors. And it will be important indeed for us through the SIFA first to set up this framework that is conducive for investments so that then we can indeed see these investments flow into the country. Now we should also be aware that of course the decisions on investments, they are dependent on a multiple set of factors by investors. The framework and the legal framework and the conditions that are existing on the country are one, the market opportunities are one, the stability of legislation, etc. are others.
And this will also very much depend from sector to sector, from different investment projects whether they are realized or whether they are done precisely in Côte d'Ivoire or in other partners, for example. Now on the issue of the importance of these issues of investment facilitation being accessible to SMEs in particular, this is indeed a very important aspect. And it is one of the fundamental characteristics of investment facilitation is precisely the fact that it benefits mostly the small and medium enterprises. The big huge investments of billions and billions, they usually get enough attraction of attention, they get enough attention from the authorities in order to get a fast track. But it's the multitude of smaller investments which are still important that will tend to benefit the most from the facilitation measures that Côte d'Ivoire can implement through the SIFA.
I think one comment was made on the calendar and the involvement of Parliament. This of course is well established practice for trade agreements and we will of course also do so with regard to the SIFA. We have shared with the committee our text proposals and we will be of course available to continue to discuss as we go into the discussions, into the negotiations. The calendar for the moment we are discussing precise calendar with our counterparts, but we expect now already in September to move to more concrete discussions on the text proposals that we have presented forward. On the comment that was made on the implementation, sorry, the enforcement part of the agreement, indeed the agreement foresees a dispute settlement.
It's a state-to-state dispute settlement in the sense that it's a dispute settlement between the parties to the agreement. It does not foresee investor-to-state dispute settlement. This is specifically another track of work which is not covered in investment facilitation agreements as the ones that we negotiate, but we do have a dispute settlement mechanism foreseen in the agreement, at least we are proposing so, of course. You've mentioned, of course, the issue of forced child labor. Indeed, this is also part of the work that has been done with regard to the cocoa sector in particular, but not only.
And we do help, we do hope to include indeed also the possibility of working on those issues with Côte d'Ivoire in order precisely to improve the situation. As far as Ghana is concerned, we have also had discussions with Ghana on the possibility of a sustainable investment facilitation agreement. They have been undertaking internal consultations on the issue. And so we hope at some point when they are ready to be able also to engage with them in these issues. And you rightly pointed out, cocoa sector is an important sector for both countries, but also the opportunities available for European investors in Ghana are also interesting and there's also potential there in that regard.
So I'll conclude now, but of course I hope we will be able to continue the discussions as we go into the more concrete negotiations with Côte d'Ivoire. Thank you.
Bernd Lange
Yes, thanks a lot. We will have an eye on that and we'll continue to look to the progress on the negotiations. Thanks a lot, George. Next item is WTO, state of play of WTO. We will have a delegation to WTO to the public forum and meet some officials there.
The ministerial conference in Yaoundé, let's say diplomatically, it was not a success. And there is a new chair of the General Council and he is quite dynamic. And now the question is, what is the perspective for the further reform of WTO? And I'm happy that Ms. Sambatara, the director of Multilateral Affairs, Strategy and Analysis from DG Trade is here and I give her the floor for about seven minutes.
Myrto Zambarta
Thank you very much, Chair, and thank you very much for giving me the opportunity to exchange with you today on recent developments in the WTO. I think our last exchange on this was in April, and since then and despite, as you said, the unsuccessful outcome of Yaoundé, the WTO reform debate has actually garnered momentum and we have had several papers tabled by WTO members, including of course the EU. So what I'll do today is debrief you on the latest reform discussions and the outlook for autumn, and I will also update you on other key WTO developments, mainly on the plurilaterals, the e-commerce agreement and IFDA, and the e-commerce moratorium discussions. So on WTO reform, you are familiar with our overall objectives. We need to see an ambitious and comprehensive WTO reform to reflect today's realities in the rules-based framework, because that is the only way to preserve the credibility and legitimacy of the global trading system.
So in our view, we need to continue tackling all issues upfront, including the more sensitive ones, like finding a new balance and leveling the playing field and avoiding the risk of settling for low-hanging fruit and calling it reform.
Since April, as I said, there's momentum, there's an accelerated pace in Geneva. WTO members are engaging in a member-driven reform discussions on the four tracks that have been identified in the informal foundational issues, decision-making, level playing field, and development. As the chair mentioned, we have a new General Council chair, the New Zealand Ambassador Kelly, who's overseeing the process, and she has appointed four facilitators for each topic and has put together an ambitious calendar of reform meetings until the end of the year, and some are claiming that it's too ambitious, but we'll see how it goes. Reflecting the fact that this is a member-driven process, the base for the reform discussions are papers tabled by WTO members. Facilitators are acting more as moderators rather than driving the process.
Kickoff meetings took place in July on each topic with members presenting their respective papers, and our assessment is that in general the reform discussions got off to a good start. But the maturity and the level of convergence on the four topics varies considerably, and this diversity is also reflected in the exchanges, so I would say that the reform process still remains fragile. On our papers, you will have seen that we tabled three reform papers addressing our top priorities: foundational issues and rebalancing the level playing field and the governance and decision-making of the WTO. On foundational issues, which is has been the most controversial of the points, but also the most important, we further explained the rationale on the need for an open debate on the parameters that define the current balance on the rights and obligations that no longer reflect today's realities. We propose some possible pathways, such as reviewing the existing exceptions to MFN and exploring the idea of sectoral trade agreements.
On level playing field, we chose to make a very concrete contribution to the discussion with a focus on extending WTO commitments on state-owned enterprises and replicating what we already see in FTAs and in accession protocols into the multilateral arena. And on governance, we propose some practical solutions and tools to overcome deadlock in decision-making, for example, raising the political cost of blocking, flexibility such as opt-outs and grace periods, and a differentiation in decision-making. We also propose some institutional reforms, such as annual ministerial conferences and a small consultative body to act as a conduit between the membership and the General Council. We have had generally positive feedback, our contributions are always appreciated, and we have engaged in extensive outreach going beyond the like-minded to key players like China, India, Brazil, and the developing country groups. But of course, there is still considerable divergence of views on foundational issues and a very different understanding of the scope of what we call level playing field.
Now, what are other members' views? Decision-making is the most mature topic, with some common themes emerging across papers, and the EU's paper has some commonalities with those submitted by other members. But we still have many developing countries stressing the need to uphold consensus-based decision-making, so that will require a lot more elucidation before we can get to results. The debate on foundational issues is the least mature, but as I said, the most significant, and as expected, there is still need for a lot more engagement and discussions on the various sides of the various ideas on the table.
Now, the discussions on the level playing field show considerable divergence of views on what the concept means and its scope. Some point to agriculture, policy space... in this light, it's important to move the discussion from concepts to concrete proposals, which is why we also opted to make a very concrete proposal on SOEs. The discussion on development and special and differential treatment so far is substantive, but with differences of view on how and if to reform SDT, and the next step could be a factual stocktake and mapping of existing SDT provisions and then looking at the results and identifying the gaps. Looking at the outlook for autumn, we're looking ahead, Geneva is just getting back. It's important to maintain momentum and move to specifics, and that will be our direction.
There is a clear need for more in-depth and technical discussions, but as the level of maturity differs across topics, we expect to see different approaches and formats in the reform meetings, and that's something that we need... that will need to be elaborated. We will of course continue to invest significantly in this discussion, and we plan to continue feeding the reform discussions with further contributions. So what we submitted in July is not the end of the EU's input. And we will of course continue intensive outreach on the EU papers in the autumn and engage with different partners. But we alone cannot drive this.
We need the other key players in the global trading system to engage sincerely and constructively across the four tracks, and that remains to be seen. If you would like, I can give you a very short update on where we are with the plurilaterals, but I see my time is over, so... yeah. Right, on the e-commerce agreement interim application, you will have seen that we submitted our proposal for a Council decision for the conclusion of the agreement by the EU, which was immediately transmitted to the Council and the European Parliament. And once both institutions have completed their procedures, we will notify the EU's acceptance to the WTO Director-General. So we count on the EP's swift support to enable this as soon as possible.
At the WTO General Council in July, some WTO members questioned the WTO DG's depository role and the Secretariat's support for the interim implementation of the e-commerce agreement. We pushed back, together with other co-sponsors, arguing that this is a WTO agreement in waiting and it should remain linked to the WTO, but this is obviously something that we need to monitor closely. On the IFDA, you will recall that ministers issued a joint declaration at MC14 reinforcing the strong collective determination to secure the timely entry into force and implementation of the IFDA within the WTO framework. Incorporation into Annex 4 remains our ultimate objective, but simply insisting on it is not going to get us where we need to be. So we're now focusing on possible interim implementation, and our view, our preference is to take inspiration from the solution found for the e-commerce agreement, and that would also help consolidate this approach as a solution for plurilaterals against WTO blockage by a single member or a few members.
Of course, this runs a risk and has wider policy implications and a potential backlash regarding the interim e-commerce agreement, so we need to keep a close eye on that too. So I will stop here. Thank you very much for your indulgence.
Bernd Lange
Thanks a lot, and I give now the members the floor, and the co-chair of the steering committee, Jörgen Warborn, is the first for two minutes.
Jörgen Warborn
Thank you very much and thank you to the Commission for the presentation. First of all, I'd like to stress the urgency situation because as the chairman said, it wasn't really a success in Yaoundé. And I remember that Dr. Ngozi said something along the line that we simply ran out of time. And that's why there was some hope that we would finalize at the General Council. Of course, that didn't happen and honestly, I didn't think it would, but we are still in an urgency situation, I would say.
And that's why I like the fact that you mentioned that we should have meetings every year. Because we need that. We need the political pressure on the system in order to make that happen. And I understand that this idea is gaining some traction. We had it in the European Parliament's resolution as well, so we have backing, or the Commission has backing from the Parliament on this one.
I would like the Commission to push, to push this idea to the situation that we actually have a meeting next spring. Set a date, set a timeline, drive that force and that will push the timeline. Because if there is no timeline, this will go on forever and nothing will end up. We need the time pressure and once we are there, we need the political pressure to make some moves. Then you said that EU cannot do this alone and that is of course true.
We need other, well all of them in order to reach some kind of consensus on this. And here we have to show still leadership as the European Union. And I'd like to take the opportunity to ask the Commission the tricky question on the Industrial Accelerator Act. Because here I understand on the European origin, the list of the companies, or the countries that will be part or will be, will have the equivalent status is very unclear to me. And it's very unclear to the procurement authorities.
It's very unclear to companies. It's very unclear to member states. And hopefully it's not unclear to the Commission. So can we have the list of the countries that are defined as equivalent according to the Commission on the Commission's proposal? Of course this might change when we negotiate in the Parliament and the Council, but we cannot decide in blind.
We need to have this information and not only we, I think all of us need that. That will be my question. Thank you.
Javier Moreno Sánchez
Sí, gracias presidente y yo comparto las preocupaciones expresadas tanto por el presidente como por Jörgen porque los que estuvimos en Yaundé nos dimos cuenta que esto no funciona. Pero yo creo que más que nunca desde esta casa tenemos que apoyar los trabajos de la OMC porque la alternativa sabemos cuál es. La alternativa es la ley de la jungla, la ley del más fuerte que algunos dirigentes de algunos países quieren imponer. Entonces yo le agradezco a la Comisión y que sepa la Comisión que esta casa siempre estará apoyando. Cuando usted hablaba de los socios que no se puede hacer solo, ¿nos puede decir qué socios y cómo están los socios, cuáles son los más activos en estos momentos, con cuáles podemos hablar para reforzar la posición de la Unión Europea?
Y lo dijimos en Yaundé en nuestro documento, lo de las ministeriales anuales yo creo que es esencial.
Y quería saber cómo está el tema, si hay una aceptación favorable por parte de los socios. Y nada, seguir trabajando y si nos puede decir un poco más dónde estamos avanzando en los acuerdos plurilaterales, porque mientras la OMC esté un poco bloqueada, creo que es una de las soluciones para que sigamos avanzando. Pero sobre todo, lo más importante es que los países, los representantes se sigan sentando a la mesa negociando, dialogando, por muy difícil que sea. No tenemos que desesperarnos porque es importante que sigamos, porque la alternativa ya la he dicho, la ley de la jungla, y ahí perderíamos todos. Muchas gracias.
Rihards Kols
Yes, thank you very much, Chair, and thank you, Commission, for the update. Well, I will contradict what Mr. Chair mentioned. Diplomatically, well, let's leave that for diplomats. We're politicians and let's call it a spade a spade. And in my view, the MC14 not only failed to agree on a reform path for the WTO, it also let the e-commerce duty moratorium lapse for the first time in 28 years.
And based on what we saw in Yaoundé, we were nearly close to reaching a consensus, but ultimately lost it. And the usual suspect wasn't actually the one who blocked it. So this is, needless to say, this is another example of how badly need WTO reform is, and a reform that would no longer allow a country to block initiatives where a clear majority of WTO members support them. As was mentioned over the summer, the Commission has submitted three additional papers in Geneva. We, I mean the ECR, we fully support the predictable, fair, and flexible WTO reform, but three papers do not constitute a work plan for agreement.
So therefore, the question is, what is the Commission's realistic plan to deliver a reform package or at least restore the e-commerce moratorium before MC15? And also, is the Commission able to form alliances with other countries that share our views to help break this impasse? And last but not least, one thing is that we leave it for kind of gentlemen's agreement from one MC to another MC. Wouldn't it be a time actually to lock in in a legal framework of, in a way of memorandums of understanding? Then we do not jeopardize this potential move for the political internal flip-flops because of the election cycles and etc.
So therefore, these kind of MOUs are not kind of breaking those things, but at least lock in the commitment for the reform, for the delivering of agreements and etc. Thank you.
Catarina Vieira
Thank you very much for the update. I was wondering a couple of different things. First of all, for the upcoming public forum this year, do we have some information about the most pressing themes being raised by the Global South partners? Are there any initiatives in, you know, that are particularly being pushed by the Global South? Secondly, I'd like to ask about any possible reactions that there might have been in the WTO when it comes to the tariff regime of the US and especially the latest developments with basis on Section 301 investigation.
Essentially, are countries already or in any form challenging this tariff structure or is the discussion not there yet? And then finally, I'd like to speak a bit about the input provided by the Commission on the WTO reform on the 13th of July.
We very much welcome this input. A key element that we however think is missing is in this submission is the absence of any reference to climate change and the need to decarbonize the economy, which is a shared challenge for all of us at the WTO. It's possible to address both economic security and fair trading practices and overcapacity while also addressing the need to decarbonize the economy. So for example, when addressing subsidies disciplines, why not modernize the WTO rules not only on state-owned enterprises, but also agreeing on disciplines for subsidies that are harmful for climate and the environment? And when looking at the possible reform of the MFN principle to enable sectoral agreements, why not also look at enabling coalitions of the willing to put in place trade disciplines that do not only address economic security, but also climate objectives?
I think it's really time to think outside the box and should we should not wish to enable agreements amongst interested WTO members on crucial, sorry, on trade in critical materials if they also contribute to ensuring key climate, environmental and human rights standards, such as the rights of indigenous peoples. Thank you.
Thanks a lot. Terry, you want to come in? No. Lynn? Lynn is not there.
Okay. Then I will give back the floor to the Commission.
Myrto Zambarta
Thank you very much. I'll start in the reverse order. On on the Global South and what concerns they they raised. We haven't seen anything new. It's it's all encompassing the discussion about special and differential treatment, which we're very happy to have.
The and and it's basically requests of flexibility in policy space, which as I said, it's something that we are very happy to discuss to discuss. What we would like what we are in our discussions with with developing countries and and the Global South, what we're trying to pinpoint is the fact that we would like to have their views on a wider set of issues that is not simply saying well, you know, do whatever you want, but we want an exception. And what we do see is that there is a clear understanding that for example, subsidies are harmful to their industries as well. Subsidies are harmful to their economies as well. So we're actually finding fertile ground for cooperation there.
We're we're spending a lot of time explaining that our positions on looking again at MFN exceptions etc. are not targeted at their flexibilities or the way that the EU unilaterally treats developing countries. I mean, of course our unilateral preferences will not change in any in any way. So this is definitely a sector of the membership that we are investing a lot on. On climate, we there were not it was not mentioned explicitly in the July submissions, but of course there were mention it was mentioned very explicitly in our in our first submission on WTO reform. And the idea of coalitions of the willing with climate objectives is of course there and it's actually happening.
What we're trying to put in place now, which is is the more fundamental changes to the way the WTO works precisely to allow such coalitions of the willing to become effective.
And this is the whole debate about plurilaterals and decision making. So we are, before we get into sectoral issues, we want to fix the way that the system itself is working precisely to allow groups of members to move ahead on areas of their interest even when there is no consensus. On, sorry, I can't read my handwriting, the Commission's plan to deliver reform. The Commission cannot deliver reform on its own. I mean, that's perfectly clear.
So we're starting with papers, we're animating the discussion, we are putting concrete proposals on the table because the way that the discussion and the debate has evolved after MC12 is that this has to come from the members, and we are fulfilling that responsibility. It's still early days. The discussion has been now taking place for three months, the process has only been in place for even less than that. So we are working towards that. We are incredibly aware of the sense of urgency, and part of our efforts is to make others realize that there is a sense of urgency because this is not recognized by everyone, or if it is recognized, it's recognized in statements but not in actions.
So we are still seeing in the debates that we're having the same arguments being put forward, the same reluctance to touch on the fundamentals. So it's going to be a long process. I mean, we do have a sense of urgency, we fully agree that there needs to be more political involvement, and we very much salute and appreciate the European Parliament's willingness to put political attention on this, and we would urge you to continue. But this is not going to happen overnight, and it's not going to happen by MC13, whether that happens this year or the next. Now, on the question of MOUs, the way that the WTO decision making goes, I mean, there's no substantive difference between a ministerial declaration that is adopted by consensus or an MOU that is adopted by consensus.
So we had hoped to conclude that commitment and lock in that commitment to reform in a ministerial declaration. That did not happen, and then you've had various plurilateral statements. But what we have seen in Geneva since MC12 is precisely that that commitment is there. Now, the extent to how much that commitment will translate to results, that remains to be seen, but at least that has been locked in. Mr. Hübner, I hear your plea for a spring ministerial.
We have been, we have received positive noises about the idea of annual ministerial conferences, but I think we're a long way off from actually having, if we table a proposal now for an MC in spring, it's going to be told, I don't think it would be successful. So the idea was to at least lock in the idea of annual ministerials at MC13. But what we are looking at is a possibility of increasing the number of informal ministerials through the year, at least possibly not with the whole membership, but at least with a big coalition that would allow us to provide that political impetus as we go forward. On the list in the IAA, I understand that it's still in preparation, there's still no clarity as such, which is why the EP has not been informed. We are not in the lead on this, but of course we will be happy to inform the Parliament once there will be more clarity, and I understand you're going to have a whole session on the IAA in the afternoon where I hope you get more information on that.
Thank you very much.
Bernd Lange
Thanks a lot. This concludes this item and I guess we will come back specifically after our delegation to WTO. And now I'm really happy that I can welcome, and it's really a big honor for me, our new Director General of the DG Trade, Ditte. Good to see you. And I guess it is not really necessary to introduce you here in the Trade Committee.
I guess everybody is knowing yet that you started your career in DG Trade, well known in different departments of DG Trade. And then you switched to the cabinet of Madame Vestager and then of course responsible for DG Energy. And now back to DG Trade. And I guess my colleagues are knowing that sometimes I'm using in my remarks some quotes from famous rock songs. This time I will refer to a famous movie.
And I guess it's really similar a little bit like Back to the Future, this movie, where some starts and then left and then coming back in a third episode in this famous saga Back to the Future where Marty McFly travels back into the really hard Wild West. And I guess now we have also in this geoeconomic and geopolitical situation a little bit Wild West. And perhaps you feel a little bit like that as well. So the question of rules, and we had just a debate about WTO, are under threat. We have US and China which are not behavior in a fair manner.
But of course we had a lot of trade agreements, a lot of opportunities. So it is really a challenging time, but also a possibility to find a proper way and proper strategy for stable trade and economic relation to other countries. And of course this exchange with the Director General is always the opportunity for us to get the temperature and the possibilities to get a clear vision what the vision of the DG Trade is. And therefore I'm really happy that you are here. And I give you now the floor for a round about 15 minutes to explain how this Back to the Future will be managed by you.
Please.
Ditte Juul Jørgensen
Thank you very much, Chairman. Thank you very much, Bernd, for the invitation to join you here today and for the very kind welcome. I've been in my job as Director General for DG Trade and Economic Security for three months, more or less exactly. It's been already an interesting few months, but as you said, it's very much Back to the Future. It is coming home to a place I know, a place I know well.
That includes of course this committee. I've been working very, very closely with the INTA Committee back in the day, so to say, and in particular very, very close work with the committee after the Lisbon Treaty and in the adaptation of trade policy and trade policy instruments to the Lisbon Treaty, which as you will know well was a quite a significant change in trade policy and in how we work with the European Parliament.
In all of the jobs I have had in the Commission over these last many decades, working with the European Parliament has always been essential for me. It is, of course, essential for the Commission as a whole, and that is something that I would wish to continue to ensure. I am committed to continuing the very good practices that I know have been established by my predecessor, Sabine Weyand, having regular exchanges, ensuring transparency and information sharing, but of course, I'm also ready to take it further. I am available and always ready to talk to you, and I look forward to continuing this close cooperation and exchange. Now, as you have said, this back to the future is coming back to something of a Wild West.
I think it's a very appropriate image. The world has changed very, very significantly in recent years, very significantly since I left DG Trade 12 years ago. We are operating in a very different environment. It's characterized much more by uncertainty, instability, geopolitical challenges. And at the same time, in that changing environment, I think it is essential that we have our eyes clearly set on our strategic objectives, on the interests of the European Union.
We create opportunities for European Union trade and investment. We promote and defend European Union interest, and that remains the objective and the guiding principle. But of course, the way we do that, the approach and our instruments will have to reflect the new reality so that we can effectively and efficiently achieve our European Union objectives. One clear sign of the change in policy is, of course, that economic security is an integral part of all European Union policies, and it is built into DG Trade. We are also the ones within the Commission leading economic security as an integral part of trade policy.
Now, as you mentioned, I come from a job as Director General in Energy over the past seven years. And in energy, and over these last years, energy security was obviously very, very high on the agenda with the Russian invasion of Ukraine in 2022 and more recently the Strait of Hormuz. And in energy security of supply, in energy security, there are three golden rules, three golden principles that have been very clearly established by the International Energy Agency and its lead, Fatih Birol. It's diversification, it's preparedness, and it is cooperation. Now, these three pillars of energy security are equally relevant in trade and economic security.
They align entirely with the pillars of economic security strategy: the promote, protect, and partner. So promoting European Union interests and resilience through diversification is really particularly relevant, and that is what we do. The single most important tool for diversification and therefore also for our economic security are the trade agreements we negotiate with others. The free trade agreements create opportunities for our traders and our investors, and it helps us diversify our supply chains and value chains, which is a particularly important consideration in a context of economic security. And as you know, over the past years, the European Union, the Commission has concluded quite an impressive series of free trade agreements.
What has allowed us to do that is clearly that we are an attractive partner. What makes us an attractive partner in particular is our internal market.
It's the predictability, it's the stability, it is the opportunity of having preferential access to that most important market in the world. Trading partners see that and that helps us achieve create opportunities for European traders and investors as well. So it's clear that as a as a partner to trade policy if you will, we need to make sure that we maintain the internal market and we have to be careful that we don't weaken or question that leverage because that would negatively impact our ability to negotiate good outcomes in in free trade agreements and in other partnership agreements. We now have 45 agreements with 80 countries. It covers almost half of our trade.
That will increase to over half when the ones that have been negotiated that we are about to hopefully sign soon, Indonesia, India and Australia come into force. If you look at it in terms of the share of the of the global population, we now cover 1.8 billion people. Obviously India is a particularly important contributor to to those numbers. Mercosur and Mexico adding another 400 million people and so more than half of the global population will live in a country or in a customs area that is covered by trade agreements with the European Union. That is quite significant and I think an indication of the rest of the interest in the rest of the world in working with the European Union and our internal market.
Now to make most the most out of these agreements, we obviously have to be able to handle our internal processes as swiftly as possible, to simplify wherever possible and while maintaining the quality and control that is required, that goes without saying. We have already transmitted the proposal for Indonesia to Council, India is on its way and we're making very good and swift progress on the text for Australia, so we are on track. There is a possibility that these could be already signed by the end of the year with Indonesia and India and we're discussing with Australia how to advance the steps. And then in addition to those that have been that have been finalized, we are continuing negotiations with Philippines, Thailand, Malaysia, the United Arab Emirates and as you will have seen, more have expressed interest and are lining up, so a continued active agenda of creating opportunities for European companies and thereby diversifying our trade for the economic security. While these agreements of course establish significant clarity, stability, predictability, it is clear that in global trade, a multilateral trading system that functions, the World Trade Organization is the central guarantor of of that.
We also know that that is significantly challenged. I'm sure you followed closely the ministerial earlier this year and so a reform, progress in reform, continued engagement for reform is absolutely essential and it is very, very clear that such reform will only happen with the active engagement of the European Union. So we are engaging in that. You have just seen Director Myrto Zambarta who is responsible for that and engaging actively in that. There's some momentum in Geneva.
We have submitted some policy papers to to help launch the discussion. They have been fairly well received, but a lot of work ahead on these issues, foundational issues, governance and level playing field, state-owned enterprises in particular. Now I referred to the role of FTAs in our economic security, the diversification for economic security, but of course that is only one side of our economic security policy and economic security instruments. We have to make sure that the instruments we have are fit for today's reality and where necessary give ourselves further tools to to handle the challenges we see today. The instruments we have are FDI screening, you the co-legislators have helped deliver on on that revision.
We have export controls, how do we bring that forward at European level?
How do we defend ourselves? How do we prepare ourselves for what is at times weaponization of strategic dependencies? So we are investing in our preparedness to strengthen our economic security in the European Union. There are several actions that we need to take to strengthen our capacity, as I mentioned, an integration of economic security across all European Union policy areas, de-risking from dependencies, preventing new dependencies. You will have heard President von der Leyen, you will have heard my Commissioner Maroš Šefčovič talking about the diversification instrument in the following the European Council in June.
What we would want to do is to move from risk assessment in economic security to risk mitigation, addressing dependencies that are a risk as discussed indeed by leaders in June, making sure also of course that we are able to handle what have become global trade and macroeconomic imbalances. And when it comes to overcapacity imbalances, we are more in the trade defense arena where we take action to defend European industry and jobs against unfair competition. Now what you will have seen over the last few years is a significant increase in trade defense, a good use of trade defense instruments. There's a peak of 30 annual measures that have been introduced, including safeguards, which has become a more frequently used in the current global circumstances because of import surges and injury to European industry. So this is a direct response to the challenges that we face, in particular a number of strategic and important sectors to the European economy, and we will continue that work.
Now what we have heard very clearly are the many calls for faster investigations and faster decisions. What I have done already is to increase the resources dedicated to trade defense within DG Trade so as to help address some of those challenges. We have developed capabilities also to make sure we monitor trade on a continuous basis so that we can identify early on developments that could indicate import surges and the risk of injury to our industry. So we are working significantly to strengthen our capabilities, strengthen what can we do on trade defense, of course as much as possible within the existing tools because that is the most effective way of going about it. Now I have talked for 11 minutes and I have not yet mentioned the two large partners, China and the US.
They are of course the two largest partners. We are going through specific challenges with each of them, and I'm sure that I will be coming back to you at regular intervals to update you on developments also specifically with these two partners. Over the summer and since I started in DG Trade and economic security, I have had very active, frequent engagements with my counterparts both in China and in the United States, and that really is a reflection of the importance of working closely with both these partners. First of all on China, as you will have seen, the Commissioner before the summer started an informal trade and investment consultation with China. The idea is really to engage intensively in discussion to balance the bilateral trading relationship.
What we see in relation to China is both increasing concentration, dependencies, including in strategic sectors. That is a risk to the European Union. We see that as a result of a number of Chinese domestic policies, but of course also of China's competitiveness in a number of these sectors. We have an increasing trade deficit, 360 billion in 2025. We see that China is stepping in higher at the value chain, so it is an untenable situation and one that requires rebalancing.
I think it's important to note that this is not a European problem, it is a global problem and a global challenge. China has has a 1.2 trillion global trade surplus in 2025. The dependencies are global, for example in critical minerals and clean technologies. So a bigger macroeconomic a bigger macro imbalance at global level. We cannot afford that degree of concentration, that degree of dependency.
And when Commissioner Šefčovič met Chinese Minister Wang in person and meeting next week, this is of course what is top of the agenda. There has been very active engagement over the summer, as you might be aware my deputy Denis Redonnet is in Beijing right now, traveling back and we will then take stock of what progress has been made and how do we best take it forward. I aim to travel there later this month. Now the Commissioner spoke to these ongoing talks over the last few days. He's he's said very explicitly that we're working on concrete proposals.
We see an engaged China in these talks, but of course the challenges are very, very significant. So today is not a day to speculate on what will be the next steps, just to underline the strong engagement. And as the Commissioner has said, talks are both open but also tough. There are all topics on the tables and we do need to see concrete results when it comes to rebalances rebalancing, sorry, when we come to the Commissioner's meeting in October. We do need a proof of concept to continue talks and to help find solutions.
We do need to find an outcome that not only rebalances by a market opening for European Union exports to China, but also rebalances through addressing these structurally high exports from China, notably in strategic sectors. So it has to address both sides of the equation. Now when it comes to the United States, I think it's useful to recall where we were, where you were about a year ago, the significant challenges. We knew that we had to respond to a significant shift in US trade policy, respond to the uncertainty, the threats that we were seeing, to help create as much as possible predictability for our traders, as much stability and predictability as as possible. Not all of that is in our hands, but we have done what we could to give that predictability and stability.
That is what the agreement has achieved. I think as we can all agree, this was never a perfect deal, but it was a responsible and pragmatic one and one that has helped create some calm, some predictability and stability and given us a good framework to work with our United States partners, the most important bilateral partnership we have in in trade. Of course there's a lot more work to do. We do that within this framework, within this anchor for the relationship. We have a clear roadmap going forward, of course also very clearly established in the regulation that you helped adopt before the summer.
And so we will certainly be coming back to that as well. What we saw in terms of the actual trade is that the transatlantic trade relationship is robust. That trade continued in 2025, but of course with a high degree of volatility. We saw some increase in trade, we see patterns develop, but at a slightly lower level than before. Now that volatility is of course further enhanced by the number of ongoing section 232 and section 301 investigations.
There's an outstanding one on excess capacity. So there's still a lot to be done there again. In my in my contacts with the United States over the summer, I've talked to them of course about steel and aluminium derivatives, but also other issues that have come forward. And what I've aimed to do is to establish a good and close dialogue.
This will continue in the coming weeks. I also aim to travel to Washington, of course, and have a personal meeting with my counterparts, and I look forward to providing more details as soon as possible. So, that was my attempt at covering as much as possible the overall approach to trade policy that the Commissioner is setting and where I am working closely with him and other Commission colleagues. It's clear that in this unstable, uncertain context, we need to be as clear and predictable and stable as possible, setting a clear direction, pursuing European Union interest, but also being confident in doing that. Again, in global trade, we are a leader.
Our single market is a significant lever and of significant value there. So we will continue efforts for diversification, preparedness, and cooperation, both in the EU and with the global partners. And with that, back to you. Thank you.
Thanks a lot, Tim. And now we have two rounds. One round is the round with the speaker of the political groups, and then we have the second round with some other members asking for the floor. And I give now the speakers for the political groups the floor for three minutes, and Jörgen Warborn from the EPP is the first.
Jörgen Warborn
Thank you, Chair. I'd like to start to welcome the Director General to, welcome back, I have to say, to INTA. I look very forward to working together with you. I guess we will meet several times. The Chairman started with a movie, and let me try to do the same.
You remember the Monty Python's Life of Brian, where there is this scene where the characters say, "What have the Romans ever done for us?" trying to say that they didn't do everything. But then they start to do the list. Well, they did the aqueducts, the roads, the sanitation, the health, peace. And I think you are re-entering the world of trade when too many people ask, "What have ever free trade done for us?" And I think we have a collective responsibility to mention that, well, peace, jobs, prosperity, taking people out of poverty, increased export, more possibility for choice of goods and services at better prices and better quality.
There is a long list what free trade has done. And that's why I think it is so important that we do not turn protectionist, neither in the European institution nor around the world. So let's continue to spread the message what free trade has done for us. And on that note, I'd like to bring up the Industrial Accelerator Act and the Union origin. I did that with Director Sambarta on the previous point because the problem we have is that as co-legislators, we don't know what, which countries are on the list that could be equivalent according to this.
Of course, this can change, but I guess that the Commission has a position or a stance on this. And I understand as Sambarta said, this is not the DG Trade is not in the lead. But of course, we have our free trade partners, we have our customs unions partners, and we have the GPA partners. And according to me, the list would be something like 80 or 90 countries. But what is the DG Trade's position on the list?
You're not in the lead, but I guess you are working on this. And so I'd like to know, and I think companies and countries and public authorities or procuring authorities need to know this, which countries are on the list. And if you cannot respond on this immediately, I'd like to know when the Parliament can get this list from the Commission. Because we need it. Co-legislators need it.
My second question is on Australia. Because we have the free trade agreement negotiated, it's done, and now we will deal with it in the Parliament.
But there have been some reporting from media, not least, that the opposition in Australia is now hesitant to the free trade agreements. Have you had any outreach with our counterparts and how do you think we can be able to solve this situation so that we can get back on track? Thank you.
Kathleen Van Brempt
Thank you very much, and let me also warmly welcome you back. S&D group is really looking forward to cooperate very closely with you and your team. And I think you must have one of the most challenging jobs at this stage in the European Commission. And as we all know, the narrative on trade is changing rapidly. And you mentioned the fact that we need to make sure that we're pursuing our interests, and I'm quite sure you will do that.
But let me also ask you to be very vigorous and with a lot of courage in doing that, because normally DG Trade being part of a diplomatic approach, that will not help anymore alone. We will need to be vigorous. And that brings me to the United States. You know the S&D group was very critical, we voted at the end, but we were very critical, and under the leadership of the man sitting next to you, who's not only the chair but also the standing rapporteur, we've put a lot of safeguards in that deal. It's extremely important for us.
And that is my first question: how do you assess, you said some issues about it, but can you be a little bit more concrete, how do you assess now the state of play when it comes to the derivatives of steel, but also the discussions under section 232 and 301, what is the state of play? And that brings me smoothly to the other partner, which is a close partner, actually a very close partner on the transatlantic, which is Canada. And you didn't mention Canada, but I know you had only small time. But that's why I'm asking, after Independence Day, our group immediately said the response to the madness of the Trump administration on trade should be a response with our partners: Canada, Australia, Japan, together. We didn't do that.
We all went ourselves into negotiations. And now Canada is in a very dire situation, but a very courageous one. And Mr. Carney will be in Strasbourg with us on the State of the Union. Can you please enlighten us a little bit, what is DG Trade doing in preparedness of helping Canada in this situation, being a real partner with them? And then of course China, very quickly.
It's, we're very happy that there is a dialogue going on, but also a little bit afraid that it will be a talking shop. The AFET committee went to China in July, and we will be going in October, and we very much want to prepare that really well. The feedback we got from the people of AFET, because they also discussed trade for sure, is that there is, as you said, openness to talk, but they do not accept our arguments. They do not accept that there is over-subsidy, over-capacity, and everything together that is, as you mentioned and we're very concerned about that, a real threat to our industrial capacity today, but also of the future. So can you please enlighten us?
And the last question, Chair, because the industrial accelerator act has been mentioned. I I see now many many sectors and their plea is not just do a good industrial accelerator act, but please, you mentioned it as well in our trade defense, please, there's so many sectors. Yesterday I saw the sector of the wind energy offshore and they're losing jobs daily, daily. We need to act now and it's your direct responsibility to do that. Thank you, Chair.
Thierry Mariani
Merci, Président. Trois dossiers que je voudrais aborder et trois manières qui permettent comment on est en train de sacrifier notre agriculture européenne. D'abord le Mercosur. Signé le 17 janvier malgré l'opposition de nombreux pays dont la France, la Commission nous vantait l'accès aux matériaux critiques, au marché dans l'ingénierie et les services. Mais soyons honnêtes.
Cet accord permet surtout de sauver les exportations automobiles allemandes et la variable d'ajustement c'est notre agriculture, mise en concurrence avec un continent entier qui ne connaît ni les normes sanitaires, ni nos normes environnementales, ni les coûts de production. Et la preuve de ce que j'avance c'est ce qu'on trouve aujourd'hui dans la presse Euractiv. Ce jeudi 3 septembre désormais on apprend que un certain nombre de produits bovins et de volailles vont être interdits d'entrer dans l'Union européenne parce qu'on ne parce que ces produits ne respectent pas les normes. Et quand on lit l'article, c'est Euractiv, l'exécutif européen considère que les autorités brésiliennes n'ont toujours pas fourni les garanties suffisantes pour démontrer que les filières concernées respectent les exigences européennes sur l'utilisation des antimicrobiens. Donc on a mis en place, si je comprends bien cet article, un traité qu'on applique avant même d'avoir les garanties que les produits sont corrects.
Est-ce que vous trouvez ça normal et est-ce que c'est pas une fois de plus la preuve qu'on est prêt à sacrifier notre agriculture? Ensuite la Commission, deuxième dossier pour moi, fait la promotion d'une technique, pardonnez-moi, de plus en plus vicieuse. Bruxelles a compris qu'un accord mixte politique et économique prend du temps, qu'il faut consulter les parlements nationaux et que les peuples souvent peuvent refuser les pièges de la Commission. Alors vous multipliez les accords intermédiaires, les agréments provisoires, les MOU, les textes purement commerciaux qui relèvent de la seule compétence exclusive de l'Union européenne. Résultat, plus besoin de consulter le Bundestag allemand, l'Assemblée nationale française ou les autres parlements, on découpe les accords pour contourner la démocratie.
Cette méthode qui devait être exceptionnelle devient la norme et à chaque fois c'est un peu plus de souveraineté nationale qui disparaît sans qu'aucun peuple ne soit consulté. Enfin, le dossier ukrainien. Depuis octobre 25 l'accord renforcé avec l'Ukraine est entré en vigueur à titre permanent. Regardons les chiffres. Le quota de sucre augmenté par cinq, la volaille qui explose, les œufs qui triplent, le miel qui passe de 6 000 à 35 000 tonnes.
Les propres organisations agricoles françaises nous disent que deux des produits phytosanitaires sur trois employés en Ukraine sont interdits en France. Nos agriculteurs veulent bien rivaliser mais à armes égales. Et ce n'est pas du commerce équitable, c'est du dumping, une sorte d'assassinat programmé. On demande et derrière cet accord commercial, il est évident qu'il y a un projet que l'on n'ose pas dire, c'est faire l'intégration de l'Ukraine par la petite porte, à bas bruit, accord après accord avant même que la question soit posée clairement aux peuples européens. Je crois que ce qui s'est passé en Islande devrait vous faire réfléchir.
protection du marché islandais pour la pêche. Voilà trois dossiers de la politique commerciale, mais une seule logique : sacrifier l'agriculture, contourner les parlements et avancer masqué pour permettre à la Commission d'imposer ses choix. Est-ce que vous croyez que les peuples européens vont longtemps encore l'accepter ?
Rihards Kols
Yes, thank you very much. And Madam Jørgensen, first of all, congratulations on your appointment and a warm welcome also on behalf of the ECR group. I think you bring something unique to this role, years of experience leading DG Energy through the EU energy transition. And I hope you can carry some of that expertise from energy transition into trade policy as well, because today trade and energy security are closely intertwined. On this, I will elaborate slightly more at the end of my intervention.
In general lines, ECR, we believe in trade policy based on enforcement and reciprocity and resilience. And you already elaborated the efforts to open new markets and we commend this initiative. And from our point of view, the focus should not only be on expanding the list of countries that EU has FTAs with, but also actually implementing the ones we have already agreed and ratified. Somebody mentioned Canada, there are still ten member states who haven't ratified CETA. It's unacceptable and it sends the wrong signal.
But we fully support what the Commission is planning on the future FTAs as well. On the US, we need full implement the US framework. Our group supported the framework deal. This Parliament added safeguards for a reason. And here I have the question, how does DG Trade plan to hold accountable Washington to its side of the bargain as firmly as it holds us to ours?
And continuing on accountability, China was brought and I have to say that we need to hold China accountable through trade defense tools. And it kind of caught my ear, you mentioned US partners and other country you mentioned as a partner, China. As far as I know, they're systematic rivals, not partners. And it should stay in our communiqué as well. Nothing has changed to make them partners because our trade deficit with China is nearly one billion euros a day.
And we have steel safeguards, that is one tool that we can apply. The Commission economic security strategy announced in December last year promised further measures against overcapacity by this September. So in this regard, I have a question, how far has that come? I suppose we can hope that Commission's President will present something revolutionary in her annual State of Union address that is upcoming in September. And we need more than strategies that look good on paper.
We need the ability to react faster to unfair trading practices that harm European industry. It was odd to hear that negotiating with US, everyone was bragging about the anti-coercive mechanism to be launched, which was actually created originally towards China. And we have never, never deployed this towards China and still kind of playing these cuddling games with China. And I want to address other topic that I care about deeply, Ukraine and Russia barbaric war against it. So it's been four years, I know I'm running out of time, Chair is already eagerly looking at me to finish.
But the questions on the quotas, we kind of have decreased and the special treatment is not anymore there. How we can actually treat a country that is at war, that is a candidate country and start to put the limits? And the last point also, the same goes for the CBAM, no relief on reporting duties for a country at war. How do you envision the DG Trade we can more support Ukraine in these dire situation that they are in? Thank you very much and sorry for abusing the time.
Svenja Hahn
Welcome very much to the committee. I can't say welcome back because I think when you were in DG Trade I was not here, so great to looking forward with you in the future. To stay with the habit of pop cultural references, I would go with Elvis Presley. It's now or never and the EU doesn't have to hold a romantic partner tight, but all of those partners that we have that still want to do fair and rules-based trade with us. So I was very happy to hear that you say that there are other partners that are expressing interest in deepening the relationship with us.
But what are they? And what is the Commission doing or planning to do to speed this up? Because it's very clear we need more trade with more partners to be less dependent, particularly as we are in a somewhat difficult relationship with partners like the US and China. Particularly on China. We hear that there are more and more evidence for manipulation of the exchange rate.
We see that the cases for anti-subsidies and anti-dumping are taking extremely long because we also hear that there's a lack of staff on the Commission to deal with those processes. This is really letting down particularly SMEs in Europe. So what are your planning to tough up on China there? Also the anti-coercion instrument. We negotiated, we have that.
I really would like to call on you, be tough on China and the US. We should not be a pushover. We need to be strong in order to have fruitful negotiations because that should be our goal, to have negotiations to come to a better framework than it is now. But we need to be tough on the Chinese overcapacities that is flowing into our market, that is particularly harmful for smaller companies. While we're being tough on China and the US, we need to be pragmatic to other partners.
I'm all game for more full-on free trade agreements, but we also need to be pragmatic. If there's room for sectoral agreements, let's go for that. So what can we do to have more trade agreements, have them faster and particularly, we know it's also sometimes difficult with ratification in this house, to smoothen the process of ratification. And yeah, so that would be my message, be tough on China and the US. What is the Commission planning to do there?
And what can we do also from the Parliament side to speed up the process to have more trade agreement because I think we owe that to our companies to be tough on the trade defense but be more open to more partners in the world to open up new markets. Thank you very much.
Lynn Boylan
Thanks, Chair, and very warm welcome to Mr. Jørgensen and congratulate you on your appointment. I suppose you won't be surprised to hear that as an MEP from the Left, maybe we don't share the same view of free trade and extolling of its values. But I have three questions really that I'd like to address today. First of all is around the credibility of the EU, particularly in its compliance with international law. So we know that on the July 2024, the International Court of Justice advisory opinion was incredibly clear that Israel's occupation of Palestine is illegal and that states are under an obligation to abstain from entering into economic relations that further entrench that illegal occupation.
And yet the EU is still trading with the illegal settlements in the West Bank, which is granting of course economic support and further entrenching the illegal occupation. And I'm not going to rehash all of the various debates that there has been around a settlement ban, but what I want to specifically ask you as the DG is whether or not you believe that EU trade policy should comply with international law.
Because Article 207 of the treaty is very clear that common commercial policy should be conducted in the context of the principles and objectives of the Union's external action, which means you don't trade with illegal settlements established in breach of international law and you don't allow people to profit from the crime of occupation. So that's the the first question. And just obviously that then the lack of action and how damaging it is in terms of the EU's credibility on the international stage and also when we're negotiating other free trade agreements and asking those trading partners to comply with the obligations under those trade agreements. The second question is really about the amendments to the EU-Morocco trade agreement following again the Court of Justice ruling there on Western Sahara. We're now nearly a year on from the provisional application.
We don't have a referral. New legal cases have been launched and yet we still have not been able to do our job in this house in democratic scrutiny of of the agreement. And I suppose to ask you, do you agree that this is an unacceptable delay and it's especially unacceptable given that the agreement arises from the fact that the previous agreement the Commission negotiated was illegal and there are huge doubts regarding the legality of the amended agreement. And then the the third point is just in relation to the Turnberry joint statement that was signed last year. The EU committed to address US concerns regarding deforestation, CBAM, CS triple D and the US has recently indicated that it will seek full or partial exemptions from these rules.
Yet the Commission maintains that EU standards won't be weakened, but you signed a document that specifically says the European Union commits to work to address the concerns of US producers and exporters regarding the EU deforestation regulation with a view to avoiding undue impact on EU-US-EU trade and the European Commission commits to work to provide additional flexibility in the CBAM implementation. So I think the committee deserves to know what concrete changes will you make to honor that commitment. What are the exemptions, the equivalence arrangements, the changes in scope, the implementation or enforcement or special treatment for US companies and products that are on the table?
Bernd Lange
Thanks. There's another question. So did for from my side, two areas. So you mentioned first on the IAA. You mentioned in your introduction remark that Europe is a predictable and reliable partner.
If I would be South Africa, I would have so my doubts. In South Africa, we are producing a lot of cars for the European market and they might be now excluded from public procurement in Europe and some other restriction from the IAA as well. So is there an clear assessment what the IAA means for jobs and growth in our trading partners? And in this field, my doubt is that we have one target for the IAA in the protective measures, that's China and they have unfair competition advantage regarding the currency, regarding illegal subsidies. But looking to the other trade partners on the competition on price, but also on the competition on value in the last years, there is more or less no change.
The serious problem is China and with this instrument might be that we are harming a lot of other countries as well. And the second to the United States as rapporteur of this famous agreement which was Lynn also mentioning. So there is now an investigation starting in the United States to put 20 additional products as so-called derivatives from 15 percent up to 50. This is a clear breach of the agreement. How the Commission is reacting and will if this will be a reality will the Commission start the safeguard reintroduced in the regulation and similar to the pharmaceutical investigation they have the normal investigation and they have a specific investigation against price building in Germany.
How is the Commission reacting to that? And now you have 15 minutes.
Ditte Juul Jørgensen
Thank you very much. Thank you everyone for the comments and and overall direction suggestions for European trade policy. Very helpful, very important. And I will try to do my best within these within these 15 minutes. We've covered you have covered a lot of a lot of ground and I will respond to the best of my abilities.
I think starting with your question what has what has free trade done for us a lot. And I think you're absolutely right on the importance of continuing to communicate that and also to communicate the the balance that we have continuously tried to achieve one of opening and creating opportunities while of course making sure that we are operating as much as possible in a level playing field and taking action when that is is necessary. It links into the question of more free trade agreements. I think it came from the Renew how can we have more free trade agreements what can we do to continue that agenda. As I said a lot is ongoing a lot is being delivered and others are clearly expressing an interest so there is more room there to to add to the already significant opportunities created by free trade agreements.
Now two comments on that two links to some of the other questions. Now first of all there were some questions on how do we safeguard European interests also in the context of free trade agreements. There was a question relating to Mercosur what does it mean what do these free trade agreements mean for European agriculture what does it mean in relation to food safety to to SPS. Now the first point I would want to make is that there has been a very a recent study on what will the what is the cumulative effect of these various free trade agreements for European agriculture. And the result is very clear.
It is very very good for our exports and there will of course also be more imports but the balance is very very clear we are creating opportunities. This is a significant benefit for the European agricultural sectors in terms of increased export opportunities and so that is a very very good thing. You rightly mentioned the specific case of Mercosur and SPS and concerns there. I see that specific case rather as a very clear sign that our system works. The Mercosur agreement includes a number of safeguards reflecting the fact that these are very strong very capable very competitive agricultural suppliers.
It also reflects the fact that we want to make sure that products arriving at the European Union reflect our SPS standards.
So that is one question linked to the FTAs and what does it mean for agriculture and the balance there, but also the safeguards more generally that we build into our trade agreements. Then on the other hand, and here I link into your question of the Industrial Accelerator Act and what does it mean for our FTA partners, which is indeed a question that I have been met with frequently over these last three months when I speak to our trading partners. And I should say I use the word partners to encompass all trading partners. So there is no value judgment in the word partners, it simply is a fact that these are countries we trade with and some of them are challenging, others are close partnerships, but partners means trading partners, just to be clear on that. But one of the questions I have met most frequently over the last few months is from our FTA partners who ask, what is this going to mean for us?
What is that going to mean for our trade with the European Union, the access to that internal market that once again is what has helped drive all these trade opportunities? So there's some very genuine concerns and questions there. Another question that has arisen frequently is of course that of our steel measures and what does it mean for FTA partners. So I think establishing that clarity within the Industrial Accelerator Act is extremely important. We have made a proposal where we refer to equivalence for FTA partners, but also suggest some specificity, some specific considerations for what constitutes equivalence.
It's clear that that is an issue that will require further discussion with the co-legislators, both the European Parliament and Council, to make sure that we establish an act that fulfills its objectives in terms of European competitiveness, accelerating our capacities, technologies in the European Union, including linked to decarbonization. And that has to be with a higher degree of clarity for these FTA partners. So I think there is work ahead. We in DG Trade have of course worked very, very closely with our DG Grow colleagues and will continue to do that. But I think it is now with the co-legislators and we look forward to continuing that.
Again on free trade agreements and creating opportunities, there was a question about Australia. Indeed there are discussions within Australia about how to approach it. It appears really to be primarily a domestic political issue. We of course remain in close contact with them to understand what is going on, but also to see what can we do. Are there messages we can send, are there signals we can send that can help accelerate that process, but also always remaining cautious that any intervention from our side does not inadvertently push in the wrong direction.
I'm very glad that Canada was raised as well, a close partner in all its sense. And that is shown as you or evidenced partly also by the presence of Prime Minister Carney in just two weeks in Strasbourg, but also evidenced by the very, very close cooperation we have with Canada. We've got a summit coming up in just a few months' time. We are negotiating on digital trade. I have had conversations with my Canadian counterpart over the summer as well, including of course following the US-Canada breakdown in talks to get an understanding of what is behind it and what can we expect there.
So very, very close cooperation and an important summit coming up in just a few months, again continuing to strengthen that important partnership. Now on the United States, I know you have spent a lot of time on that, a lot of time on the joint statement and on the implementation of that.
We very much appreciate your role in that and the, and the cooperation. If I start there with what I think is one of the most sensitive issues and rightly raised, the question of our regulation and what does that, what does it mean, what is in the agreement and what are we going to do? I think it is essential to underline that European regulation is European regulation. We are not negotiating our regulation. That is our regulatory autonomy.
That is what we do here. But of course, we always try to make sure that the way we implement the regulation in force is one that does not constitute unnecessary barriers or unnecessary burdens on our industry, on our traders and our investors, and of course also on our bilateral trade relationship. So that will continue, but again, we're not negotiating our regulation. It is, it is ours. The second point on US that came up from several of you is, is the question of, well, what do we do to ensure that the US is, is accountable, that the US respects the commitments made in the agreement?
So far, in all the conversations I've had with my counterparts, and I know the Commissioner's conversations also with the US, we have assurances that they will be respecting the terms of the, of the deal, the maximum 15%. And we will continue to work closely with them to make sure that that happens. As you have also said, there are a number of investigations that have been launched just over these last few weeks and, and, and months under 232, 301. And so that does create a degree of uncertainty. What does that mean and what does it mean for the 15%?
So those are issues that we are working with the US on. Again, we have assurances. We will continue that very, very close engagement so as to make sure that the manner in which these investigations will, will deliver and will eventually be implemented stays within the terms of the deal. Linked to that is the specific question of steel derivatives that some of you have raised. And indeed, I think that is a particular, a particular challenge.
We saw some very positive developments before the summer. We saw that, that the list of derivatives was changed so that there was a, a positive development. We now see the more, the more recent developments which goes in the other direction. And so I think the degree of uncertainty there and a degree and a necessity to continue to engage and make sure that we bring the results that have been envisaged in the agreement, but also of course envisaged in the European regulation passed by the, by the co-legislators. So more work to be done there on steel and derivatives in, in particular.
Now, moving on to, to China and the very significant challenge that China poses as a trading partner for the reason I also set out in my introductory remarks and that several of you have pointed to. Now, the first point I want to make, and the Commissioner has been very clear on, on that, including over the last few days in, in the press, on the need to deliver results, that these ongoing talks are not just talks. They are talks that have to give a proof of concept by October. It's obviously a difficult conversation because we see things from different perspectives. We have been very clear that the rebalancing, that these global imbalances that exist cannot continue and there has to be a rebalancing.
And that is the conversation we are having, looking at what are the means, what are the instruments, what are the arrangements that one could rebalance jointly. But of course, at the same time, looking at, well, what are the instruments we have? We have existing trade defense instruments, safeguards. We are being approached by industry and by member states.
instruments as is appropriate. That is not something new, it is not an escalation, these are existing instruments that are that have been built in accordance with the multilateral trading system rules and we will continue to deploy them, but we will continue to work to do that more efficiently, faster and making sure that we we achieve the results that we are working or that we aim to achieve. I think in relation to China, the steel sector specifically was mentioned, we've got our steel regulation in place, colleagues have been working over the last months to negotiate under GATT Article 28 and to negotiate specifically with partners. We will continue the implementation of that, obviously very relevant in relation to China, but also relevant in relation to FTA partners and other suppliers. What we want to make sure in the implementation is of course that we do market monitoring, that we look at the downstream industries to make sure that there are no negative impacts for European downstream industry, but also that we continue to engage with our FTA partners to address any concerns that are there and achieve the best possible results again for European for European industry.
Now in relation to these to the rebalancing and to reducing the risk that follow from overcapacity, the competitiveness risk from overcapacity, but also the dependency and concentration risk that has followed from overcapacity and other measures, as I mentioned in the in the introductory remarks, we're looking at an diversification instrument. Our President has clearly stated that after the European Council, my Commissioner has explained we're working on it. It is early days, but it is another important part of the picture of the global imbalances, important to underline this is not a China-specific instrument, just as TDI are not China-specific. This is an instrument aiming to address some of the challenges we see in in today's global trade and again in the dependencies, in the risks to our security and and resilience. There was a question about other partnership agreements that are not free trade agreements that are therefore fall under the non-binding instrument procedures where there is no formal role envisaged for the European Parliament.
That is indeed the case. What we try to do in all of those cases is of course to keep the European Parliament and specifically the INTA Committee closely informed and involved. If there is more you would like to hear from us there in terms of information or discussion, we're always available to come here and and share information. Then there were questions about Ukraine from several of you, a very important partner and in this case it's a partner for security, it's a European partner, it's a trading partner, it's a partner with whom I have been working very closely also as Director-General for Energy over the last seven years given the Russian invasion and the impact on our energy system and the impact on Ukrainian energy security. In the trade context, we have the trade agreement, the Deep and Comprehensive Free Trade Agreement which is in in force and applied and again like other free trade agreements, it includes the the opening, the opportunities and it includes the safeguards that are necessary to make sure that that the application of the agreements do not cause a problem for the European Union and European Union industry.
And then last Israel, the question about does European trade policy align with international law? Yes, it does. Two, what are we what are we doing with the with the territories and there you will we have done as was requested by the Council conclusions in June this year, we have submitted an options paper which sets out what are ways that one could handle imports of goods from the illegal settlements, so what are the restrictions. It has been discussed in the Foreign Affairs Council before the summer. My understanding, our understanding is that there is no consensus reached on this, but that discussions will will continue, so that is again currently in Council, it's with the Foreign Affairs Council.
Then we've got the separate issue of the possible suspension of trade preferences under the Association Agreement. We have already proposed that, that is at the table before Member States and so again I would say on these issues the ball is currently in in the in the Council court so to say and we'll continue to work with them and with you here in the European Parliament.
Thank you.
Bernd Lange
Thanks a lot, Sabine. Now I have eight requests for the floor, and regarding to the time, I would say one and a half minute. And Javier is the first.
Javier Moreno Sánchez
Sí, voy a hablar en castellano. Bueno, dado que hoy esto va de cine, pues yo también voy a mencionar una película mucho más antigua, que es Casablanca, y como en la última réplica, Humphrey Bogart dice al comisario: "Espero que esto sea el inicio de una larga amistad y de una larga cooperación con nuestra comisión". Y el presidente hablaba de vuelta al futuro. Yo quiero hablar de presente. Canadá, tenemos una cumbre en octubre y quisiera saber cómo van las negociaciones del acuerdo digital.
¿Vamos a conseguirlo y qué más podremos sacar de esa cumbre a nivel comercio? Segundo, yo soy el presidente de la, de esta casa, de la delegación con las relaciones con Canadá, y me cuesta cada vez que los canadienses me preguntan que por qué hay tantos países que no han ratificado. ¿Qué podemos hacer juntos? Nosotros estamos tratando de hacer diplomacia parlamentaria, pero, pero usted en su nueva etapa, ¿qué podemos hacer para convencer a un acuerdo que, en fin, yo digo, si no, si no tenemos comercio con ellos, con quién lo vamos a tener? Y luego sobre Mercosur, coincido con usted.
Demuestra lo que decía el señor Mariani, demuestra que el acuerdo funciona. Y quería saber, tal vez es un poco pronto, pero ¿tenemos ya tendencias, cifras del efecto positivo y sobre todo, supongo que estarán en contacto con nuestros socios latinoamericanos, cómo lo perciben y cómo lo perciben pues nuestras, nuestras empresas, nuestros agricultores? En fin, estos primeros meses, ¿cuál es un poco el mood de este acuerdo? Muchas gracias.
Iuliu Winkler
Yes, thank you very much, Chairman, and thank you very much, Director General, for being here. And of course, you are very right, new realities are increasingly complex. But in the same time, I think that part of our new reality in trade and, and in general, are also the good old basic things. I mean, they don't disappear. We all discuss about digital trade and, and economic security and artificial intelligence in, in our, in our operations, but I think that good old things are also important.
Just let me give you an example: simplification. You know very well that our Parliament is very highly devoted now to omnibusing unnecessary complexities, and simplification is very important for us. But for example, what I hear about the new, of course, they are only talks for the moment, about the new diversification instrument that will be anything but simple. So, so what can you do in this direction of, of simplification? And of course, another basic old reality linked to, to this are the small and medium enterprise.
Because, because if we want that trade is better accepted by the general population, I think we have to have in board small and medium enterprise. They are closest to the, to the public opinion in this way. And of course, we need portals, we need contact points, we need SME chapters that we have already, but we need also, I think, some more, more and better communication in this line.
Thank you very much.
Angelika Niebler
Thank you so much and welcome here. It's great to have you here, Mrs. Jørgensen, Director, happy to also cooperating with you. I have two questions to address to you. First of all, I'd like to come back to the Industrial Accelerator Act because I'd like to get some reassurance from you that actually the Commission has a coherent approach in all the respect. You know, we have the EIA, we have GIDA, we have the new public procurement rules coming up, we have CBAM, we have a lot of trade instruments.
And my feeling, honestly, is not that there is such a coherent approach. If you look at, you mentioned steel, what is our policy on batteries, etc.? So I'm not 100% persuaded, you know, that there is this coherent approach, but there are so many things going on. And if I'd been a trading partner, I would not know, you know, what are our rules and where to find my ways through. So maybe you can give some reassurance on that again.
And the second issue, EU-India relationship, as I think there will be a summit at the end of this year and maybe Mr. Modi coming. We heard from the speaker of the Lok Sabha that he's also planning to come to the European Parliament in at the end of September, the beginning of October. I would be interested in knowing when do we get the final text of the FTA and what is the planning until the end of the year? Thank you.
Manon Aubry
Merci beaucoup. Bonjour à toutes et à tous. Merci Madame Jørgensen d'être parmi nous aujourd'hui. Le moins qu'on puisse dire avec votre présentation, c'est qu'on n'est pas dépaysés puisque on a eu droit à une petite ode au libre-échange que vous avez vanté très largement et dont vous avez vanté tous les mérites, y compris en disant des choses qui sont à mon sens fausses. Vous avez dit que ça permet de diversifier les chaînes de production.
Je pense que ça diversifie surtout notre dépendance, notre dépendance à l'étranger, notre incapacité à produire en Europe ce dont nous avons besoin. Et ce sans parler de l'impact climatique de la multiplication de ces accords de libre-échange. Vous n'avez pas eu un mot sur le climat alors que littéralement l'Europe a cramé dans tous les sens du terme ces deux derniers mois. On a eu le mois de juin et de juillet le plus chaud jamais enregistré, 35 000 personnes qui sont mortes à cause des vagues de chaleur, 600 000 hectares qui sont partis en fumée. Et à aucun moment vous vous posez la question et vous remettez en question le rôle et la responsabilité de ces accords de libre-échange à aller chercher à l'autre bout du monde ce qu'on sait et qu'on peut produire ici, sans parler y compris de l'impact en matière de concurrence déloyale.
À tel point que votre propre Commission a suspendu l'importation de poulet et de bœuf du Brésil. Pour que la Commission européenne en arrive à suspendre des importations en se disant mince, finalement un il y en a trop, deux ça respecte pas nos normes, pardon mais on vous avait prévenus. Et cet accord Mercosur, il est mis en œuvre alors qu'aucun d'entre nous ici n'a voté dessus et que on attend toujours l'avis de la Cour de justice de l'Union européenne. Donc ma question elle est simple : à quel moment vous allez vous poser la question d'un changement radical de cap pour prendre en compte à la fois l'impact sur nos agriculteurs et sur nos industries et l'impact climatique de ces accords de libre-échange ? Et enfin, cinq secondes, je résiste pas quand même à redire un mot sur l'accord entre l'Union européenne et Israël parce que Madame Jørgensen, non seulement dans votre présentation initiale en quinze minutes vous n'avez eu pas un seul mot sur l'accord de libre-échange qui existe, l'accord commercial entre l'Union européenne et Israël qui fait de l'Union européenne le premier partenaire commercial, et en plus vous avez le toupet de dire que la politique commerciale européenne respecte le droit international.
Mais pardon, quand il y a un génocide en cours en Palestine, comment vous pouvez dire que cette politique commerciale respecte le droit international ?
Anna Bryłka
Dziękuję panie przewodniczący. Pani dyrektor krótkie pytanie dotyczące blokady Morza Czarnego który już za chwilę będzie trwała dwa miesiące i skutków i skutki tej blokady Morza Czarnego dla dla Unii Europejskiej czy Komisja Europejska ma zamiar podejmować jakieś decyzje w związku z tym czy to jest przegląd umowy stowarzyszeniowej DCFTA z Ukrainą czy zwiększenie bezsłowych kontyngentów czy jakiekolwiek inne decyzje w tej sprawie na poziomie Unii Europejskiej w związku z tą blokadą. Dziękuję.
Saskia Bricmont
Thank you very much. It's a pleasure to meet you. Sorry for being late and joining the debate later but I was debriefed of your previous answers and intervention. My first question is related to economic security. It has been added to your portfolio DG Trade and Economic Security.
In one words does economic security rhyme in your ears with sustainability. Indeed I'm wondering whether and and I've somehow kind of answers already but if you are part of the deregulation frenzy with even with the climate breakdown that we are facing and that obviously threatens our economy and our economic security. The water levels of Danube and Rhine disruption in value change devastated agricultural crops they will obviously have impacts on our trade flows. So we have to take that into account. So will you implement the TSD chapters of our trade agreements with more determination ban invest protection in fossil fuel industries beef up autonomous measures in one word make our trade more sustainable.
My second question is related to our overdependent situation to China. There is a de-risking policy towards China but nevertheless the current answers do not bring the needed economic security towards China. Imports from China have grown by 45% over the five past years and we have a record trade deficit of almost 1 billion a day. This is huge not sustainable nor in terms of economic security nor in terms of environment and climate. So we need rules to really tackle unfair competition not to deregulate our own rules and set clear rules and limits on the expansion of Chinese investments in the EU.
Finally a couple of years ago I commissioned a study on the impact of our trade on child labor. The intention of Madame von der Leyen was zero tolerance towards child labor in terms of trade flows. We are nowhere and the forced labor regulation only catch a tiny percentage of the 54 million children in hazardous work. So I really want us to work together and tackle this phenomenon through trade. Thank you.
Thanks a lot. Juan Ignacio.
Juan Ignacio Zoido Álvarez
Voy a hablar en castellano. En primer lugar muchas gracias señora directora general por su presencia hoy por la información que nos ha suministrado y voy a solicitar si pudiera concretar más en un tema de diversificación y también de sobrecapacidad. El comisario Šefčovič hablaba esta semana en una entrevista de vender más a China en sectores no sensibles y de un instrumento de diversificación para reducir nuestra dependencia en sectores estratégicos. Por eso quisiera preguntarle qué detalles concretos puede darnos sobre esa apertura de mercado y especialmente de cómo avanza el diseño del instrumento de diversificación y si nos pudiera dar alguna orientación sobre el calendario previsto. Y en segundo lugar el señor Šefčovič mencionó también que la Comisión está valorando aplicar una medida similar a la del acero en sectores sensibles.
Quiere esto decir que nos acercamos a tener un instrumento de sobrecapacidad sectorial y no general.
Muchas gracias.
Hana Jalloul Muro
Muchísimas gracias, voy a cambiar al inglés, aunque la próxima vez ya hablaré en castellano, como mis compañeros españoles. So good morning, Director General, it's a pleasure to have you here today, and let me congratulate you also on your appointment and wish you every success in your new role. As Javier said, we hope that este es el comienzo de una gran y larga amistad, como en Casablanca. So let's focus also on what Mr. Zoido was asking just now, and you mentioned like the diversification of supply chains. We have seen over the past the last year how quickly developments in China, but also other parts of the world, impact European supply chains in areas such as semiconductors and critical raw materials.
This makes diversification essential, and we want to reduce excessive dependencies and strengthen the resilience of our supply chains. I therefore wanted to ask you about the work currently underway on a potential supply chain diversification instrument. Deputy General Redonnet came to this committee before the summer break and shared some initial insights, but we have not heard much more about it. So we would like to know on that, and could you give us an update on where the Commission stands and when we might expect a potential proposal to be published? Thank you very much.
Rihards Kols
Yes, thank you very much for giving this opportunity. I just wanted to conclude what I started in my first intervention, your previous responsibilities as DG Energy. And here I wanted to raise that when we agreed to ban Russia's gas within the timeline set by the Council, the Commission promised that oil would follow and banned no later than 2027. And that would also act on Russia's nuclear fuels and petrochemicals. Nine months later, the oil ban proposal has not set date.
It's still not there. Every barrel we still import helps fund the brutal war. So therefore, based on your previous experience and now at the DG Trade, how do you envision when the Parliament can receive the draft on the phasing out Russian oil and petrochemicals? And last but not least, what would be the policy towards on top of the sanctions putting immense tariffs on any products or services that originates from Russia? Is there any plan to do that?
Because we are still trading with Russia, unfortunately. Member states are still trading in their billions with Russia. Thank you.
Pascal Canfin
Thank you, Chair. Welcome to INTA for the new General Director. We have met already when you dealt with energy issues. Of course, I do support what was asked on economy, security, and climate and so on. So thank you for answering to these questions.
But my own question is, could we have your analysis or your first comments on the work you have been doing in the DG Trade on the war on extraterritoriality? I mean, there are a lot of comments on tariffs and quotas in the trade war, okay, but aside, you have a war between the US, EU, and China on who is going to set the standards that have to be followed by the others.
And the EU law is made in an extraterritorial way. It's true for REACH, for CBAM, for deforestation, forced labor, for so many regulations we have. And that's something that the US are now contesting more and more. Of course, it's written in the political declaration of the Turnberry agreement, but China is doing it more and more as well with the new decrees taken over the last past months. So I would like to know what is your analysis of this new setting and what is the doctrine of your DG and the Commission on this one.
Branislav Ondruš
Thank you, Madam Jørgensen. I absolutely accept your formal position, however, let me to use your presence at our session also to deliver a political message to the Commission. And I'm glad that Canada has been mentioned few times during our discussion. Colleagues, Prime Minister Mark Carney said after applying of counter-tariffs to US these words, I will quote him. These tariffs should serve as a wake-up call for our allies.
Other countries have tried to appease Trump, but Canada, which has the most to lose due to its close ties with the US, didn't give in and stood its ground. Well, and what has been European response to this wake-up call? Our chair Bernd Lange presented support to Canada, but the European Commission spokesperson delivered a textbook example of evasion. I will quote her. Both the US and Canada are key partners for us, we want to continue working closely with both sides and maintain this stability.
So I would like to stress that since Canadian Prime Minister used the word allies, we are using word partners. But Canada is not just our partner, it is our ally, and allies need sometime just not just cooperation, but also support. And I think that in this fight between US and Canada we should show our clear support to our Canadians partners and Canadians allies, because surrender is not in our best interest, I'm absolutely sure. And this cowardly approach will be very costly and is costly for the Europe. So take into consideration that international trade policy is not just a technical issue, it is a politics.
And therefore, I think that we need to be much more proactive regarding to our allies and to show that we can be credible partners. It same applies to our international trade relations with Israel. So let take into consideration that international trade policy has a big impact on our international credibility.
Bernd Lange
Thanks. And Dita, back to the investigation of United States, I guess you would agree that if the United States would set additional tariffs on derivatives like machinery and if they would set tariffs on the price building of pharmaceuticals, that this would be a breach of the deal and we have to take action. Dita, now you have ten minutes.
Ditte Juul Jørgensen
Thank you very much once again for all the good questions and comments, also for the invitation to friendship.
Your mention of Casablanca made me realize that I had not responded to a previous question about Morocco, so I will do that with some delay, my apologies for that. We have negotiated an agreement with with Morocco, as you also referred. It is with the European Parliament, so there there is a debate to be had here in terms of the consent, and then Council should adopt a decision on the conclusion. And so in other words, that agreement negotiated is currently with Parliament and and Council. If I turn to again to the free trade agreements, there were questions around Mercosur and what is the mood in Mercosur.
There were questions about the ratification of the EU-Canada CETA, and then there were questions about the India text. Now, the mood in in Mercosur reflects first of all, of course, and I should say when I when I talk about the mood in Mercosur, it is based on the frequent conversations I have had with Mercosur partners over these last few months since I started, and some of that in fact reflecting a continued cooperation that was also relevant in in the field of trade and and sorry, of energy, and that I bring with me in into trade. So the mood is is one as in Europe, a deep recognition of the alliance, of the free trade agreement, of the opportunities that that will bring. At the same time, I think it is important to note that there are concerns among Mercosur partners with some of the measures in the European Union. One member before mentioned questions of SPS that impact Brazilian exports of poultry and and beef.
There have been questions around what is the impact of our steel regulation, what does that mean for the agreement, and then there have been questions, those are primarily from Argentina, around trade in in biofuels and what does the European regulatory framework mean. So what we are doing is of course having a close dialogue with the countries to try to find out what exactly are the issues and how do we best solve them together, while remaining of course in full respect of our regulatory environment, but also in full respect of the of the trade agreement. So I think that ongoing dialogue and that effort to to solve outstanding issues is an important one also with the countries in in Mercosur. As regards the CETA ratification, indeed unfortunate that there are still some outstanding. We work closely with the member states in question to also see how can we help.
Are there people we can talk to, regions we can talk to, to help push this to push this forward. On the India text, the text is publicly available. In terms of the more formal transmission, that should happen very very soon, and so yeah, we'll keep you posted on that. Now, these questions around FTA partners links into some of the other question. There was a question about small and medium-sized enterprises, and I'm very glad that that was raised.
It is a very important part of the European economy, but these companies are also very important a very important part of our exports, part of our trade. And so we reflect that in our free trade agreements. We have chapters on small and medium-sized enterprises, and we reflect that in the way we work with companies, including small and medium-sized enterprises. So thank you for for flagging that important part of European economy, European jobs and and European growth, and part of the opportunities of the trade agreements relevant for those countries. There was another question again on the Industrial Accelerator Act, steel measures, and that balance between negotiating free trade agreements, creating opportunities, and then the attractiveness and credibility and reliable predictability of the internal market and the opportunities there, and the questions we have from free trade partners.
Indeed, Canada is a close ally. The Prime Minister will be joining you in just a few weeks. We've got a summit coming up. We're negotiating a digital trade agreement. There were questions about that.
Good progress made there and I'll be meeting my counterpart in the coming weeks. So we are working very, very closely with Canada. Indeed, a very, very close partner and an ally. When it comes to the specific conversation between the US and Canada, we are not in that room. We typically do not intervene in bilateral relations between others, but of course work closely with our partners.
On US tariffs, derivatives and the what-if, I try not to engage in speculation. It's not helpful, but I do note that we have an agreement, a framework within which we work with the United States. And I do note that we have a clear regulatory framework within the European Union. And of course within that regulatory framework, it's clear that we will come back later in this year to take stock. And so we will see where we are as we approach that deadline and I'll be glad to come back to you on that particular aspect.
On Ukraine and the Black Sea, now some of those specific challenges on transport on the Black Sea and the corridors is really more with my colleague from DG MOVE, so I can't say much detail there, but obviously an important issue for Ukraine and for Europe and for trade, so one that we follow closely and work closely with DG MOVE, but it's in that framework when it comes to the transport corridors. Now that is a natural segue to Russia, the questions about Russia and the trade with Russia. Indeed, in my time in DG ENERGY, we passed with your support and with the cooperation of this committee, the REPowerEU to phase out Russian gas in the European system. When it comes to oil, it constitutes 2% of European oil. It is really specific to parts of Europe that had security of supply challenges and infrastructure challenges.
And so we have to make sure that we get all of that right. I cannot speak to the timing of that proposal. It's not from within my Directorate-General, but I know that a lot of work has been carried out to prepare that already. When it comes to trade with Russia beyond energy and energy supplies, we've got I think a very ambitious, developed set of sanctions in place and a good monitoring of these sanctions. It is a separate workstream where we in DG TRADE contribute and will continue to do that.
So an issue that as you know remains high on the agenda also of our President. We have seen over the last weeks the increase in attacks and the significant impact of that also at a human level. And so obviously a priority for the Commission and for the European Union as a whole. There were a number of questions about the link between economic security, trade and climate. Thank you very much for putting that on the agenda.
Indeed, economic security as a concept, as a doctrine, as an approach to our international economic relations is also a concept that comprises climate and the impact of climate and sustainable development.
As you said at the opening, I have several decades of experience in trade policy. I negotiated the first trade and sustainable development chapters and helped develop those chapters, and we remain committed to robust trade and sustainable development chapters in our FTAs, and I look forward to continuing that work and to continue working with you. Now, specifically on climate and on the clean energy transition, you have pointed correctly to the very high degree of global concentration. It's not just concentration for us, it's not just European dependence, but a global dependence on a very, very limited number of suppliers, and notably China, in almost the entire value chain in these clean technologies. That is a significant risk to our economic security, to our resilience, and that is of course something that is being discussed and considered as part of economic security, but also in this very operational conversation with China on rebalancing.
That is a consideration relevant for climate, relevant for the energy transition, relevant for our economic security and the need to rebalance. To be clear, it is that degree of concentration, that degree of dependence on any one supplier, whoever that supplier is, that is in and of itself a risk. We saw again the very high levels of dependence on Russia in the energy system and what that meant for the European Union. So, high degrees of concentration and high degrees of dependence are a challenge, and that is the reason that we are working on a diversification instrument. Some of you asked about that.
I can't say much more at this point in time. It really is work in progress, but the context is clear: the dependence, the concentration, the risks for European economic security and European security more broadly, and the need to address that. There were questions about child labor, again linked into the sustainable development. We have a good system in place, we will continue the implementation of that. So it does remain high on the agenda, and that zero tolerance expressed by our President continues to be applied.
It is something that we are working on within trade policy as well, of course. There was a question about extraterritoriality and the global regulatory environment, if you will, which is I think a very interesting discussion and analysis to have: how are we all impacted by regulation in trading partners and how do trading partners deploy it? We have had the Brussels effect: European regulation has had a significant global impact. It is clear that there is a balance between that global impact and then attempts at extraterritoriality that can be a challenge for trade agreements and for the global trading system, and we need to make sure that we strike the right balance there. I think it comes back to some of the points that have been made about regulation and trade agreements and what does it mean for free trade partners.
So I think that is very much a discussion to be continued on that balance and how to make best use of the regulatory instruments we have. Again, regulatory autonomy: we don't negotiate on that, but how do we work with others in some of these areas? I hope I have, and I hope I have responded to the questions raised.
Bernd Lange
Yeah, thanks a lot, Dorothee, thanks a lot for the first exchange as a new Director-General of DG Trade, and I hope you didn't feel as to be grilled, as I read this morning in a publication. So we will stay in contact and I'm happy that we will see you again quite soon, and all the best for you and for your work.
Thank you very much once again for welcoming me here.
Ditte Juul Jørgensen
It's been a great opportunity. I'm very glad to have met you and look forward to the next occasion. Thanks.
Bernd Lange
So, dear colleagues, 40 minutes to go.
And also an important subject now on our agenda. We have a good relation to the OECD in Paris. And we also some years ago visited OECD in Paris and I guess we should do it again because this organization for a lot of countries is an important group building institution and gives also a lot of information and figures to the work and this is also relevant for us. And I'm happy that the Deputy Secretary General of the OECD, Mr. Mazaki, is here with us. Welcome.
And the focus today is on a database on industrial subsidies, specifically of course focused on China, which was published quite recently in June. And of course this is relevant for us also regarding the discussion in WTO where at the moment the question of subsidies, allowed subsidies, illegal subsidies are quite vague. And no doubt about and I heard a figure that around about 4.4% of the GDP of China is spent into subsidies, but I guess we will see some figures now as well. So this is a relevant issue. We discussed just before also the competition with China in some industrial sectors.
So therefore I'm really happy that you are here and give us an overview about the findings about industrial subsidies specifically regarding China. And I give you now the floor for about 10 minutes, please.
Yoshiki Masaki
Thank you very much, Chair. Good morning and thank you for the opportunity to speak with you today. We are pleased that Chairman Lange initiated this exchange through the OECD's Global Parliamentary Network, which exists precisely to support legislators in their work. A warm hello to the several INTA members who are long-standing and valued participants in the network's activities. And personally also I am very happy to be back to the European Parliament.
I spent three years as Ambassador of Japan to the European Union. I came here to explain the Japanese position on trade. But this time I came as a Deputy Secretary General of the OECD. I have taken up this post since last January. So today I would like to present the OECD MAGIC database of industrial subsidies, an OECD flagship database that provides a comprehensive view of government support to large industrial firms around the world.
The MAGIC database is a contribution by the OECD to help improve transparency around industrial subsidies, a topic that has become increasingly important for global trade, competitiveness, and economic security. In my presentation, I will cover three things: why the OECD developed this database, how it works, and what it tells us. So please look at the slide two, five main areas where OECD works on subsidies. The OECD has a long tradition of measuring and analyzing government support.
It began in the late 1980s with measuring agriculture subsidies. Today, it also covers fossil fuels, fisheries, industrial subsidies as well as the OECD arrangement on officially supported export credits. Industrial subsidies are the newest addition. The OECD's work on government support has long informed WTO discussions and negotiations, most visibly in the agreement on agriculture and fisheries subsidies agreement. In this spirit, we hope that the work on industrial subsidies will equally inform ongoing discussions at the WTO, notably those on industry subsidies in the context of the WTO reform process.
At a time when governments around the world are relying more heavily on industrial policy, understanding the scale and impact of subsidies is also becoming essential for informed policy makers and international cooperation. Slide three. Why and how we do this work. There are two simple questions: why do we do this work and how do we do it? The reason is that subsidies are a central feature of international trade policy.
This is the case because subsidies can distort markets and therefore jeopardize the benefits nations expect from the open markets. WTO agreements therefore contain disciplines on subsidies. The rules relevant for industrial subsidies are contained in the ASCM, the agreement on subsidies and countervailing measures. With WTO members considering that the ASCM was not entirely fulfilling its purpose, a reform of the ASCM was already part of the Doha round negotiations. Having transparent and objective information is essential for policy makers seeking to re-establish a fair, transparent, predictable and rule-based trading system through this WTO reform process.
As for how we do this work, it's carried out under the OECD Trade Committee. The European Union is represented through DG Trade, while the 38 OECD member countries, including 22 EU countries, participate through their national ministries. Importantly, OECD publications in this area are reviewed and approved by members through the Trade Committee process, ensuring both transparency and collective oversight. The EU has therefore played a key role in developing the work, and I will be presenting to you today, and it is work we want to keep taking forward with you. Next slide please.
The OECD approach is unique and different from traditional approaches because it has been using firm-level measurement to assess the scope and scale of industrial subsidies. This avoids having to rely on government reporting on subsidies, which often lacks transparency and does not always capture government subsidies that are channeled through subsidiary bodies such as state banks. More importantly, it allows us to express subsidies in terms of firms' revenues, which in turn provides a good indication for the distortive potential of those subsidies. And this firm-level approach allows us to estimate the subsidies actually received by firms, and not only the amounts announced, covering government grants, corporate income tax concessions and below-market finance across regions and over time. The OECD major database currently covers 525 large firms in 15 strategically important industrial sectors over the period from 2008 to 2024.
These sectors include semiconductors, automobiles, solar panels, steel, chemicals, telecommunication equipment, shipbuilding, and many others. For each sector, the database covers the largest firms globally and aims to capture at least 60% of worldwide activity, measured through sales, production, or capacity. A key point is that the database relies exclusively on publicly available information. The underlying methodology is also publicly documented and fully transparent. Another key point is that the database does not rely on government reporting.
Instead, the OECD collects information directly from primary corporate sources and applies a consistent methodology across all countries and firms. This ensures that the approach is scientifically robust, neutral, and comparable across jurisdictions. Every country and every firm is treated according to the same methodology. With these features, the OECD MAGIC database is the first global database to estimate industrial subsidies using a bottom-up, firm-level methodology across multiple industries and economies. For the first time, aggregate data and results from the MAGIC database were made publicly available in June this year.
Next slide. Now to the findings from the MAGIC database. This chart shows the evolution of industrial subsidies relative to company revenues. The key takeaway is that industrial subsidies have risen to their highest level since the global financial crisis of 2008 and 2009. Historically, peaks in support often reflected responses to specific economic disruptions.
For example, the sharp rise around 2009 followed the global financial crisis, and another increase around 2015 was linked in part to challenges in Chinese heavy industries. The recent increase appears different. Rather than being primary crisis-driven, it looks more structural in nature. Many governments are once again using industrial policy more actively to pursue economic, technological, and strategic objectives. This suggests that industrial subsidies are becoming a more permanent feature of the global economic landscape.
Next slide, please. This slide compares subsidy levels across regions. Data consistently indicate that firms based in China receive substantially more support than firms based in other regions. This pattern holds not only relative to OECD economies, but also relative to other emerging and developing economies. Subsidies in the form of below-market borrowing are particularly important in explaining the difference, although grants and tax concessions also contribute.
While subsidies increased more broadly during 2022, the gap between China and other economies remains significant. Next slide, please.
This chart looks across all 15 sectors covered by the MAGIC database and compares Chinese firms with firms based in the European Union. The main finding here is simple. In every sector for which data are available, Chinese firms received larger subsidies than their EU-based competitors relative to the firms' revenues. This is true even in sectors where subsidy levels in Europe have risen substantially in recent years, such as semiconductors, steel, and automobile manufacturing. Overall, Chinese firms received subsidies that were on average about nine times higher than those received by EU firms in 2024.
This matters because subsidies can influence competitiveness, investment decisions, and market outcomes. They can also interact with other factors such as energy costs, financing conditions, and regulatory environments. As a result, subsidy levels may contribute to a widening competitiveness gap across industrial sectors. Next slide please. This slide examines market share dynamics over time.
If you look at the bars in red color, you see that Chinese firms have achieved significant gains in global market share in many industrial sectors during the last two decades. Although a variety of factors influence competitiveness, OECD analysis indicates that subsidies have played a substantial role in these gains. One important finding is that nearly 60% of the increase in global market share achieved by Chinese firms between 2005 and 2023 can be statistically associated with the subsidies they received. Semiconductors remain one of the few sectors where China has not yet achieved comparable market share gains, although Europe has also faced challenges in maintaining its position in that industry. Next slide please.
This chart connects subsidies with trade outcomes and suggests that sectors benefiting from substantial support have often experienced a large increase in Chinese export competitiveness. In a number of industries, including wind turbines, heavy machinery, steel, solar panels, automobiles, fertilizers, and chemicals, China has moved from being a net importer to becoming a significant net exporter. Taken together, these developments increasingly resemble a second China shock, this time affecting a broad range of advanced manufacturing industries that are strategically important for Europe. Next slide please. Let me end with briefly highlighting the OECD MAGIC dashboard.
Since June this year, the dashboard provides free public access to the aggregated results of the OECD's MAGIC database of industrial subsidies. The aggregated results can now be accessed by researchers, policymakers, businesses, and the public. The dashboard thereby allows users to explore trends across sectors, countries, subsidy instruments, and time periods. This represents a significant step forward in improving transparency around industrial support policies worldwide. The full firm-level database remains confidential, but OECD member government entities can request access to it through their OECD Trade Committee representatives.
In the EU, the ECB and Banca d'Italia recently released studies using the MAGIC database. Final slide please.
...subsidies and related issues, including of course the latest release of the MAGIC database itself. The OECD Secretariat, of course, also remains at your disposal should you require additional background or information. We look forward to a strong collaboration with the EU representatives on this and other trade-related issues. With 22 EU members and DG Trade around the table, the EU has a strong voice in the OECD Trade Committee, a voice that can be used to shape the future trading system that will emerge from the current turmoil in the trade policy world. Thank you very much for your attention.
I'm looking forward to our discussion. Thank you very much.
Bernd Lange
Thanks a lot for this food-for-thought presentation. First, I will give the floor to Pascal Canfin. He is the standing rapporteur for the relation to China. Pascal.
Pascal Canfin
Thank you, Bernd, and thank you, Mr. Ambassador, Deputy General. Happy to have the OECD working closely with the European Parliament between Paris and Brussels. So, as a standing rapporteur for China, I will co-lead the next mission with together with Bernd to China. And of course, these data are absolutely key and at the heart of the discussion we are having now on what kind of policy tools we should have, what kind of objective analysis we could have jointly with China to try to overcome the difficulties we are in, avoiding a trade war. I have only two questions maybe for you to go a bit beyond what you said.
The first one is what has been the reaction of the Chinese authorities, because when we met Chinese representatives, they challenged the figures. So to what extent you can comment their own challenge and go beyond your own figures and maybe comment their own criticism? Did they, were they associated to the, because of course China is not part, full member of OECD, we all know that, but you have ongoing discussions with them at technical level. So were they associated with that, well, all this discussion? And the second one is, and very short, is the timeline.
Your database stops in 2024. Could you elaborate a bit more on 25 and maybe, I don't know, first semester 26, do you see what kind of trend do you see compared to 24?
Bernd Lange
Thanks a lot. And now for about two minutes, the shadow rapporteurs, and Kathleen is the first.
Kathleen Van Brempt
Thank you very much, and thank you for being here and presenting the study. I have to say it's a quite peculiar name, the MAGIC database, I have to say. Interesting. But then I come to my questions. First of all, I think it's really relevant and I have, I do also underline the question of our rapporteur because we had feedback from people, the AFET people going to China in July, and they came with the same message.
They said, yes, we can have a dialogue, but they do not accept our analysis of overcapacity and oversubsidies, and it's today about oversubsidies. And that brings me to a few more methodological questions. First of all, I was triggered by the fact that in your slides it said that it's based on publicly available data. How does that work when it's about countries that are not transparent, not democratic, and so not open?
Maybe it's even, although it's already quite shocking, maybe it's even an underestimation, or isn't it? Can you elaborate on that part of the methodology? And then more in general, which is, of course, we also have subsidies. You can see that in the figures. We need subsidies, especially in our green transition in these very specific industries.
When do we start talking about, well, not permitted subsidies or subsidies that distort? Can this magic database help us in defining that more precisely also for the future and also for our talks with the Chinese? And then I have a very, maybe more a question on, because I saw that also in North America the subsidies are much higher than in Europe. Can you elaborate, is that the Inflation Reduction Act or is that more recent because of the Trump administration? Do you have an explanation for that?
Thank you.
Markéta Gregorová
Thank you, Chair, and thank you, Deputy Secretary-General Masaki, genuinely, because what the OECD did here is really end an alibi. For years, when we had every debate on Chinese subsidies, they died in the same place, that we don't have the data, and Beijing stopped notifying subsidies honestly to the WTO. Disclosure requirements went ignored, and we were told nothing could be proved. So you did not ask governments as we did, but you analyzed over 500 companies and industrial firms at what they actually received. And what does it show is a huge disparity and problem, because 108 billion dollars in subsidies in a single year, the highest level relative to revenue since the financial crisis, except this time there is no crisis.
This is not an emergency support, this is a strategy. And it shows in black and white that Chinese manufacturers receive three to eight times more state support than their competitors in the OECD. And that's, as you called it yourself, a conservative estimate. And not through honest tools of industrial policy, but through grants and below-market loans that no European company can match, because our companies borrow at market rates and answer to state aid rules that we rightly enforce on ourselves. We can also look at where the money goes.
Our solar industry was not out-innovated, it was out-subsidized into the ground. Market share in strategic industries is being bought, not earned. So thank you, and my two questions. You say the estimates are conservative because below-market equity and land are hard to measure. How much bigger, honestly, do you think is the real number?
And also if you account for China's constant currency devaluation, that's a very important part of it. And secondly, does the OECD see any evidence, any at all, that this support is declining, or must we assume that what happened to solar is now scheduled for semiconductors, wind, maritime ports, heavy machinery, and so on? Thank you.
Bernd Lange
Thanks a lot. A comment from my side, Markéta, of course, on the solar issue, there was a missing of industrial policy in Europe as well. So there was this thinking that the market should solve everything, and I guess now we learned a lot on that. But I have also three questions from my side. First, can you give me also a link between the subsidies and the volume of subsidies and the overcapacity production?
We have now around about 60 percent of steel is global steel production is produced in China. This is clear an overproduction, it's more than the demand in China and more than demand worldwide.
So is there a link? And secondly, we have our foreign subsidies regulation here in the European Union as an answer. What is your assessment? Is this the right answer or do we have to modify that? And the third question.
So we saw now your study and I read also another study and there is evidence. And therefore I guess there should be a common action to make clear distinction between legal and illegal subsidies, perhaps to make a common action of the OECD countries towards WTO to put it on the agenda so that we have a coordinated action against one country which is undermining fair competition. Is there a discussion going on in this direction? I give now the floor the chair of the China delegation. Oh, Anna, excuse me.
No, now we have two members of the China delegation, but priority has of course the INTA. Please, Anna, start.
Anna Cavazzini
Thank you so much, like my colleagues, to your report and the excellent presentations. I mean, again, a lot of my colleagues said it, the data is now very clear and I think it's important because we are having now several discussions in the European Union on which policy measures we can bring forward to also answer to this challenge. So I think the data gives a lot of feed to our arguments of those who demand policy action because for a lot of years we sleepwalked into this situation because it was clear for a lot of times that this is happening, but political action was lacking or missing, but now I think it's even more black on white. I wanted to probably know, does the OECD also develop policy recommendations and what are you thinking about the current debates we're having in the European Union? And would you say the question of illegal subsidies or subsidies that are counterproductive is this only concerning this one country or are there other countries where you see the same problems or patterns?
And yeah, a little bit like Bernd, how can we probably prevent a spiraling of subsidy competition that at the end also will lead to overcapacity? Thank you.
Bernd Lange
Thanks a lot. Now the chair of the China delegation, I'm happy that we have a guest here and Engin, you have the floor for three minutes roundabout.
Engin Eroglu
Thank you, chair. I have no questions. We have enough questions now in the room. I think the important question is what is illegal versus what's not illegal as subsidies. So we have it also in the European Union and in our agriculture sector.
I'm sure that we have the discussion by our visit in China in the end of October.
Ondřej Dostál
And another guest from the China delegation, Mr. Dostál.
Thank you, chairman. I would like to ask a methodological question whether we are not committing a grave conceptual mistake because we apply the concepts of market economy or Western capitalism like subsidies or market loans to a very different system, to the socialism with Chinese characteristics, to a planned economy. And in this, perhaps the notions of subsidies might have a very different meaning or no meaning at all. Shouldn't we perhaps rather consider that for instance banking, which in Western societies is basically a tool to get value for multinational shareholders, has a very different purpose in Chinese economy and the states perhaps can be described more precisely or less imprecisely as a huge vertically integrated corporation and not like in Europe an independent referee, the government, and then competing companies.
Can you please go more into details in this? Thank you very much.
Bernd Lange
Thanks a lot. So now Mr. Mazaki or perhaps also Marion Jansen, it's your turn.
Yoshiki Masaki
Thank you very much, Chair. Thank you very much for all the questions. I try to answer as much as possible and if not I leave the floor to my colleague Marion to answer the rest. So many questions on China of course. And I think first questions about the Chinese reaction, maybe it's most interesting for all of you.
So China recently expressed its dissatisfaction with the OECD MAGIC database. But we firmly reject the proposition that the OECD methodology is not neutral. We consider that the methodology used for the construction of the MAGIC database is scientifically sound and in line with state-of-the-art approaches in financial markets. Of course we are already exchanging with China on these questions and we will be open to continuing the concrete dialogue with China. And there's a questions about the period 2025 and 2026.
Unfortunately we have not yet covered. So that means we couldn't cover the shock of Middle East crisis. Certainly that would give a very impact on the subsidies but we are still examining a possibility of continuing our research. And for the methodologies, so I try to explain to you in my presentation our methodology is based on the collection of data from companies or the firms, not from the government. So everybody knows the government data in a country such as China or others which are not transparent couldn't be reliable.
Well, I don't dare to say but so our approach anyway to whatever the country our interest is vis-à-vis the firms or companies and we can collect the data from them. That is I think the original approach of the OECD. And so that's our methodology which is very transparent, very neutral and everybody can check that and if they have a protest or complaints they can provide with additional data which we are happy to examine later. And there's a questions about subsidies legal or illegal. That's a very interesting questions.
But from what point of view they are legal or illegal? That's a questions and there's an international forum such as WTO which has agreements on subsidies and countervailing duties. But certainly this is not adapted to the actual phenomenon where one country is so huge to utilize these measures. So I think the discussion under WTO in the context of the reform of WTO on this agreement is very important. And OECD is continuing to work with the EU Trade Committee in the Trade Committee with the European Commission in order to explore a possibility to adapt this agreement better to the actual situations.
And for United States, I leave it to Marion later. And the questions and so we are very humble. We say that this is a very conservative evaluation. So we don't know, maybe that will be bigger. But of course, there's a question, how big are that?
We want to know. But actually we can't pass to that stage. But hopefully this MAGIC database methodology will be improved and we can get more reality very, very soon, I hope. And well, the questions by chair, the subsidies. EU has the subsidy regulations and many countries have their proper subsidy regulation.
What can be a very good reaction to this situation? That's a very good question and every country will ask us to the OECD. But our point is the problem of global industrial subsidies cannot be solved unilaterally. Each country or each entity can adopt their proper subsidy policies. But that can affect of course the balance of the budget and that can make sacrifice on the other parts of the important activities of those country including the EU.
So if every country try to make competitions to adopt more harsh or more positive for the subsidies given, that would be catastrophe. And what I think we need is not such a unilateral action, but to have a dialogue, discussions multilaterally under the WTO or international fora. And OECD is one of a very starting place. We have a trade committee where EU and member states are present. We can discuss on this topic with United States or with Japan and with member states.
And after that, maybe we can enlarge, if we have a consensus on that, we can enlarge our discussion on more global base such as WTO and others. So that's my our feeling. And there's a questions about the which kind of form of subsidies. There's a questions about the private banks loan and so on. Actually our definitions of subsidies has included only three things.
One is the government grant. Second is the tax concessions. And the third is a borrowing under below market level. And this third one is very, very tricky and unfortunately that can be used very, very often by country such as China because they have so many state-owned companies and so on. So maybe that would not be sufficient to cover all the form or hidden form of subsidies.
But already under these three criteria, there has a very bad disruptions impact to the world economy. So we have to tackle by one by one and hopefully we can have some more criteria to see the level of scope of the subsidies in the economy. Well, I think in my capacity I answered all the questions, so but I'd like to ask my colleague Marion to cover the other things which she can answer. Thank you.
Marion Jansen
Thank you. To add a few more details on the on the MAGIC name, MAGIC stands for Manufacturing Groups and Industrial Corporations. So there is something behind that well to remember acronym. There are a number of reasons why we consider the estimates to be conservative.
One is for instance that subsidies to land use are not included so far in our measure. A recent IMF study for instance did include those type of subsidies. And also as we include below market borrowing in the measurement we are not yet including below market equity. This is a variable we are currently working on and hope to soon include. We will continue indeed to publish data and we expect to update the database on an annual basis.
We expect to have 2025 data published in Q2 next year. On the United States increase indeed so far in the data that's to a large extent the IRA. But there is an increase the move towards more use of industrial subsidies across our memberships. We expect that we will continue to see this. On overcapacity we are not explicitly making the link to the term overcapacity.
But we do find indeed that increase in global market share of Chinese companies can be explained for 60% by subsidies. And I think that 60% number is that's a very important one. We also have in sector specific study seen that for instance in solar panels that production increase continues when Chinese companies are starting to make losses and shed labor. So this is not a profit seeking increase of production and exports anymore and subsidies are probably the reason why it is possible to continue with this. And I think I answered the remaining questions and but would like to repeat that Yoshimasa's call of the OECD Secretariat's interest to continue and further strengthen the collaboration with EU members.
Bernd Lange
Perfect. Thanks a lot. And we have also representative from the Commission Fabian Gehl here. And he is responsible for multilateral affairs and WTO reform. And of course this is also important part of WTO discussion as we heard just before.
Fabian.
Fabien Gehl
Thank you very much and good morning and thank you chair. It's a pleasure to be back here today and thank you very much for the presentation. And I just want to share what a support for the work done by the OECD at the end of this discussion. I think the discussions are important. This data is we're very appreciative of the work that has been done.
The database has been an effective and a very precious tool. I think this as we know there's no other database that measures industrial support at the level of individual firm across 15 sectors in the major producing economy on one consistent method over a number of years. And in particular we found that that database has been very important for our work because it shed light on how subsidization is taking place. And I think that has been very very helpful. So we see that as a public good supportive of evidence-based public policy.
And as chair you just made the link with WTO reform we are at the juncture where we're going to push a very strong level playing field agenda at the WTO in relation to the argument on subsidies building on transparency on potentially new disciplines or revised disciplines and looking at remedies. So the whole spectrum of tools we have to tackle the subsidy question multilaterally that kind of database and data is obviously very important. So we'll continue supporting the work of OECD as the Deputy Secretary General has indicated and continue obviously to use that data. Thank you very much for this.
Bernd Lange
Thanks a lot Fabian. Thanks a lot Deputy Director. Thanks a lot and Marion Jansen thanks a lot for coming. And of course we will stay in contact. Thanks a lot.
So we have now the lunch break and we will continue at half past two.