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INTA European Parliament
Ihren Sitzungen folgenDora CARRERA
It's also important to note that the scheme as such is a very generous scheme and it compares favorably to other existing schemes. Just one figure to give you an idea of the benefits accruing from the scheme, we estimate that the preferences have brought about a benefit of 5 billion euros in tariff reductions in 2024 alone, and half of this, over half of this going to EBA countries. Of course, these savings in terms of duties not paid accrue to the exporters in GSP beneficiaries, but also to the importers in the EU and of course to our consumers as well at the end of the line. Let me just also zoom in on Africa because, and the report also points that out, we foresee that going forward the number of beneficiaries from the scheme will be shifting to the African continent as a number of Asian beneficiaries graduate out of EBA.
This is a particular issue to follow in going ahead because of course it will be the GSP scheme will be an important part of asserting I would say EU influence and EU's role in the African continent. Graduation from LDC status in itself is of course a positive thing and we as EU continue to accompany the countries in their path of development and in particular the countries that achieve the UN graduation from LDC status and who meet the GSP requirements are very much encouraged to join the EU GSP+ arrangement. In that way we can keep working together towards their sustainable development. Of course the benefits also accrue to our beneficiaries and in particular in economic terms by bringing more development, by bringing more investment, by bringing more jobs to these countries, but also benefiting the citizens of these countries by creating additional incentives through trade to raise labor standards, protect human rights, the environment and climate and improve good governance.
The report includes a number of detailed specific examples by country in terms of this progress across the different areas. I will not go into that given that I have a little bit over a minute to conclude my my intervention. Of course, the report also includes assessment of shortcomings and necessary improvements and in doing that our objective is to encourage consistent progress over time on all major issues, keeping in mind of course the specific political, economic and social contexts in our beneficiary countries. It's not an easy task, but I think we achieved a good balanced assessment in in the report. Just one very quick word on the new regulation because of course as Chair Lange has mentioned, this report also marks the transition to the new GSP regulation and in particular of course to the fact that current GSP+ beneficiaries will need to reapply for that status under the new the new regulation.
In terms of next steps, we are now busy preparing the secondary legislation to give effect to the new regulation.
Let me just highlight that there will be two delegated acts coming very soon to the Parliament for your scrutiny. This is the delegated act on the temporary withdrawal procedure and also the delegated act on the safeguards investigation. We will in parallel also prepare an implementing act on the management of the tariff rate quota foreseen in the new regulation. And I also wanted to mention that to celebrate the 25th anniversary of our EBA arrangement, the Commission will be organizing an international high-level event on the 4th of November. Let me start by thanking already Chair Lange for being present in that event, and we very much hope to be able to welcome also the members of the committee at the event itself.
So my time is already out. So let me just finish by thanking the European Parliament and this committee in particular for its active involvement on the GSP scheme. Of course, the strenuous legislative work in the new regulation, of course, but also in terms of the recommendations this house adopts, the country visits to beneficiary countries, and of course, the meetings with civil society representatives or the beneficiaries themselves. All this supports our message in favor of sustainable development and very much helps our contacts with the third countries and civil society in these countries as well. So we look forward to continue this partnership with you, with this committee, under the new regulation as well.
If you allow me, I will pass the floor to my colleague from the EEAS. Renzo, please.
Renzo Consoli
Thank you, Nora. Thank you very much, Chair and members of the committee, for inviting also the European External Action Service to the presentation of this joint GSP report. The report and supporting staff working documents are the results of a close cooperation between Commission services under DG Trade lead and the EEAS, both in the headquarters and with our delegations. Allow me to commend and thank my colleagues from the Commission for the excellent cooperation on this.
The report shows in full the relevance of the GSP, not only for trade, but also for the EU's broader foreign policy and relations with partner countries. As DDG Koreas said, the report demonstrates that GSP remains a source of stability and predictability for partner countries, but allow me also to add reliability of the European Union, which you know better than me, nowadays in international relations is becoming rare and important. Developing countries' exports help them to sustain jobs and economic development, and the EU companies and consumers gain more diversified and efficient access to supplies, while we also safeguard the competitiveness of sensitive EU sectors. Especially the GSP+ arrangement continues to deliver on its goal to incentivize sustainable developments and good governance, based on internationally agreed and recognized standards. Through the GSP conditions, we get an effective platform for engaging with beneficiaries countries on human rights, labor rights, climate and environment, anti-corruption and rule of law.
Without it, we would not have the same possibilities.
This is also the case for human rights, for which the European External Action Service plays a particular role. Many current GSP+ beneficiaries strengthened human rights legislation and institutional arrangements during the period covered by this report. The GSP brings important broader foreign policy benefits in a challenging geopolitical context. It helps to strengthen economic and political partnership with countries based on shared values and goals. The full benefits from the GSP require strong and continuous reform efforts by authorities and stakeholders in all GSP beneficiary countries.
Pressure is important there. We remain committed to continue supporting such efforts via capacity buildings and other measures. The GSP scheme does continue to ensure a balance between supporting trade and economic development and promoting shared values and sustainability objectives. Finally, just as the Deputy Director General said, I'm very pleased that agreement was finally reached on the new GSP regulations. With this, the EU ensures, confirms the EU's long-standing commitment to supporting growth and sustainable development in our partner countries across the globe.
Through generous, stable and predictable and reliable trading terms with the EU as a trustworthy partner in an increasingly harsh and volatile geoeconomic climate globally. Thank you very much.
Yeah, thanks a lot for this positive assessment of GSP and specifically also GSP Plus. And I give now the floor to the rapporteur and the shadow rapporteurs. And I guess the first is Mr. Soido for Mr. Mato.
Juan Ignacio Zoido Álvarez
Muchas gracias, presidente. Voy a hacer uso de la palabra en nombre de mi colega Gabriel Mato, que se encuentra en una misión fuera de la Unión Europea. El sistema de preferencia generalizada es, como todos sabemos, un instrumento fundamental de nuestra política comercial y de desarrollo.
Pero como hemos defendido durante toda la negociación del nuevo reglamento, hemos concretado estas preferencias que deben ser compatibles con una protección adecuada de nuestros sectores más sensibles. Como ya se imaginarán, quisiera centrarme especialmente en el arroz. Durante la negociación del nuevo reglamento trabajamos para reforzar la protección del sector arrocero europeo y conseguimos incorporar por primera vez una salvaguardia automática específica para el arroz. Y su importancia es evidente. Según los propios datos de la Comisión, si el nuevo mecanismo hubiera estado ya en vigor, se habría activado en 2025 tanto para Camboya como para Myanmar.
Por eso, una vez concluida la negociación política, nuestra prioridad debe ser garantizar una aplicación rigurosa y verdaderamente automática. El nuevo reglamento comenzará a aplicarse el próximo 1 de enero y quisiera preguntarle a la Comisión si pueden confirmar que el acto de ejecución y todos los procedimientos necesarios estarán plenamente operativos desde ese mismo día. Y especialmente si pueden garantizar que cuando se alcancen los umbrales previstos, la salvaguardia se activará automáticamente y sin retraso alguno. Finalmente, una breve cuestión sobre el SPG Plus.
En el caso de Pakistán, el informe reconoce avances, pero también deficiencias que persisten en el cumplimiento efectivo de las obligaciones vinculadas al régimen. ¿Considera la Comisión que la situación actual sigue justificando únicamente el diálogo y la monitorización? ¿Qué tendría que ocurrir para que considerase necesario iniciar un procedimiento de retirada temporal de las preferencias? Muchas gracias.
Enikő Győri
Thank you so much, Mr. Chair. I also welcome, well, this is a very good instrument, we all know that, because it gives incentives, it boosts relations through trade. And I think even the concept of this kind of development policy is something my group really welcomes. And with the GSP Plus, we move a gear up from 1st January in two terms. First, in concerning migration, that those countries who are beneficiaries of this program but refuse to cooperate on migration terms will no longer be entitled.
So I think we really, it's an important change, something my group has always been very keen on and we were fighting for it. And second is what Mr. Szydło has already mentioned, is the automatic safeguards. And my question to the Commission and even the EEAS would be how do they prepare for this change? What kind of, how will the monitoring go? Whether they have new mechanism concerning how they will pay attention to the rice commercial flows and how often can we count on getting feedback, reports on what is happening?
And the same goes to the migration dimension of this issue. Thank you so much.
Lynn Boylan
Thank you, Chair, and welcome to the guests from the Commission. I'm interested to see that the Commission is concluding that GSP and GSP+ is an effective driver of sustainable development, but also simultaneously acknowledges that there are persistent and sometimes serious failures in implementation of human rights, labor rights, and environmental commitments. Excuse me.
And there's a striking contradiction between serious violations and the Commission's assessment of GSP+ as a success. So it emphasized that all eight GSP+ countries featured have ratified the 27 relevant conventions, but then the report goes on to explicitly acknowledge that ratification of the conventions doesn't mean effective implementation. So I think there's a big gap between the evidence and the conclusion. And the report measures commitments, but very little systematic outcome measurement in the main report. So in terms of questions for the Commission, I think the first thing I would ask is, since the Commission accepts that the ratification of conventions doesn't mean effective implementation, why not use indicators of success that actually measure whether workers can organize, whether they can bargain collectively, whether they can receive decent wages, obtain remedies when their rights are violated, instead of just whether or not the country's actually ratified the conventions?
And secondly, what measurable outcome indicators does the Commission use to determine that GSP+ conditionality is actually improving rights rather than just simply generating legislation, action plans, and dialogues? And then the report also states in 2024 GSP beneficiary countries benefited from preferential tariffs, as you said, with an estimated value of 5 billion in savings. But the Commission also explicitly acknowledges that the tariff savings benefit both to exporters in beneficiary countries and to EU importers. So Bangladesh, India, and Pakistan being the three main users and clothing representing 59% of all GSP imports into the EU. So the report doesn't really specify who actually captures the 5 billion GSP benefit.
So has the Commission actually assessed how much of the preference margin is captured by producers and workers in beneficiary countries and how much by EU importers, brands, and retailers? And if not, on what basis does it conclude that tariff savings translate into sustainable development? And in the garment sector, do the trade preferences actually generate higher wages? Do they improve labor conditions, stronger domestic firms, and more domestic value added, or are substantial proportions of the preference margin actually captured by major European importers, retailers, and brands?
And then finally, just to say, from 2027, we know, because we were negotiating this, the new GSP regulation introduces a deeply problematic migration conditionality, which is to say, when serious and systematic shortcomings in a beneficiary country's obligation to readmit its own nationals in the context of irregular migration may lead to the withdrawal of GSP preferences. Yet the Commission's own report acknowledges that torture and impunity, restrictions on civic space and freedom of association, and persistent forced and child labor among GSP+ beneficiaries. So despite the gravity of these findings, the report records no withdrawal or suspension of GSP+ preferences on human or labor rights grounds during the reporting period. So I suppose it raises a fundamental question about the hierarchy of EU priorities within GSP. If trade preferences can be withdrawn rapidly to protect EU producers, but from 2027 potentially to secure cooperation on migration, why is there no comparably clear, time-bound, and enforceable mechanism when governments persistently violate workers' rights and fundamental human rights?
Bernd Lange
Thanks a lot. And as a all-party rapporteur, I would also take the floor now.
That for me, this GSP story is really a success story, that we could really have an exchange with a lot of countries worldwide to improve the situation for the people on the ground and on the other side make a clear input for the economic development there. And of course you can look to the figures, we had really serious success together with lot of countries of the so-called Global South. And I think this gives also a really benefit for the European Union in the mindset of lot of people, that we are sticking to this mechanism as a mechanism of dialogue and trust, instead of other countries worldwide using support as an economic and political power and sometimes use it, sometimes cut it. And this is not a stable relation to third countries.
And therefore I'm really happy that we had this for such a long time and that we will have a new regulation starting next year. And of course there are some questions, so this old and new one, for example the case of Pakistan is here, the question countries which applied for the old one, will they have to make a new apply for the new regulation? How we can really guarantee that there is a functioning period of negotiation and starting without disruption? So this was one element where I would like to have more information from you. And also this form of dialogue, I guess regarding Pakistan we have the ratification of 27 conventions and they did it and there's a significant change in question of child labor, child marriage and death penalty and so on.
Of course this is a continuous dialogue, no doubt about it, but for me it's always a better way to try to have a dialogue instead of having a finger pointing system.
And this leads also to the question regarding the countries as Dora mentioned in Africa. A lot of countries will be now in the focus because of the change of some Asian countries. How we can use this Everything But Arms issue for having also some upgrades to GSP, GSP+. So just having Everything But Arms is not the end of the story. So we should really have some mechanism for some upgrade situation.
And then, of course, we have a specific obligation in the new regulation that only 37% of textile could, not more than 37% of textile could come from one GSP country. And Bangladesh is getting, I guess, roundabout importing 50% of the textile to the European Union. So they have to pay tariff on that.
So the alternative for GSP would of course having a trade agreement. Is there an idea to go for Bangladesh also in the direction of a trade agreement so that we then have a, let's say, more binding obligation in several areas? And lastly, a specific issue regarding Indonesia. The GSP will be expire and I'm not sure that we will manage to have the trade agreement in force for the end of this year. It's not our fault, but nevertheless, that might be the reality.
So what will happen? Dora.
Dora CARRERA
Thank you very much, Chair, and honorable MEPs for your questions. Very briefly, and then I would see also if my colleague wants to intervene on any of the points raised. First of all, to reply to the questions on the new features of the new regulation. Let me maybe start by that, notably the issue of the rice safeguard and also the issue of readmission.
I mentioned earlier on that we are preparing a series of secondary legislation. So the delegated act on the withdrawal procedure would cover as well withdrawals for reasons of lack of cooperation on migration management. So the new readmission feature would be covered and let's say made more concrete in this delegated act. And then the second delegated act is on the operation of the safeguards and the safeguards investigation. Let me just zoom in on this one in particular.
We are of course very much aware that there are also sensitivities on the EU side, notably on agriculture products and rice in particular. I think the new regulation as agreed by the co-legislators strikes the right balance by preserving the generosity of the scheme whilst putting in place a series of safeguard mechanisms to protect the EU industries and the EU sensitivities when it's needed. Let me just highlight that the regulation includes four different types of safeguards and one very stringent and automatic one as mentioned on rice.
And of course the Commission will apply the regulation as decided by the co-legislators in a very rigorous manner. So we will be prepared to start doing so as the regulation enters into force on the 1st of January. Let me just also mention that we have indeed already prepared an implementing act on the operation of the rice mechanism which will be discussed and presented at the Member States Committee, the General Preferences Committee on the 18th of September. So that's the the first step and and you know we are on time so we hope that on the 1st of January everything will indeed be in place for the full implementation of these different mechanisms. Let me also then highlight the the point that was made that some countries, some beneficiary countries have indeed regressed on some aspects and specific mention was made of of Pakistan.
The report does highlight shortcomings on different areas for different beneficiaries and also to reply to honorable MEP Boylan's question on implementation versus ratification, the report does go into effective implementation of these conventions. And here what we see in general, I would say, is indeed shortcomings, for example, in ensuring space for civil society in some beneficiaries, increased pressure on media, also issues of capacity and resource constraints to implement many of the needed reforms, issues of governance, notably in terms of fighting against corruption, ensuring the independence of judiciary, and also continued allegations and insufficient accountability, for example, on enforced disappearances, excessive pretrial detention. There is also an uneven implementation and enforcement of labor rights as you mentioned, including capacity constraints as well. As I said, we try to look at the successes and the shortcomings bearing in mind the specific context, the specific context of developing countries who are our beneficiaries.
In particular as regards Pakistan and the the mentioned regression, we have also received a single entry point complaint that we are assessing in parallel. And what we intend to do is to take all these elements, so the evidence collected in the monitoring report, the monitoring mission that we did to Pakistan as well, the evidence collected in the context of the single entry point, and factor in all of these elements when we move to the next to the next regulation. And here, Mr. Lange, to answer to your question, so all GSP+ beneficiaries will need to reapply. And the reapplication will be assessed against all available information. There will be a period of two years for this reapplication to to take place.
So that will be the case for Pakistan and all the other GSP+ beneficiaries. And this is why this is this monitoring report is is so important. In terms of the question on how do the benefits of the tariff savings are distributed among the different constituencies, I would say, we haven't precisely modeled this economically. I'm not sure it's possible to do that.
I would need to consult our our chief economist. The evidence we have collected in the during the monitoring report drafting points to indeed a share and reciprocal benefits accruing both to the EU and to to these countries. I mean let's not forget that you mentioned for example the garment exports from Bangladesh and India and Pakistan to the EU many of these exports are actually come from EU companies settled in these countries. So that's why we talk about a reciprocal and mutual benefits coming from the EBA and the GSP in general. Moving to the issue of Africa that you raised Chair Lange in terms of where we are with our EBA beneficiaries in the continent.
As I said, it's very much linked to the graduation process in the UN and the need then to have a dialogue with these countries following this graduation to see what is the best next step for them. In terms of the EBA graduation, once the UN LDC graduation takes place, there is a three-year transition period. And the GSP is very generous because we give an additional three-year transition to go out of the EBA. So we still have time. The next country which seems to be in line for graduation in the UN in Africa is Senegal.
And this could intervene next year. The next ones, but will be for later, I think around 2029 if my memory is correct, would be Rwanda, Uganda, and Tanzania. So these are the countries that will be graduating from LDC soon. But again, we will need to sit down and see what is the best way forward with them in a dialogue and cooperative manner, which is indeed the trademark of the GSP. You mentioned Bangladesh, who is precisely in that situation.
So Bangladesh graduation should intervene this year. The country has requested to the UN to postpone that graduation for three years. The General Assembly will decide on that request for postponement.
But indeed it is also the right moment to see what would be the best next step for the country. As you mentioned yourself, GSP+ would not be the answer because the main export of Bangladesh to the EU is garments, where we do have that threshold you mentioned. So Bangladesh has indeed requested to the EU to start negotiating an FTA. We are now assessing technically whether this will be indeed a feasible option with Bangladesh. We will start what we call a scoping exercise very soon.
And of course we will be keeping Parliament informed of that exercise and the result in due time. And finally on Indonesia, yes, we're doing our best to have the FTA in force by the end of the year. So we have completed our internal procedures. The ball is now with the Council. And we very much hope...
I will not comment on that. And we do hope that we will be in a position to have the agreement in force at the beginning of 2027, and if not 1st of January, soon after.
Renzo Consoli
Just a few words about the issues raised on ratifications versus effectiveness of the respect of the convention. Of course, we are very much aware that one thing is to put pressure on partner countries in ratifying, and another thing is to assess the effectiveness. This applies not only, of course, to the conventions which are under the scope of GSP, but also others in our international actions. I would say, nevertheless, that once a convention is ratified, let's not forget that the country is exposed to international obligations, not only vis-à-vis the European Union. So on this, the European Union joins the international community in monitoring and assessing the respect of the convention.
Thank you, Chair.
After the ratification, there are basically two elements which are important in assessing for us. First, the possible international cooperation, and also the possibility, which is more complicated without the ratification, of a dialogue with the civil society. They are really our good sources on the ground and with whom we are in dialogue in our monitoring missions to assess the real compliance with the obligations of the convention.
Bernd Lange
Thanks a lot to both of you and of course we will stay in contact on the delegated acts and but also on the implementation on the old and of the new regulation. Thanks a lot. This concludes item 11. We switch to item 12, the monitoring group activities. Due to our internal guidelines, it's clear that monitoring groups are an integrated part of the INTA committee and also that after taking place they should at the earliest make a report to us in the committee.
We had two monitoring groups taking place so far since our last meeting and the first is with South Korea and Lena will report us.
Lina Gálvez
Thank you, thank you very much, Chair.
So we know that trade is a key aspect of our strategic partnership with South Korea that is growing more and more in importance. This year we are celebrating the 15th anniversary of birthday of our free trade agreement. And since the 1st of July 2011, it has been in force. And our bilateral trade has increased substantially since then. And in last year, in the 2023, South Korea was the European Union's eighth largest trading partner and we are the largest foreign investor in South Korea.
We are now further deepening our bilateral trade relations with a digital trade agreement. You know, this is the second one, we already signed the first one with Singapore. And the DTA was signed on 10th of June during the 11th European Union-South Korea summit that took place here in Brussels. And shortly after, the Council sent the referral to the European Parliament requesting our consent, for which this is the leading committee.
We have a monitoring group on the 15th of July and we have a first general discussion on the digital trade agreement with Mr. Ivan Breskovic, head of sector in DG Trade, unit for services and digital trade. We also have a second item in our agenda, comprise a discussion on the latest developments in the broader European Union-South Korea trade relations, in particular with the free trade agreement, mutual recognition agreement and recent high political level meetings with Marco Chirullo, head of unit for Far East in DG Trade. Specifically on the mutual recognition agreement, the Council has given its green light to open negotiations. We discussed an indicative timeline with the Commission and the Commission to be informed accordingly about progress. Finally, I would like to inform that a further monitoring group is scheduled on the 29th of September to discuss with stakeholders their views on this digital trade agreement.
And the end of September, we will have another monitoring group meeting to hear the views of yeah, the stakeholder because we think this is especially important, especially having in mind what happened also with the Singapore digital trade agreement in which this exchange of views with the stakeholders was specifically rich and very important. Finally, and this is the last thing I said, this is obviously very timely because on the 1st of October, we'll present to the INTA committee my draft report concern plus accompanying resolution for this digital trade agreement with South Korea. So thank you very much.
Bernd Lange
Thanks a lot, Lina, and this digital agreement of course is a crucial one regarding our exercise with South Korea, but also with other partner countries. We are starting now with Canada as well. So thanks a lot for looking to that. And South Korea is also one of the like-minded countries and we will visit South Korea as INTA next year. So thanks a lot.
Any questions, any remarks? Not the case. Then we switch to the next monitoring group. It's on was on China, the 15th of July. Pascal Canfin can't be here.
Just a short remark that specifically there was a discussion about the report by the European Union Chamber of Commerce in China, specifically on restrictions, new restrictions on investment and trade. And this is of course in the context of the ongoing negotiation between the European Commission and China. Let's see what this will bring. End of October we are knowing more and I'm sure that we will have another monitoring group on that at that time. Okay, thanks a lot.
Then we switch to point 13, which is the vote on the temporary trade liberalization measures for Armenian products. This autonomous trade measures, which were adopted by the Commission on the 2nd of July, is important for the economic situation in Armenia and will liberalize round about 80% of the Armenian export to the European Union.
We adopted a simplified procedure based on rule 52, paragraph 2 of our rules of procedure, so no draft report, so that we had a swift discussion and a swift timeline. And there was a deadline for amendments set for the 30th of July and no amendments were tabled. AGRI adopted an opinion letter and sent it to us in time so that we can really vote today. And also the Council is ready to adopt the Commission proposal without amendments and on the procedure regarding the timescale and the future activities we will have some Commission statement in the September plenary. And of course, as always in this quite rapid and quick procedure, we will have the possibility that there are some legal change after the legal linguistic revision of the text.
So, having said this, we can go for the vote, but before voting, of course, we will have to make a test vote. And the test question is: are you happy that the summer break is over?
The vote is open. Okay, the vote is closed. Oh, quite mixed agreement result. Okay, then we now vote on the temporary measures to Armenia. And the vote is open.
And the vote is closed. And it is adopted by big majority. Also, it's 35 in favor, 2 against, and 3 abstentions. Okay, thanks a lot. This was the short voting session of today.
Congratulations to the rapporteur. And if anybody would leave the room now, I can't really understand why.
Please do it in a quiet way. Quiet means quiet. I will take note. Everybody who's leaving will have a minus on my list. Okay.
So, next item is item 14.
And this is the state of play of the negotiation for a trade agreement between EU and the Philippines. This country, the ASEAN country is now the presidency, has the rotating presidency of the ASEAN and has been involved in negotiation with us since 2015. And of course there are some political disruption, let's say it this way, in the Philippines so that this was not continuous negotiations. But nevertheless, in 2024 and still since then, there was really a more intensive dialogue between European Union and the Philippines. Also we made an delegation to the Philippines and due to my knowledge, the negotiation are going quite well, so that it might be possible to conclude them this year.
But the expert on that is of course Dora and I give her immediately the floor.
Thank you very much, Chair Lange.
Dora CARRERA
Of course a pleasure to be here again this morning on on the Philippines now as the the chief negotiator for the ongoing FTA negotiations. It is indeed a very good moment to update the committee on the state of play of of these negotiations and I want to thank very much also the support of the parliament not only through the the monitoring group with whom I've met a number of times already under the chairmanship of MEP Warborn but also through your visit to Manila earlier this year in February that provided a very strong support and a very strong political signal in favor of our negotiations. We are indeed at an advanced stage. So we had six full rounds of negotiations. The last such round was in May this year in Manila and since May myself and my counterpart the chief negotiator on the Filipino side we have been in constant contact over the summer with chief negotiators meetings basically on a monthly basis in person and online.
So indeed the the situation of our negotiations is a very positive one and the positivity is also in stark contrast with the difficult context in the region and and in the country.
Of course, we all know the impact of the US unilateral tariffs in the countries of the region, but also the fact that the Philippines in particular, but also other countries in the region, have been very much affected by the ongoing war in Iran and the resulting energy crisis. There are some good news also for the Philippines, who have been recognized as an upper-middle-income country by the World Bank for the first time in 2026, in spite of the serious challenges it is facing. Now, the Philippines sees the EU as a key partner, a key reliable and stable partner, and it is now indeed the right moment to strengthen the relations with the Philippines, which is very much a like-minded country when it comes to trade policy.
Both the EU and the Philippines share a strong support for a rules-based international trading system and have the objective of de-risking and protecting our supply chains through open and fair trade. Just to give you an example of this like-mindedness, in MC14, the Philippines was one of the 65 WTO members adopting the e-commerce agreement, which includes, of course, the permanent moratorium on the imposition of custom duties on electronic transmissions. Since the beginning of the negotiations, we have seen a very strong commitment and a clear political push on the Philippine side to advance quickly, and this has now even become more apparent in light of the recent context that I just described. So where are we in terms of the negotiations? We have been able to agree the majority of the text of the agreement, and in particular the discipline part of the agreement, where we have set rules according to the highest standards and in line with the EU practice with other FTA partners, most of the cases aligned with the most ambitious agreements.
And this includes important chapters of the agreement that facilitate trade and help our exporters and investors in the Philippines to compete in the Filipino market. Just to give you some examples, on sanitary and phytosanitary, we have concluded on ambitious rules to help our exporters of agricultural products face less barriers in the Filipino markets when exporting plant and animal products. On TBT, the technical barriers to trade, we have also agreed rules that will help our industrial goods exporters and reduce their compliance costs, and in particular let me mention the rules in the car annex to the agreement which will help our car manufacturers compete in the growing Philippine market by making reference to internationally recognized standards for car manufacturing. We have also agreed to rules protecting intellectual property to very high standards and these will provide protection to IP holders in the EU in a growing Asian market like the Philippines.
We have also agreed on high standard rules for digital trade to ensure smooth digital trade while protecting privacy. And last but not least, we have also agreed on a complete trade and sustainable development chapter with a comprehensive framework and ambitious commitment covering environmental, climate governance, protecting workers' rights, and providing a platform for dialogue and cooperation. So these were rules which have been provisionally agreed at my level. Of course, nothing is agreed until everything is agreed, but I wanted to report this very important and ambitious outcome already. As far as market access is concerned, we are having detailed discussions at the moment covering market access for goods, services and investment, and also government procurement.
These are progressing well, and let me highlight in particular that for goods, in general, our export baskets, EU and Filipino, are quite complementary.
And this is both the case in industrial goods and agricultural goods. So, of course, there are more sensitive products which are more sensitive than others, and these will be agreed in the final stages, but in general, I have to say that the fact that indeed there is this complementarity facilitates the discussion in goods. On services and investment, importantly, it is the first time that the Philippines is taking commitments on market access on services and investment according to the EU practice. So there is also an element of novelty for the Philippines in this area. At this stage, we are very much discussing the level of opening of the Filipino services sector, but there is encouraging progress in recent negotiations.
Finally, in terms of market access, the area of government procurement, where this is a complete novelty for the Philippines, it is the first time that the Philippines will include commitments on government procurement in a free trade agreement, and here we are aiming to achieve a level of market opening that is beneficial for both sides.
The discussion is still ongoing on this on this particular issue. So, what are the next steps? I hear the chairman with this ambitious deadline of end of the year for conclusion of the FTA. Things are going well. As any negotiator, I will not commit to a to a deadline, but let me just say that we will continue to conduct negotiations virtually and and in person on a continuous basis.
I'm going to Manila now at the end of September, third week actually of September, to continue to push. There is of course a momentum to indeed conclude the negotiations, but as always, substance comes over speed, and we very much keen to make sure we have a good outcome on the ongoing discussions. Of course, we will keep Parliament informed of the state of play of negotiations and indeed if we are moving to to conclusion, and I do hope that this materializes, this conclusion materializes as soon as possible. I'll stop here, but I very much look forward to your questions.
Bernd Lange
Perfect. Thanks a lot. And now I give the floor to the rapporteur Jörgen Warborn for up to five minutes.
Jörgen Warborn
Thank you, Chair, that was very generous, I have to say. Thank you also to Dora Correia. We have had a very good relationship with the Commission and with Dora throughout this negotiation, so I think the monitoring group are well informed of the situation. And let me just mention how important I think this agreement is. We are of course in a very turbulent times when it comes to trade today and concluding a free trade agreement with the Philippines as one of ASEAN's fastest growing economies is exactly the kind of diversification we need at this moment.
And then of course we also have the deadline with the GSP+ to take into consideration because if there will be a gap, that of course is a problem for the exporters in the Philippines, but that is also a problem for European businesses as importer of products from the Philippines.
So I think there is a lot of reasons why we should continue to push it as far and as fast as we can. As as Dora said, substance comes over speed and we have heard that repeatedly and I do understand that of course in negotiations you have to you have to take into all the considerations there is to do. But in in some instances I think speed might be substance because if we always say that substance comes over speed, that means that we will never yield on anything and at the end of the day we will not have any new free trade agreements. There have we have to show flexibility and they have to show flexibility. And my relationship when I've met the chief negotiator of the Philippines as well, I think they are very constructive.
And I think the Commission also is very constructive of this.
So, I think there is all the reason that we do the extra push and that we finalize this as soon as possible. And if it is possible in September, that would be of course fantastic. And I would support that and like to send this message to the Commission. Then we have the government procurement issue that I know is problematic. As was said, this is the first time the Philippines are opening up for this kind of provisions.
And of course the issues is more on how you get through the sub-central level and how we will manage to create that kind of businesses that we need with them. And the only question I have, I guess, to the Commission is in relationship to the Industrial Accelerating Act. Because this is a big problem and concern for a lot of our free trading partners. And I guess there have been some concerns from the Philippines as well. And maybe you can inform us from the Commission on how the Philippines are responding to the proposal from the Commission on the Industrial Accelerating Act.
I and EPP, we have pushed for that we need to have a list of all the countries that will be included as Union equivalents in the IAA. So my question is, is the Philippines included or not? Thank you.
Kathleen Van Brempt
Thank you very much. It's on behalf of our shadow rapporteur Christina Maestre that I take the floor and maybe at the end I say something about the Industrial Accelerator Act, so maybe. But I first stick to the to the text. As you know, our group in principle is very much in favor of the negotiations for a trade agreement with the Philippines as well as strong engagement with our ASEAN partners and we recognize the strategic importance of diversification and we see clear potential for a mutually beneficial agreement. However, we want to be clear that the substance of the agreement must be must come before speed.
We need a strong and ambitious agreement that delivers meaningful commitments rather than an agreement concluded simply to meet a political timeline. The European Parliament mission in February reiterated its support for the negotiations while also stressing several important priorities: robust provisions on trade and sustainable development, comprehensive commitments on public procurement, and continuous improvement in the human rights and labor situation in the Philippines.
On public procurement, there appears to be a window of opportunity now of the Philippines side to make some substantial commitments in the FTA, and this has been one of the key outstanding issues, and progress here would be an important step forward. At the same time, we continue to receive concerns from European civil society organisations regarding shortcomings in respect to human rights, and we therefore expect improvements to be continuous and where possible measurable. This is particularly important when it comes to the sustainable development chapter; we need binding, robust, and enforceable commitments. So while we support objectives of concluding the negotiations in the second half of this year, we should not compromise on ambitious or enforceable simply to reach a faster conclusion. My questions to the Commission today would therefore be: what kind of mechanism is the Commission considering to concretely monitor or enforce compliance with labour and human rights commitments beyond relying on the commitments made by the Philippine government itself, and what is the exact state of play regarding public procurement?
And one sentence on the IAA: I raised that question, Jürgen, so many times as well. There simply is no list, and there will be no answer to that question, and that is why I think we as legislators on this file, co-legislators on this file, need to take that issue into our own hand and come up with a very good proposal when it comes to the relation between the IAA and our trading partners.
And I think that is our responsibility in this INTA committee. Thank you.
Katarína
Thank you very much, Chair, and thank you, Ms. Correia, for coming here and giving us this update. I apologize, I'm a bit ill, so sorry for the voice. I wanted to start by, well, thanking you and also recognizing that indeed the Philippines are a key partner. And then I'll do something I don't often do, which is agree with the Commission and disagree with the EPP, which then is a bit more common. No, but on the substance over speed, I think it goes without saying, and it should go without saying.
I understand the geopolitical situation and the need or the desire to speed up the process, and I can really empathize with that. But at the end of the day, we're only as strong as the deals we strike, and these deals are really long-term. They're not about the now, they're about many years in the future. So I really hope the Commission continues to prioritize substance over speed, as they said they would. As for the Philippines, I think it's clear that our concerns as the Greens group really lie with the human rights situation in the country, which unfortunately we see violations continued in the country and largely unaddressed, to be very honest.
And this includes arbitrary arrests, extrajudicial killings, and enforced disappearances, also by security forces. So without enough environmental and social safeguards and legislation that really protects human rights defenders and environmental defenders in this country, I really would fear that more trade with the Philippines risks exacerbating these human rights violations, these land rights conflicts, and the environmental destruction that we already see in the Philippines. So what would make us happier, what would we like to see? Everyone do their homework. That starts with us here in Europe, of course, with the implementation of the CS3D and other deforestation regulation and so on and so on.
We have a lot of work to do, but also to see the Philippines commit to strong labor environmental standards.
...referring to the fundamental ILO conventions, to make sure that indigenous people and local communities are meaningfully consulted in business projects, to minimize the harm of economic operations on these communities, and especially, and this is really important, defend human rights defenders, protect human rights defenders and environmental defenders, because they are at risk of red-tagging, of persecution, of violence by police, by military forces. We would then really be keen to see changes from the Philippines government by adopting national legal reforms in this direction to improve environmental permitting and improve labor rights in the country, and really work on bills on human rights defenders, anti-extrajudicial killing, and the charter for the Commission on Human Rights. With all of these wishes that are of course there, then my question to the Commission would be, when it comes to where these things are addressed as best as they can be in a trade agreement, that would be the trade and sustainable chapter, and I would like to know, is it like in the case of Indonesia, enforceable? Is it under the dispute settlement mechanism? Can we really rely on it strongly, and can you give us an update as clear as possible on where we stand on that?
Thank you.
Marina Mesure
Merci, Monsieur le Président. La question que je me pose, c'est quelle crédibilité peut bien avoir un accord de libre-échange avec les Philippines si les droits humains, les droits des travailleurs ne constituent pas une condition absolue et préalable à sa conclusion. Ça faisait dix ans que les négociations étaient à l'arrêt, et à juste titre, avec les Philippines, notamment en raison du régime de Duterte et les violations avérées des droits humains.
Et voilà que les discussions reprennent à marche forcée et l'aboutissement de l'accord est désormais visiblement imminent. Pourtant, la société civile est très claire. Sur le terrain, ça n'a pas changé. Les exécutions extrajudiciaires, les disparitions forcées, le fichage politique, les persécutions systématiques contre les journalistes, les défenseurs des droits humains et des syndicalistes continuent à être très documentés. La Commission européenne avait elle-même acté dans une dernière étude d'impact de 2019 les répercussions dévastatrices de l'accord sur les droits humains, tout en refusant obstinément depuis lors de commander une nouvelle étude d'impact sur justement la répercussion sur les droits humains.
Alors s'il vous plaît, ne nous ressortez pas pour répondre le fameux chapitre sur le commerce et le développement durable parce qu'on le sait très bien, ce chapitre ne permet pas, c'est un mécanisme de suivi qui est inopérant et franchement illusoire.
Sincèrement, ils sont documentés pour les travailleurs philippins dans des secteurs clés comme l'industrie minière, l'agriculture et le secteur manufacturier, tout comme pour l'environnement et les populations autochtones d'ores et déjà confrontées à des déplacements brutaux. Donc ma question est simple et directe. Par quels moyens exigez-vous, vérifiez-vous les progrès concrets, mesurables, immédiats en matière de droits humains et sociaux avant de signer cet accord et le soumettre au vote du Parlement européen ?
Bernd Lange
Merci, and from my side, on the IPI, we have this discussion about IPI and on the 9th there will be the new proposal for public procurement. Is this playing a role in the negotiation about access to public procurement in Indonesia, in the Philippines ? So I could imagine that negotiation to push for opening their public procurement could be more complicated if they then recognize that we are closing more and more our public procurement. Secondly, on corruption, there is some scandals about corruption quite vital in the Philippines quite recently. Is there the idea of having an anti-corruption chapter in, like we have it with Mexico, on the table ?
And thirdly, Dora, you didn't mention GI. Am I right if this also linked to the situation that in the ASEAN region there is a pressure coming from the United States not to get any binding agreement with us on GIs? So there was a big discussion with Malaysia and now the USTR is attacking Mexico about our GI commitment there. Is this also a case in the negotiation with Philippines? Dora.
Oh, excuse me, I excuse me, we I forgot Mr. Borner.
Dan Barna
Thank you, Chair, and thank you, Ms. Correia, for being here today and giving us this update. I have to address two questions in the name of our shadow rapporteur Svenja Hahn. The first one is related to digital trade. And this chapter, I understand, is more or less concluded already during the negotiating round in May.
Could you tell us a bit more about this chapter and how it relates to the digital trade chapters in the other agreements being negotiated and to the standalone digital trade agreements with Singapore and South Korea? As we know, digital trade is an area where we have great opportunities for closer cooperation with ASEAN. So it's interesting to see if there are divergences between the chapters and agreements with the different ASEAN countries. And the second one, it was mentioned by my previous speakers, but I'll also address it. Several civil society organizations have expressed serious concern regarding the human rights situation in the Philippines, including, though not limited to, the persecution and so-called red-tagging of activists and human rights defenders.
We know that human rights situation is touched upon in the political dialogue under, for example, GSP scheme, but how are these concerns handled in the FTA negotiations? What concrete tools does the Commission have to address this issue? Thank you.
Okay, thanks a lot. And Dora.
Thank you very much, Mr. Chair, and honorable members, for all these questions. I didn't mean to start a debate on speed over substance, but let me just try to reply on that sort of cross-cutting theme to start with. Substance, of course, is paramount. And I think the main message here that I want to leave with you is that substance is very good. Yes.
Dora CARRERA
We now need, of course, to crack the last nuts. There are always the last mile is always the most difficult. But as far as things stand now, we can stand by the very ambitious outcome that we have already. So substance is there. It's a question of going to that last last mile.
So and of course, Mr. Warborn, I'm very much mindful of the need to find landing zones which are acceptable to both and which are beneficial to both. And as you say, I'm very happy that my counterpart is also very much solution-oriented and discussions have been extremely constructive. So on that side, I just want to reassure the committee that we are in a good place, basically. Let me also clarify one cross-cutting point, and this is where are we in terms of the GSP+ current status of the Philippines and then the FTA.
So as I said in the initial intervention, the Philippines was classified as an upper-middle-income country by the World Bank this year. If that happens for two years more, so three years in a row, then the Philippines would lose GSP+ with a year transition. So basically we're talking four years in total. From 2026, so 6, 7, 8, 9, 2029 then the Philippines would lose the GSP+ status, right? So this explains also partly why for them it's so important that we have the FTA in place in a reasonable timeframe so that they can then manage this transition.
Once the FTA is in place, there will be a period of two years for the Philippines to transition from GSP to the FTA in terms of market access. That's a little bit the rules in terms of the transition between the two regimes.
But one point I want to mention in particular because I've I've heard the comments made by the honorable members in terms of the sustainability, in terms of human rights, in terms of good governance. The fact that the Philippines is a GSP+ member already gives us a very good basis for these discussions because basically we have been monitoring the Philippines for a number of years now in all of the 27 conventions covered by the GSP+ regulation and have had dialogues and monitoring missions with the Philippines covering the effective implementation of these conventions, notably on human rights and on on labor rights. So first of all, there is already an ongoing dialogue. There is already a I would say an acceptance also on the Philippine side to cover these issues with the EU in a frank and open discussion. And yes, I'm not saying problems do not subsist and if you look at the monitoring report we were discussing earlier this morning, there is a number there is a section on the Philippines as a complete document on the Philippines with the assessment of progress and and shortcomings.
But the interaction between us on these matters is long-standing. And the report actually notes progress on human rights with the setting up of a dedicated committee for human rights coordination across the different ministries, and also a dedicated roadmap on freedom association and labor inspections that has been actually also welcomed by civil society and trade unions locally. So the fact that we have this dialogue ongoing on these matters has very much facilitated the discussion in the context of the FTA of the trade and the sustainability disciplines. And I'm happy to report that we have provisionally agreed a TSD chapter which is in line with the most ambitious chapters we have in the FTA. So I think there was a question whether the outcome would be similar to Indonesia with dispute settlement included.
And indeed I can confirm that as the text stands now in terms of provisional agreement, it has been agreed with the I would say top-notch level of commitments and enforceability that we have. There was also a question on how would you then monitor the implementation of these sustainability commitments going ahead.
Of course, the fact that we have this monitoring under GSP+ already gives us a basis to continue with the FTA, with this implementation and this monitoring. Let me just also highlight, of course, we will have a TSD committee, so a committee in the institutional setup of the FTA dedicated solely to sustainability issues. There will be also the setting up of a domestic advisory group specifically for this FTA, which would also be monitoring these aspects. And let me also highlight that there is very much an openness in the Philippines to welcome this type of sustainability issues in a trade context. Myself, I participated in a number of stakeholder consultations in Manila with civil society, with my counterpart, with the Filipino chief negotiator.
Filipino civil society is vibrant, has lots of space to speak out and make their points, and we had very lively meetings.
So, you know, in comparison to other partners where there is a reticence to link sustainable issues, sustainable development issues and trade, I can report that in the Philippines this is very much accepted and actually put in practice. So I just wanted to highlight that. And of course we will continue to monitor the sustainability issues, but also the human rights issues through the different channels. And yes, we have suspended the negotiations of the FTA during the Duterte administration, but I mean, I think it's clear for everyone who has been to the Philippines, who knows the reality on the ground, that progress since those times is indeed very stark. So this is on these matters.
Going to the points, more sectoral points raised. Government procurement, first of all. There was a number of questions on whether we will be able to achieve a substantial and ambitious outcome on government procurement. These are things which are being discussed now, so it's very difficult for me to give you an assessment of where we are. It's a moving target, if you like.
I have to say I am encouraged with the direction of travel, and I'll be happy to report on the final level of ambition once we get there.
What is important, though, to highlight. First of all, the discussions on government procurement are also discussions on governance, because we talk a lot about transparency, we talk a lot about non-discrimination. And Chair Lange was making reference to the recent corruption scandals that have emerged in the Philippines on the flood control measures. I think the fact that we ask for these disciplines in terms of government procurement is already a very strong signal, you know, encouraging those in the administration who want to fight against those practices. And I'm sure you noticed as well when you were there in February that the highest level of administration has been very vocal and very active in reaction to the uncovering of these scandals.
So, of course, it's also a very positive note to strike. On the, of course, concerns or the reactions to the IAA. We haven't been very specific on the proposal because it is a Commission proposal, but it's very early on in the inter-institutional discussion.
So this is not something that we have proactively put on the table with our Filipino counterparts. Of course some elements of it have trickled down and in particular they have voiced concerns with these ideas of buy European and the changes to the procurement law. So as you mentioned yourself it's very difficult to be asking for openness on government procurement on their side when there are indications of different developments on the European side. But you know I think we have reached a level of understanding in terms of trying to find a landing zone which is acceptable to us to us both and which translates the ambition of the of the agreement on both sides. So as I say these are ongoing discussions.
I will be very happy to come and and debrief once we have clarity on on the outcome. There was also I think a point on digital trade asking where we are in terms of the outcome.
I can confirm indeed that that part of the agreement, that chapter of the agreement has been provisionally closed. And here I'm very happy to report that it is closed to in in you know with the most ambitious outcomes of other FTAs or the digital trade agreements you mentioned, in particular on the issues which are very dear to to the EU as you know, of course the prohibition of custom duties, data flows and protection of source code where I think we have achieved a very positive positive outcomes. Let me see in my notes if I'm forgetting something. Yes, GIs. Indeed, so on GIs, the situation in the region is what you described, Chair Lange, and indeed we we notice this is a sensitive issue across many countries there.
For the Philippines though, I have to say we had a very positive start of the discussions because the commission the Filipino legal framework is very similar to ours in a way and they have already their own geographical indications.
So in that sense, the starting point of discussions was quite positive. The Filipinos also published all the geographical indications, all the EU geographical indications for objection in a timely manner. So I'm talking about the 196 EU GIs which were published for objection in a timely manner in the Philippines. And then, of course, the issue is discussing the ones which received most objection, and this is the normal part of any negotiation, and this is where we are now. As I said, this is the last mile, sometimes it's a bit longer than we would hope for, but I am confident that overall we will get a positive outcome there too.
I think I've covered all the points, but please do not hesitate to come back if that's not the case.
Jörgen Warborn
Maybe a short comment from my side because I think it was interesting to hear that they have voiced concern over the Buy European issue in the IAA. And between the lines, I read that we have probably lost some of our market access in our negotiations due to the fact that we have introduced the IAA.
So there is a price, and I think that has to be open in the open. There is a price if we are closing our markets that others will do the same. And I think economically, the European Union and our businesses will lose out of this because we have a lot of possibilities to do business with the Philippines and with the rest of the world if we keep being open on this. And that's why I think we should be very clear. If we have a free trade agreement with the Philippines, they should be included on the list.
We didn't get it, and I agree with Kathleen Van Brempt. I agree that we might need to decide it ourselves since the Commission is not prepared to give us that list. And that's why I'd like to be very clear from my side. I'd like the Philippines to be on the list. Does Kathleen Van Brempt would like the Philippines to be on the list if we have a free trade agreement with them?
And if that is the case, does that include all the free trade agreements that we have negotiated with all our partners? Does it include all the GPA partners that we have in the WTO and the Customs Unions partners?
Because that is what we need in order to ensure our trading partners that you can trust us. If we do international agreements, you can trust the European Union. And that trust is at the very core at this very turbulent times in international trade.
Kathleen Van Brempt
Yes, and we'll come back to that. And we still have time. And but that's what I said yesterday also in the hearing. We need objective criteria. And it's us who will define that because the Commission didn't do that.
So we need objective because we cannot say, I like this country, I like that country. That would be and I think we agree on that. And one of these issues that will be key in the discussion is reciprocity. And in that case, I don't know that much about the Philippines because I'm not on that file. But the case of Japan is very, very interesting.
It's a like-minded country. It's very close to us, all of that. But if you look to our access to their market on public procurement, it's very complex. It's divided in cities. Tokyo is not open for our European businesses.
So the IPI, if we do it right, is also a leverage to start renegotiating some of these issues and to get more openness in a market like Japan and also the others. So yes, that's the key issue, one of the things that we will need to discuss here. And in that sense, it was a very interesting hearing yesterday, and I think we need to work on that.
Jörgen Warborn
Yeah. We had a coordinator meeting some time ago and we said maybe it would be good to have a bit more debate.
Jörgen Warborn
No, a reaction on that because I think reciprocity is a bit hard. So like this, when you have free trade negotiations, you negotiate the entire package, all the 20, 25, 30 chapters. And then there is a give and take, and at the end of the day, you see that there is a win-win situation for both. And in some instances, it might be that we give more on public procurement than the other partners did, but they got something else. And that means that now we have free trade agreements that might have that not reciprocity in each chapter, but on whole it's reciprocity.
Which means that if we are going back now to our partners, our trading partners, and say, you know what, the deal that we did three, five, eight, 10 years ago, it's not valid anymore because we changed our idea of reciprocity.
And now you have to give us something and we will not give you anything. That is not how you build trust. That is not how the European Union will be a good trading partners where there are so many other partners around the world that is not sticking to their agreements. We have to do it.
Bernd Lange
I guess we will come back to that, of course. I got the information that the report, or the draft of the report, will be ready next week. So then we will have an intensive discussion, no doubt about it. And yes, on this reciprocity, Commissioner Sejourné mentions this as well, and he talked of a list of 20 countries or so. And therefore also the question, there are countries which have never had an open access to third countries and we got something, like with Japan, like with Mexico, but not everything.
Are they in this list, on this list?
I have no clue. But in general, with Japan, it's a wonderful trade agreement and we got some public procurement in the railway area which were totally new. And if we now get in a way trying to say you have to do exactly the same what we are doing, then they will go of course in a different way. And the second, Jörgen, you mentioned the economic figures and this is also for me a big miracle. So of course there will be some effects for companies in Europe with this IPI, but how big will this be?
I guess in average we have 15% of GDP related to public procurement. So it's not so big. And secondly, not all products on public procurement are covered, textile for example not. So in hospital buying textile and so on. So this you have to reduce this 15% additionally.
So how big is really the effect economically and how big is the effect which we are risking in the trade with third countries? This has to be put on paper, I guess, to have a proper calculation.
So Dora, we are skipping a little bit away to the Philippines. So we wish you a good luck in the negotiations and having in mind that I expect that you conclude as a Christmas gift for me the negotiations. Thanks a lot. Good. So and then we switch to our last point for today, the negotiations on point 15 with the United Arab Emirates.
And this is also a tricky issue I guess. And the formal negotiations started in May 2025. And Leon Delvaux, well known here, hello, is there and he gives us an update about the state of play of the negotiation.
Leon DELVAULT
Thank you very much, Mr. Chairman, and thank you for the invitation. And it's my pleasure to give you a readout of our negotiations. But if I may start maybe with recalling the broader context of where these negotiations fall in.
The Gulf, needless to say, is a strategically situated region and a very close economic partner. Actually, taken as a whole, the six Gulf countries constitute our sixth largest export market. So it's already a very significant partner. And it's of course also an important source and destination of investment flows. We believe that a stronger engagement with the Gulf in general and the UAE particularly is very important for the EU.
And as you know, there was two years ago a summit, the first ever EU-GCC summit, what was held here in Brussels to launch this or to reinforce this partnership. And we actually looking forward to the second summit, which is likely to take place next month in Riyadh. So this is the kind of summit where you have all EU member states with the EU institutions and the six partner countries.
Our objective more specifically in the trade area is of course to improve the conditions for our traders and investors in the UAE, but also importantly to prevent the relative deterioration of the conditions for our traders and investors because as you know the UAE has a very active FTA agenda, although they don't call it FTA, but they have a very active trade negotiation agenda. You may have seen that they a few weeks ago even concluded negotiations with Canada. They have an agreement with New Zealand, with Australia, with Japan. The UK is likely to be launched soon. So they have a very active trade agenda and of course this all has also an impact on how we trade with them because in the absence of a trade agreement, let's say the access to their market is of course improved for some of our competitors.
You'll also recall that in parallel to the FTA negotiations we have taken the initiative of putting forward strategic partnership agreements to all GCC countries and the one with the UAE has been launched over the last winter. So coming to the FTA negotiations proper, we've had seven rounds already at this stage, so the last one was in July and we are preparing for having the next one here in Brussels early October.
So as you see, it's a very, quite an enhanced pace of negotiations that we are conducting. If to sum up the state of play of these negotiations, I can say that progress is good in a number of areas. So for instance, the sanitary and phytosanitary measures, customs, anti-fraud cooperation, rules of origin, intellectual property rights. We have some progress on technical barriers to trade and public procurement. But if you look at the fully closed chapters, we just have two, which is SMEs and the anti-fraud clause.
Gaps and quite important gaps remain in very key chapters, including but not limited to energy, trade and sustainable development, GIs, digital trade, others of course, but I just want to highlight those. However, I think there is a continues to be a clear interest by the UAE in these negotiations. But it's clear that the kind of agreement the EU has put forward moves quite a lot of the lines that they had in their previous FTAs. And some of the areas are new ground for them.
So they, it's clear that some of our asks they feel slightly uncomfortable with, but we, I think we are progressing in our discussions also on these, and I hope we can find solutions for all of the outstanding issues. Because it's clear that the UAE has a diversification agenda which is particularly striking in that region. So they, I think, have the most active policy of getting away and the most successful also so far getting away from hydrocarbons and diversify their economy. So I think a link to a trade hub like the EU, an internal market like the EU is of course of very significant interest for them. However, what we all, and especially me, have to have in mind is that at this stage already, if you just look at the goods flow, essentially 78% of the goods that the UAE is exporting to the EU comes in tariff-free because they are essentially MFN zero or have been suspended.
So essentially, if you just look at the goods part, it's only 22%, sorry, 22% of their exports which face tariffs.
And of course, this inevitably has an impact in these negotiations because their interest is very focused in these. And if I may maybe right from the start say that for most of these sectors, these are sectors driven by the export of energy-intensive products, which is of course an area where the UAE has a natural advantage given its access to energy. So these would be sectors like aluminium, steel, fertilizers, chemicals. So these are all sectors where I think in the EU, as you know, we have some concerns as to the viability of our own industry in some of these sectors. So this is of course something we have to be very attentive to, that whereas we of course fully understand what their offensive interests are, that we also secure a level playing field so that our companies are not unduly exposed to exports which would not comply with the same rules, notably when it comes to dual pricing or let's say the access to energy at a low cost.
So I mentioned the UAE's active FTA agenda. I mentioned I think New Zealand, Australia, Canada.
You've also seen that now there's recently been an agreement between the GCC, of which of course the UAE is still part, and the UK. So this is also for the GCC a major development with the biggest G7 member. And there is also, just to signal, a clearly renewed interest from the GCC part to engage with the EU on a block-to-block agreement. But I think also the fact that the UK is now looking for to add actually an agreement potentially to the GCC one with the UAE, I think also shows a little bit the level of ambition that might differ on the two levels, the regional and the bilateral. So maybe a few words on our main interests.
So agriculture is of course very high on our list. First of all, because we already have a good situation, but as I mentioned, there are agreements that have been negotiated with Australia, New Zealand, now the UK.
So there is also we can expect increased competition from these exporters. And on top of that, we need to be mindful that at least so far, the UAE population has always been growing. So the interest for importing EU agricultural foodstuffs and products is also something that can still, I mean, we can expect exports to actually increase with a good entry. Because some of these, notably dairy, but others, face still face tariffs. Linked to that, there are geographical indications.
I noted that you just discussed this also with Dora. So this is also something quite interesting because the UAE have their own legislation on GIs. So it's, I think, the first one in that region that has one. It's not the area where we have progressed the most, but of course this remains, I think, a very important ambition for the EU because of our very clear commercial interest in that regard. I mentioned at the outset energy.
So this is a chapter where we haven't progressed as much as we would have liked because of the reason I gave you.
I think there is clear interest from their side to to work together on developing and have joint cooperation on renewable energy, which is of course also a key a key ask of our side and also to give a chance to our companies to to invest and partner in the UAE. What has held us back in these negotiations is essentially the issue of how we ensure a level playing field when it comes to their let's say preferential access to very affordable energy. So we have had difficult discussions on dual pricing. So we have asked them essentially to to introduce dual pricing so that there would be no preferential access to energy granted to energy-intensive industries. This is an issue where we have made, just to be clear, no progress because they see this as first of all something they've never accepted to to negotiate and something that goes at the heart of their sovereignty and the way they run their their economy.
So I just want to flag it because it's it's a very important ask on our side, but not one where we have made progress. On public procurement, of course, it's also a key a key ask.
There we have made some progress at the federal level, but since the Emirates are of course a federated state, a lot of, or most of the procurement is in single Emirates. No third country has ever managed to negotiate an access to this public procurement with the UAE. This is also something we have not secured yet, but it's certainly something we're talking about. And I've given you just this ICA also to signal that there are, let's say, clear schemes in place whereby there is preference granted to domestic production, domestic ownership, and others in these public procurements. So this is something we are currently discussing with them to see how we can find a way forward.
Then technical barriers to trade is of course also always a key chapter in an FTA. There we're trying to ensure that we simplify, notably certification, testing issues for some of our exporters. Again, this is not, I mean, we have made progress in the sense that we have essentially secured standard outcomes, but of course we want to improve that. We're working on that. Then last, it's certainly not the last, but it's by far maybe probably the most complicated, but I keep it for the end.
So this is trade and sustainable development.
The UAE traditionally in their FTAs, in their trade agreements, they don't have chapters on trade and sustainable development. They have broken new ground, if I can put it like this, with New Zealand and Australia, but it's cooperation-based TSD chapters. So of course our approach with binding commitments and underlying dispute settlement is something they don't see as fitting a trade agreement. So these are discussions where we haven't progressed much. The point of focus in particular is...
It's not limited to, but it's of course particularly sensitive when it comes to labor and the ILO conventions, the some two core conventions that the UAE has not ratified, one on the right of association, the other one on health, on safety at work.
So these are discussions where we are very clear about the EU's expectation and asks, but we have made little progress because they consider this touches their sovereignty and the way they decide to run their economy. And as you know, they have a demographic structure which makes that essentially a bit more than 85% of their population are foreigners with different, well, let's say different origins. And so this is something they look at, so the right of association in particular, something they look at as an issue of national security and are not ready to discuss with us, at least at this stage. One maybe one more point I want to mention, because also it's a bit of a novelty in our own mandate, and I know the Parliament is very sensitive to this too, is cooperation on sanctions circumvention. You know that there has been, and I know the Parliament has voted notably on the delegated act on, had a very strong view on this, the delegated act on anti-money laundering.
So we have a certain degree of cooperation, so David O'Sullivan's office with the UAE when it comes to sanctions circumvention, but I think it's fair to say it's not at the level we would like it to be.
So we have included this in our negotiations in this agreement to enhance cooperation in that regard. It's also one issue where the progress is not very material, but I think we've made it very clear that this is a key ask on our side and we continue discussing this. Maybe one last, sorry, one very last point is state-owned enterprises and subsidies. You know that the UAE economy is largely dominated and driven by state-owned enterprises because of this also diversification strategy, because they want to invest in new economic sectors and push some of these investments and policies. So this is something where we have had also good discussions, but not ones where we would be confident that we can have disciplines that would make a major difference.
That said, this is always a bit, you know that this is part of all our negotiations. We therefore also of course expect an outcome that is meaningful here, but I just want to flag that this is something that is again very sensitive for the UAE.
Bernd Lange
Thanks. Our rapporteur is Lynn, and I give her the floor for three minutes.
Lynn Boylan
Thanks, Chair, and thanks to the Commission for a very detailed outline of where we're at in terms of the negotiations. I think though it is important that we sort of point out the type of country that we are currently trying to negotiate a trade agreement is a country where independent civil society has been dismantled, where trade unions are prohibited, freedom of association and collective bargaining are not guaranteed, and fundamental ILO conventions, as you've said, remain unratified and are a very sensitive issue for the UAE. But it's also important to note that the UAE is also a country that's directly arming the Rapid Support Forces in Sudan, who are currently committing heinous human rights violations. So I'm going to focus today just really around the human rights elements of this, because while there might be good progress in lots of the chapters as you've set out and that there's going to be, you know, the accelerated talks, I think the key point for us is are we prepared to sacrifice human rights?
Because a basic element of of all EU trade agreements allegedly is the trade and sustainable development chapters as as you've said yourself, and it includes commitments to respect fundamental labor rights, implement core ILO principles and allow for independent civil society and trade unions to monitor the implementation through the domestic advisory groups. So what concrete TSD commitments does the EU expect to get from the the UAE and and can we get a commitment that this will be a red line for the negotiations because how can they be monitored where independent unions cannot even legally exist? You as you said you said you're very clear about how important this issue is to the EU, but is it a red line for us? Are we prepared to sacrifice and close a TSD chapter without concrete reforms that allow for for participation of independent trade unions, of civil society and workers' rights? Is ratification and implementation of the fundamental ILO conventions on freedom of association and collective bargaining a non-negotiable requirement or is DG Trade prepared to conclude an FTA while the UAE continues to prohibit those rights?
And I suppose then just finally on this, are you willing to accept the formulation of merely requiring efforts towards ratification, knowing that the the UAE could claim that they're making efforts for ever into the decades without ever ratifying the conventions?
So I'm sure other colleagues will go into some of the other chapters, but for me this is fundamental. Are we prepared to sacrifice all of those values and the TSD chapters to do a negotiation with a country and as I said that's also arming the RSF at a time when there's a genocide happening in Sudan?
Jörgen Warborn
Thank you. I think Lynn is right in that that this will be a lot about the TSD chapters at the end of the day when we when we will discuss this. At the same time the world the world has changed quite a lot when the trade world has changed quite a lot recently. And the question we have to ask ourselves should we continue like nothing has changed or should we from the European Union find some kind of flexibility in this changing world? Because before we had all full comprehensive free trade agreements with our mold so to speak with all the different chapters and that was what we presented to our partners and from that on we negotiated.
But I think we have to be more flexibility in this sense, and that's why I think mini-deals or different kinds of deals where we find more targeted solutions is probably one of the ways where we have to find flexibilities. Because otherwise we see how other partners now around the world make deals with UAE, which means that European businesses get less competitiveness in comparison to those. And that means that we lose our growth, we lose jobs in Europe, and that of course is not good for workers in Europe. So I think we should try to be flexible, stay at the core of our trade, I mean INTA is about the trade perspective, but not of course totally give up of our standards, of course, we still have them. And that's the tricky part, how should we, how should we deal with this?
I think when respected countries like New Zealand, like Australia, like Canada, they have obviously chosen to be more flexible than the European Union has, and that is what we have to think about.
Going on the actual subjects, I'd like to bring up the energy thing. What I understand the UAE sees this as, they say if you have problems with this in the line that we subsidize our intensive energy industry, that we can solve in chapters around subsidies. What's the Commission's response to this? Is this a subsidies issue or is this a dual pricing issue? And then rights of association, the ILO conversation.
How do you see the arguments from the UAE on their demographic situation and this that this is a national security argument for them? Is that valid, you think, or how could we solve this in a creative manner? Thank you.
Andi Cristea
Yeah, thank you, Chair. So it's a factual reality, things are not perfect and we have divergent views on different issues. In the same time, there is significant potential in this agreement, both economically and in strategic areas such as energy, investments, and resilient supply chains. For our group, trade and sustainable development chapter will be a particularly important part of the final agreement.
I would therefore welcome an update from the Commission on the progress made so far in this area. You did that, it was much appreciated, maybe if there are things you can still double-click. Finally, I guess we cannot look at this partnership outside the current geopolitical context and with the ongoing conflict in the Middle East. I would therefore also ask the Commission how it sees this partnership contributing to greater stability in the region. Thank you.
Thierry Mariani
Merci, Président. Les Émirats arabes unis ne sont pas un partenaire commercial parmi d'autres. C'est le premier partenaire de l'Union en investissement direct dans le Golfe, c'est notre premier débouché pour les biens et services dans la région. 55 milliards d'euros d'échanges et le 19e plus grand partenaire commercial de l'UE pour les biens. Et pourtant, nous négocions depuis un an un accord que nous devrions déjà avoir conclu.
Soyons réalistes, la volonté politique, certes, est là des deux côtés. Sept tours de négociation en un peu plus d'un an, c'est un rythme que l'Union a rarement tenu. Mais la réponse, pourquoi ces accords commerciaux mettent autant de temps à être signés ? La réponse, nous la connaissons tous, nous mélangeons systématiquement les sujets commerciaux avec des considérations politiques qui n'ont jamais rien eu à y faire.
On veut imposer des conditionnalités, des clauses, des exigences qui relèvent de la diplomatie et non du commerce. Les Émirats arabes unis ne seront jamais une démocratie sociale-démocrate scandinave. Résultat, on ralentit un accord qui peut accélérer les bénéfices de nos entreprises et de nos industriels pour des postures qui risquent de braquer Abou Dhabi et qui n'apportent rien à nos concitoyens. Lors de mon dernier voyage personnel à Abou Dhabi, certains officiels me rappelaient qu'il leur a fallu huit semaines pour signer un accord avec l'Inde et qu'ils sont toujours en discussion avec nous. En somme, il faut cesser de prendre en otage nos intérêts écologiques, économiques par idéologie.
L'Union se targe d'être le plus grand réseau d'accords commerciaux au monde, très bien, mais un réseau qui se muscle en concluant des accords, pas en les enlisant. Le huitième round aura lieu début octobre, ce sera un test. Où nous continuons à vouloir être aussi bien une ONG qu'une puissance commerciale, ou bien nous choisissons clairement comme l'ont fait l'Australie, la Nouvelle-Zélande et la Grande-Bretagne de donner une priorité uniquement sur le commerce. C'est un choix. J'appelle la Commission à conclure cet accord et à rester concentrée essentiellement sur le commerce.
Thank you very much.
Katarína
Today we discuss a trade agreement with a country with quite the track record on human rights at home and abroad. Internally, we're talking about no right to collective bargaining, no right to go on strike, no independent labor unions whatsoever, and millions of migrant workers exceeding the numbers of UAE nationals who are exploited, many of them on a daily basis, to fuel the economy of the country. And somehow, still abroad, the picture isn't any better. The UAE funds one of the most brutal civil conflicts in the 21st century in Sudan. It's very clear that they are supporting the RSF forces militarily, politically, financially, and that support has helped them to sustain this escalation in violence, particularly in West Darfur.
I would say that as a rule of thumb, the EU should not be engaging in deepening economic relations and political ties with countries that escalate conflicts anywhere in the world. So if this is true for Russia, this should be true for other countries as well. And if Israel is under so much pressure, then what kind of pressure could we even... I mean, it's simply unthinkable.
So let me be very clear. Not only this is to me personally a no-go, I think this is to us as the European Union a no-go. And I actually think it would be very hard to find a majority for a deal like this in this Parliament. Weirdly enough, a word of solidarity to the negotiators on DG Trade because we had the opportunity to be in your shoes for a few minutes when we were in Yaoundé in Cameroon and we met with the negotiators. And I've never felt so much like I was living in a different reality, like an absurd, upside-down world in which all of the flexibility that the colleagues ask for was simply not there.
And any, like, they don't even believe in TSD chapters. They don't believe in trade unions. Like, how are you, I guess my question to you is, how do these negotiations go? Are you able to make any progress whatsoever in these topics? Because when we met with these negotiators, I thought up was down and down was up.
And finally, a question that maybe would be more for the EEAS, but perhaps you can also answer, I hope you could. In July, the European Parliament had a resolution naming for the first time specifically the UAE as participating in and fueling the war in Sudan. Has, have you seen a reaction on, from the UAE on this and has that had an impact or changed at all the course of negotiations? Thank you.
Udo Bullmann
Well, the geopolitical role of the Emirates as mentioned by our rapporteur and by colleagues, it's not only the Sudan, it's Ethiopia, it's Libya, it's Somalia, where the Emirates are one of the most aggressive external forces fueling into military conflicts. Hundreds of thousands of innocent people had to suffer from their activities. It's one of the most brutal forces hindering regional integration and international trade from flourishing. So I understand if people say trade is about our self-interest. Okay, so far.
But isn't it hypocrisy at its finest if we call actors strategic partners and on the other hand complain about the amount of refugees on our borders and cut humanitarian aid? Because this is the result of this aggressive external behavior in the continent of Africa. I'm far away from thinking that also this is a matter of national sovereignty.
This is a matter of international mutual understanding. And my very question to the Commission is, do we mention that once we are talking to our so-called partners for one year already? And once we have mentioned it, what was the answer and what kind of conclusion do we draw from these kind of facts, bloody facts? Thanks a lot. And a bit additional from my side, the question of labor rights is not only a question of human rights, it's also a question of competition.
If we have, and we have some examples of really harming fundamental labor rights in this conglomerate of Emirates, then they have a competition advantage to us. And looking for example in the steel industry, this is relevant. And relevant for the steel industry is secondly that we are in a transition to go for green steel and they are doing exactly the opposite. And also in the climate negotiation globally, they are really the crucial country to stop progress in climate change activities.
Bernd Lange
So this is a second advantage, competition advantage. Can we accept such an unfair competition in a trade agreement? Mr. Dalvo, now you have five minutes.
Leon DELVAULT
Thank you very much. I understand I have five minutes, so happy to come back whenever or have also bilateral talks. In brief, I think there are quite a few questions which I feel are slightly above my pay grade, but I'll try to answer as much as I can. So what are we asking them? I think this house is very familiar with our TSD chapter.
So of course what we are discussing is our TSD chapter. So I think our mandate is very clear on this. So I think we're looking for binding commitments across the board, be that on climate, environment, maritime, and labor, on what we usually negotiate with third countries. The, and as you know, the chapters of course are built on existing international agreements and commitments that our partners have taken.
I think there's quite a few where we have the same. And you will remember that for instance on climate, the UAE were actually hosts of a COP. So I think there is clearly, there's a large degree of convergence on how far we commit to international agreements in the different spheres. But it's clear that on the ILO, this is something, an issue that the UAE consider as linked to their own sovereignty to decide whether they sign up to outstanding ILO conventions or not. So this is a discussion we are having, we continue to have.
I cannot say it's the most encouraging one, but I think for them it's very clear that this is their own right and they are not ready to commit, I mean essentially to take new commitments in a trade agreement. This should for them be, I mean we've seen how on the basis of what we can, how we converge, what we can anchor in the agreement. But I think I want to be very clear, I don't see them committing to us to ratifying additional outstanding ILO conventions, especially the core conventions, because of this agreement. So if that's the objective, this is not something we're going to succeed in. But I think there is enough commonality to build on and I hope to continue this discussion and making progress.
And I think there was a question by Mr. Warborn. I think there are some issues that the UAE considers as relevant to their national security. And I think it's very difficult for us to question what their own assessment of the national security is, because I don't think we would like to see others do the same with us. So I think this is something, it's very sensitive in our discussions and there needs to be, if we want to have an, if we aim to have an agreement, I think we need to be respectful of what they consider is relevant to their national security. So we need to see whether we find solutions on these or not, and solutions which satisfy both parties.
And this is what we are trying to work on. On, yeah, so on the TSD, but that doesn't mean that, and I note also again what has been said and I see that views diverge, so I won't comment on that. What we are trying to achieve is what we have been asked to do by the Council and by you, which is to take forward our TSD chapters. The progress is difficult, but there are very small steps so far, but nevertheless the discussion is taking place.
But for instance, just to signal, we mentioned Australia, New Zealand, Canada. If you look at the UK negotiations now with the GCC, there's actually the UAE have an opt-out of the TSD chapter. So I think it shows what, as was mentioned, other third countries are ready to accept to take these agreements over the line, but also how far the sensitivity goes in the countries in the region. So this is just a call we'll ultimately have to make, what, how far we're ready to go in terms of compromise solutions. But I just would like to flag, because it has been said that the TSD is the only thing holding us up, I think of course it's an important part of our discussions, but it's certainly not the only one where we still need solutions.
I mentioned energy, dual pricing related issues, I think this is a very important part of our discussions where we haven't progressed as much as we would like either. I forgot to flag it, but of course the second export category for the UAE to the EU is actually steel.
And you know that on steel we have essentially taken off the table any meaningful concessions we could make to them because of our measures. So I think we need... and since 22% only of the exports actually face tariffs, we just need to be realistic about how much is in it for them. And I note of course all the misgivings on HR, on human rights, which I can fully understand. But we are not negotiating on a blank sheet. We are already trading quite significantly with the UAE.
They're investing quite significantly in the EU. And I think this is something we need to decide whether we want to strengthen that or not. I'm just looking if there's... Yeah, I think most of it was around that. Ah, yeah, maybe just nevertheless important, it's not in our trade remit, but it's the strategic partnership agreement.
I mean, I think we are... there's always been... Israel was mentioned, for instance, Israel, there's one encompassing agreement where we have the political part and the trade part.
So we have commitments in that regard that we are negotiating or trying to negotiate in the strategic partnership agreement. So I think we need to to say move forward on these two feet so there are things which we will address and want to address in the strategic partnership agreement and and things we are negotiating inside the FTA. I know that I should I stop here but I I see you.
Bernd Lange
Yeah thanks a lot of course we will come back to that I'm sure. Thanks a lot this concludes our inter-meeting of September. In October we will have a quite short meeting only half day on the 1st of October. And now we will cut the webstream and we will have the coordinators meeting.
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