Review of EU Trade Policy under the German Council Presidency
Chairman,
Distinguished Members of Parliament,
I am very grateful to the INTA Committee for inviting me and for giving me the opportunity to review with you the trade policies pursued by the German EU Presidency. I am especially grateful for your cooperation and support with regard to the often difficult trade policy topics on the German Council Presidency’s agenda. The sense of commitment you demonstrated especially in the discussion on strengthening Europe’s external competitiveness has been extremely helpful for the German Presidency.
Ladies and Gentlemen, it is impossible for Europe to stem the tide of globalisation by resorting to protectionism; Europe must rather avail itself of the opportunities globalization offers. Opening Europe’s markets and strengthening its external competitiveness are thus decisive preconditions of economic growth and employment in Europe. Against this background, the German Presidency’s key trade policy issues have been absolutely clear:
The Doha Round of trade talks suspended in July 2006 were officially resumed in February. At the informal EU Trade Minister meeting on 11 February 2007, the Federal Minister of Economics, Mr. Michael Glos, and the other EU trade ministers welcomed the resumption of the talks and emphasised the importance of the Doha Round for the world economy. At the same time, they advocated an early conclusion of the Doha Round negotiations with ambitious and balanced results in all negotiating areas. Thereafter, intensive talks were conducted at the G4/G6 levels as well as at the WTO in Geneva, in order to reach a compromise on trade policy disputes. After a meeting at New Delhi, the G6 Ministers emphasized their joint willingness in mid-April to conclude the Doha Round before the end of the current year.
Nonetheless, the talks held todate have been very difficult. In spite of a rapprochement of views on contentual elements of individual negotiating areas, it has not been possible so far to reach agreement on strategic issues such as the US internal agricultural support system, access to EU farm product markets and improved market access for industrial products. On the other hand, agreement among the 150 WTO member countries on a new round of trade liberalisation – friendly to development - would increase the dynamism of world trade with positive effects on economic growth and employment not only in Europe. Till the end of its term of office, the German Presidency has left no stone unturned for making progress.
We regret very much that the G4 Ministerial Meeting in Potsdam last week was unable to agree on a further rapprochement of divergent positions. We shall now have to wait and see how the Geneva talks can generate progress in the absence of any previous G4 accord on the essential core modalities. It must remain the aim of the EU to reach substantial and balanced negotiating results at the earliest possible date. I have just stressed the fact that the Doha Round of trade talks have been extremely important for the German EU Presidency.
But matters have not stopped developing in recent years. Numerous countries such as the USA and Japan have tried to obtain competitive advantages through bilateral or biregional free trade agreements in the meantime. At present, over 300 of such agreements have been notified to the WTO, others are still in the process of negotiation. This makes it necessary for us to take responsibility for Europe’s economic competitiveness worldwide and to respond to this development in an appropriate manner. We could not and were not prepared to accept disadvantages for European enterprises in international trade without response from our side.
The EU Commission’s initiatives for a new generation of comprehensive and ambitious free trade area agreements with selected growth regions have therefore been welcomed by us as the Council Presidency, by the EU Member States as well as by the European Parliament. The deliberations on the terms of reference governing free trade agreement negotiations with the ASEAN States, India and South Korea as well as negotiations on association agreements with Central America and the Andean Community have been conducted by the German Presidency in the competent EU bodies in a target-oriented manner. It has been our aim to pave the way for the earliest possible adoption of these terms of reference. The fact that we made a breakthrough in this field at the General Council Meeting last April represents an important step during our EU Presidency, in my opinion.
We were thus able to lay the basis for an early start of negotiations with the ASEAN States and with South Korea at the beginning of last month. We will hold the first meeting with India tomorrow. Within the framework of the discussions on negotiating mandates, the Member States and the EU Commission agreed that the European free trade initiatives must not result in any weakening of the multilateral trading system.
This explains why it was stressed that future free trade agreements of the EU must be based on WTO rules, complement the multilateral trading system in a meaningful manner and strengthen it thereby. (WTO plus approach). The terms of reference that were ultimately adopted reflect this point. They include comprehensive requirements.
Important topics such as investment, competition and public procurement are part of them. This applies also to issues relevant for improving commodity supply in Europe by reducing commodity export duties and lifting commodity export bans, for example. Another point of great importance concerns non-tariff barriers.
Moreover, the EU is also making efforts for reaching agreement on rules pertaining to social and environmental standards in such bilateral accords, but such agreement is currently not within reach in view of the continuing resistance of a large number of developing nations which are members of the WTO.
The fact that the EU’s free trade area initiatives have initially been focused on Asia in particular is reasonable in my opinion. Especially India and the ASEAN States represent important growth areas of the world economy with a great potential in future. At the same time, these are areas in which European businesses are often confronted with diverse trade barriers making it more difficult for them to develop these markets.
In our negotiations with Korea, we must succeed in eliminating the existing numerous non-tariff barriers to trade. There, our businesses often face severe difficulties, especially in the automotive and the pharmaceuticals sectors. We would therefore welcome it if in the further negotiations our Korean partners already took first steps by reducing the severest of such barriers by way of confidence-building measures. This would be an unambiguous signal that Korea is ready for comprehensive liberalisation and economic cooperation.
The willingness to take up talks on association agreements with Central America and the Andean Community dates back to a pertinent arrangement made at the EU/Latin America Summit in May 2006. Here, our aim is to intensify political and economic cooperation with these regions and to improve access to the markets of these regions to the benefit of our enterprises.
So, the talks on free trade agreements will continue to be an important interest of European trade policy in the next few years. As mentioned before, it was another aim of the German EU Presidency to give new major impulses to the existing dialogue processes within the framework of the 2005 EU/US economic integration and growth initiative.
The USA is the most important trading and investment partner of the European Union. Improvements in the area of non-tariff barriers are our prime interest – and are rightfully demanded by businesses on either side of the Atlantic. And, indeed, we did make progress at the EU/US Summit in Washington on 30 April 2007. We were able to concluded an economic framework accord on cooperation in reducing and harmonizing regulations.
Protecting intellectual property, guaranteed trade safety, financial markets, investment, innovation and technology as well as public procurement represent important cooperation sectors (lighthouse projects) as well. In these areas , substantial successes are to have been made prior to the 2008 EU/US Summit.
The central body of future Transatlantic cooperation in the field of regulation will be the socalled „Transatlantic Economic Council“ to be jointly chaired by EU Commissioner Günter Verheugen and Mr. Allan Hubbard, economic adiviser to the White House. Chancellor Merkel will receive the Economic Council for its first meeting in Berlin tomorrow. We may also count among our successes the the adoption of the new EU market access strategy as the basis of greater efficiency in reducing barriers to trade in third markets. Corresponding Council conclusions were adopted at the General Council meeting last week. We have thus been able to clear the way of obstacles obstructing closer cooperation between the EU, its Member States and the business community in the field of pulling down barriers to trade. It is possible henceforth to take concrete steps towards improving cooperation in third markets.
Within the framework of the discussion on strengthening Europe’s competitiveness, Germany has advocated from the outset to pay special attention to the commodity supply aspect as well. Europe as a region with poor commodity reserves depends on unrestricted and safe commodity trade to a special extent. In the field of metallic commodities, for instance, the European economy’s dependence on imports amounts to up to 86%. In recent years, numerous distortions of trade and of competition originating in third countries have aggravated the already difficult situation in world commodity markets. For this reason, the German Presidency has made it a point that the topic of trade and commodities be put on the agenda. At its informal meeting in April, the Trade Committee set up under Article 133 dealt with this topic exclusively.
Member States were agreed that this topic was one of strategic importance for Europe’s competitiveness, and they called on the EU Commission to make use of all trade policy instruments – both multilateral and bilateral– to ensure safe commodity supply for Europe’s businesses.
For this reason, future free trade agreements with countries rich in commodities must be given special importance. Moreover, the EU Commission has been asked to examine, together with affected businesses, options for action and to submit such options to the Committee. In the meantime, DG Enterprise and Industry has submitted a comprehensive study on aspects of commodity supply. Commissioner Peter Mandelson’s initiative for reviewing trade-policy protection instruments has been welcome to the German EU Presidency. For it is undisputed that the antidumping instrument must be adjusted to the requirements of a globalised economy with progressing international division of labour. However, we wish to emphasise that it is absolutely necessary to continue to guarantee effective protection of Europe’s industries from unfair competition. This attitude is shared by numerous other Member States, which has become clear during the German Presidency.
Publication of the Green Paper and the associated consultation process have initiated a reform discussion on this highly complex topic which was intensively conducted by the German Presidency till the last day. However, an end of this discussion is not yet in sight. First interim results concerning the further procedure may presumably be expected before the end of the summer recess. Germany has made it a point to make the greatest possible progress in the EPA negotiations during its Presidency. We have successfully adopted Council conclusions on the EPAs at the General Council meeting in May at which the EU’s readiness for concluding the EPAs as well as market access issues in good time was formulated. The EU offers the ACP countries substantial improvements in the field of access to EU markets. However, trade-related topics such as investment or public procurement ought to be included as well at the same time.
Such trade-related topics can, in my opinion, initiate intellectual and reform processes that are meaningful in terms of development policy, and have potential for the desired regional integration. But it is our impression that the negotiations with the ACP couintries are still in troubled waters. The next Presidency – our Portuguese colleagues – will presumably be required to invest heavily in deliberations in this field in order to make sure that the agreements can enter into effect in good time prior to the lapse of the Waiver in early 2008.
Let me underline again; that the ACP and the EU must demonstrate before 2008 their willingness to place their trade relations on a basis reconcilable with WTO law. A number of Latin American and Asian countries have made it all too clear that they would no longer accept any one-sided preferences.
Ladies and Gentlemen,
this ends my review of trade policy focuses under the German Council Presidency. As you can see, the EU will be faced with diverse challenges which shows that the EU will need the support of the European Parliament also in future. We will be required to make important decisions in Europe requiring good cooperation between Member States, the EU Commission and the European Parliament! So, we shall now hand over the baton to the Portuguese. We wish our Portuguese colleagues good luck and every success.
We would like to express our sincere thanks to you again for the good cooperation.
Thank you very much for your kind attention.
