Fair and Open Trade in Europe and beyond – High Level Conference on Trade Policy and European Strategic Autonomy

“Check against delivery” | Paris, 7 March 2022 |

Introduction

Good morning. Thank you so much for inviting me to be with you today. I am glad to be here in person. Because getting together, being in one room  makes a difference.

This is especially true these days. The events of the past weeks are a watershed moment for us all. They alter the course of our policies and the calculus of our foreign relations.

I don’t want to say too much about it. But I do feel these events will galvanise us: As Europeans and as global citizens who believe in sovereignty, democracy and respect for international law, the unacceptable aggression of the Russian leadership, and the inspiring bravery and sacrifice of the Ukrainian people, unite us and reinforce our sense of purpose.

We need to strengthen our ability to stand up to illegal aggression. In addition to our determined support to Ukraine, we have taken coordinated action with like-minded partners to strengthen our sanctions against Moscow and Minsk.

Our sanctions are only effective because of the size and strength of our economy. And we will be able to handle the potential knock-on effects of these sanctions due to the resilience of our Single Market. This is why nurturing our Single Market is also investing in our capacity to act on the global stage.

Strengthening Resilience

With this in mind, our focus must continue to be the resilience of our economy – supporting innovation, making the most of the transition to the digital and green economy, and allowing businesses to compete and to scale-up on fair terms. In short, we need to make our Single Market stronger. This strengthening exercise has both an internal and an external dimension.

An example of internal strengthening is our upcoming Single Market Emergency Instrument, which is aimed at ensuring the functioning of the Single Market at all times. As we have been progressing out of the Covid crisis, little have we known that another, very different crisis would arrive at our doorstep. This shows the importance of crisis preparedness.

Then there is the external dimension. As part of our Industrial Strategy, we have been working with industry to identify strategic dependencies, and find durable solutions, so we don’t end up in a vulnerable position.

For semiconductors, such a solution is already in the pipeline. The European Chips Act will protect the Union against extreme dependency in this vital sector, by strengthening Europe’s position in research and chip production, and partnering with like-minded democracies to stabilise supply chains. Because, crisis or not, Europe cannot do it alone.

And let’s face it, the current events in Ukraine showed us what we already knew– that our strategic dependency on Russian gas makes our energy sector vulnerable in the short to medium term. It also give us yet another reason to intensify our commitment to the green energy transition.

The point is not to turn inwards. The point is that a greener, more diversified energy mix creates resilience, by giving us options. That same logic holds for all our work on competition policy. Whether in manufacturing, retail or financial services, we need open and dynamic markets to stay resilient.

Foreign Subsidies

This is also where our Foreign Subsidies Proposal comes in – it makes clear that distortive foreign subsidies will not be tolerated in the Single Market, while keeping the Union open to the foreign investment, innovation and global competition.

It empowers the Commission to take action against foreign subsidies granted to companies operating in our Single Market. Because such subsidies can distort the level playing field, we have been building for 60 years through our State aid control. This is not about protectionism; it’s about ‘fairness. Our proposal strikes a careful balance between effectiveness and the burden it creates. And it respects the balance between our own State aid rules and our international commitments, making sure everyone is treated fairly on the Single Market. It also makes sure that undistorted foreign investment can flow to Europe.

A targeted instrument as part of a wider approach

That said, for the instrument to work, it must remain targeted. There have been calls to broaden the scope to address aspects that go well beyond subsidies – things like lower labour law standards or environmental standards.

I don’t mean to say these issues are trivial. They are as important as they are complex. What does and does not constitute a ‘fair’ competitive advantage in trade between two very different countries, is a question trade policy has been concerned with for decades.

But the Foreign Subsidies Regulation cannot resolve all these issues. This is a Single Market instrument, and that is where its focus should be: on maintaining fair competition in the Single Market.

At the same time, this instrument will not exist in a vacuum. There are a number of other initiatives that deal with labour and environmental issues. For example, our new legislative instrument on due diligence in companies’ supply chains, or the Carbon Border Adjustment Mechanism to stop carbon leakage.

And the EU remains fully committed to supporting the multilateral framework, in particular the work of the World Trade Organisation. We also actively support fair and open trade through our bilateral and neighbourhood policies.

But we are also expanding our toolkit of instruments in support of a more assertive EU trade policy. These range from a screening mechanism for Foreign Direct Investment, to the proposals for an anti-coercion instrument and the International Procurement Instrument.

Conclusion

All the initiatives I have mentioned aim at making our Single Market more resilient, fairer and more assertive on the global stage. What I see, and which I find encouraging in these momentous times, is that we are strongly united behind this common goal.

The unprovoked aggression of the kind we are witnessing in Ukraine is a sign of weakness and desperation. We do right to show solidarity towards the Ukrainian people. We also do right by remaining strong and resolved in our principles; and in our commitment to fairness, to openness, and to peace.

Thank you.

Compliments of the European Commission.