Introductory statement by Commissioner Phil Hogan at Informal meeting of EU Trade Ministers

April 16, 2020 | 

Today’s meeting takes place against the backdrop of a global public health challenge that is having profound consequences, particularly here in Europe.

Over just a few weeks, we have seen the ever-increasing impact of this virus on our citizens, our public services and our economies.

I’m sure we all join in expressing our sympathies to the bereaved, our best wishes to those who are ill and our gratitude to all those who are engaged in tackling this virus, particularly our frontline workers right across the Union.

Of course, we had planned to meet last month but that could not happen. I have tried, over the past number of days, to speak to as many of you as possible. To those of you with whom I was unable to speak directly, I hope that I can do so very soon and to all of you, I want to express my strongest commitment to work throughout my mandate as EU Trade Commissioner in close cooperation with you all.

Impact of COVID-19/Economic Recovery

The COVID-19 pandemic will have serious short and long-term consequences on the global economy and on trade, besides its immediate major consequences for health.

At this stage, it is difficult to draw firm conclusions about the impact on international trade, but we have been doing some analysis and we will soon share with the Trade Policy Committee a short background paper with the estimated impact of the crisis on EU exports and imports.

An open trade policy will need to be part of any future economic recovery plan.

The full benefits can be reaped only if there is a suitable international environment, which limits protectionism and encourages openness, cooperation and coordination, all in a stable legal environment. We need open and rules-based trade and to lead by example, urging our international partners to commit to the same.

Rules-based trade is essential for business. It provides a stable and predictable framework and our efforts to modernise the WTO therefore remain essential. The leadership we display in restoring global dialogue will be closely watched by others.

In terms of drawing conclusions from the crisis, we need to think about how to ensure the EU’s strategic autonomy. Strategic autonomy does not mean that we should aim for self-sufficiency. Given the complexity of supply chains, this would be an unattainable goal. We need an evidence-based discussion on what it means to be strategically autonomous. For example, we need to look at how to build resilient supply chains, based on diversification, acknowledging the simple fact that we will not be able to manufacture everything locally. We need to explore how to address strategic stockpiling. We need to factor in the European dimension, as it is patently clear that these goals can only be achieved if we act together.

Export Authorisation Scheme

But, let me turn to some of the initiatives that we have taken.

Last month we adopted an emergency measure requiring export authorisations for certain items of personal protective equipment (PPE).

This measure will expire on 25th April. Earlier this week, the Commission consulted the safeguard committee on a draft implementing act with the new export authorisation scheme which is more focused in terms of products and limited in time. It meets the test of being targeted, proportionate, transparent, and time-limited. It upholds the principle of international solidarity, by fully exempting humanitarian aid and by recognising the dependency of our closely integrated Western Balkans neighbours, who will be exempted from the scheme along with the EFTA countries, among others.

While the measure will be considered in the appropriate Comitology Committee, I look forward to hearing your initial political response to the Commission’s proposal this morning.

Notwithstanding some misrepresentations of the existing scheme, it is worth repeating that it is not an export ban.

FDI screening Guidance

The Commission has also adopted guidelines on foreign direct investment, free movement of capital and the protection of Europe’s strategic assets, before the EU’s FDI Screening Regulation fully applies.

This Guidance focuses on two main concerns:

• The first and immediate one is about protecting the EU’s strategic assets. This should also include its healthcare capacities – such as production of medical or protective equipment – or related industries such as research establishments, for instance developing vaccines. These are critical in the current health crisis.
• The second and broader concern relates to the current volatility and undervaluation of European stock markets. This economic vulnerability could result in a sell-off of critical infrastructure or technologies, which should be avoided.

FDI screening mechanisms play a role in addressing concerns on maintaining our strategic assets. Today more than ever, the EU’s openness to foreign investment needs to be balanced by appropriate screening tools. 

Those Member States that have screening mechanisms should make full use of them and those that do not have screening mechanisms should set-up such mechanisms.

Leaders welcomed the Commission’s guidelines in the European Council. They called on the Member States “to take all necessary measures to protect strategic assets and technology from foreign investments that could threaten legitimate public policy objectives”. They underlined that “this will contribute to the EU’s strategic autonomy, during the crisis and afterwards.”

As a follow up to those clear indications, and in anticipation of the EU rules entering into force in October 2020, we should use all available options to identify and address risks for security or public order brought by foreign acquisitions of particular businesses, infrastructures or technology.

Given the interdependencies that exist in an integrated market like ours, I invite you to coordinate your efforts and to share information ahead of the entry into force of the new rules. Remember, the acquisition of a company in your country may have a security effect in other Member States or it may negatively affect a project of Union interest.

The Commission is ready to help in the sharing of information and coordination already. We have already reached out to your authorities and we are ready to work together to discuss possible risks and solutions.

My services will present practical ways to do so in the near future but, in the meantime, I would be grateful for a political indication of your readiness to work together.

In light of the current extraordinary circumstances, the Commission is ready to start an informal cooperation with Member States on FDI screening. This cooperation could consist of two elements:

• 1) Monitoring of ongoing and planned foreign acquisitions and sharing the relevant information among Member States. The Commission would be ready coordinate and to feed into this process. At the same time, we would also expect Member States to share with us relevant information to which they may have access.
• 2) Voluntary exchanges on pending FDI screening cases among Member States. The Commission would be ready to be part of these exchanges and to provide relevant information it may have.

In parallel, I cannot but insist on the fact that for a security screening mechanism to be effective, we need the involvement and cooperation of all Member States, including by having in place the required tools and access to information in your respective territories.

While I am conscious of and fully respect Member States’ competence in this area, I believe that we can and should do more. I would appreciate your views as to how, working together, we can find ways to strengthen existing rules. It would be a matter of Member States doing more and of how could the Commission help, to address together the challenges and vulnerabilities that this crisis may uncover and which may affect the Union as a whole.

Tariff liberalisation

In the course of my discussions with a number of you, the idea arose of a collective response from the international community and reinforced global preparedness for future crises.

In preparing such a collective response, the EU will play and its part, which could include consideration of such actions as

• temporarily suspending the tariffs on most needed medical equipment to provide access to affordable healthcare products;
• calling for an international undertaking to suspend tariffs on the COVID-19 related products and facilitate access of medicines to their countries, as some of our partners have already done; and
• launching a more comprehensive negotiation of a plurilateral agreement that would lead to a level playing field, including the possible permanent liberalisation of tariffs on medical equipment and help to ensure that global supply chains can operate freely in this critical sector, and that our healthcare manufacturers could benefit from new market opportunities.

Of course, such a course of action would require some further analysis and careful calibration in terms of ensuring that it has the intended effect but that is something that I would be prepared to undertake and discuss with colleagues in the Commission.

G20 Trade Ministerial

As I mentioned initially, finding a path out of the crisis requires not only that we act together as European Union but also as part of the global community.

At the extraordinary G20 Trade Ministerial meeting on 30th March, I proposed seven concrete proposals for immediate action, which targeted both trade facilitation and trade liberalisation. Our “seven-course menu” also included export finance.

While the EU left its imprint on the final G20 statement and many supported our proposals, I regret that the final statement was not as ambitious as we had proposed or as we would have liked.

WTO Dispute Settlement

Before concluding, I would like to update you on steps taken to protect the rules-based system of dispute settlement in the WTO.

Working with like-minded WTO members since the effective collapse of the Appellate Body last December, we have developed the Multi Party Interim Arbitration Arrangement as a stop-gap to maintain an independent, two step dispute settlement function.

There are 15 co-signatories alongside the EU, including some of the biggest users of the system, such as Brazil and China.  I have also extended a broad invite to the entire membership to join, underlining the inclusive nature of the arrangement.

There will be 10 arbitrators on the MPIA roster.  The EU has the option of nominating a candidate.  The nominee will need to be submitted by the end of May.  We will notify the TPC of work on this in due course, respecting best practices used for the nomination of members of the Appellate Body heretofore.

Conclusion – on-going work in EU trade agenda

Had there been more time, there was a lot more I could have said about our continuing efforts to ensure that our trade policy delivers – whether the agreement reached on Public Procurement at sub-central level with Mexico, our ongoing negotiations with New Zealand, Australia Chile or China, ongoing TDI investigations or the enforcement of our rights vis-à-vis third countries.

However, I would make two concluding remarks

• rules-based trade is essential, especially in times of crisis and as part of our strategy to exit the crisis and
• equally, the EU must respect our Single Market and ensure that there are no internal barriers to intra-EU trade.

Compliments of the European Commission.