EU beefing up its arsenal to assert its trade sovereignty - Riester

Paris, 14 May 2021

China

Q. – The European Union has just suspended ratification of the investment agreement with China. Isn’t it naïve to want to sign it at a time when Beijing is violating social and human rights?

THE MINISTER – The current context of tension with China, which has imposed sanctions on some key European figures, doesn’t allow us to ratify the agreement. Nevertheless, it would provide more reciprocity so that our businesses could invest in new sectors without being forced to go into partnership with a local company or transfer their technology. Moreover, given our human rights concerns, it would include commitments from China for the first time, particularly with regard to combating forced labour.

Q. – How can we get concrete commitments from China?

THE MINISTER – China committed itself in this agreement to ratifying the fundamental conventions of the ILO (International Labour Organization), and we’ll be uncompromising about their implementation. What’s more, to ensure our partners honour their commitments the EU has created the post of European Chief Trade Enforcement Officer, held by the Frenchman Denis Redonnet.

Q. – What means of action does Europe have against China?

THE MINISTER – Europe is beefing up its arsenal to assert its sovereignty. We have solid anti-dumping tools, of course. In France and the European Union we’ve also strengthened the foreign-investment screening mechanism to protect our strategic flagships. And we’re working on an anti-coercion tool to respond quickly to the economic attacks we undergo. For example, when the United States wants to apply unilateral and illegal customs duties to counter the French digital tax, we don’t currently have a legal instrument to retaliate, and that must change.

There are two other instruments in addition to that: one to restore fair competition conditions in Europe in the face of subsidized foreign businesses, for example by preventing them buying up European companies, and the other to demand reciprocity in access to procurement contracts. That’s how we’re building the European trade policy of the 21st century, which will be less naïve, fairer and more sustainable.

WTO

Q. – You recently met the new director-general of the WTO (World Trade Organization), Ngozi Okonjo-Iweala. What progress are you expecting from her?

THE MINISTER – We’re delighted with Ngozi Okonjo-Iweala’s appointment, which will inject fresh momentum. One of her priorities is to get the Dispute Settlement Body’s Appellate Body – blocked for months by the United States – working again. We also need results on negotiations under way, in particular on fisheries subsidies: we fully support the Director-General in her desire to reach a conclusion by the end of the year. The WTO has a role to play on many issues: regulating industrial subsidies, access to vaccines, but also sustainable development and, for example, the fight against plastic pollution. To that end, countries like China must no longer be able to declare themselves developing countries in order to secure exemptions.

Airbus-Boeing dispute

Q. – Tension with the United States has eased since the arrival of Joe Biden. Are you hoping for an agreement between now and July on the funding of Boeing and Airbus?

THE MINISTER – This four-month moratorium announced at the beginning of March on tariffs, particularly on aerospace and wines and spirits, was a very positive signal. It’s no accident: it results from the assertion of European sovereignty. By deciding in November to apply customs duties to Boeing and American agrifood products, Europe demonstrated that it’s capable of making itself respected under international law. The new American administration says it wants to place its relationship with Europe on a new footing. The Airbus-Boeing dispute must now be resolved permanently and in a positive way by reaching agreement on aircraft financing. Clearly we won’t relinquish our support for Airbus, which is vital to our economy. We’ve made proposals to find solutions and end this needless trade war with the United States.

EU-US trade

Q. – Should there be a free-trade agreement with the United States like the TAFTA, which was abandoned?

THE MINISTER – We’ve got to strengthen our relationship with the United States, but a major free-trade agreement isn’t on the agenda. Above all, we’ve got to resolve the various disputes polluting our relationship, such as the steel and aluminium dispute, and the one concerning America’s extraterritorial practices. We can’t let an ally keep on telling us who we’re allowed to trade with and interfering directly in our sovereign choices. To respond to this, we’ve also got to make the euro play a greater role in international trade.

EU-Mercosur trade

Q. – The agreement with Mercosur (Argentina, Brazil, Paraguay, Uruguay) is very controversial. Should it be purely and simply rejected?

THE MINISTER – We’ve said and we repeat that we don’t want the draft EU-Mercosur agreement as it stands, because conditions aren’t being met on three points: deforestation, compliance with the Paris Agreement and with our sanitary and phytosanitary standards. We won’t make do with a verbal commitment; we want proof. Yet we see that Brazil’s environmental commitments are less ambitious than in 2015 and they’ve given in on the fight against illegal deforestation, which increased by a further 10% last year. Some EU countries want to go faster but we aren’t alone: the Netherlands, Belgium, Austria and Luxembourg are on the same page.

EU carbon border tax

Q. – Doesn’t the European Carbon Border Adjustment Mechanism, often called the “carbon border tax”, risk being rejected by Europe’s partners?

THE MINISTER – This tool is part of the arsenal which puts trade policy at the service of global objectives. We’re going to speed up the decarbonization of production in Europe; without the mechanism there would be more “carbon leaks”: companies would be prompted to relocate their production in less strict countries, emitting more CO2 before exporting their products to the EU. This is why we need the instrument, which isn’t protectionist; above all, the coherence of our climate policy is at stake. More broadly, in future European trade agreements compliance with the Paris climate agreement will have to be an essential clause, which will make it possible to suspend the advantages we grant our partners if they don’t adhere to their climate commitments. France is promoting this very powerful measure, which is currently being discussed with our European partners./.