Exclusive Interviews, Internal EU politics, Trade defence

Maurel: People need to be convinced trade policy is a positive vehicle for change

MEP Emmanuel Maurel

Emmanuel Maurel is the French MEP (S&D) who orchestrated a ‘counter-consultation’ on granting China market economy status in antidumping to protest against a similar initiative led by the Commission in 2016. He was also the EP’s rapporteur on the recent project of macro-financial assistance for Jordan to help the country cope with the refugee crisis in the Middle East. He talks to Hermine Donceel about China, antidumping, and the EP’s role in a revamped EU trade policy.

 

What is your take on the European Commission (EC)’s proposed approach to trade defence reform? Is it appropriate to deal with a China that will no longer be listed as a ‘non market economy’ in the EU’s ‘basic antidumping regulation’? 

 

The European Commission (EC) has not met our expectations. We were hoping it would give Europe the tools to better defend itself against dumped imports from China, which all agree is not a market economy, but sadly it has not met this goal yet. The Commission gave the reform a lot of thoughts but it is altogether petrified that China could retaliate. In the end this whole procrastination did not produce a satisfactory solution.

 

For us, and for a majority of MEPs involved in trade matters, the reforms to the basic antidumping regulation proposed by the Commission in November 2016 lack ambition. For instance, under non-market economy conditions, the burden of proof [to demonstrate the existence of dumping], used to be on Beijing. With the new proposal however, European companies will practically have to demonstrate themselves the presence of dumping.

 

Even if the Commission’s proposal intends to proactively develop a database for industrial federations to be able to defend them, I do not believe the Commission has the means to do so. Small and medium enterprises (SMEs) already have a hard time launching investigations because only few of them have a dedicated federation to carry their complaints. The new proposal further weakens their capacity to promptly and efficiently defend themselves against dumped imports.

 

As for the EU’s trade defence instruments, I have always said that there are two key issues.

 

Firstly, when dumping is assumed, the time between the launch of a dumping investigation and the effective imposition of an antidumping duty is unbearably long, potentially jeopardising entire industrial sectors. This is not the case in the United States, where a decision can be taken within one or two months. Hopefully, the proposed reform of the TDI instruments will allow the Commission to be slightly more proactive.

 

Secondly, Europe still lacks ambition on the levels of antidumping duties imposed on dumped Chinese products, which currently tend to average 20-60 percent. European Commission President Juncker has finally taken its cue from the United States, which imposes import duties that can reach levels as high as 300 percent of the value of the imported products, and admitted that we should impose higher tariffs.

 

Here again we are short of an effective solution. Even if the Council has agreed on a very partial lifting of the so-called lesser duty rule (LDR), the expected levels of antidumping duties remain far below the EP’s original demand. Many MEPs plead for a much more systematic lifting of the LDR, which would not have led to a breach in EU’s WTO obligations.

 

It is a disappointment that the internal EP compromise on the 2013 TDI reform including the lesser duty rule [the report was produced by EPP MEP Fjellner] was completely disregarded by the Council. Its solution is even softer than the Commission’s initial proposal!

 

This actually leads us to a third problem, the fact that a Council minority led by the UK was able to block everything throughout the decision-making process on the 2013 TDI reform package. It is bewildering that a country that is about to leave the EU was still recently in a leadership position to do so.

 

So this is where we stand: a very offensive European Parliament (EP), a pussyfooting Commission and a Council split between several big countries led by France and Germany, favouring a slight hardening of our legislation, and a group of smaller countries led by the UK that historically support free trade. This group is ideologically blinded! But they should now turn to a timely pragmatism in order to protect thousands of EU jobs in critical sectors such as steel, paper, glass, from Chinese dumping.

 

Is the EU more concerned with placating China than with defending its own interests?

 

China is a key partner for Europe, but sometimes we have divergent interests. Rather than being worried by Chinese reprisals against products imported from the EU or EU investors in response to European antidumping decisions it does not like, we should have a unified European front.

 

We are a market of 500 million consumers, we have the capacity to do that, and the advantage of a unified front is that it would allow to strengthen the balance of power with China in Europe’s favour. At the moment, the Chinese feel they can play European countries against each other – which they actually do. It is time for China to take a step in our direction and learn to compromise.

 

But cheaper Chinese imports imply that EU importing firms can produce at lower cost?

 

I believe that even if theoretically a few EU countries benefit from cheap Chinese supplies, the quality of Chinese products make doing so a bad long-term bet. Firms in some countries are of course more affected than others by Chinese subsidised products, which is clearly the case of France.

 

More importantly though, we should not let entire sectors vanish from our economies because we need a certain level of supply independence – and this is what we risk here. In addition, the jobs affected by China’s subsidy policy are the least skilled and flexible in Europe. Efficient anti-dumping and anti-subsidy tools should seek to protect vulnerable sectors and regions.

 

This debate is fascinating because it questions our vision of the European Union. Is the EU just a large market trading with other large markets, or do we have an integration policy where we defend the know-how of a continent, its workers, its enterprises?

 

What should be the EP’s role in trade policy making in the future?

 

Things have considerably changed since the Lisbon Treaty came into force. We now have the opportunity to decide whether we want to approve or reject trade deals. Its compels Commission negotiators to pay attention to the European Parliament’s opinion. Commissioner Cecilia Malmström is smarter than her predecessor, because she makes more efforts to report to the EP and take its opinion into account.

 

The European Parliament is also a forum. When we MEPs took ownership of the Transatlantic Trade and Investment Partnership (TTIP) and of the Comprehensive Economic and Trade Agreement (CETA), we held intense but fruitful debates with numerous stakeholders. It is crucial for the EP to play two key roles: to use a bullhorn to voice the European people’s concerns, and to share information which also allows countering a number of myths circulating on trade agreements.

 

Our role is to push the European Commission to make a transparency revolution. One cannot keep on negotiating like in the twentieth century holding secretive talks behind closed doors, then come back to the parliaments and say it’s “take it or leave it”.

 

The new world’s trade policy should be closer to open data. Citizens and stakeholders wish to know practically in real time what is being discussed and feel that they are involved in the debates. This is the only condition for interesting trade deals to be reached that strike a genuine balance between the risks and opportunities of international trade

 

We are still very far from there yet. MEPs still have no say on setting the new trade agreements’ negotiating mandate [this is a Council prerogative], they are also absent from the actual negotiating process until ratification. And finally as in the case of TISA or CETA our mid-mandate resolutions have been barely looked at. We call for more transparency, but also more say on the content.

 

New generation trade agreements sought by the EU touch on regulatory matters. Following the heated controversies over CETA and TTIP in 2016, do you think their scope needs to be reduced?

 

The issue is not so much the fact that regulatory matters are included, but that Commission negotiators have had so far a very extensible definition of the norms and standards that could be addressed in trade talks. This definition should be delineated and restricted.

 

My other major concern is about regulatory cooperation in agreements such as TTIP. The latter has been defined as a ‘living agreement’, and we have been given no reassurance nor political scrutiny over whatever technocrats are deciding under the regulatory cooperation foreseen.

 

It does not mean that we should stop negotiating trade agreements altogether. There are fair agreements, to Europe’s credit. This is the case of the deals with Tunisia, Ecuador and perhaps Morocco soon, with asymmetric, progressive deals striking a fair balance between both sides’ needs and capacities. I want to see more such agreements with emerging and developing countries.

 

In the case of trade deals with more mature economies I think there should be some real brainstorming as to how to make these deals more innovative in order to be really beneficial to all. Initiatives such as the Namur Declaration orchestrated by Wallonia’s Minister President Paul Magnette rightly go in that direction.

 

We MEPs, as representatives of the European people, need to understand that the critics of the EU trade policy are not Eurosceptics. Most of them are progressive, pro-Europeans and want the EU to better control the excesses of economic globalisation. These people need to be convinced that a reshuffled, democratic trade policy – that also focuses on tackling issues such as tax evasion or climate change – can be a positive vehicle for change. This is the challenge we face, and this is what we need to build in the upcoming months.

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