Documents considered by the Committee on 25 November 2015 - European Scrutiny Contents

8 EU Trade Strategy

Committee's assessment Politically important
Committee's decisionCleared from scrutiny; drawn to the attention of the Business, Innovation and Skills Committee and the Foreign Affairs Committee
Document detailsCommission Communication on Trade for All: Towards a more responsible trade and investment policy
Legal base
DepartmentBusiness, Innovation and Skills
Document Numbers(37189), 13111/15, COM(15) 497

Summary and Committee's conclusions

8.1 On 14 October, the Commission published its new trade strategy, Trade for All: Towards a more responsible trade and investment policy, ("Trade Strategy") — a five year indicative programme for EU trade and investment policy.

8.2 The Commission considers that the new approach is a direct response to the intense debates on the accountability and impact of trade policy taking place across the EU and is therefore implementing the Juncker Commission's pledge to listen and respond to EU citizens' concerns. In particular, it sets out a range of trade and investment initiatives based on three 'pillars' — 'effectiveness', 'transparency', and 'EU values', and presents a forward looking programme of multilateral and bilateral trade and investment negotiations.

8.3 The Minister for Trade and Investment, Lord Maude of Horsham, is broadly supportive of the Trade Strategy, stating that it "presents an ambitious, trade-liberal, modern approach to European trade policy for the next five years which is in line with the Government's ambition to secure ambitious trade agreements suitable for the 21st Century in a responsible and transparent way". While the Minister welcomes all the main themes of the Trade Strategy, in particular its ambition for reinvigorating the WTO and concluding existing and new bilateral agreements (noting that the UK's priority FTAs are with the USA and Japan), he also stresses the need to "see negotiations progress more quickly".

8.4 We note that a more effective, transparent and responsible EU trade and investment strategy can help deliver economic growth and boost welfare both in the UK and globally, and complement and support the EU's external policies as well as the EU's drive for deepening and extending the internal market.

8.5 We take note of the key strands of the Trade Strategy, in particular:

·  Ensuring that trade policies are more 'effective' by: focussing on services trade liberalisation, professional mobility and digital trade; paying more attention to SMEs; and reviewing the tools or instruments intended to help workers or regions negatively affected by structural changes (for example, the European Globalisation Adjustment Fund);

·  Recognition by the Commission that it needs to be more 'transparent' in the way it conducts trade negotiations and trade defence cases, and engages with civil society to respond to public concerns, for example on regulatory issues;

·  Using trade as a lever to promote 'EU values' and standards globally (such as labour, environmental and consumer protection, human rights, good governance and anti-corruption rules);

·  Developing an investment regime which safeguards EU governments' right to regulate and transforms the old investor-State dispute settlement system into a public Investment Court System (with a court of first instance and appeals court, code of conduct and independent judges), with the long-term goal being the establishment of an International Investment Court; and

·  Incorporating the commitments of effectiveness, transparency and values above into the EU's programme of trade negotiations.

8.6 We are disappointed that the Explanatory Memorandum lacks detail on the Government's priorities and what the Government considers the prospects for delivery of the commitments are. In particular, the Minister could have:

·  been clearer as to where the Commission's and UK Government's priorities align and/or diverge (and the reasons for this), and what specific results he would like to see emerge within the next couple of years; and

·  provided information on what the Government is doing or will do to help negotiations progress more quickly (particularly as seeking agreement on an ambitious range of initiatives that tackle complex 'behind the border' barriers to trade and investment and promote wider EU values is likely to be resource and time intensive).

8.7 In terms of timing and delivery, we consider that commitments to mainstreaming transparency should be implemented quickly.

8.8 While we clear this document — one of policy intent — from scrutiny, we urge the Government to:

·  work proactively with the Commission in increasing transparency in trade negotiations and trade defence cases, and extending/deepening the involvement of national parliaments (which are referenced only once in the entire Communication) in trade negotiations and trade policy implementation; and

·  provide (in the spirit of transparency underpinning this Trade Strategy) timely updates on progress being made in implementing the Trade Strategy, in particular on existing and future trade negotiations and how these reflect UK interests, as well as reforms to the investment regime.

8.9 In view of the political importance of this Communication, we also draw it to the attention of the Business, Innovation and Skills Committee and the Foreign Affairs Committee.

Full details of the documents: Commission Communication: Trade for All: Towards a more responsible trade and investment policy: (37189), 13111/15, COM(15) 497.


8.10 The Commission's Work Programme for 2015 envisaged a comprehensive review of the EU's trade policy strategy, with a particular focus on its contribution to jobs, growth and investment.

The Commission Communication of 14 October 2015

8.11 The Commission Communication sets out the Commission's strategy for EU trade and investment over the next five years, including a programme of trade and investment bilateral and multilateral negotiations.

8.12 It emphasises that trade is one of the EU's key drivers to boosting jobs, growth and investment. It also stresses that the EU's trade and investment policy should support its wider foreign and development policies — for example, by promoting EU values and standards — as well as the functioning of the internal market.

8.13 Three 'pillars' underpin the strategy: 'effectiveness', 'transparency' and 'values', which are summarised below.

8.14 Effectiveness — The Trade Strategy proposes "an effective policy that tackles new economic realities and lives up to its promises" by:

·  Updating trade policy to take account of the new economic realities such as global value chains, digital trade and the importance of services;

·  Supporting the mobility of professionals and service providers;

·  Reinforcing international regulatory cooperation and the efficient management of customs;

·  Ensuring stronger enforcement of the EU's rights through a range of mechanisms, including EU diplomacy or the proportionate and effective use of dispute settlement mechanisms or trade defence instruments;

·  Including effective SME provisions in future trade agreements; and

·  Reviewing the performance of the European Globalisation Fund to make it more effective.

8.15 Transparency — The Trade Strategy intends to support a more transparent trade and investment policy by:

·  Extending the Transatlantic Trade and Investment Partnership ("TTIP") transparency initiative to all EU trade negotiations;

·  Increasing transparency in the area of trade defence cases; and

·  Working more closely with Member States, the European Parliament and stakeholders to implement trade and investment agreements better.

8.16 Values — The Trade Strategy puts forward a trade and investment policy based on EU values by:

·  Including a clear pledge to safeguard EU regulatory protection and a strategy to lead the reform of investment policy globally. This is largely a response to public concerns over TTIP. In particular, the Commission commits to the "transformation of the old investor-State dispute settlement into a public Investment Court System composed of a Tribunal of first instance and an Appeal Tribunal operating like traditional courts", with a code of conduct and independent judges, and to working with international partners to develop an International Investment Court;

·  Expanding measures to support sustainable development, fair and ethical trade and human rights, including by ensuring effective implementation of related FTA provisions and the Generalised Scheme of Preferences; and

·  Including anti-corruption rules in future trade agreements.

8.17 The Trade Strategy finally sets out a "programme of negotiations to shape globalisation" by:

·  Giving priority to the conclusion of major ongoing projects like the Doha Round of multilateral WTO negotiations, the Transatlantic Trade and Investment Partnership, the EU-Japan Free Trade Agreement and the EU-China Investment Agreement;

·  Launching new negotiations with the Asia-Pacific region (including FTAs with Australia, New Zealand, the Philippines and Indonesia);

·  Ensuring Economic Partnership Agreements are implemented effectively, and deepening relationships with African partners that are willing to go further and with the African Union; and

·  Modernising existing agreements with Mexico and Chile and the Customs Union with Turkey.

The Minister's Explanatory Memorandum of 2 November 2015

8.18 The Minister presents the following analysis of the Trade Strategy:

"First, in terms of trade negotiations, the Commission recommits itself to the programme of ongoing FTA negotiations (notably our own priority FTAs including those with the USA and Japan), and sets out plans for four new deals in the Asia-Pacific region (Australia and New Zealand, as this Government has championed recently, and the Philippines and Indonesia). At the multilateral level, the Commission is clear that the World Trade Organization (WTO) must remain the cornerstone of EU trade, but that - in line with our own thinking - it needs to be "re-invigorated". The strategy also sends a strong signal that plurilateral negotiations, on which we too are very supportive, involving subsets of willing WTO members, such as those currently underway on services, information technology and green goods, are necessary to keep liberalisation efforts abreast of real developments in global trade.

"Second, this is a modernising strategy in how it defines and approaches the nature of twenty-first century trade. In particular, the paper recognises how imports from around the world support production in the EU, it sets out trade in services as a new priority, and it seeks to take advantage of opportunities to ensure the EU is effectively plugged into global value chains going forward.

"Third, it defines what it means by 'responsible trade and investment'. For instance: the Commission has proposed reforms for investor-state dispute settlement which it says will place greater weight on preserving countries' freedom to regulate; the paper cites the importance of including labour rights, environmental standards and sustainable development in EU trade negotiations; the paper commits the Commission to greater transparency in relation to its trade negotiations; and sets out how trade contributes to lifting people out of poverty and can integrate developing countries into the global trading system. Also on Trade for Development, there is an emphasis on ensuring that FTAs do not indirectly harm Least Developed Countries interests, as well as on implementing the recently agreed Economic Partnership Agreements (EPAs) with three African regions effectively."

8.19 The Minister is broadly supportive of the Trade Strategy, stating that it "presents an ambitious, trade-liberal, modern approach to European trade policy for the next five years which is in line with the Government's ambition to secure ambitious trade agreements suitable for the 21st Century in a responsible and transparent way".

8.20 The Ministers welcomes:

·  "in particular the ambition for FTAs, plurilateral negotiations and reinvigorating the WTO, but will be keen to see negotiations progress more quickly; and

·  "the other main themes of the strategy [including]:

o  Modernising [the] trade strategy in the light of Global Value Chains;

o  Supporting the multilateral system (whilst advocating change wherever needed);

o  Greater transparency around negotiations;

o  The investor-state dispute settlement reforms;

o  The ongoing emphasis on sustainable development; and;

o  Using trade as a tool to facilitate development."

8.21 The Minister concludes that the Trade Strategy "presents trade agreements as a means of supporting economic growth and job creation in Europe and in developing countries, and of promoting European values abroad, and is largely in line with the Government's trade policy priorities. The key now will be to deliver on these promises".

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