Tuesday, 3 December 2019

Questions (64)

Thomas P. Broughan

Question:

64. Deputy Thomas P. Broughan asked the Minister for Business, Enterprise and Innovation the steps she is taking to support businesses affected by the current EU and US trade war. [49683/19]

View answer

Written answers (Question to Business)

International Trade Policy is a competence of the EU Commission under the EU Treaties and defined as the Common Commercial Policy (CCP).  The Lisbon Treaty extended this competence to cover foreign direct investment, as well as making the European Parliament a co-legislator alongside the Council on trade matters.  Under this architecture the European Commission acts as lead negotiator on behalf of all EU countries regarding trade agreements with non-EU countries.  Member States (in Council) approve negotiating directives (or mandates) before negotiations begin, are consulted as the negotiations proceed and have final approval at Council as has the European Parliament. 

The current international trade environment has seen a rise of protectionism, which is an unwelcome development for Ireland, given our open and globalised economy and has the potential to harm market sentiment and disrupt global supply chains should the situation prolong and/or escalate. 

Co-operation on trade matters is in all of our common interest and Ireland very much welcomed the Joint US-EU Statement following the meeting between President Trump and then Commission President Juncker in July 2018.  The Presidents agreed to work towards zero tariffs, non-tariff barriers and subsidies on “non-auto industrial goods”, to work to reduce barriers and increase trade in services, chemicals, pharmaceuticals, medical products, as well as soybeans.  They also agreed to strengthen strategic energy cooperation, to launch a close dialogue on standards to ease trade barriers (regulatory cooperation), and to work closely together with like-minded partners on a reform agenda for the WTO.  They also committed to resolving the steel and aluminium tariff issues and to introduce no further tariff measures unless either party terminated the negotiations.

On the 10th September 2018, EU Trade Commissioner Cecilia Malmström and U.S. Trade Representative (USTR) Robert Lighthizer initiated the work of the Executive Working Group (EWG) to improve current trade relations between the US and EU and address each of the aforementioned topics in the Joint Statement issued by Presidents Juncker and Trump. 

On 15th April 2019 the EU Council voted to approve the negotiating directives for the commencement of limited trade negotiations with the US in the sectors of conformity assessment and the removal of tariffs on industrial goods.  The Joint Statement also referred to seeking an agreement on “non-auto industrial goods”.  As it is important that negotiations focus on a limited range of areas where results could be realistically achieved quickly and without entering areas of significant sensitivity for either sided, Public Procurement from the US perspective and Agriculture from the EU side were excluded.

Technical discussions regarding talks on conformity assessment for the testing and approval of certain products are taking place and progress is being made.  I am hopeful that formal negotiations in this area may not be too far away as the EU Commission has submitted a draft Agreement in this area to the US side. 

Additionally, on 17 May 2019 President Trump announced via Presidential Proclamation that he had delayed by 6 months the imposition of tariffs on automotive and automotive parts imports from the EU to allow US trade officials to attempt to negotiate a solution to what the US sees as a matter of national security, albeit from the EU side we do accept this rationale.  The proclamation provided a 180-day time frame for the negotiation of an agreement.  This deadline has now passed without any formal announcement from the US. 

Separately, as far back as 6 October 2004 the United States requested consultations, in line with WTO procedures, with the governments of Germany, France, the UK and Spain, and with the European Commission concerning measures affecting trade in large civil aircraft.  The US concern was that Airbus were receiving subsidies from these Member States supporting the production of its civilian aircraft and that these subsidies were damaging to a direct competitor, US aircraft manufacturing firm Boeing, and contrary to WTO rules.  In parallel, on 27 June 2005, the EU made its own request to the WTO for consultations citing Boeing’s receipt of non-WTO-compliant subsidies from both federal and state level authorities in the US.

On 15 May 2018 the WTO Appellate Body found in favour of the US/Boeing - that Airbus were receiving non-compliant subsidies from certain EU Member States.  Subsequently, a WTO arbitrator evaluated the claim and reported on the 2 October 2019 that the value of countermeasures that the US can impose commensurate with the adverse effects caused by EU subsidies is $7.496 billion.  In the parallel Boeing case, the WTO arbitrator’s report is due for finalisation and publication around Q2 2020.

On the same day as the WTO Arbitrators' Findings were released, the Office of the United States Trade Representative (USTR) published its final list of products that will be targeted with new tariffs.  The list has 15 sub-sections with Ireland, along with other EU Member States, included in 9 of these sub-sections.  For those products effected by the USTR list, Ireland exported approximately €362m worth of goods to the US in 2018.  My Department continues to engage with industry to fully understand the potential impacts these measures will have.  We are also fully engaged with colleagues in the Department of Agriculture, Food and the Marine and our Enterprise Agencies in relation to implications for Irish business. 

The Government has highlighted our concerns in bilateral engagements with US interlocuters in Dublin and Washington, intensively over recent months.  The issue of the tariffs was also raised during the US Presidential and Vice-Presidential visits this year.  I and my officials, as well as colleagues in the Department of Foreign Affairs & Trade and Agriculture, Food & the Marine, continue in contact with our US counterparts in Dublin and Washington on these issues.  In addition to raising this matter with my fellow Trade Ministers in Council, I have also recently written to the United States Trade Representative to outline the impact these measures will have on Irish exporters.  I also held a bilateral meeting with Trade Commissioner-elect Phil Hogan while in Brussels in October at which we discussed the WTO Airbus and Boeing cases and the potential impact the imposition of tariffs on Ireland would have. 

Ireland remains committed to a negotiated settlement to this issue as I firmly believe imposition of tariffs will only inflict damage on businesses and citizens on both sides of the Atlantic and harm global trade and the broader aviation industry at a sensitive time.

On another EU-US trade issue, on 14 June 2019 the Commission informed Member States that it had reached an agreement in principle with the United States and other substantial supplying countries regarding the “Hilton” Beef quota.  The agreement does not change the overall volume, quality or safety of beef imported into the EU; rather it allocates a larger share of the quota (35,000 Tonnes out of a total of 45,000 Tonnes) to the United States, phased in over a period of 7 years.  The quota was an interim solution put in place some years ago to address a long-standing dispute between the EU and the US regarding the EU’s ban on the importation of hormone beef into the EU.  The European Parliament voted in favour of this Agreement on 28th November which will hopefully see its adoption by Council in early December and an entry into force from 1st January 2020.  This is a positive example of what can be agreed by the EU and US working together. 

Set against the current EU-US trade turbulence, and also having regard to the impacts of Brexit, my Department through Enterprise Ireland supports Irish based companies in their ambition to internationalise and diversify their export base or global footprint.  This is critical for long term business growth.  In 2018 Enterprise Ireland:

- Supported clients in winning 1,504 new overseas contracts

- Supported clients establish 402 new overseas presences

- Supported 82 first time exporters outside the UK

- Ran 1,023 international buyer visits.

Further, Enterprise Ireland offers a range of supports such as:

- Access to Enterprise Ireland’s Market Research Centre which allows companies access business intelligence in the form of company, market and sector performance.

- Enterprise Ireland’s Exporter Development Team working with potential and emerging exporters to assist them research their global ambition.

- EI's Export capability programmes which offer customised sales training and access to experts to assist companies develop international selling skills, such as Excel at Selling and the International Selling Programme.

- A global network of 33 international offices which provides client companies entering new markets with in-market expertise.

In addition, Enterprise Ireland provides a Market Discovery Fund to incentivise companies to research viable and sustainable market entry strategies in new geographic markets.  This fund provides support towards internal and external costs incurred when researching new markets for products and services.  Support for Market Discovery Fund applies when eligible companies are either looking at a new geographic market for an existing product/service or an existing geographic market for a new product/service.  The Market Discovery Fund is available across three levels involving grants up to €35K, grants between €35K but less than €75K and grants greater than €75K but less than €150K.

In conclusion, I must emphasise that the Economic Trade and Investment Relationship between Ireland and the United States has been immensely beneficial to both countries, and Ireland remains fully committed to a continued strong partnership with the US – both bilaterally and at EU-level.  It is important to appreciate that the European Commission has “competence” on International Trade matters on behalf of the all EU Member States and in this regard, I welcome the progress made on the Joint US-EU Statement agenda to date, albeit, from an Irish perspective we wish swifter progress could have been made in our ongoing dialogue.  I remain optimistic that we will see a return to more usual trade relations between the EU and US that would be in both of our mutual interests, and in the meantime, Government, principally through Enterprise Ireland, has a range of enterprise supports to assist companies diversify their export base.

Question No. 65 answered with Question No. 57.