I recently attended the Informal meeting of Trade Ministers which took place on 1st October 2019 in Brussels. Ministers discussed the critical situation in the WTO, and EU collective efforts regarding its reform and on-going negotiations. Ministers also discussed related trade matters involving the United States. In addition, the EU Commission updated Trade Ministers on the preparation of the third annual report on the implementation of EU trade agreements. Finally, Ministers discussed the next steps in the EU agreement with Mercosur.
In relation to the Deputy’s request for an update on recent EU trade agreements, the latest up-to-date information on specific FTAs is as follows:
EU-Canada (CETA) – The 21st September marked the second anniversary of the Agreement’s ‘provisional application’, under which EU/Irish companies gain access to the removal of customs duties and substantially improved access to the Canadian public procurement market. CETA also opened up new sectors of the Canadian services market, reduced regulatory barriers and provided more transparent rules for market access. Ireland already has a strong trading relationship with Canada which is reflected in the €3.2 billion worth of annual trade between both countries. The value of Irish exports to Canada is worth €2.4 billion whilst the value of Irish imports from Canada is worth €780 million.
EU-Japan - The EU-Japan Economic Partnership (EPA) was signed in Tokyo on the 17th July 2018. The European Parliament and Japan's National Diet voted to ratify the EPA in December 2018 and the Agreement entered into force on 1st February 2019. The Agreement provides for tariff reductions to be delivered on a phased basis over a period of up to 15 years. It will open up new opportunities for Irish exporters and companies across a wide range of sectors, including the agri-food sector, which will see particular benefits with new access for dairy products and beef. It will also facilitate greater ease in doing business in the financial services, med-tech, and green energy sectors and across the full range of trade interests that Ireland and Japan share. The Agreement also creates opportunities for Irish-based manufacturers in our pharmaceutical sector through an expansion of existing Mutual Recognition Agreement (MRA) on Good Manufacturing Practice to cover new pharmaceutical products.
EU-Singapore - The EU-Singapore Free Trade Agreement (FTA) was signed by the EU and Singapore at the 12th Asia-Europe Meeting (ASEM) Summit on 19th October 2018. The FTA was ratified by the European Parliament on 12th February 2019. The aim is for the FTA to enter into force during 2019. The deal goes beyond many previously negotiated free trade accords in committing to open up public procurement, an area where the EU and Ireland has many leading suppliers, and agreeing on technical standards in areas such as motor vehicles, electronics and green technologies. Irish-owned SMEs are developing strong trade links with Singapore and this trade is growing steadily.
EU-Vietnam – An FTA was successfully negotiated with Vietnam in 2015. The European Commission and Vietnam signed the deal on the 30th June 2019 in Hanoi. The hope is that it will be ratified by the European Parliament during 2019. The EU-Vietnam FTA will eliminate over 99% of tariffs and will unlock a market with huge potential for Irish exports. The FTA will also create opportunities by addressing other barriers to trade and will address trade-related areas such as public procurement, regulatory issues, competition, services, investment, intellectual property rights, and sustainable development. The Agreement creates opportunities for the Irish Agri-food sector, in particular. Ireland's food exports to Vietnam have grown considerably in recent years and the FTA will support further growth. There are opportunities for Ireland to grow exports in dairy products, pork, seafood, and alcoholic beverages by taking advantage of reduced tariffs under the FTA. Currently tariffs on EU exports of spirits to Vietnam are particularly high at 48% and will be eliminated under the FTA. The elimination of tariffs of 15% on frozen pork products is also significant for Irish producers.
EU-Mexico - On the 21st April 2018, the EU and Mexico announced that they had reached Political Agreement in their negotiations to modernise the existing EU-Mexico Global Agreement to broaden its scope to include regulatory cooperation, more trade in agriculture and food, common phytosanitary standards (food safety and animal and plant health), sustainable development, rules of origin, public procurement. The EU and Mexico hope to finalise the full legal text before the end of the year. The final text will be reviewed by lawyers from both parties, a process called “legal scrubbing”. After this, the agreement will be submitted for the approval of EU Member States and of the European Parliament before signature. The Agreement will provide a platform to increase Irish exports to Mexico, this will be significant for Ireland’s important Agri-food sector especially for dairy, pork and beef products. Ireland is a significant exporter to Mexico of powdered milk and milk derivatives. There are also many exciting opportunities in Mexico for Irish businesses including in the automotive, aeronautics, electronics, financial and telecommunications sector.
EU-Mercosur - The EU recently reached political agreement in their negotiations with the Mercosur region (Argentina, Brazil, Uruguay, and Paraguay). The EU-Mercosur Agreement is the EU’s largest trade deal to date. The Agreement covers a population of over 770 million with trade in goods and services valued at €122 billion. It aims to reduced and, in some areas, eliminate trade tariffs between the EU and the Mercosur region. In 2018, Ireland exported €0.5 billion worth of goods to the Mercosur region. In 2017 – the latest year for which data is available – services exports to Mercosur totalled almost €1.5 billion. Trade with this region has grown by 19% in the period 2010 to 2016. The EU-Mercosur Agreement will, we anticipate, allow Irish exporters to expand faster, and will open opportunities across a wide range of sectors – in business services, chemicals, machinery, medical devices and processed food and dairy. This Agreement will see a significant reduction or elimination of tariffs and barriers to trade that will allow a cross flow of trading and investment between Ireland and the rest of the EU, and the Mercosur region. The EU-Mercosur Free Trade Agreement will make exports from Ireland more attractive and potentially increase the demand for Irish products.
As the Deputy will be aware from Debates in this House before the summer Recess, the TRQ agreed in respect of beef is more than we would have wished for. Equally, there was much debate about the environmental sustainability elements of the Agreement.
The final text of the Agreement will be reviewed by lawyers from both parties, a process called “legal scrubbing” and translated into the various EU and Mercosur languages. After this, the agreement will be submitted for the approval of EU Member States and of the European Parliament before signature - a process we believe will take 2 years based on previous FTAs.
The Government has committed to a full independent economic impact analysis, and to an environmental impact assessment of the deal, in the meantime.
EU-Australia - Negotiations for an FTA with Australia commenced in July 2018. Four rounds of negotiations have been held with the most recent taking place 1st-5th July 2019. The fifth round is scheduled to take place the week commencing the 14th October. Good progress has been made across many areas to date, however, more challenging discussions are also anticipated on sensitive issues such as recognition of the EU’s Geographic Indicators for food and beverages, and in finding agreement on the structure of tariff offers.
EU-New Zealand – Negotiations for an FTA with New Zealand also commenced in 2018. To date there have been four rounds of negotiations with the most recent taking place from 13th-17th May 2019 in Wellington. Overall, progress has been constructive with some chapters capable of being closed and the negotiation continuing with the date of the next round yet to be agreed.
EU-Chile – Negotiations for a trade agreement with Chile were launched in November 2017. There have been four rounds of discussions to date, the latest taking place in Santiago de Chile 1– 5 April 2019. Over the course of the round the negotiating teams discussed all the issues covered by the Agreement.
EU- Indonesia - The first FTA negotiations with Indonesia took place in September 2016. The eighth round of negotiations took place in Jakarta from 17th-21st June 2019. The negotiations are approximately at the half-way point. Good progress has been made in a number of areas, however, more challenging discussions lie ahead. The ninth round of negotiations is expected to be held in early December 2019.
In relation to EU-US discussion on trade, on the 25th July 2018, European Commission President Juncker and President Trump met in Washington to launch a new phase in the close friendship and strong trade relations between the United States and the European Union. They agreed a Joint EU-US Statement to:
- work together toward zero tariffs, zero non-tariff barriers, and zero subsidies (on non-auto industrial goods) and to work to reduce barriers and increase trade in services, chemicals, pharmaceuticals, medical products, as well as soybeans,
- strengthen strategic energy cooperation to potentially increase US imports of (LNG) to diversify the EU’s energy supply,
- launch a close dialogue on standards to ease trade barriers, reduce bureaucratic obstacles, and slash costs, and
- work closely together with like-minded partners to reform the WTO and to address unfair trading practices, including intellectual property theft, forced technology transfer, industrial subsidies, distortions created by state owned enterprises, and overcapacity.
An EU-US Executive Working Group (EWG), was established on foot of the July joint statement, co-chaired by EU Trade Commissioner Cecelia Malmström and the US Trade Representative Robert Lighthizer, as the vehicle for carrying forward this joint agenda. The EWG has met over a dozen occasions most recently in New York on 24th September 2019.
On 15th April 2019, the EU Council voted by qualified majority to approve the negotiating directives for the commencement of trade negotiations with the US in the sectors of conformity assessment and the removal of tariffs on industrial goods. The approval of the negotiating directives was a key step on the road to a possible future limited trade agreement between the EU and US.
On 25th July 2019 the European Commission released a progress report – available on the DG Trade website - on the work of the EWG in delivering on the EU-US Joint Statement July 2018. Entitled “Greater together: Slashing billions in industrial tariffs and boosting transatlantic trade”, this is the second progress report since the formation of the EWG. The report underlines the fact that there has been concrete progress made in EU-US trading relationship in the areas of conformity assessment (full implementation of the Mutual Recognition Agreement on Pharmaceuticals) and cooperation on increasing EU purchasing of US soya beans. There have also been positive conversations around medical devices and cybersecurity. While these areas of progress are encouraging, no progress had been achieved in the area of Industrial Goods. The USTR has made clear to Commissioner Malmström that the US will not engage on this strand as a future deal will not be acceptable to Congress, without Agriculture being included. The relevant EU Negotiating Directive, or mandate, drawn up in accordance with the July 2018 agreement between the US and EU Commission Presidents, makes clear that Agriculture is not comprehended by the discussions. Therefore, progress on Conformity Assessment is certainly more achievable, but more engagement with the US is required.
US “Section 232” tariffs on steel and aluminium imports from the EU remain in place. Additionally, President Trump delayed by 6 months, to November 2019, 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 – that is, that the importation of autos and auto-parts is a threat to US national security, a position the EU cannot accept. While the US has signalled its view the commencement of a new EU Commission term in November 2019 is an opportunity to re-engage on trade matters, the EU have been clear that there is no mandate from Member States to revisit the existing Negotiating Directives to discuss agriculture.
While the position of both parties regarding agriculture remains a barrier to significant progress in terms of negotiating an agreement on industrial goods, there has been progress both through the aforementioned EWG and the recent renegotiation of the “Hilton” Beef quota between the EU and US. This agreement does not change the overall volume, quality or safety of beef imported into the EU; rather it allocates a larger share of the WTO 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 longstanding dispute between the EU and the US regarding the EU’s ban on the importation of hormone beef into the EU. This agreement regarding the redistribution of the Hilton Quota is the result of considerable negotiations between all interested countries.
In relation to the Deputy’s Question regarding proposed duties on EU imports, these relate to cases where both the EU and the US have been found at fault by the WTO in relation to providing certain subsidies to their aircraft manufacturers, Airbus and Boeing, respectively. In that regard, the WTO this week published their Arbitration findings in the Airbus case which effectively authorised the US to apply retaliatory measures up to the value of $7.5 billion annually against the EU. As this dispute relates to the aircraft manufacturing sector, the primary target for US remedial tariffs would be aircraft manufacturing, however, the US can apply retaliatory measures to a wider range of goods exported by EU Member States.
As International Trade Policy is a competence of the EU Commission under the EU Treaties, the EU Commission takes the lead on this issue taking into account the views of individual Member States and the collective good of the Union. Therefore, Ireland continues to be engaged with the Commission, both at a Ministerial and Official level on these issues. Indeed, as recently as Tuesday of this week, I attended the EU Council of Trade Ministers’ meeting in Brussels where, among other items, EU Ministers discussed our concerns on these Aircraft cases and I articulated Ireland’s particular concerns. In that regard, the European Commission has consistently communicated to the US that the EU is ready to work with them to agree on a fair and balanced solution for our respective aircraft industries. As recently as this July, the EU shared concrete proposals with the US for a new regime on aircraft subsidies, and a way forward on existing compliance obligations on both sides, to avoid a round of tit-for-tar tariffs as the EU will have a similar option against the US in some 6/9 months when an Arbitrator determines the quantum of damage to EU industry US subsidies to Boeing has caused. So far, regretfully, the US has not engaged. Nonetheless, Ireland’s preference, as I and my Government colleagues as well as my officials have articulated, along with the EU, is for a negotiated settlement to be reached on these issues.
Initial analysis by my Department of the US list of products on which it proposes to apply tariffs on foot of the Airbus Arbitration findings published this week is that Irish exporters of certain cheese products, pork products, butter and Irish Cream Liqueurs will be subject to additional import duties of 25%. On the other hand, despite earlier lists published by the US, Irish Whiskey appears not to be included among the current measures.
My Department has engaged with colleagues in the Department of Agriculture, Food and the Marine, as well as industry and its Enterprise Agencies in relation to the implications for Irish business of the US proposals here. In parallel, 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.
Our position remains that the mutual imposition of sanctions 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. Ireland does not want to see this escalation at this time.