A ministerial session with a somewhat monotonous agenda is looming on Thursday 21 November, during which no decisions are expected. However, in the ministers’ policy debates - World Trade Organization (WTO) reform, transatlantic relations, challenges from China, implementation of trade agreements, EU citizens’ expectations in trade policy - the whole future of the Union’s trade policy is probably at stake.
Under the chairmanship of Finnish Foreign Trade Minister Ville Skinnari, the ministers will meet with European Trade Commissioner Cecilia Malmström, who will brief ministers for the last time on these major issues.
Brain death of the WTO?
The EU Council will begin its work by examining the progress of the reform of the World Trade Organization (WTO) (dispute settlement, regulation and supervision), the stakes of which were raised by the Commissioner in early November (see EUROPE 12365/25).
The most critical issue is undoubtedly the need to avoid the paralysis of the organisation's Appellate Body (AB) as early as 11 December. The lifting of Washington’s veto on the appointment of new AB judges requires the commitment of the American authorities to the reform of the multilateral organisation (see EUROPE 12350/16, 12271/16, 12264/16, 12262/12).
However, this is a completely different signal than the one the Trump administration is sending these days to the members of the multilateral organisation. Denouncing the WTO’s financial support for an ad hoc arbitration mechanism, a temporary alternative to bypass the blocking of the AB, Washington is reportedly threatening to block the multilateral organisation’s biennial budget, confirmed several EU sources.
As for the implementation of this alternative - but legal - arbitration mechanism promoted by default by the EU, it has not yet convinced a critical mass of countries - certainly not enough to consider taking it to the plurilateral level.
In the long term, this alternative solution also points to the risk of a permanent downgrading of the AB, as this new system could be perpetuated in the event of an absence of an American reaction, which is also a concern for Europeans.
Trilateral cooperation between the EU, the United States and Japan to address distortions in international trade, mainly due to non-market-based Chinese policies, has also not yet produced any concrete results.
Ministers will therefore once again discuss strategies to engage the United States in reforming the WTO and its rules. As diplomats from the Member States and European leaders like to point out, the EU “shares many of the criticisms, but not the methods” of its transatlantic partner.
As for the organisation’s regulatory function, it has also ground to a halt, other than some plurilateral initiatives (electronic commerce). WTO members will need to work hard and creatively to ensure that the 12th WTO Ministerial Meeting, scheduled to take place in Nur-Sultan, Kazakhstan in early June 2020, produces concrete results. Thus, on 15 November last, members admitted that the 2019 deadline for concluding negotiations on fisheries support would no longer be met (see EUROPE 12365/25). The ministers will therefore discuss this summit, which could be “a total failure or the beginning of a new dawn” for the WTO, according to a European source.
Relations with the heavyweights of the global economy
Not surprisingly, recent developments in transatlantic trade relations are on the agenda. However, the EU is rather in a wait-and-see mode toward its American partner, in particular with regard to the latter’s decision on possible tariff sanctions on car imports, bilateral negotiations on industrial products and the dispute over the European aircraft manufacturer Airbus.
Over lunch, ministers will have an informal discussion on trade relations with China (see EUROPE 12368/18, 12355/14, 12232/7).
This will include Beijing’s progress on its accession process to the Plurilateral Agreement on Government Procurement, the recent conclusion of a bilateral agreement on geographical indications (see EUROPE 12364/17) and the progress of talks to seal a comprehensive bilateral investment agreement. The negotiations are now in the process of a second exchange of texts: an important step which, by revealing Beijing’s degree of ambition, will make it possible to gauge its real willingness to respond to the demands for reciprocity in the opening of markets raised by the EU.
The Commission will also inform Ministers of the progress of other ongoing bilateral trade negotiations.
Optimising the implementation of trade agreements
The EU Council will also hold a policy debate on the implementation of free trade agreements (FTAs) on the basis of the European Commission’s 2018 report, which was presented last October (see EUROPE 12348/10). While the European chancelleries are generally satisfied with the direction of the report, which also includes elements of sustainability, they are calling on the Commission to further strengthen this aspect of the implementation of its trade policy, for the benefit of small and medium-sized enterprises on the one hand, but also to better meet the expectations of EU citizens.
The Commission will also present the results of the 2019 Eurobarometer survey on international trade, published the day before. Sixty percent of Europeans believe that they personally benefit from international trade, 16% more than in the previous survey 10 years ago, this survey reveals. Defending EU environmental and health standards has also become more important for Europeans, with half of respondents considering it a priority. More than half of the respondents consider that the EU should increase import duties against non-Member States and companies that do not respect international trade rules.
The other point addressed here - the question of responsible entrepreneurship brought forward by the Netherlands - is also part of this responsible trade approach. The Hague would like to propose to its European partners that they jointly carry out a comparative analysis of the mechanisms for responsible business conduct with a view, in the long term, to a possible approximation of methodologies or an action plan at the EU level. (Original version in French by Hermine Donceel)