At a Foreign Affairs Council meeting on Friday 22 May, the Member States’ Trade Ministers focused on the response to the repercussions of the war in the Middle East on world trade (see EUROPE 13872/2).
“The situation in the Strait of Hormuz is putting great pressure on our energy security, value chains, and maritime transport. This is creating new vulnerabilities for the European economy, increasing costs for our businesses, particularly in sectors where we are still dependent on imports, [such as] fertilisers”, said Stéphane Séjourné, Executive Vice-President of the European Commission responsible for Industrial Prosperity, who attended the meeting.
He made it clear that the European Union “must speed up its diversification strategy and reduce its dependencies without creating new ones”. In this context, the Ministers broadly welcomed the conclusion on Friday of a modernised free trade agreement with Mexico (see EUROPE 13872/2).
Diversification. “Given the current trade tensions, diversification is more important than ever”, said the Cypriot Minister of Energy, Industry and Trade, Michális Damianós. “Extending the EU’s network of free trade agreements will help to find new markets and mitigate the risks associated with trade tensions”, he added.
During the working lunch, the Ministers discussed the agreements currently being negotiated with Thailand, Malaysia, the Philippines, and the United Arab Emirates. Discussions also covered the negotiations recently concluded with India, Indonesia, and Australia. The European Commission is expected to submit a proposal on the free trade agreement with India by the end of the year.
Still on trade issues, some countries, notably Ireland, raised the question of the partnership agreement between the EU and Israel. The ban on imports of products from illegal Israeli settlements had been debated in the European Parliament (see EUROPE 13863/7) and discussed at a previous Foreign Affairs Council (see EUROPE 13866/3). However, according to our information, the subject was not discussed on Friday.
WTO. Ireland, which takes over the rotating presidency of the EU Council in July, also stressed the need to reform the World Trade Organization. “This is a point to which we will continue to give priority throughout our Presidency”, Irish Minister for Foreign Affairs Helen McEntee said ahead of the meeting.
The Ministers deplored the failure of the negotiations at the 14th Ministerial meeting in Yaoundé (see EUROPE 13839/17) and at the WTO General Council in early May. However, the EU27 were keen to reaffirm their commitment to the multilateral trading system, underlining the essential regulatory role played by the WTO. The EU will continue to play a leading role on this issue, Commissioner Séjourné told the press.
“The European Union is committed to a process of reform of the WTO based on three pillars: predictability, fairness and flexibility, so that the organisation can continue to achieve its objectives effectively and meet the urgent challenges facing world trade today”, recalled Michális Damianós for his part.
Generalised Scheme of Preferences. On Friday 22 May, the EU Council gave the green light to a new Generalised Scheme of Preferences (GSP), following a final vote by Parliament in April (see EUROPE 13858/4). The revision of the GSP provides for the reduction or even elimination of customs duties on imports from 65 developing countries over the next decade, measures that should also enable trade relations with these countries to be intensified.
However, specific safeguard measures have been added to protect the European rice industry. The text also contains a controversial new measure, allowing the EU to suspend preferential customs duties for GSP beneficiary countries in the event of continued non-cooperation on the readmission of irregular migrants.
Fertilisers. Finally, in response to soaring fertiliser prices, the EU Council decided to suspend ‘most-favoured nation’ (MFN) customs duties on imports of certain essential nitrogen fertilisers and the inputs needed to manufacture them, for a period of one year (see EUROPE 13872/11). The European Commission put forward this proposal last February, in order to reduce costs for EU farmers and manufacturers (see EUROPE 13815/25). (Original version in French by Juliette Verdes)