In a conversation with Borderlex’s Iana Dreyer, MEP Marie-Pierre Vedrenne explains her thinking behind her widely-endorsed report that could turn the EU’s trade retaliatory ‘bazooka’ into something even bigger.
It’s all about dissuasion. The European Parliament’s international trade committee voted on the first piece of trade legislation entrusted to it since last year’s European elections: an amendment to the European Union’s ‘enforcement regulation’.
One of the changes request on Monday by a large majority of committee members is a ‘rendez-vous’ clause that would enjoin the European institutions to revise the regulation two years after coming into force. The parliamentarians’ aim is to introduce the right for the EU to swiftly take unilateral retaliatory trade measures should a free trade agreement partner not comply with the deal’s labour and environment provisions and prove uncooperative over the matter.
The issue may come up in the context of the EU-Mercosur free trade agreement, the ratification process of which is expected to start in the autumn 2020. “How do you enforce its Paris Agreement commitments?” asks Marie-Pierre Vedrenne, the international trade committee’s rapporteur on the file.
“I find that through the enforcement regulation and the proposal to take temporary measures, we can tell our farmers and our small and medium-sized enterprises that the EU is there to defend their interests. The message must be easily understandable,” said Vedrenne.
The French MEP used to direct La Maison de l’Europe, a resource centre on the European Union in Rennes, Britanny, before running for a parliamentary job in Brussels under the banner of president Macron’s majority.
“My role [back then] was to inform. It was the time of TTIP*, of CETA*. And it was quite tough. I have seen too much defiance against the EU’s trade policy become unleashed and grow in the regions,” said Vedrenne.
“If we want to avoid getting to a complete blockage on trade policy in the National Assembly [in Paris] or in the European Parliament over the ratification of new trade agreements, it is important the EU demonstrates that it is aware of the international context, that it is not the naive party in the globalisation process.”
Agri-food perfect storm
Vedrenne’s Brittany is home to a sizeable section of France’s exporting food and drink sector. Businesses there are in the middle of a perfect storm. There are increasing environmental demands from society made on the agri-food sector and potential competitive pressures from trade agreements. The sector is particularly exposed to the ongoing tariff ‘wars’ between the EU and the United States. And now there are COVID-19 induced supply chain re-configurations to consider.
On Monday, Vedrenne’s report garnered a strong majority in the international trade committee for a report that is already shifting the conversation over the EU’s unilateral trade retaliation instruments with the other European institutions.
Last week, the European Commission announced it was considering introducing new legislation to allow the EU to act in the face of coercive unilateral trade actions which aim to pressurise the EU into changing its policies. One such example is a new Section 301 investigation into European plans to introduce digital taxes. The US initiated this investigation at the same time as it pulled out of international negotiations at the Organization for Economic Cooperation and Development a coordinated approach to such taxes.
Introducing such a retaliatory instrument is precisely the core request tabled by the international trade committee. But INTA wants this possibility to be included in the current enforcement regulation, not separately.
Last autumn, the Commission announced a revamp of its rarely used enforcement regulation to allow the EU to proceed with the lifting of trade concessions under its World Trade Organization commitments should it find itself in a situation where judicial proceedings in the institution’s dispute settlement body are blocked. Current rules are not tailored to scenarios such as an ‘appeal into the void’ – in the absence of an Appellate Body.
The trade concessions that may be removed under the enforcement regulation cover tariffs and other trade preferences on goods, as well as foreign bidders’ rights in public procurement processes.
The Commission’s move was dubbed a ‘bazooka’ against the United States by a Brussels-based media last summer.
But the Commission did not want to change anything else in this regulation for fear of opening a pandora’s box and triggering further trade frictions with difficult trading partners. It also wanted to act swiftly as the Appellate Body, chocked off by a US veto on appointments , is no longer functioning.
The Commission’s hopes for swift and targeted change to the regulation appear to have been dashed.
Services, intellectual property rights and quick temporary measures
Not only have MEPs voted for the extension of the economic areas in which the EU can lift concessions to services and intellectual property rights. “This is about effectiveness and coherence,” so Vedrenne.
The new report also wants the Commission not even to wait for a first panel report at the WTO to be released or a bilateral trade agreement panel process to be finalised first. MEPs also want the EU to be able to introduce temporary retaliatory measures early in the dispute settlement process if necessary.
These innovations might raise hackles with many capitals, the European Commission and with stakeholders concerned the EU might act illegally under WTO norms, trigger unnecessary trade wars or even be tempted by protectionism.
Vedrenne, who tabled the changes this spring, managed to convince 35 MEPs out of 42 committee members that the gist of her proposals was right. The French MEP said she encountered a lot of reticence at the beginning. “I am caricaturing a little: but the initial reaction was, okay, it’s a Frenchwoman who is in charge of the report – and she is going to table protectionist measures.”
Only the German Green MEP Reinhard Bütikofer was not for turning. He and his colleagues from the same political group voted against the Vedrenne report.
Mr. Bütikofer tweeted: “EP’s #INTA Committee has voted today to turn a trade dispute “bazooka” which the Commission proposed into an MRV . ? The majority of INTA discards the defense of WTO centered trade multilateralism and opts instead for a unilateralist approach. We all must hope – for the Council!”.
“Defending your interests is not protectionism”
Vedrenne rejects any suggestion that she turned a simple bazooka into a carrier of multiple warheads.
“The regulation says the European Union’s measures must be targeted and proportionate,” Vedrenne insists. “The temporary measures are not a war declaration. They are a defensive instrument that allows the EU to negotiate on equal terms with states that do not follow the rules.”
The Renew Group MEP stresses that the regulation is mainly reactive: “We must not forget that at the beginning there is a third country that takes unilateral and illegal measures. It is not the EU that wants to impose such measures. Defending your interests is not protectionism”.
“I believe in the multilateral system. I defend it, although I think it must evolve. I have always said it during exchanges with the other shadow rapporteurs : I see this as an instrument of dissuasion”.
Asked whether she doesn’t fear the legislation might be abused and applied against the wrong country or for protectionist purposes, Vedrenne said: “I do not share these worries”. The European Commission, who would lead in any such case, is perfectly capable of using the instrument “intelligently”.
Now to the coming inter-institutional talks.
Trilogue negotiations could start as soon as this month. Vedrenne, like the Commission, would like to move fast under the current German presidency of the EU. “I am not taking a confrontational approach with the Council,” said Vedrenne. “But there is a strong mandate from the European Parliament.”
Vedrenne said the Commission’s new proposals for a separate new regulation are “good news”. She added: It’s important that the Commission sent this message before the trilogue”
* TTIP refers to the now-defunct and then highly controversial Transatlantic Trade and Investment Partnership negotiations between the EU and the United States held under the Obama administration. CETA is a flagship trade agreement between the EU and Canada, temporarily in force since 2017.