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Lange: We have a more integrated perspective on trade policy 

Bernd Lange is Chair of the European Parliament’s committee on International Trade

Bernd Lange served as chair of the European Parliament’s international trade committee for two terms. In an in-depth conversation with Iana Dreyer, he discussed what changes to EU trade policy occurred under his tenure in this pivotal position, where he sees future relationships with the United States and China – and supporting Ukraine. 

Q: What’s the main change you’ve seen in the ten years you served as international trade committee chair? 

Bernd Lange: The term that started in 2014 was the one that set out to bring the 2010 Lisbon Treaty to life. Under the Lisbon Treaty the European Parliament became co-decision maker in trade policy, an exclusive EU competency. 

It was quite an important exercise to get Lisbon properly implemented in trade policy.  

Before becoming chair of the international trade committee, I was the trade spokesperson for the Socialists and Democrats. 

In this role I was involved in the rejection of the international intellectual property protection treaty ACTA in 2012 and in the rejection of a trade agreement with Morocco in 2011. This sent quite a strong signal to the other institutions that the parliament’s participation in the negotiation process was crucial to achieve results. 

When CETA, the trade agreement with Canada negotiated by the European Commission, was brought to the parliament for ratification in 2016, I made it very clear that without a change in the investment protection system we would not accept the treaty.  

As a result, the treaty was reviewed to replace investor-state arbitration with a bilateral investment court system and some revised rules. 

It is a big success for the parliament to have a strong influence on the EU’s trade policy. 

Today there is good cooperation with the commission, also in terms of accessing negotiating documents. This has really changed since the time of the EU-US TTIP negotiations. 

The international trade committee on the European Parliament in what is probably its last meeting of the 2019-2024 mandate today in Strasbourg. Photo credit: European Parliament

At the beginning, INTA was the committee in parliament with the least well-developed relationship with the commission. Today, other committees are looking to our status and our relationship with the commission as best practice. 

Q: Surely the parliament’s greater power has also shifted the content of trade policy? 

There have been two fundamental changes in the content of trade policy in the last years.  

First, we have become more autonomous and assertive by expanding our toolbox with instruments such as the International Procurement Instrument, the anti-coercion instrument, the foreign subsidies regulation, foreign investment screening, among others.  

Second, our trade policy has become much more sustainable.  

I have long fought for stronger inclusion of sustainability issues into the EU’s trade agreements.  

I wanted to change the trade policy narrative from one that just focuses on reducing tariffs and non-tariff barriers with the hope that growth would ensue automatically and everybody would be happy – to a narrative focusing on creating stable and sustainable relationships for the benefit of the people on the ground.  

Step by step things changed. In June 2022 the commission presented the EU’s new fundamental model chapter on ‘trade and sustainable development’ which made compliance with the labour and environment chapter mandatory and subject to potential sanctions in the last resort.  

This is more or less the position the parliament and I myself always argued for.  

That approach was included in the EU New Zealand trade agreement which will come into force in May.  

The new approach to TSD is also under negotiation with other trading partners and will be included in future updates to agreements such as the Enhanced Framework Agreement with Chile.

As a result, today we have a more integrated perspective on trade policy.  

There is also the question of how to implement environmental and labour commitments in a cooperative manner.  

I’m quite clear that we should not be pointing fingers at our trading partners and saying “you have to do this and that”. We have to look at what is possible and how we can jointly develop implementing measures to reach a common goal.  

I am confident we can reach an understanding on TSD chapters with countries with which we are currently negotiating trade agreements. I had a conversation with India’s trade minister Piyush Goyal before the negotiations with his country re-started in 2022. He accepted that everything is on the table and that we have to discuss the question of sustainability. 

We also need to find an understanding with our partners on our unilateral sustainability legislation such as the new deforestation regulation. 

Q: What will be on the plate of the next term? 

Implementation of both FTAs and of the EU’s new unilateral regulations – and their interrelationships – will become a major issue in the next term. 

The EU-Mercosur Association Agreement text, for example, includes the obligation that products generated in areas where illegal logging is occurring are not covered by the agreement so that beef coming from this zone is not tariff-free. But the agreement [which has yet to be signed] doesn’t say how this obligation will be monitored, how it will be implemented nor how products will be certified.  

We could look at whether the geo-localisation systems of Brazil can be taken on board. And we need to see how the EU can offer some support on that.  

With CETA we have the question of hormone-free beef. We have some understanding of how to certify the meat from Canada that comes to Europe is hormone-free.  

It is really important to have a dialogue in real partnerships about implementation with our trading partners.  

Separately, the EU will need to better coordinate the implementation of regulations and FTAs, be it within the commission but also sometimes in parliament.  

Also, we need greater resources dedicated to implementation more generally.  

Our EU delegations in our partner countries need have the necessary means to monitor and coordinate implementation on the ground. 

In some cases, the EU should also be more flexible about changing legislation if implementation is proving impossible.  

We should be more able to recognise what our partner countries do on the ground – this is important for precisely the deforestation regulation. 

Q: You have been standing rapporteur for relations with the United States. Where are we now on this crucial relationship? 

There is an irony of history that the Washington consensus is being killed by Washington. The United States has returned to a pre-World War II state-driven and protectionist trade policy. Since the financial crisis of 2008-2009 there’s been a roll-back in the United States of the so-called Washington Consensus which puts free markets at the heart of economic development.  

It is clear that at the moment there is no movement in the other direction, regardless which party will provide the next US president. When looking at the trade conflicts we have with the United States on steel tariffs, or industrial subsidies: the US only focuses on domestic considerations. 

There is no view anymore that a global rules-based system needs to be a priority.  

This leads to an attitude in the World Trade Organization that is not proactive.  

Under president Joe Biden, the EUUS Trade and Technology Council has proven a good forum for exchange.  

The TTC has offered a venue for limited cooperation on export controls and the sanctions against Russia.  

The forum also led to a little more transparency on industrial subsidies and fostered cooperation on risk assessments regarding artificial intelligence.  

In the next term and the next US administration there will be possibilities to communicate and also find common ground. But the fundamental differences in outlook between the EU and US on trade will remain.  

We only have a ceasefire agreement with the US on steel tariffs and on tariffs related to Airbus and Boeing. I don’t expect a change in the attitude of the United States next year. 

Until the US election in November, nothing will happen. So, the question in 2025 will be of re-activating our safeguard measures adopted in response to US tariffs on steel and aluminium under the Section 232 legislation. 

The other question will be whether we will need to use the autonomous toolbox we developed in recent years such as the enforcement regulation when we win WTO cases or the anti-coercion instrument. 

The anti -coercion instrument was created in response to US Section 301 tariffs against EU and member state plans for a digital tax.  

Should Trump return to the White House, the whole set of EU defensive measures will be ready. We should use these against our politically strongest ally – if necessary.  

Q: How to respond to the China challenge? 

We depend much more on trade than our trading partners. Our openness to trade averages 43% – the US’ trade ratio to gross domestic product is 26. Also, 40 percent of our imports go into our exports.  

Onone hand we have the United States with its more state -driven, domestic policy-orientated trade policy.  

On the other we have China, where I see a change from a development-focused perspective to a more hegemonic perspective with a more state-driven economy. Beijing plans for the centenary of the communist party in 2049 to be the leader in several sectors worldwide.  

The EU is stuck in between itself and the US and we have to carefully maneuver our ship on these troubled waters.  

We need to go for bilateral free trade agreements and real partnerships with reliable partners.  

These partners do not all need to be like-minded. We have a good trade agreement with Vietnam whose political system is not what we want, but it is a reliable partner with which we have many good trading relationships and investment possibilities.  

A cornerstone of our approach should be in the Pacific region where we need to strengthen our network of fair partnerships with reliable partners.  

We are negotiating a trade agreement with Thailand: that is positive. Negotiations with Indonesia are really promising. Negotiations with the Philippines will soon restart.  

We need to continue to strengthen our autonomous instrument toolbox. The recent European Commission proposal to revise the foreign direct investment screening regulation is necessary: we need a more harmonised approach in the EU.  

But regarding the possible introduction of outbound investment controls, this is going a little bit too far in following the United States.  

The interests of outbound investors are different between the United States and the European Union. In the United States we have more venture capital and more financial investment. In Europe we have more companies investing outside the European Union.  

We need to boost our industrial policies so that we can really be the leader in key technologies.  

It makes no sense from our side to go for a decoupling strategy – while of course China remains a big market for our exporters. 

We need to diversify our supply chains and pursue our bilateral partnerships.  

Of course, politically, we will discuss the respect of human rights of the International Labour Organisation conventions.  

The Comprehensive Agreement on Investment concluded in late 2020 but put on hold by the parliament due to sanctions on MEPs, diplomats and think tanks in Europe, remains on ice.   

Of course it would be a good agreement, it would give more security for our companies, more transparency, also greater possibilities to make our case heard and so on. But unfortunately, there is no chance at the moment that for it be revived.  

Regarding Taiwan we respect the sovereignty of countries and we have the One China policy.  

With China, we have the CAI investment agreement. And we should do such an agreement with Taiwan as well. There is no doubt about that.  

Should China ever start a military invasion of Taiwan, we will use all our economic and political power to support Taiwan. This I have always made quite clear to all my Chinese counterparts. 

China is of course a big country and we need China in a lot of international fields of cooperation such as climate change. 

Q: In light of current geopolitics, how can we support Ukraine better with trade policy? 

Continuing to support Ukraine through our trade policies remains a cornerstone of our strategy.  

First and foremost, we must promptly adopt of our compromise agreement on trade liberalisation for Ukraine. The parliament voted on it today – now it’s up to the member states. 

Agriculture constitutes about 10% of Ukraine’s GDP – and the EU’s gesture underscores the importance of our support for our neighbour.  

The autonomous trade measures not merely beneficial but crucial. They are central for sustaining Ukraine’s traditional economic activities, particularly in agriculture, and ensure that individuals can maintain their livelihoods. 

We should also not forget that these imports are essential to EU operators—who would otherwise buy these products from other third countries. Sourcing from Ukraine is not only practical but strategic. 

Second, it is vital for the EU to revisit and refine our trade agreement with Ukraine next year.  

This includes expanding the DCFTA’s scope to include products not yet liberalised under the current agreement, thus securing mutual benefits that bolster both Ukraine and the EU. 

Last but not least we must explore options regarding frozen Russian assets with utmost sensitivity and within legal bounds. An avenue we are examining is the reallocation of profits derived from these assets to help in Ukraine’s reconstruction.

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