Dombrovskis announces new defense instrument against trade ‘bullies’

European Parliament hearing of Valdis Dombrovskis, European Commission executive vice-president for Economy, designated to assume responsibility for trade.

The European Commission’s executive vice-president, Valdis Dombrovskis, told the European Parliament on Friday (2 October) that he will put forward a new mechanism to protect the EU from the coercive manoeuvres of trade partners like US and China.

Dombrovskis appeared before the International Trade committee as part of his confirmation process to take over the trade portfolio. His predecessor, Phil Hogan, resigned after he skipped the COVID-19 restrictions in Ireland to attend a private dinner.

Dombrovskis convinced MEPs during his three-hour hearing with his detailed answers on issues such as the World Trade Organisation reform, trade relations with China and the US, the Mercosur agreement with South American countries, or the enforcement of sustainable goals and human rights in trade deals.

The former Latvian prime minister announced that he will put forward next year a new trade enforcement tool to counter “coercive” actions by China or the US, which had threatened the EU in the past with imposing trade restrictions or new tariffs against European carmakers and other products.

If needed, he said, the Commission would use this new ‘anti-coercion’ mechanism even against Washington.

“Europe needs to become more assertive,” Dombrovskis said, echoing the message that Hogan gave to MEPs during his hearing a year ago.

Hogan convinces MEPs by toughening up trade stance

Phil Hogan obtained late on Monday (30 September) the MEPs’ preliminary approval to become the EU’s next Trade Commissioner, promising a tougher stance towards China to ensure the protection of European values, and environmental principles in particular.

In this regard, Dombrovskis said the new chief trade enforcement officer will ensure that market barriers are removed as agreed in trade deals, and will act against trade partners who do not play by the rules. 

Eyeing China, Dombrovskis announced his intention to launch an instrument to tackle distortions from foreign companies in the internal market, and he vowed to strengthen the screening of foreign investment in the EU.

Dombrovskis stressed that he wants a trade relationship with Beijing that is “restructured to be reciprocal, balanced and fair”.

The EU-China investment agreement, which is still under negotiation although it should have been concluded this year, will be key to that end. 

He said the EU is “making it very clear” that the investment deal will be finalised only if the economic relations are rebalanced. 

“For this, we need more reciprocity, we need more market opening from China because the current situation is asymmetric,” he said. 

EU, China make progress on investment deal despite human rights tensions

The leaders of the EU and China agreed to speed up negotiations to conclude a long-standing investment deal during a virtual summit on Monday (14 September), despite Europe’s lingering concerns over Beijing’s human rights record and its treatment of Hong Kong.

This new investment deal will also be used to address labour rights concerns raised by some MEPs in regard to the Asian superpower.

Sustainable goals

In some important aspects for Europeans, like the sustainability chapter, Dombrovskis admitted that progress in the talks with China has been slower and agreed with MEPs that the enforcement of trade and sustainable development requirements in trade deals should be stepped up. 

“We will examine how we can include more granularity in the enforcement of these chapters,” Dombrovskis replied.

MEPs were also concerned about the historic Mercosur agreement, which is undergoing a very difficult ratification process due to the concerns about the Amazon region. 

Dombrovskis was against renegotiating the trade deal with the South American countries, but he said the EU must “find lasting solutions for the Amazon region” before the ratification of the Mercosur agreement.

The Commission vice-president stressed the ‘green’ push he wants to give to its portfolio by announcing the launch of a “WTO trade and climate initiative, focusing on green goods”, acknowledging that “today, trade is about much more than just trade”.

The chair of the International Trade commissioner, Bernd Lange (S&D, Germany), tweeted after the hearing that Dombrovskis had given a “very solid performance”.

“I appreciate his attention to detail and clear commitments, a very refreshing performance compared to other hearings,” he said.

Once the Parliament concludes its evaluation process, the plenary will vote on whether he takes the trade portfolio on 7 October.

In parallel, Dombrovskis will give away the financial services dossier to Mairead McGuinness if she is confirmed by the Parliament, also on 7 October.

McGuinness wants 'full investigation' into Wirecard scandal

The Commissioner-designate for financial services, Ireland’s Mairead McGuinness, promised on Friday (2 October) a “full investigation” into the Wirecard fraud that has thoroughly shaken up Germany, to see why supervision failed.

[Edited by Zoran Radosavljevic]

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