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.
During his three-hour hearing before the European Parliament’s Trade Committee, the EU’s outgoing Agriculture Commissioner made clear that tackling China’s unfair trade practices will be a major challenge during his five-year mandate.
He also said he will work with the US to progress on the “positive” agenda agreed in July 2018, despite the growing trade tensions between the two partners.
Hogan proved to be well-prepared for the parliamentary scrutiny, and did not endure any difficult moment during his three-hour hearing.
After the hearing, the chair of the Parliament’s Committee on International Trade, German Socialist Bernd Lange, wrote on his Twitter account that Hogan had made “no mistakes” but was sometimes “a bit vague”, and his commitments “not very clear”.
Still, Lange said the committee will recommend his approval on Tuesday, and suggested some “homework” for the Irish commissioner-designate, a member of the centre-right European People’s Party (EPP).
Hogan was asked by various MEPs how he intends to tackle China’s forced transfer of technology and illegal subsidies, and his plan to open up the Chinese market.
He outlined a strategy on various fronts that would take the work done by his predecessor Cecilia Malmström a step further. The ultimate goal is to “rebalance” the bilateral relation with the Asian country, by toughening up the European position, Hogan said.
Notably, Hogan said he intends to make progress on a proposed international procurement instrument to gain leverage vis-à-vis Beijing.
This proposal, which seeks to win mutual access to the procurement market of trade partners, has been blocked in the Council due to member states’ diverging interests.
But Hogan noted that there is a “growing awareness now in the Council” about the importance of the dossier. For example, he noted “a little bit of softening” on the side of German Economy minister, Peter Altmaier.
Hogan also said he would like to beef up the EU’s foreign investment screening mechanism to have a more “coordinated and harmonised approach” on foreign takeovers.
“I hope that we can achieve that,” he said, arguing that it is “essential” to protect European technology and critical infrastructures, given that the EU is one of the most open economies in the world.
The screening mechanism proposal came in response to concerns triggered by the growing number of Chinese takeovers in the EU, particularly in cutting-edge technologies.
The new rules however failed to bring a single screening body or common principles for all member states to assess foreign investment.
As stated in his mission letter, Hogan said he will work to conclude the EU-China investment deal by the end of next year.
The investment deal will help to address some of the European concerns, but he admitted that it would be “quite challenging” to seal a deal after years of slow progress.
The Irish commissioner said he will discuss some of these issues with the Chinese leadership during a World Trade Organisation ministerial meeting in Shanghai scheduled in early November.
When it comes to the reform of the WTO, he admitted that Europeans were currently working closer with the Chinese authorities than with the US Administration.
In this regard, he said he will continue to engage with the US to restore a level playing field under the WTO umbrella. To that end, Europe will push to modernise the organisation, with a view to scrapping subsidies for industry and technological development.
Until now, Europe has failed to convince the US Administration to cooperate on the renovation of the WTO’s appellate body.
According to Hogan, the EU is working on a “plan B” for the WTO reform with the objective of having it in place by the end of 2020, although he did not give further details.
With regard to the US, Hogan said his goal would be to build on the joint agreement reached by Commission president Jean-Claude Juncker and US President Donald Trump in July last year.
“The key is to relentlessly focus on the positive dimension,” Hogan said, citing as an example the beef dispute that was solved over the summer.
However, no progress was made on the elimination of industrial tariffs or plans to introduce regulatory harmonisation in various sectors.
Hogan’s hearing before the European Parliament took place as the US prepares to announce new tariffs against the EU, in response to European subsidies granted to aerospace company Airbus.
Hogan recalled that the Commission tried to find a negotiated solution with Washington, and that the EU will also be authorised by the WTO to punish the US, in response to the illegal aid given to plane-maker Boeing.
At one point, MEPs grilled Hogan as to how he intends to ensure Europe’s trade partners respect their international environmental commitments.
Hogan said he “strongly” supported the use of trade instruments to guarantee the full implementation of the Trade and sustainable development (TSD) chapter in bilateral agreements with foreign countries.
In this regard, he said Korea will be an “interesting test case”, as this was the first example in which the EU used some dispute settlement instruments.
“My ambition is to integrate as far as we can and with as much political muscle as we have, the values of the European Union in any trade agreement, whether they are economic, environmental or social,” Hogan stressed.
In this context, he said the Commission will create a new position of Trade Enforcement Officer, to be set up as soon as possible in 2020.
During his hearing, Hogan also defended the “overall positive impact” of the Mercosur agreement, although he understood farmers’ “concerns.”
Hogan will be responsible for negotiating a future trade deal with the UK after its withdrawal from the EU.
He said “it is impossible to predict the outcome” of the divorce process, as Brexit nears the 31 October deadline.
But he told MEPs that “I am sure that the level playing field will be high in our minds”, as some of them expressed their concern for unbalanced trade relations if the UK lowered its standards after Brexit.
Hogan will take over as EU Trade Commissioner in November after the Parliament’s plenary confirms the full commission in a vote scheduled for 23 October.
[Edited by Frédéric Simon]