Statement by European Commissioner for Trade Phil Hogan in the Dutch Senate
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On behalf of the European Commission, I would like to express our total solidarity as you continue to deal with the Covid-19 pandemic in the Netherlands. I wish to convey our sincere sympathies to the victims and their families, and our heartfelt thanks to the frontline medical staff and supply chain workers who are helping you to cope.
I would also like to thank you for this opportunity to participate in your discussion on CETA. This agreement is the result of many years of engagement between the EU and Canada, on the basis of a mandate negotiated and agreed unanimously by our Member States and made public on 15 December 2015.
Of course, our discussions in Europe have been equally important: between the Commission, Member State governments and parliaments, business and civil society. The quality of reflection and analysis provided by committees such as this one is crucial in relation to guaranteeing the right levels of expert input and democratic legitimacy for our shared European trade policy.
This engagement has helped to shape a CETA agreement that is balanced, ambitious, mutually beneficial, and, I would add, more important than ever in the current economic context.
Role of trade policy in the post-COVID-19 recovery
The Covid-19 pandemic is one of the biggest crises facing our generation and it will have far-reaching impacts on public health as well as on the economy and employment.
While the immediate challenge continues to be in public health, there is also a huge economic challenge building up. The European Commission and governments throughout the EU have been very active in implementing emergency measures to support their respective economies and to preserve as many jobs as possible.
The public health and economic challenges are closely linked, and the choices we make in the coming months will determine not only our success in defeating the virus, but also the speed of our post-Corona economic recovery. Of course, there are some things we can and should do differently in the post-coronavirus world.
This could include:
- building strategic stockpiles of vital medical and protective equipment to make us better prepared for future pandemics;
- Diversifying and solidifying our supply chains to make our economies less vulnerable;
- And strengthening international rules and our own trade defence toolbox to keep the playing field level.
An open trade policy will be an important driver for recovery. For companies of all sizes to reap the benefits of trade, stability and predictability will be needed in the trading environment. This view has been strongly supported by leading companies such as Philips in recent weeks.
Better enforcement and implementation of all trade chapters is important for stakeholders and citizens.
Open Strategic Autonomy & Trade policy Review
The Commission is therefore advocating for a model of ‘open strategic autonomy’. Simply put, this means achieving the right balance between a Europe that is “open for business” and a Europe that protects its people and businesses.
To map the correct way forward, we are preparing a strategic review of our trade policy, to make it fit for purpose and meet the economic challenges coming out of the crisis. This review will be a wide and inclusive process, and we will need the input of committees and houses like this one for it to succeed.
Let me welcome in this respect the recent submission prepared by your government together with France calling for a stronger alliance between our trade and sustainable development policies. Creating the right global framework for this agenda will require us to work closely with our allies right around the world, and Canada is one of our staunchest allies.
Canada and the EU are working together to maintain and modernize the multilateral trade system and the WTO. In fact, Canada was the first country to join the EU in protecting an independent two-step system to settle trade disputes, through an arrangement which has now been notified to the WTO.
It has also championed alongside the EU and its Member States the establishment of a Multilateral Investment Court to replace the flawed Investor-State Dispute Settlement agreements. Canada is on our side at the G7 and G20, when we work as part of the global community to find ways to overcome the current international challenges and chart a path towards an economic recovery based on inclusiveness and sustainability.
EU-Canada and Netherlands-Canada Relationship
Our co-operation at the international level is based on a longstanding privileged relationship. We share many values - democracies based on the rule of law; a society that is inclusive and tolerant; and a system of governance that protects and serves its citizens, offering public services and public safeguards, from healthcare to consumer protection. Importantly, we share the conviction that greater trade and investment, based on values and sustainability, can help us serve our people: offering prosperity, opportunity, jobs.
Canada also has a special partnership with your country. Only a week ago, Canada and the Netherlands jointly celebrated 5th May - you celebrated the 75th Liberation Day and Canada celebrated Dutch Heritage Day.
Canadian soldiers played a pivotal role in the battle to free the Netherlands and to provide much needed relief to the Dutch population during the ‘hunger winter’ and Canada hosted the Dutch royal family in exile during the war. These strong bonds are reflected in all aspects of your bilateral relations, including trade.
CETA is a central pillar of this political, trade and economic partnership. CETA is a recent agreement – not even three years old – but it is already delivering concrete positive results. Since its provisional application in 2017 EU-Canada trade continues to grow, with EU exports to Canada growing at an even stronger pace than exports to the rest of the world (9% compared to +3.5%).
We see similar trends in Netherlands-Canada trade. Dutch exports to Canada increased by 12% last year, including 4.6 billion euro of goods, and exports of agriculture goods were up by 18%, with total exports of 321 million euros. Business both big and small have benefitted.
Take Canuck, a small Dutch company operating in the drinks dispensing business: it increased its workforce from 8 to 11, thanks to increased sales in Canada after CETA. This is also true in the field of services and procurement: a great example is Spotzi, a Dutch start-up working in data visualisation which thanks to CETA was able to successfully win an Ontario public tender.
However, trade policy is not just about opening markets – it should also reflect our values. CETA is a progressive agreement, going beyond the lowering of tariffs or the removal of barriers. It also provides the framework to move towards a green transition, improved gender equality, and improved participation of small businesses.
I understand that certain concerns have being expressed in the ongoing debate in the Senate on the agreement’s ratification. I would like therefore to take this opportunity to provide information and clarifications that could help inform the debate and address your concerns. And I will be very happy to answer any questions you have.
Many fears were expressed about this agreement at the time of provisional application, three years ago. Agriculture is one of these areas. However, no influx of Canadian agricultural goods into the EU has occurred. According to the Canadian Agri-Food Trade Alliance, EU imports of Canadian agri-food products have actually decreased by 10% since the deal was implemented. So the EU has maintained and in fact increased its trade surplus with Canada. With CETA, Canada has become our 7th most important export destination for agricultural goods.
Meanwhile, Canadian meat exports to the EU remain very low: the fill rate for pork and beef was just 1.5% and 3% respectively in 2018. Quota use rate was equally low in 2019: 0.47 % for pork and 3.1% for beef. By contrast, CETA quotas for EU cheese exports to Canada are filled at 96% - to the strong benefit of Dutch companies. And I want to be crystal clear on the fact that the EU has maintained its food safety and quality standards.
Nothing in CETA affects the safety of the food we eat or the products we buy. Nor does anything change the prerogative of EU lawmakers to set EU rules under EU procedures on food safety or other issues. Nor can CETA governance structure adopt decisions that circumvent the role of the EU and its MS in making policy.
When it comes to animal welfare, which I know is a very important issue here in the Netherlands, we are engaged in a strong and robust dialogue with our Canadian counterparts. And I am happy to tell you that this robust dialogue is already bearing fruit.
Based on input from EU civil society, animal welfare was identified as one of the first topics of discussion under the CETA Regulatory Cooperation Forum. The first meeting of this Forum was held in December 2018. It identified the issue of long distance animal transportation as a specific concern. Thanks to this cooperation, we can point to a tangible outcome which proves that CETA is delivering on animal welfare.
Canada has updated its Animal Transport Regulations, which will include stricter animal transportation requirements. The new rules came into force on 20 February 2020. CETA does not modify the requirement that all products imported into the EU need to comply with our rules and regulations. This includes the EU rules on hormones and GMOs.
The EU has a tight system of controls including inspections, audits, and border controls by its MS, as well as market surveillance tools to make sure that products that do not comply with EU requirements do not enter the EU market. If stronger checks and controls are required, then the Netherlands can do so.
And finally, nothing in CETA affects the precautionary principle, which is enshrined in EU treaties. In fact, the Commission’s latest proposals on endocrine disruptors show that we can maintain a high level of health protection in the face of scientific uncertainty. We are in line with the EU's precautionary principle and with relevant WTO requirements.
Trade and Sustainable Development
Concerns have also been expressed in relation to the effectiveness of CETA’s trade and sustainable development provisions. First, let me emphasise that CETA’s rules on environment and labour are solid and anchored in a vast network of underlying international treaties, including the Paris Agreement.
The EU and Canada have both pledged to reach carbon neutrality by 2050. Far from being an obstacle, CETA can facilitate transatlantic cooperation to reach this goal. A great example is Pi-Eco, a Dutch company providing solutions for plastic waste management, which is actively looking at how to use CETA opportunities to increase its sales in Canada in the context of our cooperation on climate change and a cleaner future.
On labour rights, both the EU and Canada have very advanced legal frameworks. As a result, we use CETA to focus efforts in implementing labour provisions in third countries with whom we have free trade agreements in place.
The EU and Canada are currently engaged in the early review of the implementation of the Trade and Sustainable Development provisions of CETA. While our initial assessment of this exercise has not revealed any issues regarding compliance, we will continue to monitor the effectiveness of implementation and, if needed, consider whether a change in our policy, with Canada and other countries, is warranted.
I can assure you that we will remain vigilant. In this context, I welcome the direction of the joint paper recently prepared by the Dutch and French governments on trade and sustainability; its contributions are appreciated and they will feed into our ongoing efforts to strengthen the enforcement of trade agreements. This document will be an important contribution to the review of EU Trade policy, which I have just commenced.
Implementation & CTEO
Robust implementation of EU trade agreements is an important priority of this Commission: the imminent appointment of an EU Chief Trade Enforcement Officer (CTEO) will help enormously in this regard.
The CTEO will ensure that any potential non-compliance with trade and sustainable development commitments, as well as barriers to market access, are identified early on and that action is taken to address shortcomings as a matter of priority. This will also include putting in place an effective process to receive complaints and to streamline the follow-up on all implementation and enforcement issues.
Furthermore, I am deeply committed to ensuring a balanced representation of business and non-business representatives in implementation of EU trade agreements though the EU’s Domestic Advisory Groups.
The Domestic Advisory Groups will also be able to issue own opinions on the implementation of trade and sustainability provisions. EU trade policy is most effective when it listens to the points of view of all our citizens.
Services and Investment Protection
I note that there is a perception that CETA’s clauses on services and investment protection could put at risk the key role of public authorities to regulate in the public interest. To be clear: CETA fully protects the right of state and local authorities to regulate, and this applies to all fields where public policy objectives are at stake. It is a matter for Dutch local and national authorities to generate and implement all aspects of public service delivery.
The Belgian Government expressed doubts about this aspect and asked the EU Court of Justice to look into the matter. The Court confirmed that there was no such risk in its Opinion on CETA delivered in April 2019. Dutch legislators can therefore have confidence that CETA does not impact on the ability to regulate in the public interest.
CETA does not require privatisation of water, public housing, healthcare or other public services. Nothing in it prevents governments from providing public services or bringing these services back to the public domain provided, in particular, that it is done in a non-discriminatory manner.
CETA’s investment chapter even clarifies that a measure which reduces investors’ profits does not in itself create a breach under CETA. As regards investment dispute resolution, it is important to underline that the Investment Court System established in CETA is a clear break from the ad hoc system of private arbitration of Investor to State Dispute Settlement (ISDS) which exists in many Bilateral Investment Treaties. The new system not only preserves the government’s right to regulate but also makes the procedures to resolve investment disputes fairer and more transparent.
Furthermore, CETA is an important stepping-stone to a Multilateral Investment Court which will potentially reform the 3000 existing bilateral investment treaties, including the 70+ Bilateral Investment Treaties of the Netherlands.
Honourable members, let me conclude by saying that CETA is not only a modern and forward-looking trade agreement. It is also the cornerstone of a strong bilateral relationship between two like-minded partners. Our businesses are already benefiting enormously, particularly our agri-food sector.
And I hope I have made it abundantly clear that CETA does not, and will not, lower any of our European standards. Canada is an indispensable partner for the EU to address global challenges such as WTO reform, investment governance, climate change, ocean governance and so on.
And perhaps even more importantly, as our European SMEs strive to recover after the COVID-19 crisis, CETA delivers growth and jobs in the EU. It will therefore be an important building block to reinvigorate our economies and to rebuild the world economy on fair and sustainable foundations.
Thank you for attention, honourable members, and I will be happy to answer any questions you may have.
12 May 2020