Keynote address by Commissioner Phil Hogan at the Centre for European Reform

Good evening ladies and gentlemen,

First of all let me thank CER for the invitation to speak here today, and let me commend you for the hugely important space you provide for reflection and debate.

We live in a time where balanced analysis has gone out of fashion in many constituencies. Polarised politics, misinformation, fake news, and online abuse are increasingly common within the European Union and beyond.

In this toxic environment, organisations that promote rational and informed public debate are more important than ever, and CER is certainly prominent among these.

CER has of course been a strong advocate for many years for a European Union that is more outward-looking; a European Union takes its global responsibilities seriously; a European Union that leads from the front.

On that basis you must have felt wholly vindicated when new Commission President Ursula von der Leyen pledged to lead a more geopolitical Commission aiming to be more assertive on the global stage.

Trade will feature prominently in this agenda.

Many aspects of our trade policy need to be updated to reflect the staggering pace of change in recent decades. Technology and digitalisation have changed human life in so many ways. The climate challenge has risen to the top of our agenda. And new geopolitical dynamic are at play in the world.

Policy is still catching up with the new reality.

So our great challenge, and at the same time our great opportunity, is to bridge this gap.

Thanks to our single market, the European Union has immense strength as a trading power, evidenced by the number of agreements we have signed in recent years.  But we are so much more. We represent what is possible when nations work together, across borders, through shared rules and values.

President von der Leyen wants to leverage this immense strength to promote our values and standards globally.

The Commission recently adopted our landmark policy agenda for the sustainable transformation of our economy, the Green Deal.

We will soon unveil a package of actions to implement our Digital Strategy. This twin ecological and digital transition will affect every European citizen.

These agendas are our mission statement to the world. They declare that Europe will lead on issues of global importance such as climate change and the digital transition, and not follow.

We need to get this right.

Our trade policy will both inform and promote these flagship policies. But of course, our ability to do so is reliant on preserving a free, fair and rules-based global order.

Our long-term vision is for a stable multilateral system reflecting today’s global economy: we urgently need to achieve consensus around technology and the digital space, the climate crisis, security & migration.

Our short-term priority is to build coalitions to spearhead WTO reform. That is the key to unlocking the current impasse at global level.

The current rulebook is out of date, and the rules-based multilateral system has drifted away from economic and business realities. The WTO needs a profound overhaul, not just tweaking at the margins.

Rulemaking is paralyzed. Transparency is underused. The current rulebook does not adequately address some of the most trade distorting measures, such as industrial subsidies.

Three weeks ago I was in Washington DC to assess the prospects for transatlantic cooperation on these issues.

One very positive development was the trilateral agreement between the EU, US and Japan to find new ways to strengthen global rules on industrial subsidies.

This is a very important step towards tackling issues distorting global trade, and shows what can be achieved when global partners work together.

The recent mini-Ministerial in Davos also represented a good outcome. We will keep talking and we will keep pushing. Because without global rules based on a strong global rulebook, how can we hope to tackle global challenges?

Take the climate agenda, for instance. Europe is already a global leader in relation to implementing the COP21 targets, but our ambition has been turbo-charged by President von der Leyen’s flagship initiative, the European Green Deal.

Our recent trade agreements have included a Trade and Sustainable Development chapter, including  legally binding commitments to effectively implement the Paris Agreement.

This was a step in the right direction. But for our future trade agreements, we will go further, tying in the Paris Climate Agreement as an essential element.

The Green Deal also introduces a Carbon Border Adjustment Mechanism to prevent carbon leakage. This is a necessary measure because climate change does not respect national borders. Of course our proposal will be WTO compatible.

How to leverage our trade agenda to boost climate action goals is a complex question. [I welcome the contribution of experts like Pascal Lamy who are providing valuable input in this regard. NB he is attending today’s CER conference]

We are determined to make our headline policies work in synergy. This is what a geopolitical Commission must do to succeed.

But I want to be clear on one thng: a more assertive approach does not mean protectionism. A Europe that protects is not a protectionist Europe.

The EU’s economic success is built on openness, which we have a strong interest to maintain. However, any sign that our openness is being exploited will be dealt with swiftly. 

We will have tools at our disposal to defend other vital interests. We will stand up against protectionism where it occurs. We will strive to promote reciprocal trading conditions and fair competition by levelling the playing field both internally and externally.

For example, instruments such as the International Procurement Initiative aim to create reciprocity, enabling EU businesses to succeed in government procurement markets abroad.

We must also tackle unfair competition, for instance by standing up against foreign subsidies affecting EU companies in third markets and on the single market. We will make full use of our trade defence instruments.

This will mean strengthening our own toolbox, including stronger rules that allow us to react to illegal discriminatory trade measures by third countries.

We made a solid start on this before Christmas with our proposal to strengthen the Enforcement Regulation.

Our global leadership is also defined by how we relate to other global leaders.

Let me start by looking at the transatlantic agenda. During my recent week-long mission to Washington, our main message to our American friends was this: let’s focus on what we can do together rather than drifting further apart.

We are now faced with profound challenges, many of which are totally new.  It is crucial that leaders on both sides of the Atlantic make the right choices, and the choice above all, is this: either we cooperate and shape the response to these challenges together, or these challenges shape, divide and diminish us.

The foundation remains solid: Transatlantic trade in goods and services is worth over 3 billion dollars per day.

US companies invest more in the EU than in all other markets combined.

Transatlantic supply chains allow companies in the EU and US to operate more efficiently, and secure millions of jobs on both sides of the Atlantic: 16 million at last count.

The EU is absolutely committed to a strong and positive bilateral agenda.

We are keen to intensify our cooperation on technology. This cooperation will be massively important for our economies and our security.

However, imposing tariffs on each other serves nobody's long-term interest. Tariffs are in reality just another form of taxation on businesses and consumers.

I will work closely with President von der Leyen to build on the positive engagement that we recently developed with the US.

The transatlantic alliance remains the best hope for tackling all te challenges I have listed.

There are few challenges more complex than China.

China’s growth, geopolitical ambition and distinct state capitalism model have generated an ongoing debate here in the European Union. How can we best balance the challenges and opportunities that China presents?

As identified in the Joint Communication of March 2019, China is a strategic partner to us in many areas, but also a competitor and a systemic rival. In particular, the lack of a level playing field is too often handicapping our economic operators from competing with China on an equal footing.

Our businesses are missing out on opportunities in our respective markets as well as in third countries. This is a serious challenge that requires a serious response.

The need for a robust approach is very well elaborated in the Joint China Communication of March 2019.

It calls on the EU to upgrade our internal toolbox and maintain engagement with China.

A recent paper by Business Europe raises similar issues: the need for a level playing field, mitigating the impact of China’s market distortions, the need to reinforce our own competitiveness and the need to ensure that competition is also fair in third markets and in the single market.

We want to see China making concrete progress in relation to opening up its markets. This was one of the key commitments made during last year’s EU-China Summit.  The negotiations for a Comprehensive Agreement on Investment are important in this respect: we committed to concluding the negotiations before the end of 2020.

We will also of course maintain our bilateral agenda. We have concluded many FTAs in recent years, including ambitious agreements with Japan, Canada, and Mexico. Negotiations are continuing with partners like Australia and New Zealand.

Early analysis of the CETA and Japan deals shows very promising developments in relation to exports.

These deals provide win-win economic outcomes for both parties, but they also give us a chance to match our ambitions with actions. Europe is already a global standard setter across a range of areas, notably climate action, anti-corruption, workers’ rights, gender equality and data protection. When we sign deals with our global partners, we expect them to meet our standards.

In this mandate, our strategic focus will be on achieving maximum value from existing agreements as well as pursuing new ones.

For example, a particular priority will be to make sure that our small and medium sized business reap more of the benefits of our trade agreements.

Over 80 per cent of EU businesses involved in international trade are SMEs, and trade and investment barriers present particular challenges for them.

In this respect, the appointment of a Chief Trade Enforcement Officer to monitor and improve the compliance of our trade agreements is a very welcome development. It shows that we are backing up our principles with action. 

This office will help EU companies to do more business with our FTA partners and also monitor the implementation of all trade chapters. 

Finally, dear friends, let me say a few words about Brexit.

Last Friday, the United Kingdom left the European Union and became a third country. While it was a day we hoped would never happen, it has happened and we sorely lament this fact.

The Brexit debate has been a tyranny over British public life for the last 3 and a half years.

The British public was understandably fed up with the paralysis in Westminster, and as a result, the election was won on a platform of “Get Brexit Done”.

With this slogan, Boris Johnson seemed to offer an escape from talking about Brexit, and I think we can all understand why that appealed to people.

But the reality of course is that Brexit is far from complete. The crucial phase is only beginning now and while I acknowledge the very real sense of Brexit fatigue, the next phase cannot be ignored. A  full national conversation needs to take place.

The only date that really counts is December 31st December, not January 31st. There is an urgent need for British business and civil society to re-engage.

Yes, Brexit Phase One is done. But what exactly are you Brexiting from, and where are you Brexiting to?

President von der Leyen and Michel Barnier have made it clear in the past week that the truly difficult choices still lie ahead, and the further the UK chooses to diverge from EU standards and regulations, the less it can benefit from the protections and economic strength of the EU single market.

I urge the CER and all influential stakeholders to hold the British government to account and insist that a clear picture is provided of the economic costs of every choice from this point on, including the Canada or Australia-type agreements.

The European Commission is already looking forward. Yesterday, the European Commission issued a recommendation to the Council to open negotiations on a new partnership with the UK.

It includes a comprehensive proposal for negotiating directives, covering all areas of interest for the negotiations, including trade and economic cooperation, law enforcement and judicial cooperation in criminal matters, foreign policy, security and defence, participation in EU programmes and other thematic areas of cooperation.

The EU wants a close relationship, as outlined in the European Council guidelines of 23 March 2018.

According to those guidelines, our future partnership should cover trade and economic cooperation as well as other areas, in particular the fight against terrorism and international crime, as well as security, defence and foreign policy.

However, as close as our relationship may be, it cannot be as close as we enjoyed when the UK was a full member of the EU. The UK has chosen to leave and that choice has consequences for our relationship.

Notwithstanding the relatively short time available to us, assuming that there will not be an extension to the transition period, we are prepared to negotiate in good faith, in the framework of the Political Declaration, with the objective to achieve the best possible outcome.

As President von der Leyen, said: “It's now time to get down to work. Time is short. We will negotiate in a fair and transparent manner, but we will defend EU interests, and the interests of our citizens, right until the end.”

As Commissioner for Trade, I will continue to work very closely with Michel Barnier.

Just last week, we had another of our regular meetings in which we reiterated our commitment to work closely together over the coming months, in what will be a very intensive period.

Dear friends, the international environment in which EU trade policy operates has been the object of dramatic changes in recent years.

The question we have to ask ourselves today is: what do we want trade to do in the 2020s? I hope I have given you some idea of our direction of travel, and I hope I have given you a clear indication that this European Commission is very serious about its global responsibilities.

The CER analysis from last September forecast that we could expect “choppy waters ahead for EU trade policy”.

Well, I am not a weather forecaster, but I can assure you that however choppy the waters may get, we have plenty of experienced sailors on our boat. Thank you.