Written answers

Thursday, 11 July 2019

Department of Jobs, Enterprise and Innovation

European Council Meetings

Photo of Robert TroyRobert Troy (Longford-Westmeath, Fianna Fail)
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424. To ask the Minister for Jobs, Enterprise and Innovation the status of the recent items discussed at the informal EU Competitiveness Council meeting in Helsinki; if an overview of decisions regarding recent trade agreements agreed or being negotiated will be provided; and the status of discussions on trade with the United States of America and recent developments regarding proposed duties on EU imports. [31118/19]

Photo of Heather HumphreysHeather Humphreys (Cavan-Monaghan, Fine Gael)
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The discussions at the informal EU Competitiveness Council, which took place on 5th July, were on the theme of sustainable growth. Ministers focussed on integrating the single market, the digital economy and a modern industrial policy. In the afternoon, the Council discussed smart solutions for a competitive and climate neutral Europe. Trade matters are discussed by a different Council formation, whereas the Competitiveness Council - or COMPET - is generally composed of "industry" Ministers.

With regard to your request for an overview of EU Trade agreements and trade discussions, the EU’s suite of Free Trade Agreements (FTAs), go beyond the reduction or elimination of conventional tariff barriers to include:

- non-tariff and regulatory barriers, services,

- investment,

- recognition of professional qualifications,

- intellectual property rights,

- access to public procurement,

- regulatory cooperation,

- sustainable development,

- labour and environment.

They help to open new markets, break down barriers and provide new opportunities for Irish-based firms.

The latest up-to-date information on specific FTAs is as follows:

EU-Canada (CETA) - On 21st September 2017, CETA was "provisionally applied", under which EU/Irish companies gain access to the removal of customs duties and substantially improved access to the Canadian public procurement market. CETA also opened up new sectors of the Canadian services market, reduced regulatory barriers and provided more transparent rules for market access.

Ireland already has a strong trading relationship with Canada which is reflected in the €3.2 billion worth of annual trade between both countries. The value of Irish exports to Canada is worth €2.4 billion whilst the value of Irish imports from Canada is worth €780 million.

EU-Japan - The EU-Japan Economic Partnership (EPA) was signed in Tokyo on the 17th July 2018. The European Parliament and Japan's National Diet voted to ratify the EPA in December 2018 and the Agreement entered into force on 1st February 2019. Tariff reductions will be delivered on a phased basis over a period of up to 15 years. It is expected that the Agreement will open up new opportunities for Irish exporters and companies across a wide range of sectors, including the agri-food sector, which will see particular benefits with new access for dairy products and beef. It will also facilitate greater ease in doing business in the financial services, med-tech, and green energy sectors and across the full range of trade interests that Ireland and Japan share. The Agreement also creates opportunities for Irish-based manufacturers in our pharmaceutical sector through an expansion of existing Mutual Recognition Agreement (MRA) on Good Manufacturing Practice to cover new pharmaceutical products.

EU-Mexico - On 21 April 2018, the EU and Mexico announced that they had reached Political Agreement in their negotiations to modernise the existing EU-Mexico Global Agreement to broaden its scope to include regulatory cooperation, more trade in agriculture and food, common phytosanitary standards (food safety and animal and plant health), sustainable development, rules of origin, public procurement. The EU and Mexico hope to finalise the full legal text before the end of the year. The final text will be reviewed by lawyers from both parties, a process called “legal scrubbing”. After this, the agreement will be submitted for the approval of EU Member States and of the European Parliament before signature. The Agreement will provide a platform to increase Irish exports to Mexico, this will be significant for Ireland’s important Agri-food sector especially for dairy, pork and beef products. Ireland is a significant exporter to Mexico of powdered milk and milk derivatives. There are also many exciting opportunities in Mexico for Irish businesses including in the automotive, aeronautics, electronics, financial and telecommunications sector.

EU-Singapore - The EU-Singapore Free Trade Agreement (FTA) was signed by the EU and Singapore at the 12th Asia-Europe Meeting (ASEM) Summit on 19th October 2018. The FTA was ratified by the European Parliament on 12 February 2019. The aim is for the FTA to enter into force during 2019. The deal goes beyond many other free trade accords in committing to open up public procurement, an area where the EU has many leading suppliers, and agreeing on technical standards in areas such as motor vehicles, electronics and green technologies.

EU-Vietnam - A Free Trade Agreement (FTA) was successfully negotiated with Vietnam in 2015. The European Commission and Vietnam signed the FTA on 30 June 2019 in Hanoi. The hope is that it will be ratified by the European Parliament during 2019. The EU-Vietnam FTA will eliminate over 99% of tariffs and will unlock a market with huge potential for Irish exports. The FTA will also create opportunities by addressing other barriers to trade and will address trade-related areas such as public procurement, regulatory issues, competition, services, investment, intellectual property rights, and sustainable development. The Agreement creates opportunities for the Irish Agri-food sector, in particular. Ireland's food exports to Vietnam have grown considerably in recent years and the FTA will support further growth. There are opportunities for Ireland to grow exports in dairy products, pork, seafood, and alcoholic beverages by taking advantage of reduced tariffs under the FTA. Currently tariffs on EU exports of spirits to Vietnam are particularly high at 48% and will be eliminated under the FTA. The elimination of tariffs of 15% on frozen pork products is also significant for Irish producers.

EU-Mercosur - The EU has recently reached political agreement on FTA with the Mercosur region (Argentina, Brazil, Uruguay, and Paraguay). The EU-Mercosur Agreement is the EU’s largest trade deal to date. The Agreement covers a population of over 770 million with trade in goods and services valued at €122 billion. It aims to reduced and, in some areas, eliminate trade tariffs between the EU and the Mercosur region. In 2018, Ireland exported €0.5 billion worth of goods to the Mercosur region. In 2017 – the latest year for which data is available – services exports to Mercosur totalled almost €1.5 billion. Trade with this region has grown by 19% in the period 2010 to 2016. The EU-Mercosur Agreement will, we anticipate, allow Irish exporters to expand faster, and will open opportunities across a wide range of sectors – in business services, chemicals, machinery, medical devices and processed food and dairy. This Agreement will see a significant reduction or elimination of tariffs and barriers to trade that will allow a cross flow of trading and investment between Ireland and the rest of the EU, and the Mercosur region. The EU-Mercosur Free Trade Agreement will make exports from Ireland more attractive and potentially increase the demand for Irish products. The final text of the Agreement will be reviewed by lawyers from both parties, a process called “legal scrubbing” and translated into the various EU and Mercosur languages. After this, the agreement will be submitted for the approval of EU Member States and of the European Parliament before signature - a process we believe will take 2 years based on previous FTAs.

EU-Australia and New Zealand - Negotiations for separate FTAs with Australia and New Zealand commenced in July 2018. Three rounds of negotiations have been held with the most recent taking place from 25th-29th March 2019. The fourth round is expected to take place during July 2019. Good progress has been made in many areas to date, however more challenging discussions are also anticipated on sensitive issues such as recognition of the EU’s Geographic Indicators for food and beverages, and in finding agreement on the structure of tariff offers. To date there have been four rounds of negotiations for an EU-New Zealand Free Trade Agreement with the most recent taking place from 13th-17th May 2019 in Wellington. Overall, progress has been constructive with some chapters capable of being closed.

EU-Chile - The EU and Chile launched negotiations for a modernised Association Agreement in November 2017. There have been three rounds of discussions to date, the latest taking place in Brussels, 28 May-1st June 2018. Over the course of the round the negotiating teams discussed all the issues covered by the Agreement. While no date has been confirmed for the fourth round of negotiations, both sides agreed on work in relation to various areas, and contact will continue to this effect to continue advancing in all areas of preparation for the next round of negotiations.

Indonesia - Indonesia is a member of the ASEAN group. The first FTA negotiations with Indonesia took place in September 2016. The eighth round of negotiations took place in Jakarta from 17 - 21 June 2019. The potential for further progress before October is limited as Indonesia will not have a new government in place until then following elections in April. The negotiations are approximately at the half-way point. Good progress has been made in a number of areas, however more difficult discussions undoubtedly lie ahead.

EU-US trade discussions - On the 25th July 2018, European Commission President Juncker and President Trump met in Washington to launch a new phase in the close friendship and strong trade relations between the United States and the European Union. They agreed a Joint EU-US Statement to –

- work together toward zero tariffs, zero non-tariff barriers, and zero subsidies (on non-auto industrial goods) and to work to reduce barriers and increase trade in services, chemicals, pharmaceuticals, medical products, as well as soybeans,

- strengthen strategic energy cooperation to potentially increase US imports of (LNG) to diversify the EU’s energy supply,

- launch a close dialogue on standards to ease trade barriers, reduce bureaucratic obstacles, and slash costs, and

- work closely together with like-minded partners to reform the WTO and to address unfair trading practices, including intellectual property theft, forced technology transfer, industrial subsidies, distortions created by state owned enterprises, and overcapacity.

An EU-US Executive Working Group (EWG), was established on foot of the July joint statement, co-chaired by EU Trade Commissioner Cecelia Malmström and the U.S. Trade Representative Robert Lighthizer. The EWG is vehicle for carrying forward this joint agenda and is scheduled to meet again in early May 2019.

On 15 April 2019 theEU Council voted by qualified majority to approve the negotiating directives for the commencement of trade negotiations with the US in the sectors of conformity assessment (making it easier for companies to prove their products meet technical requirements on both sides of the Atlantic) and one on the elimination of tariffs for industrial goods (excluding agricultural products). The approval of the negotiating directives is a key step on the road to a possible future trade agreement between the EU and US. Furthermore, these mandates will enable the EU Commission, in consultation with Member States, to work towards removing tariff and non-tariff barriers to EU-US trade in industrial goods, key goals of the July 2018 Joint Statement of EU Commission President Juncker and US President Trump.

A recent economic analysis released by the EU Commission found that a targeted EU-US agreement eliminating tariffs on industrial goods would increase EU exports to the US by 8% and US exports to the EU by 9% by 2033. In this context where Ireland and the US have a bilateral trading relationship worth more than €100 billion per annum, the potential gains for Ireland, and resultant employment, from an EU-US trade agreement would be very positive.

It will be a matter for the EWG to determine the timing of future EU-US trade negotiations.

In relation to the Deputy’s reference to proposed duties on EU imports, I assume that this refers to two long-running disputes between the EU and US regarding alleged subsidies provided to their respective commercial aircraft manufacturers, Boeing (US) and Airbus (EU). In both cases the WTO has found that the EU in relation to Airbus, and Washington State in relation to Boeing, provided subsidies to support these airlines in contravention of WTO rules.

The US has requested the authority to impose countermeasures worth $11.2 billion, commensurate with their estimation as to the adverse effects caused by EU subsidies to Airbus. However, a WTO arbitrator is currently evaluating the claim and the report is due before the end of 2019 such that the amount has yet to be determined. However, in advance of the arbitrator’s decision, the US published in April 2019 a draft list of products that may attract increased tariffs. This US list is divided into two sections, the first included aircraft related products and is targeted at the four Member States (France, Germany, Spain and the UK) that provided support to Airbus the second section targets a wide range of products to be applied across all 28 EU Member States. Included in both sections are products that Ireland exports in significant volumes to the US, including aircraft and aircraft parts, butter, cheese and liqueurs.

On 1st July the Office of the US Trade Representative (USTR) published a supplementary list of product lines which may be subject to increased tariffs. The list includes agricultural products exported by the EU 28. Dairy spreads, Italian cheeses, olives, coffee and pasta are all included, as are Irish and Scotch whiskies, as well as pork products. This supplemental list adds 89 tariff subheadings with an approximate trade value of $4 billion to the initial list published in April. In line with its standard procedures, the USTR has invited written submissions on the supplemental list and will hold a public hearing on 5th August 2019.

It is important to note that the US lists (initial and supplemental) are only proposed lists and it will be for the WTO arbitrator in the case to determine the amount of possible damage. Only after the WTO Arbitration report is issued can the US choose products to impose tariffs on and only up to a value that matches the amount awarded.

The EU has stressed that the arbitrator in the Airbus case has yet to release its report which could permit the EU to impose tariffs on the US to the value of the arbitration findings,

Importantly, the EU remains open for discussions with the United States on both cases and believes the US estimate of $11billion worth of tariffs to be greatly exaggerated. Ireland continues to support the EU position of seeking a negotiated resolution to the Airbus/Boeing disputes that is to the benefit of both sides and has encouraged discussions to start as early as possible to this end.

Finally, at a national level, my Department continues to monitor the potential impacts of the trade measures being proposed by the US. Officials in my Department continue to engage with the European Commission on the matter as it is important that we maintain a common EU position, principally given that the EU Commission has competency on trade matters under the EU Treaties.

Photo of Robert TroyRobert Troy (Longford-Westmeath, Fianna Fail)
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425. To ask the Minister for Jobs, Enterprise and Innovation if changes to EU state aid rules as a policy lever to support exposed firms and exports from a no-deal Brexit were discussed at the informal EU Competitiveness Council meeting in Helsinki; and if not, the reason Ireland did not raise the issue. [31119/19]

Photo of Heather HumphreysHeather Humphreys (Cavan-Monaghan, Fine Gael)
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My colleague Minister Breen attended the informal EU Competitiveness Council meeting on 5 July to which the Deputy refers.  State Aid rules did not feature on the agenda of this meeting.  The Competitiveness Council is a consultative committee and is not a forum for direct representations from Member States.  Changes to State Aid rules is therefore not part of the remit of the Council.

However, my Department and its agencies are providing extensive supports, schemes and advice to ensure that businesses are prepared for Brexit.  My Department has been working closely with the EU Commission and DG Competition since November 2017 through the Irish/EU Technical Working Group on State Aid. The Group comprises senior representatives from DG Comp, my Department, the Department of Agriculture, Food and the Marine and Enterprise Ireland.  Its objective has been to scope and design schemes to support enterprises impacted by Brexit in line with State Aid rules.  

Through the mechanism of the Technical Working Group Ireland has fully utilised the provisions of the State aid framework to enable the investment by Enterprise Ireland of €74 million in Brexit impacted businesses in 2018.  Options available through the Agriculture Guidelines are also being developed to support large food companies.

Earlier this year I met with Commissioner Vestager.  The focus of the meeting centred around the severe challenges that Irish businesses will face when the UK leaves the EU and the need for appropriate and timely State supports.  It was agreed that Irish officials will continue to work closely with the Commissioner's team in addressing any State aid issues that may arise to ensure a rapid and appropriate response as the ultimate shape of Brexit and its firm-level implication become known.  The Commissioner emphasised that the Commission stands ready to act urgently in mitigation against the impacts of Brexit on Irish firms.

Should issues arise that require an approach that does not fit within the existing State aid rules, this will be raised as part of these Working Group discussions.

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