Thank you Madame Chair, Honourable Members, for inviting me to the ECON Committee to discuss EU-US relations.
This is pertinent because the complex geopolitical situation calls for strong EU-US relations across many policy areas.
To put our discussions into perspective, let me start with the current state of EU-US trade and investments.
When we look at transatlantic trade and investment flows, we see a very strong partnership. Businesses prioritise transatlantic supply chains, allowing transatlantic trade in goods to reach just over €1.3 trillion last year. Mutual investments increased to a record total of around €5 trillion.
This makes the EU and the US each other's biggest and most important trade and investment partners, supporting millions of well-paid jobs on both sides of the Atlantic. Our trade and investment partnership continues to be the central artery of the global economy.
We need to continue to nurture this relationship and avoid irritants.
On the Inflation Reduction Act, we welcome the US climate ambitions and the important contribution of the IRA to global efforts to mitigate climate change.
Our concerns mostly relate to the protectionism enshrined in the IRA.
Economically, the IRA as a whole is acting as a big stimulus to the US economy. Many EU companies can participate in this through intensive EU-US trade and investment ties. That is why many EU companies are actually positive about the IRA.
But it also has subsidies that contain some form of local production, local content or local employment requirements, which EU companies cannot meet unless they move their business to the US.
This may have a chilling effect on EU exports and some EU businesses will be impacted more than others.
The IRA subsidies are uncapped and paid out automatically. The more production, the more money. This means that companies will continue to be lured to the US.
Another concern is that US companies will try to export their products with unfair subsidies. This may create adverse effects in Europe and could lead to trade defence instruments being used to protect our internal market.
We need to avoid transatlantic zero-sum competition and mitigate negative effects of the IRA.
This is why we have been working hard to find pragmatic solutions to the IRA that reduce the damage to the EU-US relationship.
We started this work with a high-level Task Force last October, directly engaging with the White House. This achieved positive results, in that we agreed on a non-discriminatory application of electric vehicle leasing with EU companies competing on equal terms with US competitors.
Presidents von der Leyen and President Biden went one step further on 10 March. Both agreed to deepen cooperation by negotiating a Critical Raw Materials agreement and setting up the Clean Energy Incentives dialogue as part of the TTC.
As regards the Critical Raw Materials agreement, we are working on a targeted agreement focused on ensuring secure and resilient supply chains between the EU and US for minerals that are essential for the green transition. This will allow the US government to treat the EU as an FTA like partner for the purposes of the IRA.
A successful conclusion would allow our mining and chemical companies to offer their products to US battery manufacturers without them risking losing out on the IRA benefits.
The Commission asked the Council for a negotiation authorisation on 14 June. We hope that we will soon get this authorisation and we hope that we can then swiftly conclude discussions with the US.
Second: on the Clean Energy Incentives Dialogue. This is a more formalised continuation of the Task Force, placed within the TTC, and aims to increase the transparency and coordination between our respective support programmes.
It allows us to better understand what the other side is doing to prevent market-distorting subsidisation. But we also want to address the non-market incentives of others to put our work into the big picture.
On the Trade and Technology Council, the fourth TTC meeting took place in Luleå, in northern Sweden, on 30 and 31 May.
On the trade side I would like to highlight its main outcomes and work:
- The launch of a concrete work programme on the Transatlantic Initiative on Sustainable Trade;
- The work on trade facilitation; and
- The work on the "trade and security" cluster, notably on export controls and investment screening cooperation.
First, regarding the sustainable trade initiative: we want to make sure that trade policy contributes to the green transition. We agreed on a work programme, which we now want to put into practice.
Second, on facilitating trade between the EU and the US: the main areas of work are on conformity assessment and on digital initiatives that enhance trade. It is no secret that this has not been an easy area of cooperation. However, we were able to make some concrete progress at TTC4, for example in relation to the expansion of the Mutual Recognition Agreement on pharmaceuticals to veterinary medicines. We also agreed to continue work on machinery and green tech.
It is not a secret that China is advancing at a record pace in green technologies. The EU is still relatively well placed. If we create a transatlantic regulatory free trade area with the US, then we will have a significant counterweight in this strategically important sector.
So we have now a window of opportunity in the TTC.
Third, we continued to make significant progress on export controls and investment screening cooperation. As you know, the work on export controls has been essential in coordinating our response to Russia's aggression against Ukraine. We want to continue these efforts.
During the discussion on economic security in Luleå, our approach towards the challenges caused by China and the trade impacts caused by its state-led economy were also raised. It is important to note that the work we are doing here is paying off - with the US recognising the validity of the approach set out by President von der Leyen and the need for de-risking, rather than decoupling.
Lastly, the EU has also been taking action internally as a reaction to the IRA. We have proposed a Green Deal Industrial Plan where open trade for resilient supply chains is one of the four pillars. This must strengthen and promote the green tech production in Europe.
The Commission has also proposed the Net-Zero Industry Act to increase Europe's competitiveness in the transition to a net-zero economy.
We have chosen eight strategic technologies essential for the green transition, namely (i) solar photovoltaic and solar thermal technologies; (ii) onshore wind and offshore renewable energy; (iii) batteries and storage; (iv) heat pumps and geothermal energy; (v) electrolysers and fuel cells; (vi) biogas/biomethane; (vii) carbon capture and storage; and (viii) grid technologies.
The EU should have industrial capacity to serve at least 40% of its net-zero deployment needs by 2030, across the strategic technologies and at different value chain levels.
We want to make the EU more attractive for investment in these sectors. This is why the Commission has proposed ways to reduce the administrative burden for companies, set up "strategic" manufacturing projects to simplify permit-granting processes, and to set up "Net-Zero regulatory sandboxes".
We continue to rely on your contribution and political support for this policy and for the work we are doing with the US related to the IRA and in the TTC. The European Parliament and its committees are important players in the EU-US relationship.
Thank you again for this invitation and I look forward to hearing your comments and questions and to further exchanges.
