EU - South Korea free trade agreement (debate) 
President
The next item is the debate on the oral question to the Commission by Daniel Caspary, Peter Šťastný, Paweł Zalewski, David Martin, Gianluca Susta, Kader Arif, Michael Theurer, Niccolò Rinaldi, Metin Kazak, Marielle De Sarnez and Jan Zahradil, on behalf of the Group of the European People's Party (Christian Democrats), the Group of the Progressive Alliance of Socialists and Democrats in the European Parliament, the Group of the Alliance of Liberals and Democrats for Europe and the European Conservatives and Reformists, on the free trade agreement between the EU and South Korea - B7-0001/2010).
Daniel Caspary
Madam President, Commissioner, the negotiations on the agreement with South Korea have been completed and the documents have been initialled. That is a very good thing. However, if we look at the details of the agreement, it seems as if speed took precedence over thoroughness. I have the impression that your predecessor wanted the agreement to be signed and sealed at any price, so that she had at least one success during her period of office.
We are familiar with the many expert reports which were drawn up before the start of negotiations and which clearly indicated the many possible benefits for European industry and the European economy. There is likely to be a positive impact on the mechanical engineering, chemical, pharmaceutical, food and service industries. All of these sectors and many others hope to gain major benefits from the agreement. However, the main protests are coming from the car industry. There are difficulties with the duty drawback system, with the question of the amount of parts from foreign suppliers that can be used in cars from South Korea and with the issue of environmental standards which remain unresolved.
I would like to see us not only addressing but resolving many of these criticisms over the next few months using the safeguard mechanisms and the safeguard regulation. The Members of this House can only vote in favour of this free trade agreement if we have dealt with the justified concerns of the car industry and can also incorporate genuinely effective solutions into these safeguard mechanisms.
The text of the safeguard mechanisms was published on the Internet today, but unfortunately, I have not yet had a chance to read it. I would like to offer you the opportunity on behalf of my group to work with us in partnership to develop a suitable regulation at a European level, in order to ensure that the interests of the car industry are addressed in this free trade agreement.
Gianluca Susta
author. - (IT) Madam President, Commissioner, ladies and gentlemen, new players have emerged out of the wings onto the world stage, some of which were actually considered developing countries not long ago.
This must change our approach, cultural and otherwise, towards free trade and the tangible manifestations of the relationship between the European Union and its major competitors. This relationship is currently mediated by certain magic terms that have not yet entered into the vocabulary of the European Commission. These terms are reciprocity, European interest, the fight against dumping and the fight against tariff barriers.
This is the background to the free trade agreement with Korea, which incidentally confused two Commissioners - the Commissioner for Internal Market and Services and the Commissioner for Employment - and some governments.
What are the real advantages of this bilateral agreement, when 50% of the trade between the European Union and Korea concerns the automotive sector, when the disparity between the 700 000 Korean cars exported to us as opposed to the 27 000 European cars imported by Korea is glaringly evident? What is the sense in providing indirect aid of approximately EUR 1 600 for each Korean car sold in Europe when some European governments find it difficult to provide incentives for buying and selling cars to stimulate consumption? How can we also fail to take into account the serious doubts over the textile and electronics industries?
We will not settle with hearing for the umpteenth time, Commissioner, as Mrs Ashton said before you, that there are advantages for our chemical, pharmaceutical or agrifood industries because these pale scandalously into insignificance compared to the consequences for textiles, electronics and, above all, for cars, or financial services. Could it be that Europe, even with the crisis we are in today, is yet again choosing the financial option for its development?
We all welcomed the birth of the new Europe in Lisbon with hope. Europe cannot however, fail to take responsibility for European interests in the world, particularly today. The United States is jumping through hoops to defend Boeing against Airbus and the Argentinean Government is threatening to expropriate Telecom.
The agreement with Korea actually legitimises pass-through financing with China which, until now, was illegal. This is the scenario in which our major businesses are forced to operate. Behind them are hundreds of thousands of workers, of families who can see their future going up in smoke, not because they are producing poor quality services or goods but because poorly defined interests are allowed to prevail over more evident and objective interests.
We trust in your sensitivity, Commissioner, in the hope that you will avoid over-hasty ratifications, which could go hand in hand with unacceptable decisions over the provisional application of the commercial side of the agreement pending ratification, or at least decisions that will be unacceptable until the regulation on the bilateral safeguard clause has been clearly defined. The adoption of this clause is subject to the ordinary legislative procedure that should be considered a first step to any appraisal of the advisability ...
(The President cut off the speaker)
Michael Theurer
author. - (DE) Madam President, Commissioner, ladies and gentlemen, the Treaty of Lisbon is opening a new chapter in the cooperation between the Commission, the Council and Parliament. The right of codecision of the European Parliament that has been directly elected by the citizens of Europe gives us the opportunity to bring democracy back into decisions on trade policy. This is the right thing to do, because it will have consequences for employees and consumers in the Member States.
Free and fair trade forms the basis for Europe's prosperity. We must therefore firmly oppose any protectionist tendencies. Free trade agreements like this one with South Korea can make an important contribution to stimulating world trade, growth and employment. However, it is in the nature of agreements of this kind, that, depending on their specific structure, they bring more benefits for some sectors of industry than for others. It is our job in Parliament to weigh up carefully the impact on different industries and sectors within the EU. In order to do this, we need the relevant data and impact assessments and it is the Commission's task to provide them. However, despite many requests from the committee and in the plenary session, we have not yet received data which we believe to be satisfactory. This is the reason why the Group of the Alliance of Liberals and Democrats for Europe has joined with other groups to ask this question.
According to the information that we have received so far, the agreement offers opportunities for the service, mechanical engineering and plant construction, chemical and agricultural industries in the European economy. However, the concern is that the agreement will have a negative impact on the car industry and the textile and electronics sectors.
The free trade agreement with South Korea is the only agreement with a developed country which does not include a ban on duty drawbacks. This may lead to one-sided cost benefits for South Korean industry. As the Commission has assured us on several occasions, the provisions on the duty drawback include a safeguard clause, which allows for a waiver on the basis of certain criteria. However, we urgently need to clarify this in the interests of the companies involved. The system must be applicable in practice. It must not be the case that the safeguard clauses are worthless because the companies cannot provide the necessary proof. As the agreement seems to contain one-sided regulations and as it sets a precedent for future agreements, for example, with India or with the Association of Southeast Asian Nations, we feel that the specific wording of the safeguard clauses, the procedure for settling disputes and the other regulations relating to the application of the agreement are of central importance.
We are therefore calling on the Commission to submit the free trade agreement together with the provisions on its application to Parliament for approval. We want a decision quickly. For this reason, a provisional version of the agreement must not be allowed to come into force. I know from discussions with companies what an important impact the implementation has. Therefore, my question to the Commission is as follows: Will the development of the European External Action Service lead to it playing a stronger role in trade policy? In our opinion, at least, this should be included.
Robert Sturdy
author. - Madam President, during times of economic downturn, it is only through the opening-up of markets and the removal of barriers that we can rebuild our industry, create jobs and boost development. Thank you, Commissioner, for your points of view on the previous debate.
EU exporters of consumer goods, electronics, pharmaceuticals, chemicals and medical devices are just some of the sectors which will benefit immensely from the removal of non-tariff barriers. Simplification of certification procedures, transparency and price predictability are all things that will benefit the consumer. The Korean consumer market, in turn, wants access to speciality European agricultural products, such as wines, spirits, meats, cheeses, all protected by geographical indicators.
However, it would be wrong to accept this free trade agreement - and we have heard many people speak on it - at face value, and there are areas which need further clarification by the Commission. The inclusion of duty drawback clauses has been a concern for many of us, as I mentioned.
Any free trade agreement must be based on the principle of reciprocity or mutual benefit, but the potential burden on European car manufacturers remains unclear and of great concern to us. The Commission has assured us that Korea is actively liberalising its import regime. The level of duties that Korea can refund under the duty drawback are gradually being reduced. The negotiators are convinced that the economic relevance of the duty drawback will therefore diminish over time. What evidence does the Commission have to support this argument? If the Commission finds itself resorting to repeated or continued use of this safeguard mechanism, will it consider reviewing negotiations to extend the transfer period?
Commissioner, I look forward to working closely with you in the new agreement that is coming up.
Karel De Gucht
Member of the Commission. - Madam President, I would like to thank the honourable Members for their oral question, which confirms the interest of the European Parliament in the EU-South Korea free trade agreement.
As this will be the first major trade agreement to which the European Parliament will be asked to give its formal consent under the Lisbon Treaty, I very much welcome this opportunity to reply to the many aspects of the free trade agreement raised in the oral question. I might not be able to give detailed replies to all aspects of the question, but I am happy to address them in a possible follow-up question.
The EU-South Korea agreement is not only the first FTA negotiated by the EU with a country in Asia; it is also the most ambitious and comprehensive free trade agreement ever negotiated by the European Union. After more than two years of negotiations, the free trade agreement was initialled on 15 October last year.
Throughout the negotiating process, the Commission remained in close contact with Parliament. In this respect, the Commission welcomes the resolution on Korea voted by Parliament in December 2007. Many of the issues raised in this resolution have been addressed in the free trade agreement.
The whole process was also accompanied by a constant dialogue with civil society and a comprehensive trade sustainable impact assessment. The FTA is currently being translated. By the end of March, the Commission envisages presenting to the Council the decisions to authorise the signature of the FTA as well as to conclude the FTA. The objective is to sign the agreement in April.
The Commission is currently completing its analysis as to whether the agreement also falls within the competence of Member States. In this case, the FTA would require the ratification of all Member States before formally entering into force. As this process may take some time, it may be necessary for the Commission to propose that the agreement be provisionally applied pending its entry into force. The provisional application is decided by the Council on a proposal by the Commission.
The Commission is sensitive to the desire of Parliament to be able to give its views on the FTA before it is provisionally applied. The Commission will continue to seek out the best means, together with the Council and Parliament, to ensure that this takes place in a manner that does not cause unnecessary delays. It is of great importance that we apply the agreement as soon as is feasible.
As regards the regulation on safeguards, the Commission intends to present its proposal for such a regulation to the Council and the European Parliament in the coming weeks, and hopes that it will be possible to adopt this legislation rapidly so as to ensure that its application takes place as close as possible to the application of the FTA.
The economic benefits of the FTA are mostly in the EU's favour. It will relieve EU exporters of industrial and agricultural goods from Korean tariffs, saving them EUR 1.6 billion in duties annually, half of these directly from the day of the entry into force of the agreement. Obviously, potential gains from these duty savings will be even higher, as trade between the EU and Korea is expected to expand over time.
According to one study, the FTA will create substantial new trade in goods and services of 19.1 billion for the EU compared to 12.8 billion for Korea. Existing studies have not identified any sectors that would be negatively affected by the FTA, but in case of serious injury or threat thereof, the Commission would not hesitate to activate the safeguard procedures built into the agreement. Let me also remind you that, in the event of such a necessity, we have the possibility of employing the support measures under the European Globalisation Adjustment Fund.
With regard to intellectual property rights, the FTA contains ambitious commitments going beyond WTO rules. Besides, the Commission has been careful to ensure that no element in the FTA contradicts the EU acquis communautaire.
On the implications of the protocol on cultural cooperation, the FTA would set a framework for engaging in policy dialogue on cooperating and facilitating exchanges regarding cultural activities. It is, above all, a demonstration of the EU's commitment to actively promoting the 2005 UNESCO Convention on the Protection and Promotion of the Diversity of Cultural Expression.
On rules of origin, the negotiations with South Korea resulted in a number of changes which are consistent with the ongoing process of reform of such rules. These changes go in the direction of simplification, thus implementing a specific request by the European Parliament. At the same time, strict rules have been maintained for all sensitive sectors.
The Commission has paid particular attention to creating a new market-access opportunity in Korea for European fruit and vegetables. In order to encourage Korea to open up its market, European Union entry prices have been eliminated except in the case of the three most sensitive products: tomatoes, oranges and Korean citrus.
Obviously, the FTA also opens the EU market to Korean products. To protect our industry against import increases causing or threatening injury, the FTA contains an effective safeguard mechanism.
This safeguard clause can be invoked from the entry into force of the FTA. The Commission will monitor the EU market and Korean imports to assess the need to invoke the safeguard clause, and remains committed to making use of it if conditions are met.
The same applies to the special clause on duty drawback, which can be invoked based on publicly available trade statistics on imports into and exports from Korea.
I am aware of certain concerns expressed, notably by the EU car industry, about the duty drawback provisions in the FTA, but I have to emphasise that duty drawback is currently allowed and used by Koreans as well as by EU exporters. Thus, maintaining it in the FTA does not accrue any new benefit. The current economic impact of duty drawback is very small, about one eighth of the value of the Korean duty concessions.
In the case of cars, available studies show that, on average, the foreign content of Korean cars is between 10% and 15%. If foreign sourcing were to increase significantly, the special clause on duty drawback would provide for an effective remedy.
It cannot be ruled out that implementation of the FTA may give rise to different views and interpretation between the parties. To address such situations, the FTA contains an efficient and rapid dispute settlement mechanism. The Commission will monitor closely the implementation of commitments by Korea and will not hesitate to invoke dispute settlement procedures if warranted.
The FTA would also break new ground in promoting the protection of the environment and respect for labour rights, containing comprehensive commitments on a range of social and environmental standards. The scope of these commitments is broader than that of any comparable agreement. To ensure that these commitments are respected, the FTA establishes a strong framework for monitoring their implementation, involving civil society, business, trade unions and NGOs.
Finally, I would like to inform you that Korea and the EU have been discussing possible adjustments to the tariff dismantlement schedule. These adjustments would imply, inter alia, that products classified under three years and five years would be subject to four- and six-year tariff cuts respectively, so that duties would be eliminated one year later than originally scheduled.
While this implies a modest sacrifice in terms of our offensive interests, we thought that such an adjustment would be appropriate, taking into account the sensitivities of certain sectors. Korea has indicated its readiness to agree to those changes on the basis that the sensitivities of both sides are equally respected.
Ivo Belet
Commissioner, first of, I would like to wish you the best of luck in your new role. We find ourselves in economically tricky times, but we know that you are not afraid of them.
In relation to this free trade agreement with South Korea, as you say, there are undoubtedly many positives for Europe in this agreement, but for our car-making industry, it is, and remains, a disastrous agreement. Mr Caspary also made this point. Just take a look at the figures, Commissioner. For every car that we export to South Korea from Europe, 15 come the other way. We currently have a ratio of 15:1, and that is primarily the result of non-tariff barriers to trade in South Korea.
It is also no coincidence that a manufacturer such as General Motors should reverse its decision to build the new, small SUV in Europe, specifically in its Antwerp factory, and instead move the entire project to South Korea. This forthcoming free trade agreement with South Korea is the direct cause of this decision. I do not think, Commissioner, that we can accept that, and just sweep it under the carpet by arguing that many other sectors in Europe will benefit.
I believe that we still have plenty of time to adapt this situation for our automotive sector, and you were quite right to refer to the safeguard clause. I accept that such safeguarding measures exist, but we are asking, first and foremost, for there to be a fundamental review of the impact of this agreement on the automotive sector. The numbers and the trends are much too alarming. The reality, in any case - and you know this better than I do - is that the US Government is currently negotiating with the South Koreans about making adaptations to a similar agreement that they have.
Do not forget, Mr De Gucht, that the car industry is still Europe's most important industrial sector. We are talking about an awful lot of jobs, here, that are under severe pressure at the moment. In my opinion, we must not allow more jobs to be put on the line and we therefore urgently ask you to build additional guarantees into this agreement.
David Martin
on behalf of the S&D Group. - Mr President, I believe that this Korean free trade agreement is important for three reasons. Firstly, as you have indicated, it is a win-win deal for Korea and for the European Union economies. It is good for consumers, it is good for jobs and, as you rightly say, it has a potential to add 19 billion to our trade flows with Korea.
Secondly though, given the debate we have just had, in the context of the current global financial crisis, it sets a very positive example. If two large economies like the European Union and Korea can agree a free trade agreement, it sets an impetus for other partners. Japan, for example, is showing much more interest in economic relations with the European Union than it was just a few years ago and partly that is due to the Korean deal.
Suddenly, on the other side, the Koreans are finding the US is now coming back, knocking on their door, wanting to get the KORUS agreement moving again.
The third reason - more parochially, but I hope colleagues in the House will bear this in mind - is that it is important for Parliament because many of the demands we made in my report have been met by the Commission, and time does not permit me to go through them all but I want to just give you three or four examples.
Firstly, we said in my report that we needed much better access to the Korean agricultural market. Well, Korean agricultural tariffs are going to come down by 75% over the first seven years of this agreement; we wanted our geographical indicators protected, our Whisky, our Champagnes, our wines, our hams and so on are going to be protected in Korea as a result of this agreement. And they are not, as one of my colleagues indicated, insignificant. Scottish whisky sells GBP 137 million worth a year into the Korean market already so with this deal, we could see a significant increase.
We called for non-tariff barriers to be tackled and this will be of particular benefit to the automobile industry. We wanted improved trade in environmental goods. Well, under this deal, environmental trade in goods and services will, after three years, have virtually duty-free access to the Korean market and their environmental goods and services duty-free access to our market.
We asked as a Parliament for improved social and environmental standards. Well, Korea, since the negotiations have been initialled, has signed four ILO Conventions and their trade and sustainable development forum is going to be established as a result of this agreement allowing the civil partners in Korea to ensure that greater market opening is accompanied by labour and environmental standards improvements.
All of these things, Parliament asked for. It would be ludicrous and perverse for us to turn our back on them, having achieved them.
Is this a perfect deal? Well, of course it is not. Are there things in it that I would not want in it, of course there are, but negotiations mean that you have to come and go, but on balance, is it a good deal for Europe? Yes. Is it a good deal for Korea? Yes. Is it a good deal, potentially, for the world economy? Yes. So we should not shilly-shally on this: we should get on and sign it.
Niccolò Rinaldi
Mr President, Commissioner, ladies and gentlemen, this is a classic subject on which European institutions are staking their reputation with industrialists, with workers and with European consumers.
A free trade agreement is always good news, a cornerstone for stability and a cornerstone for the prosperity of the planet, all the more so when it represents the first successful bilateral trade policy for the European Union after years of disappointments. Perhaps, however, for this very reason, there has been a certain amount of haste in sealing the agreement. It is almost as though the Commission were tempted to close the deal at any cost.
For us in the Alliance of Liberals and Democrats for Europe, although the duty drawback is acceptable for the WTO, even though it is already practised, it is effectively an export subsidy and a slackening of the rule of origin is a step backwards as far as transparency is concerned. These two principles will soon constitute a precedent for our other trade partners. We know that the Commission has driven a hard bargain, but, in the words of the Korean proverb, 'even the best make mistakes'.
We have often heard that the Commission is losing its ability to safeguard the legitimate interests of producers, workers and consumers and something certainly went wrong in its communication with both sides of industry in a negotiation that was sometimes criticised for its lack of transparency.
Every European citizen expects all of us, Commission and Parliament, to demonstrate political sensitivity. European industry is not doing well and it is pointless for some Member States to grant the automotive sector subsidies, which I am incidentally totally opposed to. On the other hand, with this agreement, we risk introducing subsidies for Korean exports.
We all know that these agreements are complicated and that there are also many benefits to be welcomed: the end of Korean customs duties, the recognition of European certifications, new possibilities for European services, the protection of geographical indications. Partly for this reason, I have no wish to go down the same road as in the United States, where an agreement with Korea has been awaiting ratification for years and where some even want to re-open the automotive chapter.
This is the Commission's demand: the text of the agreement must form part of an overall package made up of three documents, in other words, the free trade agreement to be submitted for ratification, the implementing measures, particularly with regard to duty drawback, and the regulation on the safeguard clause. If possible, I would also add the option of access to the global adjustment fund for areas that may be affected by this agreement.
Commissioner, we wish to see all the documents together and we consider, above all, under the ordinary legislative procedure established by the Lisbon Treaty, that we should rule out any kind of interim agreement, which we would oppose because we want to work together.
Yannick Jadot
Mr President, as you said, this agreement breaks new ground. It breaks new ground, but not necessarily in the way in which we talk about it. Perhaps for the first time, in fact, we see in the outcome of the negotiations that there are losers, which one accepts, but within the context of trade negotiations with third parties. It is not within the context of the Lisbon Strategy, it is not within the context of an industrial policy that it was decided who, in Europe, would lose out in an open trade relationship.
Secondly, this agreement also breaks new ground because, in trade negotiations, it is usually the farming sectors that resist and the industrial sectors that are satisfied. In this case, we see that the opposite is true. For the first time, it is literally major industrial sectors that are complaining about the decisions made by Europe.
Thirdly, this agreement also breaks new ground because you refer to a EUR 1.6 billion reduction in customs duties from which we will benefit on the Korean market. Just what do these figures mean, however? I am an elected representative for the west of France region, and more specifically for Brittany. If you have visited Brittany, Mr De Gucht, you will know that, these days, green algae and ground water pollution associated with the intensification of pig farming are a huge problem.
Now, we are told that we shall earn a small amount of money from pigs by trading with South Korea. The reality, in the region I represent, is that this intensification of pig farming leads to a loss of jobs, a loss of added value, a loss of tourism and, consequently, in my region, we are the losers in this agreement. Perhaps in your overall calculation, people gain from it, but in a region like mine, people lose.
Lastly, this agreement again breaks new ground because, for the first time, an environmental derogation will be called for. We are continually told that Europe is the indisputable and undisputed leader in the fight against global climate change. The reality is that we are reduced to negotiating derogations with South Korea on CO2 emissions from cars because the automobile lobby has been very powerful in Europe when it comes to pushing back the deadlines for the introduction of restrictions on CO2 emissions and because now, it is obliged to obtain derogations abroad.
We therefore clearly see once again that, when it comes to an industrial strategy, a strategy for our businesses and the choice of economy, it will be more the case that Europe suffers this agreement than that it shapes it. You have talked about the Lisbon Strategy, the green economy and innovation. I do not see in this agreement how this will be encouraged.
Finally, your approach to discussing issues is often very balanced, but as soon as people start talking about taxes, all of a sudden ... On the carbon border tax mentioned during your hearing and now on the Tobin tax, I bet you, Mr De Gucht, that before the end of your mandate, the Commission will have to speak out strongly on the Tobin tax because it is now an essential tool for regulating the financial markets.
James Nicholson
on behalf of the ECR Group. - Mr President, first of all, can I take the opportunity of welcoming you, Commissioner, to your new post, and may you have a very successful term. Can I take the opportunity to say that it is good that we are having this debate here tonight and getting some things out in the open.
The truth is that the negotiations have been long and protracted, and I certainly welcome the Commissioner's statement that he is hoping to bring this very shortly to an end.
There will be enormous benefit to both Europe and Korea on the signing of this deal. I know there are concerns and I have listened to those concerns. We have heard them here tonight about the car industry. But, you know, I think if we are going to depend on the car industry - and we are going to totally defend it - then I think we are picking the wrong particular area in which to do this, and certainly General Motors would not be the most important in my area, as far as I would be concerned.
I share these concerns and I share some of the real concerns held by many people, and I understand them. But I believe the opportunity outweighs that concern, and I think that, if we are always to be reticent, then I do not believe we will achieve anything.
So we must look to the opportunities and take them, and not the negatives. We cannot forget that this deal also has a political content, because to the north of South Korea there is a very aggressive enemy, and I think we send out a message as well as to whom we support.
So we must do all we can to break down the barriers that are in that particular region. The agreement will show our support for progress.
I have had the opportunity to go there and I know the people in that area are very much inclined to go forward and to be progressive. There is clear and visible support for each other between the north and the south when you visit an area like Kaesong This, I believe, is a tremendous opportunity for us to move forward.
Can I just simply ask the Commission: firstly, how would it comment on the provision of the dispute settlement mechanism and how will this operate in practice? Specifically, how quickly will we be able to utilise this mechanism in the case of serious market disruption?
João Ferreira
on behalf of the GUE/NGL Group. - (PT) Mr President, Commissioner, we have decried the disastrous consequence of the liberalisation of the global economy for many sectors of economic activity, particularly in some Member States and the regions that are most dependent on these sectors. We are talking about the destruction of productive activity and jobs, a serious impact on the capacity to create and distribute wealth, an increasing dependence on foreign markets, chronic and growing imbalances in trade; in short, economic and social breakdown.
We are also talking about the attacks on workers' rights, social dumping, the ruination of millions of small producers and many small and medium-sized enterprises. These are consequences of the gradual liberalisation of international trade which their advocates cannot ignore. I recall here the clothing and textile industry, which is particularly pertinent to this agreement, and a study by the Directorate-General for Employment and the Eurofund, which presents scenarios for a decrease of 20 to 25% of Community jobs by 2020, while acknowledging a scenario where 50% of jobs in this sector would be lost. I also recall, however, sectors such as electronics and the component manufacturing industry in the automotive sector, already mentioned here. These complaints give rise to questions that continue to go unanswered.
What measures will be taken to safeguard these sectors, doing more than mitigating the effects of getting rid of jobs? What defence mechanisms and safeguards are there against aggressive exports? When and how will we have a way of effectively tackling the relocation of businesses? According to the proposal of this group, the budget for 2010 will provide a new budget heading for action in the textile and footwear industry and creating a Community programme for the sector. What are the key elements of this programme?
Commissioner, fair economic relations must be established as a matter of urgency. These must be at the service of the people and their countries, rather than certain economic groups or those who finance the European Union. Defending every country's right to produce in a sustainable way has been necessary for the future, in the name of a new economic, social, energy-oriented and environmental rationality that the neoliberal model not only fails to deliver but even renders impossible.
Anna Rosbach
Mr President, I do not see this in the same way as the previous speaker. I actually welcome the free trade agreement with South Korea. As far as I can see, it is clearly in the EU's interest to foster as close a relationship as possible between Europe and the democratic countries of Asia, including South Korea.
For a long time, there was an imbalance in trade between Europe and South Korea because of protectionism, between the EU with its free trade and South Korea with its protectionism. A few decades ago, South Korea was an agricultural society; it has developed rapidly into an industrial society, with 81% of the population now living in urban areas. The country is now the world's eleventh largest economy and the EU's fourth largest trading partner.
South Korea is an important ally in a strategically important area. Forecasts suggest that the country will have an even more dominant position in the high-tech sector in a decade's time.
South Korea has to compete with the economic and military giant to the north of it, China, which is, at the same time, the country's main trading partner. In competitive terms, China has an almost inexhaustible resource in the form of cheap labour. Consequently, China is also the country's main trade competitor. By imposing quality requirements on South Korea, the EU can make the country's goods better suited for export to the US and Europe - much better than those from China, and I imagine we are all interested in bringing that about.
This free trade agreement will, as has been mentioned, remove tariffs worth EUR 1.6 billion a year. That may be a very good thing in general, but for me, the question is whether South Korean trade and industry has been sufficiently liberalised and whether the roadmap for the free trade agreement can be met, taking into consideration the fact that South Korea still gives extraordinary subsidies to certain industries such as the pharmaceutical and electronics sectors.
Peter Šťastný
Mr President, during the last few months, the EU has experienced several changes and transitions. We have had three Commissioners on International Trade, two EU Council Presidents and the Lisbon Treaty.
During that time, I argued with all the top officials about the need to fine-tune the South Korea-EU FTA, so as to get on board deeply dissatisfied industries, particularly the EU automotive industry.
The strongest arguments were mainly in the area of DDB safeguards and non-tariff barriers. When the new Commissioner, in response to my question during the hearings, stated that DDB deserved a closer look, I felt optimistic. Even the USA has shelved its FTA with South Korea partly because of similar objections from the car industry.
This is the first major FTA. This is a template. We need to do it right. There must be a level playing field for both parties. Please do not get me wrong. I am a strong proponent of FTAs. I understand their positive impact on GDP and employment, but we should also understand that, when the competitive advantage is one-sided, benefits will diminish and, in the worst case, could even be negative.
Employees in the EU deserve better. Perhaps we should turn to our transatlantic partner and together demand small adjustments which would at least partially satisfy these giant industries and get new FTAs to work as soon as possible. There will always be some unsatisfied elements but, all in all, FTAs must be beneficial to citizens of both sides. It is my responsibility to monitor the situation and ensure that my constituents, and EU citizens, get a fair deal.
Kader Arif
(FR) Mr President, Commissioner, ladies and gentlemen, in September, we were already debating in plenary the free trade agreement between the European Union and Korea. There were already many of us who expressed our fears about the negative consequences of this agreement, especially with regard to the automobile sector. We did not think that events would prove us right so quickly.
On 21 January, Opel announced the closure of its Anvers site, the production activities of which will be relocated to South Korea. Are we to believe that this decision has nothing to do with the free trade agreement that has just been negotiated? Allow me to spot a connection there. During this period of economic crisis in which the workers are the first to pay for the mistakes of the financiers, the Commission is duty-bound to consider, now more than ever, the job-related consequences of the agreements that it negotiates.
It is no longer possible to give a simplistic response to these employees, for whom we know full well it will be very difficult to find another job. We cannot say to them that international trade is a game of winners and losers and that, unfortunately, they are the ones who will be sacrificed and that we can do nothing about it.
We expect answers from you today, Commissioner. First of all, we want to know whether your Directorate-General has assessed the impact of this agreement on jobs in Europe, for I must tell you that the figure greedily announced, that is, the EUR 19 billion profit that European exporters are expected to make, does not convince us. Where does this figure come from? On what study is it based? Leaving aside the expected positive effects, however, have the negative effects also been taken into account?
The Commission has drafted a regulation on the methods for implementing safeguard measures within the context of this agreement. These methods relate, in particular, to duty drawback, an advantage that has never before been conceded, not even to our developing trade partners. The proposals put forward provide for complicated procedures for invoking and enforcing the safeguard clauses.
Nevertheless I feel reassured because, for the first time ever, Parliament will soon be able to express an opinion on this text under the ordinary legislative procedure. I would, however, like to point out that Europe's employment problem will not be solved by palliative measures taken on a case-by-case basis. That is why I, together with my whole group, am calling for a real European industrial policy, one that represents a genuine strategy for the future of our industries, to be drawn up at last.
In a context of economic crisis and of intensified global competition, this industrial policy must be coordinated effectively with the common trade policy so that our free trade agreements do not lead to job cuts in Europe.
A second matter on which we expect clarification is that of the protocol on cultural cooperation included in the agreement. Several Member States have reacted very harshly to the negotiations initiated with Korea, a country that has failed to ratify the UNESCO Convention on the Protection and Promotion of the Diversity of Cultural Expressions.
I condemn the very principle of initiating negotiations on this topic, and I believe that cultural issues should be handled separately from trade negotiations and placed in the hands of the Commissioner for Culture so as to prevent this matter from becoming a negotiating item under the same heading as conventional goods or services.
To conclude, Commissioner, you know how essential it is for MEPs to be kept fully informed of the negotiations under way and to be involved at all stages, including from the point at which the negotiating mandate is defined. Leaving aside our differences in approach, I would like to point out that better upstream consultation of Parliament would have made it easier for us to understand the strategy being pursued.
I therefore trust I can count on your support and on that of your Commission to assist us in our future work, with everyone acting within the scope of his responsibilities, but always for the benefit of a trade policy that is obviously more European in scope, but that is, above all, fairer.
President
Thank you, Mr Arif, but the interpreters are still having problems keeping up with you. They keep signalling to me to tell me that they cannot keep up with you. It is all very well to make a long speech, much longer than the speaking time permits, but the fact is it is not being interpreted.
Therefore, only you yourself and the French speakers in the House are following what you are saying.
Ramon Tremosa i Balcells
Mr President, the proposal of a free trade agreement between the European Union and South Korea has been considered unfair and unbalanced by the Catalan and the European car industry.
This industry and also the European textile sector have expressed concerns on specific issues such as the duty drawback system and the safeguard clause. Also, the European Trade Unions Federation has criticised this free trade agreement. South Korea has not ratified any of the fundamental conventions of the International Labour Organisation. South Korea persists in repressing trade union rights.
Moreover, we are aware that, for this free trade agreement with South Korea, there was a clear division among the European Commission college and also among the European Commission services, in particular, between DG Taxation and Customs Union and DG Trade, on the duty drawback system.
As far as the DG Taxation and Customs Union is concerned, the duty drawback system creates economic distortion as it is actually an export subsidy. This should create a clear competitive advantage against European industry in favour of Korean industry in the European Union.
The same Korean trade investment promotion agency has calculated this advantage as at least EUR 1 300 per car. Therefore, does the new Commission consider this free trade agreement a fair trade agreement? Will the new Commission provide Parliament with a full, up-to-date impact assessment and analyses about this duty drawback system?
Paweł Zalewski
(PL) Mr President, we are discussing, today, a very important agreement, which is going to be a model for agreements with other countries in the Far East, so careful reflection and analysis are needed. We must not be pressurised into acting too quickly. I support free competition, and think its influence on stabilisation of the political situation and on economic development is unquestionable, but it must be competition which is balanced, and which is based on competition between technologies or product production costs, and not on instruments such as duty drawback, which is included in the agreement and serves the interests, quite frankly, of only one party.
We have an economic crisis, and we must, today, be particularly sensitive to the situation in Europe - we must take particular responsibility for the future of European industry. This is not only a question of the motor industry, but is also about the electronics and textiles industries. Numerous branches of industry, including many from Poland, are complaining about this agreement. Therefore, it is my conviction that we should act as follows. Firstly, we must be sure of the effects of the agreement, and for this we should also work with those industries which have reported misgivings about the agreement, and not only with those which think they will win on this agreement. I expect the Commission to produce a very comprehensive analysis of the consequences of bringing this agreement into force. Secondly, we must look very carefully at the safeguarding measures and at how to construct them so that the agreement will, in fact, be advantageous to both sides, and not just to South Korea. Thirdly, we cannot introduce this agreement provisionally before Parliament is sure that it is, in fact, advantageous to all countries of the European Union and does not establish any kind of unjustified advantage for Korean industry.
Vital Moreira
author. - (PT) Mr President, I would like to put two questions on the importance of this agreement for the commercial policies of the EU to the Commissioner in charge of trade. In fact, since the launch of the Global Europe strategy in 2006, aimed at strengthening the role of international trade in the European Union's economic strategy, this is the first and only free trade agreement that has been negotiated, but not yet ratified, in which the trade partnership has been significant.
How does the Commission view its own role and the meagre results achieved in the light of the objectives of the Global Europe strategy? Does the Commission consider, then, that the credibility of its own trade policy is at stake in this treaty, and that this credibility also depends on its ratification and approval by Parliament?
Secondly, this treaty involves only one country, so it is a bilateral agreement. We know that the ambitious multilateral trade agreement under the World Trade Organisation is merely marking time, with no immediate prospects. The various regional agreements proposed by the European Union have failed almost everywhere, or clearly have no real prospects. To sum up, does this mean that this bilateral agreement is testament to the failure of EU investment in bilateral and regional agreements, and that we will henceforth be condemned to bilateralism?
Pablo Zalba Bidegain
(ES) Mr President, Commissioner, the position of the Group of the European People's Party (Christian Democrats) is very clear as far as the European Union's trade policy is concerned. We are firm defenders of free trade and it is certainly vital that Europe continues negotiating trade agreements with other countries because they generate new opportunities for European companies, that is to say, new jobs, which are very much required in light of the serious current economic crisis.
I did very much like your words Commissioner, because I also believe that it is very important that these agreements contain sufficient guarantees to avoid signing clauses which are unbalanced and unfair for European industry.
The agreement with South Korea has been put forward by the Commission as the first in a new generation of more ambitious trade agreements for Europe, hence the importance of this agreement. It is not a question of whether it is a small country or not; it is a question of not weakening our capacity for negotiation in future agreements with much larger countries.
Therefore, we are not against the South Korea free trade agreement; however, we do want certain paragraphs to be studied more rigorously, which we believe create unfair competitive disadvantages for certain European industrial sectors and give Korean producers an unfair advantage.
Commissioner, I want you to clearly explain to me why the safeguard clause for the duty drawback enters into force in five years. On the last opportunity I had to speak to you, you stated that the reason was that tariffs on vehicles were also dismantled after five years.
The agreement stipulates that they will dismantle the tariffs for vehicles which weigh more than five tonnes after five years. However, for vehicles which weigh less than five tonnes, which are all standard vehicles, the 10% tariff will be dismantled in three years. What is the reason for this two-year time lapse Commissioner?
I would also like to receive more details regarding any updates on this aspect you mentioned. What is the point of correcting these problems ex post when the whole reason for having a safeguard clause is to anticipate possible negative consequences?
Evelyn Regner
(DE) Mr President, the EU should only conclude free trade agreements with countries which show full respect for human rights. It seems fundamental to me that the core labour standards of the International Labour Organisation should be implemented and, above all, complied with. The labour clauses in the contract are good, but they do not go far enough. There have been cases in Korea, in particular in recent months, in which there have been fundamental breaches of trade union rights, such as the right to collective bargaining and the right to freedom of organisation. Throughout the negotiating process, the European trade unions and, in particular, the unions in the metal industry, have highlighted these cases, specifically with regard to the problems to be expected in the automotive sector.
The case of Opel in Antwerp has been mentioned several times. To reiterate, operations have not only been moved because of overcapacity, as the management has repeatedly claimed, but primarily in order to relocate production to South Korea. Who will benefit from this? Is it possible that this is an advance effect of the free trade agreement?
Another sector with problems which has not received as much attention is the shipbuilding industry. In its ten-year plan which forms part of an act of state, Korea has made it an objective to ensure that more than 90% of the companies supplying the Korean shipbuilding industry are based in Korea. This makes the situation for European competitors and, in particular, for the employees in the industry, very difficult.
(Question on the basis of Rule 149(8) of the Rules of Procedure)
Daniel Caspary
(DE) Mr President, Mrs Regner, thank you very much for this opportunity. You have referred to the situation with Opel in Antwerp. I would like to ask you whether you agree with me that Opel has been in serious financial difficulty for several months, that the company could produce far more cars than it is currently doing and that Opel's poor economic situation cannot be caused by a free trade agreement that has not yet come into force.
Evelyn Regner
(DE) Mr President, of course, it is true that there are serious economic problems. That is very much the case. However, the company management and, in particular, Mr Reilly, have breached a delta agreement. Under the terms of this agreement, the Opel site in Antwerp was given the assurance that SUVs would be produced there. These cars are now not being manufactured in Antwerp, but in South Korea. As far as I see it, this is, in very simple terms, a case of moving existing operations from Opel in Antwerp to South Korea.
Bernd Lange
(DE) Mr President, Mr De Gucht, I have three questions for you. My first question concerns the need for fair competition conditions. The fact that employees' rights in South Korea are restricted means that there are unfair competitive conditions, which include the question of collective action. Paragraph 314 of the South Korean Criminal Code refers to the crime of 'disrupting operations'. This is used to prevent strikes and to limit the rights of trade unions, for example, in the case of Ssangyong. I would also like to know why we are concluding free trade agreements with countries such as South Korea and Colombia which have the most problems with the standards of the International Labour Organisation. Therefore, my first question is this: How do you propose to use the free trade agreement to ensure that there are no unfair competition conditions in South Korea caused by restrictions on employees' rights?
My second question relates to the problems in the car industry, which several other speakers have also referred to. It is very important in this case that there are sensible safeguard clauses. General safeguard clauses are currently in place for major market disruptions and for the duty drawback system. I am not able to understand this fully. Mr De Gucht, perhaps you could explain the safeguard clauses to me in simple terms. I would particularly like to know who can trigger them and when.
My third question concerns the new contractual basis for our cooperation introduced by the Treaty of Lisbon. This includes approving safeguard clauses and implementation as part of the codecision process. Can you guarantee that the free trade agreement will not be put into force until Parliament has approved this procedure and only after Parliament has exercised its rights and adopted the safeguard clauses?
Kathleen Van Brempt
(NL) Commissioner, I am sure you agree with me that free trade agreements are not concluded for ideological reasons, but because we are well aware of the impact that they have on society, both socially and economically. You, yourself, referred to a number of impact studies, but I have never read an impact study that sets out what the impact is, sector by sector, on employment.
Many people have already spoken about the automotive sector. Well, we, both I and my home region, but also still your region too, to an extent, Commissioner, have discovered, in the meantime, what that impact is. The Opel car plant in Antwerp is closing down, and the trade unions there - and these are people who have been working on this for years and years - are absolutely convinced that this trade agreement is a very important part of Opel's much talked-about business plan, a plan which we simply do not get to see and which lies at the heart of the decision not to build the SUV in Antwerp.
I have two questions for you about this. Do you know what the impact of this agreement is on employment, the effect on employment for each economic sector? If not, are you prepared - and I want to press you on this - to have an impact study carried out at this point, in order to ensure that we, in Parliament, have the information that we need when we ultimately have to give our consent? My second question is, do you intend, in future - with this being the start of your term of office - to consistently carry out this kind of impact study at the social level?
Seán Kelly
(GA) Mr President, I welcome this trade settlement between the European Union and South Korea.
In welcoming this, I would say that, in all agreements of this nature, there are going to be winners and losers. Unfortunately, in this instance, the Automobile Association seems to be pointed out as the loser, but I would say that, with automobile demand likely to grow over the next 20 or 30 years fourfold at least, there may be an opportunity there.
But the overall question pointed out by the Commissioner of the EUR 19.1 billion advantage to the European Union and EUR 12.5 billion to South Korea is a good deal in my book. If it was the other way round, we might have cause for concern. Also, we cannot underestimate the political importance of South Korea psychologically in extending the hand across the oceans to Asia - something which is very important to them - and also, where we are concerned, in re-establishing our place in the world, which was somewhat undermined in Copenhagen.
Harlem Désir
(FR) Mr President, Commissioner, this agreement with Korea will be the first to truly implement the Global Europe strategy as an important agreement, and it ought therefore to be particularly exemplary because it will set a precedent.
However, we note that, firstly, there is a problem concerning the information given to Parliament, particularly with regard to the safeguard clauses, then a problem concerning the method used, since we have already been told that it might be possible to implement temporary provisions or temporarily to implement the agreement without even waiting for Parliament's assent, and finally, a problem concerning the clarity and transparency of the trade framework - this was raised by Mr Rinaldi - since, through the duty drawback, we could in fact have an agreement indirectly concluded with China. I believe we must be particularly clear about these free trade agreements.
In addition, there is a consistency problem with regard to the aim of developing social and environmental standards. When it comes to compliance with social standards, we are, for example, a very long way from what the United States has negotiated in its agreement with Korea.
Finally, to be honest, when one looks at the economic situation we are in, with a car industry ...
(The President cut off the speaker)
Niccolò Rinaldi
(IT) Mr President, ladies and gentlemen, I would like to put a supplementary question to the Commissioner. We understand that we do not have a clear framework as far as the procedure for any ratification by national parliaments is concerned, but what majority will have to vote in this agreement in the Council? Is it a qualified majority or a majority by consensus? This is something else I have not grasped and I believe it is important to understand this aspect of the legal basis.
I would also add that I have been surprised by the tone of this debate. I feel that I have heard many concerned voices and I therefore again call on the Commission for us to work together. Commissioner, we are sure you will do an excellent job but, in the words of another Korean proverb, 'ask the way even when you already know it'.
Czesław Adam Siekierski
(PL) Mr President, the free trade agreement with South Korea seems a very good development. An agreement on a free trade area will lead to a significant growth in reciprocal trade. Thanks to the elimination of Korean import duties of around EUR 1.6 billion and EU import duties of around EUR 1.1 billion, there will be a significant liberalisation of trade in important sectors of industry and in services. This concerns mainly telecommunications, environment protection, transport, finance and legal services. In addition, the free trade agreement will contribute to an increase in transparency on the question of intellectual property protection and public procurement. Thanks to the agreement, Korea will also honour EU certificates and quality standards. The agreement is particularly important in the present economic situation, because it will allow for faster development in EU countries. We realise, however (...).
(The President cut off the speaker)
Karel De Gucht
Member of the Commission. - Mr President, first of all, with respect to the procedure - because a lot of questions have been asked about that - obviously, this will be the first time that Parliament has had to give its consent on the agreement as such and also the first time that the safeguard clauses will have to be adopted by codecision. This has consequences, I think, for the relationship between the Council, the Commission and Parliament.
The safeguard clauses are a proposal. The Commission adopted its proposal yesterday and it will be presented to the Council and Parliament very soon. Obviously, then, it will be a codecision procedure, so I do not understand the many remarks in which you put questions and express doubts about safeguard clauses. There will only be safeguard clauses that get your agreement, because it is codecision: it is as simple as that. So you should not be so worried about it and about ratification by Parliament.
That implies, of course, that there will be a debate in your committee. I already said during the hearing that I am not going to make a proposal for an early, provisional application unless Parliament has itself pronounced on the agreement, whether as formal ratification by Parliament or by some other procedure that we can establish between the INTA Committee and the Commission. That remains open and can be discussed, but in any case, Parliament will have the opportunity to give its political judgment on the agreement before any proposals for early application are put forward.
Another question is whether this is a mixed agreement or an agreement which is only about Community competences. The Legal Service is still preparing an opinion on that, but we cannot rule out the possibility that in the end, we will have to consider this a mixed agreement, which implies that all the national parliaments will also have to ratify it, and which could also have - in reply to Niccolò Rinaldi's question - consequences for the voting procedure in Council.
So much for the procedure: you will have every opportunity to express yourselves, and we will scrupulously respect this - if we did not do so, I think we would get into trouble!
Member of the Commission. - (NL) I will now deal with the issue of Opel. I understand that it is not just in Belgium, but also in other Member States, that the Opel issue arises. What I do not understand, however, is when people say 'look, there is a direct link between the free trade agreement with South Korea and the fact that there are plans to make closures at Opel in Europe'.
Opel announced back at the beginning of 2009 that it intended to cut capacity in Europe by 20%. It is true that this can be done in such a way that, ultimately, all the factories remain open, on condition, of course, that Opel also views it as possible, from a business point of view.
It is also the case, however, that the decision to actually produce the SUVs in South Korea came, at any event, after the agreement with Magna had been reached but before the conclusion of the negotiations over a free trade agreement between the European Union and South Korea. The assertion made by both Mr Belet and Mrs Van Brempt thus does not fit in with the timeline. The agreement with South Korea was only concluded afterwards.
It is possible, in fact, to argue the opposite case, I would have thought, in other words, that some Member States only agreed to a free trade agreement with South Korea on condition that they knew what was going to happen with Opel. I think, in fact, that you have to go with this opposite case if you look at the correct timeline as it developed in practice.
Incidentally, I would like to add, for Mr Belet's benefit, that there is a small mathematical error in the comparison he quoted, where he stated that South Korea exports 15 times as many cars to Europe as Europe exports to South Korea. This may be related to policies that I was recently involved in in Belgium. The present figures are that 37 000 cars are being exported to South Korea and approximately 440 000 imported from there.
What is more, your line of reasoning is also faulty, as you are presuming that the two markets are the same size. If you compare the two markets, you have to observe that the South Korean market, of course, is much smaller than the European one, and that means that you are comparing apples with oranges.
When it comes to market penetration, we actually send the same percentage from Europe to South Korea as comes the other way: approximately 3 to 4%. This is what really matters.
Something that I think is actually far more important in estimating the market situation is the fact that South Korean manufacturers have recently opened major factories in Europe, namely in the Czech Republic and in Slovakia, which will be capable of producing around half a million cars between them on an annual basis, so the reality is perhaps that, in future, Korean cars produced in Europe will largely, in effect, be the cars that reach the market here. What you have there is a clear shift, and so what you actually see across the car market as a whole is that there is a displacement taking place towards the major markets where, in the end, cars can be bought and sold.
As a final thought about what is, in any event, a particularly regrettable situation at Opel - for which, in my view, a solution is ultimately on the way - I think that one must not overlook the fact that the manufacturers follow the customers, and not the other way around, and that that is one of the most important reasons for specific policy decisions in a shrinking European car market also faced with a number of car makers who have found themselves in a difficult financial situation.
I will, perhaps, make one last comment about the tension between bilateral and multilateral negotiations, an issue also raised by Mr Moreira. Negotiations based on the Doha Round have been taking place since 2001, which is now nine years, and there is still no solution to the impasse. I am a great supporter of multilateralism, and I think that we do also need to bring a positive conclusion to Doha, specifically retaining the development elements that it contains. I believe this also because its multilateral framework also provides the greatest legal certainty for international trade. I do think, however, that while we await the conclusion of the Doha Round - which I hope will be in 2010 or at the latest in early 2011 - we cannot sit on our hands in relation to the bilateral front.
What I think is very important is that, when it comes to bilateral arrangements, we only conclude agreements that go further than Doha, so as not to undermine what is decided in the Doha Round, insofar as we are setting higher criteria. That, too, explains the drawing up of the free trade agreement with South Korea. It is not, in my opinion, of such a nature that it undermines multilateralism. If we were to undercut the multilateral track, then that would indeed be the effect, but that is not the intention, nor will it be in the forthcoming negotiations.
President
The debate is closed.
The next session will take place tomorrow, Thursday, 11 February 2010, from 09.00 to 13.00 and from 15.00 to 17.00.
The agenda is published in the session document which contains the same name and also on the European Parliament's website.
