The EP’s Committee on Industry, Research and Energy (ITRE) and the Committee on International Trade (INTA) organised a public hearing with experts on the “Impact of TTIP on ITRE policy areas” on the 24th of February. The Chairman of the Board of Directors of CEEP, Paweł Olechnowicz, presented CEEP’s position on the matter. Here below, his intervention.
- Understanding TTIP: We understand that the TTIP represents a major boost for the EU in the competitive world. Nowadays, we are conceding ground to such external competitors as China and India, as well as other emerging economies. We also observe the rapid development of the United States’ economy, not only due to the shale revolution, but also due to an innovative and dynamic approach to economic solutions. Should we join our efforts, talents, and knowledge to push our economies ahead and make them more resilient to other economies? CEEP’s answer is clear: we support the concept of the TTIP as enabling more investments and securing more new employment opportunities.
- Differences between economic sectors in the EU: Creation of a free trade zone with the US is very tempting, and the TTIP is supported by many sectors, as, for example, the EU’s automotive industry, whilst there is a lot of debate within the food industry, and a somewhat divided approach from the chemical industry. I am very optimistic that the parties will reach positive solutions, but we in the EU, should realise that problems connected with the TTIP need to be categorised into two parts. One concerns EU/US relations; the other relates to internal matters for the EU itself.
- What are our needs? US coal has zero (‘0’) custom duties already, and can be freely exported to the EU. We, should have the same access to crude oil and gas, which will strengthen our energy security, whilst heightening the chances of further development of the EU’s energy-intensive industries (refinery, chemical, fertilizer, steel, and others). Today, we observe a very dynamic development of the chemical industry in the US, thanks to low energy and raw material prices. The graph illustrates booming investments in the nitrogen sector with 53% of its investment coming from the EU. We should be aware that the EU has lost a lot of new jobs. We realise that lower prices of energy and raw materials are not only connected with easier access in the US to cheaper sources of energy, but are primarily due to lower taxes and lesser environmental regulations. This is what should be taken into consideration by the EU’s legislators.
- What does the EU need to implement before it can approve of the TTIP?
At first glance, it seems that the TTIP for the above sectors is not acceptable: for example, in the chemical industry, we have 6.5% import duties protecting our chemical and derivatives market. When the TTIP is in force, this branch of the chemical industry might be eradicated within five to ten years. We must take measures, therefore, to secure the future of such threatened industries. That is why we suggest:
4.1. A waiver period
A waiver period up to 10 years should be considered for tariff reductions for those products, that are particularly energy-intensive. The purpose is would be to allow time for energy and gas prices across the Atlantic to approximate, therefore 10 years may be necessary.
4.2. Bilateral safeguard clause:
The parties shall have the right to increase their import duties, informing the other party of the reasons for their decisions. Such measures should be obligatory through the validity of the TTIP.
4.3. Internal Regulations (REACH):
We welcome the information received from the DG for the Internal Market Industry Entrepreneurship and SMEs that the REACH Regulation will not be affected and those from the US will have to comply with the registration obligations.
- CO2 Emissions: This should be treated as a very important economic issue, which is connected very much with the final price of goods. CO2 emissions in 2013 amounted in the US to 16.55 and in the EU to 7.35 tonnes per capita. If we note that the cost of a decrease of one tonne of CO2 is around $600, one can easily see that American production is much cheaper than in the EU, and the question arises as to how to overcome this discrepancy.We acknowledge the enormous American efforts concerning CO2 reduction, but as you can see, they are still not enough, resulting in an unsatisfactory outcome giving the US a tremendous edge over the EU’s industries. I would like to suggest that ITRE arranges a special study on this issue, as the very interesting study prepared by the European Parliament in 2015, titled: ‘TTIP impacts on European Energy Markets and Manufacturing Industries’, unfortunately, does not tackle this issue.
CO2 emissions per capita (kg/cap)
Based on Eurostat data
- Internal: the EU’s requirements to enable the creation of more favourable conditions for EU industry under the TTIP: As I said, CEEP supports the TTIP, but we have to review some EU regulations, as we should provide equal opportunities which means fair competition, leading to further development of industry in the EU and the creation of more jobs.
6.1. Carbon leakage list: Energy-intensive industries, should be put on the carbon leakage list up to 2020, and beyond to 2030, under the condition that they fulfil the requirements of BAT – at least 25% of leading world producers. The presence of such a list should assure, 100%, CO2 allowances free of charge. I would like to draw your attention to the fact that some industries/companies which are already on the carbon leakage list, do not enjoy full benefits. The ailing refinery industry in the EU, which is much more efficient than its American equivalent, only enjoys the said benefits up to 73.9%.
6.2. Affordable energy: Indigenous energy should be more intensively supported by the EU. The coal-power plants surpassing, at least 43%, of their efficiency, should enjoy derogation concerning CO2 emissions up till 2030.
- Final remarks:
It is evident to me that in the industries represented by me, both energy and energy-intensive, the EU does not enjoy such favourable conditions as the Americans do, but we in Central Europe, want to create new jobs and develop our industry to decrease relatively high unemployment. The TTIP should help us in our efforts. I advocate for special consideration of the situation of energy and energy-intensive industries, reform of the whole ETS system, including MSR, and acceptance of my proposal concerning the carbon leakage list.