EU free trade agreements: implementation and future

The blog post Reflection paper on globalisation: Opportunity or threat? introduced the European Commission’s reflection paper on harnessing globalisation COM(2017) 240 and the entry Fair, competitive and resilient: EU responds to globalisation indicated paths for rules, firms and societies.

Here, as part of the discussion about the future of Europe - #FutureOfEurope on Twitter - we go beyond the reflection paper to look at facts and opinion regarding globalisation - European and world integration - especially international trade.

A fresh report about existing EU trade agreements offers us substance on current issues and avenues for the future of international trade.

EU trade agreements

On Thursday, 9 November 2017, the European Commission published an assessment of existing trade agreements, with suggestions for future improvement IP/17/4486. The press release was accompanied by a three-page factsheet on the implementation report, which groups the 25 agreements in force into four categories depending on their scope and economic and political objectives (page 3):  

• "First generation agreements", e.g. those concluded in the past with Switzerland, Mediterranean countries, South Africa or Chile, that focussed on increasing EU exports through elimination of customs duties;  
• Much more recent, "New Generation agreements", like those with Korea, Andean countries and Central America, that extend to new areas and include rules ensuring that trade goes hand in hand with sustainable development;  
• Deep and Comprehensive Free Trade Areas created to support close economic relations with EU's neighbours, such as Ukraine, Georgia and Moldova;  
• Economic Partnership Agreements focused on development needs of African, Caribbean and Pacific regions.  

Increasingly, sustainable development goals (SDGs) are taken into account, as we are going to see later.

For those interested, here are the EU trade agreements in force and here is an overview of free trade agreements FTAs and other trade agreements being negotiated, complemented by a blog post Reviewing our trade agreements, by the trade commissioner Cecilia Malmström.

The perception of the European Commission being in cahoots with corporations, while keeping the public in dark, used to lead to much suspicion and resistance among Europeans. In addition to more comprehensive and fairer rules, the Juncker Commission has promised more transparent trade negotiations.

The Council’s web page on EU trade agreements offers a quick view of the role of the Council and names the ongoing trade agreement negotiations with Japan, Mercosur, Mexico, Chile, Australia and New Zealand.  

Implementation of EU free trade agreements

More detailed information is on offer in the FTA implementation report, which is already available on Eur-Lex in all the official EU languages, except Irish Gaelic; here the English language version:

Report from the Commission on Implementation of Free Trade Agreements 1 January 2016 - 31 December 2016; Brussels, 9.11.2017 COM(2017) 654 final (41 pages)

The  Commission staff working document accompanying the FTA implementation report has been published only in English:

Country reports and info sheets on implementation of EU Free Trade Agreements; Brussels, 9.11.2017 SWD(2017) 364 final (136 pages)

Future of EU trade

On Friday, 10 November 2017, the EU trade ministers were informed about the FTA implementation report (page 6) at the Foreign Affairs Council (Trade).   

Looking forward to the future of Europe, according to the provisional version of the conclusions, the trade ministers were briefed about the WTO ministerial conference in Buenos Aires, the state of play of negotiations with Mexico and Mercosur, the home stretch of the economic partnership agreement to be concluded with Japan, trade and sustainable development (TSD) chapters in EU trade agreements (including the Commission’s July 2017 TSD non-paper), and trade relations with Colombia and Peru.

The European Commission’s announcement about the upcoming EU Trade Policy Day and the enlightening  Trade Policy in a Turbulent World programme for the 5 December 2017 provide additional information about topical issues.

Ralf Grahn

Fair, competitive and resilient: EU responds to globalisation

The blog post Reflection paper on globalisation: Opportunity or threat?, which  introduced the European Commission’s reflection paper on harnessing globalisation COM(2017) 240, left me with a desire to present the reasons of the Commission and how it wants to handle the internal and external pressures of globalisation, as part of the discussion about the future of Europe - #FutureOfEurope on Twitter.

Profound changes

We may be well or ill prepared, but profound changes await us. As the EU Commission writes about our interconnected future (page 11):

We are still in the early phase of the transformation where digitalisation, robots, artificial intelligence, the internet of things, 3D printing will revolutionise how we produce, work, move and consume.

The UK and the USA have both upset long traditions of integration, European and global. China increasingly acts like an economic and a military great power, but not based on the values of democracy, human rights and the rule of law many of us believed were becoming universal.

In the emerging tri-polar (or multipolar?) world, the relative weight of Europe in world affairs continues to decrease, to say nothing about the dwindling relative size of individual EU member states (page 12):

In 2025, 61% of the world's 8 billion-population will be in Asia, predominantly in China and India. Europe's relative share of the world population will decline, with the EU27 accounting for 5.5 %. This may bring about a multipolar world order with different political, technological, economic and military powers. But it also means large new markets for European companies.

Isolationism and protectionism - closing minds and borders, building physical and mental walls, creating obstacles to trade and investment - may entice individuals, communities, regions and countries feeling left behind, but the relief is shortlived (page 14):

Changes associated with globalisation can lead to calls for countries to isolate and insulate themselves from what is happening around them. This is particularly acute in regions that have been left behind. Some want to put up barriers and close borders.  

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However, a majority of European citizens recognise that protectionism does not protect. It may provide short-term relief, but history shows that it never had lasting success, and has often led to disastrous outcomes.

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Protectionism would disrupt production and increase costs and prices for consumers. European exports would become less competitive putting even more jobs at risk. An increase in trade restrictions by 10% is estimated to lead to a 4% loss of national income. We would lose access to new products, services, technologies and ideas. By hitting the poorest hardest with price increases, protectionism would have the opposite of its desired effect.

Harnessing globalisation

In a nutshell, for the sake of the citizens of Europe and the world, the Commission sketches the road to follow (page 14):

To better harness globalisation, we need more global governance and global rules. And we need to support that with domestic policies that boost our competitiveness and resilience at home.

Chapter 3 about the EU’s external response is dedicated to promoting a fairer international economic order (pages 15-18). Chapter 4 deals with the internal response of the EU: how to enhance innovation and competitiveness, as well as to bolster the resilience of those who otherwise fall behind (pages 19-23).

The thoughts about life-long learning and active labour market and social policies are closely related to the future of Europe reflection paper on the social dimension, the European pillar of social rights to be proclaimed and the Social Summit for Fair Jobs and Growth the coming week, 17 November 2017 in Gothenburg (Sweden). - For more information you can follow #SocialRights and #SocialSummit17 on Twitter.

EU level action

Individuals and firms make their own choices in a changing world, but the reflection paper is about how the political sphere should tackle globalisation. There are challenges for each political level - local, regional, member state and EU - as summarised on page 24.

Here we are interested primarily in a sketch of how the EU institutions should should invest their time and energy regarding globalisation:

• Trade agreements to open markets and enforce level-playing field
• Measures to ensure global tax justice and transparency
• Promotion of higher global regulatory standards
• Trade Defence Mechanism
• European Budget (such as EFSI, ESIF, GAF, Horizon)
• European External Investment Plan
• Development Assistance
• Product and Food Safety  

If this succeeds in inviting blog followers to read about the EU’s external and internal responses to globalisation - fair, competitive and resilient - it may be better to continue with the expert assessments I promised in a separate blog post.

Ralf Grahn

Reflection paper on globalisation: Opportunity or threat?

The Commission’s White paper on the future of Europe: Reflections and scenarios for the EU27 by 2025 COM(2017) 2025 invited the citizens of the European Union to discuss our common future ahead of the elections to the European Parliament in 2019.

In the White paper, published 1 March 2017, the European Commission promised to contribute to the discussion during the coming months with a series of reflection papers on the following topics:

• developing the social dimension of Europe;

• deepening the Economic and Monetary Union, on the basis of the Five Presidents' Report of June 2015;

• harnessing globalisation;

• the future of Europe’s defence;

• the future of EU finances.

As promised, the European Commission published a paper discussing the economic and societal challenges of rapid integration:

Reflection paper on harnessing globalisation; Brussels, 10.5.2017 COM(2017) 240 final (25 pages)   

For those who prefer the less readable pastel coloured “printed” versions, with annexes, the European Commission’s web page White paper on the future of Europe and the way forward serves as a convenient channel to the White paper and the five reflection papers, including the one on harnessing globalisation in the official EU languages.

Opportunity of threat?

One of the difficulties for building coherent policies and action is that people in the EU are divided: 55 per cent see globalisation as an opportunity, while 45 per cent consider globalisation as a threat overall (page 10).  

Even worse, fear of globalisation is the main cause for voters to abandon mainstream political parties and to turn to populist parties, especially on the Right, but also on the Left, according to the 2016 study from the Bertelsmann Stiftung Globalisierungsangst oder Wertekonflikt? The lower the level of education, the less the income and the higher the age of people, the more likely they are to perceive globalisation as a threat.

Majorities in Austria and France experienced globalisation as a threat, while the proportion of people fearing globalisation was particularly low in Italy, Spain and the United Kingdom. Public opinion in the Netherlands, Germany and Hungary formed a middle group between the extremes.  

However, in May 2017, along with stronger economies in the EU and the euro area, the Bruegel blog found that Europeans rediscover enthusiasm for globalisation, even in France, as Uuriintuya Batsaikhan and Zsolt Darvas wrote.

Tri-polar world?

A fresh post on the Bruegel blog, European worries about isolationist trends, reasons that despite populist shocks in the UK and US, withdrawing from the world is no solution, but that Europe needs to reassess the future of globalisation.

Internal EU reform is long overdue, and Europe’s allies are withdrawing, while European integration and globalisation both build on the idea ‘work together, as a way of doing better’. Maria Demertzis discusses both economic inequality in Europe (the UK and US) and the rise of a China promoting different values than the EU.

Can the EU overcome populist and protectionist pressures? Is the European Union going to be able to conclude constructive deals with China?

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Let us return with a blog entry on how the European Commission wants to handle the internal and external pressures of globalisation and at a few expert comments about the reflection paper.

Ralf Grahn

Future of Europe: European Parliament’s vision

It is possible to find overviews in Reader’s Digest style of the most notable Future of Europe initiatives.

The annotated version of president Jean-Claude Juncker’s State of the Union 2017 address, with the sub-heading Proposals for the future of Europe that can be implemented on the basis of the Lisbon Treaty, demonstrates how the flexibilities of the EU treaties can be used to improve the effectiveness of European Union action, without embarking on a formal process of treaty reform.

European Parliament and Juncker proposals

Already at headline level we notice a high degree of similarity with one of the EU reform resolutions from the European Parliament:

European Parliament resolution P8_TA(2017)0049 of 16 February 2017 on improving the functioning of the European Union building on the potential of the Lisbon Treaty (2014/2249(INI)) [rapporteurs Elmar Brok and Mercedes Bresso]

The European Parliament Think Tank did a bit more, by comparing Juncker’s SOTEU proposals with the resolution by the EP plenary. For our purposes it is enough to recall the general drift of the document The European Council and the 2017 State of the Union proposals, which describes Juncker’s vision for a more united, stronger and more democratic Europe:

His vision consists of five proposals which would require a decision by the European Council, as well as one suggestion which would directly impact on the composition and working methods of this EU institution. The five proposals are: 1) using the general passerelle clause to shift from unanimity to qualified majority voting (QMV) in the Council on remaining internal market issues and aspects of taxation policy; 2) moving to QMV in the field of Common Foreign and Security Policy (CFSP); 3) setting up a European Defence Union; 4) extending the competences of the European Public Prosecutor's Office; 5) agreeing on a new composition for the European Parliament, including transnational lists. The additional suggestion is to merge the positions of President of the European Council and European Commission.

In principle, all proposed initiatives could be carried out without a Treaty change. The Treaty on European Union (TEU) and the Treaty on the Functioning of the European Union (TFEU) include a series of clauses enabling the European Council to go beyond the current status quo. In three cases, the European Council would need the consent of the European Parliament before taking its decision. A comparison between President Juncker's proposals and the views of the European Parliament indicates that their opinions overlap regarding four of the ideas, while on one of them, discussions in the Parliament are still ongoing (see Table 1 below).

In each case, the Juncker proposal, the treaty basis and the European Parliament view are presented.

Since the directly elected European Parliament represents the citizens of the union, and the European Commission promotes the general interest of the EU, their views are often similar.

Juncker and Macron

The in-house think tank of the European Commission, the European Political Strategy Centre EPSC, published a Juncker-Macron comparison available in English, French and German: Two Visions, One Direction: Plans for the future of Europe as laid out in President Juncker’s State of the Union and President Macron’s Initiative for Europe.

The summary of this comparative assessment is telling (page 2):

Out of the proposals put forward by President Macron in his speech of 27 September, about 80% are already proposed or foreseen in the European Commission’s work programme, as outlined on 13 September in President Juncker’s Letter of Intent to European Parliament President Antonio Tajani and to Estonian Prime Minister Jüri Ratas.

Naturally, each proposal is compared and commented on.

European Parliament vision

The EP has presented its view on the need for EU reform in the publication Future of Europe: European Parliament sets out its vision.

President Antonio Tajani states the view of the European Parliament (page 1):

If the EU is to be more responsive to citizens’ expectations and democratically accountable, it must first boost its capacity to act and make the euro zone more resilient to economic shocks, whilst making full use of the Lisbon Treaty. But to go further, it needs to reform itself more substantially.

The views of the European Parliament in various policy areas are at the centre, but these opinions are compared with the proposals from Juncker and Macron.

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I have not yet found other language versions of the publication about the EP’s vision on the future of Europe, but maybe one of my queries will receive a response.

Ralf Grahn

Future of Europe initiatives

The European Parliament, the European Commission and its president Jean-Claude Juncker, as well as the French president Emmanuel Macron, have provided substantive initiatives for the ongoing debate about the future of Europe.  

This blog post provides the main references for contemplation, discussion and engagement.

European Parliament

The directly elected European Parliament, which represents the citizens of the union, launched a real discussion, by setting out its vision for the future of Europe in three resolutions:

European Parliament resolution P8_TA(2017)0049 of 16 February 2017 on improving the functioning of the European Union building on the potential of the Lisbon Treaty (2014/2249(INI)) [rapporteurs Elmar Brok and Mercedes Bresso]

European Parliament resolution P8_TA(2017)0048  of 16 February 2017 on possible evolutions of and adjustments to the current institutional set-up of the European Union (2014/2248(INI)) [rapporteur Guy Verhofstadt]

European Parliament resolution P8_TA(2017)0050 of 16 February 2017 on budgetary capacity for the euro area (2015/2344(INI)) [rapporteurs Reimer Böge and Pervenche Berès]

White Paper and reflection papers

The European Commission, which promotes the general interest of the union, invited the EU institutions and all EU citizens to a broad debate, by publishing its White Paper on the Future of  Europe and the five reflection papers about the social dimension, globalisation, the economic and monetary union (EMU),European defence and EU finances:

White Paper on the future of Europe: Reflections and scenarios for the EU27 by 2025

Reflection paper on the social dimension of Europe

Reflection paper on harnessing globalisation

Reflection paper on the deepening of the economic and monetary union

Reflection paper on the future of European defence

Reflection pages on the future of EU finances

President Jean-Claude Juncker promised to take the ideas in the White Paper and the reflection papers forward in his State of the Union 2017 speech. The Future of Europe debate is open for everyone and it continues until the elections to the European Parliament in June 2019.

State of the Union 2017

The European Commission’s State of the Union 2017 web page offers us access to the references we need, president Jean-Claude Juncker’s State of the Union (SOTEU) address SPEECH/17/3165 with the letter of intent and the roadmap for a more united, stronger and more democratic union.

Commission Work Programme 2018   

On 24 October 2017 the SOTEU speech and the Commission’s letter of intent with the roadmap graduated into the Commission Work Programme 2018: An agenda for a more united, stronger and more democratic Europe COM(2017) 650, with five annexes and the related communication on better regulation COM(2017) 651, accompanied by the staff working document SWD(2017) 675.

The communications are still available only in English, French and German, but @EurLex kindly informed me that translation work is ongoing, so new language versions may appear.

I presented the CWP 2018 in the blog entries Commission Work Programme 2018 and New and REFIT initiatives in Commission Work Programme 2018 plus Many EU priority proposals pending.    

President Macron

You can find links to the Initiative pour l’Europe by the president of France, Emmanuel Macron, in the original French at the Elysée Palace website, as well as two translations of his full motivational Sorbonne speech in the blog post Macron’s Initiative for Europe in English and German.

European Council

In the European Union designed by the heads of state or government, they (the European Council EUCO) should provide the union with the necessary impetus for its development and define the general political directions and priorities, according to Article 15(1) TEU.

Why have I neglected their role in the debate about the future of Europe until now?

After the Brexit vote in the United Kingdom, the presidents and prime ministers of EU27 started their own reflection period. Their Bratislava Declaration and Roadmap promised to make their union a success, and it evoked a number of important challenges to tackle.

But they reflected only among themselves and saw the 25 March 2017 as the end of the discussion, which petered out into the Rome Declaration.

Does the European Council participate in the future of Europe debate in an open manner, even when a discussion becomes unavoidable?  Has the European Council acted effectively in line with suggestions from the European Parliament, proposals from the European Commission, recommendations from international organisations and assessments form think tanks and researchers? Has EUCO listened to and engaged with the citizens of the union? Has it based its reasoning on the best interests of the citizens or the general interest of the union? Has EUCO ever honestly confronted the structural flaws of the European Union?

There are no signs that the European Council has even discussed the European Parliament’s resolutions or the Commission’s White Paper ahead of the Rome Declaration, or the reflection papers  later, as part of the ongoing, open Future of Europe debate.

Only after president Juncker’s State of the Union and roadmap proposals and president Macron’s initiative for Europe gained a foothold inside the European Council, did the heads of state or government after an informal discussion endorse a Leaders’ Agenda for 2017-2019 proposed by EUCO president Tusk, a timetable without any political reform commitments.

For these reasons it is hard to see the European Council as  a genuine provider of needed impetus for the future of the European Union, but more of a receiver. How constructive EUCO is going to be in that reduced role, remains to be seen.

Ralf Grahn