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

Gordon Brown on Global Europe

Until now, the only thing that has maintained Prime Minister Gordon Brown’s credentials as a European statesman, has been the Conservative Party’s complete lack of constructive EU policy.

Yesterday, Brown did much to cast off his crown as curmudgeon of the year among EU leaders. Speaking to a business audience Brown finally outlined a programme for Britain in Europe, laying the background for future success, coming out strongly in favour of British EU membership and pointing towards the needed economic reforms within the Union.

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What is needed for future success? Brown clearly placed himself in the economic reform camp:
“The countries and continents that will succeed in the new era of globalisation will be those that are open rather than closed, for free trade rather than protectionism, are flexible rather than rigid, and invest in high skills and the potential of their people.”
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The future of the United Kingdom lies in the European Union, was the message of Brown:
“But what is clear is that at this time of global economic uncertainty, we should not be throwing into question -as some would - the stability of our relationship with Europe and even our future membership of the European Union --- risking trade, business and jobs. Indeed, I strongly believe that rather than retreating to the sidelines we must remain fully engaged in Europe so we can push forward the reforms that are essential for Europe's, and Britain's, economic future.
The EU is key to the success of business in the UK:
Europe accounts for nearly 60 per cent of our trade;
700,000 British companies have trading ties to Europe;
And 3.5 million British jobs depend upon Europe.
And even in the face of rapid globalisation, our trade with Europe continues to rise, meaning Europe is as important to the future of Britain than ever.”
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Economic reform is key to the European Union’s future and relevance, according to Brown:
“At the heart of a more competitive Europe in the 21st century must be a long-term commitment to a more outward looking relationship with the rest of the world. This is what I mean in practice by 'global Europe' - a Europe that knows it must face outwards if it is to be open for business.”
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A few comments:
Great Britain has a lot to give its continental European partners and the EU when it comes to a dynamic business climate, although the Nordic countries may have succeeded at least as well while excelling at public services and social security. Brown’s programme on economic stability, growth, competitiveness and jobs reads like a roadmap to a more prosperous future for European citizens.

On more foreign policy oriented themes, Brown made the case for European climate change and environmental policy and reforming international institutions.

So far, so good. But what did Gordon Brown leave uncovered, at least in this speech?

More than twenty years have passed since the European Community (formerly the EEC) began its transformation into a political union, with efforts to forge common foreign policy as well as new internal policies.

The future security and prosperity of EU citizens is going to depend on how successfully the European Union manages to pool the resources of its member states in the areas of common foreign, security and defence policies, including a common defence.

When are we going to hear this speech?


Ralf Grahn


Gordon Brown: Beyond The Reform Treaty: Business Priorities For A ‘Global Europe’; 14 January 2008;
http://www.number10.gov.uk/output/Page14251.asp

Very latest EU

From 12 until 15 October 2007 I have fed my Finnish blog with some web columns and notices about the European Union. The topics include the EU and globalisation, Turkey’s maturity for EU membership, military assistance within the EU and NATO, the need for the European Union, consolidated versions of the Reform Treaty, ’civil’ members of a military alliance to be and self-inflicted marginalisation.

The adress is:

http://grahnlaw.blogs.fi


The postings have the following headings:


EU globalisaatiossa

Turkki ja EU:n laajeneminen

Sanoma euroskeptikoille

EU:n ja Naton turvatakuut

Uudet EU-sopimukset päivitettyinä

Puolustusliiton siviilijäsenet

Arkaaisessa marginaalissa hyvä olla?



Regards
Ralf Grahn