The think tank founded by Jacques Delors, Notre Europe, agreed to publish my views and policy proposals on the EU’s trade policy in its neighbourhood, post Arab Spring, in a new paper.
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This paper assesses the trade policy of the European Union (EU) in its neighbourhood. It formulates proposals for the negotiation of “Deep and Comprehensive Free Trade Agreements” (DCFTAs) that the EU is currently engaged in, or offering to, Ukraine, Moldova, Georgia, Armenia, Jordan, Egypt, Tunisia and Morocco, as part of the European Neighbourhood Policy (ENP). DCFTAs belong to a wider package of EU policies towards its neighbours brought forward as a response to the democratisation processes witnessed in Eastern Europe and the Caucasus in 2003-2005, and in the Middle East in 2011.
The study draws lessons from past EU policies aiming at economic integration in its vicinity. It takes stock of the trade policy arrangements currently in place with all its neighbours, from the wealthiest to the poorest. It also sets the proposed DCFTAs against broader recent trade policy trends in the EU. In particular it uses as a benchmark the bilateral free trade agreements (FTAs) the EU has signed in recent years with emerging markets outside its neighbourhood.
The fundamental issue at stake in the current DCFTA negotiations is how far the EU should push the EU acquis communautaire in particular in the field of technical and sanitary standards. The countries under discussion are not expected to join the EU or the Single Market with its four freedoms – free movement of goods, services, capital and people – anytime soon. This is a very different setting from the trade arrangements that have been developed in the EU’s neighbourhood in the past, for which EU enlargement played a significant role. Despite this reality, the EU continues to push for regulatory alignment. Yet this is problematic. The EU is dealing with economies that are much poorer than the EU’s poorest member states. For them, integrating EU standards into their legislation, and in particular putting them into practice, will be costly and will probably fail.
Another important issue is the need to foster investment in the economies targeted by the DCFTAs. Both for the purposes of these economies, and for the sake of its own growth, the EU will need to focus on convincing these countries to open up their economies to EU investments in manufacturing and services, not least in infrastructure-related and business services. This is not an easy task. In order to achieve this, the EU needs to design DCFTAs that are ambitious, while offering trade concessions in return that respond sufficiently to the expectations of EU neighbours for access to the EU’s market. These expectations revolve around agriculture, and activities in manufacturing and services that require low-to-medium-skilled labour.
The DCFTAs should also be considered a means to foster industrial renewal in the EU and in the partner economies. However, in a world of global industrial supply chains, the EU’s rules of origin (ROOs) in its current FTAs in the neighbourhood (PanEuro) are inadequate to foster the kind of regional trade in parts and components that would be required to build sophisticated cross-border production chains that are part of today’s competitive industries.
Three proposals are formulated:
• The first is to design an ambitious FTA building on the most advanced FTAs the EU has recently signed outside the region. This means a bolder DCFTA that offers swift 100% duty free trade, with longer phase-in periods for agriculture. It focuses on liberalising and protecting investments in manufacturing and services, and limits the EU’s regulatory agenda to essential areas such as public procurement.
• The second is a formula to help directly exporting firms based in DCFTA economies to comply with EU standards by giving them direct access to EU based standardisation bodies.
• The third proposal is to shift from an FTA model to a customs union. In the EU’s neighbourhood, it is a better formula to both achieve the goals of regional economic integration and reduce the distortions coming from rules of origin in FTAs.
It is election time in France. The first round of the presidential elections took place last week. The socialist candidate’s lead in the first round last Sunday has raised concerns about France’s future economic and tax policies and its attitude towards the European Financial Stability treaty, given that Hollande has stated he would want to renegotiate it.
But will it really make a difference whether Francois Hollande or Nicolas Sarkozy is president? What could happen once the French presidential and parliamentary elections will be over in June 2012 and the new ministers and members of parliament get down to work ? Some background. Read the rest of this entry »
The press and the public are mesmerized about “Merkozy”. I am being asked many questions about French politics in the current of the Eurozone crisis and about the French German couple that seems to be running Europe these days. Last night Ms Merkel and Mr Sarkozy held a joint press conference in which Ms Merkel openly declared her support for Mr Sarkozy in the current presidential election campaign in France. Some background thoughts on all this: Read the rest of this entry »
In Europe, the mood is gloomy. The debt crisis, looming recession, rising unemployment, and the slow and timid political responses, all fully justify this. Yet overall, the year 2011 could go down in history as a rather good one. This is why:
- Kim Jong Il died
- Vladimir Putin lost his majority in the last parliamentary elections although he doesn’t want to admit it
- Muammar Gaddafi is gone
- Ben Ali is no longer in power in Tunisia
- Hosni Mubarak in Egypt is no longer in power and was judged and sentenced
- Morocco is moving towards a constitutional monarchy
- Yemen has a transition government
- Saudi women are allowed to vote in municipal elections even if they may not drive to the polling station by car
- Burma is slowly opening up
- Ivory Coast’s Laurent Gbagbo is standing trial in The Hague
What else…?
In Europe:
- Silvio Berlusconi was ousted from power
- Jacques Chirac was tried and sentenced this week in France for misdeeds in his time as mayor of Paris – the first time a (former) French president stands trial and is found guilty.
- Central and Eastern Europe is “coming of age”
I commented on Russia’s imminent WTO accession this morning on BBC World Service. Listen here.
On Monday morning, the 5th of December, I talked to a UK based journalist about the crisis in the Eurozone. I had to answer three main questions: whether the meeting between French president Nicolas Sarkozy and the German Chancellor Angela Merkel in Paris that day in the run-up to 8-9 December Brussels EU summit would be meaningful in solving the Eurozone crisis and help clinch an announced deal on fiscal union; whether, if it failed, sovereign debt contagion would spread like wildfire across Europe and destroy the euro; and whether the French and most of all the Germans were imposing their will on others. Read the rest of this entry »
See here for facts and my comments.
There has been a noticeable slowdown in trade growth according to the WTO. This was predictable – see my post this spring on why the trade growth recovery in 2010 could not last.
In public discussions on the current crisis, many parallels are drawn between today and the 1930s Depression. I personally tend to prefer to draw the less frequent parallels with the 1970s Stagflation. Making such parallels is interesting because it allows one to understand how much the world has moved on in some matters, and how it has not in others. This post is a bit long, so be warned. It is the result of a privileged moment with loads of time to think, in between two jobs…. Read the rest of this entry »
