European Union

Niccolò Machiavelli (1469-1527)

Yet again the European Union is sleepwalking into a diplomatic disaster. According to China’s interpretation of article 15 of its WTO accession protocol signed in December 2001, after 15 years (hence in one year’s time) it will automatically acquire market economy status (MES). For years this was the consensus view in Europe too. Not any more. For two reasons. Washington is starting to reject this interpretation in an electoral year in which being tough on China is popular, and China’s overcapacity (evidenced by the recent fall in steel prices) is starting to trigger a protectionist reaction in the Old Continent.

In this context many officials in Brussels and the national capitals are having second thoughts to the point that there is now a legal battle between those that think that China will obtain MES automatically, and those that believe that although paragraph 15(a)(ii) will expire, the rest of article 15 remains, which means that China will continue to have to prove that it is a market economy to avoid anti-dumping duties.

This matter could be seen as too legalistic and economically trivial. It affects only 2% of EU trade with China. The issue is important, however, for several reasons.

It shows that the EU is divided, even in trade relations, which are supposed to be competence of the European Commission. Italy – the country that launches the most anti-dumping investigations against China – is the only member state that has openly declared that China should not be given MES. The rest of the members are reluctant to position themselves. This lack of unity among the Europeans is a constant and highlights that the relationship between the EU and China remains asymmetric (as it has been for decades), but now it is in China’s favour, as we argue in a recent report written with other leading European think tanks.

Contrary to what is commonly assumed, China is not in the business of ‘divide and conquer’  in Europe. It does not need to. The Europeans are already divided. So much that I was told that officials at the European External Action Service (EEAS) are reading the late 15th Century and early 16th Century Discourses of Niccolò Machiavelli where he lamented that the Italian city-states were culturally and economically incredibly sophisticated but they were too small and divided to compete with the empires in-the-making (and nation-states in-formation) that were Spain, England and France at the time. This led him to write:

‘we [in Italy] have become prey of anybody who has wanted to overrun this land’ (Discourses, II.4).

The post-1945 EU is a bit like Florence, Milan and Venice after the Peace of Lodi in 1454. It has overcome pernicious parochialism and managed to become a regional quasi-state but ‘its members are distinct and each has its own capital; which makes it difficult for them to consult and to make decisions’ (ibid). This is a disadvantage in a globalised world where the great powers are no longer mid-sized European states, but rather continental-sized economies such as the US, China and India. This is the main reason why the Europeans do not know how to deal with the rise of China. On the one hand, they want to protect their national and sectorial interests, but on the other the Chinese market is too big, and therefore too attractive, to alienate China by not granting it MES.

Because of their divisions, the Europeans have played the MES card very badly. For years China has begged for this recognition and the EU could have used it as a political bargaining chip. Now it is too late. The Europeans are in a cul-de-sac. If the EU does not grant China MES in December 2016 after years saying that it will do so, they would be categorized in Beijing as hypocrites, with a possible diplomatic or economic backlash. Contrary, if the EU does finally grant China MES, it would fail Italy, important business associations such as AEGIS Europe and the European Chemical Industry Council, trade unions such as IndustriAll, a great part of European public opinion who does not believe that China is a market economy, as well as the US, an important ally which will not grant China MES anytime soon. Washington shows the advantages of a politically united, continental-sized economy. While in the treaty-constrained, legalistic EU, granting MES would require changing EU law (meaning the Commission, the Council and the Parliament need to approve it, a cumbersome process), in the US the executive branch has full discretion in this matter.

So what would Machiavelli suggest in this situation? Most likely, he would opt for a nuanced approach. First he would divide the problem in its legal, political and economic dimensions. On the legal side, the sensible thing to do is to grant China MES. In this way the Europeans would demonstrate that they respect international law, and what they have signed 15 years ago, even though now it might go against their interests. This can be done immediately in one year’s time. The alternative is to continue applying anti-dumping duties, wait for China to sue the EU before the WTO and then accept the resolution of the dispute settlement mechanism. The danger of Chinese retaliation is higher in the latter option so perhaps it is better to go for the former.

However, politically the EU needs to use this opportunity to show that it is united. Under international law China might have MES, but that does not make it a market economy. Thus, ideally, all three institutions: the European Commission, the Council and the Parliament should issue a joint ‘political’ statement declaring that although some progress has been done over the past 15 years, China is not a full market economy according to the five criteria used by EU. The evidence is very clear on this.

This show of unity would please the constituencies in the Old Continent that are more critical with China and surprise Washington and Beijing, which always think that the Europeans cannot get their act together. Consequently, it could turn the MES into a bargaining chip for the EU again, especially if finally the WTO decides that article 15 – even without paragraph 15(a)(ii) – continues to oblige Chinese firms to prove that they operate in a market economy. In any case, on the economic front, the EU should make clear that it will continue to use all the anti-dumping and anti-subsidy tools at its disposal, and even propose and apply innovative ones, to protect its industries while there is no level playing field with China.

This might provoke a protectionist reaction from Beijing. The risk exists. But with the threat of Chinese overcapacity only increasing, sending a clear message to China is no doubt what Machiavelli would do (if he was appointed counsellor to the EU). If China wants to deepen trade and investment relations with Europe under the One Belt and One Road (OBOR) initiative, and see more Chinese companies buy European ones and obtain public contracts, it needs to open up its market to European products and investments. Ultimately, it is a give-and-take.

This post was simultaneously published on the website of the Royal Elcano Institute.

EU-Asia Institute at ESSCA Ecole de Management, Angers
www.essca.fr/EU-Asia / @Essca-Eu-Asia

The post Should the EU grant China Market Economy Status? What Machiavelli would say. appeared first on Ideas on Europe.

Source : © European Union, 2016 - EP

European Council meeting will take place on 18-19 February 2016 in Justus Lipsius building in Brussels. 

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On 7 January 2016, the Council appointed Mr Kęstutis Lančinskas, a senior Lithuanian police official, as head of the European Union Advisory Mission Ukraine. Mr Lančinskas will replace Mr Kalman Mizsei and is expected to take up his duties in Kyiv on 1 February 2016. 

The European Union Advisory Mission for Civilian Security Sector Reform Ukraine, EUAM Ukraine, was formally launched on 1 December 2014, with a mandate to support Ukrainian state agencies in the reform of the security sector. The mission is one the central elements of the EU's enhanced support to the Ukrainian authorities after the Maidan uprising in December 2013. It follows the signing of an Association Agreement between Ukraine and the EU in 2014, which includes the establishment of a Deep and Comprehensive Free Trade Area (DCFTA). The DCFTA came into effect on 1 January 2016. 

The EUAM aims to strengthen and support reform in state agencies such as the police, other law enforcement agencies and the overall judiciary, particularly the prosecutor's office. This process is ultimately designed to restore the trust of the Ukrainian people in their civilian security services, which have been beset by allegations of corruption and malpractice. 

Today's decision was taken by the Political and Security Committee. 

A Masters graduate of criminal law, Mr Lančinskas held several first secretary roles as part of Lithuania's diplomatic service during the 1990s. From 1998 to 2005, he served as the head of the international cooperation and European integration service at Lithuania's Ministry of the Interior, where he was also responsible for Lithuania's participation in peace-keeping missions, and its accession to the Schengen cooperation.

Mr Lančinskas became deputy police commissioner general of Lithuania in 2005, before taking over as chief of Vilnius County Police in January 2009, a position he has held until now.

As reported in today’s Daily Mirror, the Conservative government has admitted that it has no concrete evidence to prove that so-called ‘benefit tourism’ exists.

And yet, Prime Minister David Cameron has vowed to ‘crack down’ on benefit tourism to reduce the numbers of EU migrants coming to Britain.

Mr Cameron wants EU migrants in Britain to wait four years before they are eligible to claim benefits – longer than British workers currently have to wait.

His proposal would break an EU foundation principle: that when EU citizens move to another EU county for work, they will enjoy the same benefits as the natives of the host country.

In a Parliamentary question, former Labour leader, Neil Kinnock, requested “all factual evidence” held by the Department for Work and Pensions that proved migrants were lured to Britain because of benefits.

The response provided by the DWP was analysed by expert Jonathan Portes, a Senior Fellow at the National Institute of Economic and Social Research.

He concluded, “This answer doesn’t show any connection at all between people coming here and wanting to claim benefits. If they wanted evidence of benefit tourism, they could commission a study – the government knows that perfectly well.”

As I have reported on numerous occasions, no evidence has emerged of any serious problem of so-called ‘benefit tourism’.

In fact, even prior to Lord Kinnock’s intervention, on three occasions the European Commission asked the British government for evidence of ‘benefit tourism’ – and three times the government wasn’t able to provide any.

Only 2.2% of welfare claimants in Britain are EU migrants – just 114,000 out of a total of just over 5 million benefit claimants.

The evidence is that welfare systems don’t generally drive immigration, according to Mr Portes. Nobody from the rest of Europe comes to Britain to claim benefits; they come here for employment.

Britain currently has more job vacancies than can be filled by the native workforce. That, in a nutshell, is why we need migrants. The country has a chronic skills shortage and without migrants helping to fill that gap, Britain – and Britons – would be poorer.

According to Bank of England boss, Mark Carney (himself a foreign worker), Britain has one of the strongest jobs market in the world, and it’s mostly British workers who are taking up the jobs. But foreign workers are also needed, he said, and they are contributing to Britain’s increase in productivity.

A major study by University College London showed that EU migrants coming to Britain in the last decade made a net contribution to the Treasury of around £20 billion, during a time when British natives were taking out more than they were putting in.

So this is the question: why is the Conservative government concentrated on fixing problems that don’t exist (e.g. ‘benefit tourism’, ‘too many migrants’) and ignoring problems that do exist (e.g. poor people relying on food banks; flood victims not getting sufficient support)?

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Related stories by Jon Danzig:

• Does the Prime Minister know what he’s doing?
• Fact: Most migrants come to work or study
• Why Britain needs migrants

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The post Benefit tourism: why ‘fix’ a non-existent problem? appeared first on Ideas on Europe.

General : This month it has been 30 years since Spain and Portugal joined the EU. At the time the EU was still known as the European Economic Community and after the accession of Portugal and Spain consisted of 12 member states.

Source : © European Union, 2016 - EP

General : This month it has been 30 years since Spain and Portugal joined the EU. At the time the EU was still known as the European Economic Community and after the accession of Portugal and Spain consisted of 12 member states.

Source : © European Union, 2016 - EP

Any second now…

Christmas is always a tricky time for politicians: on the one hand, everyone’s packed up for a break after a long autumn, but on the other, there’s usually something that needs urgent attention, like a flood. However, on balance this Christmas past has been generally quite quiet on the referendum front, before bursting back on front pages this week.

Tempting as it is to write about Cameron’s decision to give the Cabinet a free vote in the referendum, there’s little to be said. There has never really looked to be a good alternative position to take on this, especially given the folk-memory of the 1975 campaign, where the free vote produced all kinds of positive effects for Wilson. Faced with a front bench strongly determined in its views, Cameron’s best hope is that none of the senior team will want to take a very visible lead role with the Leavers, in case it damages their prospects for the Tory leadership contest that must be held in the next couple of years.

Likewise, much as the mini-drama of Nigel Farage’s ‘assassination attempt‘ (to be clear, someone trying to kill him, rather than vice versa) trundles on, it merely underlines the marginal position that UKIP find themselves in of present. The poor state of Carswell-Farage relations does not help in this, but more generally the party has yet to find its groove in the way that it did during 2014-15: that might not be so important in the referendum context, but certainly matters for the next cycle of local elections, where a strong performance is going to be essential.

Which brings us to one of the more marginal developments, namely the Labour reshuffle: shuffle being the operative word, given its (lack of) speed.

The broadly accepted reading of the reshuffle was that Corbyn wanted to exert some authority over his shadow cabinet, removing those who had spoken against him or his policies. However, after the protests at the removal of Michael Dugher at Culture, the whispers about replacing Hilary Benn as Foreign Secretary seemed to stop, along with any clear direction about what to do. Finally, Benn stayed in post, but Pat McFadden was taken out of the shadow Europe minister role, followed by a couple of other junior roles resigning in protest. Together with the changes at Defence, to bring a more Trident-unfriendly team, it has been foreign affairs that have taken the main hit of change.

Even if European policy has not been singled out as a point of contention in all of this – instead, Trident and security issues have been the bones of argument – then that policy is likely to suffer. Indeed, the willingness to replace McFadden, who was widely seen as being effective in his role, with Pat Glass, chair of the pro-EU group in the party, suggests no issue with working towards a Remain position in the referendum, but rather a lack of intra-party mobilisation on the referendum at all. The debate about whether Benn has been ‘muzzled’ by Corbyn has principally focused on security, but the scope for disagreement after the end of the EU renegotiation is also considerable.

In short, Labour look like a party that is studiously avoiding the referendum right now. And that matters if Cameron is serious about trying to wrap up a deal in February.

Whether he can achieve that is very up in the air. The Polish suggestion that they could accept limits on free movement in return for support for a NATO base was probably more about Polish concerns about rebuilding some support in the EU after the installation of the PiS government, and indeed everyone seemed to step away from the reports when pressed, but it potentially opens up a new phase of discussions. Given the need for unanimity, every other member state has a strong incentive to name a price for agreement and that incentive only increases as other make their demands.

As White Wednesday noted yesterday, odds on a summer 2017 vote have shortened considerably of late, so many punters remain to be convinced that speedy resolutions are at hand. Given the track record of the government to date, such a delay is not at all unthinkable, even if it comes with some very dubious benefits.

Whatever’s happening, there is a sense that things are picking up some speed: both sides are getting into the swing of campaigning, with videos, joint op-eds and the rest. To that list I will also add my own news, namely that during 2016 I will be a Senior Fellow of the ESRC’s “UK in a Changing Europe” programme, working on the campaign materials around the referendum, as well as more generally trying to help inform the public debate. There’s a lot planned, so I’ll keep you updated about events as we do.

And remember, it all has to be over by Christmas. 2017.

The post Gear-shifting the referendum? appeared first on Ideas on Europe.

I think this is my all time favorite quotation from a European philosopher.

“There lies something unique [in Europe humanity], which all other human groups, too, feel with regard to us, something that, apart from all considerations of expediency, becomes a motivation for them – despite their determination to retain their spiritual autonomy – constantly to Europeanize themselves, whereas we, if we understand ourselves properly, will never, for example, Indianize ourselves.”

- Edmund Husserl

Why do I like this? No, not because I am racist. Because, first of all, Husserl is not a Francis Bacon who thought that non-European people were cannibals by nature. Neither is Husserl a right-wing, conservative, neocon, colonialist with his self-indulgence in his European superiority. Keep your Sartre away. Nor is he a French leftie who indulges in self-flagellation, who affirms his superiority by claiming a monopoly on evil. He is none of these. He does not babble. He is crystal clear. Of course, there are always those non-Europeans who are already Europeanized enough to strictly disagree with his claim. But they only reinforce his claim. Anyways. I love this quotation not because I enjoy the fact the Europeans in general never Indianize himself – if they were to Turkishize themselves I would be terribly sad though (I used the fact that I am Turkish in order to justify this racism – which is not something that only Europeans are privileged to do). Rather, I love this quotation because it has the courage to say what it already is without any reservations, shyness, or, slyness, and, as such, it puts a problem before us with its all gravity. It speaks the truth. You like it or not, Husserl does not in the least care about it. He has greater concerns than some’s petty, multicultural, hypocritical, liberal concerns. So, I love this parrhesiastic moment – to have the courage to say what everybody already knows because by saying this, by revealing what is already being evinced, he also problematizes it. Then you start asking asking yourself, why? Why is this so? Why are we all being Europeanized? Some politically-correct forms of life cannot even bare such an utterance. Why? Because as long as you keep it as a secret, it would “function” like a tyrant ruling a nation challenged by nobody. These people were always there, and will always be there and comprise the majority. But their existence had never impaired and will never impair the truth.

I love this quotation because it speaks the truth without any reservations, without any undeserved pride. Hence, it raises a tremendous challenge: Will we all turn into little Americans (as Europeans are already becoming Americans) not because being American is bad by nature or something of course it is not, but because there must be some alternatives, for a world without alternatives, a world in which we all watch the same youtube videos.. I don’t know, I think it will an unbearable world. But of course, you can disagree and call me that I am a racist. After all, you will be right, whatever you say: this is your beautiful world and it seems it will be always yours.

The post We never Indianize ourselves appeared first on Ideas on Europe.

DRAFT OPINION on a new forward-looking and innovative future strategy on trade and investment
Committee on Foreign Affairs
Tokia Saïfi

Source : © European Union, 2015 - EP

RECOMMENDATION on the draft Council decision on the conclusion, on behalf of the Union, of the Stabilisation and Association Agreement between the European Union and the European Atomic Energy Community, of the one part, and Kosovo, of the other part
Committee on Foreign Affairs
Ulrike Lunacek

Source : © European Union, 2015 - EP