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News & Insights on Europe

News and Views on Europe – 7 Jul 2017

posted by eucentresg

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Estonia’s EU-Presidency
On 1 July Estonia took over the Presidency of the Council from Malta. The Presidency rotates among the EU member states every 6 months. The motto of the Estonian Presidency is “Unity through balance” – a nod to the difficulties ahead. The Presidency’s four priorities are: 1. An open and innovative European economy, 2. A safe and secure Europe, 3. A digital Europe and the free movement of data and 4. An inclusive and sustainable Europe.

On Wednesday (5 July) the Estonian Prime Minister Jüri Ratas spoke at the European Parliament to outline the priorities ahead. He urged EU member states to do more on defence. In order to keep up the ambitions set in the EU Global Strategy and the EU-NATO joint declarations, he added that “we need to spend more, and we need to spend better on defence”. A closer cooperation between the EU and NATO will be a top priority for the Baltic state, also because it shares a border with Russia. The negotiations between Russia and the European Commission over the Nordstream 2 pipeline will also be due during its Presidency.

Being one of the world’s most digitally connected countries, Estonia is also pushing for the free flow of data across the EU. It plans to provide almost 10 million people worldwide with electronic identities to become its e-residents.

 

China, Germany tighten ties before G20 Summit
Two days before Germany hosts the 2017 G20 Summit in Hamburg, Chinese President Xi Jinping and German Chancellor Angela Merkel engaged in a high-profile “Panda Diplomacy” at Berlin Zoo on Wednesday (5 July). The two leaders unveiled to the public two giant pandas, Jiao Qing (Darling) and its female companion Meng Meng (Sweet Dream), that China is lending to Germany (for 15 years) as a token of friendship.

The panda handover, described as “the ultimate Chinese gesture of tightening relations”, is quite symbolic of the current relations between China and Germany, the world’s largest and third largest merchandise exporters. Ahead of the zoo ceremony, Xi and Merkel held bilateral talks on various trade and market access issues (as well as such thorny political matters as the latest North Korean missile test and China’s human rights record). In particular, Merkel called for a mutual opening of markets and wanted a quick signing of an investment treaty which could one day lead to a comprehensive free trade agreement between the EU and China. The Chancellor also made it clear that, notwithstanding some earlier reservations about transparency and standard, Germany is ready to participate in China’s Belt and Road Initiative to upgrade trade links along the ancient Silk Road across Eurasia.

For his part, Xi recalled the long history of successful bilateral ties with Germany and said he believed that their excellent cooperation was currently starting a new phase, with new goals and projects. Notably, Chinese-German relations have been “repositioned” in the face of a protectionist US Administration that is less interested in global leadership and more interested in pursuing “America First” policies. After claiming that Europe cannot completely rely on the US (and the UK), Merkel in her campaign programme for the upcoming election dropped the term “friend” in describing the relationship with Washington. Instead, the US is described as Germany’s “most important partner” outside of Europe, stressing a functional nature of their relationship.

As fissure and widening gap appear between the US and Europe, Germany and China increasingly share similar views on everything from multilateralism, to trade liberalisation, the United Nations and the Paris climate accord. Converging views between China and Europe fits into the Chinese vision of creating an alternative leadership to the US on the global stage. On the other hand, New York Times noted that China has recognised how important Germany and Merkel – the woman many consider not just the most important leader in Europe, but also “the reluctant, de facto leader of the West” – are in influencing EU policies toward China, especially after Britain’s vote to quit the bloc. Over the years, China and Germany have set up more than 70 dialogue and cooperation mechanisms covering a wide range of policy and commercial areas. In this regard, China Daily praised Beijing’s approach of promoting trust and cooperation through high-frequency contacts and exchanges to be “a model for cooperation”.

 

EU strikes free trade deal with Japan
The EU and Japan signed a free trade agreement – officially known as the EU-Japan Economic Partnership Agreement (EU-Japan EPA) on Thursday (6 July) following more than four years of negotiations. Among others, EU will allow Japanese cars to enter its market without tariffs (at present, the tariffs can go as high as 10%), and Japan over the coming years will allow most European food and drink products into Japan on a duty-free basis.

The outline plan was signed in Brussels after a meeting between the Japanese Prime Minister, Shinzo Abe, and the European Commission president, Jean-Claude Juncker, on the eve of the G20 meeting of leading economies in Hamburg. Full workable agreement is still unknown and may take some time to finalise.

Germany’s Ifo Institute for Economic Research estimates that the EU’s real GDP will increase by 0.06% and 0.29% depending on assumptions of the depth of trade liberalisation between the EU and Japan. Japan is predicted to reap larger gains in real economic output, estimated at 0.23-1.63%. This is because Japanese exporters generally face stiffer protection in European market than is the case for European firms in Japanese market. And the simulations suggest that Brexit would have a negligible impact on the economic value of EPA.

More important than the potential GDP increase, however, would be the strategic and normative value of such an agreement. The EU-Japan EPA constitutes almost a third of global GDP. Also, in this era of Brexit and Trump, it would signal a clear commitment to economic cooperation and free trade. As Juncker put it, “Together, we are sending a strong message to the world that we stand for open and fair trade”. Donald Tusk , President of the European Council, went on to suggest that the EPA is a testimony to the shared values between the two sides: “liberal democracy, human rights and the rule of law”.

 

Migrants arrival in Italy reaching new peak
The arrival of 12,000 people in Italy over the past few days has led to a meeting of Italy’s, France’s and Germany’s interior ministers on Sunday (2 July), after Italy called on other EU member states to open their ports to rescue ships. During the meeting, which was also attended by EU Commissioner for Refugees Dimitris Avramopoulos, the four discussed “coordinated and concerted response” to the migrant influx in the Central Mediterranean. The UN’s refugee agency, UNHCR, announced that around 85,000 people have arrived in Italy so far – a 20% increase compared to the same period last year. 70% of those are said to be economic migrants, and therefore not eligible for protection. In the whole of Europe around 100,000 arrivals were registered so far this year.

In order to support Italy, the European Commission announced an “Action Plan” on Tuesday (4 July), outlining €35 million in aid for Italy and further cooperation with Libya and other countries to stem the flow of migrants. Frans Timmermans, the Commission’s Vice-President, lamented that other EU member states had failed to show solidarity, particularly Poland, Hungary and the Czech Republic are refusing to participate in the EU’s relocation scheme. Until now less than 20,000 people have been relocated under the scheme, which was originally due to move 160,000 people over a two-year period ending in September 2017.

There are also talks about an NGO code of conduct in order to reduce the risk of accidents at sea, and addressing criticisms that NGO rescues encouraged migrants to come. However, the criticism has been dismissed by NGOs such as UNHCR and IOM. The Action Plan is to be discussed in an informal meeting by EU ministers in Tallinn, Estonia, on Thursday (6 July).

Fearing an influx of migrants, Austria threatened to close its borders with Italy resulting in rising tensions between Austria and Italy. Austrian defence minister remarked that 750 soldiers were be on stand by to go to the border at 72 hour notice. Austria will hold snap elections in October, with not only the far-right FPÖ trying to put immigration at the centre of discussions.

Timmermans acknowledging that there is no silver bullet solution to the migration crisis added that “this issue will not go away tomorrow, or next year, not in a decade – it is here to stay for generations”.

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