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News & Insights on Europe

News and Views on Europe – 22 Jun 2018

posted by eucentresg

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EU reaffirms commitment to free trade through EU-Australia talks
On Monday (18 June), EU Commissioner for Trade Cecilia Malmström, Australian Prime Minister Malcolm Turnbull and Trade Minister of Australia Steven Ciobo met to officially launch trade negotiations for a comprehensive trade agreement between the EU and Australia. The meeting aimed to promote the idea of open trade, and the removal of barriers to trade in goods and services. Leaders also agreed on creating greater opportunities for small and large companies, as well as ensuring that businesses continue to engage in fair competition on a level playing-field.

The EU-Australia trade meeting in Canberra aimed to consolidate the bloc’s engagement in the Asia-Pacific region and boost inter-regional trade networks and connectivity as well. Since 2008, the EU and Australia have been conducting bilateral trade and economic relations under the 2008 EU-Australia Partnership Framework.The EU is Australia’s second largest trading partner, with bilateral trade reaching an estimate of EUR 48 billion last year. Ms. Malmström praised Australia for the country’s sustained commitment to global trade liberalization, stating that such “good trade agreements are a win for both sides”. The EU commissioner also expressed her confidence in strengthening EU-Australia relations, commenting on the similar views shared by both on how global trade should operate. In turn, Australian Prime Minister Malcolm Turnbull reiterated the country’s resolve towards fair and open trade, stating that the EU-Australia free trade partnership will be strongly built on a rule-based framework.

Notwithstanding positive developments during the trade talks, Ms. Malmström did warn that agriculture and designations of origin will prove to be challenging topics in trade discussions between Brussels and Canberra. This is because Australian companies regularly identity local products with European references. Despite the potential complications, both parties have expressed their commitment in reaching a consensual agreement that will be effectively ratified.

The opening of talks with Australia reaffirms the EU’s support for free trade amidst ongoing trade tensions, particularly in relation to the US’ increasingly inward-looking stance. The EU seeks to strengthen global free trade and buck a rising trend toward protectionism. Ms. Malmström leaves for Wellington on Thursday (21 June) to launch trade negotiations between the EU and New Zealand.

 

Migration/refugee crisis remains on top of EU agenda
Plans to firm up discussions regarding eurozone reforms were overshadowed by a new political crisis over migration during the annual Franco-German meeting on Tuesday (19 Jun). German Chancellor Angela Merkel and French President Emmanuel Macron had originally intended to approve and ratify a partial eurozone budget deal that had recently been agreed upon by the countries’ finance ministers. Their meeting was supposed to be a pivotal moment in setting out a common “road map” for the EU’s monetary union. After months of negotiations between the two, both leaders finally managed to achieve a compromise, with the German premier ultimately agreeing to make several concessions regarding eurozone reforms. All these “achievements” were however dimmed because of the migration / refugee crisis that surface again with Italy’s refusal to allow a migrant vessel to dock on its shores, and the problems that Merkel faced with her coalition partner CSU on how to handle the migrant / refugee issues.

In their meeting Merkel and Macron agreed on the critical need for a Europe-wide response. This urgency had been triggered by the possibility of withdrawal of support from the ruling coalition Christian Social Union (CSU) over the country’s immigration asylum policy. The dispute over asylum between Merkel and the Bavarian Interior Minister Seehofer over the weekend threatens the split of Merkel’s three-month-old coalition government and spells potential crisis for the country. Merkel has since been given a two-week period to broker a migration deal with the other EU allies before the European summit happening from 28-29 June. The French and German leaders have both expressed their desire to formulate a common policy that would help to ease the burden on Member States such as Italy and Greece, countries that currently bear the brunt of the immigrant/refugee influx.

In light of the chaos, European Commission President Jean-Claude Juncker has called for an emergency talks on Sunday (24 Jun). The informal working meeting will exclusively focus on finding an EU-wide solution to tackle the migration crisis. The discussion will also include the possibility of setting up “disembarkation platforms” outside the EU to facilitate the administration process of migrants streaming into Europe. This idea was first proposed by Hungarian Prime Minister Viktor Orban in 2016 and was recently endorsed and promoted by several Members States as a viable solution to the relocation of refugees across Europe. However, the prospects of reaching common ground amongst all Member States seem to be increasingly dim. Hungry and Poland have either refused outright or resisted taking in more refugees according to an EU quota system that has been unsuccessful. The controversial “anti-Soros” law was also recently passed in Hungary, criminalising individuals and groups that help immigrants claim asylum. Moreover, the new coalition government in Italy has also pledged to adopt a stricter position regarding its domestic immigration laws. With domestic challenges and internal disagreements threatening to tear apart the EU from within, only time will tell of the Union’s ability to stand firm amidst such crises.

 

UK passes Withdrawal Bill with more battles to come
The British Parliament made yet another U-turn this week. It voted down a backbench amendment to Ms May’s European Union (Withdrawal) Bill on Wednesday (20 June). It was meant to give the Parliament a “meaningful vote” on any eventual deal negotiated with Brussels, and to decide on the course the government should take if it fails to reach a Brexit deal. Seen as an embarrassment to Ms May, the amendment was backed by a group of Tory rebels days ago before being sent to the House of Commons for a debate and the vote. After Ms May offered concessions to would-be rebels before the vote while reaffirming parliamentary sovereignty, the amendment was rejected. This means the government’s Withdrawal Bill has finally passed through parliament and will become law after going for Royal Assent.

For some, the passing of the Withdrawal Bill is no big achievement. The more important battle is winning an imminent vote on whether the government should pursue a customs union with the EU or not, via the Trade Bill. That vote is expected before the summer recess on 24 July. The outcome of the vote on the Trade Bill could fundamentally alter the course of Brexit and could lead to Ms May losing the support of the Brexiteer wing of her party. Additionally, there are three reasons why that vote could be more contentious and unpredictable than the one on the Withdrawal Bill.

First, in relation to post-Brexit commercial arrangement with the EU, many in the UK entered into Brexit negotiations with the expectation that a deal on future trade relations could be part of the withdrawal pact, allowing both sides to establish new ties while undoing the old ones. Guy Verhofstadt, the European Parliament’s chief Brexit negotiator, however, poured cold water on this hope on Wednesday, saying a new EU-UK trade deal will not be concluded before the end of a post-Brexit transition period.

Second, Ms May’s government has not tabled its formal position on post-Brexit trade, adding to the uncertainties. One major difficulty Ms May encounters in drafting a long-awaited White Paper on future trade relation is the long-running impasse over how to avoid a hard border on customs between Northern Ireland and the Republic of Ireland. According to the EU’s chief negotiator Michel Barnier, “serious divergences” remain over this issue. Earlier this week Irish foreign minister Simon Coveney also expressed frustrations over the confusions that resulted from the UK’s inconsistent and conflicting statements on this matter.

Third, negotiations for a trade deal are likely to take place in an acrimonious political environment as a few moves by Brussels this week were not viewed in positive light in the UK. Take security. Speaking in Vienna, Barnier made it clear that the UK will be excluded from the European Arrest Warrant and EU crime databases after it leaves the bloc. More generally, he warned that the UK would not enjoy the same access to police, judicial and security instruments when it formally departs from the EU (probably in December 2020). In a further move to surprise, if not antagonise, the UK, the European Commission is making plans to require visas for British travellers post-Brexit. While the EU proposes that UK nationals should be exempt from visa requirement “for stays of no more than 90 days in any 180-day period”, many in the UK are already annoyed. “Many third countries enjoy visa-free access to the EU and given the UK’s historical links, one would not expect the EU to adopt such an apparently perverse position,” said Brexit-supporting Conservative MP David Jones. Given Brussels’ insistence on Brexit means ‘Brexit with consequences’, such a prospect is not entirely impossible.

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