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News & Insights on Europe

News and Views on Europe – 6 Jul 2018

posted by eucentresg

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Migration to remain top of EU agenda amidst trilateral deals, compromises and differences
Austria took over the rotating 6-month EU Presidency from Bulgaria. Commentators point to Kurz’s “A Europe That Protects” slogan as evidence that further protection from migration should be anticipated under Austrian presidency. Sure enough, on Tuesday (3 July), Austrian Chancellor Kurz called for a “paradigm shift in migration”, and for the safeguarding of Europe’s external borders as prerequisites for a common border-free Europe. This led to the European Commission (EC) chief Jean-Claude Junker hitting back at Kurz, arguing that the EC had previously proposed to protect the EU’s external borders as far back as since 2008, and alluded that such plans were then rejected by the Austrians.

At the EU summit (29 June) before Austria took over the presidency, a wider EU migration agreement was struck. It was seen as a fragile agreement that was big on promises but short on details. Hence, it was not surprising that Spain, Greece and Germany reached a trilateral “reciprocal cooperation” migration swap deal. The deal, initiated by German Chancellor Angela Merkel, aimed to minimise ‘secondary movements’ of migrants. Germany pledged to finance and facilitate the return of Spain-registered asylum seekers back to Spain. In return, Germany agreed to ‘gradually compete and close’ asylum applications to reunite 2900 individuals with their families. Greek Prime Minister Alexis Tsipras expressed confidence in handling the arrival of asylum seekers since less than 150 people emigrate for Germany monthly.

Meanwhile, in Germany, Merkel secured a compromise with her Interior Minister and Leader of the Bavarian Christian Social Union (CSU) Horst Seehofer, ending a weeklong migration row that threatened to bring down the ruling coalition government. Prior to their reconciliation, Seehofer offered his resignation from both offices in disagreement to Merkel’s proposed solution for the migration crisis. In line with the CSU’s upcoming Bavarian state election campaign strategy, Seehofer demanded a more hard-line anti-immigration stance. The Merkel-Seehofer compromise entailed the establishment of “transit zones” along southern Germany to facilitate accelerated deportations of refugees who have been denied asylum.

The Merkel-Seehofer compromise, while ensuring the ruling coalition government remains in power, left Austria and Italy up in arms. Both Austria and Italy threatened to reintroduce border controls should Berlin enact its “transit zone” plan. Meanwhile, Austrian Chancellor Sebastian Kurz warned that the Merkel-Seehofer deal could force Austria to enact stronger border checks on neighbours Italy and Slovenia.

Meanwhile in France, President Emmanuel Macron firmly rebuked outgoing Ambassador to Hungary Eric Fournier after a leaked confidential cable revealed the latter’s praises for Hungarian Prime Minister Viktor Orban’s migration policy. Orban was widely criticised in 2015 for erecting razor-wire fence along the Hungary-Serbia border to prevent an inflow of migrants. As this leak came at a sensitive time where tension over the migration crisis was high, Macron swiftly denounced Fournier’s sympathy and clarified that Forunier’s memo was not “the expression of the official French position”.

 

EU Unites Against Trump’s Tariff; EU’s Warning Elicits Trump’s “Veiled” WTO Threat
On Friday (29 June), EU leaders pledged to react firmly against protectionism and called for a new EU law to screen foreign investments, especially from the USA and China. They agreed that the import tariff imposed on EU steel and aluminium by the US is unjustified and supported the European Commission’s legal challenge against the tariff. However, on Thursday (28 June), the EU leaders agreed on a set of World Trade Organisation (WTO) reforms which is expected to create ground with US President Donald Trump in hopes of de-escalate the ongoing trade war. The proposed WTO improvement include modernising the organisation and the Appellate Body. The proposal, however, was only agreed “in substance” as Italy Prime Minister Giuseppe Conte blocked its formal adoption till the migration crisis was fully addressed.

The EU Summit took place against the backdrop of a mounting trade war. Retaliating to the steel and aluminium tariffs, the EU targeted a reciprocal US$3.2 billion worth of American exports to the EU. This retaliation follows China’s tit-for-tat tariff on American exports amounting US$50 billion. Most recently, the US also threatened to impose a 20% tariff on all EU-assembled cars imports; the EU has warned the US that this automobile tariff will harm its own industry and likely elicit retaliation by the EU on American exports amounting to US$294 billion.

Following EU’s warning on the automobile tariff, Trump issued a veiled threat, warning the WTO that the US “will be doing something” if they are not treated properly. A source familiar with Trump’s thinking revealed that Trump had privately expressed a desire to quit the WTO, though it was ‘not a serious proposal’. Since the US automobile tariff plan was publicised, over 40 countries including all 28 EU states, objected the tariff plan. Meanwhile, China also proposed to launch a joint action, together with the EU, against the US at the WTO. However, the EU rejected the idea of allying with China against the US. The Sino-European Summit which would be held in Beijing on 16 – 17 July is also expected to produce a modest communique that affirms the commitment of both parties to the multilateral trading system and pledges to create a working group on modernising the WTO. China would be placing pressure on the EU to issue a strong joint statement against Trump’s trade policies.

 

Brexit negotiations remain deadlocked over Irish border
The Brexit negotiations between the EU and the UK are at a standstill. It is deadlocked over the issue of Irish border. The EU’s position has been a full regulatory alignment between Northern Ireland and the European Single Market to avoid a hard border dividing the Irish Island. This protects the interests of the Republic of Ireland while effectively erecting a border within the UK. This stance is unacceptable to the UK. While it is yet to know Whitehall’s final negotiation position on future trade relations due to a lack of internal consensus, the redline cannot be clearer: there cannot be a border down the Irish sea and territorial sovereignty is nonnegotiable. The current situation therefore is one of the UK pledging to reject a withdrawal agreement that has “Northern Ireland-specific” elements and the EU offering no concessions on this (because the EU is “all Irish” on Brexit).

The alternative option the EU has tabled is for the whole of the UK to stay in the customs union. This option is not very popular in the UK either, not least because it curbs the UK’s ability to run an independent trade policy. Jacob Rees-Mogg, a leading Brexiteer and Eurosceptic, warned on Wednesday (4 July) that accepting EU trade rules and regulations would be “the worst option” (and a “really foolish policy”) for Brexit. Unless a compromise can be reached, the risk of the UK crashing out of the EU without a deal to govern future trade relations is increasingly evident. (Commentators went so far as to opine that the “tortured and contradictory relationship” between the EU and the UK leads to “‘no deal’ Brexit by default rather than design”.)

The European Commission briefed MEPs on Monday (2 July) that to prepare for Brexit doomsday it will propose “legislative adaptations” after 29 March to ensure “information to all citizens and stakeholders” and remove the UK from many of the EU’s databases and IT systems. Interestingly, while the EU is erasing the footprint of the UK, the UK is pushing to beef up its Brussels presence for fear of being left out of the loop on EU matters of huge importance to the UK as a “third country”.

The MEPs were also concerned with the UK’s plans for EU citizens post-Brexit. The UK’s residency scheme for EU citizens released last month would allow those who have been continuously living in the country for five years to be eligible for “settled status,” and once obtained, these residents would “have the same access as they currently do to healthcare, pensions and other benefits” in the UK. But MEPs believed there are “four big concerns” about the plan: a lack of independent authority to monitor the process, a “very dense” network of contact points impeding efficiency, no registration deadline, and the £65 registration fee.

More than two years after the Brexit referendum, a draft report by the UK’s Electoral Commission finds that “Vote Leave” broke campaign spending rules. But Vote Leave said its campaign spending was in line with electoral rules — which set a limit of £7 million — and had submitted a 500-page rebuttal to the Electoral Commission on Tuesday (3 July). Whether the campaign violated the rules seems rather irrelevant now as the UK faces grave consequences leaving the EU on 29 March 2019.

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