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News & Insights on Europe

News and Views on Europe – 15 Feb 2019

posted by eucentresg

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European Union-Singapore Free Trade Agreement Gets Go Ahead
The European Parliament on Wednesday (13 Feb) voted to give consent to three landmark agreements between the European Union (EU) and Singapore. These are the EU-Singapore Free Trade Agreement (EUSFTA), EU-Singapore Investment Protection Agreement (EUSIPA) and EU-Singapore Partnership and Cooperation Agreement (ESPCA) following the vote. This means that the pacts can now be ratified and come into force.

In a press release released by the Singapore Ministry of Trade and Industry (MTI) on Wednesday, Singapore heralded the EU Parliament’s decision, stating that “the comprehensive and ambitious EUSFTA will improve Singaporean and European companies’ access to each other’s markets, and provide a stable and fair regime for foreign investors while preserving the right of the parties to regulate in the public’s interest. Using Singapore as a launchpad, European businesses will also be able to tap into the opportunities in the wider region.”

Beyond the economic benefits, the EUSFTA also includes a comprehensive chapter on trade and sustainable development that sets the highest standards on labour, safety, environmental and consumer protection. The agreement will also look into strengthening joint actions on sustainable development and climate change.

Both the EU and Singapore will undertake their “respective internal administrative processes” to enable the EUSFTA to enter into force as soon as possible, said MTI.

Under EU’s processes, the EUSIPA will have to be sent to and approved by regional and national parliaments in EU member states before they can enter into force. The EUSIPA is set to replace the 12 existing bilateral treaties between Singapore and individual EU member states, and also includes rules on state-investor disputes.

Complementing the EUSFTA and EUSIPA is the EUSPCA which “provide a basis for us to broaden our cooperation including in areas such as education, transport, air services as well as science and technology,” Mr. Balakrishnan said in a Facebook post on Wednesday.

The EUSFTA and the EUSIPA marks the first trade and investment agreements concluded between the EU and a member state of the Association of Southeast Asian Nations (ASEAN), said MTI. The EUSFTA negotiations were first launched by Singapore and the EU in 2009, following the initial breakdown of talks for an EU-ASEAN Free Trade Agreement. The EU is Singapore’s third largest trade partner, with bilateral trade in goods exceeding S$114 billion in 2018. Singapore’s total exports in goods to the EU was worth approximately S$49 billion, with imports from the EU reaching around S$65 billion. Singapore is also the EU’s largest trading partner in ASEAN, with over 10,000 EU companies established in Singapore to serve the Asia-Pacific region. Singapore is also the number one location for European investment in Asia, with investment between the two growing rapidly in recent years, reaching over S$526 billion in 2017.

Singapore’s Minister in charge of Trade Relations Mr. S. Iswaran added that this is an important milestone in Singapore’s bilateral relations with the EU, and that “Singapore and EU companies, in particular our small and medium-sized enterprises, can look forward to significant benefits from the reduction of tariff and non-tariff barriers.” He added that the FTA and IPA underlines a shared commitment to open trade, and are “strategic pathfinders to an eventual EU-ASEAN trade and investment agreement.”

European leaders echoed the same sentiments. In a press release by the European Commission, President of the European Commission Jean-Claude Juncker said: “The European Parliament’s approval of the EU-Singapore trade and investment agreements marks a historical moment. This is the European Union’s first bilateral trade agreement with a Southeast Asian country, a building block towards a closer relationship between Europe and one of the most dynamic regions in the world. We are forging closer economic and political ties with friends and partners who, like us, believe in open, reciprocal and rules-based trade.

Commissioner for Trade Cecilia Malmstrom added: “In uncertain times, we need agreements like these more than ever. They will help Europe and Singapore to prosper, boosting our trade and strengthening an already essential relationship.”

In light of Brexit and the possibility of a no-deal exit, Singapore’s Minister for Trade and Industry Mr. Chan Chun Sing stated Monday night (11 Feb) in response to a parliamentary question that “trade between the UK and Singapore will not be fundamentally impaired” should the United Kingdom (UK) leave the EU without a deal. Mr Chan pointed out that the UK is the second largest economy in the UK and an important trading partner with Singapore, adding that Singapore is prepared to work with the UK to apply the EU-Singapore Free Trade Agreement (EUSFTA) in a UK-Singapore context that could form the basis of a future trade agreement between both countries.

 

EU-Cambodia Trade Preference to be Suspended
The European Union (EU) began Monday (11 Feb) the process of temporarily suspending Cambodia’s preferential trade access to EU markets under the Everything But Arms (EBA) scheme. The EBA scheme is one arm of the EU’s Generalised Scheme of Preferences (GSP), which allows vulnerable developing countries to pay fewer or no duties on exports to the EU, giving them vital access to the EU market and contributing to their growth.

The EBS grants full duty free and quota free access to the EU Single Market for all products except arms and armaments. Countries are granted EBA status if they fulfil several conditions, of which they must be listed as a Least Developed Country (LDC) by the UN Committee for Development Policy. EBA preferences can be withdrawn under certain conditions, notably in cases of serious and systematic violation of fundamental human rights and labour rights as determined by article 19 of Regulation (978/2012).

Launching the temporary withdrawal procedure does not entail an immediate removal of tariff preferences, which is the option of last resort. Instead, it kicks off a period of intensive monitoring and engagement. The is aligned with the aim of the Commission’s action, which is to improve the situation for the people on the ground.

In a press release by the European Commission, High Representative for Foreign Affairs and Vice President of the European Commission Federica Mogherini said: “Over the last eighteen months, we have seen the deterioration of democracy, respect for human rights and the rule of law in Cambodia. In February 2018, the EU Foreign Affairs Ministers made clear how seriously the EU views these developments. In recent months, the Cambodian authorities have taken a number of positive steps, including the release of political figures, civil society activists and journalists and addressing some of the restrictions on civil society and trade union activities. However, without more conclusive action from the government, the situation on the ground calls into question Cambodia’s continued participation in the EBA scheme”.

EU Trade Commissioner Cecilia Malmstrom echoed Mogherini, commenting that “there are severe deficiencies when it comes to human rights and labour rights in Cambodia that the government needs to tackle if it wants to keep its country’s privileged access to our market.”

Over the course of their fact-finding mission, The Commission had decided that Cambodian citizens have been repeatedly and regularly denied a number of fundamental rights, including freedoms of assembly and association, the right to political participation and labour organisation; and the right of free expression. The Commission also said that the findings add to “longstanding EU concerns” about the lack of workers’ rights and disputes linked to economic land concessions in the country.

The Commission is starting six months of intensive monitoring and will report on its findings and determine if Cambodian exports should continue to enjoy tax-free entry into the European market. It could decide in one year to withdraw Cambodia’s trade preferences. Any withdrawal would come into effect within 18 months.

Cambodian government spokesperson Phay Siphan rejected the conclusions of the EU’s fact-finding mission, but said Cambodia “had already prepared” for the decision to launch the temporary withdrawal procedure. Siphan added that the EU’s decision was taken for “geopolitical reasons.” In response to the US Embassy’s support for the start of the withdrawal, Siphan said the US and the EU were “ready to interfere in Cambodian affairs,” and that the decision was an extreme injustice when the European Commission disregards the “concrete measures and substantial progresses” made by the government in adhering and committing to the implementation of the 15 United Nations and International Labour Organisation core conventions. Analysts, however, said that the actions already taken by Cambodia are insubstantial, and that more have to be done in order to remain in the EBA scheme.

In light of the Commission’s announcement, Garment Manufacturers Association of Cambodia (GMAC) highlighted that the garment industry in Cambodia would be severely affected. Cambodia is the EU’s sixth largest garment supplier, and the robust garment and footwear industry exports over US$4 billion worth of products to the bloc and currently employs more than 700,000 workers. Tariffs on garments will rise by 12 per cent and it will more than double for footwear exports from eight to 17 per cent, meaning that the loss of EBA could cost Cambodia up to US$700 million a year. GMAC stated that the move would put “the competitiveness of our sector at risk… and Cambodia’s development will be halted. All efforts made in building a responsible garment supply chain will be jeopardised and it will be a dramatic setback for workers.”

In an immediate response, the European Chamber of Commerce (EuroCham) in Cambodia expressed its “disappointment” with the decision. Academic Kin Phea said the threat of Cambodia losing its access to the EBA should be countered by looking to markets outside Europe and the US, despite Malmstorm assurance that the Commission is “ready to engage fully with the Cambodian authorities and work with them to find a way forward.”

While businesses were upset by the news, Siphan expressed optimism, believing that the “positive impact and sustainability [from EBA withdrawal] will create a new history for Cambodia and the government to have the opportunity to be independent, sovereign and free from interference and interruption by foes, near and far.”

 

Brexit impasse continues as negotiations pushed to March; all bilateral deals will not roll over in time
Last week, UK Prime Minister Theresa May met with EU leaders including Jean Claude Juncker and Donald Tusk in Brussels to discuss the Irish border issue. At the meeting between May and Juncker, they agreed that the talks were “robust and constructive”. However, no decision was reached on the deal and the two agreed to meet again at the end of February to take stock of progress.

Donald Tusk also suggested to May that Jeremy Corbyn’s proposal to remain in the EU customs union could provide a “promising way out of an impasse” but this hope was dashed as May rejected the idea. On Sunday (10 Feb), May published a letter in response to Corbyn’s 5 conditions for a Brexit compromise, which sought to keep the withdrawal agreement and instead focuses on the political declaration. Remaining in the customs union, she said, would impede Britain’s ability to negotiate trade deals outside of the Union and have an “independent trade policy”, which was one of the main economic incentives for leaving the bloc.

The rest of the letter was conciliatory in tone and signaled her agreement to being more aligned with EU rules and regulations and to ensure more protection for the workers and environment. May is still fighting for legally binding changes on the Irish backstop, the main demand of her Conservative party, whereas the EU remains firm on their unwillingness to renegotiate the withdrawal agreement. However, she is also said to be holding cross party talks to get a majority in Parliament.

Similarly, talks between UK Brexit negotiator Stephen Barclay and EU counterpart Michel Barnier on Monday (11 Feb) were held to be “constructive”. In the meeting, they discussed “next steps” in the withdrawal process that would be acceptable both to UK parliament and the EU. Barnier echoed Tusk’s comments that he found Corbyn’s letter to be “interesting” and helpful while further reiterating that “something has to give on the British side”.

Since talks with the EU did nothing to solve the Brexit deadlock, PM May was not able to present any alternative arrangements that would gain a majority in the Commons. With time running out before the withdrawal date–May also rejected requesting an extension through article 50. Some analysts believe that May is taking a risky gamble by “merely playing for time” in the hope that either the EU will blink or the British parliamentarians would swallow hard and accept the initial deal. If she fails to deliver a deal before 27 February, her government will table a new motion to Parliament, to find a deal that could obtain majority support from MPs. This means the final chance for EU leaders to finalise a deal before the March deadline is during an EU summit scheduled for 21 March.

Adding to the uncertainties, international trade secretary Liam Fox admitted that the UK will not be able to roll over all the trade deals with third countries it had with the EU. The UK intended to continue over 40 trade agreements which account for around 12% of its total international trade by March 29. However, Fox said they had to prioritise trade deals with some countries over others. One such deal between UK and Switzerland was signed on Monday (11 Feb). The relationship is worth 32 billion pounds and it is one of the concrete steps taken by the UK to ensure trade continuity in the face of the Brexit outcome. A similar agreement with Israel has been announced while Australia and New Zealand have agreed to ‘mutual recognition’ deals
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Meanwhile, defence minister Gavin Williamson has announced that Britain will take a more active global role. Williamson said there are plans to send its new aircraft carrier to the Pacific, invest in offensive cyber capabilities and adopt a harder military stance after Brexit. He cited threats from Russia and pointed to US-UK military links as well as a stronger NATO.

 

All around Europe: internal politics of Germany, Spain, Italy and France
In Germany, new Christian Democratic Union (CDU) party chair Annegret Kramp-Karrenbauer held a “workshop discussion” on 10 and 11 February to review German and European asylum and migration policies. Many saw this “workshop” as an opportunity for Kramp-Karrenbauer, who has been called a “Mini Merkel”, to distinguish herself from her predecessor’s migration policy. So far it seems, she has been successful as she has unveiled plans to tighten immigration rules which includes “intelligent spot checks” at German borders. Other measures include speeding up asylum processing procedures to facilitate integration and a proposal for a joint European holding centre for asylum seekers in the Mediterranean. Merkel did not participate in these discussions.

After France recalled its ambassador to Italy last week over an ongoing dispute with Italy over issues ranging from migration to Interior Minister Luigi Di Maio’s meeting with yellow jackets, French President Macron has attempted to mend relations through a phone call with Italian President Sergio Mattarella on Tuesday (12 Feb). The two mutually “reaffirmed the importance of French-Italian relations for each country“. Deputy Prime Minister Matteo Salvini also tried to contain the row by announcing his intention to speak to Emmanuel Macron on three things: migration, Italian terrorists “living freely” in France,and French border checks on Italians commuters.

The Italian Prime Minister Giuseppe Conte has also weighed in on the spats in a Politico interview, saying they amount to “misunderstandings” and that while Italy wants change, it is not anti-EU. He attempted to put out fires on Di Maio’s meeting with the “Yellow Vest as well as other disputes. However, he also put to question the viability of the European project driven by privileged bilateral relations, namely the Franco-German engine recently renewed by the Aachen treaty, and said “we cannot allow the creation of a European Union with variable geometries”. Conte’s defense of Italy’s vision of Europe comes a day before flinging words with MEPs and repudiating a claim that he is a “puppet” of populists at an address to European Parliament.

Meanwhile in Spain, 12 Catalan separatists faced charges in the nation’s Supreme Court on Tuesday (12 Feb) including rebellion and misuse of public funds. The trial was held regarding a Catalonia referendum on independence held unilaterally in October 2017. Madrid considered the results void and indicted 20 separatists including Oriol Junqueras, the former deputy leader of Catalonia. Some of them remain in self imposed exile while 9 of them are already in jail without bail. The trial itself could last three months and the Spanish judiciary has been scrutinised on whether it can uphold civil rights in Spain’s hard won democracy.

The trial has also given the Spanish far right a global platform. Far-right party Vox will take part as a “popular prosecutor”, a role which allows member of the public, individual or organization, to be an accuser on par with appointed public prosecutors. Vox has called for a 74 years jail sentence for Junqueras, compared to 25 and 12 years asked for by prosecutors and state attorney, respectively.

There is also popular dissent on how Prime Minister Pedro Sanchez has handled the Catalonia issue as tens of thousands waving Spanish flags joineda rally for a “global Spain” on Sunday (10 Feb). The rally was organized through a combined effort by the centre and far right: Ciudadanos, the conservative Popular Party (PP), and Vox, with the aim of forcing a general election that could overthrow Sanchez’ minority Socialist government before his term in up in 2020. The rally came in response to Sanchez’ concession to the Catalan Separatists’ demand for a facilitator in talks between pro-independence and pro-unity political parties.

However, PM Sanchez has also lost the support of Catalan and Basque parties, who have been propping up his government against the right, as they rejected his 2019 budget proposal in Parliament on Wednesday (13th Feb). His office has announced that Sanchez could call for an early election, as soon as April and could coincide with the May European elections. While he could wait to dissolve the government until the end of term, it is just as likely that a snap election would take place. It is predicted that there is a 50/50 chance that right wing coalition could get a majority of the seats.

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