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News & Insights on Europe

News and Views on Europe – 1 Jul 2019

posted by eucentresg

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Sustainability as central theme for Finland’s presidency of the EU
Finland takes over the six-month rotating presidency of the Council of Europe on 1 July from Romania. Helsinki has declared that it wants to push rule of law as its priority in chairing the EU budget, expressing the need to have a more structured debate on the rule of law that will not single out countries such as Poland and Hungary. It also wants to improve the coordination of security and defence inside the EU against traditional threats as well as new challenges like cybersecurity and climate change. Finland’s European affairs minister Tytti Tuppurainen affirmed that “a multilateral international order” and “rule-based geopolitical system” is necessary for economic prosperity security of a small country like itself.

Finland has chosen the slogan “Sustainable Future, Sustainable Europe” as the overarching theme for the Finnish presidency of the EU from 1 Jul to 31 Dec 2019. Finnish Prime Minister Antti Rinne in presenting the 6-month programme to the Finnish Parliament reiterated that a key priority would be EU’s global leadership in climate action, but added that sustainability encompasses also the socioeconomic dimension. The future of the EU should be “socially, economically and ecologically sustainable”.

 

EU-Vietnam, EU-Mercosur trade deals
The EU signed an accord with Vietnam on Sunday, removing virtually all customs duties on trade. EU-Vietnam trade currently represents €50 billion euros in goods and €4 billion euros in services. A trade and investment researcher, Lora Verheecke has expressed that the inclusion of an Investor-State Dispute Settlement (ISDS) system into the trade and investments deal “threatens public budgets and puts social and environmental protections” at risk. The deal also contains no obligations for EU corporations in Vietnam to respect human rights.

Despite public outcry across Europe, with over half a million signing a petition to stop ISDS in EU trade deals, very little has changed with an updated approach of the ISDS known as the Investment Court System (ICS). As Verheecke writes, “One of the most fundamental problems is that it is a one-way system that only provides rights to investors, with no corresponding obligations to support the public interest.”

In another region, the EU and the South American bloc of Brazil, Argentina, Uruguay and Paraguay (Mercosur) finally ended the world’s longest-running trade negotiations on a successful note 20 years after they began – on 28 June 1999. As with most trade negotiations, both sides worried about opening up their relatively protected or politically sensitive industries to more competition and negotiations stalled multiple times over those differences.

Known as the EU-Mercosur deal, it is the largest deal the EU has struck in terms of tariff reductions and is considered “historic” as it would create the largest free trade area in the world. Duties on EU exports to Mercosur are expected to be cut by €4 billion euros a year. It is also the first sweeping trade agreement signed by Mercosur since its launch in 1991. Extending far beyond tariffs, the scope of the deal includes access to public procurement contracts, protection for regional food specialities and greater freedom to the provision of services.

Negotiators said that one of the biggest wins for Mercosur is the increased access to the European market for agricultural goods, while the biggest gain for the EU is a vastly improved export environment for its companies which will now have a global advantage over other companies that still face Mercosur’s traditionally high tariffs and trade barriers. Europe’s food producers should also benefit from the dropping of tariffs on spirits (up to 35 percent), wines (27 percent) and confectionery (20 percent).

The Financial Times reports that the wider significance of the deal lies in the “powerful political messages” it sends that the international trading system would endure despite strains from the US-China trade war. The agreement shows that trade deals are still possible despite mounting world-wide protectionism, as Brussels adds another deal after clinching pacts with Canada, Mexico, Japan and Singapore in recent years.

French President Emmanuel Macron has been one of the wariest leaders, giving the agreement a cautious welcome on Saturday, saying it was “good at this stage, it goes in the right direction, but we will be very vigilant”. Macron has previously said that the deal could not go ahead if there was any wavering by Brazil on its international environmental commitments, asking the EU to safeguard the bloc’s farmers and climate goals.

The pact has also drawn sharp criticism from farmers and environmentalists. Farmers and ranchers in Europe say they are being sacrificed to secure markets for Europe’s powerful industrial exports, such as autos and machinery. European activists had called on the EU to walk away from talks because they feared that more beef exports from Mercosur would spur deforestation of the Amazon rainforest.

Both parties said they have committed to implementing the Paris climate change agreement and that a special chapter on sustainable development would cover issues such as forest conservation and labour rights.

The agreement still needs to be ratified by the national parliaments of all member countries of both blocs, as well as by the European Parliament and EU Council. This could result in a long delay for provisional implementation of the deal amidst a rise of anti-establishment parties opposed to globalisation.

 

EU held another emergency summit on EU top jobs last week
The European Council summit on Sunday was threatening to end the same way as the last one, without agreement on who should take the European Commission presidency and other EU top jobs. This is because Manfred Weber, the lead candidate from the center-right European People’s Party (EPP), has not even managed to attain majority support from his fellow Members of the European Parliament (MEPs) and has been criticised by French President Emmanuel Macron as unsuitable. The EU’s leadership deliberations look to be effectively frozen until the EPP decides how to proceed.

As a result, the EU Parliament has decided to postpone the election of the new Parliament president by 24 hours to Wednesday (3 July) instead of Tuesday (2 July) to give EU leaders extra time to decide on other EU top jobs. Choosing who will have the EU’s top jobs is a matter of urgency because one of the positions already needs to be filled by the time the new European Parliament meets on Wednesday. Furthermore, it is important to strike a precise balance between the demands of party families, country affiliation and gender and “if the first button is buttoned wrong, the whole jacket will be crooked”.

Before the Sunday summit, Tusk warned of difficult negotiations and that an immediate breakthrough should not be expected. Tusk’s caution appears to hold water since the summit, the third attempt at filling 5 top posts to run the European Union for the next 5 years, saw a surprise breakdown over a possible appointment of Dutch socialist Frans Timmermans as president of the European Commission. While the leaders of Germany, France and Spain agreed to back him while in Japan for the G20 summit last week, unexpectedly tough opposition arose from Poland, Hungary, Czech Republic and Slovakia during the summit.

Eastern European leaders at the summit said they were opposed to Timmermans, who in his current role as vice president of the Commission has repeatedly accused Poland and Hungary of violating civil rights. “I’m afraid that this person is not really the right one to unite Europe,” Czech Prime Minister Andrej Babis said. Hungary’s government spokesman Zoltan Kovacs tweeted that appointing Mr Timmermans to the top EU job was “completely unacceptable”.

The summit was suspended late on Sunday evening (around 11pm) for bilateral consultations with Tusk and will resume through the rest of today (1 July) in attempts to break the deadlock.

The battle over the top job has also developed into an intriguing Franco-German standoff, with Macron publicly questioning Weber’s credentials and incurring the incense of German officials as a result. While the EPP has publicly stood by Weber prior to the summit on Sunday, his opponents have criticised Weber for his lack of high-level executive experience, clout and gravitas. An EPP insider said the EPP will insist on the Bavarian politician as the next Commission chief, despite mounting pressure from Paris to back down. “The vast majority of EPP prime ministers don’t believe that we should give up the presidency quite so easily, without a fight,” Ireland’s centre-right Prime Minister Leo Varadkar said. The relationship between Macron and Merkel is said to have been severely damaged after Macron opposed the election of Manfred Weber as Commission president, according to sources in Brussels.

Liberals and Socialists led by Macron and Spanish Prime Minister Pedro Sanchez say they are pushing back at what they see as increasing centre-right German domination in Brussels and want to focus less on financial austerity and more on issues such as climate change and a higher minimum wage.

The key issue for all participants is when and how to proceed with a Plan B, coming up with alternative EPP candidates for the Commission presidency who are palatable for both EU leaders and Parliament. POLITICO has put up nine possible EPP contenders for the powerful post with plenty of executive power to go around between them.

Manfred has also put up a vigorous defence, making it clear that he is not ready to abandon his bid. In an op-ed for German Die Welt, he rallied for the Spitzenkandidat system and in a veiled jab at the French President, wrote that “[t]hus far, those who have prevailed are the ones who are destructive”. The Spitzenkandidaten model is an attempt to make European elections more meaningful by allowing voters to vote on the top job. The promise was that it should also be more transparent in the distribution of the top jobs, with the top candidates campaigning beforehand and revealing their political convictions in a pan-European election campaign.

Rebutting Weber’s defense of the Spitzenkandidat system was Franziska Brantner, a Green MP of the German Bundestag. She remarked that the recurring argument in Germany that questioning the Spitzenkandidaten process would undermine the democratic legitimacy of the European Parliament is not a valid point. Instead, she pointed out that the European Parliament’s democratic legitimacy lies in its ability to find common political ground and not in the Spitzenkandidaten system itself

Claire Stam reports that German tensions over Manfred Weber’s candidacy for the European presidency are deeply rooted in Germany’s national politics. Traditional parties in power today such as the Christian Democratic Union have been at the heart of German democracy for decades and “have no interest in suffering the same fate as French counterparts, who are now facing an existential crisis”, remarked Claire Demesmay, head of the Franco-German relations programme at the German Council for Foreign Relations (DGAP).

 

NATO to prepare for post-INF world as EU tries to de-escalate tensions between the US and Iran
In foreign affairs, the EU tried to de-escalate tensions between the US and Iran while urging Russia to abide by the Intermediate-range Nuclear Forces (INF) treaty or face military response from NATO. The US has unilaterally withdrawn from the INF treaty with Russia and the Joint Comprehensive Plan of Action (JCPOA) with Iran, without consultation with its European allies making the transatlantic partnership more difficult amidst regional tensions.

On Monday (24 June), Euractiv reported Russian Deputy Foreign Minister Sergei Ryabkov as saying Russia would retaliate and things could escalate “right off the limit” if US actually deployed missile systems in eastern Europe. The US has deployed 5000 US soldiers alongside NATO forces and has promised to send additional 1000 troops to Poland and there were also talks of deploying land-based missile system there. He warned that the stand-off could be a repeat of the 1962 Cuban missile crisis. Ryabkov’s comments were geared to countering Washington’s suspension from the INF treaty in February, citing Russian violation of key terms within the Cold-war treaty signed in 1987.

At a NATO press conference in Belgium on Tuesday (25 June), Secretary General Jens Stoltenberg said that Russia has 5 weeks remaining to save the INF treaty failing which, NATO’s response will be “defensive, measured, and coordinated”. He also urged Russia to come back into compliance with the INF by dismantling the 9M729/SSC-8 nuclear-capable cruise missile system which allows for short-notice nuclear attacks on Europe.

Stoltenberg did not go into specifics of the countermeasures on Tuesday but US Ambassador Kay Bailey Hutchison said Washington is only considering conventional, non-nuclear weapons as part of their response. NATO defence ministers met on Wednesday (26 June) to discuss and prepare for a world without INF.

The Northern Group containing NATO members bordering the Baltic Sea met in Berlin at the bi-annual meeting on Tuesday (25 June) to deepen security cooperation and quicken military maneuvers within the region. They also carried out a maritime exercise called BALTOPS (Baltic Operations) in Germany. The Northern Group is part of the European efforts to further regional integration of the armed forces of EU member states outside of but in cooperation with NATO.

In the Middle East, Brussels is calling for “urgent restraint” from both Iran and the US after Washington announced new “hard-hitting” sanctions on Iran following an alleged attack on a US drone by Iran. The EU wants to maintain the implementation of the Joint Comprehensive Plan of Action (JCPOA) with Iran and has emphasised “exclusively diplomatic routes” to lower tensions between Tehran and Washington. US special advisor Brian Hook firmly restated that EU needs to apply pressure on Iran to “promote regional stability” and said that the US is seeking a comprehensive new deal that is not only limited to Iran’s nuclear program.

Iran’s UN envoy, meeting Top French, German and British diplomats on Thursday (27 June) said they cannot be expected to hold up the JCPOA unilaterally under US sanctions. To make matters worse, Russia has signaled support for its ally and said “any attempt to portray Iran as the main threat to regional security is unacceptable to us”. EU, led by Emmanuel Macron, is trying to re-open negotiations between US and Iran.

EU also sent a “special representative”, Susanna Terstal, to Bahrain for the unveiling of the US’ controversial Middle East Peace Plan. A spokesperson said that the EU’s attendance is at a “technical level” and that it does not waive their commitment to the negotiation of the two-state solution. Helmed by President Trump’s son-in-law, Jared Kushner, the plan is to “unlock $50bn (€44bn) of investment, including $5bn of infrastructure projects in the Israeli-occupied Palestinian territories”. The plan has been boycotted by Palestinian and some Arabian authorities as well as businesses as it does not address the political situation.

Meanwhile, the parliamentary assembly of the Council of Europe (PACE), a human rights body made up of 47 European states, has returned voting rights to Russia after they were removed over the annexation of Crimea. While supported by France and Germany, Ukraine has expressed dismay at this move and declaimed it as “unilateral surrender of the Council of Europe to Russian demands.” Russia had threatened to quit the human rights assembly if its voting rights were not returned before the election of the new leadership, meaning Russians would lose access to the European Court of Human Rights.

On Thursday (26 June) Croatian foreign minister Maria Pejcinovic Buric was voted the new Secretary General of PACE with 159 votes from 268 members of the Parliamentary Assembly. However, to protest Moscow’s controversial return, delegations from Estonia, Georgia, Lithuania, Latvia, Poland, Slovakia and Ukraine walked out of the assembly and suspended their participation.

More recently, Russian President Vladimir Putin called liberalism “obsolete”, invoking a passionate defense from EU Council President Donald Tusk on Friday (28 June) that “freedoms”, “rule of law”, and “human rights” are not obsolete and remain essential for Europe.

 

Irish border and post-Brexit tariffs the main lines of contention in Tory leadership race
Former foreign secretary Boris Johnson and current foreign secretary Jeremy Hunt are the two remaining candidates in the Tory leadership race to become the next Prime Minister of the UK. They participated in a live husting event on Wednesday (26 June) to answer questions from the public. The results of the Conservative Party ballot will be announced on 23rd July and the new PM will take over from Theresa May by 24 July.

On Monday (24 June), Hunt challenged his rival to be clear on his plan for a no-deal, saying that he himself would be willing to abide by Parliament wishes if they chose to remove a no-deal from the table. Hunt also criticised the EU for playing “hardball” with the Irish border provision and accused them of trying to exert influence to keep the UK in the custom union. Instead, Hunt says he wants to renegotiate a deal which would rely on existing technology to make the physical border unnecessary.

Boris Johnson said that the October 31 deadline is a “do or die” and challenged Hunt to stick to it as well. He also acknowledged that EU’s cooperation is needed in order for the UK to make an orderly exit but is willing to play by World Trade Organization’s rules in the event of a no-deal. Johnson also came under media scrutiny for a domestic ruckus but has declined to talk about his private matters to the press.

On Sunday (30 June), Johnson clarified in an interview that if the Tory party could not deliver Brexit, he believes their electorate will lose faith in them and there will be a shift away from both mainstream parties. He has also said MPs also have the responsibility to get Brexit done; it is reported that Johnson is planning a “war Cabinet” to force it through.

On Thursday, the UK’s Brexit department published its latest overarching plan that does not include holding a final parliamentary vote on the final deal–including the Withdrawal Agreement and future EU-UK relations. This is likely unconstitutional as the government is required by law to hold the final vote but the department maintains that they would like to keep the new Prime Minister’s options open.

Despite having no clear plan, Johnson said on Wednesday (25 June) that he would not impose tariffs on goods coming into the UK in a no-deal scenario at the Irish border in order to keep consumer prices low. Johnson believes that Article 24 of the WTO General Agreement on Tariffs (GATT 24) would allow them to keep the same tariffs without a deal.

However, the interpretation of this clause in the WTO rules has come under contention by the EU as well as Bank of England Governor Mark Carney who said, “GATT 24 applies if you have an agreement, not if you’ve decided not to have an agreement or been unable to come to an agreement.” EU commissioner for trade Cecilia Malmstrom told Reuters that tariffs are unavoidable in the event of a no-deal Brexit. Britain will be treated like any other third country without a Brexit agreement, which means new tariffs will be imposed. Malmstrom is supported by trade lawyers who say Johnson’s interpretation is a “misrepresentation” of the GATT 24 and doubt it will soften the economic blow of a no-deal.

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