As European leaders head to Rome this weekend to contemplate the EU’s future, there is an elephant in the room, and it is not actually Brexit. It is the question of whether the EU is ultimately reaching the zenith of the harmonising push begun with the creation of the single market thirty years ago. The logic of Brussels has always been that unity follows uniformity. One of the more interesting subtexts in Rome will be the idea that one path to unity may be to accept – even encourage – differences. In Versailles a few weeks ago when France, Germany, Spain and Italy met and formally restarted the multi-speed debate, French President François Hollande proclaimed that “unity does not equal uniformity”.
We were lucky to have former MEP and Dutch Labour Party President Michiel van Hulten in to GC this week for a briefing on the Dutch election. Michiel provided plenty of food for thought, especially on the coalition-building dynamic over the weeks (months?) ahead. A couple of things stood out from the group’s discussion for me.
The Dutch election has set a precedent: It pays for ‘mainstream’ European politicians to take a tough line on Turkey, which has become the symbol for the challenges of immigration in many EU member states. Mark Rutte’s stand-off with Ankara was certainly a vote winner. This has not gone unnoticed by party strategists in Paris and Berlin, who are preparing for their own landmark elections this year. Turkey is also heading towards its own vote in a few weeks, making domestic politics an important part of current disputes between the Turkish government and its counterparts in Europe. Once the dust settles later this year, will both sides return to more cooperative relations?
During a trip to Chicago earlier this month, I reflected on the differences between my time in office and the present. Despite economic gains from globalisation, failures in politics and in policy have led to a crisis of confidence in global cooperation. This has made the identity-based, pessimistic politics promoted by populists more attractive. But it also poses a challenge to the centre left and the centre right as they try to reset their policies and appeal to the moderate majority of citizens.
One of the big political stories in the UK this week was the ‘u-turn’ by Chancellor Philip Hammond on his budget proposal to raise National Insurance Contributions (NICs) for the self-employed. These are the basic levies on all UK taxpayers to fund social welfare provision. Despite being praised by some as a progressive tax reform, Hammond reversed the policy just one week after announcing it after coming under pressure for breaking a 2015 manifesto commitment to not raise personal taxes. The NICs u-turn demonstrated a couple of important things about politics and policymaking at Westminster as the UK prepares for the most complex bout of parliamentary activity in its modern history, namely legislating its way out of the EU.
Mark Carney knows that the Financial Stability Board, the global financial regulator he chairs, needs the US on board. And he knows that the Trump administration is facing pressure to abandon ship. These facts explain the thrust of his letter to the G20 finance ministers and central bank governors ahead of this weekend’s summit in Baden, Germany. It is an almost explicit appeal for US participation in the FSB and an almost official admission that the organisation is worried.
One of the many things the UK will need to do on its way out of the EU is to establish its new ‘most favoured nation’ trading profile at the WTO in Geneva. This means establishing the tariffs for goods, minimum market access conditions for services trade and a number of other notified conditions that will apply in the UK market. Other WTO member states will have the right to challenge this process if they feel they have been disadvantaged by it. To help avoid this, the UK has said that it proposes to adopt for itself the goods and services schedules that it currently applies as an EU member state, except in a small number of areas where quantitative EU import quotas will need to be divided in some way between the two markets.
If you want to understand the state of the EU-China economic relationship, then reading the analysis of China’s Manufacturing 2025 strategy by the European Chamber of Commerce in China is a great place to start. It does not bother with the usual, dry statistical analysis of export growth rates and bilateral deficits. Instead, it is a stark exposé of why European businesses find competing in China anything but fair. It sends a strong signal that the political pressure on European policymakers to take a tougher line on Chinese investment and competition in Europe is only going to grow. And it suggests that those hoping a far-reaching bilateral investment agreement will soon be agreed between China and the EU are likely to be disappointed.
Today SoftBank, new owners of UK tech jewel ARM Holdings, sold a 25% stake in the business just nine months after acquiring the chipmaker. Though the UK government is committed to ending short-termism in company governance and stewardship, and addressing the power of ‘foreign’ takeovers of British companies, the move apparently sounded no more alarm bells than did the initial swoop for ARM.
Northern Ireland’s Assembly election on 2 March has come close to delivering a political earthquake, with the nationalist Sinn Fein coming within 1,200 votes of beating the Democratic Unionist Party (DUP) to first place, while the Assembly could for the first time lack a unionist majority. Arguably the most consequential election since the 1998 Good Friday Agreement, the election will have important ramifications for both the future of devolution and Brexit’s impact on Northern Ireland.