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EU Elections: Liberals join forces

With the European elections of May 2019 only six months away, most European parties are announcing their Spitzenkandidaten and campaign programs. European Liberals, however, announced something bigger.   

During their party congress in Madrid, liberal leaders announced plans to build a new liberal alliance. At the core of this new alliance are French President Emmanuel Macron’s La République En Marche (LREM) party and the Alliance of Liberals and Democrats for Europe (ALDE). Together, they hope to break the conservatives’ grip on European politics who currently hold all three presidencies of the EU’s main institutions – the European Commission, the European Parliament and the European Council.  

Despite joining forces, liberal leaders also announced to nominate not just one candidate but a Spitzenkandidaten team with up to nine candidates, hoping it will help them achieve better results in the EU elections. The following names are circulated as possible candidates: the EU’s Danish Commissioner for Competition Margrethe Vestager, the ALDE group leader in the EP and former Belgian Prime Minister Guy Verhofstadt and the EU’s Czech Commissioner for Justice Vera Jourová. The final team of candidates will be announced in February.

However, polls suggest that LREM together with ALDE would currently win 92 seats of the total 705 in the European Parliament, lagging well behind the conservative European People’s Party (EPP) and the Socialists (S&D).   

"Projected_number

Source: Politico, 29 October 2018

Despite the forecast for the Parliament, the coalition would have nine liberal leaders in the European Council, just like the conservatives, with Macron and Dutch Prime Minister Mark Rutte as the most prominent elected leaders among them. It is the European Council who nominates the next Commission President, taking into account the Parliament’s new composition resulting from the elections. Then, the nominee needs to be approved by a majority in the Parliament. As the European Council opposed the Spitzenkandidaten process, the Liberals hope that presenting a Spitzenkandidaten team will offer the European Council more discretion, making it more likely that one of their candidates will be chosen. 

Whether this strategy works out remains to be seen. The EPP’s candidate Manfred Weber is considered to have good chances, with the EPP being the biggest group in the Parliament.  

Besides the empowering atmosphere at the conference and a speech by Astrid Panosyan, co-founder of LREM, that was widely perceived as being impressive, some differences still remain. As Morten Løkkegaard, a Danish Member of European Parliament, pointed out, ALDE delegates insist on the French accepting the term liberal. In France the term “liberal” is interpreted as being free-market conservative, leading to their hesitation to embrace the label at European level. Furthermore, Macron’s camp is open for the alliance to include former socialist and green parties, causing some senior Liberals to worry that the umbrella might become too big. 

It remains unclear whether other parties are actually willing to join forces and if the Liberals among themselves can agree on whom to welcome in their ranks.  

 

The next European Commission President: Manfred Weber reaches for the top job

On 7-8 November, the European People’s Party (EPP), a party in the European Parliament (EP), held its party congress in Helsinki. Since the EPP is the biggest party in the EP, Weber’s nomination matters as he has high chances to eventually become the Commission’s next President.

In the run-up to the European Elections in May 2019, the Congress was marked by the election of the EPP’s Spitzenkandidat, who will compete with other parties’ nominees to become the President of the European Commission.

Within the centre-right party, two candidates, Manfred Weber, a German party politician and current Chair of the EPP in the European Parliament, and Alexander Stubb former Prime Minister of Finland and current Vice President of the European Investment Bank, had thrown their names in the ring.

The debate

The first widely-awaited highlight was the very first debate of two Spitzenkandidaten candidates on the evening of 7 November. However, everyone who expected a sharp exchange of words will have been disappointed.

Even though Stubb and Weber come from very different political backgrounds and differ on a number of core issues, the debate was a friendly exchange of views rather than lively confrontation.

Both participants praised Michel Barnier, the EU Chief Negotiator for Brexit, for his work and they emphasized that the UK made a mistake, leaving them worse off. Also, turning you back on the Union should not and does not come without a price.

A topic that was widely missed during the debate, and potentially one of the most interesting questions, was how to deal with Hungary. Weber was keen not to mention Hungary as this was considered the biggest danger to him becoming a Spitzenkandidat and eventually President of the European Commission. The relationship between Weber and Hungary’s Prime Minister Viktor Orbán changed throughout the last month. Originally being very close with each other, Weber began to distance himself when becoming a candidate. The concerns about Hungary’s fading respect for the rule of law let to the unprecedented triggering of the Article 7 of the Treaty on European Union procedure by the Commission, which will investigate the risk of Hungary to breach the EU’s core values. Weber voted in favour of triggering Art. 7.

The debate was perceived very differently between members of the wider EPP family and major news outlets. The latter did not consider it a proper debate, as they missed punches being thrown that would actually emphasize the differences between the two candidates. The EPP family, unsurprisingly, applauded the civilized exchange, calling it exactly what Europe needs. Whether or not one liked the debate or the candidates, it surely showed how far away the Spitzenkandidaten process remains from true primary campaigning.

The final pitch

On 8 November, the second day, the candidates gave their final pitches before the delegates’ vote for the EPP’s Spitzenkandidaten selection process closed.

Stubb in his speech talked about values, his vision for Europe and the vote the delegates were about to take. He did not go into the details of his campaign program but rather focused on demanding more integration and stronger commitment to the European Union from government leaders. He called upon the heads of government not to always blame Brussels for things that do not go well and take credit for policies that deliver.

Weber, for his part, turned more into campaign mode and took up his program about the people in Europe who should not be forgotten. During his speech, Weber emphasized that the core values of the European Union are Christian values and as a Christian he knows exactly what Europe is founded on. His statement that he needs no socialists or liberals to tell him what Europe is about came as a surprise as they were understood as being directedly addressed towards French President Emmanuel Macron’s new movement La République En Marche.

The Spitzenkandidat

As expected, Weber was elected the EEP’s Spitzenkandidat for the position of next President of the European Commission with 79,2% of the votes.

Regarding endorsements, Weber had outscored Stubb by far, securing support from all EPP leaders on the European Council. The election of Stubb would have been a major surprise.

The others

In the election of who becomes the next European Commission President, Weber now faces the candidates of the other parties in the European Parliament. The other Spitzenkandidat to have actual chances to become the Commission’s President is the current Commission Vice President Frans Timmermans from the Socialists & Democrats Party.

The European Conservatives and Reformers (ECR) Group will endorse its only candidate Czech Member of European Parliament Jan Zahradil on Monday 12 November. The ECR Group although currently the third biggest in the European Parliament are likely to lose many seats in the elections in May, as the British Conservative Party and the Ulster Unionist Party are members of it.

The Alliance of Liberals and Democrats for Europe (ALDE) has not yet named potential candidates and is not sure they will, as they are critical of the Spitzenkandidaten process. Also, ALDE has been approached by Macron’s La République En Marche to form a liberal alliance and agree on a joint campaign platform. The discussions are still ongoing and the question whether La République En Marche would actually join ALDE or form its own group remains to be answered.

The European Commission is already developing its priorities for the next mandate

On Tuesday 23 October, the European Commission unveiled the details of the annual Work Programme for 2019, thereby outlining its policy plans for the upcoming year. The Work Programme follows up on Jean-Claude Juncker’s State of the Union of 12 September 2018. But what to expect from the EU’s executive arm in a year that will be marked by the United Kingdom’s departure from the EU and the European elections?

Business as usual? Not entirely. The Work Programme is entitled: “delivering what we promised and preparing for the future”. As such, the approach is twofold. Amidst the hustle and bustle of political campaigns and the subsequent power shuffle in the EU institutions, the daily work of the Juncker Commission continues until autumn next year. Therefore, expect the Commission to tie up loose ends on the pending legislative files. Only 15 new, non-legislative, initiatives have been tabled. A further 10 files will go through the Regulatory Fitness and Performance Programme (REFIT) to ensure their effectiveness. Moreover, President Juncker urges the co-legislators to speed up negotiations on the pending 45 proposals.

Besides finishing the legislative cycle, the Commission aims to look beyond 2019. This future will be given a boost during a key milestone event next year: the EU leaders’ Summit in Sibiu on 9 May 2019, shortly after Brexit day and just before the European elections. During this Summit, Member States will discuss the future of the Union. The Commission will contribute to this by providing the necessary input in order to set the agenda.

Consequently, the Work Programme for 2019 feeds into this Summit. It gives us a sneak peek in what to expect next year in Sibiu and ultimately, the next Commission 2019-2024. Most of the new initiatives in the Work Programme will focus on the EU’s commitment to climate change and engagement with the Paris Agreement. In the runup to the Katowice Climate Change Conference (COP24) this December and following the latest report by the Intergovernmental Panel on Climate Change, the Commission will issue a strategy for long-term EU greenhouse gas emissions reduction. Expect this strategy to set the scene for upcoming legislation during the next mandate.

Similarly, a progress report on the state of the Energy Union will identify which challenges still need to be addressed in the coming years to complete the EU’s 2030 energy and climate framework. These long-term frameworks set the scene for specific policy areas. Expect the next Commission to further roll-out how all transport modalities will have to deliver their parts to ensure a low-carbon and sustainable future in order to achieve the targets as set in the Paris Agreement.

Moreover, work will continue to strengthen the Digital Single Market. For next year this means wrapping up the remaining 12 proposals, but also setting out the building blocks for years ahead by presenting a Coordinated Plan on Artificial Intelligence and a Joint Action Plan on the spread of online disinformation.

These strategies and progress reports will provide guidance for the years ahead and will feed into the agenda of the EU Summit in Sibiu. Amidst the heat of Brexit and the EU elections, the 2019 Work Programme is more than merely a wrap-up of the current Commission, and will aim to provide the building blocks for Europe’s years ahead. In order to have an impact on the next Commission priorities, it is imperative to seize this window of opportunity to actively shape the policy priorities for the EU and create a favourable political and regulatory framework. After all, priorities are already being developed. Want to know more? Feel free to contact us.

UK party politics: The storm before the storm?

With less than six months before the UK exits the European Union, Brexit negotiations enter their hot phase. Adding to the island’s political uncertainty was 2018’s Party Conference season.  

Delegates at the Labour Party Conference in Liverpool were in a good mood. The party sought to demonstrate their readiness for government. Despite presenting their programme on housing and taxes, Brexit took centre stage. Labour’s repeated emphasis that it will vote down Prime Minister Theresa May’s Chequers proposal in Parliament as it does not pass Labour’s six tests for a good Brexit deal, aggravated the uncertainty around the Brexit negotiations, as it made Chequers’ passing Parliament more unlikely. Whilst putting Prime Minister May in a bad spot, it would work out well for Jeremy Corbyn and his Party, who are scoring well in polls and might, therefore, benefit from a general election.  

Corbyn’s leadership ambitions received another boost in confidence after he met in Brussels with EU Chief Negotiator Michel Barnier and European Commission Secretary-General Martin Selmayr directly after the conference. While the Commission’s decision to agree to the meeting was widely perceived as a loss in faith in a final deal to be reached, it did not seem to harm the pace of the ongoing negotiations.  

As it is not Labour’s decision whether to have a general election, the party also agreed to support a second referendum in case of a no deal scenario. However, they do not agree on whether the question should include remain as an option or only decide on the final deal.  

Labour’s decision to keep all options open in case no Brexit deal is finalised by March 2019, including a second referendum, is a major boost for the People’s Vote campaign which has been gaining in popularity in September. The People’s Vote is a campaign group that, launched in April 2018, calls for second referendum on the terms of departure. This means that British citizens receive a chance to vote on the final deal negotiated with the EU, provided there will be any. Considering that May already refused to hold a second plebiscite, it remains to be seen how much pressure the campaign will be able to exert.  

For Theresa May, the Conservative Party Conference could have been a major disaster and some of her final days as Prime Minister. Instead, she was able to secure her position for at least a little while longer. In the run up to the conference it was widely speculated that Former Foreign Secretary Boris Johnson would call for her replacement as result of the deep dissatisfaction with the Chequers proposal and her handling of the Brexit negotiations. However, no such demands were voiced and Theresa May balanced her way through the conference, trying to unite her party, while strongly defending her proposal against the critique of the EU. She also reaffirmed that it will either be Chequers or no deal, which in turn forecasts an interesting EU Summit on 18th and19th October, as significant progress is to be made there in view of finalising the exit deal in November. EU heads of states and governments will hold a Brexit dinner on the evening of the 17th October. 

Finally, one announcement made at the Tory party conference might add additional tension to the Brexit negotiations with the EU. Theresa May declared that her government plans a new visa regime to be introduced after Brexit. Well received by Conservatives, the scheme foresees to end free movement with the EU and limit the overall number of immigrants per year. The new system will be based solely on skills and will not discriminate between EU and non-EU citizens, following up on of a core promise from the original EU referendum.

 

State of the Union 2018: cautious calls for more unity

On 12 September, in his fourth and final State of the Union speech – “The Hour of European Sovereignty” – European Commission President Jean-Claude Juncker prepared the Union for the rough months to come.

Juncker, for sure, had no trouble finding inspiration for his speech. The question of migration is far from being solved and sparks of populism throughout the Union keep politicians searching for answers. Hence, he touched upon a wide array of topics, always recalling his key message that only a united Europe is strong enough to withstand the challenges of the future.

Of course, a topic he could not miss was Brexit, as no discussion or decision is spared by it. Especially not the future of the European Union.

Yet, his remarks on Brexit exposed nothing new under the sun: he once again reminded his audience of the inviolability of the single market and that the times of cherry picking are over. Regarding the most sensitive issue of the discussion, Juncker made it clear that Ireland will not be left alone throughout the final rounds of negotiations. The EU27 will continue to stand together in solidarity with Ireland and continue supporting the objective to prevent a hard border. This does not mean that the EU turns against the UK but rather it will value a close relationship in the future.

While Brexit puts a negative tone on the unity in Europe, the forthcoming European Parliamentary elections and the appointment of the new European Commission will definitely keep up the heat not only in Brussels but also in the Member States in the next 12-16 months.

With reference to the forthcoming elections, Juncker, as true European, expressed his support for the “Spitzenkandidaten” procedure and his desire to see transnational lists in the European Parliament in 2024. It remains questionable, however, whether his wish will come true since the European Parliament already rejected transnational lists for the elections in 2019.

In terms of policy, by following Juncker’s plan for the months before the elections, it will not get boring for policy wonks in the EU bubble. Further progress on proposals in policy fields such as the digital single market, waste management or digital taxation, are just a few of his many wishes. Overall, Juncker hopes to see divides between North, East, South and West to be overcome.

Time is running out to complete the Digital Single Market Strategy

At the beginning of its mandate in 2014, Jean-Claude Juncker made progress toward a connected European Digital Single Market (DSM) a key priority for the newly-appointed European Commission. The observation was simple: since digital technologies know no borders, the rules framing their development should follow the same logic.

The plan laid down in the 2015 Communication “a Strategy for a Digital Single Market” was particularly ambitious. It balanced symbolic measures with tangible impact on EU citizens and offered clear communicative value, with technical yet potentially disruptive proposals that are instrumental in connecting national digital markets.

The deadline set by the Commission to wrap up the negotiation on all the DSM files is getting dangerously close and reaching agreements on the remaining 12 files before the end of 2018 will be an uphill struggle.

The European Commission’s strategy for completing the Digital Single Market rests on three complementary pillars that translated into 29 legislative proposals and a series of complementary initiatives sharing the same core objective to “unlock the digital potential of Europe”.

European legislators have reached agreements on 17 of the 29 legislative proposals presented by the Commission so far. EU Institutions communicated heavily on early successes with the adoption of legislation on Free Roaming, Portability of online content and Geo-blocking, but also managed to agree on key legislative files such as the General Data Protection Regulation, the Regulation on the free flow of data or the overhaul of VAT rules for e-commerce.

The work, however, is far from over. The European Commission reiterated that all proposals should be agreed by the end of 2018, putting additional pressure on an already overloaded legislative agenda. 

The Austrian Presidency will have to navigate difficult files, in particular the ePrivacy Regulation on which member states have been blocked for months, and deliver on new legislative proposals such as the Platform-to-business Regulation. While those two proposals do appear in the Austrian Presidency’s priorities, other files might fall in limbo, like the Digital contract rules Directives that have been moving at different pace, causing increasing uncertainties for businesses.

With the ongoing and upcoming trilogue negotiations, the European Parliament also has its fair share of responsibilities in ensuring all legislations are adopted this year. The toughest battle will be the negotiation over the reform of Copyright rules, which are back on the table in September after a rare rejection of the bill during the EP Plenary on 11 July.

The pressure to agree on the remaining files arrives at the same time as other major negotiations, including talks on the European Multi-Financial Framework and sector-specific programs which will determine the resources attributed to the DSM. It is also amplified by the looming uncertainties created by Brexit and the European elections next May, which will be sure to delay greatly any ongoing negotiations.

Austrian Presidency: “A Europe that protects”

On 1 July, Austria took over the Presidency of the Council of the EU, amid, one could say, a very turbulent time for Europe. On the one hand, there is US President Trump, whose rhetoric and actions, such as the introduction of tariffs on steel and aluminium from the EU and other trading partners, are shaking the foundations of EU-US relations. On the other hand, the migration crisis and the rise of populism across the EU are threatening the unity of the EU itself. Then, of course, there is Brexit and the political uncertainty that is stemming from it, making both sides wonder what the future of EU-UK relations will look like.

These challenges are reflected in the list of priorities of the Austrian Presidency. While safeguarding the principle of subsidiarity, Austria plans to tackle major issues that require joint actions by all member states. The three priority areas are:

1)    Security and the fight against illegal migration;

2)    Securing prosperity and competitiveness through digitalisation;

3)    Stability in the European neighbourhood – EU perspective of the Western Balkans/ South Eastern Europe.

The issue of illegal migration is probably the most pressing one. With thousands of migrants trying to enter Europe in hope of fleeing conflict or economic despair, populism in some EU member states has been on the rise. This is evidenced by the latest decision of the Italian authorities to block ships carrying migrants from docking in Italian ports. It ultimately led to a trade of insults between Rome and Paris, showing that EU unity on this matter is far from strong. It is, therefore, no surprise that this is Austria’s number one priority. Reforming the Common European Asylum System and ensuring efficient protection of the EU’s external borders will be important topics for discussion during the Austrian Presidency.

Yet, while Europe is dealing with the migration crisis and Brexit, the rest of the world is not sleeping. During his speech at the European Parliament, Austrian Chancellor Kurz mentioned that big American and Chinese internet companies are dominating on the world stage. This is why Austria wants to make sure that Europe can keep up with its rivals by fostering innovation and digitalisation. Securing prosperity and competitiveness without overregulation will, therefore, be an important priority. This also includes discussions on how to prevent tax competition and tax avoidance as well as how to tax the digital economy. Many agree that the Austrian Presidency will be crucial in determining the fate of the proposed Digital Services Tax which aims at taxing revenues of large internet companies. While some argue this is well overdue, others are afraid it might hurt EU competitiveness and job creation. However, one thing is sure: tough negotiations will follow in the coming months.

Another real challenge is the EU enlargement to the South Eastern European countries. Welcoming these countries to the EU is important not only because it will bring greater stability to the fragile region, but also because it would show that the EU is still attractive to third countries, even post-Brexit. However, with so many unresolved disputes and political tensions in the region, it is unlikely anything significant will happen during the Austrian Presidency. Although, the recent agreement between Macedonia and Greece over the former’s name, which is to be known as the Republic of North Macedonia going forward, certainly gives hope for progress in the years ahead.

It remains to be seen how much progress on these issues the current Presidency will be able to achieve in the following six months. Nonetheless, let’s hope that among all the uncertainties and challenges, common sense will prevail and that Europe will continue to protect, prosper and grow.

The future of the EU is now

How will the new European Parliament look like? Who is going to be the next President of the European Commission? Should the European Commission and the European Council have a single President? These are some of the questions people are asking a year ahead of the European Parliament elections.

The answers, however, are far from being clear. It is likely that for the first time, pro-European parties in the European Parliament might not be able to gain a majority. This leads the question: which party would have a mandate big enough to put forward the first candidate for the President of the European Commission? The European Parliament’s position is more than clear about its preference to use the so-called Spitzenkandidaten process, but it is not that certain whether the Member States will automatically give their blessing to it. The EU Treaties require the European Council, acting by qualified majority, to nominate for the European Parliament’s approval a candidate for the President of the European Commission “taking account of the results of the European Parliament election”. It is worth noting that the Spitzenkandidaten procedure requires that the political parties name their candidates already before the end of this year.

The Spitzenkandidaten procedure was first applied in 2014 when the current President of the European Commission, Jean-Claude Juncker was elected. Yet, four years later it is still unclear whether this procedure is the right way to engage with voters, to bridge the EU democratic gap and to legitimise EU institutions. While the recently conducted Eurobarometer survey shows that citizens’ support for the European Union has hit a record high since 2007, it is doubtful whether those who plan to cast their vote in May 2019 are aware of the fact that they do not only elect members of the European Parliament but they also have the power to indirectly choose who the new President of the European Commission could become.

The leaders of the EU institutions have been making an outstanding effort in the past decade to bring the robust system of the EU closer to citizens. Direct and indirect outreach, simplified communication and use of social media have increased significantly the awareness around the work of the institutions. However, there is still a long way to go before candidates for the European Commission presidency would campaign directly in Member States. It is also certain that the transnational lists of the Members of the European Parliament will be left for the next elections in 2024. Only once all these steps have advanced, then we can finally say that the democratic system of the European Union is becoming a reality.

Brexit: Are you ready to fudge?

June is crucial month for the Brexit negotiations. It may even be decisive. At least, that is what many political pundits, businesses leaders and other observers are hoping for.

This month, Her Majesty’s Government publishes a Brexit ‘backstop’ plan, finalises a blueprint on a future UK-EU partnership and attends the EU Council summit on 28-29th June. Also, the EU (Withdrawal) Bill comes back to the House of Commons, bringing back no fewer than 196 amendments from the upper house.

These developments will all shape the outcome of the negotiations and, therefore, how the UK will be defined as a third country outside the European Union. Unfortunately, the past two years have shown one should not hold their breath for too long when a new milestone is reached in the negotiations process. The divorce is a complicated and divisive task and the EU has been watching from across the Channel how the UK’s infighting is concocting a fudged (dare I say muddled?) response.

Brexit ‘backstop’ plan

On Thursday 7th June, the UK Government published a proposal for a ‘backstop’ Brexit plan. The aim is to avoid a hard border between both Irelands if the future partnership deal between the UK and the EU has not yet been implemented by the end of the transition period in December 2020.

Whilst only being a technical note to the withdrawal agreement, this plan ruffled quite some feathers within the UK Tory party. It proved very difficult for PM Theresa May and Brexit Secretary David Davis to come to an agreement, with DD threatening to resign (again, oops) if the proposal did not include a time limit. He got his way, and May averted another crisis. The text states that the transitional arrangement will only be in place until the future customs arrangement can be introduced and it expects the latter “to be in place by the end of December 2021 at the latest”.

Merely 24 hours later, however, the EU’s chief Brexit negotiator Michel Barnier branded the time limit as “unacceptable” because the backstop has to provide guarantees under all circumstances unless and until a permanent solution is found. Whilst not rejecting the proposal entirely, he said it raises more questions than it provides answers.

Equally important, Barnier criticised the fact that the issue of regulatory alignment was omitted and that, consequently, the border issue between Ireland and Northern Ireland remains unresolved. Barnier called for both sides to find pragmatic solutions. It is, however, a highly political question. The EU wants the backstop solution to be only applicable to Northern Ireland, but the UK is “committed to maintaining the integrity of [their] own internal market. That position will not change” a UK Government spokesperson said.

Lastly, Barnier criticised the British suggestion to stay in “a” customs union with the EU as it implies that public authorities and businesses would need to adapt to this temporary solution before adapting again to a permanent solution. Indeed, this is extremely burdensome to anyone affected and the need to adapt only once after Brexit is an issue the UK has acknowledged in the past too.

EU (Withdrawal) Bill

On Tuesday 12th and Wednesday 13th June, the EU (Withdrawal) Bill, which repatriates EU law into national law to ensure continuation after March 2019, comes back to the House of Commons bringing back 196 amendments from the House of Lords. However, debates will be dominated by the 15 amendments on which the Government was defeated in the Lords.

Tory MPs have been urged not to give in to the Lords’ amendments and to vote with the Government. Surely no one wishes to see the Government fall and enable Jeremy Corbyn to become Prime Minister? Warnings might fall on deaf ears, but it will be interesting to see how those Tory Remain rebels vote. They might pursue their vision of a ‘sensible Brexit’ (as Ken Clarke MP likes to put it) or they might fear a leadership contest that gives way to a hardline Tory Brexiteer and just keep quiet instead.

The amendment causing May the biggest headache concerns giving Parliament a ‘meaningful vote’ on the Brexit negotiations outcome. This amendment provides Parliament with the power to reject the final deal. Brexiteers fear this will put everything into jeopardy. This is definitely one to watch on the Tuesday. Important votes on whether to opt for a customs union and whether to enter the European Economic Area (EEA) are scheduled for Wednesday. Do not take anything for granted, as the Labour Party is also divided on the issue, not least since Labour came out with a new position the previous week to keep full access to (i.e. as opposed to full membership of!) the EU single market. Labour MPs are whipped to abstain on the EEA vote, but there may well be some rebels.

Future EU-UK Partnership and the EU Council Summit

It was expected that the UK Government would publish a blueprint on its relationship with the EU ahead of the June EU Council summit, but it was reported to have been delayed until after EU leaders come together in Brussels. The news obviously came as a disappointment to many who want to avoid kicking the can down the road until the very last minute, but the Government may want to buy itself more time during summer recess. If patience is running low, do not despair: the document is expected to be about 150 pages, so plenty to digest once it is out there.

The EU and UK are currently discussing the framework of a new relationship which will comprise economic partnership as well as strategic cooperation on security matters. According to the Commission, proper negotiations can only officially start once the UK leaves EU institutions. This view is not shared by the UK, but only few people believe that negotiations will reach the detailed technical part before next March anyway.

For now, the EU has repeatedly insisted that access to mainland Europe’s market would not be à la carte and despite the UK acknowledging the four freedoms of the single market, it still looks like a fudged compromise is the only option that will actually be viable. Some might call that an off-the-shelf cake.

New EU investment screening rules: What changes would it bring to the China-EU relations?

 

2018 marks the 15th anniversary of the China-EU comprehensive strategic partnership. Chinese investment in the European Union has been increasing exponentially, with a record of EUR 35 billion in 2016, compared to only EUR 1.6 billion in 2010. The continued expansion of the Chinese economy and its foreign direct investment (FDI) – in the framework of the “Belt and Road Initiative” – creates new realities in EU-China relations.

In September 2017, the European Commission proposed a new regulation for the screening of foreign investments in the EU. The EU has one of the most open investment regimes in the world and the new legal instrument without doubt will be a game-changer for business relations between China and the EU. The European Commission’s proposal aims at more transparency of investments from non-EU entities into European firms in strategic areas where the Union’s technological edge and security could be at risk.

The European Parliament has recently confirmed that it is ready to work together with the Council of the EU towards the adoption of this new legislation by the end of 2018. During the debates around the new regulation, several Members of European Parliament (MEPs) voiced concerns over security and anti-competitive behavior in Chinese takeovers of European companies. Reciprocity being one of the key pillars of the EU trade policy, MEPs also called for the removal of barriers to EU investments in China. To illustrate, these barriers have since 2010 instigated a fall of 25% of European FDI in China.

In China, the FDI screening proposal has been politically considered as a protectionist move from the EU’s side. At the World Economic Forum, President Xi Jinping urged world leaders to “say no to protectionism”, warning that “no one will emerge as a winner in a trade war”.  The EU’s scrutiny is increasing towards Chinese investments in high technology and other sectors.

Now that the EU might impose additional burdens on Chinese investments into EU firms, China is eager to negotiate a bilateral investment protection treaty with the EU. China has already invested heavily in developing bilateral relations with EU Member States through its “Belt & Road Initiative” and other programs such as the 16+1 group – which links China with 16 Central and Eastern European countries, 11 of which are in the EU. At its 6th annual meeting in December 2017, Chinese Prime Minister Li Keqiang announced to increase Chinese investment in several prestige projects, such as strengthening cooperation in the field of healthcare and the construction of a Budapest-Belgrade highway. With the EU tightening its grip on foreign investment, these bilateral relations are only becoming more important for China. As trade relations with the US are escalating, a strategic partnership could benefit both the EU and China while an efficient EU FDI screening mechanism would safeguard strategic EU industries.